CITY NATIONAL CORP, 10-K405, 2000-03-24

CITY NATIONAL CORP
10-K405, 2000-03-24
NATIONAL COMMERCIAL BANKS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, 1999 Commission File Number 1-10521

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CITY NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

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<TABLE>
<S> <C>
DELAWARE 95-2568550
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

CITY NATIONAL CENTER
400 NORTH ROXBURY DRIVE,
BEVERLY HILLS, CALIFORNIA 90210
(Address of principal executive offices) (Zip code)
</TABLE>

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (310) 888-6000

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Securities registered pursuant to Section 12(b) of the Act:

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<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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<S> <C>
Common Stock, $1.00 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
</TABLE>

NO SECURITIES ARE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT

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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES _X_ NO ____

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. YES _X_

Number of shares of common stock outstanding at March 14, 2000: 47,428,919

Aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 14, 2000: $1,083,349,148

DOCUMENTS INCORPORATED BY REFERENCE

THE INFORMATION REQUIRED TO BE DISCLOSED PURSUANT TO PART III OF THIS REPORT
EITHER SHALL BE (i) DEEMED TO BE INCORPORATED BY REFERENCE FROM SELECTED
PORTIONS OF THE DEFINITIVE PROXY STATEMENT FOR CITY NATIONAL CORPORATION'S 2000
ANNUAL MEETING OF SHAREHOLDERS, IF SUCH PROXY STATEMENT IS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO REGULATION 14A NOT LATER THAN
120 DAYS AFTER THE END OF THE CORPORATION'S MOST RECENTLY COMPLETED FISCAL YEAR,
OR (ii) INCLUDED IN AN AMENDMENT TO THIS REPORT FILED WITH THE COMMISSION ON
FORM 10-K/A.

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PART I

ITEM 1. BUSINESS

GENERAL

City National Corporation (the "Corporation") was organized in Delaware in
1968 to acquire the outstanding capital stock of City National Bank (the
"Bank"). Because the Bank comprises substantially all of the business of the
Corporation, references to the "Company" reflect the consolidated activities of
the Corporation and the Bank. The Corporation owns all the outstanding shares of
the Bank.

The Bank, which was founded in 1953 and opened for business in
January 1954, conducts business in Southern and, as of February 29, 2000, in
Northern California. The Bank operates more than 50 banking offices in Los
Angeles, Orange, San Diego, Riverside, Ventura, San Bernardino, San Mateo and
San Francisco counties, as well as a loan production office in Sacramento and an
offshore office which takes deposits.

In the three years ended December 31, 1999, the Company acquired five
financial institutions. On August 27, 1999, the Company acquired American
Pacific State Bank ("APSB"), an eight branch bank with total assets at June 30,
1999 of $442.3 million. The total cash purchase price was $90.4 million. See
"Note 2 to Notes to Consolidated Financial Statements" on page A-39 of this
report. On December 31, 1998, the Company acquired North American Trust Company
("NATC"), an independent trust company with $4.0 billion in total assets under
management or administration at that date. On January 9, 1998, the Company
acquired Harbor Bancorp ("HB"), a one bank holding company with six branches and
total assets at December 31, 1997 of $241.8 million. On January 24, 1997, the
Company acquired Riverside National Bank ("RNB"), a four branch bank with total
assets at December 31, 1996 of $252.2 million. On January 17, 1997, the Company
acquired Ventura County National Bancorp ("VCNB"), a two bank holding company
with six branches and total assets at December 31, 1996 of $279.8 million.

On February 29, 2000, the Company completed the acquisition of The Pacific
Bank, N.A. ("Pacific Bank") headquartered in San Francisco, California with
total assets at December 31, 1999 of $774.9 million. The total purchase price
was approximately $145.2 million (including the consideration for outstanding
stock options). The Corporation issued approximately 2,365,169 shares, primarily
from treasury, with an aggregate market value of $65.2 million and paid the
remainder in cash.

The Company is engaged in one operating segment: providing private and
business banking, including investment and trust services. The Bank operates
primarily in the Southern California market and is the largest independent
commercial bank headquartered in that region. The Bank's principal customer base
comprises small-to middle-market companies with annual sales revenue of up to
$250 million, entrepreneurs, professionals, and affluent individuals. The Bank
typically serves customers seeking relationship banking, which it seeks to
provide through a high level of personal service, tailored products, and private
banking teams. The Bank offers a broad range of loans, deposit, cash management,
international banking, and other products and services. The Bank lends, invests,
and provides services in accordance with its Community Reinvestment Act ("CRA")
commitment. Through City National Investments, the Bank offers personal and
employee benefit trust services, including 401(k) and defined benefit plans,
manages investments for customers, and engages in securities sales and trading.
The Bank also manages and offers mutual funds under the name of CNI Charter
Funds.

COMPETITION

The banking business is highly competitive. The Bank competes with domestic
and foreign banks for deposits, loans, and other banking business. In addition,
other financial intermediaries, such as savings and loans, money market mutual
funds, securities firms, credit unions, and other financial services companies,
compete with the Bank. Furthermore, interstate banking legislation has eroded
the geographic constraints

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on the financial services industry. Recently enacted legislation will facilitate
the ability of non-depository institutions to act as financial intermediaries.
See "--Supervision and Regulation--Financial Services Modernization
Legislation."

ECONOMIC CONDITIONS, GOVERNMENT POLICIES, LEGISLATION, AND REGULATION

The Company's profitability, like most financial institutions, is primarily
dependent on interest rate differentials. In general, the difference between the
interest rates paid by the Bank on interest-bearing liabilities, such as
deposits and other borrowings, and the interest rates received by the Bank on
its interest-earning assets, such as loans extended to its customers and
securities held in its investment portfolio, comprise the major portion of the
Company's earnings. These rates are highly sensitive to many factors that are
beyond the Company's control, such as inflation, recession, and unemployment,
and the impact which future changes in domestic and foreign economic conditions
might have on the Company cannot be predicted.

The Company's business is also influenced by the monetary and fiscal
policies of the federal government and the policies of regulatory agencies,
particularly the Board of Governors of the Federal Reserve System (the "Federal
Reserve"). The Federal Reserve implements national monetary policies (with
objectives such as curbing inflation and combating recession) through its
open-market operations in U.S. Government securities, by adjusting the required
level of reserves for depository institutions subject to its reserve
requirements, and by varying the target federal funds and discount rates
applicable to borrowings by depository institutions. The actions of the Federal
Reserve in these areas influence the growth of bank loans, investments, and
deposits and also affect interest rates earned on interest-earning assets and
paid on interest-bearing liabilities. The nature and impact on the Company of
any future changes in monetary and fiscal policies cannot be predicted.

From time to time, legislative acts, as well as regulations, are enacted
which have the effect of increasing the cost of doing business, limiting or
expanding permissible activities, or affecting the competitive balance between
banks and other financial services providers. Proposals to change the laws and
regulations governing the operations and taxation of banks, bank holding
companies, and other financial institutions and financial services providers are
frequently made in the U.S. Congress, in the state legislatures, and before
various regulatory agencies. See "--Supervision and Regulation."

EMPLOYEES

At December 31, 1999, the Company had 1,874 full-time employees. None of the
employees are covered by a collective bargaining agreement. The Company
considers its employee relations to be satisfactory.

SUPERVISION AND REGULATION

GENERAL

Bank holding companies and banks are extensively regulated under both
federal and state law. This regulation is intended primarily for the protection
of depositors and the deposit insurance fund, and not for the benefit of
stockholders of the Corporation. Set forth below is a summary description of the
material laws and regulations which relate to the operations of the Corporation
and the Bank. The description is qualified in its entirety by reference to the
applicable laws and regulations.

THE CORPORATION

The Corporation, as a registered bank holding company, is subject to
regulation under the Bank Holding Company Act of 1956, as amended (the "BHCA").
The Corporation is required to file with the Federal Reserve quarterly and
annual reports and such additional information as the Federal Reserve may

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require pursuant to the BHCA. The Federal Reserve may conduct examinations of
the Corporation and its subsidiaries.

The Federal Reserve may require that the Corporation terminate an activity
or terminate control of or liquidate or divest certain subsidiaries or
affiliates when the Federal Reserve believes the activity or the control of the
subsidiary or affiliate constitutes a significant risk to the financial safety,
soundness, or stability of any of its banking subsidiaries. The Federal Reserve
also has the authority to regulate provisions of certain bank holding company
debt, including authority to impose interest ceilings and reserve requirements
on such debt. Under certain circumstances, the Corporation must file written
notice and obtain approval from the Federal Reserve prior to purchasing or
redeeming its equity securities.

Under the BHCA and regulations adopted by the Federal Reserve, a bank
holding company and its nonbanking subsidiaries are prohibited from requiring
certain tie-in arrangements in connection with any extension of credit, lease or
sale of property, or furnishing of services. Further, the Corporation is
required by the Federal Reserve to maintain certain levels of capital. See
"--Capital Standards."

The Corporation is required to obtain the prior approval of the Federal
Reserve for the acquisition of more than 5% of the outstanding shares of any
class of voting securities or substantially all of the assets of any bank or
bank holding company. Prior approval of the Federal Reserve is also required for
the merger or consolidation of the Corporation and another bank holding company.

The Corporation is prohibited by the BHCA, except in certain statutorily
prescribed instances, from acquiring direct or indirect ownership or control of
more than 5% of the outstanding voting shares of any company that is not a bank
or bank holding company and from engaging directly or indirectly in activities
other than those of banking, managing or controlling banks, or furnishing
services to its subsidiaries. However, the Corporation, subject to the prior
approval of the Federal Reserve, may engage in, or acquire shares of companies
engaged in, any activities that are deemed by the Federal Reserve to be so
closely related to banking or managing or controlling banks as to be a proper
incident thereto. See "--Financial Services Modernization Legislation".

Under Federal Reserve regulations, a bank holding company is required to
serve as a source of financial and managerial strength to its subsidiary banks
and may not conduct its operations in an unsafe or unsound manner. In addition,
it is the Federal Reserve's policy that in serving as a source of strength to
its subsidiary banks, a bank holding company should stand ready to use available
resources to provide adequate capital funds to its subsidiary banks during
periods of financial stress or adversity and should maintain the financial
flexibility and capital-raising capacity to obtain additional resources for
assisting its subsidiary banks. A bank holding company's failure to meet its
obligations to serve as a source of strength to its subsidiary banks will
generally be considered by the Federal Reserve to be an unsafe and unsound
banking practice or a violation of the Federal Reserve's regulations or both.

The Corporation's securities are registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). As such, the Corporation is subject to the information, proxy
solicitation, insider trading, and other requirements and restrictions of the
Exchange Act.

THE BANK

The Bank, as a national banking association, is subject to primary
supervision, examination, and regulation by the Office of the Comptroller of the
Currency (the "Comptroller"). To a lesser extent, the Bank is also subject to
certain regulations promulgated by the Federal Reserve. If, as a result of an
examination of a bank, the Comptroller should determine that the financial
condition, capital resources, asset quality, earnings prospects, management,
liquidity, or other aspects of the Bank's operations are unsatisfactory or that
the Bank or its management is violating or has violated any law or regulation,
various remedies are available to the Comptroller. Such remedies include the
power to enjoin "unsafe or

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unsound" practices, to require affirmative action to correct any conditions
resulting from any violation or practice, to issue an administrative order that
can be judicially enforced, to direct an increase in capital, to restrict the
growth of the Bank, to assess civil monetary penalties, to remove officers and
directors, and ultimately to terminate the Bank's deposit insurance.

Various requirements and restrictions under the laws of the United States
affect the operations of the Bank. Statutes and regulations relate to many
aspects of the Bank's operations, including reserves against deposits, ownership
of deposit accounts, interest rates payable on deposits, loans, investments,
mergers, and acquisitions, borrowings, dividends, locations of branch offices,
and capital requirements. Further, the Bank is required to maintain certain
levels of capital. See "--Capital Standards."

FINANCIAL SERVICES MODERNIZATION LEGISLATION

On November 12, 1999, President Clinton signed into law the
Gramm-Leach-Bliley Act of 1999 (the "Financial Services Modernization Act"). The
general effect of the Financial Services Modernization Act is to establish a
comprehensive framework to permit affiliations among commercial banks, insurance
companies, securities firms, and other financial service providers by revising
and expanding the BHCA framework to permit a holding company system to engage in
a full range of financial activities through a new entity known as a Financial
Holding Company. "Financial activities" is broadly defined to include not only
banking, insurance, and securities activities, but also merchant banking and
additional activities that the Federal Reserve, in consultation with the
Secretary of the Treasury, determines to be financial in nature, incidental to
such financial activities, or complementary activities that do not pose a
substantial risk to the safety and soundness of depository institutions or the
financial system generally.

Generally, the Financial Services Modernization Act:

- Repeals historical restrictions on, and eliminates many federal and state
law barriers to, affiliations among banks, securities firms, insurance
companies, and other financial service providers;

- Broadens the activities that may be conducted by national banks and their
financial subsidiaries;

- Provides an enhanced framework for protecting the privacy of consumer
information;

- Provides a uniform framework for the functional regulation of the
activities of banks, savings institutions, and their holding companies;

- Adopts a number of provisions related to the capitalization, membership,
corporate governance, and other measures designed to modernize the Federal
Home Loan Bank system;

- Addresses disclosure issues relating to the CRA; and

- Addresses a variety of other legal and regulatory issues affecting
operations and regulatory oversight of financial institutions.

In order for the Corporation to take advantage of the ability to affiliate
with other financial services providers, the Corporation must become a
"Financial Holding Company" as permitted under an amendment to the BHCA. To
become a Financial Holding Company, the Corporation would file a declaration
with the Federal Reserve, electing to engage in activities permissible for
Financial Holding Companies and certifying that it is eligible to do so because
its insured depository institution subsidiary is well-capitalized and
well-managed. In addition, the Federal Reserve must also determine that each
insured depository institution subsidiary of the bank holding company has at
least a "satisfactory" CRA rating. See "--The Bank--Community Reinvestment Act
and Fair Lending Developments." The Corporation currently meets the requirements
to make an election to become a Financial Holding Company. The Corporation's
management has not determined at this time whether it will seek an election to
become a Financial Holding Company. The Corporation is examining its strategic
business plan to determine whether, based on market conditions, the relative
financial conditions of the Corporation and its subsidiaries, regulatory

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capital requirements, general economic conditions, and other factors, the
Corporation desires to use any of the expanded powers provided in the Financial
Services Modernization Act.

The Financial Services Modernization Act also permits national banks to
engage in expanded activities through the formation of financial subsidiaries. A
national bank may have a subsidiary engage in any activity authorized for
national banks directly or any financial activity, except for insurance
underwriting, insurance investments, real estate investment or development, or
merchant banking, which may only be conducted through a subsidiary of a
Financial Holding Company. Financial activities include all other activities
permitted under new sections of the BHCA or permitted by regulation.

A national bank seeking to have a financial subsidiary must be
"well-capitalized" and "well-managed." The total assets of all financial
subsidiaries may not exceed the lesser of 45% of a bank's total assets, or
$50 billion. Further, if the bank is among the 50 largest in the United States,
it must have an issue of unsecured long-term debt rated in one of the top three
investment grade categories or if the bank is in the next 50 largest banks, as
is the Bank, it must meet either the same requirement or a comparable standard
which, as of March 1, 2000, had not been proposed. The latter requirement does
not apply to activities engaged in as agent. A national bank must exclude from
its assets and equity all equity investments, including retained earnings, in a
financial subsidiary. The assets of the subsidiary may not be consolidated with
the bank's assets. The bank must also have policies and procedures to assess
financial subsidiary risk and protect the bank from such risks and potential
liabilities. National banks may still conduct activities authorized for national
banks directly through operating subsidiaries.

The Corporation and the Bank do not believe that the Financial Services
Modernization Act will have a material adverse effect on operations in the
near-term. However, to the extent that it permits banks, securities firms, and
insurance companies to affiliate, the financial services industry may experience
further consolidation. The Financial Services Modernization Act is intended to
grant to community banks certain powers as a matter of right that larger
institutions have accumulated on an ad hoc basis. Nevertheless, this act may
have the result of increasing the amount of competition that the Corporation and
the Bank face from larger institutions and other types of companies offering
financial products, many of which may have substantially more financial
resources than the Corporation and the Bank.

DIVIDENDS AND OTHER TRANSFERS OF FUNDS

Dividends from the Bank constitute the principal source of income to the
Corporation. The Corporation is a legal entity separate and distinct from the
Bank. The Bank is subject to various statutory and regulatory restrictions on
its ability to pay dividends to the Corporation. Under such restrictions, the
amount available for payment of dividends to the Corporation by the Bank totaled
$96.5 million at December 31, 1999. In addition, the Federal Reserve has the
authority to prohibit the Bank from paying dividends, depending upon the Bank's
financial condition, if such payment is deemed to constitute an unsafe or
unsound practice.

The Comptroller also has the authority to prohibit the Bank from engaging in
activities that, in its opinion, constitute unsafe or unsound practices in
conducting its business. It is possible, depending upon the financial condition
of the Bank and other factors, that the Comptroller could assert that the
payment of dividends or other payments might, under some circumstances, be such
an unsafe or unsound practice. Further, the bank regulatory agencies have
established guidelines with respect to the maintenance of appropriate levels of
capital by banks or bank holding companies under their jurisdiction. Compliance
with the standards set forth in such guidelines and the restrictions that are or
may be imposed under the prompt corrective action provisions of federal law
could limit the amount of dividends which the Bank or the Corporation may pay.
An insured depository institution is prohibited from paying management fees to
any controlling persons or, with certain limited exceptions, making capital
distributions if after such transaction the institution would be
undercapitalized. See "--Prompt Corrective Regulatory Action and Other

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Enforcement Mechanisms" and "--Capital Standards" for a discussion of these
additional restrictions on capital distributions.

The Bank is subject to certain restrictions imposed by federal law on any
extensions of credit to, or the issuance of a guarantee or letter of credit on
behalf of, the Corporation or other affiliates, the purchase of, or investments
in, stock or other securities thereof, the taking of such securities as
collateral for loans, and the purchase of assets of the Corporation or other
affiliates. Such restrictions prevent the Corporation and such other affiliates
from borrowing from the Bank unless the loans are secured by marketable
obligations of designated amounts. Further, such secured loans and investments
by the Bank to or in the Corporation or to or in any other affiliate are
limited, individually, to 10.0% of the Bank's capital and surplus (as defined by
federal regulations), and such secured loans and investments are limited, in the
aggregate, to 20.0% of the Bank's capital and surplus (as defined by federal
regulations). See "Note 10 to Notes to Consolidated Financial Statements" on
page A-50 of this report. Additional restrictions on transactions with
affiliates may be imposed on the Bank under the prompt corrective action
provisions of federal law. See "--Prompt Corrective Action and Other Enforcement
Mechanisms."

CAPITAL STANDARDS

Each federal banking agency has promulgated regulations defining the
following five categories in which a banking organization will be placed, based
on its capital ratios: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized.

To be "adequately capitalized," the Corporation and the Bank must maintain
minimum ratios of total capital to risk-weighted assets of eight percent (8%)
and of Tier 1 capital to risk-weighted assets of four percent (4%). For the
Corporation and the Bank, Tier 1 capital includes common shareholders' equity,
less goodwill and certain other deductions, including the unrealized net gains
and losses, after applicable taxes, on available-for-sale securities carried at
fair value. For the Corporation and the Bank, total capital also includes the
allowance for credit losses, subordinated debt, and net unrealized gains on
marketable securities, subject to limitations established by the guidelines. At
least half of total capital must be in the form of Tier 1 capital.

Capital is compared to the risk associated with a banking organization's
operations for both transactions reported on the balance sheet as assets as well
as transactions which are off-balance sheet items, such as letters of credit and
recourse arrangements. Under the capital regulations, the nominal dollar amounts
of assets and the balance sheet equivalent amounts of off-balance sheet items
are multiplied by one of several risk adjustment percentages, which range from
0% for assets with low credit risk, such as certain U.S. Treasury securities, to
100% for assets with relatively high credit risk, such as commercial loans. At
December 31, 1999, the Corporation and the Bank exceeded the required ratios for
classification as "well capitalized."

In addition to the risk-based capital guidelines, federal banking agencies
require banking organizations to maintain a minimum amount of Tier 1 capital to
total assets, referred to as the leverage ratio. For a banking organization
rated in the highest of the five categories used by the federal banking agencies
to rate banking organizations, the minimum leverage ratio of Tier 1 capital to
total assets is 3%. For all other banking organizations, the minimum ratio of
Tier 1 capital to total assets is 4%. Banking organizations with supervisory,
financial, operational, or managerial weaknesses, as well as organizations that
are anticipating or experiencing significant growth, are expected to maintain
capital ratios above the minimum levels. In addition to these uniform risk-based
capital guidelines and leverage ratios that apply across the industry, the
federal banking agencies have the discretion to set individual minimum capital
requirements for specific institutions at rates significantly above the minimum
guidelines and ratios. See "Management's Discussion and Analysis--Balance Sheet
Analysis--Capital" on page A-14 of this report.

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PROMPT CORRECTIVE ACTION AND OTHER ENFORCEMENT MECHANISMS

Federal banking agencies possess broad powers to take corrective and other
supervisory action to resolve the problems of insured depository institutions,
including but not limited to those institutions that fall below one or more
prescribed minimum capital ratios.

An institution that, based upon its capital levels, is classified as well
capitalized, adequately capitalized, or undercapitalized may be treated as
though it were in the next lower capital category if the appropriate federal
banking agency, after notice and opportunity for hearing, determines that an
unsafe or unsound condition or an unsafe or unsound practice warrants such
treatment. At each successive lower capital category, an insured depository
institution is subject to more restrictions. The federal banking agencies,
however, may not treat a significantly undercapitalized institution as
critically undercapitalized unless its capital ratio actually warrants such
treatment.

In addition to measures taken under the prompt corrective action provisions,
commercial banking organizations may be subject to potential enforcement actions
by the federal regulators for unsafe or unsound practices in conducting their
businesses or for violations of any law, rule, regulation, or any condition
imposed in writing by the agency or any written agreement with the agency.

SAFETY AND SOUNDNESS STANDARDS

As required by the Federal Deposit Insurance Corporation Improvement Act of
1991, as amended, the federal banking agencies have adopted guidelines designed
to assist the federal banking agencies in identifying and addressing potential
safety and soundness concerns before capital becomes impaired. The guidelines
set forth operational and managerial standards relating to: (i) internal
controls, information systems, and internal audit systems, (ii) loan
documentation, (iii) credit underwriting, (iv) asset growth, (v) earnings, and
(vi) compensation, fees, and benefits. In addition, the federal banking agencies
have also adopted safety and soundness guidelines with respect to asset quality
and earnings standards. These guidelines provide six standards for establishing
and maintaining a system to identify problem assets and prevent those assets
from deteriorating. Under these standards, an insured depository institution
should: (i) conduct periodic asset quality reviews to identify problem assets,
(ii) estimate the inherent losses in problem assets and establish reserves that
are sufficient to absorb estimated losses, (iii) compare problem asset totals to
capital, (iv) take appropriate corrective action to resolve problem assets,
(v) consider the size and potential risks of material asset concentrations, and
(vi) provide periodic asset quality reports with adequate information for
management and the board of directors to assess the level of asset risk. These
guidelines also set forth standards for evaluating and monitoring earnings and
for ensuring that earnings are sufficient for the maintenance of adequate
capital and reserves.

Federal regulations require banks to maintain adequate valuation allowances
for potential credit losses. The Company has an internal risk analysis and
review staff that continually reviews loan quality and ultimately reports to the
Audit Committee. This analysis includes a detailed review of the classification
and categorization of problem loans, assessment of the overall quality and
collectibility of the loan portfolio, consideration of loan loss experience,
trends in problem loans, concentration of credit risk, and current economic
conditions, particularly in Southern California. Based on this analysis,
management and the Audit Committee evaluate and determine the desired amount of
the allowance. The allowance for credit losses is allocated to different
segments of loan portfolios, but the entire allowance is available for the loan
portfolio in its entirety.

PREMIUMS FOR DEPOSIT INSURANCE

The Bank's deposit accounts are insured by the Bank Insurance Fund ("BIF"),
as administered by the Federal Deposit Insurance Corporation (the "FDIC"), up to
the maximum permitted by law. Insurance of deposits may be terminated by the
FDIC upon a finding that the institution has engaged in unsafe or unsound
practices, is in an unsafe or unsound condition to continue operations, or has
violated any

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applicable law, regulation, rule, order, or condition imposed by the FDIC or the
institution's primary regulator.

The FDIC charges an annual assessment for the insurance of deposits, which
as of December 31, 1999, ranged from 0 to 27 cents per $100 of insured deposits,
based on the risk a particular institution poses to its deposit insurance fund.
The risk classification is based on an institution's capital group and
supervisory subgroup assignment. An institution's capital group is based on the
FDIC's determination of whether the institution is well capitalized, adequately
capitalized, or less than adequately capitalized. An institution's supervisory
subgroup assignment is based on the FDIC's assessment of the financial condition
of the institution and the probability that FDIC intervention or other
corrective action will be required. Pursuant to the Economic Growth and
Paperwork Reduction Act of 1996 (the "Paperwork Reduction Act"), at January 1,
1997, the Bank began paying, in addition to its normal deposit insurance premium
as a member of the BIF, an amount which for 1999 was equal to approximately 1.2
cents per $100 of insured deposits toward the retirement of the Financing
Corporation bonds ("Fico Bonds") issued in the 1980s to assist in the recovery
of the savings and loan industry. Members of the Savings Association Insurance
Fund ("SAIF"), by contrast, paid in 1999, in addition to their normal deposit
insurance premium, approximately 5.9 basis points. Under the Paperwork Reduction
Act, the FDIC is not permitted to establish SAIF assessment rates that are lower
than comparable BIF assessment rates. Effective January 1, 2000, the rate paid
to retire the Fico Bonds became equal for members of the BIF and the SAIF at
approximately 2.1 cents per $100 of insured deposits.

INTERSTATE BANKING AND BRANCHING

The BHCA permits bank holding companies from any state to acquire banks and
bank holding companies located in any other state, subject to certain
conditions, including certain nationwide- and state-imposed concentration
limits. The Company has the ability, subject to certain restrictions, to acquire
by acquisition or merger branches outside its home state. The establishment of
new interstate branches is also possible in those states with laws that
expressly permit it. Interstate branches are subject to certain laws of the
states in which they are located. Competition may increase further as banks
branch across state lines and enter new markets.

COMMUNITY REINVESTMENT ACT AND FAIR LENDING DEVELOPMENTS

The Bank is subject to certain fair lending requirements and reporting
obligations involving home mortgage lending operations and CRA activities. The
CRA generally requires the federal banking agencies to evaluate the record of a
financial institution in meeting the credit needs of its local communities,
including low- and moderate-income neighborhoods. A bank may be subject to
substantial penalties and corrective measures for a violation of certain fair
lending laws. The federal banking agencies may take compliance with such laws
and CRA obligations into account when regulating and supervising other
activities.

A bank's compliance with its CRA obligations is based on a performance-based
evaluation system which bases CRA ratings on an institution's lending service
and investment performance. When a bank holding company applies for approval to
acquire a bank or other bank holding company, the Federal Reserve will review
the assessment of each subsidiary bank of the applicant bank holding company,
and such records may be the basis for denying the application. In connection
with its assessment of CRA performance, the appropriate bank regulatory agency
assigns a rating of "outstanding," "satisfactory," "needs to improve," or
"substantial noncompliance." A bank's CRA rating will also affect the ability of
the bank and its bank holding company to take advantage of the new powers
granted by the Financial Services Modernization Act. Based on an examination
report dated January 10, 2000, the Bank was rated "satisfactory." See
"--Financial Services Modernization Legislation."

9
<PAGE>
YEAR 2000 COMPLIANCE

The Federal Financial Institutions Examination Council issued an interagency
statement to the chief executive officers of all federally supervised financial
institutions regarding year 2000 project management awareness. The statement
provides guidance to financial institutions, providers of data services, and all
examining personnel of the federal banking agencies regarding the potential year
2000 problem. The federal banking agencies conducted year 2000 compliance
examinations to ascertain whether a bank's year 2000 readiness presented an
unsafe and unsound banking practice. The Company's core banking systems
successfully responded to the century date change. The Company will continue to
monitor its major vendors and clients throughout year 2000.

ITEM 2. PROPERTIES

The Company has its principal offices in the City National Center, 400 North
Roxbury Drive, Beverly Hills, California 90210, which the Company owns and
occupies. As of March 1, 2000, the Company and its subsidiaries actively
maintain operations in over 50 banking offices and certain other properties.

Since 1967, the Bank's Pershing Square Banking Office and a number of Bank
departments have been a tenant of the office building located at 606 South Olive
Street in downtown Los Angeles. The building was originally developed and built
by a partnership between a wholly-owned subsidiary of the Bank, Citinational
Bancorporation, and Buckeye Construction Co., and Buckeye Realty and Management
Corporation (two corporations then affiliated with Mr. Bram Goldsmith, then a
director and currently Chairman of the Board of the Corporation). Since its
completion, the building has been owned by Citinational-Buckeye Building Co., a
limited partnership of which Citinational Bancorporation and Olive-Sixth Buckeye
Co. are the only general partners, each with a 29% partnership interest.
Citinational Bancorporation has an additional 3% interest as a limited partner
of Citinational-Buckeye Building Co.; the remainder is held by other,
unaffiliated limited partners. Olive-Sixth Buckeye Co. is a limited partnership
of which Mr. Goldsmith is a 49% general partner; therefore, Mr. Goldsmith has an
indirect 14% ownership interest in Citinational-Buckeye Building Co. The
remaining general partner and all limited partners of Olive-Sixth Buckeye Co.
are not affiliated with the Corporation. Since 1990, Citinational-Buckeye
Building Co. has managed the building, which is almost fully leased.

The Bank's subsidiary, Citinational Real Estate, Inc., as of December 31,
1999 owned two buildings located on Olympic Boulevard in downtown Los Angeles,
which are occupied primarily by the Bank's support departments and one of which
contains a banking office. In addition, as of December 31, 1999, the Bank owned
an unoccupied building in North Hollywood and four other banking office
properties: two in the city of Riverside, one in Studio City, and one in Granada
Hills.

The remaining banking offices and other properties are leased by the Bank.
Total annual rental payments (exclusive of operating charges and real property
taxes) are approximately $14.9 million, with lease expiration dates ranging from
2000 to 2009, exclusive of renewal options.

ITEM 3. LEGAL PROCEEDINGS

The Corporation and its subsidiaries are defendants in various pending
lawsuits. Based on present knowledge, management, including in-house counsel, is
of the opinion that the final outcome of such lawsuits will not have a material
adverse effect upon the Corporation.

The Corporation is not aware of any material proceedings to which any
director, officer, or affiliate of the Corporation, any owner of record or
beneficially of more than 5% of the voting securities of the Corporation, or any
associate of any such director, officer, or security holder is a party adverse
to the Corporation or any of its subsidiaries or has a material interest adverse
to the Corporation or any of its subsidiaries.

10
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There was no submission of matters to a vote of security holders during the
fourth quarter of the year ended December 31, 1999.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

Shown below are names and ages of all executive officers of the Corporation
and officers of the Bank who are deemed to be executive officers of the
Corporation, with indication of all positions and offices with the Corporation
and the Bank. Mr. Russell Goldsmith is the son of Mr. Bram Goldsmith.

<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND PRINCIPAL
NAME AGE OCCUPATION DURING THE PAST FIVE YEARS
- ---- --- ----------------------------------------------
<S> <C> <C>
Russell Goldsmith......................... 50 Vice Chairman and Chief Executive Officer,
City National Corporation since October 1995;
Chairman of the Board and Chief Executive
Officer, City National Bank since October
1995; President, Goldsmith Entertainment
Company, production and media company, 1994 to
1995; Consultant, Spelling Entertainment
Group, Inc, television and home video company,
1994 to 1995; Chairman of the Board and Chief
Executive Officer, Republic Pictures
Corporation, entertainment company until 1994

Bram Goldsmith............................ 77 Chief Executive Officer until October 1995 and
Chairman of the Board, City National
Corporation; Chairman of the Board and Chief
Executive Officer, City National Bank until
October 1995

George H. Benter, Jr...................... 58 President, City National Corporation since
1993; President and Chief Operating Officer,
City National Bank since 1992

Frank P. Pekny............................ 56 Executive Vice President and Treasurer/Chief
Financial Officer, City National Corporation
since 1992; Vice Chairman and Chief Financial
Officer since 1995, Executive Vice President
and Chief Financial Officer, 1992 to October
1995, City National Bank

Heng W. Chen.............................. 47 Assistant Chief Financial Officer and
Assistant Treasurer since June 1998,
Controller, 1996 to 1998, Assistant Treasurer,
1991 to 1996, City National Corporation;
Executive Vice President, Finance since March
2000, Senior Vice President, Finance, June
1998 to March 2000, Senior Vice
President-Finance and Controller, 1995 to
1998, City National Bank
</TABLE>

11
<PAGE>

<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND PRINCIPAL
NAME AGE OCCUPATION DURING THE PAST FIVE YEARS
- ---- --- ----------------------------------------------
<S> <C> <C>
Stephen D. McAvoy......................... 54 Controller, City National Corporation since
March 1998; Senior Vice President and
Controller, City National Bank since March
1998; Vice President-Controller, Transamerica
Home Loan, August 1997 to February 1998;
Consultant in the area of the Financial
Controller functions, Transamerica Home Loan,
June 1997 to August 1997, Transamerica
Financial Services, May 1996 to June 1997;
Executive Vice President, April 1989 to April
1996, Controller until September 1994, First
Interstate Bancorp

Robert A. Moore........................... 57 Executive Vice President and Chief Credit
Officer, City National Bank since 1992

Barbara S. Polsky......................... 45 Executive Vice President, Secretary and
General Counsel, City National Bank and City
National Corporation, since November 1999;
General Counsel, Executive Vice President and
Secretary, Aames Financial Corporation, June
1996 to October 1999; Partner, Manatt, Phelps
& Phillips, a law firm, until May 1996

Jeffery L. Puchalski...................... 44 Executive Vice President and Senior Risk
Management Officer, City National Bank since
1992
</TABLE>

12
<PAGE>
PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Corporation's common stock is listed and traded principally on the New
York Stock Exchange under the symbol "CYN." Information concerning the range of
high and low sales prices for the Corporation's common stock, and the dividends
declared, for each quarterly period within the past two fiscal years is set
forth below.

<TABLE>
<CAPTION>
DIVIDENDS
QUARTER ENDED HIGH LOW DECLARED
- ------------- -------- -------- ---------
<S> <C> <C> <C>
1999
March 31........................................... $41.56 $30.31 $0.165
June 30............................................ 40.88 29.63 0.165
September 30....................................... 38.81 30.38 0.165
December 31........................................ 41.50 30.31 0.165
1998
March 31........................................... $39.31 $32.13 $ 0.14
June 30............................................ 40.44 34.69 0.14
September 30....................................... 39.19 27.88 0.14
December 31........................................ 41.63 26.56 0.14
</TABLE>

As of March 14, 2000, the closing price of the Corporation's stock on the
New York Stock Exchange was $26.69 per share. As of that date, there were
approximately 2,029 record holders of the Corporation's common stock. On
January 26, 2000, the Board of Directors authorized a regular quarterly cash
dividend on its common stock at a rate of $0.175 per share payable on
February 22, 2000.

For a discussion of dividend restrictions on the Corporation's common stock,
see "Note 10 to Notes to Consolidated Financial Statements" on page A-50 of this
report.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this item appears on page A-2, under the caption
"Selected Financial Information," and is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The information required by this item appears on pages A-3 through A-29,
under the caption "Management's Discussion and Analysis," and is incorporated
herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this item appears on pages A-15 through A-18,
under the caption "Management's Discussion and Analysis," and is incorporated
herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item appears on pages A-31 through A-57 and
on page A-29, under the captions "1999 Quarterly Operating Results" and "1998
Quarterly Operating Results," and is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

13
<PAGE>
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item, to the extent not included under
"Item 4A. Executive Officers of the Registrant" in Part I of this report, will
appear in the Corporation's definitive proxy statement for the 2000 Annual
Meeting of Stockholders (the "2000 Proxy Statement"), and such information
either shall be (i) deemed to be incorporated herein by reference from that
portion of the 2000 Proxy Statement, if filed with the Securities and Exchange
Commission pursuant to Regulation 14A not later than 120 days after the end of
the Corporation's most recently completed fiscal year, or (ii) included in an
amendment to this report filed with the Commission on Form 10-K/A.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item will appear in the 2000 Proxy
Statement, and such information either shall be (i) deemed to be incorporated
herein by reference from the 2000 Proxy Statement, if filed with the Securities
and Exchange Commission pursuant to Regulation 14A not later than 120 days after
the end of the Corporation's most recently completed fiscal year, or
(ii) included in an amendment to this report filed with the Commission on
Form 10-K/A.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

14
<PAGE>
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

1. Financial Statements:

<TABLE>
<S> <C>
Management's Responsibility for Financial Statements........ A-30
Independent Auditors' Report................................ A-31
Consolidated Balance Sheet at December 31, 1999 and 1998.... A-32
Consolidated Statement of Income and Comprehensive Income
for each of the years in the three-year period ended
December 31, 1999......................................... A-33
Consolidated Statement of Cash Flows for each of the years
in the three-year period ended December 31, 1999.......... A-34
Consolidated Statement of Changes in Shareholders' Equity
for each of the years in the three-year period ended
December 31, 1999......................................... A-35
Notes to the Consolidated Financial Statements.............. A-36
</TABLE>

2. All other schedules and separate financial statements of 50% or less owned
companies accounted for by the equity method have been omitted because they
are not applicable.

3. Exhibits

<TABLE>
<CAPTION>
NO.
---
<C> <S>
3.1 Restated Certificate of Incorporation

3.1.1 Certificate of Designations of Series A Junior Participating
Cumulative Preferred Stock

3.2 Bylaws, as amended to date

4.1 6 3/8% Subordinated Notes Due 2008 in the principal amount
of $125 million (This Exhibit is incorporated by reference
from the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1997.)

4.2 Rights Agreement dated as of February 26, 1997 between the
Registrant and Continental Stock Transfer & Trust Company,
as Rights Agent

10.2.2* Employment Agreement made as of March 18, 1998, by and
between Bram Goldsmith, and the Registrant and City National
Bank, including Sixth Amendment to Split Dollar Life
Insurance Agreement Collateral Assignment Plan between City
National Bank and the Goldsmith 1980 Insurance Trust, dated
March 18, 1998 (This Exhibit is incorporated by reference
from the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1997.)

10.2.3* First Amendment to Employment Agreement made as of June 1,
1999, by and between Bram Goldsmith, and the Registrant and
City National Bank, including Seventh Amendment to Split
Dollar Life Insurance Agreement Collateral Assignment Plan
between City National Bank and the Goldsmith 1980 Insurance
Trust, dated June 1, 1999 (This Exhibit is incorporated by
reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1999.)

10.3* Split Dollar Life Insurance Agreement Collateral Assignment
Plan between City National Bank and the Goldsmith 1980
Insurance Trust, dated as of June 13, 1980, and first
through fourth amendments thereto
</TABLE>

15
<PAGE>

<TABLE>
<CAPTION>
NO.
---
<C> <S>
10.3.1* Fifth Amendment to Split Dollar Life Insurance Agreement
Collateral Assignment Plan between City National Bank and
the Goldsmith 1980 Insurance Trust, dated May 15, 1995 (This
Exhibit is incorporated by reference from the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1997.)

10.10* 1985 Stock Option Plan, as amended to date

10.22.1* Stock Option Agreement under the Registrant's 1985 Stock
Option Plan dated as of October 16, 1995, between the
Registrant and Russell Goldsmith (This Exhibit is
incorporated by reference from the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995.)

10.22.2* Employment Agreement made as of July 15, 1998 by and between
Russell Goldsmith and the Registrant and City National Bank
(This Exhibit is incorporated by reference from the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998.)

10.24* 1995 Omnibus Plan (This Exhibit is incorporated by reference
from the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995.)

10.24.1* Amended and Restated Section 2.8 of 1995 Omnibus Plan (This
Exhibit is incorporated by reference from the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1997.)

10.28 Lease dated September 30, 1996, between Citinational-Buckeye
Building Co. and City National Bank (This Exhibit is
incorporated by reference from the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997.)

10.29* 1999 Omnibus Plan

10.30* 1999 Variable Bonus Plan

10.31* City National Bank Executive Deferred Compensation Plan

10.32* Form of Change of Control Agreement for members of City
National Bank executive committee

10.33* Director Deferred Compensation Plan

11.1 Earnings per share computation

21 Subsidiaries of the Registrant

23.1 Consent of KPMG LLP

27 Financial Data Schedules
</TABLE>

- ------------------------

* Management contract or compensatory plan or arrangement

(b) During the calendar quarter ended December 31, 1999, the registrant did not
file any current reports on Form 8-K.

16
<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

<TABLE>
<S> <C> <C>
CITY NATIONAL CORPORATION
(Registrant)

By /s/ RUSSELL D. GOLDSMITH
-----------------------------------------
Russell D. Goldsmith,
CHIEF EXECUTIVE OFFICER
</TABLE>

March 22, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ RUSSELL D. GOLDSMITH Vice Chairman/ Chief
------------------------------------------- Executive Officer and March 22, 2000
Russell D. Goldsmith (Principal Executive Officer) Director

/s/ FRANK P. PEKNY Executive Vice President
------------------------------------------- and Chief Financial March 22, 2000
Frank P. Pekny (Principal Financial Officer) Officer

/s/ STEPHEN D. MCAVOY Controller
------------------------------------------- March 22, 2000
Stephen D. McAvoy (Principal Accounting Officer)

/s/ BRAM GOLDSMITH Chairman of the Board and
------------------------------------------- Director March 22, 2000
Bram Goldsmith

/s/ GEORGE H. BENTER, JR. President and Director
------------------------------------------- March 22, 2000
George H. Benter, Jr.

/s/ RICHARD L. BLOCH Director
------------------------------------------- March 22, 2000
Richard L. Bloch

/s/ STUART D. BUCHALTER Director
------------------------------------------- March 22, 2000
Stuart D. Buchalter

/s/ EZUNIAL BURTS Director
------------------------------------------- March 22, 2000
Ezunial Burts

/s/ BARRY M. MEYER Director
------------------------------------------- March 22, 2000
Barry M. Meyer

/s/ MICHAEL L. MEYER Director
------------------------------------------- March 22, 2000
Michael L. Meyer
</TABLE>

17
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ CHARLES E. RICKERSHAUSER, JR. Director
------------------------------------------- March 22, 2000
Charles E. Rickershauser, Jr.

/s/ EDWARD SANDERS Director
------------------------------------------- March 22, 2000
Edward Sanders

/s/ ANDREA L. VAN DE KAMP Director
------------------------------------------- March 22, 2000
Andrea L. Van de Kamp

/s/ KENNETH ZIFFREN Director
------------------------------------------- March 22, 2000
Kenneth Ziffren
</TABLE>

18
<PAGE>
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
INCREASE
(DECREASE)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1999 1998 AMOUNT
- ------------------------------------------------ ---------- ---------- ----------
<S> <C> <C> <C>
FOR THE YEAR
Net income............................................... $ 108,107 $ 96,228 $ 11,879
Net income per common share, basic....................... 2.37 2.08 0.29
Net income per common share, diluted..................... 2.30 2.00 0.30
Dividends, per common share.............................. 0.66 0.56 0.10

AT YEAR END
Assets................................................... $7,213,619 $6,427,781 $785,838
Deposits................................................. 5,669,409 4,887,402 782,007
Loans.................................................... 5,490,669 4,530,427 960,242
Securities............................................... 1,102,092 1,012,526 89,566
Shareholders' equity..................................... 571,646 561,803 9,843
Book value per share..................................... 12.58 12.21 0.37

AVERAGE BALANCES
Assets................................................... $6,488,834 $5,633,829 $855,005
Deposits................................................. 4,809,800 4,267,602 542,198
Loans.................................................... 4,822,254 4,213,853 608,401
Securities............................................... 1,050,716 842,346 208,370
Shareholders' equity..................................... 564,091 538,426 25,665

SELECTED RATIOS
Return on average assets................................. 1.67% 1.71% (0.04)%
Return on average shareholders' equity................... 19.16 17.87 1.29
Tier 1 leverage.......................................... 6.73 7.99 (1.26)
Tier 1 risk-based capital................................ 7.88 9.43 (1.55)
Total risk-based capital................................. 11.21 13.20 (1.99)
Dividend payout ratio, per share......................... 27.91 27.06 0.85
Net interest margin...................................... 5.56 5.86 (0.30)
Efficiency ratio......................................... 57.58 56.87 0.71
</TABLE>

A-1
<PAGE>
SELECTED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1997 1996 1995
- --------------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Interest income..................................... $ 470,446 $ 423,949 $ 357,996 $ 282,123 $ 217,594
Interest expense.................................... 148,441 130,278 104,328 82,389 55,331
---------- ---------- ---------- ---------- ----------
Net interest income................................. 322,005 293,671 253,668 199,734 162,263
Provision for credit losses......................... -- -- -- -- --
Noninterest income.................................. 87,212 67,684 53,418 43,995 34,566
Noninterest expense................................. 241,803 211,331 181,757 144,595 118,076
---------- ---------- ---------- ---------- ----------
Income before taxes................................. 167,414 150,024 125,329 99,134 78,753
Income taxes........................................ 59,307 53,796 45,196 32,571 29,961
---------- ---------- ---------- ---------- ----------
Net income........................................ $ 108,107 $ 96,228 $ 80,133 $ 66,563 $ 48,792
========== ========== ========== ========== ==========

PER SHARE DATA:
Net income per share, basic......................... $ 2.37 $ 2.08 $ 1.74 $ 1.52 $ 1.08
Net income per share, diluted....................... 2.30 2.00 1.68 1.47 1.06
Cash dividends declared............................. 0.66 0.56 0.44 0.36 0.26
Book value per share................................ 12.58 12.21 11.03 9.13 8.19
Shares used to compute net income per share,
basic............................................. 45,683 46,357 46,018 43,888 45,198
Shares used to compute net income per share,
diluted........................................... 46,938 48,141 47,809 45,146 45,886

BALANCE SHEET DATA--AT PERIOD END:
Assets.............................................. $7,213,619 $6,427,781 $5,252,032 $4,216,496 $4,157,551
Loans............................................... 5,490,669 4,530,427 3,825,224 2,839,435 2,346,611
Securities.......................................... 1,102,092 1,012,526 833,122 811,092 975,407
Interest-earning assets............................. 6,677,475 5,982,968 4,838,926 3,844,834 3,784,245
Deposits............................................ 5,669,409 4,887,402 4,228,348 3,386,523 3,248,035
Shareholders' equity................................ 571,646 561,803 508,670 400,747 366,957

BALANCE SHEET DATA--AVERAGE BALANCES:
Assets.............................................. $6,488,834 $5,633,829 $4,703,886 $3,821,314 $2,849,807
Loans............................................... 4,822,254 4,213,853 3,387,784 2,539,323 1,758,671
Securities.......................................... 1,050,716 842,346 829,557 839,564 705,122
Interest-earning assets............................. 5,985,018 5,187,897 4,290,453 3,505,422 2,624,436
Deposits............................................ 4,809,800 4,267,602 3,614,068 2,871,870 2,062,412
Shareholders' equity................................ 564,091 538,426 472,843 373,491 350,551

ASSET QUALITY:
Nonaccrual loans.................................... $ 25,288 $ 23,138 $ 27,566 $ 41,543 $ 48,124
ORE................................................. 1,413 3,480 2,126 15,116 7,439
---------- ---------- ---------- ---------- ----------
Total nonaccrual loans and ORE.................... $ 26,701 $ 26,618 $ 29,692 $ 56,659 $ 55,563
========== ========== ========== ========== ==========

PERFORMANCE RATIOS:
Return on average assets............................ 1.67% 1.71% 1.70% 1.74% 1.71%
Return on average shareholders' equity.............. 19.16 17.87 16.95 17.82 13.92
Net interest spread................................. 4.12 4.27 4.64 4.47 4.84
Net interest margin................................. 5.56 5.86 6.13 5.87 6.26
Average shareholders' equity to average assets...... 8.69 9.56 10.05 9.77 12.30

ASSET QUALITY RATIOS:
Nonaccrual loans to total loans..................... 0.46% 0.51% 0.72% 1.46% 2.05%
Nonaccrual loans and ORE to total loans and ORE..... 0.49 0.59 0.78 1.98 2.36
Allowance for credit losses to total loans.......... 2.44 2.99 3.60 4.58 5.60
Allowance for credit losses to nonaccrual loans..... 530.20 584.92 499.75 313.14 273.28
Net (charge-offs) recoveries to average loans....... (0.10) (0.12) 0.02 (0.06) 0.40
</TABLE>

A-2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS

OVERVIEW

The Corporation is the holding company for the Bank. In light of the fact
that the Bank comprises substantially all of the business of the Corporation,
references to the "Company" mean the Corporation and the Bank together.

See "Cautionary Statement for Purposes of the "Safe Harbor" Provision of the
Private Securities Litigation Reform Act of 1995," on pages A-28 and A-29 in
connection with "forward looking" statements included in this report.

The Company regularly evaluates, and holds discussions with, various
potential acquisition candidates. Since December 31, 1997, the Company has
acquired four financial institutions. Most recently on February 29, 2000, the
Company acquired Pacific Bank. In that transaction, Pacific Bank merged into the
Bank, and the Corporation paid consideration equal to $145.2 million (including
the consideration for stock options), 47.0% of which was paid in the
Corporation's common stock and 53.0% of which was paid in cash. The transaction
was accounted for as a purchase. Pacific Bank had total assets, loans, and
deposits of $782.0 million, $488.0 million, and $702.0 million, respectively, at
the date of acquisition. The acquisition will result in goodwill and intangibles
upon the final valuation of the purchase.

On August 27, 1999, the Company completed its acquisition of APSB. The total
purchase price was $90.4 million in an all cash transaction accounted for as a
purchase. APSB had total assets, loans, and deposits of $450.0 million,
$255.0 million, and $411.0 million, respectively, at the date of acquisition.
The acquisition of APSB resulted in the recording of goodwill and intangibles of
approximately $62.8 million.

On December 31, 1998, the Company completed its acquisition of NATC for
$11.5 million in an all cash transaction. NATC had approximately $4.0 billion in
total assets under management or administration. The acquisition resulted in
goodwill of approximately $11.4 million.

On January 9, 1998, the Company completed its acquisition of HB. The total
purchase price was approximately $34.5 million. The Corporation issued
approximately 540,000 shares, primarily from treasury, with an aggregate market
value of $17.9 million and paid the remainder in cash in a transaction accounted
as a purchase. HB had total assets, loans, and deposits of $241.8 million,
$152.8 million, and $221.3 million, respectively, as of December 31, 1997. The
acquisition of HB resulted in the recording of goodwill and intangibles of
approximately $23.9 million.

Consolidated net income for 1999 was $108.1 million, or $2.30 per diluted
common share, compared with $96.2 million, or $2.00 per diluted common share in
1998. The increase in net income reflects the growth in the Company's loans and
deposits during 1999 including the impact from the acquisition of NATC in
December 1998 and APSB in August 1999. Net interest income on a fully
taxable-equivalent basis for 1999 increased $28.4 million over 1998. Noninterest
income increased $19.5 million compared with 1998. Partially offsetting these
increases was a $30.5 million increase in noninterest expense over the 1998
period.

The return on average assets was 1.67%, and the return on average
shareholders' equity was 19.16%, compared with 1.71% and 17.87%, respectively,
in 1998.

Earnings before the amortization of goodwill and core deposit intangibles
(net of applicable taxes) ("cash" earnings) for the year ended December 31, 1999
were $115.4 million, or $2.46 per diluted common share, compared with
$101.7 million, or $2.11 per diluted common share for the year ended
December 31, 1998. On the same basis, the return on average assets was 1.80% and
the return on average shareholders' equity was 23.98%, compared with 1.82% and
20.98%, respectively, in 1998. "Cash" income is presented because it measures
the Company's ability to support growth, pay dividends, and repurchase stock.
The Company's "cash" income per share and other ratios are not necessarily
comparable to similarly titled measures reported by other companies.

A-3
<PAGE>
Average assets increased to $6,488.8 million in 1999 from $5,633.8 million
in 1998, an increase of $855.0 million, or 15.2%, primarily due to increased
average loans and the acquisition of APSB. Total average loans increased
$608.4 million, or 14.4%, between 1999 and 1998 largely due to increases in
internal loan origination of commercial, mortgage, and construction loans. Other
contributors to this increase included $255.0 million in loans from the APSB
acquisition and a $29.5 million increase in commercial non-relationship
syndicated loans. Average core deposits (checking, savings and money market
accounts, and time certificates of deposit in denominations less than $100,000)
increased $374.5 million, or 10.7%, to $3,881.1 million in 1999 from
$3,506.6 million in 1998. Included in this was the average impact of acquiring
approximately $300.0 million in core deposits as part of the acquisition of
APSB.

The dollar amount of nonaccrual loans increased to $25.3 million at
December 31, 1999 compared with $23.1 million a year earlier, but decreased as a
percent of total loans to 0.46% at December 31, 1999 from 0.51% at
December 1998. ORE totaled $1.4 million at year-end, down from $3.5 million a
year earlier.

The allowance for credit losses at December 31, 1999 was $134.1 million, or
2.44% of loans outstanding at year-end. Net charge-offs totaled $4.7 million in
1999 compared with $5.2 million in 1998. Based on its review of the loan
portfolio, management considers the allowance for credit losses to be adequate.

On July 29, 1999, the Corporation announced a program for the repurchase of
up to 1.0 million shares of its common stock. At December 31, 1999, a total of
280,800 shares had been repurchased at a cost of $9.3 million, or an average
price of $33.10 per share. Also in July, the Corporation completed a
1.0 million common shares stock buyback program announced on September 8, 1998
at a cost of $32.2 million, or an average price of $32.18 per share.

The Corporation paid dividends of $0.66 per share of common stock in 1999
and $0.56 per share of common stock in 1998. On January 26, 2000, the Board of
Directors authorized a regular quarterly cash dividend on common stock at a rate
of $0.175 per share to shareholders of record on February 9, 2000 payable on
February 22, 2000. This reflects a 6.0% increase over the quarterly dividend
paid in 1999.

A-4
<PAGE>
RESULTS OF OPERATIONS
OPERATIONS SUMMARY

<TABLE>
<CAPTION>
INCREASE INCREASE
YEAR (DECREASE) YEAR (DECREASE) YEAR ENDED DECEMBER 31,
(DOLLARS IN THOUSANDS ENDED ------------------- ENDED ------------------- ------------------------------
EXCEPT PER SHARE AMOUNTS) 1999 AMOUNT % 1998 AMOUNT % 1997 1996 1995
- ------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income (1)............ $481,113 $46,601 11 $434,512 $67,007 18 $367,505 $288,049 $219,626
Interest expense............... 148,441 18,163 14 130,278 25,950 25 104,328 82,389 55,331
-------- ------- -------- ------- -------- -------- --------
Net interest income............ 332,672 28,438 9 304,234 41,057 16 263,177 205,660 164,295
Provision for credit losses.... -- -- -- -- -- -- -- -- --
Noninterest income............. 87,212 19,528 29 67,684 14,266 27 53,418 43,995 34,566
Noninterest expense:
Staff expense................ 133,935 18,970 17 114,965 17,331 18 97,634 77,011 65,375
Other expense................ 107,868 11,502 12 96,366 12,243 15 84,123 67,584 52,701
-------- ------- -------- ------- -------- -------- --------
Total...................... 241,803 30,472 14 211,331 29,574 16 181,757 144,595 118,076
-------- ------- -------- ------- -------- -------- --------
Income before income taxes..... 178,081 17,494 11 160,587 25,749 19 134,838 105,060 80,785
Income taxes................... 59,307 5,511 10 53,796 8,600 19 45,196 32,571 29,961
Less: adjustments (1).......... 10,667 104 1 10,563 1,054 11 9,509 5,926 2,032
-------- ------- -------- ------- -------- -------- --------
Net income................. $108,107 $11,879 12 $ 96,228 $16,095 20 $ 80,133 $ 66,563 $ 48,792
======== ======= ======== ======= ======== ======== ========
Net income per share,
diluted.................. $ 2.30 $ 0.30 15 $ 2.00 $ 0.32 19 $ 1.68 $ 1.47 $ 1.06
======== ======= ======== ======= ======== ======== ========
</TABLE>

- ------------------------

(1) Includes amounts to convert nontaxable income to a fully taxable-equivalent
yield.

NET INTEREST INCOME

Net interest income is the difference between interest income (which
includes yield-related loan fees) and interest expense. Net interest income on a
taxable-equivalent basis expressed as a percentage of average total earning
assets is referred to as the net interest margin, which represents the average
net effective yield on earning assets.

Net interest income is impacted by the volume and rate of interest-earning
assets and interest-bearing liabilities. The following table shows changes in
net interest income between 1999 and 1998 as well as between 1998 and 1997
broken down between volume and rate.

A-5
<PAGE>
CHANGES IN NET INTEREST INCOME

<TABLE>
<CAPTION>
1999 VS 1998 1998 VS 1997
-------------------------------- --------------------------------
INCREASE (DECREASE) INCREASE (DECREASE)
DUE TO NET DUE TO NET
(DOLLARS IN THOUSANDS--FULLY ------------------- INCREASE ------------------- INCREASE
TAXABLE-EQUIVALENT BASIS) VOLUME RATE (DECREASE) VOLUME RATE (DECREASE)
- ----------------------------------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest earned on:
Interest-bearing deposits in other
banks............................ $ (272) $ (263) $ (535) $ 404 $ 32 $ 436
Loans.............................. 51,535 (16,141) 35,394 72,739 (10,111) 62,628
Securities available for sale...... 13,957 (1,113) 12,844 913 543 1,456
Trading account securities......... 572 (597) (25) 473 (143) 330
Federal funds sold and securities
purchased under resale
agreements....................... (1,155) 78 (1,077) 2,239 (82) 2,157
------- -------- -------- ------- -------- -------
Total interest-earning assets.... 64,637 (18,036) 46,601 76,768 (9,761) 67,007
------- -------- -------- ------- -------- -------
Interest paid on:
Interest checking.................. 239 (1,925) (1,686) 183 (109) 74
Money market deposits.............. 2,909 (542) 2,367 2,863 160 3,023
Savings deposits................... 1,168 212 1,380 19 447 466
Other time deposits................ 8,371 (4,455) 3,916 10,691 (306) 10,385
Other borrowings................... 15,330 (3,144) 12,186 11,372 630 12,002
------- -------- -------- ------- -------- -------
Total interest-bearing
liabilities.................... 28,017 (9,854) 18,163 25,128 822 25,950
------- -------- -------- ------- -------- -------
$36,620 $ (8,182) $ 28,438 $51,640 $(10,583) $41,057
======= ======== ======== ======= ======== =======
</TABLE>

Taxable-equivalent net interest income totaled $332.7 million in 1999, an
increase of $28.4 million, or 9.3%, from 1998. The increase in net interest
income was due to a $797.1 million, or 15.4%, increase in average total
interest-earning assets and a $374.5 million increase in average core deposits,
offset by the decrease in the net interest margin.

Average loans increased to $4,822.3 million in 1999 from $4,213.9 million in
1998, an increase of $608.4 million, or 14.4%. This increase is primarily due to
higher internal loan origination activity, the acquisition of APSB and, to a
lesser extent, the purchase of syndicated corporate loans. The Company's
syndicated loan portfolio has added to the geographical and industry
diversification of the loan portfolio. However, due, in part, to the increase
in, and management's preference for, relationship lending, management in the
latter part of 1999 decided to slow the rate of growth of this type of lending.
Average commercial loans were up $374.3 million, or 17.1%, including a
$29.5 million increase in syndicated loans during the year. Average residential
first mortgage loans increased $40.6 million, or 3.9%, due to continued strong
loan demands for fixed rate mortgages. Average real estate mortgage loans
increased $95.6 million, or 12.7%, primarily due to the impact of the APSB
acquisition. Average real estate construction loans increased $96.3 million or,
50.2%, due to the Company's emphasis in this area.

Average total securities increased $208.4 million, or 24.7%, between 1998
and 1999 from investing excess deposit and borrowing growth which were not yet
needed to fund loan growth.

Average interest-bearing core deposits increased to $1,804.2 million in 1999
from $1,648.6 million in 1998, an increase of $155.6 million, or 9.4%. Average
time deposits in denominations of $100,000 or more increased $167.6 million or,
22.0%, between 1998 and 1999. Average noninterest-bearing deposits increased to
$2,076.9 million in 1999 from $1,858.0 million in 1998, an increase of
$218.9 million, or 11.8%. These increases resulted from the Company's increased
marketing efforts, the nature of the Company's relationship business which
allows customers to maintain balances as compensation for banking services, as
well as from the acquisition of APSB.

A-6
<PAGE>
For 1999, the net interest margin was 5.56% compared with 5.86% in 1998. The
combination of strong growth in earning assets, which outpaced growth in lower
cost core deposits, and a slightly lower average prime rate in 1999 contributed
to the slight narrowing in the net interest margin. Much of the growth in
average loans over the last two years was due to the strong Southern California
economy from which substantially all the Company's loans are derived. At the
same time, the competitive environment for loans within the Company's market has
resulted in increasingly competitive pricing. To the extent such competitive
activity continues in 2000, the Company's net interest margin could decline.

Taxable-equivalent net interest income totaled $304.2 million in 1998, up
$41.1 million, or 15.6%, from 1997. The increase from 1997 to 1998 was due to a
$897.4 million, or 20.9%, increase in average total interest-earning assets,
offset by a decrease in the net interest margin to 5.86% from 6.13%.

Average loans increased to $4,213.9 million in 1998 from $3,387.8 million in
1997, an increase of $826.1 million, or 24.4%. The majority of this increase
reflects higher average commercial loans outstanding, up $562.5 million, or
34.6%. This increase resulted from the Company's increased marketing efforts,
including the formation of several specialized industry teams in 1998, the
expansion of the media-communications group, the acquisition of HB, and
participations in domestic bank non-relationship syndicated loans. Average
residential first mortgage loans increased $86.6 million, or 9.2%, due to
continued strong internal loan originations, primarily of fixed rate mortgages.
Average real estate construction loans increased $63.9 million, or 50.0%, due to
the Company's emphasis in this area. Average real estate mortgage loans
increased $108.1 million, or 16.7%, primarily due to the impact of the
acquisition of HB.

Average total investment securities and securities available-for-sale
increased $12.8 million, or 1.5%, between 1997 and 1998 from investing excess
deposit and borrowing growth which were not yet needed to fund loan growth.

Average noninterest-bearing deposits increased to $1,858.0 million in 1998
from $1,522.7 million in 1997, an increase of $335.2 million, or 22.0%, while
average interest-bearing core deposits increased to $1,648.6 million in 1998
from $1,556.9 million in 1997, an increase of $91.7 million, or 5.9%. Average
time deposits in denominations of $100,000 or more increased $226.6 million, or
42.4%, between 1997 and 1998. These increases resulted from the Company's
increased marketing efforts, as well as from the acquisition of HB.

A-7
<PAGE>
The following table shows average balances and interest rates for the last
five years.

NET INTEREST INCOME SUMMARY

<TABLE>
<CAPTION>
1999 1998
---------------------------------- ----------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ INTEREST AVERAGE INCOME/ INTEREST
(DOLLARS IN THOUSANDS) BALANCE EXPENSE(1) RATE BALANCE EXPENSE(1) RATE
- ---------------------- ---------- ---------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets(2)
Loans
Commercial.............................. $2,560,701 $219,460 8.57% $2,186,395 $195,288 8.93%
Residential first mortgages............. 1,069,522 77,330 7.23 1,028,966 76,874 7.47
Real estate construction................ 288,084 27,496 9.54 191,782 20,874 10.88
Real estate mortgages................... 851,396 75,956 8.92 755,752 71,976 9.52
Installment............................. 52,551 5,208 9.91 50,958 5,044 9.90
---------- -------- ---------- --------
Total loans(3).......................... 4,822,254 405,450 8.41 4,213,853 370,056 8.78
State and municipal investment
securities.............................. -- -- -- 103,491 7,044 6.81
Taxable investment securities............. -- -- -- 100,350 6,260 6.24
Securities available-for-sale............. 1,050,716 70,205 6.68 638,505 44,057 6.90
Federal funds sold and securities
purchased under resale agreements....... 44,637 2,381 5.33 66,379 3,458 5.21
Trading account securities................ 67,411 3,077 4.56 65,319 3,637 5.57
---------- -------- ---------- --------
Total interest-earning assets........... 5,985,018 481,113 8.04 5,187,897 434,512 8.38
-------- --------
Allowance for credit losses............... (139,973) (137,257)
Cash and due from banks................... 295,432 310,201
Other nonearning assets................... 348,357 272,988
---------- ----------
Total assets............................ $6,488,834 $5,633,829
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Interest checking accounts................ $ 411,350 2,065 0.50 $ 385,075 3,751 0.97
Money market accounts..................... 989,888 29,385 2.97 892,765 27,018 3.03
Savings deposits.......................... 200,579 7,547 3.76 169,606 6,167 3.64
Time deposits--under $100,000............. 202,387 9,658 4.77 201,152 10,428 5.18
Time deposits--$100,000 and over.......... 928,692 44,559 4.80 761,048 39,873 5.24
---------- -------- ---------- --------
Total interest-bearing deposits......... 2,732,896 93,214 3.41 2,409,646 87,237 3.62
Federal funds purchased and securities
sold under repurchase agreements........ 232,350 11,019 4.74 209,982 10,821 5.15
Other borrowings.......................... 818,809 44,208 5.40 553,153 32,220 5.82
---------- -------- ---------- --------
Total interest-bearing liabilities...... 3,784,055 148,441 3.92 3,172,781 130,278 4.11
-------- --------
Noninterest-bearing deposits................ 2,076,904 1,857,956
Other liabilities........................... 63,784 64,666
Shareholders' equity........................ 564,091 538,426
---------- ----------
Total liabilities and shareholders'
equity................................ $6,488,834 $5,633,829
========== ==========
Net interest spread........................... 4.12% 4.27%
==== =====
Fully taxable-equivalent net interest
income...................................... $332,672 $304,234
======== ========
Net interest margin........................... 5.56% 5.86%
==== =====
</TABLE>

- ------------------------------

(1) Fully taxable-equivalent basis. To compare the tax-exempt asset yields to
taxable yields, amounts are adjusted to pre-tax equivalents based on the
marginal corporate federal tax rate of 35%.

(2) Includes average nonaccrual loans of $22,676 and $32,140 for 1999 and 1998,
respectively.

(3) Loan income includes loan fees of $17,662 and $12,185 for 1999 and 1998,
respectively.

A-8
<PAGE>

<TABLE>
<CAPTION>
1997 1996 1995
- --------------------------------------------- ---------------------------------- ----------------------------------
INTEREST AVERAGE INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ INTEREST AVERAGE INCOME/ INTEREST AVERAGE INCOME/ INTEREST
BALANCE EXPENSE(1) RATE BALANCE EXPENSE(1) RATE BALANCE EXPENSE(1) RATE
- --------------------- ---------- -------- ---------- ---------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

$1,623,851 $150,528 9.27% $1,123,819 $101,039 8.99% $ 874,875 $ 88,629 10.13%
942,381 73,199 7.77 783,648 62,293 7.95 375,932 29,454 7.83
127,867 15,004 11.73 88,498 10,295 11.63 49,160 6,168 12.55
647,658 63,662 9.83 509,565 49,452 9.70 423,462 42,297 9.99
46,027 5,035 10.94 33,793 3,615 10.70 35,242 3,570 10.13
---------- -------- ---------- -------- ---------- --------
3,387,784 307,428 9.07 2,539,323 226,694 8.93 1,758,671 170,118 9.67
105,325 7,400 7.03 57,461 4,061 7.07 23,793 1,717 7.22
117,874 7,683 6.52 116,970 7,457 6.38 516,495 27,709 5.36
606,358 40,822 6.73 665,133 42,841 6.44 164,834 10,519 6.38

23,485 1,301 5.54 64,230 3,562 5.55 116,387 7,013 6.03
49,627 2,871 5.79 62,305 3,434 5.51 44,256 2,550 5.76
---------- -------- ---------- -------- ---------- --------
4,290,453 367,505 8.57 3,505,422 288,049 8.22 2,624,436 219,626 8.37
-------- -------- --------
(136,587) (129,788) (110,570)
327,013 284,331 239,032
223,007 161,349 96,909
---------- ---------- ----------
$4,703,886 $3,821,314 $2,849,807
========== ========== ==========

$ 366,997 3,677 1.00 $ 316,146 2,925 0.93 $ 268,593 2,638 0.98
797,902 23,995 3.01 726,942 21,589 2.97 595,467 16,892 2.84
169,030 5,701 3.37 132,591 4,450 3.36 79,391 1,564 1.97
222,972 11,414 5.12 139,572 7,196 5.16 80,341 3,826 4.76
534,431 28,502 5.33 363,659 18,596 5.11 140,020 7,119 5.08
---------- -------- ---------- -------- ---------- --------
2,091,332 73,289 3.50 1,678,910 54,756 3.26 1,163,812 32,039 2.75

222,617 11,731 5.27 253,853 12,835 5.06 287,015 16,404 5.72
338,930 19,308 5.70 265,638 14,798 5.57 114,865 6,888 6.00
---------- -------- ---------- -------- ---------- --------
2,652,879 104,328 3.93 2,198,401 82,389 3.75 1,565,692 55,331 3.53
-------- -------- --------
1,522,736 1,192,960 898,600
55,428 56,462 34,964
472,843 373,491 350,551
---------- ---------- ----------
$4,703,886 $3,821,314 $2,849,807
========== ========== ==========
4.64% 4.47% 4.84%
$263,177 $205,660 $164,295
======== ======== ========
6.13% 5.87% 6.26%
===== ===== =====
</TABLE>

A-9
<PAGE>
PROVISION FOR CREDIT LOSSES

The provision for credit losses charged to earnings reflects management's
judgment of the adequacy of the allowance for credit losses and is determined
through periodic analysis of the loan portfolio.

Since 1994, the Company has not recorded a provision for credit losses. In
1999 and 1998, net charge-offs totaled $4.7 million and $5.2 million compared
with net recoveries in 1997 of $0.7 million. The Company did not record a
provision for credit losses for the last five years because of the combination
of loan growth, low net charge-offs, a change in the risk profile of the loan
portfolio, 21.4% of which now consists of residential first mortgages, the
continued reduction in problem loans, and the improvement of the Southern
California economy. See "--Balance Sheet Analysis--Asset Quality--Allowance for
Credit Losses."

NONINTEREST INCOME

Noninterest income represented 21.3% of total revenues in 1999, as compared
with 18.7% and 17.4% in 1998 and 1997, respectively. That increase resulted from
implementing management's plan to increase the Company's noninterest income
primarily by enhancing and adding to the products offered by the Bank's City
National Investments division and expanding the international division.

Noninterest income in 1999 totaled $87.2 million, up $19.5 million, or
28.8%, from 1998 which was up $14.3 million, or 26.8%, from 1997. A breakdown of
noninterest income by category is reflected below.

ANALYSIS OF CHANGES IN NONINTEREST INCOME

<TABLE>
<CAPTION>
INCREASE INCREASE
(DECREASE) (DECREASE)
------------------- -------------------
(DOLLARS IN MILLIONS) 1999 AMOUNT % 1998 AMOUNT % 1997
- --------------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts........ $18.1 $ 0.7 4.0 $17.4 $ 3.1 21.7 $14.3
Investment services........................ 19.8 3.5 21.5 16.3 3.1 23.5 13.2
Trust fees................................. 18.1 8.7 92.6 9.4 1.1 13.3 8.3
International services..................... 10.0 1.9 23.5 8.1 0.8 11.0 7.3
Bank owned life insurance.................. 2.3 0.2 9.5 2.1 2.1 -- --
Gain on sale of loans and assets........... 2.1 0.3 16.7 1.8 0.2 12.5 1.6
Gain (loss) on sale of securities.......... 3.7 0.6 19.4 3.1 4.1 N/M (1.0)
All other income........................... 13.1 3.6 37.9 9.5 (0.2) (2.1) 9.7
----- ----- ----- ----- -----
Total.................................. $87.2 $19.5 28.8 $67.7 $14.3 26.8 $53.4
===== ===== ==== ===== ===== === =====
</TABLE>

Service charges on deposit accounts increased $0.7 million, or 4.0%,
compared with a 21.7% increase in 1998. The increase in 1999 was the result of
the acquisition of APSB in August 1999 and strong growth in deposits, albeit at
a slower rate than in 1998 over 1997. The increase in 1998 was the result of
strong deposit growth, the acquisition of HB in the beginning of the year, and
higher service charge rates. Service charges on deposit accounts are expected to
increase in 2000 primarily as a result of continued deposit growth and the
acquisition of Pacific Bank. Service charges on deposit accounts are lower than
for many peers, in part, because of the relatively high level of deposit
balances maintained by many of the Bank's clients in lieu of paying fees for
banking services.

Investment services income, which includes fees, commissions and markups on
securities transactions with clients, and fees on money market mutual funds,
increased in 1999, compared with 1998, by $3.5 million, or 21.5%, primarily due
to client acceptance of new investment products and an increased customer base
partially due to the acquisition of NATC. Through the acquisition of NATC, City
National Investments was able to introduce mutual funds and enhanced 401(k)
plans to its products and extend its client base outside the state of
California. Trust fees increased by $8.7 million, or 92.6%, from 1998 to 1999
due to the acquisition of NATC and an increased number of affluent clients. The
increase in investment services income and trust fees from 1997 to 1998 was
attributable to new investment products and an increase in affluent clients. At
December 31, 1999, the Company had approximately $14.1 billion of assets,

A-10
<PAGE>
including $2.2 billion in money market funds, under custody or management in
City National Investments, compared with $14.9 billion at December 31, 1998.
Investment services income and trust fees are expected to increase in 2000
primarily due to the acquisition of Pacific Bank, which had a trust department,
and continued emphasis on developing and marketing new products in these areas.
In early 2000, City National Investments expanded the mutual funds offered and
in the second quarter of 2000 will further enhance its 401(k) plan products by
offering on-line access.

International fee income increased $1.9 million, or 23.5%, from 1998 to
1999, and $0.8 million, or 11.0%, from 1997 to 1998, due to an increased
customer base. International income is expected to increase in 2000, partially
due to the acquisition of the Pacific Bank which also operated an international
division. In 1998, the Company purchased bank owned life insurance policies on
certain of its officers, which generated $2.3 million and $2.1 million of income
for 1999 and 1998, respectively.

Gains on the sale of securities available-for-sale in 1999 totaled
$3.7 million compared with $3.1 million in gains for 1998 and $1.0 million in
losses for 1997.

NONINTEREST EXPENSE

Noninterest expense in 1999 increased 14.4% over 1998 which had increased
16.2% over 1997. The increase over the period primarily reflects increased
salaries and employee benefits mostly due to the increased staff levels from
five acquisitions completed over the three year period and, to a lesser extent,
staff increases in information systems and cash management. During 1999, the
Company implemented its on-line banking platform, City National eLink, which
will be expanded in 2000 to include cash management and on-line brokerage. The
Company also will incur additional expenses in 2000 as a result of the Pacific
Bank acquisition and management's focus on building staff levels to serve the
growth industries in the Company's marketplace, including the high technology
area. The Company intends to expand its high technology division by opening a
new banking office in Palo Alto, California during the third quarter of 2000.

Noninterest expense totaled $241.8 million in 1999, up $30.5 million, or
14.4%, from 1998 which was up $29.5 million, or 16.2%, from 1997. A breakdown of
noninterest expense by category is reflected below.

ANALYSIS OF CHANGES IN NONINTEREST EXPENSE

All Other:
Professional......................... $ 20.8 $(2.6) (11.1) $ 23.4 $ 5.5 30.7 $ 17.9
Net occupancy of premises............ 19.0 4.8 33.8 14.2 2.1 17.4 12.1
Information services................. 12.3 3.5 39.8 8.8 (3.9) (30.7) 12.7
Marketing and advertising............ 10.4 0.1 1.0 10.3 2.3 28.8 8.0
Depreciation......................... 11.2 2.4 27.3 8.8 2.7 44.3 6.1
Office services...................... 8.2 0.9 12.3 7.3 -- -- 7.3
Amortization of goodwill and core
deposit intangibles................ 9.3 2.4 34.8 6.9 1.3 23.2 5.6
Equipment............................ 2.2 (0.1) (4.3) 2.3 (0.2) (8.0) 2.5
Other operating...................... 14.5 0.2 1.4 14.3 2.3 19.2 12.0
------ ----- ----- ------ ----- ----- ------
Total all other.................... 107.9 11.6 12.0 96.3 12.1 14.4 84.2
------ ----- ----- ------ ----- ----- ------
Total............................ $241.8 $30.5 14.4 $211.3 $29.5 16.2 $181.8
====== ===== ===== ====== ===== ===== ======
</TABLE>

A-11
<PAGE>
Salaries and employee benefit expense increased 16.4% in 1999 compared with
a 17.8% increase in 1998. The increase in 1999 and 1998 is the result of the
additional personnel that joined the Company as a result of the acquisitions,
the hiring of new personnel in the Company's expansion efforts, and higher costs
associated with performance incentives and contributions to the City National
Corporation Profit Sharing Plan. On a full-time equivalent basis, staff levels
have increased to 1,874 at December 31, 1999 from 1,670 at December 31, 1998.
Staff levels are expected to increase in 2000, in part, due to the acquisition
of Pacific Bank.

The remaining expense categories increased $11.6 million, or 12.0%, between
1998 and 1999. The decrease in professional expense resulted primarily from
lower consulting expense due to completed productivity and revenue enhancement
projects. Marketing and advertising expense increased slightly as the Company
continued its marketing and advertising program to increase the Company's
visibility. The Company intends to continue to use marketing and advertising as
it expands its market areas and share. The increase in depreciation expense
resulted from the Company's capital expenditures during 1999 of $17.8 million
for premises and technology equipment upgrades. The increase in information
services in 1999 relates to the growth of the Company and increased expenses
relating to Year 2000 readiness. Amortization of goodwill and core deposit
intangibles increased $2.4 million due to the acquisition of APSB and NATC.
Other expense in 1999 includes $1.2 million of integration expenses relating to
APSB, of which $0.64 million was paid in 1999 and $0.56 million was paid in the
first quarter of 2000.

The remaining expense categories increased $12.1 million, or 14.4%, between
1997 and 1998. The increase in professional expense resulted primarily from
higher customer service expense on increased deposits. Marketing and advertising
expense grew as the Company expanded its marketing and advertising program. The
increase in depreciation expense resulted from the Company's capital
expenditures during 1998 of $18.0 million for premises and technology equipment.
The decrease in information services in 1998 relates to the absence of costs
incurred in 1997 for data processing conversions and the buyout of the Company's
former data processing contract. Amortization of goodwill and core deposit
intangibles increased $1.3 million due to the acquisition of HB. Other expense
in 1998 includes a $0.8 million charge for NATC integration expenses, of which
$0.6 million was paid in 1998 and $0.2 million was paid during the first half of
1999. The remaining other increases resulted from the acquisition of HB, higher
operating losses, and other factors.

During 1999, the Company completed the process of preparing for the Year
2000 date change. This process involved identifying and remediating date
recognition problems in computer systems, software, other operating equipment
and facilities, working with third parties to address their Year 2000 issues,
and developing contingency plans to address potential risks in the event of Year
2000 failures. To date, the Company has successfully managed the transition.

Although considered unlikely, unanticipated problems in the Company's
business processes, including problems associated with non-compliant third
parties and disruptions to the economy in general, could still occur despite
efforts to date to remediate systems problems and develop contingency plans.
Management will continue to monitor all business processes, including
interaction with the Company's customers, vendors, and other third parties,
throughout 2000 to address any issues and ensure all processes continue to
function properly.

In 1999, approximately $2.4 million was directly and indirectly expensed on
Year 2000 matters compared with $1.7 million in 1998. This amount excludes
hardware and software that was replaced in the normal course of business. Total
direct and indirect expenses related to Year 2000 matters are expected to be
approximately $0.1 million in 2000.

INCOME TAXES

The 1999 effective tax rate was 35.4% compared with 35.9% in 1998 and 36.1%
in 1997. The effective rates differed from the applicable statutory federal tax
rate due to various factors including state taxes, tax

A-12
<PAGE>
exempt income including interest on bank owned life insurance, and amortization
of nondeductible goodwill.

The amortization of nondeductible goodwill will continue to adversely affect
the Company's effective tax rate in 2000. However, the Company's tax rate will
continue to benefit from state tax credits received as an incentive for making
or renewing loans in certain designated areas in and around its market areas,
investments in municipal securities and leases, bank owned life insurance, the
dividends received deduction for preferred stock, tax credits from investments
in low income housing, and other tax-advantaged business strategies.

A-13
<PAGE>
BALANCE SHEET ANALYSIS

CAPITAL

At December 31, 1999, the Corporation's and the Bank's Tier 1 capital, which
is comprised of common shareholders' equity as modified by certain regulatory
adjustments, amounted to $471.3 million and $440.6 million, respectively. At
December 31, 1998, the Corporation's and the Bank's Tier 1 capital amounted to
$474.9 million and $446.5 million, respectively. The decrease from December 31,
1998 resulted from intangibles created from the APSB acquisition, dividends
paid, and amounts related to shares repurchased which were almost fully offset
by the retention of 1999 earnings and capital raised through the exercise of
stock options. See "--Overview."

The following table presents the regulatory standards for well capitalized
institutions and the capital ratios for the Corporation and the Bank at
December 31, 1999, 1998 and 1997.

<TABLE>
<CAPTION>
REGULATORY DECEMBER 31
WELL CAPITALIZED ------------------------------
STANDARDS 1999 1998 1997
---------------- -------- -------- --------
<S> <C> <C> <C> <C>
CITY NATIONAL CORPORATION
Tier 1 leverage.......................... 4.00% 6.73% 7.99% 9.19%
Tier 1 risk-based capital................ 6.00 7.88 9.43 10.99
Total risk-based capital................. 10.00 11.21 13.20 12.27
CITY NATIONAL BANK
Tier 1 leverage.......................... 4.00 6.30 7.53 7.93
Tier 1 risk-based capital................ 6.00 7.40 8.90 9.50
Total risk-based capital................. 10.00 10.75 12.65 10.78
</TABLE>

LIQUIDITY MANAGEMENT

The objective of liquidity management is the ability to maintain cash flow
adequate to fund the Company's operations and meet obligations and other
commitments on a timely and cost effective basis. The Company achieves this
objective through the selection of asset and liability maturity mixes that it
believes best meet the needs of the Company. The Company's liquidity position is
enhanced by its ability to raise additional funds as needed in the money
markets.

The Company's core deposit base in recent years provided the majority of the
Company's funding requirements. This relatively stable and low cost source of
funds has, along with shareholders' equity, provided 69% and 72% of funding for
average total assets in 1999 and 1998, respectively.

A significant portion of remaining funding of average total assets is
provided by short-term federal fund purchases and sales of securities under
repurchase agreements. This funding source, on average, totaled $232.4 million
and $210.0 million in 1999 and 1998, respectively. Additionally, the Company
increased its funding from other borrowings, primarily Federal Home Loan Bank
advances, to $818.8 million on average in 1999 from $553.2 million in 1998.

Liquidity is also provided by assets such as federal funds sold, securities
purchased under resale agreements, and trading account securities which may be
immediately converted to cash at minimal cost. The aggregate of these assets
averaged $112.0 million during 1999, down $19.7 million, or 14.9%, from the
prior year.

Liquidity is also provided by the portfolio of securities available-for-sale
which totaled $1,102.1 million at December 31, 1999. The unpledged portion of
securities available-for-sale at December 31, 1999 totaled $537.8 million and
would be available as collateral for borrowing. Maturing loans also provide
liquidity, and $2,305.4 million of the Company's loans are scheduled to mature
in 2000.

A-14
<PAGE>
ASSET/LIABILITY MANAGEMENT

The principal objective of asset/liability management is to maximize net
interest margin subject to margin volatility and liquidity constraints. Margin
volatility results when the rate reset (or repricing) characteristics of assets
are materially different from those of the Company's liabilities. Liquidity risk
results from the mismatching of asset and liability cash flows. Management
chooses asset/liability strategies that promote stable earnings and reliable
funding. Interest rate risk and funding positions are kept within limits
established by the Board of Directors to ensure that risk taking is not
excessive and that liquidity is properly managed.

The Company has established three measurement processes to quantify and
manage exposure to interest rate risk: net interest income simulation modeling,
present value of equity analysis, and gap analysis. Net interest income
simulations are used to identify the direction and severity of interest rate
risk exposure across a twelve month forecast horizon. Present value of equity
calculations are used to estimate the theoretical price sensitivity of
shareholder equity to changes in interest rates. Gap analysis provides insight
into structural mismatches of assets and liability repricing characteristics.

NET INTEREST INCOME SIMULATION: The Company's net interest margin is
affected by the level of interest rates and by the shape of the yield curve. The
yield curve depicts market interest rates as a function of maturity. The Company
has a large portfolio of rate sensitive commercial loans that are funded in part
by rate stable core deposits. As a result, the Company is generally asset
sensitive; net interest margin increases when interest rates are increasing and
decreases when rates are declining. The Company uses a simulation model to
estimate the severity of this risk and to develop mitigation strategies. It
captures the dynamic nature of the balance sheet by anticipating probable
balance sheet and off-balance sheet strategies and volumes under different
interest rate scenarios over the course of a twelve month period. Model
assumptions are updated periodically and are reviewed by the Asset/Liability
Management Committee (ALCO). The Board of Directors has adopted limits within
which interest rate exposure must be contained. Within these limits, ALCO sets
management guidelines to further limit exposure and to take advantage of
movements in rates.

The most recent simulation indicates that net interest income would not be
substantially impacted by changes in interest rates. An immediate interest rate
decline of two percentage points would result in a decrease in projected net
interest income of one percent. An increase in rates would have only a minor
impact over a twelve month projected horizon. The decline is within the ALCO
guideline of minus five percent. The Company's asset sensitivity was reduced
during 1999 due to increased holdings of fixed rate mortgages, the lengthening
of the duration of the Company's investment portfolio, and the use of
off-balance sheet derivatives.

PRESENT VALUE OF EQUITY: The present value of equity ("PVE") model is used
to evaluate the vulnerability of the market value of shareholders' equity to
changes in interest rates. The PVE model calculates the expected cash flow of
all of the Company's assets and liabilities under various interest rate
scenarios. The present value of these cash flows is calculated by discounting
them using the interest rates for that scenario. The difference between the
present value of assets and the present value of liabilities is the PVE. PVE
will vary depending on the timing of expected cash flow, the level of interest
rates, and the shape of the yield curve. The assumptions governing these
relationships are the same as those used in the net interest income simulation.
They are updated periodically and are reviewed by ALCO. The Board of Directors
has adopted limits within which this exposure must be contained.

The most recent model report indicates that PVE is only slightly vulnerable
to an increase in interest rates. A two percentage point increase in interest
rates results in a 2.3% decline in PVE. A two percentage point decrease in
interest rates results in a 1.7% appreciation in PVE. These results indicate a
slight moderation of PVE exposure over the previous twelve months.

GAP ANALYSIS: The gap analysis is based on the contractual cash flows of
all asset and liability balances on the Company's books. The contractual life of
these balances may differ substantially from their

A-15
<PAGE>
expected lives however. For example, checking accounts are subject to immediate
withdrawal. Experience suggests that these accounts will have an average life of
several years. Also, certain loans (such as first mortgages) are subject to
prepayment. The gap analysis reflects the contractual cash flows adjusted for
anticipated customer behavior. It may be used to identify periods in which there
is a substantial mismatch between assets and liabilities. These mismatches can
be moderated by securities or off-balance sheet derivatives transactions. The
Board of Directors has adopted limits within which the ratio of rate-sensitive
assets to rate-sensitive liabilities must be contained. The most recent gap
analysis indicates that the Company's ratio is 107% and is within the limits set
by the Board.

The following table presents in tabular form information about the Company's
financial instruments that are sensitive to changes in interest rates. The table
presents principal cash flows and related average interest rates by expected
re-pricing or maturity dates and fair values as of December 31, 1999 and
December 31, 1998. Expected re-pricing or maturities of assets are contractual.
Interest-bearing demand and savings deposits are included in the earliest
maturity category, even though withdrawal of these balances is not contractually
required and may not actually occur during that period. Average interest rates
on variable rate instruments are based upon the Company's interest rate
forecast. Actual re-pricing or maturities of interest-sensitive assets and
liabilities could vary substantially from expectations if different assumptions
are used or if actual experience differs from the assumptions used.

INTEREST-SENSITIVE FINANCIAL INSTRUMENT MATURITIES
DECEMBER 31, 1999

<TABLE>
<CAPTION>
FAIR
(DOLLARS IN MILLIONS) 2000 2001 2002 2003 2004 THEREAFTER TOTAL VALUE
- --------------------- -------- -------- -------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST-SENSITIVE ASSETS:
Securities available-for-sale......... $ 30.5 $ 26.5 $ 62.4 $ 85.5 $ 80.0 $ 817.2 $1,102.1 $1,102.1
Average interest rate............. 6.44% 6.50% 6.27% 6.16% 6.92% 6.26% 6.31%
Loans
Commercial.......................... 2,455.6 116.6 63.7 63.7 54.2 116.6 2,870.4 2,947.2
Average interest rate............. 8.58% 7.13% 6.96% 6.96% 6.87% 6.26% 8.33%
Residential first mortgage.......... 262.0 148.7 120.2 98.7 82.4 461.3 1,173.3 1,158.3
Average interest rate............. 8.31% 7.24% 7.22% 7.22% 7.19% 7.17% 7.43%
Real estate construction............ 315.4 18.5 1.2 1.2 1.1 7.5 344.9 347.4
Average interest rate............. 9.15% 9.00% 10.32% 10.32% 7.71% 7.69% 9.11%
Real estate mortgage................ 526.5 52.7 47.9 47.9 43.5 323.6 1,042.1 1,054.0
Average interest rate............. 8.68% 8.38% 8.52% 8.52% 8.18% 7.97% 8.43%
Installment......................... 18.3 10.4 6.6 6.6 1.6 16.5 60.0 55.4
Average interest rate............. 11.00% 9.43% 9.32% 9.32% 8.94% 9.16% 9.96%
-------- ------ ------ ------ ------ -------- -------- --------
Total loans..................... 3,577.8 346.9 239.6 218.1 182.8 925.5 5,490.7 5,562.3
-------- ------ ------ ------ ------ -------- -------- --------
Total interest-sensitive assets....... $3,608.3 $373.4 $302.0 $303.6 $262.8 $1,742.7 $6,592.8 $6,664.4
======== ====== ====== ====== ====== ======== ======== ========
INTEREST-SENSITIVE LIABILITIES:
Deposits
Interest checking................... $ 473.0 $ -- $ -- $ -- $ -- $ -- $ 473.0 $ 473.0
Average interest rate............. 0.40% 0.40%
Savings............................. 221.0 -- -- -- -- -- 221.0 221.0
Average interest rate............. 3.76% 3.76%
Money market........................ 1,103.9 -- -- -- -- -- 1,103.9 1,103.9
Average interest rate............. 3.22% 3.22%
Time................................ 1,366.8 39.3 7.4 4.7 4.3 0.1 1,422.6 1,419.5
Average interest rate............. 4.90% 5.30% 5.70% 5.00% 4.80% --% 4.96%
-------- ------ ------ ------ ------ -------- -------- --------
Total deposits.................. 3,164.7 39.3 7.4 4.7 4.3 0.1 3,220.5 3,217.4
Total borrowings...................... 592.2 100.0 65.0 -- 15.0 123.5 895.7 883.0
Average interest rate............. 5.08% 6.26% 5.63% --% 5.24% 6.38% 5.43%
-------- ------ ------ ------ ------ -------- -------- --------
Total interest-sensitive
liabilities......................... $3,756.9 $139.3 $ 72.4 $ 4.7 $ 19.3 $ 123.6 $4,116.2 $4,100.4
======== ====== ====== ====== ====== ======== ======== ========
</TABLE>

A-16
<PAGE>
INTEREST-SENSITIVE FINANCIAL INSTRUMENT MATURITIES
DECEMBER 31, 1998

<TABLE>
<CAPTION>
FAIR
(DOLLARS IN MILLIONS) 1999 2000 2001 2002 2003 THEREAFTER TOTAL VALUE
- --------------------- -------- -------- -------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST-SENSITIVE ASSETS:
Securities available-for-sale......... $ 50.2 $ 81.0 $ 54.9 $ 42.2 $ 92.0 $ 692.2 $1,012.5 $1,012.5
Average interest rate............. 6.25% 6.06% 6.50% 6.57% 6.21% 6.49% 6.42%
Loans
Commercial.......................... $2,078.0 $102.4 $ 91.1 $ 39.4 $ 50.4 $ 96.6 $2,457.9 $2,462.6
Average interest rate............. 7.65% 6.78% 7.03% 6.58% 6.75% 6.04% 7.49%
Real estate construction............ 219.6 1.2 14.6 0.2 0.4 1.0 237.0 237.4
Average interest rate............. 8.68% 17.84% 7.99% 7.86% 8.45% 7.77% 8.68%
Real estate mortgage................ 402.9 31.4 37.1 39.9 39.4 197.0 747.7 761.2
Average interest rate............. 8.56% 8.66% 8.51% 8.69% 8.48% 8.03% 8.42%
Residential first mortgage.......... 261.8 140.4 103.8 80.2 65.1 386.9 1,038.2 1,112.5
Average interest rate............. 7.60% 7.34% 7.37% 7.38% 7.39% 7.47% 7.46%
Installment......................... 15.1 8.2 5.7 3.2 1.5 15.9 49.6 49.3
Average interest rate............. 11.58% 10.00% 9.75% 9.37% 8.91% 9.39% 10.18%
-------- ------ ------ ------ ------ -------- -------- --------
Total loans..................... 2,977.4 283.6 252.3 162.9 156.8 697.4 4,530.4 4,623.0
-------- ------ ------ ------ ------ -------- -------- --------
Total interest-sensitive assets....... $3,027.6 $364.6 $307.2 $205.1 $248.8 $1,389.6 $5,542.9 $5,635.5
======== ====== ====== ====== ====== ======== ======== ========
INTEREST-SENSITIVE LIABILITIES:
Deposits
Interest checking................... $ 452.2 $ -- $ -- $ -- $ -- $ -- $ 452.2 $ 452.2
Average interest rate............. 0.97% 0.97%
Savings............................. 183.4 -- -- -- -- -- 183.4 183.4
Average interest rate............. 3.64% 3.64%
Money market........................ 927.7 -- -- -- -- -- 927.7 927.7
Average interest rate............. 3.03% 3.03%
Time................................ 862.6 46.3 25.8 4.6 2.0 0.1 941.4 940.4
Average interest rate............. 4.76% 5.54% 5.48% 5.94% 4.97% 6.24% 4.82%
-------- ------ ------ ------ ------ -------- -------- --------
Total deposits.................. 2,425.9 46.3 25.8 4.6 2.0 0.1 2,504.7 2,503.7
Total borrowings...................... 593.3 100.0 50.0 50.0 -- 123.3 916.6 918.9
Average interest rate............. 5.19% 5.28% 5.24% 5.79% --% 6.38% 5.40%
-------- ------ ------ ------ ------ -------- -------- --------
Total interest-sensitive
liabilities......................... $3,019.2 $146.3 $ 75.8 $ 54.6 $ 2.0 $ 123.4 $3,421.3 $3,422.6
======== ====== ====== ====== ====== ======== ======== ========
</TABLE>

The use of interest rate swaps to manage interest rate exposure involves the
risk of dealing with counterparties and their ability to meet contractual terms.
These counterparties must receive appropriate credit approval before the Company
enters into an interest rate contract. Notional principal amounts express the
volume of these transactions, although the amounts potentially subject to credit
and market risk are much smaller. At December 31, 1999, the Company's interest
rate swaps were entered into as hedges against a decrease in interest income
generated from prime based loans if the prime decreased or to convert fixed rate
deposits and borrowings into floating rate liabilities. The Company has not
entered into transactions involving any other interest rate derivative financial
instruments, such as interest rate floors, caps, and interest rate futures
contracts. The Company could consider in the future such financial instruments
if they were significantly financially attractive compared to interest rate
swaps.

A-17
<PAGE>
The table below shows the notional amounts of the Company's interest rate
swap maturities and average rates at December 31, 1999:

INTEREST RATE SWAP MATURITIES AND AVERAGE RATES

<TABLE>
<CAPTION>
(NOTIONAL AMOUNTS IN MILLIONS) 2000 2001 2002 THEREAFTER TOTAL FAIR VALUE
- ------------------------------ -------- -------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Receive fixed rate (hedge loans and
deposits)
Notional amount....................... $545.0 $90.0 $190.0 $140.0 $965.0 $(10.0)(1)
Weighted average rate received........ 5.48% 5.64% 5.77% 6.51% 5.70%
Weighted average rate paid............ 6.26% 6.26% 6.29% 5.56% 6.16%
</TABLE>

- ------------------------

(1) Estimated net loss to settle derivative contracts.

At December 31, 1999, the Company's outstanding foreign exchange contracts
for both those purchased as well as sold totaled $123.7 million. The Company
enters into foreign exchange contracts with its customers and counterparty banks
solely for the purpose of offsetting or hedging for customers transaction and
economic exposures arising out of commercial transactions. The Company's
policies prohibit outright speculation by the Company and its employees. The
Company actively manages its foreign exchange exposures within prescribed risk
limits and controls. All foreign exchange contracts outstanding at December 31,
1999 had remaining maturities of six months or less.

SECURITIES

Securities held to facilitate customer trading orders are classified as
trading securities. All other securities are classified as available-for-sale.
The securities available-for-sale portfolio includes both debt and marketable
equity securities. At December 31, 1999, the securities available-for-sale
portfolio had an unrealized net loss of $46.9 million, comprised of
$49.9 million of unrealized losses and $3.0 million of unrealized gains. At
December 31, 1998, the securities available-for-sale portfolio had an unrealized
net gain of $22.4 million, comprised of $24.0 million of unrealized gains and
$1.6 million of unrealized losses. The unrealized gain or loss on securities
available-for-sale is reported on an after-tax basis as a valuation allowance
that is a component of other comprehensive income (loss).

Comparative period end security portfolio balances are presented below:

SECURITIES AVAILABLE-FOR-SALE

<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------------- ---------------------
(DOLLARS IN THOUSANDS) COST FAIR VALUE COST FAIR VALUE
- ---------------------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C>
U.S. Government and federal agency.............. $ 291,407 $ 286,546 $268,838 $ 275,145
Mortgage-backed................................. 368,948 351,251 348,826 351,469
State and Municipal............................. 155,736 152,244 121,743 123,845
Other debt securities........................... 166,772 150,913 145,852 152,692
---------- ---------- -------- ----------
Total debt securities....................... 982,863 940,954 885,259 903,151
Marketable equity securities.................... 166,150 161,138 104,893 109,375
---------- ---------- -------- ----------
Total securities............................ $1,149,013 $1,102,092 $990,152 $1,012,526
========== ========== ======== ==========
</TABLE>

At December 31, 1999, securities available-for-sale totaled
$1,102.1 million, an increase of $89.6 million, or 8.8% from December 31, 1998.
The increase resulted from investing a portion of deposit and borrowing growth
which was not needed to fund loan growth. The average duration of total
available-for-sale securities at December 31, 1999 was 5.5 years compared with
4.3 years at December 31, 1998.

A-18
<PAGE>
The following tables provide the expected remaining maturities and yields
(taxable-equivalent basis) of debt securities within the securities portfolio at
December 31, 1999. To compare the tax-exempt asset yields to taxable yields,
amounts are adjusted to pre-tax equivalents based on the marginal corporate
federal tax rate of 35%.

DEBT SECURITIES AVAILABLE-FOR-SALE
<TABLE>
<CAPTION>
ONE YEAR OVER 1 YEAR OVER 5 YEARS TOTAL
OR LESS THRU 5 YEARS THRU 10 YEARS OVER 10 YEARS 1999
------------------- ------------------- ------------------- ------------------- -------------------
(DOLLARS IN % % % % %
THOUSANDS) AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and
federal agency..... $11,013 6.24 $202,249 6.35 $ 73,284 6.34 $ -- -- $286,546 6.34
Mortgage-backed...... -- -- -- -- 15,966 6.06 335,285 6.55 351,251 6.53
State and Municipal.. 19,443 6.56 52,093 6.87 78,823 6.51 1,885 7.63 152,244 6.65
Other debt
securities......... -- -- 103 7.00 84,342 7.50 66,468 7.99 150,913 7.72
------- ---- -------- ---- -------- ---- -------- ---- -------- ----
Total debt
securities....... $30,456 6.44 $254,445 6.46 $252,415 6.76 $403,638 6.79 $940,954 6.68
======= ==== ======== ==== ======== ==== ======== ==== ======== ====
Amortized cost..... $30,409 $256,738 $269,313 $426,403 $982,863
======= ======== ======== ======== ========

<CAPTION>
TOTAL TOTAL
1998 1997
------------------- -------------------
(DOLLARS IN % %
THOUSANDS) AMOUNT YIELD AMOUNT YIELD
- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
U.S. Government and
federal agency..... $275,145 6.11 $257,057 6.31
Mortgage-backed...... 351,469 6.61 172,075 6.66
State and Municipal.. 123,845 6.60 5,997 6.71
Other debt
securities......... 152,692 7.78 25,920 7.79
-------- ---- -------- ----
Total debt
securities....... $903,151 6.65 $461,049 6.67
======== ==== ======== ====
Amortized cost..... $885,259 $456,830
======== ========
</TABLE>

Dividend income included in interest income on securities in the
consolidated statement of income and comprehensive income was $5.6 million and
$8.7 million for 1999 and 1998, respectively.

LOAN PORTFOLIO

Total loans were $5,490.7 million, $4,530.4 million, and $3,825.2 million at
December 31, 1999, 1998, and 1997, respectively. Loans averaged
$4,822.3 million, $4,213.9 million, and $3,387.8 million for the years 1999,
1998, and 1997, respectively. The increase in total loans of $960.3 million
during 1999 relates to the overall growth in the Company's loan portfolio and
the acquisition of APSB. The most significant area of growth was the $412.5
million increase in commercial loans. In addition, residential first mortgages
increased $135.1 million, while real estate construction and real estate
mortgages increased by $107.9 million and $294.4 million, respectively. Similar
growth occurred in 1998. These increases were mainly due to the acquisition of
HB, the Company's business development efforts, and the strength of the local
economy, and in the case of the increase in the commercial loan portfolio, the
expansion of participations in domestic bank non-relationship syndicated loans.

The following table shows the Company's consolidated loans by type of loan
or borrower and their percentage distribution:

LOAN PORTFOLIO

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------
(DOLLARS IN THOUSANDS) 1999 1998 1997 1996 1995
- ---------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Commercial............................................ $2,870,438 $2,457,946 $1,972,232 $1,334,577 $1,080,125
Residential first mortgage............................ 1,173,334 1,038,229 980,040 882,573 593,546
Real estate construction.............................. 344,870 237,015 144,558 92,322 81,318
Real estate mortgage.................................. 1,042,123 747,711 686,188 499,377 553,095
Installment........................................... 59,904 49,526 42,206 30,586 38,527
---------- ---------- ---------- ---------- ----------
Total loans........................................... $5,490,669 $4,530,427 $3,825,224 $2,839,435 $2,346,611
========== ========== ========== ========== ==========

PERCENTAGE OF PORTFOLIO
Commercial............................................ 52.2% 54.3% 51.6% 46.9% 46.0%
Residential first mortgage............................ 21.4 22.9 25.6 31.1 25.3
Real estate construction.............................. 6.3 5.2 3.8 3.3 3.5
Real estate mortgage.................................. 19.0 16.5 17.9 17.6 23.6
Installment........................................... 1.1 1.1 1.1 1.1 1.6
---------- ---------- ---------- ---------- ----------
Total loans........................................... 100.0% 100.0% 100.0% 100.0% 100.0%
========== ========== ========== ========== ==========
</TABLE>

A-19
<PAGE>
The Company's loan portfolio consists primarily of short-term loans for
businesses and real estate purposes. At December 31, 1999, approximately 52.2%
of the loan portfolio were commercial loans (including participations in
domestic bank non-relationship syndicated loans), 21.4% were residential first
mortgages, and 25.3% were in real estate construction and mortgage loans. Loans
are generally made on the basis of a secure repayment source as the first
priority, and collateral is generally a secondary source for loan qualification.
Although the legal lending limit for any one borrower was approximately
$104.8 million at December 31, 1999, the Bank has established "house limits"
which vary by risk rating but, at December 31, 1999, did not exceed
$40.0 million. House limits may only be exceeded with the approval of the Bank's
Board of Directors.

The commercial loan portfolio primarily consists of loans to middle-market
companies, professional and business borrowers, and associated individuals.
Included in commercial loans as of December 31, 1999 were participations in
domestic bank non-relationship syndicated loans of approximately
$536.8 million, or 9.8% of total loans. See "--Results of Operations--Net
Interest Income." As of December 31, 1998, participations in domestic bank
non-relationship syndicated loans were $507.3 million, or 11.2% of total loans.
In addition, commercial loans include unsecured loans to real estate developers
and customers involved in real estate investments and commercial loans where
real estate partially secures the borrowing.

Residential first mortgage loans which comprised 21.4% of total loans at
December 31, 1999, continued a six-year growth trend, increasing
$135.1 million, or 13.0%, to $1,173.3 million at December 31, 1999. At
December 31, 1999, 81.9% of the portfolio was originated internally, and the
balance was purchased from third parties.

The real estate construction portfolio (6.3% of the loan portfolio) consists
of 83.2% commercial and 16.8% residential. Such loans are made on the basis of
the economic viability for the specific project, the cash flow resources of the
developer, the developer's equity in the project, and the underlying financial
strength of the borrower. The Company's policy is to monitor each loan with
respect to incurred costs, sales price, and sales cycle. Following is a
breakdown of real estate construction loans by collateral type:

REAL ESTATE CONSTRUCTION LOANS BY TYPE

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
(DOLLARS IN THOUSANDS) 1999 1998
- ---------------------- -------- --------
<S> <C> <C>
Industrial.............................................. $138,131 $ 98,853
Office building......................................... 23,276 10,226
Shopping centers........................................ 64,531 47,906
1-4 family (includes undeveloped land).................. 23,525 28,079
Condominiums/apartments................................. 34,409 16,413
Other................................................... 60,998 35,538
-------- --------
Total............................................. $344,870 $237,015
======== ========
</TABLE>

A-20
<PAGE>
Real estate mortgages (19.0% of the loan portfolio) consists of 88.0%
commercial and 12.0% residential. The increase during 1999 was primarily due to
the acquisition of APSB and internal loan origination. Following is a breakdown
of real estate mortgage loans by collateral type:

REAL ESTATE MORTGAGE LOANS BY TYPE

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
(DOLLARS IN THOUSANDS) 1999 1998
- ---------------------- ---------- --------
<S> <C> <C>
Industrial............................................ $ 464,075 $209,411
Office building....................................... 97,221 75,616
Shopping centers...................................... 59,673 61,903
1-4 family (includes undeveloped land)................ 29,391 5,660
Condominiums/apartments............................... 43,083 117,661
Land, nonresidential.................................. 13,161 6,923
Churches/religious.................................... 13,067 13,527
Equity lines of credit................................ 52,072 36,030
Other................................................. 270,380 220,980
---------- --------
Total........................................... $1,042,123 $747,711
========== ========
</TABLE>

Installment loans consist primarily of loans to individuals for personal
uses, such as installment purchases and a variety of other consumer purchases.

Concentrations of credit risk arise when a number of customers are engaged
in similar business activities, or activities in the same geographic region, or
have similar economic features that would cause their ability to meet
contractual obligations to be similarly affected by changes in economic
conditions. Although the Company has a diversified loan portfolio, a substantial
portion of the customers' ability to honor loan terms depends on the economic
stability of Southern California, which in some degree relies on the stability
of entertainment and media companies. Furthermore, at December 31, 1999, loans
to entities engaged in the entertainment or media businesses amounted to
$851.3 million, or 15.5% of the total loan portfolio, an 18.2% increase from the
$720.1 million at December 31, 1998.

The Company's lending activities are predominately in Southern California
although participations in domestic bank non-relationship syndicated loans,
which comprise approximately 9.8% of the total loan portfolio at December 31,
1999, are primarily to borrowers located out of state. The Company has one
direct foreign loan to a Canadian borrower in the amount of $2.4 million. The
Company also has some loans to domestic customers who are engaged in
international trade or film productions.

Inherent in any loan portfolio are risks associated with certain types of
loans. The Company assesses and manages credit risk on an ongoing basis through
diversification guidelines, lending limits, credit review and approval policies,
and internal monitoring. As part of the control process, an independent credit
review function regularly examines the Company's loan portfolio and other credit
related products, including unused commitments and letters of credit. In
addition to this internal credit process, the Company's loan portfolio is
subject to examination by external regulators in the normal course of business.
Credit quality will be influenced by underlying trends in the economic and
business cycle. The Company seeks to manage and control its risk through
diversification of the portfolio by type of loan, industry

A-21
<PAGE>
concentration, and type of borrower as well as specific maximum loan-to-value
(LTV) limitations as to various categories of real estate related loans. These
ratios are as follows:

MAXIMUM LTV RATIOS

<TABLE>
<CAPTION>
MAXIMUM
CATEGORY OF REAL ESTATE COLLATERAL LTV RATIOS
- ---------------------------------- ----------
<S> <C>
Industrial.................................................. 80%
Office building............................................. 75
Shopping centers............................................ 80
1-4 family (includes undeveloped land)...................... 80
Condominiums/apartments..................................... 80
Land, nonresidential........................................ 50
Churches/religious.......................................... 75
Equity lines of credit...................................... 80
Other improved property..................................... 70
</TABLE>

The Company's loan policy provides that any term loan on income-producing
properties must have a minimum debt service coverage of at least 1.20 to 1 for
non-owner occupied property and at least 1.05 to 1 for owner occupied.

One of the significant risks associated with real estate lending is the risk
associated with the possible existence of environmental risks or hazards on or
in property affiliated with the loan. The Company mitigates such risks through
the use of an Environmental Risk Questionnaire for all loans secured by real
estate. A Phase I environmental report is required if indicated by the
questionnaire or if for any other reason it is determined appropriate. Other
reasons would include the industrial use of environmentally sensitive substances
or the proximity to other known environmental problems. A Phase II report is
required in certain cases, depending on the outcome of the Phase I report.

At December 31, 1999, 51.4% of commercial loans, 52.2% of real estate loans
and 3.9% of installment loans outstanding were floating interest rate loans.
Floating rate loans comprised 51.2% of the total loan portfolio at December 31,
1999 and 41.9% at December 31, 1998. Total loans at December 31, 1999 consisted
of 42.0% due in one year or less, 12.2% due in one to five years and 45.8% due
after five years.

The loan maturities shown in the table below are based on contractual
maturities. As is customary in the banking industry, loans that meet sound
underwriting criteria can be renewed by mutual agreement between the Company and
the borrower. Because the Company is unable to estimate the extent to which its
borrowers will renew their loans, the table is based on contractual maturities.

A-22
<PAGE>
LOAN MATURITIES

<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------------------------------------
RESIDENTIAL
FIRST REAL ESTATE REAL ESTATE
(DOLLARS IN THOUSANDS) COMMERCIAL MORTGAGE CONSTRUCTION MORTGAGE INSTALLMENT TOTAL
- ---------------------- ----------- ----------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Aggregate maturies of loan balances
due:
In one year or less
Interest rate--floating........... $ 868,412 $ -- $173,499 $ 79,858 $ 65 $1,121,834
Interest rate--fixed.............. 1,073,987 -- 66,466 35,986 7,108 1,183,547
After one year but within five years
Interest rate--floating........... 295,047 5 83,309 48,255 817 427,433
Interest rate--fixed.............. 181,795 2,640 3,256 27,320 29,043 244,054
After five years
Interest rate--floating........... 310,676 363,267 6,304 582,499 1,458 1,264,204
Interest rate--fixed.............. 140,521 807,422 12,036 268,205 21,413 1,249,597
---------- ---------- -------- ---------- ------- ----------
Total loans..................... $2,870,438 $1,173,334 $344,870 $1,042,123 $59,904 $5,490,669
========== ========== ======== ========== ======= ==========
</TABLE>

ASSET QUALITY

ALLOWANCE FOR CREDIT LOSSES

A consequence of lending activities is that losses may be experienced. The
amount of such losses will vary from time to time depending upon the risk
characteristics of the loan portfolio as affected by economic conditions, rising
interest rates, and the financial experience of borrowers. The allowance for
credit losses, which provides for the risk of losses inherent in the credit
extension process, is increased by the provision for credit losses charged to
operating expense and decreased by the amount of charge-offs, net of recoveries.
There is no precise method of predicting specific losses or amounts that
ultimately may be charged off on particular segments of the loan portfolio.

The Company has an internal risk analysis and review staff that ultimately
reports to the Audit Committee of the Board of Directors and continually reviews
loan quality. This analysis includes a detailed review of the classification and
categorization of problem and potential loans and loans to be charged off, an
assessment of the overall quality and collectibility of the portfolio, and
consideration of the loan loss experience, trends in problem loans, and
concentration of credit risk, as well as current economic conditions
particularly in Southern California. Management and the Audit Committee then
evaluate the allowance and determine its desired level. Based on known
information available to it at the date of this report, management believes that
the Company's allowance for credit losses was adequate for foreseeable losses at
December 31, 1999. Examinations of the loan portfolio are also conducted
periodically by the Company's regulators.

Based on expected loan growth, the level of nonperforming loans, anticipated
recoveries in the first half of 2000 of loans previously charged off, and a
relatively constant low level of charge-offs, it is anticipated that the level
of the allowance will remain stable through the first half of 2000 with a
minimal provision for credit losses exclusive of the allowance for credit losses
to be acquired from the acquisition of Pacific Bank. However, credit quality
will be influenced by underlying trends in the economic cycle, particularly in
Southern California, and other factors which are beyond management's control.
Consequently, no assurances can be given that the Company will not sustain loan
losses, in any particular period, that are sizable in relation to the allowance
for credit losses. Additionally, subsequent evaluation of the loan portfolio, in
light of factors then prevailing, by the Company and its regulators may indicate
a requirement for increases in the allowance for credit losses through charges
to the provision for credit losses.

A-23
<PAGE>
The following table summarizes the activity in the allowance for credit
losses for the five years ended December 31, 1999:

ALLOWANCE FOR CREDIT LOSSES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
(DOLLARS IN THOUSANDS) 1999 1998 1997 1996 1995
- ---------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Average amount of loans outstanding................... $4,822,254 $4,213,853 $3,387,784 $2,539,323 $1,758,671
========== ========== ========== ========== ==========
Balance of allowance for credit losses, beginning of
year................................................ $ 135,339 $ 137,761 $ 130,089 $ 131,514 $ 105,343
---------- ---------- ---------- ---------- ----------
Loans charged off:
Commercial.......................................... (18,765) (15,019) (14,651) (14,647) (11,124)
Real estate mortgage................................ (455) (1,382) (4,275) (5,338) (5,869)
Residential first mortgage.......................... (158) (1,128) (474) (253) --
Installment......................................... (150) (107) (112) (104) (48)
---------- ---------- ---------- ---------- ----------
Total loans charged off........................... (19,528) (17,636) (19,512) (20,342) (17,041)
---------- ---------- ---------- ---------- ----------
Recoveries of loans previously charged off:
Commercial.......................................... 13,403 11,556 11,098 13,325 22,045
Real estate mortgage................................ 893 397 8,894 5,313 1,862
Residential first mortgage.......................... 527 503 58 -- --
Installment......................................... 28 11 118 279 228
---------- ---------- ---------- ---------- ----------
Total recoveries.................................. 14,851 12,467 20,168 18,917 24,135
---------- ---------- ---------- ---------- ----------
Net loans (charged off) recovered..................... (4,677) (5,169) 656 (1,425) 7,094
Additions to allowance charged to operating expense... -- -- -- -- --
Acquisitions.......................................... 3,415 2,747 7,016 -- 19,077
---------- ---------- ---------- ---------- ----------
Balance, end of year.................................. $ 134,077 $ 135,339 $ 137,761 $ 130,089 $ 131,514
========== ========== ========== ========== ==========
Ratio of net (charge offs) recoveries to average
loans............................................... (0.10)% (0.12)% 0.02% (0.06)% 0.40%
========== ========== ========== ========== ==========
</TABLE>

Net charge-offs were $4.7 million, or 0.10%, of average loans during 1999,
including $8.2 million in gross charge-offs in the fourth quarter for two
non-relationship syndicated loans which were sold. Net charge-offs were
$5.2 million or 0.12% of average loans during 1998. During 1997, the Company
experienced net recoveries of $0.7 million or 0.02% of average loans.

The allowance for credit losses as a percentage of total loans was 2.44%,
2.99%, and 3.60% at December 31, 1999, 1998, and 1997, respectively. The
allowance for credit losses as a percentage of nonperforming loans was 530.2%,
584.9%, and 499.8% at December 31, 1999, 1998, and 1997, respectively. See
"--Nonaccrual, Past Due, and Restructured Loans".

Based on an evaluation of individual credits, previous loan loss experience,
management's evaluation of the current loan portfolio, and current and expected
economic conditions, management has allocated the allowance for credit losses as
shown for the past five years in the table below.

ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES
<TABLE>
<CAPTION>
ALLOWANCE AMOUNT
----------------------------------------------------
(DOLLARS IN THOUSANDS) 1999 1998 1997 1996 1995
- ---------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Commercial................. $ 78,661 $100,811 $ 91,914 $ 75,754 $ 37,778
Real estate construction... 2,837 1,950 3,357 2,405 4,550
Real estate mortgage....... 33,590 16,508 27,378 37,748 77,730
Residential first
mortgage................. 17,659 15,625 14,750 13,283 10,705
Installment................ 1,330 445 362 899 751
-------- -------- -------- -------- --------
Total...................... $134,077 $135,339 $137,761 $130,089 $131,514
======== ======== ======== ======== ========

<CAPTION>
PERCENT OF LOANS TO TOTAL LOANS
----------------------------------------------------
(DOLLARS IN THOUSANDS) 1999 1998 1997 1996 1995
- ---------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Commercial................. 52% 54% 51% 47% 46%
Real estate construction... 6 5 4 3 3
Real estate mortgage....... 19 17 18 18 24
Residential first
mortgage................. 22 23 26 31 25
Installment................ 1 1 1 1 2
--- --- --- --- ---
Total...................... 100% 100% 100% 100% 100%
=== === === === ===
</TABLE>

A-24
<PAGE>
While the allowance is allocated to portfolios, the allowance is general in
nature and is available for the portfolio in its entirety. Due to real estate
mortgage loan growth, an increased portion of the allowance for credit losses
was allocated to the real estate mortgage loan category from that allocated in
1998. An increase in problem loans in the commercial category and a decrease in
problem loans in the real estate mortgage category during 1998 resulted in an
increased portion of the allowance for credit losses being allocated to the
commercial category from that allocated in 1997.

At December 31, 1999 and December 31, 1998, there was no allowance for
impaired loans. The allowance represents the difference between the value of the
collateral supporting those loans and the outstanding balances of those loans
and is included in the allowance for credit losses. A loan is considered
impaired when it is probable that a creditor will be unable to collect all
amounts due according to the contractual terms of the loan agreement. Once a
loan is determined to be impaired, SFAS No. 114 requires that the impairment be
measured based on the present value of the expected future cash flows discounted
at the loan's effective interest rate, except that as a practical expedient, the
impairment may be measured by using the loan's observable market price or the
fair value of the collateral if the loan is collateral dependent. The Company's
policy is to record cash receipts on impaired loans first as reductions in
principal and then as interest income. At December 31, 1999, there were no loans
identified as being impaired. At December 31, 1998, the Company had
$13.7 million in impaired loans.

NONACCRUAL, PAST DUE, AND RESTRUCTURED LOANS

The following table presents information concerning nonaccrual loans, ORE,
accruing loans which are contractually past due 90 days or more as to interest
or principal payments and still accruing, and restructured loans:

NONACCRUAL, PAST DUE, AND RESTRUCTURED LOANS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
(DOLLARS IN THOUSANDS) 1999 1998 1997 1996 1995
- ---------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans:
Real estate.................................... $10,380 $17,204 $19,243 $25,661 $39,536
Commercial..................................... 13,368 4,763 6,589 15,882 8,316
Installment.................................... 1,540 1,171 1,734 -- 272
------- ------- ------- ------- -------
Total...................................... 25,288 23,138 27,566 41,543 48,124
ORE............................................ 1,413 3,480 2,126 15,116 7,439
------- ------- ------- ------- -------
Total nonaccrual loans and ORE................. $26,701 $26,618 $29,692 $56,659 $55,563
======= ======= ======= ======= =======
Total nonaccrual loans as a percentage of total
loans........................................ 0.46% 0.51% 0.72% 1.46% 2.05%
Total nonaccrual loans and ORE as a percentage
of total loans and ORE....................... 0.49 0.59 0.78 1.98 2.36
Allowance for credit losses to total loans..... 2.44 2.99 3.60 4.58 5.60
Allowance for credit losses to nonaccrual
loans........................................ 530.20 584.92 499.75 313.14 273.28
Loans past due 90 days or more on accrual
status:
Real estate.................................. $ 736 $ 949 $13,370 $ 4,076 $ 3,816
Commercial................................... 2,794 7,661 9,226 8,076 2,623
Installment.................................. 503 13 3,596 292 58
------- ------- ------- ------- -------
Total...................................... $ 4,033 $ 8,623 $26,192 $12,444 $ 6,497
======= ======= ======= ======= =======
Restructured loans:
On accrual status............................ $ 2,707 $ 1,982 $ 2,813 $ 2,569 $ 5,483
On nonaccrual status......................... 368 1,682 1,286 -- 1,707
------- ------- ------- ------- -------
Total...................................... $ 3,075 $ 3,664 $ 4,099 $ 2,569 $ 7,190
======= ======= ======= ======= =======
</TABLE>

A-25
<PAGE>
Bank policy requires that a loan be placed on nonaccrual status if either
principal or interest payments are ninety days past due, unless the loan is both
well secured and in process of collection, or if full collection of interest or
principal becomes uncertain, regardless of the time period involved.

At December 31, 1999, in addition to loans disclosed above as past due,
nonaccrual or restructured, management also identified $8.8 million of loans
about which the ability of the borrowers to comply with the present loan payment
terms in the future is questionable. However, the inability of the borrowers to
comply with repayment terms was not sufficiently probable to place the loan on
nonaccrual status. This amount was determined based on analysis of information
known to management about the borrower's financial condition and current
economic conditions. If economic conditions change, adversely or otherwise, or
if additional facts on the borrowers' financial condition come to light, then
the amount of potential problem loans may change, possibly significantly.
Estimated potential losses from these potential problem loans have been provided
for in determining the allowance for credit losses.

The table below summarizes the approximate changes in nonaccrual loans for
the years ended December 31, 1999 and 1998.

CHANGES IN NONACCRUAL LOANS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
(DOLLARS IN THOUSANDS) 1999 1998
- ---------------------- --------- ---------
<S> <C> <C>
Balance, beginning of the year......................... $ 23,138 27,566
Loans placed on nonaccrual............................. 29,624 31,430
Acquisitions........................................... 647 3,055
Charge offs............................................ (7,953) (10,711)
Loans returned to accrual status....................... (1,762) (409)
Repayments (including interest applied to principal)... (18,354) (27,762)
Transfers to ORE....................................... (52) (31)
-------- --------
Balance, end of year................................... $ 25,288 $ 23,138
======== ========
</TABLE>

The additional interest income that would/(would not) have been recorded
from nonaccrual loans, if the loans had not been on nonaccrual status was
$0.1 million, $2.0 million, and $(0.1) million for the years ended December 31,
1999, 1998, and 1997, respectively. Interest payments received on nonaccrual
loans are applied to principal unless there is no doubt as to ultimate full
repayment of principal, in which case, the interest payment is recognized as
interest income. Interest income includes $3.6 million, $2.0 million, and
$5.5 million for the years ended December 31, 1999, 1998, and 1997,
respectively, from collection of interest related to nonaccrual loans. Interest
income not recognized on nonaccrual loans reduced the net interest margin by 0,
4, and 0 basis points for the years ended December 31, 1999, 1998, and 1997,
respectively.

OTHER REAL ESTATE

The Company's ORE totaled $1.4 million at year end 1999 compared to
$3.5 million a year ago. The Company's policy is to record these properties at
estimated fair value, net of selling expenses, at the time they are transferred
into ORE, thereby tying future gains or losses from sale or potential additional
write-downs to underlying changes in the market.

COMMITMENTS AND LINES OF CREDIT

In the normal course of business, the Company is a party to financial
instruments with off-balance sheet risk. These financial instruments include
commitments to extend credit, letters of credit, and financial guarantees. These
instruments involve, to varying degrees, elements of credit and interest rate

A-26
<PAGE>
risk in excess of the amount reflected in the consolidated balance sheet.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since a portion of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's
creditworthiness on a case-by-case basis.

The Company had outstanding loan commitments aggregating $2,294.0 million at
December 31, 1999. In addition, the Company had $168.3 million outstanding in
bankers' acceptances and letters of credit of which $141.2 million relate to
standby letters of credit at December 31, 1999. Substantially all of the
Company's loan commitments are on a variable rate basis and are comprised of
real estate and commercial loan commitments.

DEPOSITS AND BORROWED FUNDS

Core deposits provide a stable source of low cost funding. Average core
deposits were $3,881.1 million in 1999 compared to $3,506.6 million in 1998. The
increase was due primarily to internally generated growth and the acquisition of
APSB.

Short and long-term borrowed funds provided additional funding to support
loan growth. Average borrowed funds were $1,051.2 million in 1999 compared with
$763.1 million in 1998.

A maturity distribution of certificates of deposits in denominations of
$100,000 or more at year-end follows:

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS) 1999 1998
- ---------------------- ---------- --------
<S> <C> <C>
Under 3 months........................................ $ 784,689 $485,244
4 to 12 months........................................ 364,628 125,623
1 to 5 years.......................................... 19,263 87,573
Over 5 years.......................................... 114 55,275
---------- --------
Total................................................. $1,168,694 $753,715
========== ========
</TABLE>

At December 31, 1999 and 1998, the aggregate amount of deposits by foreign
depositors in domestic offices totaled $42.4 million and $36.4 million,
respectively, the majority of which was interest bearing. The Bank had brokered
deposits of $248.8 million and $90.0 million, at December 31, 1999 and 1998,
respectively.

Details regarding federal funds purchased and securities sold under
repurchase agreements as well as other short-term borrowings follows.

<TABLE>
<CAPTION>
1999 1998 1997
-------------------------------- -------------------------------- --------------------------------
BALANCE AT AVERAGE AVERAGE BALANCE AT AVERAGE AVERAGE BALANCE AT AVERAGE AVERAGE
(DOLLARS IN THOUSANDS) YEAR-END BALANCE RATE YEAR-END BALANCE RATE YEAR-END BALANCE RATE
- ---------------------- ---------- -------- -------- ---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal funds
purchased and
securities sold
under repurchase
agreements......... $95,487 $232,350 4.74% $276,311 $209,982 5.15% $206,427 $222,617 5.27%
Other short-term
borrowings......... 496,724 472,341 5.26% 317,001 280,188 5.57% 212,575 315,886 5.21%
</TABLE>

A-27
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

We have made forward-looking statements in this document that are subject to
risks and uncertainties. These statements are based on the beliefs and
assumptions of our management, and on information currently available to our
management. Forward-looking statements include the information concerning our
possible or assumed future results of operations, and statements preceded by,
followed by, or that include the words "will," believes," "expects,"
"anticipates," "intends," "plans," "estimates," or similar expressions.

Our management believes these forward-looking statements are reasonable;
however, you should not place undue reliance on the forward-looking statements,
which are based on current expectations. Actual results may differ materially
from those currently expected or anticipated.

Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties, and assumptions. Our future results and shareholder values
may differ materially from those expressed in these forward-looking statements.
Many of the factors described below that will determine these results and values
are beyond our ability to control or predict. For those statements, we claim the
protection of the safe harbor contained in the Private Securities Litigation
Reform Act of 1995.

AN ECONOMIC SLOWDOWN IN CALIFORNIA COULD HURT OUR BUSINESS. Prior to the
merger with Pacific Bank, we have focused our business in Los Angeles, Orange,
Ventura, San Diego, San Bernardino, and Riverside counties of Southern
California. After the merger, our operations include San Francisco and San Mateo
counties. An economic slowdown in California could have the following
consequences, any of which could hurt our business:

- Loan delinquencies may increase;

- Problem assets and foreclosures may increase;

- Demand for our products and services may decline; and

- Collateral for loans made by us, especially real estate, may decline in
value, in turn reducing customers' borrowing power, and reducing the value
of assets and collateral associated with our existing loans.

CHANGES IN INTEREST RATES AFFECT OUR PROFITABILITY. Changes in prevailing
rates may hurt our business. We derive our income mainly from the difference or
"spread" between the interest earned on loans, securities, and other
interest-earning assets, and interest paid on deposits, borrowings, and other
interest-bearing liabilities. In general, the wider the spread, the more we
earn. When market rates of interest change, the interest we receive on our
assets and the interest we pay on our liabilities will fluctuate. This can cause
decreases in our spread and can affect our income. In addition, interest rates
affect how much money we can lend. For example, when interest rates rise, loan
originations tend to decrease. We expect interest rates to rise in 2000.

SIGNIFICANT CHANGES IN BANKING LAWS OR REGULATIONS COULD MATERIALLY AFFECT
OUR BUSINESS. The banking industry is subject to extensive federal and state
regulations, and significant new laws or changes in, or repeals of, existing
laws may cause results to differ materially. Further, federal monetary policy,
particularly as implemented through the Federal Reserve System, significantly
affects our credit conditions, primarily through open market operations in U.S.
government securities, the discount rate for member bank borrowing, and bank
reserve requirements. A material change in these conditions would have an impact
on results.

A-28
<PAGE>
WE FACE STRONG COMPETITION FROM FINANCIAL SERVICE COMPANIES AND OTHER
COMPANIES THAT OFFER BANKING SERVICES WHICH CAN HURT OUR BUSINESS. Increased
competition in our market may result in reduced loans and deposits. Ultimately,
we may not be able to compete successfully against current and future
competitors. Many competitors offer the banking services that we offer in our
service area. These competitors include national, regional, and community banks.
We also face competition from many other types of financial institutions,
including, without limitation, savings and loans, finance companies, brokerage
firms, insurance companies, credit unions, mortgage banks, and other financial
intermediaries. Recently passed legislation will make it easier for other types
of financial institutions to compete with us.

OUR RESULTS WOULD BE ADVERSELY AFFECTED IF WE SUFFERED HIGHER THAN EXPECTED
LOSSES ON OUR LOANS. We assume risk from the possibility that losses will be
sustained because borrowers, guarantors, and related parties may fail to perform
in accordance with the terms of their loans. We have adopted underwriting and
credit policies, including establishing and reviewing the allowance for credit
losses, that we believe are appropriate to minimize this risk. We assess the
likelihood of nonperformance, track loan performance, and diversify our credit
portfolio. Those policies and procedures may not prevent unexpected losses that
could adversely affect our results.

QUARTERLY RESULTS

The following table summarizes quarterly operating results for 1999 and
1998.

1999 QUARTERLY OPERATING RESULTS

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------
(DOLLARS IN THOUSANDS) MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL
- ---------------------- --------- -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Interest income.................................... $111,492 $110,370 $119,149 $129,435 $470,446
Interest expense................................... 33,812 34,258 37,847 42,524 148,441
-------- -------- -------- -------- --------
Net interest income................................ 77,680 76,112 81,302 86,911 322,005
Provision for credit losses........................ -- -- -- -- --
Noninterest income................................. 19,145 21,687 23,165 23,215 87,212
Noninterest expense................................ 55,901 57,834 61,369 66,699 241,803
-------- -------- -------- -------- --------
Income before taxes................................ 40,924 39,965 43,098 43,427 167,414
Income taxes....................................... 14,923 13,859 15,015 15,510 59,307
-------- -------- -------- -------- --------
Net income......................................... $ 26,001 $ 26,106 $ 28,083 $ 27,917 $108,107
======== ======== ======== ======== ========
Net income per share, basic (1).................... $ 0.57 $ 0.57 $ 0.61 $ 0.61 $ 2.37
======== ======== ======== ======== ========
Net income per share, diluted...................... $ 0.55 $ 0.55 $ 0.60 $ 0.60 $ 2.30
======== ======== ======== ======== ========
</TABLE>

- ------------------------------

(1) Due to rounding quarterly per share amounts do not add up to total.

1998 QUARTERLY OPERATING RESULTS

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------
(DOLLARS IN THOUSANDS) MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL
- ---------------------- --------- -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Interest income.................................... $103,448 $103,359 $107,510 $109,632 $423,949
Interest expense................................... 30,624 31,087 33,829 34,738 130,278
-------- -------- -------- -------- --------
Net interest income................................ 72,824 72,272 73,681 74,894 293,671
Provision for credit losses........................ -- -- -- -- --
Noninterest income................................. 16,365 17,346 16,798 17,175 67,684
Noninterest expense................................ 54,366 52,973 50,859 53,133 211,331
-------- -------- -------- -------- --------
Income before taxes................................ 34,823 36,645 39,620 38,936 150,024
Income taxes....................................... 12,354 13,009 14,231 14,202 53,796
-------- -------- -------- -------- --------
Net income......................................... $ 22,469 $ 23,636 $ 25,389 $ 24,734 $ 96,228
======== ======== ======== ======== ========
Net income per share, basic........................ $ 0.48 $ 0.51 $ 0.55 $ 0.54 $ 2.08
======== ======== ======== ======== ========
Net income per share, diluted...................... $ 0.46 $ 0.49 $ 0.53 $ 0.52 $ 2.00
======== ======== ======== ======== ========
</TABLE>

A-29
<PAGE>
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

Management is responsible for the preparation of the Company's consolidated
financial statements and related information appearing in this annual report.
Management believes that the consolidated financial statements fairly reflect
the form and substance of transactions, and that the consolidated financial
statements reasonably present the Company's financial position and results of
operations in conformity with generally accepted accounting principles.
Management also has included in the Company's consolidated financial statements
amounts that are based on estimates and judgments that it believes are
reasonable under the circumstances.

The independent auditors audit the Company's consolidated financial
statements in accordance with generally accepted auditing standards and provide
an objective, independent review of the fairness of reported operating results
and financial position.

The Board of Directors of the Corporation has an Audit Committee composed
solely of three non-management directors. The Committee meets periodically with
financial management, the internal auditors and the independent auditors to
review accounting control, auditing and financial matters.

/s/ RUSSELL GOLDSMITH
------------------------------------------------------------
Russell Goldsmith
Chief Executive Officer

/s/ BRAM GOLDSMITH
------------------------------------------------------------
Bram Goldsmith
Chairman of the Board

/s/ FRANK P. PEKNY
------------------------------------------------------------
Frank P. Pekny
Executive Vice President and
Chief Financial Officer

A-30
<PAGE>
INDEPENDENT AUDITORS' REPORT

To Board of Directors and Shareholders of

City National Corporation:

We have audited the accompanying consolidated balance sheet of City National
Corporation and subsidiaries as of December 31, 1999 and 1998 and the related
consolidated statements of income and comprehensive income, changes in
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of City
National Corporation and subsidiaries as of December 31, 1999 and 1998 and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999 in conformity with generally accepted
accounting principles.

KPMG LLP

Los Angeles, California
January 13, 2000, except as to note 15
of notes to the consolidated financial
statements, which is as of February 29, 2000.

A-31
<PAGE>
CITY NATIONAL CORPORATION

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS) 1999 1998
- -------------------------------------------- ---------- ----------
<S> <C> <C>
ASSETS
Cash and due from banks................................. $ 233,178 $ 285,843
Federal funds sold...................................... 57,000 405,000
Securities available-for-sale (cost $1,149,013 and
$990,152
in 1999 and 1998)..................................... 1,102,092 1,012,526
Trading account securities.............................. 27,714 35,015
Loans................................................... 5,490,669 4,530,427
Less allowance for credit losses........................ 134,077 135,339
---------- ----------
Net loans............................................. 5,356,592 4,395,088
Premises and equipment, net............................. 62,446 55,766
Customers' acceptance liability......................... 6,784 1,759
Deferred tax asset...................................... 75,841 45,738
Goodwill and core deposit intangibles................... 127,255 73,706
Bank owned life insurance............................... 49,981 42,545
Affordable housing investments.......................... 47,934 13,262
Other assets............................................ 66,802 61,533
---------- ----------
Total assets.......................................... $7,213,619 $6,427,781
========== ==========
LIABILITIES
Demand deposits......................................... $2,448,916 $2,382,724
Interest checking deposits.............................. 472,996 452,249
Money market deposits................................... 1,103,907 927,651
Savings deposits........................................ 221,002 183,353
Time deposits-under $100,000............................ 253,894 187,710
Time deposits-$100,000 and over......................... 1,168,694 753,715
---------- ----------
Total deposits........................................ 5,669,409 4,887,402
Federal funds purchased and securities sold under
repurchase agreements................................. 95,487 276,311
Other short-term borrowings............................. 496,724 317,001
Subordinated debt....................................... 123,453 123,265
Long-term debt.......................................... 180,000 200,000
Other liabilities....................................... 70,116 60,240
Acceptances outstanding................................. 6,784 1,759
---------- ----------
Total liabilities..................................... 6,641,973 5,865,978
---------- ----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred Stock authorized--5,000,000 : none
outstanding........................................... -- --
Common Stock, par value, $1.00; authorized--75,000,000;
issued--46,885,182.................................... 46,885 46,885
Additional paid-in capital.............................. 276,464 287,363
Accumulated other comprehensive income (loss)........... (27,193) 12,901
Retained earnings....................................... 321,210 243,275
Treasury shares, at cost--1,428,439 shares in 1999 and
877,945 shares in 1998................................ (45,720) (28,621)
---------- ----------
Total shareholders' equity............................ 571,646 561,803
---------- ----------
Total liabilities and shareholders' equity............ $7,213,619 $6,427,781
========== ==========
</TABLE>

See accompanying Notes to the Consolidated Financial Statements.

A-32
<PAGE>
CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1999 1998 1997
- ---------------------------------------- -------- -------- --------
<S> <C> <C> <C>
INTEREST INCOME
Loans..................................................... $399,891 $365,352 $304,057
Federal funds sold and securities purchased under resale
agreements.............................................. 2,381 3,458 1,301
Investments securities.................................... -- 11,318 12,534
Securities available-for-sale............................. 65,209 40,956 37,539
Trading account........................................... 2,965 2,865 2,565
-------- -------- --------
Total interest income................................... 470,446 423,949 357,996
-------- -------- --------
INTEREST EXPENSE
Deposits.................................................. 93,214 87,237 73,289
Federal funds purchased and securities sold under
repurchase agreements................................... 25,954 21,824 11,731
Other short-term borrowings............................... 9,896 4,591 16,470
Subordinated debt......................................... 7,417 7,912 --
Other long-term debt...................................... 11,960 8,714 2,838
-------- -------- --------
Total interest expense.................................. 148,441 130,278 104,328
-------- -------- --------
Net interest income....................................... 322,005 293,671 253,668
PROVISION FOR CREDIT LOSSES................................. -- -- --
-------- -------- --------
Net interest income after provision for credit losses..... 322,005 293,671 253,668
-------- -------- --------
NONINTEREST INCOME
Service charges on deposit accounts....................... 18,113 17,386 14,321
Investment services....................................... 19,763 16,330 13,221
Trust fees................................................ 18,059 9,376 8,304
International services.................................... 9,950 8,106 7,271
Bank owned life insurance................................. 2,268 2,146 --
Gain on sale of assets.................................... 2,117 1,823 1,604
Gain (loss) on sale of securities......................... 3,696 3,072 (1,048)
Other..................................................... 13,246 9,445 9,745
-------- -------- --------
Total noninterest income.................................. 87,212 67,684 53,418
-------- -------- --------
NONINTEREST EXPENSE
Salaries and other employee benefits...................... 133,935 114,965 97,634
Professional.............................................. 20,811 23,445 17,899
Net occupancy of premises................................. 18,955 14,189 12,138
Data processing........................................... 12,267 8,805 12,662
Promotion................................................. 10,444 10,313 7,972
Depreciation.............................................. 11,242 8,816 6,144
Office services........................................... 8,212 7,308 7,286
Equipment................................................. 2,213 2,250 2,460
Amortization of goodwill and core deposit intangibles..... 9,309 6,854 5,619
Acquisition integration................................... 1,161 1,126 1,718
Other operating........................................... 13,254 13,260 10,225
-------- -------- --------
Total noninterest expense............................... 241,803 211,331 181,757
-------- -------- --------
Income before income taxes................................ 167,414 150,024 125,329
Income taxes.............................................. 59,307 53,796 45,196
-------- -------- --------
Net income................................................ 108,107 96,228 80,133
-------- -------- --------
Other comprehensive income
Unrealized gains (losses) on securities
available-for-sale..................................... (66,042) 16,270 11,991
Less: reclassification adjustment for (gains) losses
included in income..................................... (3,252) (3,173) 1,004
Income taxes (benefits)................................. (29,200) 5,545 5,497
-------- -------- --------
Other comprehensive income (loss)......................... (40,094) 7,552 7,498
-------- -------- --------
Comprehensive income...................................... $ 68,013 $103,780 $ 87,631
======== ======== ========
Net income per share, basic............................... $ 2.37 $ 2.08 $ 1.74
======== ======== ========
Net income per share, diluted............................. $ 2.30 $ 2.00 $ 1.68
======== ======== ========
Shares used to compute income per share, basic............ 45,683 46,357 46,018
======== ======== ========
Shares used to compute income per share, diluted.......... 46,938 48,141 47,809
======== ======== ========
Dividends per share....................................... $ 0.66 $ 0.56 $ 0.44
======== ======== ========
</TABLE>

See accompanying Notes to the Consolidated Financial Statements.

A-33
<PAGE>
CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
(DOLLARS IN THOUSANDS) 1999 1998 1997
- ---------------------- -------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................. $108,107 $ 96,228 $ 80,133
Adjustments to net income:
Gain on sales of ORE...................................... (399) (475) (3,730)
Depreciation.............................................. 11,242 8,816 6,144
Amortization of goodwill and core deposit intangibles..... 9,309 6,854 5,619
Net decrease (increase) in trading securities............. 7,301 (4,212) 1,850
Deferred income tax (benefit)............................. (2,199) 11,856 4,288
(Gain) loss on sale of securities......................... (3,696) (3,072) 1,048
Net increase in other (assets) liabilities................ (35,599) 14,954 16,446
Other, net................................................ 17,751 3,574 (18,571)
-------- --------- ---------
Net cash provided by operating activites................ 111,817 134,523 93,227
-------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities...................................... (407,722) (541,826) (368,539)
Sales of securities available-for-sale...................... 231,570 246,052 340,762
Maturities of securities.................................... 96,397 139,174 74,082
Purchase of residential mortgage loans...................... (83,371) (40,646) (74,681)
Sale of residential mortgage loans.......................... 41,357 -- 47,513
Loan originations net of principal collections.............. (682,061) (534,023) (634,616)
Proceeds from sales of ORE.................................. 2,596 2,204 26,473
Purchase of premises and equipment.......................... (17,818) (18,034) (17,695)
Net cash from acquisitions.................................. 18,905 32,419 42,876
Bank owned life insurance premium paid...................... (11) (40,399) --
Other, net.................................................. 603 658 12,633
-------- --------- ---------
Net cash used by investing activities..................... (799,555) (754,421) (551,192)
-------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in federal funds purchased
and securities sold under repurchase agreements........... (180,824) 69,884 11,878
Net increase in deposits.................................... 366,329 453,454 390,646
Net increase in short-term borrowings, net of
transfers from long-term debt............................. 79,738 54,426 54,133
Proceeds from issuance of other long-term debt.............. 80,000 200,000 50,000
Repayment of long-term debt................................. -- -- (25,000)
Net proceeds of subordinated debt........................... -- 124,081 --
Proceeds from exercise of stock options..................... 8,193 12,321 11,367
Stock repurchases........................................... (39,001) (59,768) (22,503)
Cash dividends paid......................................... (30,172) (26,042) (20,310)
Other, net.................................................. 2,810 4,987 2,906
-------- --------- ---------
Net cash provided by financing activities................. 287,073 833,343 453,117
-------- --------- ---------
Net (decrease) increase in cash and cash equivalents........ (400,665) 213,445 (4,848)
Cash and cash equivalents at beginning of year.............. 690,843 477,398 482,246
-------- --------- ---------
Cash and cash equivalents at end of year.................... $290,178 $ 690,843 $ 477,398
======== ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest................................................ $142,478 $ 122,739 $ 103,392
Income taxes............................................ 54,400 37,950 38,502
Non-cash investing activities:
Transfer from loans to foreclosed assets................ 1,331 4,010 11,885
Transfer from investment securities to securities
available-for-sale.................................... -- 182,557 --
Transfer from long-term debt to short-term borrowing.... 100,000 50,000 --
</TABLE>

See accompanying Notes to the Consolidated Financial Statements.

A-34
<PAGE>
CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER TOTAL
SHARES COMMON PAID-IN COMPREHENSIVE RETAINED TREASURY SHAREHOLDERS'
(DOLLARS IN THOUSANDS) ISSUED STOCK CAPITAL INCOME (LOSS) EARNINGS STOCK EQUITY
- ---------------------- ---------- -------- ---------- ------------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31,
1996...................... 46,302,782 $46,303 $275,610 $ (2,149) $113,266 $(32,283) $400,747
Net income.................. -- -- -- -- 80,133 -- 80,133
Issuance of shares for stock
options................... 398,109 398 949 -- -- 10,020 11,367
Tax benefit from stock
options................... -- -- 2,908 -- -- -- 2,908
Cash dividends.............. -- -- -- -- (20,310) -- (20,310)
Other comprehensive income
net of tax................ -- -- -- 7,498 -- -- 7,498
Repurchased shares, net..... -- -- -- -- -- (22,503) (22,503)
Issuance of shares for
acquisitions.............. -- -- 18,187 -- -- 30,643 48,830
---------- ------- -------- -------- -------- -------- --------
Balances, December 31,
1997...................... 46,700,891 46,701 297,654 5,349 173,089 (14,123) 508,670
Net income.................. -- -- -- -- 96,228 -- 96,228
Issuance of shares for stock
options................... 53,342 53 (22,185) -- -- 34,453 12,321
Tax benefit from stock
options................... -- -- 4,987 -- -- -- 4,987
Cash dividends.............. -- -- -- -- (26,042) -- (26,042)
Other comprehensive income
net of tax................ -- -- -- 7,552 -- -- 7,552
Repurchased shares, net..... -- -- -- -- -- (59,768) (59,768)
Issuance of shares for
acquisitions.............. 130,949 131 6,907 -- -- 10,817 17,855
---------- ------- -------- -------- -------- -------- --------
Balances, December 31,
1998...................... 46,885,182 46,885 287,363 12,901 243,275 (28,621) 561,803
Net income.................. -- -- -- -- 108,107 -- 108,107
Issuance of shares for stock
options................... -- -- (13,709) -- -- 21,902 8,193
Tax benefit from stock
options................... -- -- 2,810 -- -- -- 2,810
Cash dividends.............. -- -- -- -- (30,172) -- (30,172)
Other comprehensive income
net of tax................ -- -- -- (40,094) -- -- (40,094)
Repurchased shares, net..... -- -- -- -- -- (39,001) (39,001)
---------- ------- -------- -------- -------- -------- --------
Balances, December 31,
1999...................... 46,885,182 $46,885 $276,464 $(27,193) $321,210 $(45,720) $571,646
========== ======= ======== ======== ======== ======== ========
</TABLE>

See accompanying Notes to the Consolidated Financial Statements.

A-35
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of City National Corporation (the
Corporation) and of City National Bank (the Bank) and their subsidiaries conform
to generally accepted accounting principles and to prevailing practices within
the banking industry. The preparation of these consolidated financial statements
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reported periods. Actual
results could differ from those estimates.

City National Corporation and subsidiaries (the Company), through its
primary subsidiary, the Bank, provide private and business banking, including
investment and trust services, primarily in the Southern California market. The
Bank's principal customer base comprises small- to middle-market companies with
annual sales revenue of up to $250 million, entrepreneurs, professionals, and
affluent individuals. The Bank typically serves customers seeking relationship
banking, which it seeks to provide through a high level of personal service,
tailored products, and private banking teams. The Bank offers a broad range of
loans, deposit, cash management, international banking, and other products and
services. The Bank lends, invests, and provides services in accordance with its
Community Reinvestment Act commitment. Through City National Investments, the
Bank offers personal and employee benefit trust and estate services, including
401(k) and defined benefit plans, manages investments for customers, and engages
in securities sales and trading. The Bank also manages and offers mutual funds
under the name of CNI Charter Funds.

BASIS OF PRESENTATION

The consolidated financial statements of the Company include the accounts of
the Corporation, its non-bank subsidiary, the Bank, and the Bank's wholly owned
subsidiaries after elimination of all material inter-company transactions.
Certain prior years' data have been reclassified to conform to current year
presentation.

The Company is on the accrual basis of accounting for income and expenses.
In accordance with the usual practice of banks, assets and liabilities of
individual trust, agency and fiduciary funds have not been included in the
financial statements.

SECURITIES

All securities other than trading securities are classified as
available-for-sale valued at fair value. Trading securities are valued at market
value with any unrealized gains or losses included in income. Unrealized gains
or losses on securities available-for-sale are excluded from net income but are
included in comprehensive income net of taxes. Premiums or discounts on
securities available-for-sale are amortized or accreted into income using the
interest method. Realized gains or losses on sales of securities
available-for-sale are recorded using the specific identification method.
Investment services income consists of fees, commissions and markups on
securities transactions with customers and money market mutual fund fees.

LOANS

Loans are generally carried at principal amounts less net deferred loan
fees. Net deferred loan fees include deferred unamortized fees less direct
incremental loan origination costs. Interest income is accrued as earned. Net
deferred fees are accreted into interest income using the interest method.

A-36
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Loans are placed on nonaccrual status when a loan becomes 90 days past due
as to interest or principal unless the loan is both well secured and in process
of collection. Loans are also placed on nonaccrual status when the full
collection of interest or principal becomes uncertain. When a loan is placed on
nonaccrual status, the accrued and unpaid interest receivable is reversed and
the accretion of deferred loan fees is ceased. Thereafter, interest collected on
the loan is accounted for on the cash collection or cost recovery method until
qualifying for return to accrual status. Generally, a loan may be returned to
accrual status when all delinquent principal and interest are brought current in
accordance with the terms of the loan agreement and certain performance criteria
have been met.

The Company considers a loan to be impaired when it is probable that it will
be unable to collect all amounts due according to the contractual terms of the
loan agreement. Once a loan is determined to be impaired, the impairment is
measured based on the present value of the expected future cash flows discounted
at the loan's effective interest rate, except that as a practical expedient, the
impairment is measured by using the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent.

When the measurement of the impaired loan is less than the recorded amount
of the loan, an impairment is recognized by creating a valuation allowance with
a corresponding charge to the allowance for credit losses or by adjusting an
existing valuation allowance for the impaired loan with a corresponding charge
or credit to the allowance for credit losses.

The Company's policy is to record cash receipts received on impaired loans
first as reductions to principal and then to interest income.

ALLOWANCE FOR CREDIT LOSSES

The provision for credit losses charged to operations reflects management's
judgment of the adequacy of the allowance for credit losses and is determined
through quarterly analytical reviews of the loan portfolio, problem loans and
consideration of such other factors as the Company's loan loss experience,
trends in problem loans, concentrations of credit risk, and current economic
conditions, as well as the results of the Company's ongoing credit examination
process and that of its regulators.

PREMISES AND EQUIPMENT

Bank premises and equipment are stated at cost less accumulated depreciation
and amortization. Depreciation is computed generally on a straight-line basis
over the estimated useful life of each type of asset. Gains and losses on
dispositions are reflected in current operations. Maintenance and repairs are
charged to operating expenses.

OTHER REAL ESTATE (ORE)

Other real estate is comprised of real estate acquired in satisfaction of
loans. Properties acquired by foreclosure or deed in lieu of foreclosure are
transferred to ORE and are recorded at fair value less estimated costs to sell,
at the date of transfer of the property. The fair value of the ORE property is
based upon a current appraisal. Losses that result from the ongoing periodic
valuation of these properties are charged against ORE expense in the period in
which they are identified. Expenses for holding costs are charged to operations
as incurred.

A-37
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES

The Company files a consolidated federal income tax return and a combined
state income tax return. Deferred tax assets and liabilities are recognized for
the expected future tax consequences of existing differences between financial
reporting and tax reporting basis of assets and liabilities, as well as for
operating losses and tax credit carry forwards, using enacted tax laws and
rates. Deferred tax assets will be reduced through a valuation allowance
whenever it becomes more likely than not that all, or some portion, will be
realized. Deferred income taxes (benefit) represents the net change in the
deferred tax asset or liability balance during the year. This amount, together
with income taxes currently payable or refundable in the current year,
represents the total income taxes (benefit) for the year.

NET INCOME PER SHARE

Basic earnings per share is based on the weighted average shares of common
stock, which were calculated as 45,683,000, 46,357,000 and 46,018,000 for 1999,
1998 and 1997, respectively. Diluted earnings per share gives effect to all
dilutive potential common shares that were outstanding during part or all of the
year and were calculated as 46,938,000, 48,141,000 and 47,809,000, respectively.

GOODWILL AND CORE DEPOSIT INTANGIBLES

Goodwill represents the excess of the purchase price over the estimated fair
value of net assets associated with acquisition transactions of the Company
accounted for as purchases and is amortized over fifteen years. Core deposit
intangibles represent the intangible value of depositor relationships resulting
from deposit liabilities assumed in acquisitions and are amortized over seven
years. Goodwill and core deposit intangibles are evaluated periodically for
other than temporary impairment. Should such an assessment indicate that the
undiscounted value of an intangible may be impaired, the net book value of the
intangible would be written down to net estimated recoverable value. The
carrying value of goodwill and core deposit intangibles is net of accumulated
amortization of $20.0 million and $11.2 million at December 31, 1999 and
December 31, 1998, respectively.

INTEREST RATE RISK MANAGEMENT ACTIVITIES

For those interest rate instruments that alter the repricing characteristics
of assets or liabilities, the net differential to be paid or received on the
instrument is treated as an adjustment to the yield on the underlying assets or
liabilities (the accrual method). To qualify for the accrual method, the
interest rate instrument must be designated to specific assets or liabilities or
pools of assets or liabilities, and must be effective at altering the interest
rate characteristics of the related assets or liabilities.

STOCK OPTION PLANS

Compensation expense is recorded on the date of grant only if the current
market price of the underlying stock exceeded the exercise price. As a practice,
the exercise price equals the current market price and there is no compensation
expense. Pro forma net income and pro forma net income per share disclosures for
employee stock option grants are based on recognition as expense, over the
vesting period, of the fair value on the date of grant of all stock-based awards
made in 1995 and subsequent years.

A-38
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). This Statement establishes
accounting and reporting standards for derivative instruments and for hedging
activities. This Statement is effective for fiscal years beginning after
June 15, 1999. In June 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date of
FASB Statement No.133" (SFAS 137), which extended the effective date to fiscal
years beginning after June 15, 2000. The Company uses interest rate swaps to
manage interest rate exposure, which are accounted for as hedging activities.
Management does not believe that the implementation will have a significant
impact on the Company's financial position, net income or net comprehensive
income.

NOTE 2. ACQUISITIONS

On August 27, 1999, the Company completed its acquisition of American
Pacific State Bank (APSB). The total price was $90.4 million in an all cash
transaction. This acquisition was accounted for under the purchase method of
accounting and resulted in the recording of goodwill and core deposit
intangibles of $62.8 million. Included in goodwill as purchase price adjustments
were $1.2 million of accrued severance costs of which $0.8 million remains
unpaid, $0.5 million of paid transaction-related expenses and $1.5 million of
exit costs of which $0.2 million remain unpaid as of December 31, 1999. The
results of APSB's operations are included in those reported by the Company
beginning on August 28, 1999

On December 31, 1998, the Company completed its acquisition of North
American Trust Company, an independent trust company, for $11.5 million in an
all cash transaction. The acquisition of North American Trust Company resulted
in the recording of intangibles of approximately $11.3 million under the
purchase method of accounting including $1.0 million of severance, excess space
and other purchase price costs of which $0.2 million were paid in 1998. Payments
were made in the first half of 1999 of $0.3 million and the remaining payments
of $0.5 million relating to excess space are to be made over the remaining
6.5 years of a lease.

A-39
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. SECURITIES AVAILABLE-FOR-SALE

The following is a summary of amortized cost and estimated fair value for
the major categories of securities available-for-sale:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
(DOLLARS IN THOUSANDS) COST GAINS LOSSES FAIR VALUE
- ---------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1999
U.S. Government and federal agency............. $ 291,407 $ 60 $ 4,921 $ 286,546
Mortgage-backed................................ 368,948 66 17,763 351,251
State and Municipal............................ 155,736 278 3,770 152,244
Other debt securities.......................... 166,772 -- 15,859 150,913
---------- ------- ------- ----------
Total debt securities........................ 982,863 404 42,313 940,954
Marketable equity securities................... 166,150 2,617 7,629 161,138
---------- ------- ------- ----------
Total securities............................. $1,149,013 $ 3,021 $49,942 $1,102,092
========== ======= ======= ==========
December 31, 1998
U.S. Government and federal agency............. $ 268,838 $ 6,323 $ 16 $ 275,145
Mortgage-backed................................ 348,826 3,043 400 351,469
State and Municipal............................ 121,743 2,180 78 123,845
Other debt securities.......................... 145,852 6,943 103 152,692
---------- ------- ------- ----------
Total debt securities.......................... 885,259 18,489 597 903,151
Marketable equity securities..................... 104,893 5,457 975 109,375
---------- ------- ------- ----------
Total securities............................... $ 990,152 $23,946 $ 1,572 $1,012,526
========== ======= ======= ==========
</TABLE>

Gross realized gains and losses related to the available-for-sale portfolios
were $7,965,000 and $4,269,000, respectively, for the year ended December 31,
1999, $5,299,000 and $2,227,000, respectively, for the year ended December 31,
1998 and $638,000 and $1,686,000, respectively, for the year ended December 31,
1997.

The following table provides the expected remaining maturities and yields
(taxable-equivalent basis) of debt securities at December 31, 1999, by
contractual maturity:
<TABLE>
<CAPTION>
ONE YEAR OVER 1 YEAR OVER 5 YEARS TOTAL
OR LESS THRU 5 YEARS THRU 10 YEARS OVER 10 YEARS 1999
------------------- ------------------- ------------------- ------------------- -------------------
(DOLLARS IN % % % % %
THOUSANDS) AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
- ----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and
federal agency..... $11,013 6.24 $202,249 6.35 $ 73,284 6.34 $ -- -- $286,546 6.34
Mortgage-backed...... -- -- -- -- 15,966 6.06 335,285 6.55 351,251 6.53
State and Municipal.. 19,443 6.56 52,093 6.87 78,823 6.51 1,885 7.63 152,244 6.65
Other debt
securities......... -- -- 103 7.00 84,342 7.50 66,468 7.99 150,913 7.72
------- ---- -------- ---- -------- ---- -------- ---- -------- ----
Total debt
securities......... $30,456 6.44 $254,445 6.46 $252,415 6.76 $403,638 6.79 $940,954 6.68
======= ==== ======== ==== ======== ==== ======== ==== ======== ====
Amortized cost....... $30,409 $256,738 $269,313 $426,403 $982,863
======= ======== ======== ======== ========

<CAPTION>
TOTAL TOTAL
1998 1997
------------------- -------------------
(DOLLARS IN % %
THOUSANDS) AMOUNT YIELD AMOUNT YIELD
- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
U.S. Government and
federal agency..... $275,145 6.11 $257,057 6.31
Mortgage-backed...... 351,469 6.61 172,075 6.66
State and Municipal.. 123,845 6.60 5,997 6.71
Other debt
securities......... 152,692 7.78 25,920 7.79
-------- ---- -------- ----
Total debt
securities......... $903,151 6.65 $461,049 6.67
======== ==== ======== ====
Amortized cost....... $885,259 $456,830
======== ========
</TABLE>

Securities available-for-sale totaling $497.2 million were pledged to secure
trust funds, public deposits, or for other purposes required or permitted by law
at December 31, 1999.

A-40
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES

The following is a summary of the major categories of loans:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
(DOLLARS IN THOUSANDS) 1999 1998
- ---------------------- ---------- ----------
<S> <C> <C>
Commercial........................................... $2,870,438 $2,457,946
Residential first mortgage........................... 1,173,334 1,038,229
Real estate construction............................. 344,870 237,015
Real estate mortgage................................. 1,042,123 747,711
Installment.......................................... 59,904 49,526
---------- ----------
Total loans (net of unearned income and fees of
$10,709 and $7,203).............................. $5,490,669 $4,530,427
========== ==========
</TABLE>

At December 31, 1999, there were no loans identified as being impaired. At
December 31, 1998, the Company had identified $13.7 million in impaired loans.
There were no impaired loans with allocated allowances for credit losses as of
December 31, 1999 or December 31, 1998. The allowances represent the differences
between the value of the collateral supporting the loans and their outstanding
balances. For 1999 and 1998, the average balance of impaired loans was
$2.5 million and $0.3 million, respectively. During 1999, 1998 and 1997, no
interest income was recognized on impaired loans until the book balances of
these loans were paid off.

In the normal course of business, the Bank has loans to officers and
directors as well as loans to companies and individuals affiliated with or
guaranteed by officers and directors of the Corporation and the Bank. These
loans were made in the ordinary course of business at rates and terms no more
favorable than those offered to other customers with a similar credit standing.
The aggregate dollar amounts of these loans were $3.0 million and $18.7 million
at December 31, 1999 and 1998, respectively. During 1999, new loans made totaled
$0.3 million and repayments totaled $16.0 million. Interest income recognized on
these loans amounted to $1.4 million, $1.5 million and $1.4 million during 1999,
1998 and 1997, respectively. At December 31, 1999, none of these loans were on
nonaccrual status. Based on analysis of information presently known to
management about the loans to officers and directors and their affiliates,
management believes all have the ability to comply with the present loan
repayment terms.

Loans past due 90 days or more and still accruing interest totaled
$4.0 million, $8.6 million and $26.2 million at December 31, 1999, 1998 and
1997, respectively. Restructured loans totaled $3.1 million, $3.7 million, and
$4.1 million at December 31, 1999, 1998 and 1997, respectively.

A-41
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED)
The following is a summary of activity in the allowance for credit losses:

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS) 1999 1998 1997
- ---------------------- -------- -------- --------
<S> <C> <C> <C>
Balance, January 1............................ $135,339 $137,761 $130,089
Allowance of acquired institutions............ 3,415 2,747 7,016
Charge offs................................... (19,528) (17,636) (19,512)
Recoveries.................................... 14,851 12,467 20,168
-------- -------- --------
Net (charge offs) recoveries.................. (4,677) (5,169) 656
-------- -------- --------
Balance, December 31.......................... $134,077 $135,339 $137,761
======== ======== ========
</TABLE>

The following is a summary of non-performing loans and related interest
foregone (received):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
(DOLLARS IN THOUSANDS) 1999 1998 1997
- ---------------------- -------- -------- --------
<S> <C> <C> <C>
Nonaccrual loans................................. $25,288 $23,138 $27,566
======= ======= =======
Contractual interest due......................... 3,814 3,967 5,364
Interest recognized.............................. 3,692 1,973 5,490
------- ------- -------
Net interest foregone (received)................. $ 122 $ 1,994 $ (126)
======= ======= =======
</TABLE>

The Company has pledged all of its eligible residential first mortgages of
$1,113.9 million to the Federal Home Loan Bank of San Francisco under that
institution's blanket lien program although not all of the pledged mortgages are
being utilized to collateralize current borrowings.

A-42
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5. PREMISES AND EQUIPMENT

The following is a summary of data for the major categories of premises and
equipment:

<TABLE>
<CAPTION>
ACCUMULATED
DEPRECIATION
AND CARRYING
(DOLLARS IN THOUSANDS) COST AMORTIZATION VALUE
- ---------------------- -------- ------------ --------
<S> <C> <C> <C>
DECEMBER 31, 1999
Premises, including land of $5,433......... $ 58,348 $27,861 $30,487
Furniture, fixtures and equipment.......... 62,839 40,611 22,228
Software................................... 14,393 4,662 9,731
-------- ------- -------
Total.................................... $135,580 $73,134 $62,446
======== ======= =======

DECEMBER 31, 1998
Premises, including land of $5,245......... $ 51,549 $24,417 $27,132
Furniture, fixtures and equipment.......... 54,219 33,464 20,755
Software................................... 9,678 1,799 7,879
-------- ------- -------
Total.................................... $115,446 $59,680 $55,766
======== ======= =======
</TABLE>

Depreciation and amortization expense was $11.2 million in 1999,
$8.8 million in 1998 and $6.1 million in 1997. Net rental payments on operating
leases included in net occupancy of premises in the consolidated statement of
income and comprehensive income were $12.0 million in 1999, $8.4 million in
1998, and $7.1 million in 1997.

The future net minimum rental commitments were as follows at December 31,
1999:

<TABLE>
<CAPTION>
NET MINIMUM
RENTAL
(DOLLARS IN THOUSANDS) COMMITMENTS
- ---------------------- -----------
<S> <C>
2000........................................................ $14,893
2001........................................................ 12,763
2002........................................................ 12,069
2003........................................................ 8,642
2004........................................................ 6,624
Thereafter.................................................. 17,073
-------
$72,064
=======
</TABLE>

A majority of the leases provide for the payment of taxes, maintenance,
insurance and certain other expenses applicable to the leased premises. Many of
the leases contain extension provisions and escalation clauses. The Bank paid
$1.2 million in 1999 and $1.1 million in both 1998 and 1997 for rent and
operating expense pass throughs to a real estate partnership in which the Bank
owns a 32% interest, and Mr. Bram Goldsmith, Chairman of the Board of the
Corporation, indirectly owns a 14% interest.

The rental commitment amounts in the table above reflect the contractual
obligations of the Company under all leases. Lease obligations in acquisitions
have been adjusted to current market values through purchase accounting
adjustments. The allowance thus created will be accreted over the terms of the
leases and reduce the total expense recognized by the Company in its operating
expenses. At December 31, 1999,

A-43
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5. PREMISES AND EQUIPMENT (CONTINUED)
the Company is contractually entitled to receive minimum future rentals of
$7.9 million under non-cancelable sub-leases.

NOTE 6. INCOME TAXES

Income tax (benefit) in the consolidated statement of income and
comprehensive income includes the following amounts:

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS) CURRENT DEFERRED TOTAL
- ---------------------- -------- -------- --------
<S> <C> <C> <C>
1999
Federal........................................ $46,649 $(1,633) $45,016
State.......................................... 14,857 (566) 14,291
------- ------- -------
Total........................................ $61,506 $(2,199) $59,307
======= ======= =======

1998
Federal........................................ $36,594 $ 2,544 $39,138
State.......................................... 5,346 9,312 14,658
------- ------- -------
Total........................................ $41,940 $11,856 $53,796
======= ======= =======

1997
Federal........................................ $30,684 $ 2,988 $33,672
State.......................................... 10,224 1,300 11,524
------- ------- -------
Total........................................ $40,908 $ 4,288 $45,196
======= ======= =======
</TABLE>

A-44
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at December 31,
1999 and 1998 are presented below.

NET DEFERRED TAX ASSETS

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS) 1999 1998
- ---------------------- -------- --------
<S> <C> <C>
Deferred tax assets:
Allowance for credit losses............................. $44,461 $44,557
Net operating loss carryforwards........................ 13,643 15,353
Accrued expenses........................................ 6,307 4,126
State income taxes...................................... 8,874 8,816
Purchase accounting fair value adjustment............... 2,940 4,203
Unrealized losses on securities available-for-sale...... 19,700 --
Other................................................... 1,224 1,284
------- -------
Total gross deferred tax assets....................... 97,149 78,339
Valuation allowance..................................... (5,297) (5,297)
------- -------
91,852 73,042
------- -------
Deferred tax liabilities:
Unrealized gains on securities available-for-sale....... -- 9,473
Core deposit and other intangibles...................... 7,943 7,265
Leveraged leases........................................ 3,105 3,999
Installment sales....................................... -- 1,177
Deferred loan origination costs......................... 1,766 1,671
Loan fees............................................... 1,197 1,338
Other................................................... 2,000 2,381
------- -------
Total gross deferred tax liabilities.................. 16,011 27,304
------- -------
Net deferred tax assets................................. $75,841 $45,738
======= =======
</TABLE>

Income taxes resulted in effective tax rates that differ from the statutory
federal income tax rate for the following reasons:

<TABLE>
<CAPTION>
% OF PRETAX INCOME (LOSS)
------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Statutory rate....................................... 35.0% 35.0% 35.0%
Net state income tax................................. 5.6 6.3 6.0
Tax exempt income.................................... (3.7) (3.9) (4.4)
Tax credits.......................................... (1.8) (1.1) (0.8)
Cash surrender value of life insurance............... (0.5) (0.5) --
Amortization of goodwill............................. 0.9 0.8 0.5
All other net........................................ (0.1) (0.7) (0.2)
---- ---- ----
Effective tax provision.............................. 35.4% 35.9% 36.1%
==== ==== ====
</TABLE>

A-45
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. INCOME TAXES (CONTINUED)
The tax benefit of deductible temporary differences and net operating loss
carry forwards are recorded as an asset to the extent that management assesses
the utilization of such temporary differences and carry forwards to be "more
likely than not." The realization of tax benefits of deductible temporary
differences and carry forwards depends on whether the Company has sufficient
taxable income within the carry back and carry forward period permitted by the
tax law to allow for utilization of the deductible amounts. As of any period
end, the amount of deferred tax asset that is considered realizable could be
reduced if estimates of future taxable income are reduced.

At December 31, 1999, the Company's current tax receivable for refunds was
$4.2 million.

At December 31, 1999, federal net operating loss carry forwards acquired in
the First Los Angeles Bank acquisition totaled $38.9 million, of which
$13.7 million will expire in 2009 and $25.2 million will expire in 2010. First
Los Angeles Bank's California net operating loss carry forwards totaled
$11.2 million and will expire in 2000. During 1998, the Company reversed
approximately $3.0 million of the valuation allowance resulting from the
acquisition of First Los Angeles Bank and reduced core deposit intangibles by a
corresponding amount.

NOTE 7. RETIREMENT PLAN

The Company has a profit sharing retirement plan with an Internal Revenue
Code Section 401(k) feature covering eligible employees. Contributions are made
on an annual basis into a trust fund and are allocated to the participants based
on their salaries. The profit sharing contribution requirement is based on a
percentage of annual operating income. For 1999, 1998 and 1997, the Company
recorded total contributions expense of $9.1 million, $8.1 million and
$6.7 million, respectively.

Eligible employees may contribute up to 15% of their salary, but not more
than the maximum allowed under Internal Revenue Service regulations. In 1999 and
1998, the Bank matched 50% of the first six percent of covered compensation. For
1999, 1998, and 1997, the Bank's matching contribution included in the total
contribution above was $1,669,000, $1,374,000 and $1,318,000, respectively.

The Company does not provide for any post retirement employee benefits
beyond the profit sharing retirement plan.

NOTE 8. STOCK OPTION PLANS

Under the City National Corporation 1999 Omnibus Plan (the "1999 Omnibus
Plan"), 3,500,000 shares of the Corporation's common stock were reserved for
grant of stock options. Under the 1995 Omnibus Plan, 296,549 shares of the
Corporation's common stock that were reserved for grant of stock options were
available to be granted as of December 31,1999. The Corporation's 1983 Stock
Option Plan and 1985 Stock Option Plan have expired but options granted
thereunder remain outstanding. Grants to employees will be at prices at least
equal to the market price of the Corporation's common stock on the effective
date of the grant. Generally, in each succeeding year following the date of
grant, 25% of the options become exercisable. After ten years from grant, all
unexercised options will expire.

A-46
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. STOCK OPTION PLANS (CONTINUED)

The per share weighted-average fair value of stock options granted during
1999, 1998 and 1997 was $14.59, $15.55 and $9.09 on the date of grant using the
Black Scholes option-pricing model with the following weighted-average
assumptions: 1999-expected dividend yield of 2.00%, volatility of 37.1%,
risk-free interest rate of 5.20% and expected life of 7.5 years; 1998-expected
dividend yield of 2.00%, volatility of 33.6%, risk-free interest rate of 5.58%
and an expected life of 7.5 years; 1997-expected dividend yield of 2.00%,
volatility of 33.8%, risk-free interest rate of 6.49%, and an expected life of
7.5 years.

The Company applies APB Opinion No. 25 in accounting for the Plans and,
accordingly, no compensation cost has been recognized for its stock options in
the financial statements. Had the Company determined compensation cost based on
the fair value at the grant date for its stock options under SFAS No. 123, the
Company's net income would have been reduced to the pro forma amounts indicated
below:

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS) 1999 1998 1997
- ---------------------- -------- -------- --------
<S> <C> <C> <C>
Net income, as reported......................... $108,107 $96,228 $80,133
Pro forma net income............................ 101,686 90,689 77,840
Net income per share, basic, as reported........ $ 2.37 $ 2.08 $ 1.74
Pro forma net income per share, basic........... 2.23 1.96 1.69
Net income per share, diluted, as reported...... 2.30 2.00 1.68
Pro forma net income per share, diluted......... 2.17 1.88 1.63
</TABLE>

Pro forma net income reflects only options granted in 1999, 1998, 1997 and
1996. Therefore, the full impact of calculating compensation cost for stock
options under SFAS No. 123 is not reflected in the pro forma net income amounts
presented above because compensation cost is reflected over the options' vesting
period of generally four years and compensation cost for options granted prior
to January 1, 1996 is not considered.

The following is a summary of the transactions under the stock option plans
described above:

<TABLE>
<CAPTION>
1999 1998 1997
------------------------ ------------------------ ------------------------
WEIGHTED WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE
(SHARES IN THOUSANDS) OF SHARES OPTION PRICE OF SHARES OPTION PRICE OF SHARES OPTION PRICE
- --------------------- --------- ------------ --------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding, January
1............................. 3,849 $22.07 3,689 $14.57 3,687 $12.06
Granted......................... 965 36.51 1,300 35.68 751 24.48
Converted for acquisitions...... -- -- 12 9.83 176 8.99
Exercised....................... (632) 12.97 (1,061) 11.61 (858) 13.05
Canceled or expired............. (85) 32.02 (91) 23.40 (67) 14.79
----- ------ ------ ------ ----- ------
Options outstanding, December
31............................ 4,097 $26.54 3,849 $22.07 3,689 $14.57
===== ====== ====== ====== ===== ======
Exercisable..................... 1,978 1,851 2,283
===== ====== =====
</TABLE>

During 1999, the Corporation issued 632,065 treasury shares in connection
with the exercise of stock options. In 1998, the Corporation issued 1,008,079
treasury shares and 53,342 newly issued shares in connection with the exercise
of stock options. In 1997, the Corporation issued 459,891 treasury shares and
398,109 newly issued shares in connection with the exercise of stock options.

A-47
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. STOCK OPTION PLANS (CONTINUED)
The information concerning currently outstanding and exercisable options at
December 31, 1999 are as follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER REMAINING OUTSTANDING NUMBER EXERCISE
SHARES IN THOUSANDS OUTSTANDING LIFE (YRS) PRICE EXERCISABLE PRICE
- ------------------- ----------- ---------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Options issued at prices less than $12.00
per share.............................. 584 4.25 $ 9.02 584 $9.02
Options issued at prices between $12.00
and $13.99 per share................... 713 5.70 13.34 604 13.31
Options issued at prices between $14.00
and $29.99 per share................... 605 7.17 24.04 301 23.84
Options issued at prices between $30.00
and $40.00 per share................... 2,195 8.73 36.18 489 34.85
----- -----
4,097 1,978
===== =====
</TABLE>

At December 31, 1999, nonstatutory and incentive stock options covering
908,191 and 1,069,985 shares, respectively, of the Corporation's common stock
were exercisable under the plans. At December 31, 1999, 2,912,199 shares were
available for future grants.

In addition to the above, the Corporation's 1999 Omnibus Plan provides for
the automatic annual grant, on the date of the Annual Meeting of Stockholders,
of a discounted stock option (which is not an Incentive Stock Option) to each
non-employee director, including members of the Compensation and Directors
Nominating Committee to purchase 500 shares of the Corporation's common stock
("Director Stock Options"). The exercise price of Director Stock Options is
$1.00 per share, payable in cash or cash equivalents, by surrender of the
Corporation's common stock held by the director for at least a year before
exercise, or any combination of the two. Director Stock Options fully vest six
months after the date of issuance or upon the termination of the holder's
directorship (other than for cause), whichever is earlier, and expire 10 years
after the date of grant.

A-48
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. BORROWED FUNDS

The following is a summary of borrowed funds of the Company excluding
overnight federal funds purchased and securities sold under agreements to
repurchase.

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
DOLLARS IN THOUSANDS 1999 1998
- -------------------- -------- --------
<S> <C> <C>
Other short-term borrowings:
Term federal funds purchased............................ $200,000 $175,000
Treasury, tax and loan note............................. 21,724 92,001
Federal Home Loan Bank advances......................... 265,000 50,000
Other Borrowing--Revolving Line of Credit............... 10,000 --
-------- --------
Total................................................... $496,724 $317,001
======== ========
Subordinated debt....................................... $123,453 $123,265
======== ========
Long-term debt:
Federal Home Loan Bank advances......................... $180,000 $200,000
-------- --------
Total................................................... $180,000 $200,000
======== ========
</TABLE>

Short-term borrowings consist of funds with remaining maturities of one year
or less, and long-term debt consists of borrowings with remaining maturities of
greater than one year. The maximum amount of other short-term borrowings at any
month end was $621.4 million, $483.1 million and $267.9 million in 1999, 1998
and 1997, respectively. In 1999, the Corporation established a $20.0 million
revolving unsecured loan with another bank. As of December 31, 1999, the total
short-term funds borrowed on this facility was $10.0 million.

The maximum amount of securities sold under agreements to repurchase
outstanding at any month end was $74.2 million, $47.2 million and
$127.5 million, in 1999, 1998 and 1997, respectively. The average amount of
securities sold under agreements to repurchase was $19.9 million, $17.5 million
and $53.4 million during 1999, 1998 and 1997, respectively. The securities
underlying the agreements to repurchase remain under the Company's control.

On January 12, 1998, the Bank issued $125.0 million of 6 3/8% Subordinated
Notes, due in 2008, in a private offering. These Subordinated Notes qualify as
Tier II capital. The carrying value of the Subordinated Notes is net of discount
and issuance costs which are being amortized to interest expense to yield an
effective interest rate of 6.62%.

Long-term Federal Home Loan Bank (the FHLB) advances outstanding as of
December 31, 1999 (in thousands of dollars) mature as follows:

<TABLE>
<CAPTION>
BORROWINGS MATURITY INTEREST RATE
---------- -------- -------------
<S> <C> <C> <C>
$100,000 2001 6.2593%
65,000 2002 5.6362%
15,000 2004 5.2400%
--------
$180,000
========
</TABLE>

The Bank had $267.5 million and $403.8 million of unused borrowing capacity
from the FHLB at December 31, 1999 and 1998, respectively.

A-49
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. AVAILABILITY OF FUNDS FROM SUBSIDIARIES; RESTRICTIONS ON CASH BALANCES;
CAPITAL

The Corporation is authorized to issue 5,000,000 shares of preferred stock.
The Corporation's Board of Directors has the authority to issue the preferred
stock in one or more series, and to fix the designations, rights, preferences,
privileges, qualifications and restrictions, including dividend rights,
conversion rights, voting rights, rights and terms of redemption, liquidation
preferences and sinking fund terms.

Under a shareholders rights agreement (the "Agreement"), the Corporation
distributed preferred stock purchase rights ("Rights") as a Rights dividend on
March 13, 1997 at the rate of one Right for each share of the Corporation's
common stock held as of the close of business on that date. The existence of the
Rights makes it less likely that a person will acquire significant voting
control of the Corporation's common stock or otherwise acquire the Corporation
without the Board of Directors' consent. Until the Distribution Date, which is
defined in the Agreement, (1) the Rights are not exercisable, (2) the Rights are
attached to and trade only together with the Corporation's common stock, and
(3) the stock certificates representing the Corporation's common stock also
represent the attached Rights. Each share of the Corporation's common stock
issued after March 13, 1997 and prior to the Distribution Date includes one
Right. On the Distribution Date, the Rights will separate from the Corporation's
common stock, Rights certificates will be issued, and the Rights will become
exercisable as described in the Agreement. The Rights expire on March 13, 2007,
unless earlier redeemed or exchanged.

Historically, the majority of the funds for the payment of dividends by the
Corporation have been obtained from the Bank. Under federal banking law,
dividends declared by national banks in any calendar year may not, without the
approval of the Office of the Comptroller of the Currency (OCC), exceed net
profits (as defined), for that year combined with its retained net income for
the preceding two calendar years. At December 31, 1999, the Bank could have
declared dividends of $96.5 million without the approval of regulators.

Federal banking law also prohibits the Corporation from borrowing from the
Bank on less than a fully secured basis. At December 31, 1999 and 1998, the
Corporation had borrowed from the Bank $19.0 million and $13.1 million,
respectively, all of which was appropriately secured in compliance with
regulatory requirements.

Federal Reserve Board regulations require that the Bank maintain certain
minimum reserve balances. Cash balances maintained to meet reserve requirements
are not available for use by the Bank or the Corporation. During 1999 and 1998,
reserve balances averaged approximately $6.5 million and $16.0 million,
respectively.

The Corporation and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory-and possibly
additional discretionary-actions by regulators that, if undertaken, could have a
direct material effect on the Company's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Corporation and the Bank must meet specific capital guidelines that involve
quantitative measures of the Corporation's and Bank's assets, liabilities and
certain off-balance-sheet items as calculated under the regulatory accounting
practices. The Corporation's and the Bank's capital amounts and classification
are also subject to qualitative judgments by the regulators about components,
risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Corporation and the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier 1 capital (as defined in the
regulations) to risk-weighted assets (as defined). Management believes, as of

A-50
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. AVAILABILITY OF FUNDS FROM SUBSIDIARIES; RESTRICTIONS ON CASH BALANCES;
CAPITAL (CONTINUED)
December 31, 1999, the Corporation and the Bank meet all capital adequacy
requirements to which either is subject.

As of December 31, 1999, the most recent notification from the OCC
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Bank must
maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios
as set forth in the following table. There are no conditions or events since
that notification that management believes have changed the institution's
category.

The Corporation's actual amounts and ratios are presented in the table:

<TABLE>
<CAPTION>
FOR CAPITAL
ACTUAL ADEQUACY PURPOSES
------------- --------------------------------------
(DOLLARS IN THOUSANDS) AMOUNT RATIO AMOUNT RATIO
- ---------------------- ------ ----- ------ ------------------------------
<S> <C> <C> <C> <C>
As of December 1999
Total capital
(to risk-weighted assets)............................................. $671.1 11.21% $478.7 GREATER THAN OR EQUAL TO 8.0%
Tier 1 capital
(to risk-weighted assets)............................................. 471.3 7.88% 239.4 GREATER THAN OR EQUAL TO 4.0%
Tier 1 capital
(to average assets)................................................... 471.3 6.73% 280.3 GREATER THAN OR EQUAL TO 4.0%
As of December 1998
Total capital
(to risk-weighted assets)............................................. $664.9 13.20% $403.1 GREATER THAN OR EQUAL TO 8.0%
Tier 1 capital
(to risk-weighted assets)............................................. 474.9 9.43% 201.5 GREATER THAN OR EQUAL TO 4.0%
Tier 1 capital
(to average assets)................................................... 474.9 7.99% 237.9 GREATER THAN OR EQUAL TO 4.0%
</TABLE>

The Bank's actual amounts and ratios are presented in the table:

<TABLE>
<CAPTION>
FOR CAPITAL
ACTUAL ADEQUACY PURPOSES
------------- --------------------------------------
(DOLLARS IN THOUSANDS) AMOUNT RATIO AMOUNT RATIO
- ---------------------- ------ ----- ------ ------------------------------
<S> <C> <C> <C> <C>
As of December 1999
Total capital
(to risk-weighted assets)............................................. $639.9 10.75% $476.1 GREATER THAN OR EQUAL TO 8.0%
Tier 1 capital
(to risk-weighted assets)............................................. 440.6 7.40% 238.1 GREATER THAN OR EQUAL TO 4.0%
Tier 1 capital
(to average assets)................................................... 440.6 6.30% 279.5 GREATER THAN OR EQUAL TO 4.0%
As of December 1998
Total capital
(to risk-weighted assets)............................................. $634.8 12.65% $401.6 GREATER THAN OR EQUAL TO 8.0%
Tier 1 capital
(to risk-weighted assets)............................................. 446.5 8.90% 200.8 GREATER THAN OR EQUAL TO 4.0%
Tier 1 capital
(to average assets)................................................... 446.5 7.53% 237.1 GREATER THAN OR EQUAL TO 4.0%
</TABLE>

A-51
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Corporation is a party to financial
instruments with off-balance-sheet risk. These financial instruments include
commitments to extend credit, letters of credit and financial guarantees. These
instruments involve, to varying degrees, elements of credit and interest rate
risk in excess of the amount reflected in the consolidated balance sheet.

Exposure to credit loss in the event of non-performance by the other party
to the financial instrument for commitments to extend credit, letters of credit
and financial guarantees written is represented by the contractual notional
amount of those instruments. The Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance sheet
instruments.

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since a portion of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's
creditworthiness on a case-by-case basis.

The Company had outstanding loan commitments aggregating $2,294.0 million
and $2,273.8 million at December 31, 1999 and 1998, respectively compared to
outstanding loan balances of $5,490.7 million and $4,530.4 million,
respectively. In addition, the Company had $168.3 million and $150.3 million
outstanding in bankers' acceptances and letters of credit of which
$141.2 million and $129.0 million relate to standby letters of credit at
December 31, 1999 and 1998, respectively. Substantially all of the Company's
loan commitments are on a variable rate basis and are comprised of real estate
and commercial loan commitments.

The Corporation or its subsidiaries are defendants in various pending
lawsuits claiming substantial amounts. Based upon present knowledge, management
including in-house counsel is of the opinion that the final outcome of such
lawsuits will not have a material adverse effect on the Corporation.

NOTE 12. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

CASH AND DUE FROM BANKS AND FEDERAL FUNDS SOLD

For these short-term instruments, the carrying amount is a reasonable
estimate of fair value.

SECURITIES AND TRADING ACCOUNT ASSETS

For securities held as available-for-sale, fair value equals quoted market
price, if available. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities. For trading account
securities, fair values are based on quoted market prices or dealer quotes.

LOAN RECEIVABLES

For certain homogeneous categories of loans, such as some residential
mortgages, and other consumer loans, fair value is estimated using dealer
quotes, adjusted for differences in loan characteristics. The fair value of
other types of loans is estimated by discounting the future cash flows using the
current rates at which similar loans would be made to borrowers with similar
credit ratings and for the same remaining

A-52
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
maturities. In establishing the credit risk component of the fair value
calculations for loans, the Company concluded that the allowance for credit
losses represented a reasonable estimate of the credit risk component of the
fair value of loans at December 31, 1999 and 1998.

DEPOSIT LIABILITIES

The fair value of demand and interest checking deposits, savings deposits,
and certain money market accounts is the amount payable on demand at the
reporting date. The fair value of fixed-maturity certificates of deposit is
estimated using the rates currently offered for deposits of similar remaining
maturities.

SHORT-TERM BORROWINGS

For short-term borrowings, the carrying amount is a reasonable estimate of
fair value.

LONG-TERM DEBT

The fair value of long-term debt was estimated by discounting the future
payments at current interest rates.

COMMITMENTS TO EXTEND CREDIT, STANDBY LETTERS OF CREDIT, AND FINANCIAL
GUARANTEES WRITTEN

The fair value of commitments is estimated using the fees currently charged
to enter into similar agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the counter parties. The Company
does not make fixed-rate loan commitments. The fair value of letters of
guarantee and letters of credit is based on fees currently charged for similar
agreements or on the estimated cost to terminate them or otherwise settle the
obligations with the counter parties at the reporting date.

DERIVATIVES

The fair value of exchange traded derivatives is based on quoted market
prices or dealer quotes. The fair value of non-exchange traded derivatives
consists of net unrealized gains or losses, accrued interest receivable or
payable and any premiums paid or received.

A-53
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The estimated fair values of financial instruments of the Company are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
(DOLLARS IN THOUSANDS) AMOUNT VALUE AMOUNT VALUE
- ---------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Financial Assets:
Cash and due from banks..... $ 233.2 $ 233.2 $ 285.8 $ 285.8
Federal funds sold.......... 57.0 57.0 405.0 405.0
Securities
available-for-sale........ 1,102.1 1,102.1 1,012.5 1,012.5
Trading account assets...... 27.7 27.7 35.0 35.0
Loans, net of allowance for
credit losses............. 5,356.6 5,428.2 4,395.1 4,487.7
Financial Liabilities:
Deposits.................... 5,669.4 5,666.3 4,887.4 4,886.4
Federal funds purchased and
securities
sold under resale
agreements (3)............ 295.5 295.5 451.3 451.3
Other short-term
borrowings................ 296.7 296.7 142.0 142.0
Subordinated and long-term
debt...................... 303.5 290.8 323.3 325.6
Commitments to extend
credit.................... (14.8) (14.8) (12.6) (12.6)
Derivative contracts........ 965.0 (1) (10.0)(2) 710.0 (1) 6.4 (2)
</TABLE>

- ------------------------

(1) Notional Amount

(2) Estimated net gains (losses) to settle derivative contracts as of respective
period ends

(3) Includes term federal funds purchased

NOTE 13. PARENT COMPANY ONLY CONDENSED FINANCIAL STATEMENTS

Condensed parent company financial statements, which include transactions
with subsidiaries, follow:

CONDENSED BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
(DOLLARS IN THOUSANDS) 1999 1998
- ---------------------- -------- --------
<S> <C> <C>
ASSETS
Cash........................................................ $ 3,993 $ 6,145
Securities available-for-sale............................... 50,913 32,684
Other assets................................................ 440 256
Investment in City National Bank............................ 541,251 531,918
Investment in non-bank subsidiary........................... 4,483 4,958
-------- --------
Total assets.............................................. $601,080 $575,961
======== ========
LIABILITIES
Notes payable to City National Bank......................... $ 19,000 $ 13,120
Note payable to other banks................................. 10,000 --
Other liabilities........................................... 434 1,038
-------- --------
Total liabilities......................................... 29,434 14,158
Shareholders' Equity........................................ 571,646 561,803
-------- --------
Total liabilities and shareholders' equity................ $601,080 $575,961
======== ========
</TABLE>

A-54
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 13. PARENT COMPANY ONLY CONDENSED FINANCIAL STATEMENTS (CONTINUED)

CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
(DOLLARS IN THOUSANDS) 1999 1998 1997
- ---------------------- --------- --------- ---------
<S> <C> <C> <C>
Income
Dividends from bank and non bank subsidiary............... $59,044 $ 42,238 $46,792
Interest and dividend income.............................. 1,296 5,378 6,318
Gain (loss) on sale of securities......................... 3,509 2,142 (339)
------- -------- -------
Total income............................................ 63,849 49,758 52,771
------- -------- -------
Interest on notes payable to Bank and non-affiliates........ 767 2,217 2,555
Other expenses.............................................. 634 661 411
------- -------- -------
Total expenses.............................................. 1,401 2,878 2,966
------- -------- -------
Income before taxes and equity in undistributed income of
Bank and non-bank subsidiary............................ 62,448 46,880 49,805
Income taxes (benefit).................................... 1,127 490 (462)
------- -------- -------
Income before equity in undistributed income of Bank and
non-bank subsidiary..................................... 61,321 46,390 50,267
Equity in undistributed income of Bank and non-bank
subsidiary.............................................. 46,786 49,838 29,866
------- -------- -------
Net income................................................ 108,107 96,228 80,133
Other comprehensive income (loss)......................... (40,094) 7,552 7,498
------- -------- -------
Comprehensive income........................................ $68,013 $103,780 $87,631
======= ======== =======
</TABLE>

A-55
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 13. PARENT COMPANY ONLY CONDENSED FINANCIAL STATEMENTS (CONTINUED)
CONDENSED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
(DOLLARS IN THOUSANDS) 1999 1998 1997
- ---------------------- -------- --------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................. $108,107 $ 96,228 $ 80,133
Adjustments to net income:
Equity in undistributed income of Bank and non-bank
subsidiary.............................................. (46,786) (49,838) (29,866)
Other, net................................................ (131) 4,040 1,009
-------- --------- --------
Net cash provided by operating activities............... 61,190 50,430 51,276
-------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of securities available-for-sale................. -- 30,766 22,423
Purchase of securities available-for-sale................... (44,447) (22,938) (61,560)
Sales of securities available-for-sale...................... 24,685 61,549 5,813
Investment in subsidiaries.................................. -- (16,415) (24,582)
Other, net.................................................. 1,535 2,047 --
-------- --------- --------
Net cash from (used by) investing activities.............. (18,227) 55,009 (57,906)
-------- --------- --------
CASH FLOWS FOR FINANCING ACTIVITIES
Cash dividends paid......................................... (30,172) (26,042) (20,310)
(Repayments to) borrowings from City National Bank.......... 15,865 (31,880) 17,500
Repurchase of treasury shares............................... (39,001) (59,768) (22,503)
Stock options exercised..................................... 8,193 12,321 11,367
Other, net.................................................. -- -- 2,875
-------- --------- --------
Net cash used for financing activities.................... (45,115) (105,369) (11,071)
-------- --------- --------
Net increase (decrease) in cash and cash equivalents........ (2,152) 70 (17,701)
Cash and cash equivalents at beginning of year.............. 6,145 6,075 23,776
-------- --------- --------
Cash and cash equivalents at end of year.................... 3,993 6,145 6,075
======== ========= ========
</TABLE>

NOTE 14. DERIVATIVE FINANCIAL INSTRUMENTS

The following table presents the notional amount and fair value of interest
rate risk management instruments at December 31, 1999 and 1998:

<TABLE>
<CAPTION>
1999 1998
------------------- -------------------
NOTIONAL FAIR NOTIONAL FAIR
(DOLLARS IN MILLIONS) AMOUNT VALUE AMOUNT VALUE
- --------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Receive fixed/pay variable.................................. $965.0 ($10.0) $710.0 $6.4
</TABLE>

Interest rate swap agreements involve the exchange of fixed- and
variable-rate interest payments based upon a notional principal amount and
maturity date. The Company's interest rate risk management instruments had no
credit risk exposure at December 31, 1999 and $6.4 million at December 31, 1998.
The credit exposure represents the cost to replace, on a present value basis and
at current market rates, all profitable contracts outstanding at year end. The
Company's swap agreements require the deposit of

A-56
<PAGE>
CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 14. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
collateral to mitigate the amount of credit risk if certain thresholds are
exceeded. As of December 31, 1999, the Company had deposited $6.0 million par
value securities with swap counterparties as collateral for fair value
valuation.

The periodic net settlement of interest rate risk management instruments is
recorded as an adjustment to net interest income. These interest rate risk
management instruments generated $2.7 million, $1.7 million and $0.8 million in
net interest income in 1999, 1998 and 1997, respectively.

NOTE 15. SUBSEQUENT EVENT

On February 29, 2000, the Corporation completed its acquisition, which had
been announced on September 22, 1999, of The Pacific Bank, N.A. (Pacific Bank).
The transaction was accounted for as a purchase in which each outstanding share
of Pacific Bank stock was exchanged for either 0.9343 shares of the
Corporation's common stock or $29.00 in cash. The Corporation paid
$145.2 million (including the consideration for outstanding stock options) for
Pacific Bank of which 47.0% was paid in the Corporation's common stock and 53.0%
was paid in cash.

A-57

<PAGE>

[Exhibit 3.1]

RESTATED

CERTIFICATE OF INCORPORATION

CITY NATIONAL CORPORATION

_________

City National Corporation, a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:

1. The name of the corporation is City National Corporation. The
date of filing of its original Certificate of Incorporation was October 3,
1968.

2. This Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation of this
corporation, as heretofore amended, by amending and restating Article SEVENTH
thereof in its entirety and by adding new Article NINTH thereto and
renumbering subsequent Articles.

3. The text of the Certificate of Incorporation as amended or
supplemented heretofore is further amended hereby to read as herein set forth
in full:

FIRST. The name of the Corporation is

City National Corporation

This Restated Certificate of Incorporation has been duly adopted in
accordance with Section 245 of the Delaware General Corporation Law, and
restates and further amends the Certificate of Incorporation filed by the
Corporation with the Secretary of State of the State of Delaware on October
3, 1968, as heretofore amended.

SECOND. The address of its registered office in the State of Delaware
is 1209 Orange Street, in the City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.

THIRD. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware. Without limiting in any manner the scope and
generality of the foregoing, the Corporation shall have the following
purposes and powers.

(1) To acquire by purchase, subscription, or otherwise, and
to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge, or otherwise dispose of or deal in and with any and all securities,
as such term is hereinafter defined, issued or created by any corporation,
firm, organization, association or other entity, public or private, whether
formed under the laws of the United States of America or of any state,
commonwealth, territory, dependency or possession thereof, or of any

<PAGE>

foreign country or of any political subdivision, territory, dependency,
possession or municipality thereof, or issued or created by the United States
of America or any state or commonwealth thereof or any foreign country, or by
any agency, subdivision, territory, dependency, possession or municipality of
any of the foregoing, and as owner thereof to possess and exercise all the
rights, powers and privileges of ownership, including the right to execute
consents and vote thereon.

The term "securities" as used in this Certificate of
Incorporation shall mean any and all notes, stocks, treasury stocks, bonds,
debentures, evidences of indebtedness, certificates of interest or
participation in any profit-sharing agreement, collateral-trust certificates,
preorganization certificates or subscriptions, transferable shares,
investment contracts, voting trust certificates, certificate of deposit for a
security, fractional undivided interests in oil, gas, or other mineral
rights, or, in general, any interests or instruments commonly known as
"securities," or any and all certificates of interest or participation in,
temporary or interim certificates for, receipts for, guaranties of, or
warrants or rights to subscribe to or purchase, any of the foregoing.

(2) To make, establish and maintain investments in
securities, and to supervise and manage such investments.

(3) To cause to be organized under the laws of the United
States of America or of any state, commonwealth, territory, dependency or
possession thereof, or of any foreign country or of any political
subdivision, territory, dependency, possession or municipality thereof, one
or more corporations, firms, organizations, associations or other entities
and to cause the same to be dissolved, wound up, liquidated, merged or
consolidated.

(4) To acquire by purchase or exchange, or by transfer to or
by merger or consolidation with the Corporation or any corporation, firm,
organization, association or other entity owned or controlled, directly or
indirectly, by the Corporation, or to otherwise acquire, the whole or any
part of the business, good will, rights, or other assets of any corporation,
firm, organization, association or other entity, and to undertake or assume
in connection therewith the whole or any part of the liabilities and
obligations thereof, to effect any such acquisition in whole or in part by
delivery of cash or other property, including securities issued by the
Corporation, or by any other lawful means.

(5) To make loans and give other forms of credit, with or
without security, and to negotiate and make contracts and agreements in
connection therewith.

(6) To aid by loan, subsidy, guaranty or in any other lawful
manner any corporation, firm, organization, association or other entity of
which any securities are in any manner directly or indirectly held by the
Corporation or in which the Corporation or any such corporation, firm,
organization, association or entity may be or become otherwise interested; to
guarantee the payment of dividends on any stock issued by any such
corporation, firm, organization, association or entity; to guarantee or, with
or without recourse against any such corporation, firm, organization,
association or entity, to assume the payment of the principal of, or the
interest on, any obligations issued or incurred by such corporation, firm,
organization, association or entity; to do any and all other acts and things
for the enhancement, protection or preservation of any securities which are
in any manner, directly or indirectly, held, guaranteed or assumed by the
Corporation, and to do any and all acts and things designed to accomplish any
such purpose.

(7) To borrow money for any business, object or purpose of
the Corporation from time to time, without limit as to amount; to incur
indebtedness and to issue any kind of evidence of indebtedness, whether or
not in connection with borrowing money, including evidences of indebtedness

2
<PAGE>

convertible into stock of the Corporation, to secure the payment of any
evidence of indebtedness by the creation of any security interest in any of
the property or rights of the Corporation, whether at that time owned or
thereafter acquired.

(8) To render service, assistance, counsel and advice to,
and to act as representative or agent in any capacity (whether managing,
operating, financial, purchasing, selling, advertising or otherwise) of, any
corporation, firm, organization, association, or other entity.

(9) To engage in any commercial, financial, mercantile,
industrial, manufacturing, marine, exploration, mining, agricultural,
research, licensing, servicing, or agency business not prohibited by law, and
any, some or all of the foregoing.

(10) To become a joint venturer, or a partner, general or
limited, in the exercise of any power, or for any corporate purpose.

The purposes and powers specified in the foregoing paragraphs shall,
except where otherwise expressed, be in nowise limited or restricted by
reference to, or inference from, the terms of any other paragraph in this
Certificate of Incorporation, but the purposes and powers specified in each
of the foregoing paragraphs of this Article shall be regarded as independent
purposes and powers.

The Corporation shall possess and may exercise all powers and
privileges necessary or convenient to effect any or all of the foregoing
purposes, or to further any or all of the foregoing powers, and the
enumeration herein of any specific purposes or powers shall not be held to
limit or restrict in any manner the exercise by the Corporation of the
general powers now or hereafter conferred by the laws of the State of
Delaware upon corporations formed under the General Corporation Law of
Delaware.

FOURTH. The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is Eighty Million
(80,000,000) shares, of which Five Million (5,000,000) shares shall be shares
of Preferred Stock of the par value of One Dollar ($1.00) per share
(hereinafter called "Preferred Stock") and Seventy Five Million (75,000,000)
shares shall be shares of Common Stock of the par value of One Dollar ($1.00)
per share (hereinafter called "Common Stock"). Any amendment to the
Certificate of Incorporation which shall increase or decrease the authorized
capital stock of the Corporation may be adopted by the affirmative vote of
the holders of a majority of the outstanding shares of the voting stock of
the Corporation.

The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, of the Preferred Stock
shall be as follows:

(1) The Board of Directors is expressly authorized at any
time, and from time to time, to provide for the issuance of shares of
Preferred Stock in one or more series, with such voting powers, full or
limited but not to exceed one vote per share, or without voting powers and
with such designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions
thereof, as shall be stated and expressed in the resolution or resolutions
providing for the issue thereof adopted by the Board of Directors, and as are
not stated and expressed in this Certificate of Incorporation, or any
amendment thereto, including (but without limiting the generality of the
foregoing) the following:

(a) The designation of such series.

(b) The dividend rate of such series, the conditions
and dates upon which such dividends shall be payable, the preferences or
relation which such dividends shall bear to the dividends

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payable on any other class or classes or of any other series of capital
stock, and whether such dividends shall be cumulative or non-cumulative.

(c) Whether the shares of such series shall be
subject to redemption by the Corporation, and, if made subject to such
redemption, the time, prices and other terms and conditions of such
redemption.

(d) The terms and amount of any sinking fund provided
for the purchase or redemption of the shares of such series.

(e) Whether or not the shares of such series shall be
convertible into or exchangeable for shares of any other class or classes or
of any other series of any class or classes of capital stock of the
Corporation, and, if provision be made for conversion or exchange, the times,
prices, rates adjustment, and other terms and conditions of such conversion
or exchange.

(f) The extent, if any, to which the holders of the
shares of such series shall be entitled to vote as a class or otherwise;
provided, however, that in no event shall any holder of any series of
Preferred Stock be entitled to more than one vote for each share of such
Preferred Stock held by him or her.

(g) The restrictions, if any, on the issue or reissue
of any additional Preferred Stock.

(h) The rights of the holders of the shares of such
series upon the dissolution of, or upon the distribution of assets of, the
Corporation.

(2) Except as otherwise required by law and except for such
voting powers with respect to the election of directors or other matters as
may be stated in the resolutions of the Board of Directors creating any
series of Preferred Stock, the holders of any such series shall have no
voting power whatsoever.

FIFTH. The by-laws may be made, altered, amended or repealed by the
Board of Directors. The books of the Corporation (subject to the provisions
of the laws of the State of Delaware) may be kept outside of the State of
Delaware at such places as from time to time may be designated by the Board
of Directors.

SIXTH. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as
the case may be, to be summoned in such manner as the said court directs. If
a majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of
this Corporation, as the case may be, agree to any compromise or arrangement
and to any reorganization of this Corporation as a consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of this
Corporation, as the case may be, and also on this Corporation.

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SEVENTH. Each person who was or is a party, or is threatened to be
made a party, or is threatened to be made a party, to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of
the fact that such person, or person of whom such person is the legal
representative, is or was a director or officer of the Corporation or is or
was serving at the request of the Corporation as a director or officer of
another corporation or in any capacity with respect to an employee benefit
plan maintained or sponsored by the Corporation, shall be indemnified and
held harmless by the Corporation to the fullest extent permissible under the
Delaware General Corporation Law and not prohibited by other law or
regulation, as the same exists or may hereafter be amended, against all
expenses, liabilities and losses (including attorneys' fees, judgments,
fines, excise taxes pursuant to the Employee Retirement Income Security Act
of 1974 or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of his or
her heirs, executors and administrators; provided, however, that, except as
provided in the following paragraph, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof)
was authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided
however, that, if the Delaware General Corporation Law or other applicable
law or regulation so requires, the payment of such expenses incured by a
director or officer in his or her capacity as a director or officer (and not
in any other capacity in which service was or is rendered by such person
while a director or officer, including, without limitation, service to any
employee benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or
on behalf of such director or officer, to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is not entitled
to be indemnified under this Section or otherwise, and in compliance with any
other requirements of the Delaware General Corporation Law or other
applicable law or regulation. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of directors
and officers.

If a claim under the preceding paragraph of this Section is not paid
in full by the Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim and,
if successful in whole or in part, the claimant shall be entitled to be paid
also the expense of prosecuting such claim. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standard of conduct required
under the Delaware General Corporation Law for the Corporation to indemnify
the claimant for the amount claimed, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.

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The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Section shall not be exclusive of any other right which any person may have
or hereafter acquire under any statute, provision of this Certificate of
Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.

The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability
or loss under the Delaware General Corporation law or other applicable law or
regulation.

EIGHTH. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken for or in connection with any corporate
action by any provision of the General Corporation Law of the State of
Delaware the meeting and vote of stockholders may be dispensed with if such
action is taken with the written consent of the holders of not less than a
majority of all the stock entitled to be voted upon such action if a meeting
were held; provided that in no case shall the written consent be by the
holders of stock having less than the minimum percentage of the vote required
by statute for such action, and provided that prompt notice is given to all
stockholders of the taking of corporate action without a meeting and by less
than unanimous written consent. Election of directors need not be by ballot
unless the by-laws so provide.

NINTH. The number of directors which shall constitute the whole Board
of Directors shall be not less than five nor more than fourteen, and the
specific number of directors shall be determined by resolution of the Board
of Directors. The Board is divided into three classes, Class I, Class II and
Class III. Such classes shall be as nearly equal in number of directors as
possible. Each director shall serve for a term ending on the third annual
meeting following the annual meeting at which such director was elected;
provided, however, that the directors first elected to Class I shall serve
for a term ending at the annual meeting to be held in 1997, the directors
first elected to Class II shall serve for a term ending at the annual meeting
to be held in 1998, and the directors first elected to Class III shall serve
for a term ending at the annual meeting to be held in 1999. The foregoing
notwithstanding, each director shall serve until his successor shall have
been duly elected and qualified, unless he shall resign, become disqualified,
disabled or shall otherwise be removed.

At each annual election, the directors chosen to succeed those whose
terms then expire shall be of the same class as the director they succeed,
unless, by reason of any intervening changes in the authorized number of
directors the Board shall designate one or more directorships whose term then
expires as directorships of another class in order more nearly to achieve
equality of number of directors among the classes.

Notwithstanding the rule that the three classes shall be as nearly
equal in number of directors as possible, in the event of any change in the
authorized number of directors each director then continuing to serve as such
shall nevertheless continue as a director of the class of which he is a
member until the expiration of his current term, or his prior death,
resignation or removal.

Any vacancy on the Board of Directors (whether by reason of an
increase in the number of authorized directors or due to the death,
resignation or removal of a director) may be filled by a majority of the
directors then in office, although less than a quorum, or by the sole
remaining director. Any director chosen to fill a vacancy shall hold office
until the next election of the class of directors for which he shall have
been chosen, and until his successor shall have been duly elected or
qualified.

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TENTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.

ELEVENTH. Without the prior affirmative vote or written consent of
the holders of 70% of the outstanding shares of the common stock of the
corporation, voting separately as a class, and whether or not a vote of the
stockholders is otherwise required in connection with the transaction,
neither the corporation nor any of its majority-owned subsidiaries shall
become party to any "Business Combination" to which any "Restricted Person,"
any "Affiliate" of a Restricted Person or any member of a group which is a
Restricted Person is also a party. The provisions of this Article ELEVENTH
shall not, however, apply to any Business Combination approved by the Board
of Directors of the Corporation at any time which the person involved who
theretofore was or thereafter became a Restricted Person was not such a
Restricted Person.

The affirmative vote required by this Article ELEVENTH is in addition
to the vote of the holders of any class or series of stock of the Corporation
otherwise required by law, this Certificate of Incorporation, any resolution
which has been adopted by the Board of Directors providing for the issuance
of a class or series of stock, or any agreement between the Corporation and
any national securities exchange.

No amendment, alteration or repeal of any provision of this Article
ELEVENTH may be effected unless it is approved at a meeting of the
Corporation's stockholders called for that purpose. Notwithstanding any
other provision of this Certificate of Incorporation, there shall be required
to amend, alter or repeal, directly or indirectly, any provision of this
Article ELEVENTH the affirmative vote of the holders of 70% of the issued and
outstanding shares of common stock of the Corporation, excluding all voting
securities owned, directly or indirectly, by any Restricted Person or any
Affiliate of a Restricted Person.

As used in this Article ELEVENTH, the following terms have the
following meanings:

(a) A "Restricted Person" means any person, partnership,
corporation or other entity (other than a trustee holding stock for the
benefit of employees of the Corporation or its subsidiaries, or any one or
more of them, pursuant to an employee benefit plan), or any group of persons,
partnerships, corporations or other entities (other than such a trustee) who
act together for the purpose of acquiring, holding or voting securities of
the Corporation, which has (or, in the case of a group, the members of which
in the aggregate have), during any period of 12 consecutive calendar months,
directly or indirectly acquired shares of any class of the voting securities
of the Corporation which aggregate more than 5% of the outstanding securities
of such class. Any Restricted Person shall cease to be a Restricted Person
for the purposes of this Article ELEVENTH at the end of the 24th calendar
month following the most recent month in which such Restricted Person (or all
members of a group which is a Restricted Person) directly or indirectly
acquired any shares of any class of the voting securities of the Corporation
which, together with all other shares of such class acquired by such person
(or any member of such group) within such month and the immediately preceding
11 calendar months, aggregate more than 5% of the outstanding voting
securities of such class. Any Restricted Person who so ceases to be a
Restricted Person shall not thereafter again be deemed to be a Restricted
Person unless such person, firm, corporation, other entity or group once
again comes within the definition set forth in this Article ELEVENTH as a
result of subsequent acquisitions of voting securities of the Corporation.
In making the calculations provided for in this definition, shares shall not
be counted as owned or acquired by any person, partnership, corporation,
other entity or group if the transaction in which such shares were

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acquired was approved in advance by the affirmative vote of 66 2/3% of the
directors of the Corporation then in office.

(b) An "Affiliate" of a Restricted Person means any person,
firm, corporation or other entity directly or indirectly controlling,
controlled by, or under common control with such Restricted Person (or any
member of a group which constitutes a Restricted Person).

(c) A "Business Combination" means (i) the sale, exchange,
lease, transfer or other disposition by the Corporation or any of its
subsidiaries of all, substantially all, or any substantial part of its or
their assets or businesses; (ii) the purchase, exchange, lease or other
acquisition by the Corporation or any of its subsidiaries of all,
substantially all, or any substantial part of the assets or business of any
other person; (iii) a merger or consolidation to which the Corporation or any
subsidiary is a party; (iv) any reclassification of securities,
recapitalization or other transaction (other than a redemption in accordance
with the terms of the security redeemed) designed to decrease the number of
holders of voting securities of the Corporation, if immediately thereafter
any Restricted Person will be the owner of more than 35% of the outstanding
voting securities of the Corporation of any class the number of holders of
which is so decreased; or (v) the issuance to any Restricted Person, any
member of a group which constitutes a Restricted Person or any Affiliate of a
Restricted Person of voting securities of the Corporation or any subsidiary
of the Corporation, any rights, warrants or options to acquire any of the
foregoing or any combination of the foregoing. No such transaction shall
constitute a Business Combination, however, if it is approved in advance by
the Board of Directors of the Corporation at a meeting called for the purpose
by the affirmative votes of at least the number of directors which is one
less than the entire authorized number of directors of the Corporation.

TWELFTH. To the fullest extent permitted by the General Corporation
Law of the State of Delaware as the same exists or may hereafter be amended,
a director of this Corporation shall not be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.

4. This Restated Certificate of Incorporation was duly adopted by
vote of the stockholders in accordance with Sections 242 and 245 of the
General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, City National Corporation has caused this Restated
Certificate of Incorporation to be signed by Russell Goldsmith, its Chief
Executive Officer, this 24th day of April, 1996.

CITY NATIONAL CORPORATION

By: /s/ Russell Goldsmith
--------------------------
RUSSELL GOLDSMITH, Chief Executive Officer

<PAGE>

FORM OF

CERTIFICATE OF DESIGNATIONS

SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK

CITY NATIONAL CORPORATION

(Pursuant to Section 151 of the Delaware General Corporation Law)

<PAGE>

City National Corporation, a Delaware corporation (the "Company"),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Company as required by Section 151 of the General
Corporation Law at a meeting duly called and held on February 26, 1997.

RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Company (the "Board of Directors" or the "Board")
in accordance with the provisions of the Certificate of Incorporation, the
Board of Directors hereby creates a series of preferred stock of the Company
and hereby states the designation and number of shares, and fixes the
relative rights, preferences and limitations thereof as follows:

SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK:

Section 1. DESIGNATION AND AMOUNT. The shares of such series shall
be designated as "Series A Junior Participating Cumulative Preferred Stock"
(the "Series A Preferred Stock") and the number of shares constituting the
Series A Preferred Stock shall be 750,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; PROVIDED,
HOWEVER, that no decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than the number of shares then outstanding
plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Series A
Preferred Stock.

Section 2. DIVIDENDS AND DISTRIBUTIONS.

(a) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior
to the Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock , in preference to the holders of shares
of Common Stock, par value $1.00 per share (the "Common Stock"), of the
Company, and of any other junior stock, shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds legally available
for the purpose, quarterly dividends payable in cash on the first day of
March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (i) $.25 per share
($1.00 per annum) or (ii) subject to the provision for adjustment hereinafter
set forth, 100 times the aggregate per share amount of all cash dividends,
and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such event
the amount to which the holder of

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each share of Series A Preferred Stock was entitled immediately prior to such
event under clause (ii) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event, and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

(b) The Company shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (a) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); PROVIDED, HOWEVER,
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$.25 per share ($1.00 per annum) on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which event dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall cumulate but shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.

Section 3. VOTING RIGHTS. The holders of shares of Series A
Preferred Stock shall have the following voting rights:

(a) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
one (1) vote on all matters submitted to a vote of the stockholders of the
Company.

(b) Except as otherwise provided herein, in the Certificate of
Incorporation, in any other Certificate of Designations creating a series of
preferred stock or any similar stock or by law, the holders of shares of
Series A Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the Company having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of
the Company.

(c) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except

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to the extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.

Section 4. CERTAIN RESTRICTIONS.

(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section
2 are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Company shall not, directly or
indirectly:

(i) declare or pay dividends on, or make any other
distributions with respect to any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock;

(ii) declare or pay dividends on, or make any other
distributions with respect to any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are payable or
in arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;

(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock,
provided that the Company may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Company ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or

(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.

(b) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration, directly or indirectly, any
shares of stock of the Company unless the Company could, under paragraph (a)
of this Section 4, purchase or otherwise acquire such shares at such time and
in such manner.

Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock and may be reissued as part of a new series of preferred
stock subject to the conditions and restrictions on issuance set forth
herein, in the Certificate of Incorporation, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock or as
otherwise required by law.

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Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall
be made to: (i) the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received the greater of (A) $1.00 per share ($.01
per one one-hundredth of a share), plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (B) an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate amount
to be distributed per share to holders of shares of Common Stock; or (ii) the
holders of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and
all such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.

In the event the Company shall at any time declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such event the aggregate amount to which each
holder of a share of Series A Preferred Stock was entitled immediately prior
to such event under the proviso in clause (i) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately after such
event, and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

Section 7. CONSOLIDATION, MERGER OR OTHER. In the event the Company
shall enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, or otherwise changed,
then in any such event each share of Series A Preferred Stock shall at the
same time be similarly exchanged or changed into an amount per share, subject
to the provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Company shall at any
time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such event the amount set
forth in the preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event, and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.

Section 8. NO REDEMPTION. The shares of Series A Preferred Stock
shall not be redeemable.

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<PAGE>

Section 9. RANK. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Company's preferred stock whether issued
before or after the issuance of the Series A Preferred Stock.

Section 10. AMENDMENT. The Certificate of Incorporation of the
Company shall not be amended in any manner that would materially alter or
change the powers, preferences or special rights of the Series A Preferred
Stock without the affirmative vote of the holders of at least two-thirds of
the outstanding shares of Series A Preferred Stock, voting together as a
single class.

IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Company by a Vice President of the Company this 11th day of
March, 1997.

By: /s/ Richard H. Sheehan, Jr.
Name: Richard H. Sheehan, Jr.
Title: SVP and General Counsel

<PAGE>

[Exhibit 3.2]
CITY NATIONAL CORPORATION

BYLAWS

ARTICLE I

OFFICES

Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.

Section 2. The corporation may also have offices at such other
places both within and without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation
may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Beverly Hills, State of California, at
such place as may be fixed from time to time by the board of directors, or at
such other place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the
notice of the meeting. Meetings of stockholders for any other purpose may be
held at such time and place, within or without the State of Delaware, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.

Section 2. Annual meetings of stockholders shall be held on the
third Tuesday of April, if not a legal holiday, and if a legal holiday, then
on the next secular day following at 4:00 P.M., or at such other date and
time as shall be designated from time to time by the board of directors and
stated in the notice of meeting, at which they shall elect by a plurality
vote a board of directors, and transact such other business as may be brought
before the meeting. (January 27, 1982)

Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to
vote at such meeting not less than ten nor more than fifty days before the
date of the meeting.

Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in
the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and

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<PAGE>

place of the meeting during the whole time thereof, and may be inspected by
any stockholder who is present.

Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board
of directors. Such request shall state the purpose or purposes of the
proposed meeting. (Amended January 22, 1986)

Section 6. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not less than ten nor more then fifty days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.

Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.

Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certification of incorporation. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall
have power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted
at the meeting as originally notified. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.

Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or
of the certificate of incorporation, a different vote is required in which
case such express provision shall govern and control the decision of such
question.

Section 10. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such stockholder, but no proxy
shall be voted on after three years from its date, unless the proxy provides
for a longer period.

Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken for or in connection with any corporate
action, by any provision of the statutes, the meeting and vote of stockholders
may be dispensed with if all of the stockholders who would have been entitled to
vote upon the action if such meeting were held shall consent in writing to such
corporate action being taken; or if the certificate of incorporation authorizes
the action to be taken with the written consent of the holders of less than all
of the stock who would have been entitled to vote upon the action if a meeting
were held, then on the written consent of the stockholders having not less than
the minimum percentage of the vote required by statute for the proposed
corporate action, and provided that prompt

2
<PAGE>

notice must be given to all stockholders of the taking of corporate action
without a meeting and by less than unanimous written consent.

ARTICLE III

DIRECTORS

Section 1. (a) The number of directors which shall constitute
the whole board shall be not less than five nor more than twenty-five, all of
whom must be stockholders of this corporation. The first board shall consist
of three directors. Thereafter, within the limits above specified, the
number of directors shall be determined by resolution of the board of
directors or by the stockholders as provided in Section 1(b) below. The
directors shall be elected at the annual meeting of the stockholders, except
as provided in Section 2 of this ARTICLE, and each director elected shall
hold office until his successor is elected and qualified. (January 27, 1982)

Section 1. (b) Nominations for the election of directors may be
made by the board of directors or by any stockholder entitled to vote for the
election of directors. Such nominations other than by the board of directors
shall be made by notice in writing, delivered or mailed by first class United
States mail, postage prepaid, to the Secretary of the Corporation not less
than 60 days prior to the first anniversary of the date of the last meeting
of the stockholders of the Corporation called for the election of directors.
(January 27, 1982)

Each notice shall set forth (i) the name, age, business address and,
if known, the residence address of each nominee proposed in such notice; (ii)
the principal occupation or employment of each such nominee; (iii) the number
of shares of stock of the Corporation which are beneficially owned by such
nominee; and (iv) such other information as would be required by the Federal
Securities Law and the Rules and Regulations promulgated thereunder in
respect of an individual nominated as a director of the Corporation and for
whom proxies are solicited by the board of directors of the Corporation.
(January 27, 1982)

The Chairman of any meeting of stockholders may, if the fact warrant,
determine and declare to the meeting that a nomination was not in accordance
with the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(January 27, 1982)

Section 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a
majority of the directors then office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
shall qualify, unless sooner displaced. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.
If, at the time of filling any vacancy or any newly created directorship, the
directors then in office shall constitute less than a majority of the whole
board (as constituted immediately prior to any such increase), a Court of
competent jurisdiction may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares
at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors
then in office.

3
<PAGE>

Section 3. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and
do all such lawful acts and things as are not by statute or by the
certificate of incorporation or by these bylaws directed or required to be
exercised or done by the stockholders.

MEETINGS OF THE BOARD OF DIRECTORS

Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.

Section 5. A regular meeting of the board of directors shall be
held without other notice than this bylaw immediately after, and at the same
place as, the annual meeting of stockholders. (January 26, 2000)

Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.

Section 7. Special meetings of the board may be called by the
chairman, the president or the vice chairman on two days' notice to each
director, either personally or by mail or by telegram; special meetings shall
be called by the chairman, president, vice chairman or secretary in like
manner and on like notice on the written request of three directors.
(Amended January 25, 1995)

Section 8. At all meetings of the board a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If
a quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be
present.

Section 9. Unless otherwise restricted by the certificate of
incorporation or these bylaws, any action required or permitted to be taken
at any meeting of the board of directors or of any committee thereof may be
taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the board or committee.

COMMITTEES OF DIRECTORS

Section 10. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee
to consist of two or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the
committee. Any such committee, to the extent provided in the resolution,
shall have and may exercise the powers of the board of directors in the
management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it;
provided, however, that in the absence or disqualification of any member of
such committee or committees, the member or members

4
<PAGE>

thereof present at any meeting and not disqualified from voting, whether or
not he or they constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such absent
or disqualified member. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the
board of directors.

Section 11. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.

COMPENSATION OF DIRECTORS

Section 12. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed
sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving
the corporation in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allowed like compensation
for attending committee meetings.

ARTICLE IV

NOTICES

Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be
given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail addressed
to such director or stockholder, at his address as it appears on the records
of the corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by telegram.

Section 2. Whenever any notice is required to be given under the
provisions of the statues or of the certificate of incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.

ARTICLE V

OFFICERS

Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a chairman of the board, a chief executive
officer, a president, a vice chairman, a vice president, a secretary and a
chief financial officer/treasurer. The board of directors may also choose
additional vice chairmen, additional vice presidents, one or more assistant
secretaries and one or more assistant chief financial officers/treasurers.
Any number of offices may be held by the same person, unless the certificate
of incorporation or these bylaws otherwise provide. (Amended January 12,
1977; December 16, 1992; January 25, 1995, January 26, 2000)

Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a chairman of the board, a chief
executive officer, a president, one or more

5
<PAGE>

vice chairmen, one or more vice presidents, a secretary and a chief financial
officer/treasurer. (Amended January 12, 1977; December 16, 1992; January 25,
1995, January 26, 2000)

Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board. (Amended January 12, 1977)

Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors. (Amended January 12,
1977)

Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualified. Any officer elected or appointed
by the board of directors may be removed at any time by the affirmative vote
of a majority of the board of directors. Any vacancy occurring in any office
of the corporation shall be filled by the board of directors. (Amended
January 12, 1977)

THE CHAIRMAN OF THE BOARD

Section 6. The chairman of the board shall preside at all meetings
of the stockholders and the board of directors and shall be an ex-officio
member of all committees of the board of directors. The chairman of the
board shall, in the absence of the chief executive officer or if the chief
executive officer is unable, refuses or chooses not to act, function as the
chief executive officer of the corporation. (Amended January 12, 1977, January
26, 2000)

THE CHIEF EXECUTIVE OFFICER

Section 6.1 The chief executive officer shall be the managing
officer of the corporation. Subject to the control of the board of
directors, the chief executive officer shall have general supervision,
control and management of the business and affairs of the corporation and
general charge and supervision of all officers, agents and employees of the
corporation; shall see that all orders and resolutions of the board of
directors are carried into effect; and in general shall exercise all powers
and perform all duties incident to the managing officer of the corporation
and such other powers and duties as may from time to time be assigned to him
by the board of directors or as may be prescribed by these bylaws or
applicable law. The chief executive officer shall, in the absence of the
chairman of the board or if the chairman of the board is unable, refuses or
chooses not to act, function as the chairman of the board of the corporation.
(January 26, 2000)

THE PRESIDENT

Section 7. The president shall, in the absence of the chairman of
the board and the chief executive officer or if the chairman of the board and
the chief executive officer are unable, refuse or choose not to act, jointly
with the vice chairman, if any, function as the chief executive officer of
the corporation. The president shall have and may exercise any and all other
powers and duties pertaining by law, regulation, or practice to the office of
president or imposed by these bylaws. He shall also have and may exercise
such further powers and duties as may from time to time be conferred to or
assigned to him by the board of directors. (Amended January 12, 1977;
January 25, 1995, January 26, 2000)

Section 8. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed

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<PAGE>

and except where the signing and execution thereof shall be expressly
delegated by the board of directors to some other officer or agent of the
corporation. (Amended January 12, 1977)

THE VICE CHAIRMEN

Section 8.1 In the absence of the chairman of the board and the
chief executive officer or if the chairman of the board and the chief
executive officer are unable, refuse or choose not to act, the vice chairman,
if any (or, in the event there be more than one vice chairman, the vice
chairmen in the order designated or, in the absence of any designation, in
the order of their election) shall, jointly with the president, function as
the chief executive officer of the corporation and, when so acting, shall
have all the powers of and be subject to all the restrictions upon the chief
executive officer. The vice chairmen shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe. (Amended April 20, 1993; January 25, 1995, January 26, 2000)

THE VICE PRESIDENTS

Section 9. In the absence of the president or any vice chairman, if
there be any, or in the event all are unable or refuse to act, the vice
president (or in the event there be more than one vice president, the vice
presidents in the order designated, or in the absence of any designation,
then in the order of their election) shall perform the duties of the
president, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the president. Unless otherwise designated by the
board of directors, if there be vice presidents designated of different
titles, the relative authority shall first be executive vice president, then
senior vice president, and then vice president. The vice presidents shall
perform such other duties and have such other powers as the board of
directors may from time to time prescribe. (Amended January 12, 1977; April
20, 1993)

THE SECRETARY AND ASSISTANT SECRETARY

Section 10. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings
of the meetings of the corporation and of the board of directors in a book to
be kept for that purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of directors,
and shall perform such other duties as may be prescribed by the board of
directors or president, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring
it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of the corporation
and to attest the affixing by his signature. (Amended January 12, 1977)

Section 11. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the secretary or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board
of directors may from time to time prescribe.

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<PAGE>
THE CHIEF FINANCIAL OFFICER/TREASURER AND
ASSISTANT CHIEF FINANCIAL OFFICER/ASSISTANT TREASURERS

Section 12. The chief financial officer/treasurer shall have the
custody of the corporation funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all monies and other valuable effects in the
name and to the credit of the corporation in such depositories as may be
designated by the board of directors. (Amended January 12, 1977; December
16, 1992)

Section 13. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors,
at its regular meetings, or when the board of directors so requires, an
account of all his transactions as chief financial officer/treasurer and of
the financial condition of the corporation. (Amended January 12, 1977;
December 16, 1992)

Section 14. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and
with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his office and for
the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers money and
other property of whatever kind in his possession or under his control
belonging to the corporation. (Amended January 12, 1977)

Section 15. The assistant chief financial officer/assistant
treasurer, or if there shall be more than one, the assistant chief financial
officer/assistant treasurers in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the chief financial officer/treasurer or
in the event of his inability or refusal to act, perform the duties and
exercise the powers of the chief financial officer/treasurer and shall
perform such other duties and have such other powers as the board of
directors may from time to time prescribe. (Amended January 12, 1977;
December 16, 1992)

ARTICLE VI

CERTIFICATES OF STOCK

Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation
by, the chairman or vice chairman of the board of directors, or the president
or a vice president and the chief financial officer/treasurer, or the
secretary or an assistant secretary of the corporation, certifying the number
of shares owned by him in the corporation. If the corporation shall be
authorized to issue more than one class of stock or more than one series of
any class, the designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights shall be set forth in full or summarized on the face or back of the
certificate which the corporation shall issue to represent such class or
series of stock, provided that, except as otherwise provided in section 202
of the General Corporation Law of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the corporation shall issue to represent such class or series of stock,
a statement that the corporation will furnish without charge to each stock
holder who so requests the designations, preferences and relative,
participating,

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<PAGE>

optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights. (Amended December 16, 1992)

Section 2. Where a certificate is countersigned (1) by a transfer
agent other than the corporation or its employee, or, (2) by a registrar
other than the corporation or its employee, any other signature on the
certificate may be facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the corporation with
the same effect as if he were such officer, transfer agent or registrar at
the date of issue.

LOST CERTIFICATES

Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.

TRANSFERS OF STOCK

Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied
by proper evidence of succession, assignment or authority to transfer, it
shall be the duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books.

FIXING RECORD DATE

Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the board of directors may fix a new
record date for the adjourned meeting.

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<PAGE>
REGISTERED STOCKHOLDERS

Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls
and assessments a person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.

ARTICLE VII

GENERAL PROVISIONS

DIVIDENDS

Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the certificate of
incorporation.

Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums
as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation,
or for such other purpose as the directors shall think conducive to the
interest of the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.

ANNUAL STATEMENT

Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by
vote of the stockholders, a full and clear statement of the business and
condition of the corporation.

CHECKS

Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other persons
or persons as the board of directors may from time to time designate.

FISCAL YEAR

Section 5. The fiscal year of the corporation shall be the calendar
year. (Amended January 26, 1983)

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SEAL

Section 6. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate
Seal, Delaware." The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or reproduced or otherwise.

ARTICLE VIII

AMENDMENTS

Section 1. These bylaws may be altered, amended or repealed or new
bylaws may be adopted by the stockholders or by the board of directors, when
such power is conferred upon the board of directors by the certificate of
incorporation at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeat or adoption of new
bylaws be contained in the notice of such special meeting.

<PAGE>

RIGHTS AGREEMENT

dated as of February 26, 1997

by and between

CITY NATIONAL CORPORATION

and

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

as Rights Agent

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . 1

Section 2. Appointment of Rights Agent. . . . . . . . . . . . . . . . . 5

Section 3. Issuance of Right Certificates . . . . . . . . . . . . . . . 5

Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . 7

Section 5. Countersignature and Registration. . . . . . . . . . . . . . 7

Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates . . . . . . . . . . . . . . . . . . . . . . . . 8

Section 7. Exercise of Rights . . . . . . . . . . . . . . . . . . . . . 8

Section 8. Cancellation and Destruction of Right Certificates . . . . .10

Section 9. Reservation and Availability of Capital Stock. . . . . . . .10

Section 10. Securities Record Date . . . . . . . . . . . . . . . . . . .11

Section 11. Adjustment of Exercise Price, Number of Shares Issuable
Upon Exercise of Rights or Number of Rights . . . . . . . .11

Section 12. Certificate of Adjusted Exercise Price or Number of Shares
Issuable Upon Exercise of Rights . . . . . . . . . . . . . .16

Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power . . . . . . . . . . . . . . . . . . . . . . .17

Section 14. Fractional Rights and Fractional Shares. . . . . . . . . . .19

Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . .19

Section 16. Agreement of Right Holders . . . . . . . . . . . . . . . . .20

Section 17. Right Holder and Right Certificate Holder Not Deemed a
Stockholder. . . . . . . . . . . . . . . . . . . . . . . . .20

Section 18. Concerning the Rights Agent. . . . . . . . . . . . . . . . .20

Section 19. Merger or Consolidation or Change of Name of Rights Agent. .21

i
<PAGE>

Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . .21

Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . .23

Section 22. Issuance of New Right Certificates . . . . . . . . . . . . .24

Section 23. Redemption of Rights . . . . . . . . . . . . . . . . . . . .24

Section 24. Exchange of Rights . . . . . . . . . . . . . . . . . . . . .25

Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . .25

Section 26. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .26

Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . .27

Section 28. Certain Covenants. . . . . . . . . . . . . . . . . . . . . .27

Section 29. Successors . . . . . . . . . . . . . . . . . . . . . . . . .27

Section 30. Benefits of this Agreement . . . . . . . . . . . . . . . . .27

Section 31. Severability . . . . . . . . . . . . . . . . . . . . . . . .28

Section 32. Governing Law. . . . . . . . . . . . . . . . . . . . . . . .28

Section 33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . .28

Section 34. Descriptive Headings . . . . . . . . . . . . . . . . . . . .28
</TABLE>

ii
<PAGE>

TABLE OF EXHIBITS

Exhibit A -- Form of Right Certificate

TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>

Term Defined Page Section
------------ ---- -------
<S> <C> <C>
Adjustment Shares 13 11(a)(ii)

Affiliate 1 1

Agreement 1 Introduction

Associate 1 1

Beneficial Owner 1 1

Beneficially Own 1 1

Business Day 2 1

Close of Business 3 1

Closing Price 3 1

Common Share 1 1

Common Share Equivalent 3 11(a)(iii)

Company (City National Corporation) 1 Introduction

Company (following a Section 13(a) Event) 18 13(a)(iii)

Current Market Price 3 1

Distribution Date 4 3(a)

Exchange Act 4 1

Exchange Ratio 25 24(a)

Exempt Person 4 1

Exercise Price 4 7(c)

Expiration Date 4 1

iii
<PAGE>
TABLE OF DEFINED TERMS
(continued)

Term Defined Page Section
------------ ---- -------
<S> <C> <C>
10% Ownership Date 4 1

10% Stockholder 4 1

NASDAQ 3 1

Person 5 1

Preferred Share 5 1

Preferred Share Equivalent 5 11(b)

Record Date 5 Recital

Redemption Date 5 1

Redemption Price 5 23(a)

Right 1 Recital

Right Certificate 5 1

Rights Expiration Date 5 Introduction

Rights Agent 1 Introduction

Section 11(a)(ii) Event 5 11(a)(ii)

Section 13(a) Event 5 13(a)

Securities Act 5 1

Subsidiary 5 1

Surviving Person 17 13(a)

Trading Day 5 1

Unavailable Adjustment Shares 13 11(a)(iii)

Unavailable Exchange Shares 26 24(c)

Voting Share 5 1
</TABLE>

iv
<PAGE>

RIGHTS AGREEMENT

This Rights Agreement (the "Agreement") is made and entered into as of
the 26th day of February, 1997 by and between CITY NATIONAL CORPORATION, a
Delaware corporation (the "Company"), and CONTINENTAL STOCK TRANSFER & TRUST
COMPANY, a New York corporation (the "Rights Agent").

WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right") for
each Common Share (as hereinafter defined) of the Company outstanding on
March 13, 1997 (the "Record Date"), each Right representing the right to
purchase one one-hundredth of a Preferred Share (as hereinafter defined),
upon the terms and subject to the conditions set forth herein, and has
further authorized and directed the issuance of one Right with respect to
each Common Share that shall become outstanding between the Record Date and
the earliest of the Distribution Date, the Redemption Date or the Expiration
Date (as such terms are hereinafter defined).

NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereto hereby agree as follows:

Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:

"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act, as
in effect on the date hereof.

A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "Beneficially Own" any securities:

(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of
Section 13(d) of the Exchange Act and Rule 13d-3 promulgated under the
Exchange Act, in each case as in effect on the date hereof;

(ii) which such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately, or only after the passage of time, compliance with
regulatory requirements, the fulfillment of a condition or otherwise)
pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights (other than these Rights),
rights, warrants or options, or otherwise, PROVIDED, HOWEVER, that a
Person shall not be deemed the Beneficial Owner of, or to Beneficially
Own, securities tendered pursuant to a tender offer or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange;

(iii) which such Person or any such Person's Affiliates or
Associates has the right to vote, whether alone or in concert with
others, pursuant to any agreement, arrangement or understanding,
PROVIDED, HOWEVER, that a Person shall not be deemed the

<PAGE>

Beneficial Owner of, or to Beneficially Own, any security if the
agreement, arrangement or understanding to vote such security
(A) arises solely from a revocable proxy given to such Person or any
of such Person's Affiliates or Associates in response to a public proxy
solicitation made pursuant to and in accordance with the applicable
rules and regulations promulgated under the Exchange Act, and (B) is
not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report);

(iv) which are Beneficially Owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting (other than voting pursuant
to a revocable proxy as described in the proviso to clause (iii) of this
definition of "Beneficial Owner") or disposing of any securities of the
Company; and

(v) which, on any day on or after the Distribution Date,
evidence Rights that prior to such date were represented by certificates
for Common Shares that such Person Beneficially Owns on such day.

Notwithstanding anything to the contrary in this Section l(b), a Person
engaged in business as an underwriter of securities shall not be deemed to be
the Beneficial Owner of, or to Beneficially Own, any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such
acquisition.

"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the States of New York are authorized or
obligated by law or executive order to close.

"Close of Business" on any given date shall mean 5:00 p.m., New York
time, on such date; PROVIDED, HOWEVER, that if such date is not a Business
Day, it shall mean 5:00 p.m., New York time, on the next succeeding Business
Day.

"Closing Price" of a stock or other security on any day shall be the
last sale price, regular way, per share of such stock or unit of such other
security on such day or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if such stock or other security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchange on which such stock or other
security is listed or admitted to trading or, if such stock or other security
is not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use or, if on any such date such
stock or other security is not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market
maker that makes a market in such stock or other security and that is
selected by the Board of Directors of the Company.

2
<PAGE>

"Common Share" shall mean one share of the Common Stock, par value
$1.00 per share, of the Company, unless used with reference to a Person other
than the Company, in which case it shall mean one share of each class of
stock of such Person having the right to vote generally in the election of
directors or, if such Person is a Subsidiary of another Person, one Common
Share of the Person that ultimately controls such Person.

"Common Share Equivalent" shall have the meaning ascribed to it in
Section 11(a)(iii) hereof.

"Current Market Price" per share of a stock or unit of any other
security on any date shall mean the average of the daily Closing Prices of
such stock or other security for the 30 consecutive Trading Days through and
including the Trading Day immediately preceding the date in question;
PROVIDED, HOWEVER, that if any event shall have caused the Closing Price on
any Trading Day during such 30-day period not to be fully comparable with the
Closing Price on the date in question (or, if no Closing Price is available
on the date in question, on the Trading Day immediately preceding the date in
question), then each such non-comparable Closing Price so used shall be
appropriately adjusted by the Board of Directors in order to make the Closing
Price on each Trading Day during the period used for the determination of the
Current Market Price fully comparable with the Closing Price on such date in
question (or, if applicable, the immediately preceding Trading Day).
"Current Market Price" per share of any stock or unit of such other security
that is not publicly held or so listed or traded, and "Current Market Price"
of any other property, shall mean the fair value per share of such stock or
unit of such other security, or the fair value of such other property,
respectively, as determined in good faith by the Board of Directors of the
Company based upon such appraisals or valuation reports of such independent
experts as the Board of Directors shall in good faith determine appropriate,
which determination shall be described in a statement filed by the Company
with the Rights Agent.

"Distribution Date" shall have the meaning ascribed to it in Section 3
hereof.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

"Exempt Person" shall mean the Company, any wholly-owned Subsidiary of
the Company, any employee benefit plan of the Company or of a Subsidiary of
the Company, and any Person holding Voting Shares for or pursuant to the
terms of any such employee benefit plan.

"Exercise Price" shall have the meaning ascribed to it in Section 7(c)
hereof.

"Expiration Date" shall mean March 13, 2007.

"10% Ownership Date" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, a
report filed pursuant to Section 13(d) of the Exchange Act) by the Company or
a 10% Stockholder containing the facts by virtue of which a Person has become
a 10% Stockholder.

"10% Stockholder" shall mean any Person that Beneficially Owns 10% or
more of the Voting Shares of the Company then outstanding; PROVIDED, HOWEVER,
that the term "10% Stockholder" shall not include: (i) an Exempt Person; (ii)
any Person that would not

3
<PAGE>

otherwise be a 10% Stockholder but for a reduction in the number of
outstanding Voting Shares resulting from a stock repurchase program or other
similar plan of the Company or from a self tender offer of the Company, which
plan or tender offer commenced on or after the date hereof; PROVIDED,
HOWEVER, that the term "10% Stockholder" shall include such Person from and
after the first date upon which (A) such Person, since the date of the
commencement of such plan or tender offer, shall have acquired Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company
equal to 1% or more of the Voting Shares of the Company then outstanding and
(B) such Person, together with all Affiliates and Associates of such Person,
shall Beneficially Own 10% or more of the Voting Shares of the Company then
outstanding; (iii) any Person that would not otherwise be a 10% Stockholder
but for its Beneficial Ownership of Rights or (iv) any Person that is the
Beneficial Owner of 10% or more of the outstanding Common Shares as of
February 26, 1997 unless or until such person shall acquire, without the
prior approval of the Board of Directors, Beneficial Ownership of additional
Common Shares and, following such acquisition, is the Beneficial Owner of
more than 24.9% of the Voting Shares of the Company then outstanding. No
Person shall be deemed to be a 10% Stockholder by reason of clause (iv) of
the preceding sentence solely because of an acquisition of Beneficial
Ownership of Common Shares: (i) by gift; (ii) as the result of the death of a
Person, pursuant to a will or the laws of descent, or as the result of the
provisions of any trust or partnership agreement; or (iii) upon the exercise
of any stock option granted by the Company to an employee, officer or
director. In calculating the percentage of the outstanding Voting Shares
that are Beneficially Owned by a Person for purposes of this definition,
Voting Shares that are Beneficially Owned by such Person shall be deemed
outstanding, and Voting Shares that are not Beneficially Owned by such Person
and that are subject to issuance upon the exercise or conversion of
outstanding conversion rights, exchange rights, rights, warrants or options
shall not be deemed outstanding. Any determination made by the Board of
Directors of the Company as to whether any Person is or is not a 10%
Stockholder shall be conclusive and binding upon all holders of Rights.

"Person" shall mean any individual, firm, partnership, corporation,
association, group (as such term is used in Rule 13d-5 promulgated under the
Exchange Act as in effect on the date hereof) or other entity, and shall
include any successor (by merger or otherwise) of such entity.

"Preferred Share" shall mean one share of the Series A Junior
Participating Cumulative Preferred Stock, par value $1.00 per share, of the
Company, which shall have the rights and preferences set forth in the form of
Certificate of Designations attached to the Agreement.

"Preferred Share Equivalent" shall have the meaning ascribed to it in
Section 11(b) hereof.

"Record Date" shall have the meaning ascribed to it in the recitals
hereto.

"Redemption Date" shall mean the date of the action of the Board of
Directors of the Company authorizing and directing the redemption of the
Rights pursuant to Section 23(a) hereof or the exchange of the Rights
pursuant to Section 24(a) hereof.

"Redemption Price" shall have the meaning ascribed to it in Section
23(a) hereof.

4
<PAGE>

"Right Certificate", as that term is used with respect to any period
prior to the Distribution Date, shall have the meaning ascribed to it in
Section 3(b) hereof, and, as that term is used with respect to any period on
or after the Distribution Date, shall have the meaning ascribed to it in
Section 3(c) hereof.

"Rights Expiration Date" shall mean the Expiration Date, except if
there has been a Distribution Date, then it shall mean the tenth anniversary
of the Distribution Date.

"Section 11(a)(ii) Event" shall have the meaning ascribed to it in
Section 11(a)(ii) hereof.

"Section 13(a) Event" shall have the meaning ascribed to it in Section
13(a) hereof.

"Securities Act" shall mean the Securities Act of 1933, as amended.

"Subsidiary" of any Person shall mean any corporation or other Person
of which equity securities or equity interests representing a majority of the
voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.

"Trading Day" shall mean, as to any stock or other security, a day on
which the principal national securities exchange on which such stock or other
security is listed or admitted to trading is open for the transaction of
business or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, a Business Day.

"Voting Share" shall mean (i) a Common Share of the Company and (ii)
any other share of capital stock of the Company entitled to vote generally in
the election of directors or entitled to vote together with the Common Shares
in respect of any merger, consolidation, sale of all or substantially all of
the Company's assets, liquidation, dissolution or winding up. References in
this Agreement to a percentage or portion of the outstanding Voting Shares
shall be deemed a reference to the percentage or portion of the total votes
entitled to be cast by the holders of the outstanding Voting Shares.

Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of Rights in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.

Section 3. ISSUANCE OF RIGHT CERTIFICATES.

(a) "Distribution Date" shall mean the date, after the date hereof,
that is the earliest of (i) the tenth Business Day (or such later day as
shall be designated by the Board of Directors of the Company) following the
date of the commencement of, or the first public announcement of the intent
of any Person, other than an Exempt Person, to commence a tender offer or
exchange offer, the consummation of which would cause any Person to become a
10% Stockholder, (ii) the date of the first Section 11(a)(ii) Event or (iii)
the date of the first Section 13(a) Event.

(b) Until the Distribution Date, (i) the Rights shall be
represented by certificates for Common Shares (all of which certificates for
Common Shares shall be deemed to be Right Certificates) and not by separate
Right Certificates, (ii) the record holder of the Common Shares

5
<PAGE>

represented by each of such certificates shall be the record holder of the
Rights represented thereby and (iii) the Rights shall be transferable only in
connection with the transfer of Common Shares. Until the earliest of the
Distribution Date, the Redemption Date or the Expiration Date, the surrender
for transfer of such certificates for Common Shares shall also constitute the
surrender for transfer of the Rights represented thereby.

(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send by first-class,
postage-prepaid mail to each record holder of Common Shares, as of the Close
of Business on the Distribution Date, at the address of such holder shown on
the records of the Company, a Right Certificate substantially in the form of
EXHIBIT A hereto representing one Right for each Common Share so held. From
and after the Distribution Date, the Rights shall be represented solely by
such Right Certificates and may only be transferred by the transfer of such
Right Certificates, and the holders of such Right Certificates, as listed in
the records of the Company or any transfer agent or registrar for such
Rights, shall be the record holders of such Rights.

(d) Certificates for Common Shares issued at any time after the
Record Date and prior to the earliest of the Distribution Date, the
Redemption Date or the Expiration Date, shall have impressed on, printed on,
written on or otherwise affixed to them the following legend:

This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement dated as of
February 26, 1997 by and between City National Corporation and
Continental Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agreement"), as amended to date, the terms and conditions
of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of City
National Corporation. Under certain circumstances specified in
the Rights Agreement, such Rights will be represented by separate
certificates and will no longer be represented by this
certificate. Under certain circumstances specified in the Rights
Agreement, Rights beneficially owned by certain persons may become
null and void. City National Corporation will mail to the record
holder of this certificate a copy of the Rights Agreement without
charge promptly following receipt of a written request therefor.
As described in the Rights Agreement, Rights issued to any Person
who becomes an Acquiring Person (as defined in the Rights
Agreement) shall become null and void.

(e) Certificates for Common Shares issued at any time on or after
the Distribution Date and prior to the earlier of the Redemption Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:

This certificate does not represent any Right issued pursuant to
the terms of a Rights Agreement dated as of February 26, 1997 by
and between the Corporation and Continental Stock Transfer & Trust
Company, as Rights Agent.

(f) In the event that at any time on or after the earlier of the
date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event and prior to the earlier of the Redemption Date or the Expiration
Date, the Company shall issue any Common Shares pursuant

6
<PAGE>

to the exercise of conversion rights, exchange rights, rights (other than
Rights), warrants or options that shall have been issued or granted prior to
the earlier of the date of the first Section 11(a)(ii) Event or the date of
the first Section 13(a) Event, then, unless the Board of Directors of the
Company shall have provided otherwise at the time of the issuance or grant of
such conversion rights, exchange rights, rights (other than Rights), warrants
or options, the Rights Agent shall, as soon as practicable after the date of
such event, send by first-class, postage-prepaid mail to the record holder of
such Common Shares, at the address of such holder as shown on the records of
the Company, a Right Certificate substantially in the form of EXHIBIT A
hereto representing one Right for each Common Share so issued.

(h) Notwithstanding the foregoing provisions of this Section 3, the
Rights Agent shall not send any Right Certificate to any 10% Stockholder or
any of its Affiliates or Associates or to any Person if the Rights held by
such Person are Beneficially Owned by a 10% Stockholder or any of its
Affiliates or Associates. Any determination made by the Board of Directors
of the Company as to whether any Common Shares are or were Beneficially Owned
at any time by a 10% Stockholder or an Affiliate or Associate of a 10%
Stockholder shall be conclusive and binding upon all holders of Rights.

Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates and
the form of assignment, including certificate, and the form of election to
purchase, including certificate, printed on the reverse thereof, when, as and
if issued, shall be substantially the same as EXHIBIT A hereto, and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange upon
which the Rights or the securities of the Company issuable upon exercise of
the Rights may from time to time be listed, or to conform to usage. Subject
to Section 22 hereof, Right Certificates, whenever issued, that are issued in
respect of Common Shares that were issued and outstanding as of the Close of
Business on the Distribution Date, shall be dated as of the Distribution Date.

Section 5. COUNTERSIGNATURE AND REGISTRATION.

(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Vice Chairman of the Board, its
President or any Vice President, either manually or by facsimile signature,
and may have affixed thereto the Company's seal or a facsimile thereof
attested by its Secretary or any Assistant Secretary, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned
by the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any
of the Right Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery by the
Company, such Right Certificates may nevertheless be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had not ceased
to be such officer of the Company. Any Right Certificate may be signed on
behalf of the Company by any person who at the actual date of such execution
shall be a proper officer of the Company to sign such Right Certificate, even
though such person was not such an officer at the date of the execution of
this Agreement.

7
<PAGE>

(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept at its principal offices books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of Right Certificates, the number of
Rights represented on its face by each Right Certificate and the date of each
Right Certificate.

Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.

(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof,
at any time after the Close of Business on the Distribution Date, and so long
as the Rights represented thereby remain outstanding, any one or more Right
Certificates may be transferred, split-up, combined or exchanged for one or
more Right Certificates representing the same aggregate number of Rights as
the Right Certificates surrendered. Any registered holder desiring to
transfer, split up, combine or exchange one or more Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent with the form of assignment,
including certificate, on the reverse side thereof completed and duly
executed, with signature guaranteed. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto one or more Right
Certificates, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.

(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of such Right Certificate if mutilated, the Company shall issue
and deliver to the Rights Agent for delivery to the record holder of such
Right Certificate a new Right Certificate of like tenor in lieu of such lost,
stolen, destroyed or mutilated Right Certificate.

(c) Notwithstanding anything to the contrary in this Section 6, the
Rights Agent shall not countersign and deliver a Right Certificate to any
Person if such Right Certificate represents, or would represent when held by
such Person, Rights that had become or would become null and void pursuant to
Section 7(d) hereof.

Section 7. EXERCISE OF RIGHTS.

(a) Until the Distribution Date, no Right may be exercised.

(b) Subject to Section 7(d) and (g) hereof and the other provisions
of this Agreement, at any time after the Close of Business on the
Distribution Date and prior to the Close of Business on the earlier of the
Redemption Date or the Rights Expiration Date, the registered holder of any
Right Certificate may exercise the Rights represented thereby in whole or in
part upon surrender of such Right Certificate, with the form of election to
purchase, including certificate, on the reverse side thereof completed and
duly executed, with signature guaranteed,

8
<PAGE>

to the Rights Agent at the office of the Rights Agent at 2 Broadway, 19th
Floor, New York, New York, 10004, together with payment of the Exercise Price
for each Right exercised. Upon the exercise of an exercisable Right and
payment of the Exercise Price in accordance with the provisions of this
Agreement, the holder of such Right shall be entitled to receive, subject to
adjustment as provided herein, one one-hundredth of a Preferred Share (or,
following the occurrence of a Section 11(a)(ii) Event or a Section 13(a)
Event, Common Shares and/or other securities).

(c) The "Exercise Price" for the exercise of each Right shall
initially be $90.00 and shall be payable in lawful money of the United States
of America in accordance with Section 7(f) hereof. The Exercise Price and
the number of Preferred Shares (or, following the occurrence of a Section
11(a)(ii) Event or a Section 13(a) Event, Common Shares and/or other
securities) to be acquired upon exercise of a Right shall be subject to
adjustment from time to time as provided in Sections 7(e), 11 and 13 hereof
and the other provisions of this Agreement.

(d) Notwithstanding anything in this Agreement to the contrary,
from and after the earlier of the date of the first Section 11(a)(ii) Event
or the date of the first Section 13(a) Event, any Rights that are or were
Beneficially Owned by a 10% Stockholder or any Affiliate or Associate of a
10% Stockholder at any time on or after the Distribution Date shall be null
and void, and for all purposes of this Agreement such Rights shall thereafter
be deemed not to be outstanding, and any holder of such Rights (whether or
not such holder is a 10% Stockholder or an Affiliate or Associate of a 10%
Stockholder) shall thereafter have no right to exercise such Rights.

(e) Prior to the Distribution Date, if the Board of Directors of
the Company shall have determined that such action adequately protects the
interests of the holders of Rights, the Company may, in its discretion,
substitute for all or any portion of the Preferred Shares that would
otherwise be issuable (after the Close of Business on the Distribution Date)
upon the exercise of each Right and payment of the Exercise Price (i) cash,
(ii) other equity securities of the Company, (iii) debt securities of the
Company, (iv) other property or (v) any combination of the foregoing, in each
case having an aggregate Current Market Price equal to the aggregate Current
Market Price of the Preferred Shares for which substitution is made. Subject
to Section 7(d) hereof, in the event that the Company takes any action
pursuant to this Section 7(e), such action shall apply uniformly to all
outstanding Rights.

(f) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase, including certificate,
completed and duly executed, with signature guaranteed, accompanied by
payment of the Exercise Price for each Right to be exercised and an amount
equal to any applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with Section 9 hereof by certified check
or cashier's check payable to the order of the Company, the Rights Agent
shall thereupon promptly (i) requisition from the transfer agent of the
Preferred Shares (or, following the occurrence of a Section 11(a)(ii) Event
or a Section 13(a) Event, Common Shares and/or securities) certificates for
the number of Preferred Shares (or such other securities) to be purchased,
and the Company hereby irrevocably authorizes such transfer agent to comply
with all such requests, and/or, as provided in Section 14 hereof, requisition
from the depositary agent described therein depositary receipts representing
such number of one-hundredths of a Preferred Share (or such other securities)
as are to be

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purchased (in which case certificates for the Preferred Shares (or such other
securities) represented by such receipts shall be deposited by the transfer
agent with such depositary agent) and the Company hereby directs such
depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional Preferred Shares (or such other securities) in
accordance with Section 14 hereof, (iii) after receipt of such certificates,
depositary receipts or cash, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (iv) when appropriate,
after receipt thereof, deliver such cash to or upon the order of the
registered holder of such Right Certificate.

(g) Notwithstanding the foregoing provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register and qualify under the
Securities Act and any applicable securities law of any jurisdiction the
Preferred Shares to be issued pursuant to the exercise of the Rights;
PROVIDED, HOWEVER, that nothing contained in this Section 7 shall relieve the
Company of its obligations under Section 9(c) hereof.

(h) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights represented thereby, a new Right
Certificate representing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to such holder's duly authorized assigns, subject
to the provisions of Section 14 hereof.

Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.

Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.

(a) Subject to Sections 7(e) and 9(f) hereof, the Company shall
cause to be reserved and kept available out of its authorized and unissued
equity securities (or out of its authorized and issued equity securities held
in its treasury), the number of such equity securities that will from time to
time be sufficient to permit the exercise in full of all outstanding Rights.

(b) In the event that any securities issuable upon exercise of the
Rights are listed on any national securities exchange, the Company shall use
its best efforts, from and after such time as the Rights become exercisable,
to cause all such securities issued or reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such exercise.

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<PAGE>

(c) If necessary to permit the issuance of securities upon exercise
of the Rights, the Company shall use its best efforts, from and after the
Distribution Date, to register and qualify such securities under the
Securities Act, the Exchange Act and any other applicable securities laws and
to keep such registration effective until the earlier of the Redemption Date
or the Expiration Date.

(d) The Company shall take all such action as may be necessary to
ensure that all securities delivered upon exercise of the Rights shall, at
the time of delivery of the certificates for such securities (subject to
payment of the Exercise Price), be duly and validly authorized and issued and
fully paid and nonassessable securities.

(e) The Company shall pay when due and payable any and all federal
and state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any securities upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax that may be payable in respect of any transfer or delivery of a
Right Certificate to a Person other than, or the issuance or delivery of a
certificate for securities in respect of a name other than that of, the
registered holder of the Right Certificate representing Rights surrendered
for exercise, or to issue or deliver any certificate for securities upon the
exercise of any Right until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's satisfaction
that no such tax is due.

(f) With respect to the Common Shares and/or other securities
issuable pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing
covenants shall be applicable only upon and following the occurrence of a
Section 11(a)(ii) Event.

Section 10. SECURITIES RECORD DATE. Each Person in whose name any
certificate for securities of the Company is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record
of the securities represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate representing such Rights was
duly surrendered and payment of the Exercise Price (and any applicable
transfer taxes) was made; PROVIDED, HOWEVER, that if the date of such
surrender and payment is a date upon which the securities transfer books of
the Company are closed, such person shall be deemed to have become the record
holder of such securities on, and such certificate shall be dated, the next
succeeding Business Day on which the securities transfer books of the Company
are open.

Section 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER OF SHARES ISSUABLE
UPON EXERCISE OF RIGHTS OR NUMBER OF RIGHTS. The Exercise Price, the number
and kind of securities that may be purchased upon exercise of a Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.

(a)(i) In the event that the Company shall at any time after the
Close of Business on the Record Date and prior to the Close of Business
on the earlier of the Redemption Date or the Expiration Date (A) declare
or pay any dividend on the Preferred Shares payable in Preferred Shares
or Voting Shares, (B) subdivide the outstanding Preferred Shares,
(C) combine the outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue Preferred Shares or other securities of the
Company (other than those

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<PAGE>

for which an adjustment is required under Section 11(b) hereof)
in a reclassification of the Preferred Shares (including any
such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving
corporation) or in a reorganization of the Company, then, and upon each
such event, the number and kind of Preferred Shares or other securities
issuable upon the exercise of a Right on the date of such event shall be
proportionately adjusted so that the holder of any Right exercised on or
after such date shall be entitled to receive, upon the exercise thereof
and payment of the Exercise Price, the aggregate number and kind of
Preferred Shares or other securities or other property, as the case may
be, that, if such Right had been exercised immediately prior to such date
and at a time when such Right was exercisable and the transfer books of
the Company were open, such holder would have owned upon such exercise
and would have been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs that
would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.

(ii) In the event that a 10% Ownership Date shall have occurred
and neither the Redemption Date nor the Expiration Date shall have
occurred prior to the tenth Business Day following such 10% Ownership
Date (a "Section 11(a)(ii) Event"), then, and upon each such
Section 11(a)(ii) Event, proper provision shall be made so that, except
as provided in Section 7(d) hereof, each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof in
accordance with the terms of this Agreement and payment of the then
current Exercise Price, such number of Common Shares of the Company as
shall equal the result obtained by (A) multiplying the then current
Exercise Price by the then number of one-hundredths of a Preferred Share
for which a Right was exercisable immediately prior to such
Section 11(a)(ii) Event (or, if the Distribution Date shall not have
occurred prior to the date of such Section 11(a)(ii) Event, the number of
one-hundredths of a Preferred Share for which a Right would have been
exercisable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such Section 11(a)(ii) Event), and
(B) dividing that product by 50% of the Current Market Price of a Common
Share on the date of occurrence of the relevant Section 11(a)(ii) Event
(such number of shares being hereinafter referred to as the "Adjustment
Shares"). Successive adjustments shall be made pursuant to this
paragraph each time a Section 11(a)(ii) Event occurs.

(iii) In the event that on the date of a Section 11(a)(ii) Event
the aggregate number of Common Shares that are authorized by the
Company's Certificate of Incorporation, as amended from time to time, but
not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is less than the aggregate number of Adjustment
Shares thereafter issuable upon the exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof (the excess of such number of
Adjustment Shares over and above such number of Common Shares being
hereinafter referred to as the "Unavailable Adjustment Shares"), then,
and upon each such event, the Company shall substitute for the pro rata
portion of the Unavailable Adjustment Shares that would otherwise be
issuable thereafter upon the exercise of each Right and payment of the
Exercise Price (A) cash, (B) other equity securities of the Company
(including, without

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<PAGE>

limitation, shares of preferred stock of the Company or units of
such shares having the same Current Market Price as one
Common Share (a "Common Share Equivalent")), (C) debt securities of the
Company, (D) other property or (E) any combination of the foregoing, in
each case having an aggregate Current Market Price equal to the aggregate
Current Market Price of the Unavailable Adjustment Shares for which
substitution is made. Subject to Section 7(d) hereof, in the event that
the Company takes any action pursuant to this Section 11(a)(iii), such
action shall apply uniformly to all outstanding Rights.

(b) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on
the earlier of the Redemption Date or the Expiration Date, fix a record date
for the issuance of rights, options or warrants to all holders of Preferred
Shares entitling them initially to subscribe for or purchase Preferred Shares
(or shares having the same rights, privileges and preferences as the
Preferred Shares ("Preferred Share Equivalents")) or securities convertible
into Preferred Shares or Preferred Share Equivalents, at a price per
Preferred Share or Preferred Share Equivalent (or having a conversion price
per share, if a security convertible into Preferred Shares or Preferred Share
Equivalents) less than the Current Market Price per Preferred Share on such
record date, then, and upon each such event, the Exercise Price to be in
effect after such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be equal to the sum of the number of Preferred
Shares outstanding on such record date plus the number of Preferred Shares
that the aggregate offering price of the total number of Preferred Shares
and/or Preferred Share Equivalents to be so offered (and/or the aggregate
initial conversion price of the convertible securities to be so offered)
would purchase at such Current Market Price, and the denominator of which
shall be equal to the number of Preferred Shares outstanding on such record
date plus the number of additional Preferred Shares and/or Preferred Share
Equivalents to be offered for subscription or purchase (or into which the
convertible securities to be so offered are initially convertible); PROVIDED,
HOWEVER, that if such rights, options or warrants are not exercisable
immediately upon issuance but become exercisable only upon the occurrence of
a specified event or the passage of a specified period of time, then the
adjustment to the Exercise Price shall be made and become effective only upon
the occurrence of such event or such passage of time, and such adjustment
shall be made as if the record date for the issuance of such rights, options
or warrants had been the business day immediately preceding the date upon
which such rights, options or warrants became exercisable. Preferred Shares
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment to the
Exercise Price shall be made successively whenever such a record date is
fixed, and in the event that such rights or warrants are not so issued, the
Exercise Price shall be adjusted to be the Exercise Price that would then be
in effect if such record date had not been fixed.

(c) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on
the earlier of the Redemption Date or the Expiration Date, fix a record date
for the making of a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a consolidation or
merger in which the Company is the surviving corporation) of assets (other
than a distribution for which an adjustment is required under Section
11(a)(i) or (b) hereof or a regular quarterly cash dividend), then the
Exercise Price to be in effect after such record date shall be determined by
multiplying

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<PAGE>

the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be equal to the excess of the Current
Market Price per Preferred Share on such record date over and above the fair
market value of the portion of the securities or assets to be so distributed
with respect to one Preferred Share, and the denominator of which shall be
equal to such Current Market Price per Preferred Share. Such adjustments
shall be made successively whenever such a record date is fixed, and in the
event that such a distribution is not so made, the Exercise Price shall be
adjusted to be the Exercise Price that would then be in effect if such record
date had not been fixed.

(d) For the purpose of any computation under this Section 11, if
the Preferred Shares are not publicly held or traded, the "Current Market
Price" per Preferred Share shall be conclusively deemed to be the Current
Market Price per Common Share multiplied by 100.

(e) No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
then current Exercise Price; PROVIDED, HOWEVER, that any adjustments that by
reason of this Section 11(e) are not required to be made shall be cumulated
and taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest
one-thousandth of a Common Share or other share or one-millionth of a
Preferred Share, as the case may be.

(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right shall, upon exercise thereof, be entitled to
receive any securities of the Company other than Preferred Shares, and if an
event occurs in respect of such securities that, if it were to occur in
respect of Preferred Shares, would require an adjustment under this Section
11 in respect of Preferred Shares, then the number of such other securities
so receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to Preferred Shares contained in this Section 11,
and the other provisions of this Agreement with respect to Preferred Shares
shall apply on like terms to any such other securities.

(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.

(h) Unless the Company shall have exercised its election as
provided in Section 11(i) below, upon each adjustment of the Exercise Price
as a result of the calculations made in Sections 11(b) and (c) hereof, each
Right outstanding immediately prior to the making of such adjustment shall
thereafter represent the right to purchase, at the adjusted Exercise Price,
that number of one-hundredths of a Preferred Share (calculated to the nearest
one-millionth of a Preferred Share) obtained by multiplying (i) the number of
one-hundredths of a Preferred Share purchasable upon the exercise of one
Right immediately prior to such adjustment of the Exercise Price by (ii) the
Exercise Price in effect immediately prior to such adjustment, and dividing
the product so obtained by the Exercise Price in effect immediately after
such adjustment.

(i) The Company may elect, on or after the date of any adjustment
of the Exercise Price, to adjust the number of Rights instead of making any
adjustment in the number of

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<PAGE>

Preferred Shares purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one-hundredths of a Preferred Share for which a
Right was exercisable immediately prior to such adjustment. Each Right held
of record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one one-thousandth of a Right)
obtained by dividing the Exercise Price in effect immediately prior to the
adjustment of the Exercise Price by the Exercise Price in effect immediately
after such adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights pursuant to this
Section 11(i), indicating the record date for the adjustment and, if known at
the time, the amount of the adjustment to be made. Such record date may be
the date on which the Exercise Price is adjusted or any day thereafter, but,
if separate Right Certificates have been issued, it shall be at least 10 days
after the date of such public announcement. If separate Right Certificates
have been issued, upon each adjustment of the number of Rights pursuant to
this Section 11(i), the Company shall, as promptly as practicable, cause to
be distributed to holders of record of Right Certificates on such record date
Right Certificates representing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment
or, at the option of the Company, cause to be distributed to such holders of
record in substitution and replacement for the Right Certificates held by
such holders prior to the date of such adjustment, and upon surrender thereof
if required by the Company, new Right Certificates representing all the
Rights to which such holders shall be entitled after such adjustment. Right
Certificates to be so distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the
Company, the adjusted Exercise Price) and shall be registered in the names of
the holders of record of Right Certificates on the record date specified in
the public announcement.

(j) Irrespective of any adjustment or change in the Exercise Price
or the number of one-hundredths of a Preferred Share issuable upon the
exercise of one Right, the Right Certificates theretofore and thereafter
issued may continue to express the Exercise Price per one one-hundredth of a
Preferred Share and the number of Preferred Shares issuable upon the exercise
of one Right that were expressed in the initial Right Certificates issued
hereunder.

(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the
Company shall take any corporate action that may, in the advice or opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable one one-hundredths of a Preferred Share at
such adjusted Exercise Price.

(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record
date of the number of one-hundredths of a Preferred Share and other capital
stock or securities of the Company, if any, issuable upon such exercise over
and above the number of one-hundredths of a Preferred Share and other capital
stock or securities of the Company, if any, issuable upon such exercise on
the basis of the Exercise Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due bill or

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<PAGE>

other appropriate instrument representing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.

(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such further adjustments in the number
of one-hundredths of a Preferred Share that may be purchased upon exercise of
one Right, and such further adjustments in the Exercise Price, in addition to
those adjustments expressly required by this Section 11, as and to the extent
that the Company in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of any Preferred Shares at less than the Current
Market Price thereof, (iii) issuance wholly for cash of Preferred Shares or
securities that by their terms are convertible into or exchangeable for
Preferred Shares, (iv) dividends on Preferred Shares payable in Preferred
Shares or (v) issuance of rights, options or warrants referred to in Section
11(b) hereof, hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such stockholders.

(n) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on
the earliest of the date of the first Section 11(a)(ii) Event, the date of
the first Section 13(a) Event, the Redemption Date or the Expiration Date,
(i) pay any dividend on the Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares, (iii) combine the outstanding Common
Shares into a smaller number of Common Shares or (iv) issue Common Shares in
a reclassification of the Common Shares (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, and upon each such event, the
Exercise Price to be in effect after such event shall be determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction, the numerator of which shall be equal to the number of Common
Shares outstanding immediately prior to such event and the denominator of
which shall be equal to the number of Common Shares outstanding immediately
after such event. Successive adjustments shall be made pursuant to this
Section 11(n) each time such a dividend is paid or such a subdivision,
combination or reclassification is effected. If an event occurs that would
require an adjustment under both this Section 11(n) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(n) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.

Section 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF
SHARES ISSUABLE UPON EXERCISE OF RIGHTS. Whenever an adjustment is made as
provided in Section 11 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief statement of the facts
giving rise to such adjustment, (b) file with the Rights Agent and with each
transfer agent for the securities issuable upon exercise of the Rights a copy
of such certificate and (c) mail a brief summary thereof to each holder of
Rights in accordance with Section 25 hereof. Notwithstanding the foregoing
sentence, the failure of the Company to make such certification or to give
such notice shall not affect the validity or the force and effect of such
adjustment. Any adjustment to be made pursuant to Sections 11 or 13 hereof
shall be effective as of the date of the event giving rise to such adjustment.

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<PAGE>

Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.

(a) In the event (a "Section 13(a) Event") that, at any time on or
after the 10% Ownership Date and prior to the earlier of the Redemption Date
or the Expiration Date, (1) the Company shall, directly or indirectly,
consolidate with or merge with and into any other Person and the Company
shall not be the continuing or surviving corporation in such consolidation or
merger, (2) any Person shall, directly or indirectly, consolidate with or
merge with and into the Company and the Company shall be the continuing or
surviving corporation in such merger and, in connection with such merger, all
or part of the Common Shares shall be changed into or exchanged for stock or
other securities of any Person or cash or any other property, or (3) the
Company and/or any one or more of its Subsidiaries shall, directly or
indirectly, sell or otherwise transfer, in one or more transactions (other
than transactions in the ordinary course of business), assets or earning
power aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any Person or Persons other than
the Company or one or more of its wholly-owned Subsidiaries (such Persons,
together with the Persons described in clauses (1) and (2) above shall be
collectively referred to in this Section as the "Surviving Person"), then,
and in each such case, proper provision shall be made so that:

(i) except as provided in Section 7(d) hereof, each holder of a
Right shall thereafter have the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement and payment of the
then current Exercise Price, in lieu of the securities or other property
otherwise purchasable upon such exercise, such number of validly
authorized and issued, fully paid and nonassessable Common Shares of the
Surviving Person (and if such Surviving Person has more than one class or
series of Common Shares, such number of validly authorized and issued,
fully paid and nonassessable Common Shares of each series or class) as
shall be equal to a fraction, the numerator of which is the product of
the then current Exercise Price multiplied by the number of
one-hundredths of a Preferred Share purchasable upon the exercise of one
Right immediately prior to the first Section (a) Event (or, if the
Distribution Date shall not have occurred prior to the date of such
Section 13(a) Event, the number of one-hundredths of a Preferred Share
that would have been so purchasable if the Distribution Date had occurred
on the Business Day immediately preceding the date of such Section 13(a)
Event, or, if a Section 11(a)(ii) Event has occurred prior to such
Section 13(a) Event, the product of the number of one-hundredths of a
Preferred Share purchasable upon the exercise of a Right (or, if the
Distribution Date shall not have occurred prior to the date of such
Section 11(a)(ii) Event, the number of one-hundredths of a Preferred
Share that would have been so purchasable if the Distribution Date had
occurred on the Business Day immediately preceding the date of such
Section 11(a)(ii) Event) immediately prior to such Section 11(a)(ii)
Event, multiplied by the Exercise Price in effect immediately prior to
such Section 11(a)(ii) Event), and the denominator of which is 50% of the
Current Market Price per Common Share of the Surviving Person on the date
of consummation of such Section 13(a) Event;

(ii) the Surviving Person shall thereafter be liable for and
shall assume, by virtue of such consolidation, merger, sale or transfer,
all the obligations and duties of the Company pursuant to this Agreement;

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<PAGE>

(iii) the term "Company" shall thereafter be deemed to refer to
the Surviving Person; and

(iv) the Surviving Person shall take such steps (including, but
not limited to, the reservation of a sufficient number of its Common
Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to ensure that the provisions hereof
shall thereafter be applicable to its Common Shares thereafter
deliverable upon the exercise of Rights.

(b) Notwithstanding the foregoing, if the Section 13(a) Event is
the sale or transfer in one or more transactions of assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole), but less than 100% thereof, then each
Person acquiring all or a portion thereof shall assume the obligations of the
Company as to a fraction of each of the Rights equal to the fraction of the
assets of the Company and its Subsidiaries (taken as a whole) acquired by
such Person, and the obligations of the Company as to the remaining fraction
of each of the Rights shall continue to be the obligations of the Company.

(c) The Company shall not consummate a Section 13(a) Event unless
prior thereto the Company and the Surviving Person shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that such
Surviving Person shall, upon consummation of such Section 13(a) Event, assume
this Agreement in accordance with Section 13 hereof, that all rights of first
refusal or preemptive rights in respect of the issuance of Common Shares of
such Surviving Person upon exercise of outstanding Rights have been waived
and that such Section 13(a) Event shall not result in a default by such
Surviving Person under this Agreement, and further providing that, as soon as
practicable after the date of consummation of such Section 13(a) Event, such
Surviving Person shall:

(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing, use its best efforts to cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the
Expiration Date, and similarly comply with all applicable state
securities laws;

(ii) use its best efforts to list (or continue the listing of)
the Rights and the Common Shares of the Surviving Person purchasable upon
exercise of the Rights on a national securities exchange, or use its best
efforts to cause the Rights and such Common Shares to meet the
eligibility requirements for quotation on NASDAQ; and

(iii) deliver to holders of the Rights historical financial
statements for such Surviving Person that comply in all respects with the
requirements for registration on Form 10 (or any successor form) under
the Exchange Act.

(d) In the event that at any time after the occurrence of a Section
11(a)(ii) Event some or all of the Rights shall not have been exercised
pursuant to Section 11 hereof prior to the date

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of a Section 13(a) Event, such Rights shall thereafter be exercisable only in
the manner described in Section 13(a) hereof. In the event that a Section
11(a)(ii) Event occurs on or after the date of a Section 13(a) Event, Rights
shall not be exercisable pursuant to Section 11 hereof but shall instead be
exercisable pursuant to, and only pursuant to, this Section 13.

(e) The provisions of this Section 13 shall apply to each
successive merger, consolidation, sale or other transfer constituting a
Section 13(a) Event.

Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.

(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates that represent fractional Rights. If the
Company shall determine not to issue such fractional Rights, the Company
shall pay to the registered holders of the Right Certificates with respect to
which such fractional Rights would otherwise be issuable, at the time such
fractional Rights would otherwise have been issued as provided herein, an
amount in cash equal to the same fraction of the Current Market Price of a
whole Right on the Business Day immediately prior to the date upon which such
fractional Rights would otherwise have been issuable.

(b) The Company shall not be required to issue fractions of Common
Shares or Preferred Shares (other than fractions that are integral multiples
of one one-hundredth of a Preferred Share) upon exercise of Rights, or to
distribute certificates that represent fractional Common Shares or Preferred
Shares (other than fractions that are integral multiples of one one-hundredth
of a Preferred Share). Fractions of Preferred Shares in integral multiples
of one one-hundredth of a Preferred Share may, at the election of the
Company, be represented by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts
shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of Preferred Shares. If the Company shall
determine not to issue fractional Common Shares or Preferred Shares (or
depositary receipts in lieu of Preferred Shares), the Company shall pay to
the registered holders of Right Certificates with respect to which such
fractional Common Shares or Preferred Shares would otherwise be issuable, at
the time such Rights are exercised as provided herein, an amount in cash
equal to the same fraction of the Current Market Price of a whole Common
Share or Preferred Share, as the case may be. For purposes of this Section
14(b), the Current Market Price of a whole Common Share or Preferred Share
shall be the Closing Price per share for the Trading Day immediately prior to
the date of such exercise.

(c) The holder of a Right, by the acceptance of such Right,
expressly waives such holder's right to receive any fractional Rights or any
fractional Common Shares or Preferred Shares upon exercise of such Right,
except as permitted by this Section 14.

Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the
Right Certificates and certificates for Common Shares representing Rights,
and any registered holder of any Right Certificate or of such certificate for
Common Shares, without the consent of the Rights Agent or of the holder of
any other Right

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<PAGE>

Certificate or any other certificate for Common Shares may, in such holder's
own behalf and for such holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder's right to exercise the Rights
represented by such Right Certificate or by such certificate for Common
Shares in the manner provided in such Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance, and injunctive relief against actual or
threatened violations, of the obligations of any Person under this Agreement.

Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and every other holder of a Right that:

(a) prior to the Distribution Date, the Rights shall be represented
by certificates for Common Shares registered in the name of the holders of
such Common Shares (which certificates for Common Shares shall also
constitute Right Certificates), and each such Right shall be transferable
only in connection with the transfer of such Common Shares;

(b) after the Distribution Date, the Right Certificates shall only
be transferable on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and

(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate is registered as the absolute owner
thereof and of the Rights represented thereby (notwithstanding any notations
of ownership or writing on the Right Certificate by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.

Section 17. RIGHT HOLDER AND RIGHT CERTIFICATE HOLDER NOT DEEMED A
STOCKHOLDER. No holder, as such, of any Right or Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the holder
of the securities of the Company that may at any time be issuable upon the
exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of
any Right or Right Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, to give or withhold
consent to any corporate action, to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof), or
to receive dividends or subscription rights, or otherwise, in each case until
such Right or the Rights represented by such Right Certificate shall have
been exercised in accordance with the provisions hereof.

Section 18. CONCERNING THE RIGHTS AGENT.

(a) The Company agrees to pay to the Rights Agent as compensation
for all services rendered by it hereunder reasonable and customary fees and
expenses. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for

20
<PAGE>

anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability.

(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Right Certificate or certificate for Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice
of its counsel as set forth in Section 20 hereof.

Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.

(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. If, at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of
the Right Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and if at
that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in
the name of the predecessor Rights Agent or in the name of the successor
Rights Agent; and in all such cases such Right Certificates shall have the
full force provided in such Right Certificate and in this Agreement.

(b) If at any time the name of the Rights Agent shall be changed,
and at such time any of the Right Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned; and if at that
time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name
or in its changed name; and in all such cases such Right Certificates shall
have the full force provided in such Right Certificate and in this Agreement.

Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance of the Rights, shall be bound:

(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the advice or opinion of such counsel
shall be full and complete authorization

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<PAGE>

and protection to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such advice or opinion.

(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of
the Board, the Vice Chairman of the Board, the President, any Vice President,
the Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.

(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful misconduct.

(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement, or in the
Right Certificates (except its countersignature thereof), or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.

(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due authorization, execution and delivery hereof by the
Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including any
Rights becoming null and void pursuant to Section 7(d) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 7, 11, 13 and 23 hereof, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights represented by
Right Certificates after actual notice that such change or adjustment is
required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares or Common Shares or other securities to be issued pursuant
to this Agreement or any Right Certificate, or as to whether any Preferred
Shares or Common Shares or other securities will, when issued, be validly
authorized and issued, fully paid and nonassessable.

(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.

(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Vice Chairman, the President, any Vice
President, the Secretary, any Assistant Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in

22
<PAGE>

connection with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith in accordance with instructions
of any such officer.

(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not the Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.

(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided that reasonable care was
exercised in the selection and continued employment thereof.

Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30-days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares and Preferred Shares by registered
or certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30-days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of
acting as such, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Right Certificate (who shall, with such notice,
submit such holder's Right Certificate for inspection by the Company), then
the Company shall become the Rights Agent and the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the States of
New York or California (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in the
States of New York or California), in good standing, having a principal
office in New York or California, that is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and that has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose of
this Agreement and so that the successor Rights Agent may appropriately act
as Rights Agent hereunder. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing

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<PAGE>

with the predecessor Rights Agent and each transfer agent of the Common
Shares and Preferred Shares, and mail a notice thereof in writing to the
registered holders of the Riht Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Right Certificates to the
contrary, the Company may, at its option, issue new Right Certificates in
such form as may be approved by the Board of Directors in order to reflect
any adjustment or change in the Exercise Price and the number or kind or
class of shares or other securities or property purchasable upon exercise of
the Rights in accordance with the provisions of this Agreement.

Section 23. REDEMPTION OF RIGHTS.

(a) Until the earliest of (i) the date of the first Section
11(a)(ii) Event, (ii) the date of the first Section 13(a) Event or (iii) the
Expiration Date, the Board of Directors of the Company may, at its option,
authorize and direct the redemption of all, but not less than all, of the
then outstanding Rights at a redemption price of $.001 per Right, as such
redemption price shall be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (the
"Redemption Price"), and the Company shall so redeem the Rights.

(b) Immediately upon the action of the Board of Directors of the
Company authorizing and directing the redemption of the Rights pursuant to
subsection (a) of this Section 23, or at such time and date thereafter as it
may specify, and without any further action and without any notice, the right
to exercise Rights shall terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. Within ten (10)
Business Days after the date of such action, the Company shall give notice of
such redemption to the holders of Rights by mailing such notice to all
holders of Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, if prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any notice that
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives such notice, but neither the failure to give any such
notice nor any defect therein shall affect the legality or validity of such
redemption. Each such notice of redemption shall state the method by which
the payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may, directly or indirectly, redeem,
acquire or purchase for value any Rights in any manner other than that
specifically set forth in Section 24 hereof or in this Section 23, or in
connection with the purchase of Common Shares prior to the earlier of the
date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event.

(c) The Company may, at its option, pay the Redemption Price in
cash, Common Shares, Preferred Shares, other equity securities of the
Company, debt securities of the Company, other property or any combination of
the foregoing, in each case having an aggregate Current Market Price on the
Redemption Date equal to the Redemption Price.

24
<PAGE>

Section 24. EXCHANGE OF RIGHTS.

(a) At any time during the period of 180 days after a Section
11(a)(ii) Event, the Board of Directors of the Company may, at its option,
authorize and direct the exchange of all, but not less than all, of the then
outstanding Rights for Common Shares, one one-hundredths of Preferred Shares,
debt securities of the Company, other property, or any combination of the
foregoing, in each case having an aggregate Current Market Price equal to the
result obtained by (i) multiplying the Current Market Price per Common Share
on the record date for such exchange by the number of Common Shares for which
a Right is exercisable on such record date or (ii) subtracting from such
product the Exercise Price on such Record Date (the "Exchange Ratio"), and
the Company shall so exchange the Rights.

(b) Immediately upon the action of the Board of Directors of the
Company authorizing and directing the exchange of the Rights pursuant to
subsection (a) of this Section 24, or at such time and date thereafter as it
may specify, and without any further action and without any notice, the right
to exercise Rights shall terminate and the only right thereafter of the
holders of Rights shall be to receive a number of Common Shares in accordance
with the Exchange Ratio. Within ten (10) Business Days after the date of
such action, the Company shall give notice of such exchange to the holders of
Rights by mailing such notice to all holders of Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, if
prior to the Distribution Date, on the registry books of the transfer agent
for the Common Shares. Any notice that is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives such
notice, but neither the failure to give any such notice nor any defect
therein shall affect the legality or validity of such exchange. Each such
notice of exchange shall state the method by which the Rights will be
exchanged for Common Shares.

(c) Notwithstanding the foregoing, in the event that the aggregate
number of Common Shares that are authorized by the Company's Certificate of
Incorporation, as amended from time to time, but not outstanding or reserved
for issuance for purposes other than upon exercise or exchange of the Rights
is less than the aggregate number of Common Shares issuable upon the exchange
of the Rights in accordance with this Section 24 (the excess of such number
of authorized Common Shares over and above such number of issuable Common
Shares being hereinafter referred to as the "Unavailable Exchange Shares"),
then the Company shall substitute for the pro rata portion of the Unavailable
Exchange Shares that would otherwise be issuable upon the exchange of the
Rights in accordance with this Section 24 (i) cash, (ii) other equity
securities of the Company (including, without limitation, Common Share
Equivalents), (iii) debt securities of the Company, (iv) other property or
(v) any combination of the foregoing, in each case having an aggregate
Current Market Price equal to the aggregate Current Market Price of the
Unavailable Exchange Shares for which substitution is made. Subject to
Section 7(d) hereof, in the event that the Company takes any action pursuant
to this Section 24, such action shall apply uniformly to all outstanding
Rights.

Section 25. NOTICE OF CERTAIN EVENTS.

(a) In the event that the Company shall propose (i) to declare or
pay any dividend on or make any distribution with respect to its Common
Shares or Preferred Shares (other than a regular quarterly cash dividend),
(ii) to offer to the holders of its Common Shares or Preferred

25
<PAGE>

Shares options, rights or warrants to subscribe for or to purchase any
additional shares thereof or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Common Shares or Preferred Shares (other than a reclassification involving
only the subdivision of outstanding shares), (iv) to effect any consolidation
or merger with or into, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one
or more transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person or
Persons, or (v) to effect the liquidation, dissolution or winding up of the
Company, then and in each such case, the Company shall give to each holder of
a Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action that shall specify the record date for the purpose of such
dividend or distribution, or the date upon which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up
is to take place and the date of participation therein by the holders of
record of the Common Shares or Preferred Shares, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least 20 days prior to the record date for
determining holders of the Common Shares or Preferred Shares for purposes of
such action, and in the case of any such other action, at least 20 days prior
to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares or Preferred
Shares, whichever date shall be the earlier. The failure to give the notice
required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.

(b) Upon the occurrence of each Section 11(a)(ii) Event and each
Section 13(a) Event, the Company shall as soon as practicable thereafter give
to each holder of a Right Certificate, in accordance with Section 26 hereof,
a notice of the occurrence of such event, specifying the event and the
consequences of the event to holders of Rights under Sections 11 and 13
hereof.

Section 26. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:

City National Corporation
400 North Roxbury Drive
Beverly Hills, California 90210
Attention: Secretary

Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) to the
principal office of the Rights Agent as follows:

Continental Stock Transfer & Trust Company
2 Broadway, 19th Floor
New York, New York 10004
Attn: Compliance Department

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<PAGE>

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.

Section 27. SUPPLEMENTS AND AMENDMENTS.

(a) The Board of Directors of the Company may, from time to time,
without the approval of any holders of Rights, supplement or amend any
provision of this Agreement in any manner, whether or not such supplement or
amendment is adverse to any holder of Rights, and direct the Rights Agent so
to supplement or amend such provision, and the Rights Agent shall so
supplement or amend such provision; PROVIDED, HOWEVER, that from and after
the earliest of (i) the date of the first Section 11(a)(ii) Event, (ii) the
date of the first Section 13(a) Event, (iii) the Redemption Date or (iv) the
Expiration Date, this Agreement shall not be supplemented or amended in any
manner that would materially and adversely affect any holder of outstanding
Rights other than a 10% Stockholder or a Surviving Person.

(b) From and after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
Rights Expiration Date, the Company shall not effect any amendment to the
Certificate of Designations for the Preferred Shares that would materially
and adversely affect the rights, privileges or preferences of the Preferred
Shares without the prior approval of the holders of two-thirds or more of the
then outstanding Rights.

Section 28. CERTAIN COVENANTS. Subject to Section 27 hereof and the
other provisions of this Agreement, from and after the earlier of the date of
the first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event and prior to the earlier of the Redemption Date or the Expiration Date,
the Company shall not (a) issue or sell, or permit any Subsidiary to issue or
sell, to a 10% Stockholder or a Surviving Person, or any Affiliate or
Associate of a 10% Stockholder or a Surviving Person, or any Person holding
Voting Shares of the Company that are Beneficially Owned by a 10% Stockholder
or a Surviving Person, (i) any rights, options, warrants or convertible
securities on terms similar to, or that materially adversely affect the value
of, the Rights or (ii) Preferred Shares, Common Shares or shares of any other
class of capital stock, if such sale is intended to or would materially
adversely affect the value of the Rights, or (b) take any other action that
is intended to or would materially adversely affect the value of the Rights.

Section 29. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (other than those
representing Rights that have become null and void) and the certificates for
Common Shares representing Rights (other than those Rights that have become
null and void) any legal or equitable right, remedy or claim under this
Agreement, and this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and such registered holders of Right
Certificates and certificates for Common Shares representing Rights.

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<PAGE>

Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.

Section 32. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts made and
performed entirely within such state.

Section 33. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original and all such counterparts shall together constitute
but one and the same instrument.

Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.

28
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.

CITY NATIONAL CORPORATION

Attest:

By /s/ Arthur G. Spence By /s/ Richard H. Sheehan, Jr.
-------------------------- ----------------------------------
Name: Arthur G. Spence Name: Richard H. Sheehan, Jr.
Title: Assistant Secretary Title: S.V.P. and General Counsel

CONTINENTAL STOCK TRANSFER & TRUST
COMPANY

Attest:

By /s/ Thomas Jennings By /s/ William F. Seegraber
-------------------------- ----------------------------------
Name: Thomas Jennings Name: William F. Seegraber
Title: Assistant Secretary Title: Vice President

29
<PAGE>

EXHIBIT A

Form of Right Certificate

Certificate No. __ __________ Rights

NOT EXERCISABLE AFTER THE LATER OF MARCH 13, 2007 OR THE TENTH
ANNIVERSARY OF THE DISTRIBUTION DATE (AS THAT TERM IS DEFINED IN
THE RIGHTS AGREEMENT) OR EARLIER IF REDEEMED. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $.001 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS THAT TERM IS DEFINED
IN SECTION 1(a) OF THE RIGHTS AGREEMENT AND AS THOSE CIRCUMSTANCES
ARE SPECIFIED IN SECTION 7(f) OF THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE WERE ISSUED TO A
PERSON WHO WAS AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE
OF AN ACQUIRING PERSON. THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(f) OF THE RIGHTS AGREEMENT.](*)

Right Certificate

CITY NATIONAL CORPORATION

This certifies that _______________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement dated as of February 26, 1997 (the "Rights
Agreement") between City National Corporation, a Delaware corporation (the
"Company"), and Continental Stock Transfer & Trust Company, a New York
corporation (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (New York time) on the later of March 13, 2007 or the
tenth anniversary of the Distribution Date at the office or agency of the
Rights Agent at 2 Broadway, 19th Floor, New York, New York, 10004, or at the
office of its successor as Rights Agent, one one-hundredth of a fully paid
non-assessable share of Series A

- ------------------------------

* That portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.

<PAGE>

Junior Participating Cumulative Preferred Stock, $1.00 par value (the
"Preferred Shares"), of the Company, at a purchase price of $90.00 per one
one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
duly executed. The number of Rights evidenced by this Right Certificate (and
the number of one one-hundredths of a Preferred Share which may be purchased
upon exercise thereof) set forth above, and the Purchase Price per one
one-hundredths of a Preferred Share set forth above, are the number and
Purchase Price as of ______________, ____, based on the Preferred Shares as
constituted at such date.

As provided in the Rights Agreement, the Purchase Price and the number
of Preferred Shares which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and
adjustment upon the occurrence of certain events. This Right Certificate is
subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal executive offices of the Company and
the above-mentioned offices of the Rights Agent.

This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent at 2 Broadway, 19th
Floor, New York, New York, 10004, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of Preferred Shares
as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised. Subject to the provisions of
the Rights Agreement, the Rights evidenced by this Certificate may, but are
not required to, be redeemed by the Company at a redemption price of $.001
per Right.

No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof, a cash payment will be made, as provided in the Rights Agreement.

No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or,
to receive notice of meetings or other actions affecting shareholders (except
as provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.

2
<PAGE>

This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.

WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ________, ____.

ATTEST: CITY NATIONAL CORPORATION

By: By:
------------------------------ ---------------------------------
Title: Title:
--------------------------- ------------------------------

Countersigned:

CONTINENTAL STOCK TRANSFER
& TRUST COMPANY

By:
------------------------------
Authorized Officer

3
<PAGE>

Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)

FOR VALUE RECEIVED _______________________________________ hereby sells,
assigns and transfers unto_____________________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)

______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.

Dated: ____________________, ____

_____________________________________
Signature

Signature Guaranteed:

- -------------------------------------------------------------------------------
(To be completed if applicable)

The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).

________________________________
Signature

- -------------------------------------------------------------------------------

4
<PAGE>

Form of Reverse Side of Right Certificate -- continued

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to
exercise the Right Certificate.)

TO CITY NATIONAL CORPORATION

The undersigned hereby irrevocably elects to exercise
___________________ Rights represented by this Right Certificate to purchase
the Preferred Shares issuable upon the exercise of such Rights and requests
that certificates for such Preferred Shares be issued in the name of:

Please insert social security
or other identifying number

- ----------------------------------------------------------------------------
(Please print name and address)

- ----------------------------------------------------------------------------

If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:

Please insert social security
or other identifying number

- ----------------------------------------------------------------------------
(Please print name and address)

- ----------------------------------------------------------------------------

Dated: ___________________, ____

_____________________________________
Signature

(Signature must conform in all
respects to name of holder as
specified on the face of this Right
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)

5
<PAGE>

Signature Guaranteed:

- ----------------------------------------------------------------------------
(To be completed if applicable)

The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).

__________________________________
Signature

- ----------------------------------------------------------------------------

NOTICE

The signature in the foregoing Forms of Assignment and Election must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.

In the event the certification set forth above in the Forms of
Assignment and Election is not completed, the Company will deem the
beneficial owner of the Rights evidenced by this Right Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) and, in the case of an Assignment, will affix a legend to
that effect on any Right Certificates issued in exchange for this Right
Certificate.

<PAGE>

[Exhibit 10.3]

SPLIT DOLLAR LIFE INSURANCE AGREEMENT

COLLATERAL ASSIGNMENT PLAN

THIS AGREEMENT, made as of this 13th day of June 1980, by and between
the City National Bank, a National Bank hereinafter called the Bank, and the
Goldsmith 1980 Insurance Trust hereinafter called the Trust.

WHEREAS, Bram Goldsmith, hereinafter called the Employee, has rendered
competent and faithful efforts on behalf of the Bank resulting in substantial
growth and profits to the Bank, and,

WHEREAS, the Bank highly values the efforts, abilities, and
accomplishments of the Employee as an important member of management and
wishes to provide a death benefit for the Employee's designee through a Split
Dollar Life Insurance program, and,

WHEREAS, the Trust agrees to participate in such program to the extent
hereinafter provided,

NOW, THEREFORE, it is mutually agreed that:

1. In furtherance of the purposes of this Agreement, the parties
hereto shall utilize the following personal insurance policy owned by the
Trust on the life of Bram Goldsmith (hereinafter call the Insured):

Policy No. 3837807 in the face amount of $1,500,000 issued by
Connecticut Mutual Life Insurance Company.

2. As security for the Bank's premium payments on the insurance
policy as provided in Article 4 below, the Trust shall execute, on a form
provided by the insurance company, a collateral assignment of the policy to
the Bank. The policy shall be delivered to the Bank to hold for purposes of
this Agreement. The Bank shall make the policy available to the insurance
company in order to effectuate any change desired by the Trust, as to the
designation of a beneficiary, election of an income settlement option or
assignment with respect to the risk element as defined in Article 3 below.

3. It is understood by the parties hereto that, as provided under
the terms of the policy, ownership of the policy is actually divided into two
separate and distinct elements. The "cash value" element is owned by the
Bank and the "risk" element is owned by the Trust. Except as modified by the
following paragraph, the Bank has all incidents of ownership and privileges
in the policy with respect only to the cash value element, which is defined
as an amount equal to the premiums it has paid, excluding premiums for any
extra benefit agreements or riders issued under the policy, but reduced by
any indebtedness (along with any unpaid interest) on the policy, or if
greater, an amount equal to the cash value of the policy (including dividend
additions) as of the date to which premiums have been paid, plus any dividend
credits outstanding, but reduced by any indebtedness (along with any unpaid
interest) on the policy.

The Trust has all incidents of ownership in the risk element, which is
defined as the right to surrender the policy (but not the right to receive
the cash value upon surrender); the right to change a nonforfeiture
provision; the right to agree with the insurance company to any release,
modification, or amendment to the policy; the right to designate the
beneficiary, to elect an income settlement option and to assign all rights
and interests with respect to any portion of the death proceeds in excess of
the cash value element; and all rights with respect to any One Year Term
rider issued under the policy.

1
<PAGE>

As a result of the terms of the policy and of this Agreement, the Bank
has no incidents of ownership of any kind with respect to the risk element
and may not unilaterally impair or defeat the rights and interests of the
Trust in any way.

4. All premiums due on the insurance policy referred to in Article
1 shall be paid by the Bank.

5. One Year Term Insurance will be purchased on each policy
anniversary from the dividend credits outstanding under the policy and will
be purchased in an amount equal to the guaranteed cash values of the policy
at the end of the following year. Any balance of dividends not used to buy
One Year Term Insurance shall be applied to the purchase of paid-up-additions
from Connecticut Mutual Life Insurance Company.

6. In the event of the death of the Insured, the Bank, its
successors or assigns, shall be entitled to receive from the life insurance
proceeds an amount equal to the cash value element as defined in Article 3
above.

Any portion of the death proceeds which is in excess of the amount
payable to the Bank, its successors or assigns, shall be payable to the Trust
in accordance with Article 3 of the Agreement.

7. This Agreement shall terminate on May 15, 1985 or; either
party's submission of written notice to the other party; or if the Bank
attempts to undertake any action which would impair or defeat the Trust's
interest in the risk element. Such action by the Bank might include, but is
not necessarily limited to, lapse of the policy for nonpayment of premiums.
If this Agreement terminates for any reason, the Trust shall have the option,
exercisable within 60 days, to have the collateral assignment of the policy
released by the Bank.

If the Trust elects to exercise such option it shall pay to the Bank
an amount equal to the cash value element as defined in Article 3 of this
Agreement. If the Trust does not elect to have the collateral assignment
released, it shall, at the Bank's request, execute such documents as are
required to transfer its interest in the risk element of the policy to the
Bank as of the date preceding termination of this Agreement.

8. At the Insured's death, the Bank and the beneficiary designated
to receive the proceeds attributable to the risk element shall execute such
forms and furnish such other documents or information as are required to
receive payment under the policy. The Bank shall also furnish to the
insurance company an affidavit specifying the amount of the death proceeds
payable to the Bank which is attributable to the cash value element, as
defined herein.

All death benefits under this Agreement shall be paid in accordance
with the terms and conditions of the life insurance policy referred to in
Article 1 and pursuant to the claims and review procedures of the insurance
company. The Bank's liability to provide benefits under this Agreement shall
be limited solely to the payment of its share of premiums, as provided in
Article 4. The Bank assumes no responsibility for payment of death benefits
under the policy.

9. In lieu of a lump sum payable by reason of the Insured's death
which is attributable to the risk element, the Trust may, in accordance with
the procedures of the insurance company, elect any of the optional modes of
payment for the death proceeds as enumerated in the policy and known as
"settlement options." If no such election is in effect at the Insured's
death, the beneficiary of the risk element shall have the right to elect such
settlement option.

The Bank shall have a similar right to elect a settlement option for
the proceeds attributable to the cash value element.

2
<PAGE>

10. For purposes of the Employee Retirement Income Security Act of
1974 (P.L. 93-406), the Bank is the "named fiduciary" of the Split Dollar
Life Insurance plan for which this Agreement is hereby designated the written
plan instrument.

11. This Agreement may be altered, amended, or modified, including
the addition of any extra policy provisions, by a written agreement signed by
the Bank and the Trust. In addition, either party may assign its rights,
interests and obligations under this Agreement, provided, however, that any
assignment shall be made subject to the terms of this Agreement. The law of
the state of California shall govern this Agreement.

12. Where appropriate in this Agreement, words used in the singular
shall include the plural and words used in the masculine shall include the
feminine.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first herein above written.

/s/ Bruce Leigh Goldsmith
-----------------------------
Bruce Leigh Goldsmith, Trustee of the
Goldsmith 1980 Insurance Trust

/s/ Bruce Norman /s/ Russell David Goldsmith
- ---------------- -----------------------------
Witness Russell David Goldsmith, Trustee of the
Goldsmith 1980 Insurance Trust

/s/ Gary W. Fentress
-----------------------------
City National Bank, Trustee of the
Goldsmith 1980 Insurance Trust

/s/ James P. Del Guercio
-----------------------------
City National Bank, a National Bank
By: James P. Del Guercio
Executive Vice President

3
<PAGE>

AMENDMENT TO

SPLIT-DOLLAR LIFE INSURANCE
AGREEMENT

This Amendment relates to that certain Split-Dollar Life Insurance Agreement
made as of the 13th day of June, 1980 between CITY NATIONAL BANK and THE
GOLDSMITH 1980 INSURANCE TRUST (the "Agreement") and shall hereby amend
paragraph 7 thereof, to provide that the Agreement shall terminate on May 15,
1990.

Except as amended by the foregoing, the Agreement shall remain in full force
and effect and without any other change.

This Amendment is made and agreed to as of this 15th day of May, 1985.

THE GOLDSMITH
1980 INSURANCE TRUST CITY NATIONAL BANK

/s/ Bruce Leigh Goldsmith /s/ James P. Del Guercio
By --------------------------- By ---------------------------
BRUCE LEIGH GOLDSMITH JAMES P. DEL GUERCIO
Trustee Its Executive Vice President

/s/ Russell David Goldsmith
By ---------------------------
RUSSELL DAVID GOLDSMITH
Trustee

CITY NATIONAL BANK

/s/ Gary W. Fentress
By ---------------------------
Trustee

<PAGE>

AMENDMENT TO

SPLIT-DOLLAR LIFE INSURANCE
AGREEMENT

Except as amended by the foregoing, the Agreement shall remain in full force
and effect and without any other change.

This Amendment is made and agreed to as of this 15th day of May, 1990.

THE GOLDSMITH
1980 INSURANCE TRUST CITY NATIONAL BANK

/s/ Bruce Leigh Goldsmith /s/ James P. Del Guercio
By --------------------------- By ---------------------------
BRUCE LEIGH GOLDSMITH JAMES P. DEL GUERCIO
Trustee Its Executive Vice President

/s/ Russell David Goldsmith
By ---------------------------
RUSSELL DAVID GOLDSMITH
Trustee

CITY NATIONAL BANK

/s/ Gary W. Fentress
By ---------------------------
Trustee

<PAGE>

THIRD AMENDMENT TO SPLIT DOLLAR LIFE INSURANCE AGREEMENT

COLLATERAL ASSIGNMENT PLAN

This Third Amendment is made and entered into as of the 19th day of
December 1990, by and between THE GOLDSMITH 1980 INSURANCE TRUST (the
"Trust") and CITY NATIONAL BANK, a national banking association ("CNB") with
reference to the following:

A. The Trust and CNB are parties to that certain SPLIT DOLLAR LIFE
INSURANCE COLLATERAL ASSIGNMENT PLAN dated as of June 13, 1980, as amended by
amendments dated as of May 15, 1985 and May 15, 1990 (collectively, the
"Agreement"), by which the Trust grants CNB certain rights with respect to a
personal life insurance policy insuring the life of Mr. Bram Goldsmith
("Employee") owned by the Trust.

B. The Trust and CNB wish to replace such insurance policy with
another insurance policy and to define their respective rights and
obligations with respect thereto, all as more particularly set forth below.

NOW, THEREFORE, CNB and the Trust hereby agree as follows:

1. The insurance policy subject to the Agreement, which is
presently held by CNB, will be surrendered to the insurer, and the cash
surrender value thereof will be applied to the premium for a new personal
policy of life insurance to be owned by the Trust on the joint lives of
Employee and Mrs. Elaine Goldsmith (the "Insureds") in the face amount of
$5,521,946.00, to be issued by Transamerica Occidental Life Insurance Co.
(the "Joint Policy"). Any premium for the Joint Policy in excess of the cash
surrender value of the insurance policy so surrendered will be paid by the
Trust, provided, however, that if the Trust fails to pay any such premium for
any reason, CNB may do so in its sole discretion. The Joint Policy will be
delivered to CNB subject to a collateral assignment executed by the Trust and
held pursuant to the terms of the Agreement, except as amended hereby. The
Joint Policy or the collateral assignment executed by the Trust with respect
thereto will provide (i) that the insurer will provide CNB with not less than
sixty (60) days' prior written notice of its intent to cancel the Joint
Policy for any failure to make any premium payment and will allow CNB either
to make such premium payment and maintain the Joint Policy in force or to
surrender the Joint Policy in exchange for payment of the cash value thereof,
and (ii) upon the death of the second Insured or the simultaneous death of
both Insureds, or in the event of the surrender of the Joint Policy, the
death benefit or the cash value, as the case may be, will be paid by the
insurer directly to CNB in an amount equal to the cash value element, and
thereafter to the beneficiary or party otherwise entitled thereto.

2. Notwithstanding Article 6 of the Agreement, CNB will be
entitled to receive from the Joint Policy death benefits an amount equal to
the cash value element, as defined in Article 3 of the Agreement (as modified
hereinafter) only upon the death of the second Insured or the simultaneous
deaths of the Insureds. The cash value element of the Joint Policy will be
as defined in Article 3 of the Agreement, except that (i) in the event CNB
has paid any premium with respect to the Joint Policy in excess of the cash
surrender value of the original policy, the cash value element will be
increased by the amount of such premium, and (ii) in the event Employee
predeceases Mrs. Elaine Goldsmith, the cash value element, determined as of
the date of Employee's death, will bear interest from the date of Employee's
death at CNB's Prime Rate plus one percent (1.0%) per annum. Interest on the
cash value element will be payable by the Trust to CNB on the first business
day of each calendar quarter.

1
<PAGE>

3. Notwithstanding Article 3 of the Agreement, in the event that
the Trust fails to make any premium or interest payment called for hereby,
CNB may, in its sole discretion, surrender the Joint Policy in exchange for
payment of the cash value thereof, and the Agreement, as amended hereby, will
thereupon terminate.

4. Except as otherwise set forth above, the Agreement, as amended
to date, remains in full force and effect according to its terms.

IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment as of the day and year first set forth above.

CITY NATIONAL BANK, a national THE GOLDSMITH 1980 INSURANCE TRUST
banking association

/s/ A.J. Kyman /s/ Bruce Leigh Goldsmith
By: ------------------------- By: -------------------------------
A. J. KYMAN BRUCE LEIGH GOLDSMITH, Trustee
Its: President

/s/ Russell David Goldsmith
By: -------------------------------
RUSSELL DAVID GOLDSMITH, Trustee

By: CITY NATIONAL BANK, a national
banking association, Trustee

/s/ Gary W. Fentress
By: -------------------------------
GARY W. FENTRESS
Its: Vice President &
Trust Officer

<PAGE>

FOURTH AMENDMENT TO SPLIT DOLLAR LIFE INSURANCE AGREEMENT

COLLATERAL ASSIGNMENT PLAN

This Fourth Amendment is made and entered into as of the 31ST day of March,
1991, by and between The Goldsmith 1980 Insurance Trust (the "Trust") and
City National Bank, a national banking association ("CNB"), with reference to
the following:

A. The Trust and CNB are parties to that certain Split Dollar Life
Insurance Collateral Assignment Plan dated as of June 13, 1980, as amended to
date (the "Agreement"), by which the Trust grants CNB certain rights with
respect to a personal life insurance policy insuring the life of Mr. Bram
Goldsmith owned by the Trust.

B. Pursuant to the Third Amendment to the Agreement, dated as of December
19, 1990, the Trust and CNB agreed to replace the insurance policy then in
effect, issued by Connecticut General Life Insurance Company (the
"Connecticut General Policy"), with a policy insuring the joint lives of Mr.
Bram Goldsmith and Mrs. Elaine Goldsmith (the "Insureds"), issued by
Transamerica Occidental Life Insurance Company (the "Joint Policy"), by
surrendering the Connecticut General Policy to the insurer and applying the
cash surrender value therefrom to the premium for the Joint Policy.

C. CNB paid premiums with respect to the Connecticut General Policy in
the aggregate amount of $600,841.80, and the cash surrender value of the
Connecticut General Policy was equal to $524,981.88.

D. CNB has paid premiums with respect to the Joint Policy to the date of
this Fourth Amendment in the total amount of $524,981.88.

E. The Trust and CNB wish to clarify the Third Amendment to ensure that,
upon the death of the second Insured or the simultaneous deaths of both
Insureds, CNB will recover premiums paid with respect to the Connecticut
General Policy which exceeded the cash surrender value thereof applied as the
premium payment with respect to the Joint Policy.

NOW, THEREFORE, CNB and the Trust hereby agree as follows:

1. The third sentence of Article 3 of the Agreement and the second
sentence of Paragraph 1 of the Third Amendment to the Agreement are hereby
removed, and the following is hereby substituted in the place thereof:

Except as modified by the second paragraph of Article 3 of the Agreement,
CNB has all incidents of ownership and privileges in the Joint Policy
with respect only to the cash value element of the Joint Policy, which is
defined as an amount equal to the premiums it has paid with respect to
the Joint Policy, increased by $75,859.92 (the difference between the
premiums paid with respect to the Connecticut General Policy and the cash
surrender value thereof, which was applied as the premium with respect to
the Joint Policy), excluding premiums for any extra benefit agreements or
riders issued under the Joint Policy, but reduced by any indebtedness
(along with unpaid interest) on the policy, or if greater, an amount
equal to the cash value of the Joint Policy (including dividend
additions) as of the date to which premiums have been paid by CNB, plus
any dividend credits outstanding, but reduced by any indebtedness (along
with any unpaid interest) on the Joint Policy. In the event Employee
predeceases Mrs. Elaine Goldsmith, the cash value element, determined as
of the date of Employee's death, will bear interest from the date of
Employee's death to the

1
<PAGE>

date of death of Mrs. Elaine Goldsmith at CNB's Prime Rate plus one
percent (1.0%) per annum.

2. Except as otherwise set forth above, the Agreement, as amended to
date, remains in full force and effect according to its terms.

IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment as
of the day and year first set forth above.

CITY NATIONAL BANK, a THE GOLDSMITH 1980
national banking association INSURANCE TRUST

/s/ Alex J. Kyman /s/ Bruce Leigh Goldsmith
By: ------------------------------- By: -------------------------------
Its: President Bruce Leigh Goldsmith,
Trustee

/s/ Russell David Goldsmith
By: -------------------------------
Russell David Goldsmith,
Trustee

By: CITY NATIONAL BANK,
a national banking association,
Trustee

/s/ Gary W. Fentress
By: -------------------------------
Gary W. Fentress
Its: Vice President & Trust
Officer

<PAGE>

CITY NATIONAL CORPORATION

1985 STOCK OPTION PLAN

(As amended December 18, 1985; February 26, 1986; March 5, 1986; November 19,
1986; December 17, 1986; March 25, 1987; April 19, 1988; December 19, 1990;
April 17, 1990; April 16, 1991; November 25, 1991; April 21, 1992)

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. GENERAL PROVISION . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Administration. . . . . . . . . . . . . . . . . . . . . . . . .2
1.4 Shares/Rights Subject to the Plan . . . . . . . . . . . . . . .3
1.5 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . .3

2. STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.1 Grants. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 Stock Option Price. . . . . . . . . . . . . . . . . . . . . . .3
2.3 Term of Stock Option. . . . . . . . . . . . . . . . . . . . . .3
2.4 Exercise of Stock Option. . . . . . . . . . . . . . . . . . . .4
2.5 Surrender of Stock Options. . . . . . . . . . . . . . . . . . .4
2.6 Termination of Employment . . . . . . . . . . . . . . . . . . .4
2.7 Death of Optionee . . . . . . . . . . . . . . . . . . . . . . .5

2A. DIRECTOR STOCK OPTIONS. (Added April 19, 1988.). . . . . . . . . . .5
2A.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . .5
2A.2 Grant of Director Options . . . . . . . . . . . . . . . . . . .6
2A.3 Stock Option Price. . . . . . . . . . . . . . . . . . . . . . .6
2A.4 Other Terms of Director Stock Options . . . . . . . . . . . . .6

3. INCENTIVE STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . .6
3.1 Grants. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.2 Option Price. . . . . . . . . . . . . . . . . . . . . . . . . .7
3.3 Term of Option. . . . . . . . . . . . . . . . . . . . . . . . .7
3.4 Exercise of Option. . . . . . . . . . . . . . . . . . . . . . .7
3.5 Termination of Employment . . . . . . . . . . . . . . . . . . .8
3.6 Death of Employee . . . . . . . . . . . . . . . . . . . . . . .8

4. STOCK APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . . . . .9
4.1 Grants. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
4.2 Stock Appreciation Rights Period. . . . . . . . . . . . . . . .9
4.3 Exercise of Stock Appreciation Rights . . . . . . . . . . . . .9
4.4 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.5 Termination of Employment . . . . . . . . . . . . . . . . . . 10
4.6 Death of Employee . . . . . . . . . . . . . . . . . . . . . . 11

5. TAX OFFSET BONUS RIGHTS . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Grants. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Tax Offset Bonus Rights Period. . . . . . . . . . . . . . . . 11
5.3 Exercise of Rights. . . . . . . . . . . . . . . . . . . . . . 11
5.4 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.5 Termination of Employment . . . . . . . . . . . . . . . . . . 12

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<PAGE>

6. OTHER PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1 Adjustments Upon Changes in Capitalization. . . . . . . . . . 12
6.2 No Guarantee of Employment. . . . . . . . . . . . . . . . . . 13
6.3 Non-transferability . . . . . . . . . . . . . . . . . . . . . 13
6.4 Rights of a Shareholder . . . . . . . . . . . . . . . . . . . 13
6.5 Government Regulations. . . . . . . . . . . . . . . . . . . . 13
6.6 Amendment and Discontinuance of the Plan. . . . . . . . . . . 13
6.7 Effective Date and Duration of Plan . . . . . . . . . . . . . 14

</TABLE>

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<PAGE>

CITY NATIONAL CORPORATION

1985 STOCK OPTION PLAN

1. GENERAL PROVISION

1.1 PURPOSE. The purpose of the Plan is to advance the interests
of the Corporation and its shareholders and to encourage successful long-term
Corporation growth and profitability by strengthening the ability of the
Corporation to attract, retain and encourage outstanding performance of key
employees to the Corporation or a subsidiary of the Corporation who are in
positions to make significant contributions toward such success, by
increasing their proprietary interest in the Corporation through stock
ownership.

1.2 DEFINITIONS.

(a) "CORPORATION" means City National Corporation.

(b) "PLAN" means the 1985 Stock Option Plan.

(d) "COMMITTEE" means the Compensation Committee of the Board
of Directors unless the Board of Directors appoints another
committee to administer the Plan.

(e) "COMMON STOCK" or "STOCK" means the common stock of the
Corporation having a par value of $1.00 per share.

(f) "DIRECTOR STOCK OPTIONS" means Nonqualified Stock Options
granted to directors of the Corporation pursuant to
Section 2A of the Plan. (Added April 19, 1988.)

(g) "FAIR MARKET VALUE" means the price at which the Stock
shall have been sold in the last normal transaction of the
trading day on a specified date, or if no trading occurred
on such specified date, on the most recent preceding
business day on which trading occurred, as quoted on the
National Market System of the National Association of
Securities Dealers or on any exchange upon which the stock
may be traded. (Amended February 26, 1986.)

(h) "SUBSIDIARY" means any corporation of which a majority of
the outstanding voting stock or voting power is
beneficially owned directly or indirectly by the
Corporation, such as, City National Bank.

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<PAGE>

(i) "PARTICIPANT" or "OPTIONEE" means a member of a select
group of Officers and other key employees of the
Corporation or a Subsidiary who, in the opinion of the
Committee, are in a position to have a direct and
significant impact on achieving the Corporation's long-term
profit and growth objectives. No member of the Committee
shall be a Plan Participant.

(j) "INCENTIVE STOCK OPTION" means an option as defined under
Section 422A of the Internal Revenue Code and regulations
thereunder, including an Incentive Stock Option granted
pursuant to Section 3 of the Plan.

(k) "STOCK OPTION" or "NONQUALIFIED STOCK OPTION" means all
options other than Incentive Stock Options granted pursuant
to Section 2 of the Plan.

(l) "OPTION" means either an Incentive Stock Option or a
Nonqualified Stock Option.

(m) "STOCK APPRECIATION RIGHT" means a Right granted pursuant
to Section 4 of the Plan to receive the excess of the Fair
Market Value of a share of the Corporation's Common Stock
on the date when a Stock Appreciation Right is exercised
over the exercise price of the Right.

(n) "TAX OFFSET BONUS RIGHT" means a right granted pursuant to
Section 5 of the Plan to receive cash in an amount
designated by the Compensation Committee at the time such
right is granted. (Amended March 5, 1986.)

(o) "RIGHT" means, in a given context, either a Stock
Appreciation Right or a Tax Offset Bonus Right.

1.3 ADMINISTRATION. The Plan shall be administered by the
Committee, which is authorized to interpret the Plan, to adopt such rules and
regulations as it may from time to time deem necessary for the effective
operation of the Plan, to act on all matters relating to the granting and
payment of awards under the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan. The Committee may
grant Nonqualified Stock Options or Incentive Stock Options that qualify
under the terms and conditions set for the in Section 422A of the Internal
Revenue Code. The interpretation and construction by the Committee of any
Plan provisions or of any award made shall be final unless otherwise
determined by the Board of Directors. No member of the Committee shall be
personally liable for any action, failure to act, determination or
interpretation made in good faith with respect to the Plan or any transaction
hereunder.

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<PAGE>

1.4 SHARES/RIGHTS SUBJECT TO THE PLAN. Subject to adjustments
provided in Paragraph 5.1 hereof, the number of shares of stock to be
delivered upon exercise of all Options granted or Rights which may be
exercised pursuant to awards under the Plan shall not exceed 5,150,000. The
shares to be delivered under the Plan may be either authorized and unissued
shares or shares issued and thereafter acquired by the Corporation. (Amended
December 18, 1985; April 19, 1988; April 17, 1990; April 21, 1992.)

If an Option or Right for any reason expires or is terminated
without having been exercised in full, the remaining shares shall again
become available for the granting of Options or Rights under the Plan.

1.5 ELIGIBILITY. The Committee shall designate from time to time
the key employees who are to be granted Options (other than Director Stock
Options) and Stock Appreciation Rights. Subject to Section 2A of this Plan,
in no event may a member of the Committee or any non-employee Director be
granted an Option or Right under this Plan. (Amended April 19, 1988.)

No employee shall be eligible for the grant of an Incentive
Stock Option who owns or would own immediately before the grant of such
Incentive Stock Option, directly or indirectly, stock possessing more than
ten percent of the total combined voting power of all classes of stock of the
Corporation or of any parent or subsidiary corporation unless at the time
such Incentive Stock Option is granted the price is at least 110% of the Fair
Market Value of the Common Stock subject to the Incentive Stock Option and
such Incentive Stock Option by its terms is not exercisable after the
expiration of five years from the date such Incentive Stock Option is granted.

2. STOCK OPTIONS.

2.1 GRANTS. The Committee may, in its discretion, grant to
Participants Stock Options which shall be evidenced by Option agreements, on
the terms and conditions set forth in the Plan and on such other terms and
conditions as are not inconsistent with the purposes and provisions of the
Plan. The Committee shall determine the number of shares, if any, as to which
Stock Options are to be granted in any year and the number of shares as to
which Stock Options are to be granted to each Participant.

2.2 STOCK OPTION PRICE. Subject to Section 2A of this Plan, the
purchase price of stock covered by each Stock Option shall be determined by
the Committee but shall not be less than 100% of the Fair Market Value of
such stock on the date of the granting of the Stock Option. (Amended April
19, 1988.)

2.3 TERM OF STOCK OPTION. Each Stock Option and all rights or
obligations thereunder shall be expressed to expire on such date as the
Committee may determine, but not later than the tenth anniversary of the date
on which the Stock Option is granted, and shall be subject to earlier
termination as hereinafter provided.

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<PAGE>

2.4 EXERCISE OF STOCK OPTION. A Stock Option may be exercised
according to its terms as determined by the Committee, by giving written
notice to the Corporation specifying the number of shares to be purchased,
accompanied by the payment in cash, equivalent or through exchange of
previously acquired shares or a combination of cash and previously acquired
shares which will equal the total purchase price therefor. Any shares so
assigned and delivered to the Corporation in payment or partial payment of
the purchase price shall be valued at their Fair Market Value on the exercise
date.

No Stock Option or installment thereof shall be exercisable
except in respect of whole shares, and fractional share interests shall be
disregarded. The Committee may, by the terms of the Stock Option, require any
partial exercise to be with respect to a specified minimum number of shares.

2.5 SURRENDER OF STOCK OPTIONS. The Committee, in its sole
discretion, shall have the authority under the circumstances set forth herein
to agree mutually with a Participant to grant such Participant the right on
such terms and conditions as the Committee may prescribe, to surrender such
Participant's Stock Options to the Corporation for cancellation and to
receive upon such surrender a cash payment equal to the Spread applicable to
such surrendered Stock Option. Such right shall be made available only in
the event of an Offer (as defined in the following paragraph).

The term "offer" as used in this Section means any tender offer or
exchange offer for shares, other than one made by the Corporation, provided that
the corporation, person or other entity making the offer acquires shares
pursuant to such offer.

The term "Offer Price per Share" as used in this Section means the
highest price per share paid on any Offer which is in effect at any time
during the period beginning on the sixtieth day prior to the date on which
the Stock Option is surrendered pursuant to this Section and ending on such
date of surrender. Any securities or property which are part or all of the
consideration paid for shares in the Offer shall be valued in determining the
Offer Price per Share at the higher of (a) the evaluation placed on such
securities or property by any other corporation, person or entity making the
Offer or (b) the valuation placed on such securities or property by the
Committee.

The term "Spread" as used in this Section means with respect to
any surrendered Stock Option and associated Right, if any, an amount equal to
the product computed by multiplying (i) the excess of (A) the Offer Price per
Share or the highest market price per share of the Corporation's Common Stock
during the period beginning on the sixtieth day prior to the date on which
the Stock Option is surrendered pursuant to this Section and ending on such
date of surrender over (B) the purchase price per share at which the
surrendered Stock Option is then exercisable by (ii) the number of shares by
such Stock Option with respect to which it has not theretofore been exercised.

2.6 TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Committee, if the employment of the Stock Option holder terminates for any
reason other

4
<PAGE>

than for cause, death, retirement or disability, the Stock Option shall
expire at the earlier of the end of its fixed term or three months after the
date of such termination, and until then shall remain exercisable only to the
extent exercisable at such termination unless otherwise determined by the
Committee.

If the employment of the Stock Option holder is terminated for
cause, all of the Stock Options then held by the holder shall immediately
expire concurrent with such termination. Unless otherwise determined by the
Committee, cause shall include but not be limited to, wilful violation,
breach or neglect of duty by the employee.

If the employment of the Stock Option holder terminates due to
retirement or disability, the Stock Option will expire at the earlier of the
end of its fixed term or three years after the date of such termination, and
until then will be exercisable in full, regardless of any vesting schedule
otherwise applicable, unless otherwise determined by the Committee. (Amended
November 19, 1986.)

Notwithstanding the foregoing, the Compensation Committee may,
in its sole discretion, change the expiration date and/or vesting provisions
of any Stock Option after termination of the holder's employment from that
set forth above, provided, however, that in no event will the Stock Option
remain in effect after the end of its original fixed term. (Added December
19, 1990.)

2.7 DEATH OF OPTIONEE. Unless otherwise determined by the
Committee, if any Stock Option holder dies while employed by the Corporation
or any Subsidiary, or during the period referred to in Paragraph 2.6 hereof,
the Stock Option shall expire at the earlier of the end of its fixed term or
one year after the date of such death. During such period after the death,
the Stock Option may be exercised by the person or persons to whom the Stock
Option holder's right under the Stock Option shall pass by will or by the
applicable laws of descent and distribution, in full, regardless of any
vesting schedule otherwise applicable, unless otherwise determined by the
Committee. (Amended November 19, 1986.)

Notwithstanding the foregoing, the Compensation Committee may,
in its sole discretion, change the expiration date and/or vesting provisions
of any Stock Option after the holder's death from that set forth above,
provided, however, that in no event will the Stock Option remain in effect
after the end of its original fixed term. (Added December 19, 1990.)

2A. DIRECTOR STOCK OPTIONS. (Added April 19, 1988.)

2A.1 ELIGIBILITY. All directors of the Corporation who are not
employees of the Corporation or any Subsidiary shall be eligible to receive
Director Stock Options, as set forth in this Section 2A. Notwithstanding the
foregoing, any director who is, or who during the preceding calendar year
was, a member of the Committee or any committee administering any other stock
option, stock appreciation, stock bonus or other stock plan of the
Corporation or any Subsidiary will not be eligible to receive Director Stock

5
<PAGE>

Options hereunder if, in the opinion of counsel for the Corporation, the
receipt of Director Stock Options will cause such director to cease to be a
"disinterested person" with respect to the Plan or any other stock option,
stock appreciation, stock bonus or other stock option, stock appreciation,
stock bonus or other stock plan of the Corporation or any Subsidiary pursuant
to Rule 16b-3 of the Securities and Exchange Commission, or will otherwise
disqualify the Plan or any other such plan from compliance with said rule.
(Added April 19, 1988.)

2A.2 GRANT OF DIRECTOR OPTIONS. Every eligible director will
receive Director Stock Options having a value equal to the Retainer Amount
for the year beginning on the date of each annual meeting of shareholders.
Director Stock Options shall be granted automatically to each such eligible
director on the business day following such annual meeting of shareholders,
without further action of the Committee or the Board. The number of Director
Stock Options granted hereunder shall be determined according to the
following formula, rounded to the nearest share: The Retainer Amount shall
be divided by the Fair Market Value of a share of stock on the date of the
annual meeting of shareholders immediately preceding the grant less $1.00.
The "Retainer Amount" shall be $3,000. (Added April 19, 1988.)

2A.3 STOCK OPTION PRICE. The purchase price of stock pursuant to a
Director Stock Option shall be $1.00 per share.

2A.4 OTHER TERMS OF DIRECTOR STOCK OPTIONS. Each Director Stock
Option shall become exercisable six (6) months after the date of grant.
Unless otherwise determined by the Committee, if the holder of Director Stock
Options ceases to serve as a director of the Corporation for any reason other
than for cause, the Director Stock Options shall expire at the end of their
fixed term or three months after the date of such termination, and until then
shall be exercisable in full, regardless of any vesting schedule otherwise
applicable. Except as set forth in this Section 2A, all terms and provisions
of the Director Stock Options shall be as set forth in the Plan with respect
to Stock Options which are not Director Stock Options. (Added April 19,
1988; amended April 16, 1991; November 25, 1991.)

3. INCENTIVE STOCK OPTIONS.

3.1 GRANTS. The Committee may, in its discretion, grant to
Participants Incentive Stock Options which shall be evidenced by Option
agreements on the terms and conditions set forth in Section 422A of the
Internal Revenue Code and on such other terms and conditions as are not
inconsistent with the purposes and provisions of the Plan. The Committee
shall determine the number of shares, if any, as to which Incentive Stock
Options are to be granted in any year and the number of shares as to which
Incentive Stock Options are to be granted to each Participant.

6
<PAGE>

For Incentive Stock Options granted on or before December 31,
1986, the total purchase price of all Incentive Stock Options granted to any
individual Participant in any calendar year under this Plan shall not exceed
$100,000, provided, however, that:

(a) One-half of any unused portion of such $100,000 limitation may be
carried over and added to the $100,000 limitation during any of the
succeeding three calendar years, and

(b) The amount of any unused limit carry-over from any calendar year
which may be taken into account in any succeeding calendar year shall
be reduced by the amount of such carry-over which was used in prior
calendar years, and

(c) The total purchase price of Incentive Stock Options granted during
any calendar year shall be treated as first using up the $100,000 limit
and then shall be treated as using up the unused limit carry-over to such
year in the order of the calendar years in which the carry-overs arose.

For Incentive Stock Options granted on or after January 1,
1987, the aggregate fair market value (determined at the time the Incentive
Stock Option is granted) of the stock with respect to which Incentive Stock
Options are exercisable for the first time by a Participant during any
calendar year (under all Incentive Stock Option plans of the Participant's
employer corporation and its parent and subsidiary corporations) shall not
exceed $100,000. (Amended December 17, 1986.)

3.2 OPTION PRICE. The purchase price of stock covered by each
Incentive Stock Option shall be determined by the Committee but shall not be
less than 100% of the Fair Market Value of such stock on the date of the
granting of the Incentive Stock Option.

3.3 TERM OF OPTION. Each Incentive Stock Option and all rights or
obligations thereunder shall be expressed to expire on such date as the
Committee may determine, but not later than the tenth anniversary of the date
on which the Incentive Stock Option is granted, and shall be subject to
earlier termination as hereinafter provided.

3.4 EXERCISE OF OPTION. With respect to Incentive Stock Options
granted before January 1, 1987, in accordance with Section 422A(b)(7) of the
Code of 1954, as amended, no Incentive Stock Option shall be exercisable
while there is outstanding any Incentive Stock Option issued under this Plan
or any other Plan which was granted before the granting of such Incentive
Stock Option to a Participant to purchase Common Stock of the Corporation or
the parent or a Subsidiary of the Corporation or of a predecessor company of
the Corporation or a parent or subsidiary of the Corporation. (Amended March
5, 1986 and March 25, 1987.)

If shares acquired pursuant to exercise of an Incentive Stock
Option are disposed of within two years of grant or within one year of
exercise, the Incentive Stock

7
<PAGE>

Option shall be treated as a nonqualified option (Stock Option) with respect
to tax consequences for the Corporation and the Optionee.

An Incentive Stock Option may be exercised according to its
terms as determined by the Committee, by giving written notice to the
Corporation specifying the number of shares to be purchased, accompanied by
the payment in cash, equivalent or through exchange of previously acquired
shares or a combination of cash and previously acquired shares which will
equal the total purchase price therefor. Any shares so assigned and
delivered to the Corporation in payment or partial payment of the purchase
price shall be valued at their Fair Market Value on the exercise date

No Incentive Stock Option or installment thereof shall be
exercisable except in respect of whole shares, and fractional share interests
shall be disregarded. The Committee may, by the terms of the Incentive Stock
Option, require any partial exercise to be with respect to a specified
minimum number of shares.

3.5 TERMINATION OF EMPLOYMENT. If the employment of the Incentive
Stock Option holder terminates for any reason other than for cause, death,
retirement, or disability, the Incentive Stock Option shall expire at the
earlier of the end of its fixed term or three months after the date of such
termination, and until then shall remain exercisable only to the extent
exercisable at such termination unless otherwise determined by the Committee.
If such termination occurs by reason of disability or retirement, such
three-month period will be extended to three years and such Incentive Stock
Option may be exercised in full, regardless of any vesting schedule otherwise
applicable, unless otherwise determined by the Committee. However, failure
to exercise an Incentive Stock Option within three months of the date the
Optionee ceases to be employed by the Corporation or a Subsidiary by reason
of retirement or within one year of the date the Optionee ceases to be
employed by reason of disability shall cause an Incentive Stock Option to
cease to be treated as an Incentive Stock Option for purposes of Section 421
of the Internal Revenue Code. (Amended November 19, 1986.)

If the employment of the Incentive Stock Option holder is
terminated for cause, all of the Incentive Stock Options then held by the
holder shall immediately expire concurrent with such termination. Cause
shall include, but not be limited to, wilful violation, breach or neglect of
duty by the employee.

3.6 DEATH OF EMPLOYEE. In the event of termination due to death,
the Incentive Stock Option shall expire at the earlier of the term of the
Incentive Stock Option or one year after termination due to such causes.
During such period after death an Incentive Stock Option may be exercised in
full, regardless of any vesting schedule otherwise applicable, unless
otherwise determined by the Committee, by the person or persons to whom the
Incentive Stock Option holder's right shall pass by will or by the applicable
laws of descent and distribution. (Amended November 19, 1986.)

8
<PAGE>

4. STOCK APPRECIATION RIGHTS.

4.1 GRANTS. The Committee may, in its discretion, grant Stock
Appreciation Rights to selected Participants. Such rights shall be evidenced
by Stock Appreciation Rights agreements on the terms and conditions set forth
in the Plan and on such other terms and conditions as are not inconsistent
with the purposes and provisions of the Plan. Each Stock Appreciation Right
may relate to a specific Option granted under the Plan or be unrelated to an
Option. Stock Appreciation Rights granted in relation to a specific Option
shall be granted either concurrently or at such later time as determined by
the Committee.

4.2 STOCK APPRECIATION RIGHTS PERIOD. Each Stock Appreciation
Right related to an Option and all rights or obligations thereunder shall
expire upon the expiration of the related Option. Stock Appreciation Rights
unrelated to an Option and all rights or obligations thereunder shall expire
on such date as the Committee may determine. In no event may a Stock
Appreciation Right, related or unrelated to an Option, be exercised later
than the tenth anniversary of the date on which the Stock Appreciation Right
is granted, and shall be subject to earlier termination as hereinafter
provided.

4.3 EXERCISE OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights shall be exercisable at such time as may be determined by the
Committee provided that Stock Appreciation Rights granted in connection with
an Option shall not be exercised prior to the time that the related Option
may be exercised nor after the related Option expires.

Upon exercise of a Stock Appreciation Right granted in relation
to an Option, the number of shares subject to exercise under the related
Option shall automatically be reduced by the number of shares represented by
the Option or portion thereof which is surrendered. Shares subject to
Options, or portions thereof, which have been surrendered in connection with
the exercise of Stock Appreciation Rights, shall not be available for
subsequent Option grants under the Plan.

A Stock Appreciation Right granted in relation to an Incentive
Stock Option shall be exercisable only when the Fair Market Value of the
underlying Incentive Stock Option exceeds the exercise price of that Option.

All Stock Appreciation Rights unrelated to an Option not
exercised by the anniversary of the tenth year after the date such Rights
were granted shall expire and automatically be paid to the Stock Appreciation
Right holder in the amount of the aggregate value equal to the product of the
excess of the Fair Market Value on the exercise date of one share over the
stock price per share times the number of Stock Appreciation Rights awarded.

Each holder of a Stock Appreciation Right agrees to give the
Committee prompt written notice of an election made by such holder to
exercise said Stock Appreciation Rights subject to the approval of the
Committee.

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<PAGE>

Despite any other provision of the Plan, the Committee may
impose such conditions on exercise of Stock Appreciation Rights as may be
required to satisfy the requirements of Rule 16b-3 (or any successor rule),
promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.

Any exercise of a Stock Appreciation Right hereunder shall be
made beginning on the third business day following the date of release of the
financial data specified in paragraph (e)(1)(ii) of Rule 16b-3 of the
regulations promulgated under the Securities Exchange Act of 1934 and ending
on the twelfth business day following such date or at such other time as may
be permitted under an amendment or successor rule.

4.4 PAYMENTS. Upon the exercise of a Stock Appreciation Right and
surrender of any related Option, the Corporation shall deliver to the person
an amount equivalent to the excess of Fair Market Value of a share of stock
at the exercise date over the Fair Market Value of such share on the date the
Stock Appreciation Right was awarded, in either cash, Common Stock or a
combination thereof. The Committee shall determine whether cash shall be
given in lieu of fractional shares of Common Stock. No fractional shares
will be issued.

The Committee shall place a maximum limitation which will be
payable upon exercise of a Stock Appreciation Right of up to 200% of the Fair
Market Value (or lesser percentage as the Committee may determine) of a share
of Common Stock on the date the Stock Appreciation Right is granted. Such
limitation, however, must be determined as of the date of the grant, and
noted on the instrument evidencing the Participant's Stock Appreciation Right
granted hereunder.

4.5 TERMINATION OF EMPLOYMENT. In the event a Participant ceases to
be an employee of the Corporation for any reason, any Stock Appreciation Right
shall be exercisable only to the extent that any related Option is exercisable
under the applicable provisions of Paragraphs 2.6, 2.7, 3.5, and 3.6 of the
Plan. (Amended November 19, 1986.)

Stock Appreciation Rights unrelated to Options shall expire at
the earlier of the end of its fixed term or three months after the date of
termination due to any reason other than for cause, death, retirement, or
disability, and only to the extent exercisable at such termination unless
otherwise determined by the Committee. If the employment of the Stock
Appreciation Right holder terminates due to retirement or disability, the
Stock Appreciation Right will expire at the earlier of the end of its fixed
term or three years after the date of such termination and until then will be
exercisable in full, regardless of any vesting schedule otherwise applicable,
unless otherwise determined by the Committee.

If the employment of the holder of Stock Appreciation Rights is
terminated for cause, all of the Stock Appreciation Rights then held by the
holder shall immediately expire concurrent with such termination. Cause
shall include, but not be limited to, wilful violation, breach or neglect of
duty by the employee.

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<PAGE>

4.6 DEATH OF EMPLOYEE. If the holder of Stock Appreciation Rights
unrelated to Options dies, the Stock Appreciation Rights shall expire at the
earlier of the end of its fixed term or one year after the date of such death
and until then shall remain exercisable in full, regardless of any vesting
schedule otherwise applicable, unless otherwise determined by the Committee.
All Stock Appreciation Rights related to Options shall expire based on the
termination conditions of the underlying Options. (Amended November 19,
1986.)

5. TAX OFFSET BONUS RIGHTS.

5.1 GRANTS. The Committee may, in its discretion, grant Tax Offset
Bonus Rights to selected Participants. Such rights shall be evidenced by Tax
Offset Bonus Rights agreements on the terms and conditions set forth in the
Plan, which agreements shall specify the amount or method of calculating the
amount of the rights being granted and may contain such other terms and
conditions as are not inconsistent with the purposes and provisions of the
Plan. Each Tax Offset Bonus Right must relate to a specific Nonqualified
Stock Option granted under Section 2 of the Plan. Tax Offset Bonus Rights
granted in relation to a specific Nonqualified Stock Option shall be granted
either concurrently or at such later time as determined by the Committee.
The amount of any Tax Offset Bonus Right may be, but is not required to be,
calculated as a specified percentage of the excess of the Fair Market Value
of a share of the Corporation's Common Stock on the date when the right is
exercised over the price per share under the Option exercised concurrently
with the exercise of such right. (Amended March 5, 1986.)

5.2 TAX OFFSET BONUS RIGHTS PERIOD. Each Tax Offset Bonus Right
and all rights or obligations thereunder shall expire upon the expiration of
the related Nonqualified Stock Option. In no event may a Tax Offset Bonus
Right be exercised later than the tenth anniversary of the date on which the
Tax Offset Bonus Right is granted, and shall be subject to earlier
termination as hereinafter provided.

5.3 EXERCISE OF RIGHTS. Tax Offset Bonus Rights shall be
exercisable to the extent, and only to the extent, the related Nonqualified
Stock Option is exercisable. Tax Offset Bonus Rights shall only be
exercisable concurrently with the exercise of the related Nonqualified Stock
Option; any exercise of the Nonqualified Stock Option shall also be deemed an
exercise of the equivalent number of Tax Offset Bonus Rights.

Each holder of a Tax Offset Bonus Right shall agree to give the
Committee prompt written notice of an election made by such holder to
exercise said Tax Offset Bonus Rights subject to the approval of the
Committee.

Despite any other provision of the Plan, the Committee may
impose such conditions on exercise of Tax Offset Bonus Rights as may be
required to satisfy the requirements of Rule 16b-3 (or any successor rule),
promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.

11
<PAGE>

Any exercise of a Tax Offset Bonus Right hereunder shall be
made beginning on the third business day following the date of release of the
financial data specified in paragraph (e)(1)(ii) of Rule 16b-3 of the
regulations promulgated under the Securities Exchange Act of 1934 and ending
on the twelfth business day following such date or at such other time as may
be permitted under an amendment or successor rule.

5.4 PAYMENTS. Upon the exercise of a Tax Offset Bonus Right, the
Corporation shall deliver to the person exercising such right the amount of
the right being exercised, calculated as specified in the Tax Offset Bonus
Right agreement with respect thereto. Payment shall be in either cash,
Common Stock or a combination thereof, as the Committee shall determine. No
fractional shares will be issued. (Amended March 5, 1986.)

5.5 TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Committee, in the event a Participant ceases to be an employee of the
Corporation for any reason, any Tax Offset Bonus Right will be exercisable
only to the extent that any related Nonqualified Stock Option is exercisable
under the applicable provisions of Paragraphs 2.6 and 2.7 of the Plan.
(Amended November 19, 1986.)

If the employment of the holder of Tax Offset Bonus Rights is
terminated for cause, all of the Tax Offset Bonus Rights then held by the
holder shall immediately expire concurrent with such termination. Unless
otherwise determined by the Committee, cause shall include, but not be
limited to, wilful violation, breach or neglect of duty by the employee.

6. OTHER PROVISIONS.

6.1 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of a
reorganization, merger, recapitalization, reclassification, stock split-up,
stock dividend, stock consolidation or otherwise, an appropriate and
proportionate adjustment shall be made in the number and kind of shares as to
which Options and Rights may be granted. A corresponding adjustment changing
the number or kind of shares, the exercise price per share allocated to
unexercised Options and Rights or portions thereof which shall have been
granted or awarded prior to any such change, shall likewise be made. Any
such adjustment, however, shall be made without change in the total price
applicable to the unexercised portion of the Option or Right.

In adjusting Common Stock to reflect such changes, or in
determining that no such adjustment is necessary, the Board may rely on the
advice of counsel and accountants of the Corporation, and the determination
of the Board shall be conclusive. No fractional shares of stock shall be
issued under the Plan on account of any such adjustment.

In the event (a) any person, corporation or entity other than
the Corporation shall acquire more than 70% of the Corporation's Common Stock
through a tender offer, exchange offer or otherwise; or (b) the Corporation
shall be liquidated or

12
<PAGE>

dissolved following a sale of all or substantially all of its assets; or (c)
the Corporation shall not be the surviving corporation resulting from any
merger or consolidation to which it is a party, any then outstanding Stock
Option, Incentive Stock Option, or Stock Appreciation Right, or Tax Offset
Bonus Right held by an employee of the Corporation or any subsidiary of the
Corporation shall immediately become exercisable to the full extent
theretofore not exercised, but in no event after ten years from the date of
such grant, provided, however, that the Board of Directors may, by unanimous
resolution, provide that such maturity shall not result from an event in
clause (c) above.

In the event of a merger or consolidation to which the
Corporation is a party, if the Board of Directors provides that any then
outstanding Options shall not become exercisable to the full extent
theretofore not exercised, the Board will make provision in connection with
such transaction for the continuance of the Plan and the assumption of
Options and Rights theretofore granted, or the substitution for such with new
Options and Rights covering the stock of a successor employer corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to number and
kind of shares and prices.

6.2 NO GUARANTEE OF EMPLOYMENT. Nothing in the Plan or any Option
or Right shall interfere with or limit in any way the right of the
Corporation or any of its Subsidiaries to terminate any Participant's
employment at any time, nor confer upon any Participant any right to continue
in the employ of the Corporation or any of its Subsidiaries, except to the
extent as is otherwise provided in any employment contract with any such
Participant.

6.3 NON-TRANSFERABILITY. An Option or Right granted under this
Plan shall, by its terms, be nontransferable by the Option or Right holder
other than by will or the laws of descent and distribution, and shall be
exercisable during the lifetime only by the Option or Right holder.

6.4 RIGHTS OF A SHAREHOLDER. The holder of such Option shall have
no rights as a shareholder with respect to any shares subject to such Option
until the date of issuance of a stock certificate to the Participant for such
shares and then only measured by the shares actually issued.

6.5 GOVERNMENT REGULATIONS. The Plan, the grant and exercise of
Options and Rights shall be subject to all applicable rules and regulations
of government or other authorities.

6.6 AMENDMENT AND DISCONTINUANCE OF THE PLAN. The Committee may
amend or discontinue the Plan as it shall from time to time consider
desirable, provided that no amendment shall, without further approval by the
holders of a majority of the shares which are represented in person or by
proxy and entitled to vote on the subject at a meeting of stockholders of the
Corporation, change the terms of the Plan so as to (a) increase the maximum
number of shares for which Options and Rights may be granted in the aggregate
(other than upon adjustments upon changes in capitalization as

13
<PAGE>

provided in Paragraph 5.1 hereof), (b) reduce the minimum Option price, (c)
extend the maximum Option period, (d) increase the Retainer Amount for the
purpose of Section 2A, or (e) permit the grant of Director Stock Options to
employees of the Corporation or any Subsidiary, or to any person other than a
director of the Corporation. Notwithstanding any other provisions hereof, the
Plan shall not be amended more frequently than once every six (6) months with
respect to the persons eligible to receive Director Stock Options, the
purchase price of stock pursuant to Director Stock Options or the formula set
forth in Section 2A.2 that determine the number of Director Stock Options
granted to any optionee. (Amended April 19, 1988; and April 16, 1991.)

6.7 EFFECTIVE DATE AND DURATION OF PLAN. The Plan shall be
effective upon approval by the Committee and adopted by the Board of
Directors and subject to approval hereof by the holders of a majority of the
shares which are represented in person or by proxy and entitled to vote on
the subject at a meeting of the shareholders of the Corporation, provided,
however, that the Committee or the Board of Directors may grant Options or
Rights under this Plan prior to said shareholder approval provided that any
such grant or grants are made conditioned on and subject to said shareholder
approval. Unless previously terminated by the Board of Directors, the Plan
shall terminate on the tenth anniversary of its adoption by the Board of
Directors.

<PAGE>

CITY NATIONAL CORPORATION
1999 OMNIBUS PLAN

(AS APPROVED BY CITY NATIONAL CORPORATION SHAREHOLDERS AT ANNUAL MEETING OF
APRIL 21, 1999; AS AMENDED BY CITY NATIONAL CORPORATION BOARD OF
DIRECTORS, APRIL 21, 1999)

<PAGE>

CITY NATIONAL CORPORATION
1999 OMNIBUS PLAN

TABLE OF CONTENTS

Page
----
<S> <C> <C>
I. THE PLAN...........................................................1
1.1. PURPOSE....................................................1
1.2. DEFINITIONS................................................1
1.3. ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE......6
1.4. PARTICIPATION..............................................7
1.5. SHARES AVAILABLE FOR AWARDS................................7
1.6. GRANT OF AWARDS............................................9
1.7. AWARD PERIOD...............................................9
1.8. LIMITATIONS ON EXERCISE AND VESTING OF AWARDS..............9
1.9. ACCEPTANCE OF NOTES TO FINANCE EXERCISE...................10
1.10. NO TRANSFERABILITY........................................11

II. EMPLOYEE OPTIONS..................................................11
2.1. GRANTS....................................................11
2.2. OPTION PRICE..............................................11
2.3. LIMITATIONS ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS.12
2.4. LIMITS ON 10% HOLDERS.....................................13
2.5. NO OPTION REPRICING.......................................13
2.6. DIVIDEND EQUIVALENTS......................................13
2.7. SURRENDER OF STOCK OPTIONS................................13
2.8. SPECIAL REQUIREMENTS FOR DIRECTOR STOCK OPTIONS...........14

III. STOCK APPRECIATION RIGHTS.........................................15
3.1. GRANTS....................................................15
3.2. EXERCISE OF STOCK APPRECIATION RIGHTS.....................15
3.3. PAYMENT...................................................15

IV. RESTRICTED STOCK AWARDS...........................................16
4.1. GRANTS....................................................16
4.2. RESTRICTIONS..............................................17
4.3. RETURN TO THE COMPANY.....................................17
</TABLE>

(AS APPROVED BY CITY NATIONAL CORPORATION SHAREHOLDERS AT ANNUAL MEETING OF
APRIL 21, 1999; AS AMENDED BY CITY NATIONAL CORPORATION BOARD OF
DIRECTORS, APRIL 21, 1999)

<PAGE>

V. PERFORMANCE SHARE AWARDS AND STOCK BONUSES........................17
5.1. GRANTS OF PERFORMANCE SHARE AWARDS........................17
5.2. GRANTS OF STOCK BONUSES...................................18
5.3. DEFERRED PAYMENTS.........................................18
5.4. RESTRICTIONS..............................................18

VI. TAX OFFSET BONUS RIGHTS...........................................18
6.1. GRANTS....................................................18
6.2. TAX OFFSET BONUS RIGHTS PERIOD............................19
6.3. EXERCISE OF RIGHTS........................................19
6.4. PAYMENTS..................................................19
6.5. TERMINATION OF EMPLOYMENT.................................19

VII. OTHER PROVISIONS..................................................20
7.1. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS
AND BENEFICIARIES.........................................20
7.2. ADJUSTMENTS; ACCELERATIONS................................20
7.3. EFFECT OF TERMINATION OF EMPLOYMENT.......................22
7.4. COMPLIANCE WITH LAWS......................................22
7.5. TAX WITHHOLDING...........................................22
7.6. PLAN AMENDMENT; TERMINATION AND SUSPENSION................23
7.7. PRIVILEGES OF STOCK OWNERSHIP.............................23
7.8. EFFECTIVE DATE OF THE PLAN................................23
7.9. TERM OF THE PLAN..........................................24
7.10. GOVERNING LAW; CONSTRUCTION; SEVERABILITY.................24
7.11. CAPTIONS..................................................25
7.12. NON-EXCLUSIVITY OF PLAN...................................25

(AS APPROVED BY CITY NATIONAL CORPORATION SHAREHOLDERS AT ANNUAL MEETING OF
APRIL 21, 1999; AS AMENDED BY CITY NATIONAL CORPORATION BOARD OF
DIRECTORS, APRIL 21, 1999)

<PAGE>

CITY NATIONAL CORPORATION
1999 OMNIBUS PLAN

I. THE PLAN

1.1. PURPOSE

The purpose of this Plan is to promote the success of the Corporation
by providing an additional means through the grant of Awards to attract,
motivate, retain and reward key employees, including officers, whether or not
directors, of the Corporation with awards and incentives for high levels of
individual performance and improved financial performance of the Corporation.

1.2. DEFINITIONS

(a) "Award" shall mean an award of any Option, Stock Appreciation
Right, Restricted Stock Award, Performance Share Award, Stock
Bonus, Dividend Equivalent, Tax Offset Bonus or other right or
security that would constitute a "derivative security" under Rule
16a-l(c) of the Exchange Act, or any combination thereof, whether
alternative or cumulative, authorized by and granted under this
Plan.

(b) "Award Agreement" shall mean any writing setting forth the terms
of an Award that has been authorized by the Committee.

(c) "Award Date" shall mean the date upon which the Committee took the
action granting an Award or such later date as the Committee
designates as the Award Date at the time of the Award.

(d) "Award Period" shall mean the period beginning on an Award Date
and ending on the expiration date of such Award.

(e) "Beneficiary" shall mean the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to
receive the benefits specified in the Award Agreement and under
this Plan in the event of a Participant's death, and shall mean
the Participant's executor or administrator if no other
Beneficiary is identified and able to act under the circumstances.

(f) "Board" shall mean the Board of Directors of the Corporation.

(g) "Change in Control Event" shall mean:

<PAGE>

(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (i) the then outstanding shares of
Common Stock of the Corporation (the "Outstanding Common
Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Corporation entitled
to vote generally in the election of directors (the
"Outstanding Voting Securities"); provided, however, that
for purposes of this sub-section (1), the following
acquisitions shall not constitute a Change in Control: (i)
any acquisition directly from the Corporation; (ii) any
acquisition by the Corporation; (iii) any acquisition by
any employee benefit plan (or related trust) sponsored or
maintain by the Corporation or any corporation controlled
by the Corporation, (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (3) of this section (g), or
(v) any acquisition by the Goldsmith Family or any director
or partnership for the benefit of any member of the
Goldsmith Family; or

(2) Individuals who, as of the date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by the Corporation's shareholders, was
approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of
either an actual or threatened election contest with
respect to the election or removal of directors or other
actual or threatened solicitation of proxies or contest by
or on behalf of a person other than the board; or

(3) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of
the assets of the Corporation (a "Business Combination"),
in each case, unless, following such Business Combination
(i) all or substantially all of the individuals and
entities who were the beneficial owners respectively, of
the Outstanding Corporation Voting Securities immediately
prior to such Business Combination beneficially owned,
directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the
Corporation or all or substantially all of the
Corporation's assets either directly or through one or more
subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such

2
<PAGE>

Business Combination, of the Outstanding Corporation Common
Stock and outstanding Corporation voting securities, as the
case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee
benefit plan or related trust of the Corporation or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock
of the corporation resulting from such Business Combination
or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that
such ownership existed prior to the Business Combination
and (iii) at least a majority of the 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

(4) Approval by the shareholders of the Corporation of a
complete liquidation or dissolution of the Corporation.

(h) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.

(i) "Commission" shall mean the Securities and Exchange Commission.

(j) "Committee" shall mean the Compensation and Directors Nominating
Committee of the Board, or other Committee, regardless of name,
that acts on matters of compensation for eligible employees, which
Committee shall be comprised only of two or more directors or such
greater number of directors as may be required under applicable
law, each of whom, during such time as one or more Participants
may be subject to Section 16 of the Exchange Act, shall be a
Disinterested and Outside director.

(k) "Common Stock" shall mean the common stock of the Corporation,
$1.00 par value per share, and such other securities or property
as may become the subject of Awards, or become subject to Awards,
pursuant to an adjustment made under Section 6.2 of this Plan.

(l) "Corporation" shall mean City National Corporation and its
Subsidiaries.

(m) "Disinterested and Outside" shall mean "disinterested" within the
meaning of any applicable regulatory requirements, including Rule
16b-3, and "outside" within the meaning of Section 162(m) of the
Code.

(n) "Dividend Equivalent" shall mean an amount equal to the amount of
cash dividends or other cash distributions paid (or such portion
of such dividend or other distribution as may be designated by
the Committee) with respect to each Share after the date of an
Award of a Dividend Equivalent.

3
<PAGE>

(o) "Eligible Employee" shall mean an officer at a level of Vice
President or the equivalent (whether or not a director) of the
Corporation, or any Other Eligible Person, as determined by the
Committee in its discretion. In no event may any member of the
Committee or a committee administering any other stock option,
stock appreciation, stock bonus or other stock plan of the
Corporation be an Eligible Employee.

(p) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.

(q) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

(r) "Fair Market Value" shall mean, with respect to Common Stock, the
price at which the Stock sold on the last normal transaction of
the trading day on a specified date, or if no trading occurs on
such specified date, on the most recent preceding business day on
which trading occurred, as quoted on the National Market System of
the National Association of Securities Dealers or on any exchange
upon which the stock may be traded.

(s) "Incentive Stock Option" shall mean an Option which is designated
as an incentive stock option within the meaning of Section 422 of
the Code and which contains such provisions as are necessary to
comply with that section.

(t) "Nonqualified Stock Option" shall mean an Option that is
designated as a Nonqualified Stock Option and shall include any
Option intended as an Incentive Stock Option that fails to meet
the applicable legal requirements thereof. Any Option granted
hereunder that is not designated as an incentive stock option
shall be deemed to be designated a nonqualified stock option under
this Plan and not an incentive stock option under the Code.

(u) "Non-Employee Director" shall mean a member of the Board who is
not an officer or employee of the Corporation.

(v) "Option" shall mean an option to purchase Shares under this Plan.
The Committee shall designate any Option granted to an Eligible
Employee as a Nonqualified Stock Option or an Incentive Stock
Option.

(w) "Other Eligible Person" shall mean any other person (including
significant agents and consultants) who performs substantial
services for the Corporation of a nature similar to those
performed by key employees, selected to participate in this Plan
by the Committee from time to time; provided that in no event
shall a Non-Employee Director be selected as an Other Eligible
Person.

4
<PAGE>

(x) "Participant" shall mean an Eligible Employee who has been granted
an Award under this Plan.

(y) "Performance Share Award" shall mean an Award made pursuant to the
provisions, and subject to the terms and conditions, of Article V
of the Plan.

(z) "Personal Representative" shall mean the person or persons who,
upon the Total Disability or incompetence of a Participant, shall
have acquired on behalf of the Participant, by legal proceeding or
otherwise, the power to exercise the rights or receive benefits
under this Plan and who shall have become the legal representative
of the Participant.

(aa) "Plan" shall mean this 1999 Omnibus Plan.

(bb) "QDRO" shall mean a qualified domestic relations order as defined
in Section 414 (p) of the Code or Title I, Section 206(d) (3) of
ERISA (to the same extent as if this Plan were subject thereto),
or the applicable rules thereunder.

(cc) "Restricted Stock" shall mean Shares awarded to a Participant
subject to payment of such consideration, if any, and such
conditions on vesting and such transfer and other restrictions as
are established in or pursuant to this Plan, for so long as such
shares remain unvested under the terms of the applicable Award
Agreement.

(dd) "Retirement" shall mean retirement from active service as an
employee or officer of the Corporation on or after attaining age
65.

(ee) "Rule 16b-3" shall mean Rule 16b-3, as amended from time to time,
as promulgated by the Commission pursuant to the Exchange Act.

(ff) "Section 16 Person" shall mean a person subject to Section 16(a)
of the Exchange Act.

(gg) "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.

(hh) "Shares" shall mean shares of Common Stock of the Corporation.

(ii) "Stock Appreciation Right" shall mean a right to receive a number
of Shares or an amount of cash, or a combination of shares and
cash, the aggregate amount or value of which is determined by
reference to a change in the Fair Market Value of the Shares that
is authorized under this Plan.

(jj) "Subsidiary" shall mean any corporation or other entity a majority
of whose outstanding voting stock or voting power is beneficially
owned directly or indirectly by the Corporation.

5
<PAGE>

(kk) "Total Disability" shall mean a "permanent and total disability"
within the meaning of Section 22(e) (3) of the Code and such other
disabilities, infirmities, afflictions or conditions as the
Committee by rule may include.

1.3. ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE

(a) Committee. This Plan shall be administered by, and all Awards to
Eligible Employees shall be authorized by, the Committee. Action
of the Committee with respect to the administration of this Plan
shall be taken pursuant to a majority vote or by unanimous
written consent of its members.

(b) Plan Awards; Interpretation; Powers of Committee. Subject to the
express provisions of this Plan, the Committee shall have the
authority:

(i) To determine, from among those persons eligible, the
particular Eligible Employees who will receive any Awards;

(ii) To grant Awards to Eligible Employees, determine the price
at which securities will be offered or awarded and the
amount of securities to be offered or awarded to any of
such persons, and determine the other specific terms and
conditions of such Awards consistent with the express
limits of this Plan, and establish the installments (if
any) in which such Awards shall become exercisable or shall
vest, or determine that no delayed exercisability or
vesting is required, and establish the events of
termination or reversion (if any) of such Awards;

(iii) To approve the forms of Award Agreements (which need not be
identical either as to type of Award or among
Participants);

(iv) To construe and interpret this Plan and any agreements
defining the rights and obligations of the Corporation and
Participants under this Plan, further define the terms used
in this Plan, and prescribe, amend and rescind rules and
regulations relating to the administration of this Plan;

(v) To cancel, modify, or waive the Corporation's rights with
respect to, or modify, discontinue, suspend, or terminate,
any or all outstanding Awards held by Participants, subject
to any required consent under Section 7.6;

(vi) To accelerate or extend the exercisability or vesting
extend the term of any or all such outstanding Awards
within the maximum ten-year term of Awards under Section
1.7; and

6
<PAGE>

(vii) To make all other determinations and take such other action
as contemplated by this Plan or as may be necessary or
advisable for the administration of this Plan and the
effectuation of its purposes.

(c) Binding Determinations. Any action taken by, or inaction of, the
Corporation, the Board or the Committee relating or pursuant to
this Plan shall be within the absolute discretion of that entity
or body and shall be conclusive and binding upon all persons. No
member of the Board or Committee, or officer of the Corporation,
shall be liable for any such action or inaction of the entity or
body, of another person or, except in circumstances involving bad
faith, of himself or herself. Subject only to compliance with the
express provisions hereof, the Board and Committee may act in
their absolute discretion in matters within their authority
related to this Plan.

(d) Reliance on Experts. In making any determination or in taking or
not taking any action under this Plan, the Committee or the Board,
as the case may be, may obtain and may rely upon the advice of
experts, including professional advisors to the Corporation. No
director, officer or agent of the Corporation shall be liable for
any such action or determination taken or made or omitted in good
faith.

(e) Delegation. The Committee may delegate ministerial,
non-discretionary functions to individuals who are officers or
employees of the Corporation.

1 .4. PARTICIPATION

Awards may be granted by the Committee only to those persons that the
Committee determines to be Eligible Employees. An Eligible Employee who has
been granted an Award may, if otherwise eligible, be granted additional
Awards if the Committee shall so determine. Non-Employee Directors shall be
eligible to receive Awards under this Plan only as specified in Section 2.8.

1.5. SHARES AVAILABLE FOR AWARDS

Subject to the provisions of Section 7.2, the capital stock that may
be delivered under this Plan shall be shares of the Corporation's authorized
but unissued Common Stock. The shares may be delivered for any lawful
consideration.

(a) Number of Shares. The maximum number of shares of Common Stock
that may be delivered pursuant to Awards granted to Eligible
Employees under this Plan shall not exceed 3,500,000 Shares
subject to subsection (c) below and the adjustments contemplated
by Section 7.2. The maximum number of Options and Stock
Appreciation Rights (whether payable in Shares, cash or any
combination thereof) that may be granted to an Eligible Employee
during any one-year period shall not exceed 500,000, subject to
adjustment as contemplated in Section 7.2. The aggregate number
of shares designated under the Plan as Restricted Stock, stock
subject to Performance Share Awards and Stock Bonuses, shall never
exceed 1,000,000.

7
<PAGE>

(b) Reservation of Shares. Common Stock subject to outstanding Awards
of derivative securities (as defined in Rule 16a-l(c) under the
Exchange Act) shall be reserved for issuance. If a Stock
Appreciation Right or similar right based on the increased market
value of a specified number of Shares is exercised or a
Performance Share Award is paid, the number of Shares to which
such exercise or payment relates under the applicable Award shall
be charged against the maximum amount of Shares that may be
delivered pursuant to Awards under this Plan and, if applicable,
such Award. If the Corporation withholds Shares pursuant to
Section 2.2(b) or 7.5, the number of shares that would have been
deliverable with respect to an Award shall be reduced by the
number of shares withheld and such shares shall not be available
for additional Awards under this Plan. To the extent a
Performance Share Award constitutes an equity security (as this
phrase is defined in Rule 16a-1 under the Exchange Act) issued by
the Corporation and is paid in Shares the number of Shares (if
any) subject to such Performance Share Award shall be charged (but
in the case of tandem or substituted Awards, without duplication)
against the maximum number of Shares that may be delivered
pursuant to Awards under this Plan.

(c) Cash Only Award Limit. Awards payable solely in cash under the
Plan and Awards payable either in cash or shares that are actually
paid in cash shall constitute and be referred to as "Cash Only
Awards". The number of Cash Only Awards shall be determined by
reference to the number of Shares by which the Award is measured.
The maximum number of Cash Only Awards that may be paid shall not,
together with the aggregate number of Shares that may be delivered
under subsection (a), exceed 5,000,000, subject to adjustments
under Section 7.2. Awards payable either in cash or shares shall
not be counted against the Cash Only Award limit if charged
against the share limit in subsection (a). Notwithstanding the
foregoing, if an Award paid or payable solely in cash satisfies
the requirements for the exclusion from the definition of a
derivative security in Rule 16a-l(c) that does not require that
the award be made under a Rule 16b-3 plan, the Award shall not be
counted against any of the limits of this Section.

(d) Reissue of Awards. Subject to any restrictions under Rule 16b-3,
the shares which are subject to any unexercised, unconverted,
unvested or undistributed portion of any expired, canceled,
terminated or forfeited Award, or any alternative form of
consideration under an Award that is not paid in connection with
the settlement of an Award or any portion of an Award shall again
be available for Award under subsection (a) or (c) above, as
applicable, provided the Participant has not received dividends or
Dividend Equivalents during the period in which the Participant's
ownership was restricted or otherwise not vested. Shares that are
issued pursuant to Awards and subsequently reacquired by the
Corporation pursuant to the terms and conditions of the Awards
also shall be available for reissuance under the Plan. Nothing in
this paragraph shall be interpreted to allow shares which are in
the possession of the Corporation pursuant to either Section
2.2(b) or 7.5 to be available for reissuance under the Plan.

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(e) Interpretive Issues. Additional rules for determining the number
of shares or Cash Only Awards authorized under the Plan may be
adopted by the Committee as it deems necessary or appropriate;
provided that such rules are consistent with Rule 16b.

1.6. GRANT OF AWARDS

Subject to the express provisions of this Plan, the Committee shall
determine the number of Shares subject to each Award, and the price (if any)
to be paid for the Shares or the Award and, in the case of Performance Share
Awards, in addition to matters addressed in Section 1.3(b), the specific
objectives, goals and performance criteria (such as an increase in revenues,
market value, earnings or book value over a base period, the years of service
before vesting, the relevant job classification or level of responsibility or
other factors) that further define the terms of the Performance Share Award.
Each Award shall be evidenced by an Award Agreement signed by the Corporation
and, if required by the Committee, by the Participant.

1.7. AWARD PERIOD

Each Award and all executory rights or obligations under the related
Award Agreement shall expire on such date (if any) as shall be determined by
the Committee, but, in the case of Options or other rights to acquire Shares,
not later than ten (10) years after the Award Date.

1.8. LIMITATIONS ON EXERCISE AND VESTING OF AWARDS

(a) Provisions for Exercise. Except as may otherwise be provided in
an Award Agreement or herein, no Award shall be exercisable or
shall vest until at least six months after the initial Award Date.
Once exercisable an Award shall remain exercisable until the
expiration or earlier termination of the Award, unless the
Committee otherwise provides.

(b) Procedure. Any exercisable Award shall be deemed to be exercised
when the Secretary of the Corporation receives written notice of
such exercise from the Participant, together with any required
payment made in accordance with Section 2.2(b).

(c) Fractional Shares/Minimum Issue. Fractional share interests shall
be disregarded, but may be accumulated. The Committee, however,
may determine that cash, other securities or other property will
be paid or transferred in lieu of any fractional share interests.
No fewer than 100 Shares may be purchased on exercise of any Award
at one time unless the number purchased is the total number at the
time available for purchase under the Award.

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1.9. ACCEPTANCE OF NOTES TO FINANCE EXERCISE

The Corporation may, with the Committee's approval, accept one or more
notes from any Participant in connection with the exercise or receipt of any
outstanding Award; provided that any such note shall be subject to the
following terms and conditions:

(a) The principal of the note shall not exceed the amount required to
be paid to the Corporation upon the exercise or receipt of one or
more Awards under the Plan and the note shall be delivered
directly to the Corporation in consideration of such exercise or
receipt.

(b) The initial term of the note shall be determined by the Committee;
provided that the term of the note, including extensions, shall
not exceed a period of 10 years.

(c) The note shall provide for full recourse to the Participant and
shall bear interest at a rate determined by the Committee but not
less than the applicable imputed interest rate specified by the
Code.

(d) Except as otherwise provided by the Committee, if the employment
of the Participant terminates, the unpaid principal balance of the
note shall become due and payable on the 10th business day after
such termination; provided, however, that if a sale of any Shares
acquired by the Participant in connection with an Award to which
the note relates would cause such Participant to incur liability
under Section 16(b) of the Exchange Act, the unpaid balance shall
become due and payable on the 10th business day after the first
day on which a sale of such shares could have been made without
incurring such liability assuming for these purposes that there
are no other transactions by the Participant subsequent to such
termination.

(e) If required by the Committee or by applicable law, the note shall
be secured by a pledge of any shares or rights financed thereby or
any other collateral determined by the Committee in compliance
with applicable law.

(f) The terms, repayment provisions, and collateral release provisions
of the note and the pledge securing the note shall conform with
applicable rules and regulations of the Federal Reserve Board as
then in effect and any other applicable banking rules and
regulations.

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1.10. NO TRANSFERABILITY

(a) Awards may be exercised only by the Participant or, if the
Participant has died, the Participant's Beneficiary or, if the
Participant has suffered a Total Disability, the Participant's
Personal Representative, if any, or if there is none, the
Participant, or (to the extent permitted by applicable law and
Rule 16b-3) a third party pursuant to such conditions and
procedures as the Committee may establish. Other than by will or
the laws of descent and distribution or pursuant to a QDRO or
other exception to transfer restrictions under Rule 16b-3 (except
to the extent not permitted in the case of an Incentive Stock
Option), no right or benefit under this Plan or any Award,
including, without limitation, any Option or shares of Restricted
Stock, that has not vested shall be transferable by the
Participant or shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or
charge (other than to the Corporation) and any such attempted
action shall be void. The Corporation shall disregard any attempt
at transfer, assignment or other alienation prohibited by the
preceding sentences and shall pay or deliver such cash or Shares
in accordance with the provisions of this Plan.

(b) The restrictions on exercise and transfer above shall not be
deemed to prohibit the authorization by the Committee of "cashless
exercise" procedures with unaffiliated third parties who provide
financing for the purpose of (or who otherwise facilitate) the
exercise of Awards consistent with applicable legal restrictions
and Rule 16b-3, nor, to the extent permitted by the Committee,
transfers for estate and financial planning purposes,
notwithstanding that the inclusion of such features may render the
particular Awards ineligible for the benefits of Rule 16b-3, nor,
in the case of Participants who are not Section 16 Persons,
transfers to such other persons or in such other circumstances as
the Committee may in the Award Agreement or other writing
expressly permit.

II. EMPLOYEE OPTIONS

2.1. GRANTS

One or more Options may be granted under this Article to any Eligible
Employee, subject to the provisions of Section 1.5. Each Option granted may
be either an Option intended to be an Incentive Stock Option or an Option not
so intended, and such intent shall be indicated in the applicable Award
Agreement.

2.2. OPTION PRICE

(a) Pricing Limits. Subject to Section 2.4, the purchase price per
share of the Common Stock covered by each Option shall be
determined by the Committee at the time the Option is granted, but
shall not be less than 100% of the Fair Market Value of the Common
Stock on the date of grant.

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(b) Payment Provisions. The purchase price of any shares purchased on
exercise of an Option granted under this Article shall be paid in
full at the time of each purchase in one or a combination of the
following methods: (i) in cash or by electronic funds transfer;
(ii) by check payable to the order of the Company; (iii) if
authorized by the Committee or specified in the applicable Award
Agreement, in cash in an amount equal to the par value of the
shares being purchased, and, in the form of a promissory note
(consistent with the requirements of Section 1.9) of the
Participant in an amount equal to the difference between said cash
amount and the purchase price of such shares; (iv) by notice and
third party payment in such manner as may be authorized by the
Committee; (v) by the delivery of Shares already owned by the
Participant, provided, however, that the Committee may in its
absolute discretion limit the Participant's ability to exercise an
Award by delivering such Shares; or (vi) if authorized by the
Committee or specified in the applicable Award Agreement, by
reduction in the number of Shares otherwise deliverable upon
exercise by that number of Shares which have a then Fair Market
Value equal to such purchase price. Previously owned Shares used
to satisfy the exercise price of an Option under clause (v) shall
be valued at their Fair Market Value on the date of exercise.

2.3. LIMITATIONS ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS

(a) $100,000 Limit. To the extent that the aggregate "fair market
value" of Common Stock with respect to which Incentive Stock
Options first become exercisable by a Participant in any calendar
year exceeds $100,000, taking into account both Common Stock
subject to Incentive Stock Options under this Plan and stock
subject to incentive stock options under all other plans of the
Corporation, such options shall be treated as Nonqualified Stock
Options. For this purpose, the "fair market value" of the Common
Stock subject to Options shall be determined as of the date the
Options were awarded. In reducing the number of Options treated
as Incentive Stock Options to meet the $100,000 limit, the most
recently granted Options shall be reduced first. To the extent a
reduction of simultaneously granted Options is necessary to meet
the $100,000 limit, the Committee may, in the manner and to the
extent permitted by law, designate which shares of Common Stock
are to be treated as shares acquired pursuant to the exercise of
an Incentive Stock Option.

(b) Option Period. Subject to Section 2.4, each Option and all rights
thereunder shall expire no later than ten years after the Award
Date.

(c) Other Code Limits. There shall be imposed in any Award Agreement
relating to Incentive Stock Options such terms and conditions as
from time to time are required in order that the Option be an
"incentive stock option" as that term is defined in Section 422 of
the Code.

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2.4. LIMITS ON 10% HOLDERS

No Incentive Stock Option may be granted to any person who, at the
time the Option is granted, owns (or is deemed to own under Section 424(d) of
the Code) shares of outstanding Common Stock possessing more than 10% of the
total combined voting power of all classes of stock of the Corporation,
unless the exercise price of such Option with respect to the Common Stock
covered by the Option is at least 110% of the Fair Market Value of the Common
Stock subject to the Option and such Option by its terms is not exercisable
after the expiration of five years from the date such Option is granted.

2.5. NO OPTION REPRICING

Subject to Section 7.2 and Section 7.6 and the specific limitations on
Awards granted in this Plan, the Committee may not reduce the exercise price
of any Option or Stock Appreciation Right granted pursuant to the Plan
following the date of the Award or to accept the surrender of outstanding
Options or Stock Appreciation Rights as consideration for the grant of a new
Award with a lower per-share exercise price.

2.6. DIVIDEND EQUIVALENTS

The Committee may, at the time of granting an Option, grant Dividend
Equivalents attributable to Shares subject to the Option. Dividend
Equivalents shall be paid in cash only to the extent the Option is
unexercised as of the dividend record date, as specified in the Award
Agreement, as follows: the Dividend Equivalent per Share shall be multiplied
by the number of Shares subject to Option and an amount equal to the product
so derived shall be paid in cash to the Participant on the dividend payment
date. The Committee may, in the Award, specify that Dividend Equivalents
shall be paid only for a specified time period or only as to that portion of
the Option that has vested.

2.7. SURRENDER OF STOCK OPTIONS

The Committee, in its sole discretion, shall have the authority under
the circumstances set forth herein to agree mutually with a Participant to
grant such Participant the right on such terms and conditions as the
Committee may prescribe, to surrender such Participant's Options to the
Corporation for cancellation and to receive upon such surrender a cash
payment equal to the Spread applicable to such surrendered Option. Such
right shall be made available only in the event of an Offer (as defined in
the following paragraph).

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The term "Offer" as used in this Section means any tender offer or
exchange offer for Shares, other than one made by the Corporation, provided
that the corporation, person or other entity making the offer acquires Shares
pursuant to such offer.

The term "Offer Price per Share" as used in this Section means the
highest price per share paid on any Offer which is in effect at any time
during the period beginning on the sixtieth day prior to the date on which
the Option is surrendered pursuant to this Section and ending on such date of
surrender. Any securities or property which are part or all of the
consideration paid for shares in the Offer shall be valued in determining the
Offer Price per Share at the higher of (a) the valuation placed on such
securities or property by any other corporation, person or entity making the
Offer or (b) the valuation placed on such securities or property by the
Committee.

The term "Spread" as used in this Section means with respect to any
surrendered Option and associated right, if any, an amount equal to the
product computed by multiplying (i) the excess of (A) the Offer Price per
Share or the highest market price per share of the Corporation's Common Stock
during the period beginning on the sixtieth day prior to the date on which
the Stock Option is surrendered pursuant to this Section and ending on such
date of surrender over (B) the purchase price per share at which the
surrendered Option is then exercisable, by (ii) the number of shares subject
to such Option with respect to which it has not theretofore been exercised.

2.8. SPECIAL REQUIREMENTS FOR DIRECTOR STOCK OPTIONS

(a) Eligibility. All directors of the Corporation who are not
employees of the Corporation shall be eligible to receive Director Stock
Options, as set forth in this Section 2.8. Notwithstanding the foregoing,
any director who is, or who during the preceding calendar year was, a member
of the Committee or any committee administering any other stock option, stock
appreciation, stock bonus or other stock plan of the Corporation or any
Subsidiary will not be eligible to receive Director Stock Options hereunder
if, in the opinion of counsel for the Corporation, the receipt of Director
Stock Options will cause such director to be a "disinterested person" with
respect to the Plan or any other stock option, stock appreciation, stock
bonus or other stock plan of the Corporation or any subsidiary pursuant to
Rule 16b-3 of the Securities and Exchange Commission, or will otherwise
disqualify the Plan or any other such Plan from compliance with said rule.

(b) Grant of Director Options. Every eligible director will
receive five hundred (500) Director Stock Options on the date of each annual
meeting of shareholders. Director Stock Options shall be granted
automatically to each such eligible director on the business day following
such annual meeting of stockholders, without further action of the Committee
or the Board.

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(d) Other Terms of Director Stock Options. Each Director Stock
Option shall become exercisable six (6) months after the date of grant.
Unless otherwise determined by the Committee, if the holder of Director Stock
Options ceases to serve as a director of the Corporation for any reason other
than for cause, the Director Stock Options shall expire at the end of their
fixed term or three months after the date of such termination, and until then
shall be exercisable in full, regardless of any vesting schedule otherwise
applicable. Except as set forth in this Section 2.8, all terms and provisions
of the Director Stock Options shall be as set forth in the Plan with respect
to options which are not Director Stock Options.

III. STOCK APPRECIATION RIGHTS

3.1. GRANTS

In its discretion, the Committee may grant to any Eligible Employee
Stock Appreciation Rights either concurrently with the grant of another Award
or in respect of an outstanding Award, in whole or in part, or independently
of any other Award. Any Stock Appreciation Right granted in connection with
an Incentive Stock Option shall contain such terms as may be required to
comply with the provisions of Section 422 of the Code and the regulations
promulgated thereunder.

3.2. EXERCISE OF STOCK APPRECIATION RIGHTS

(a) Exercisability. A Stock Appreciation Right related to another
Award shall be exercisable at such time or times, and to the
extent, that the related Award shall be exercisable, provided,
however, that any exercise of any Stock Appreciation Right
hereunder shall be made beginning on the third business day
following the date of release of the financial data specified in
paragraph (e)(1)(ii) of Rule 16b-3 of the regulations promulgated
under the Securities Exchange Act of 1934 and ending on the
twelfth business day following such date or at such other time as
may be permitted under an agreement or successor rule.

(b) Effect on Available Shares. In the event that a Stock
Appreciation Right is exercised, the number of Shares subject to
the Award shall be charged against the number of Shares subject to
the Stock Appreciation Right and the related Option of the
Participant.

(c) Stand-Alone SARs. A Stock Appreciation Right granted
independently of any other Award shall be exercisable pursuant to
the terms of the Award Agreement but, unless the Committee
determines otherwise, in no event earlier than six months after
the Award Date.

3.3. PAYMENT

(a) Amount. Unless the Committee otherwise provides, upon exercise of
a Stock Appreciation Right, the Participant shall be entitled to
receive payment of an amount determined by multiplying

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(i) The difference obtained by subtracting the exercise price
per Share under the related Award (if applicable) or the
initial share value specified in the Award from the Fair
Market Value of a Share on the date of exercise of the
Stock Appreciation Right, by

(ii) The number of Shares with respect to which the Stock
Appreciation Right shall have been exercised.

Notwithstanding the above, the Committee may place a maximum
limitation on the amount payable upon exercise of a Stock
Appreciation Right. Such limitation, however, must be determined
as of the date of the grant and noted on the instrument evidencing
the Stock Appreciation Right granted hereunder.

(b) Form of Payment. The Committee, in its sole discretion, shall
determine the form in which payment shall be made of the amount
determined under paragraph (a) above, either solely in cash,
solely in Shares (valued at Fair Market Value on the date of
exercise of the Stock Appreciation Right), or partly in such
Shares and partly in cash, provided that the Committee shall have
determined that such exercise and payment are consistent with
applicable law. If the Committee permits the Participant to elect
to receive cash or Shares (or a combination thereof) on such
exercise, any such election shall be subject to such conditions
as the Committee may impose and, in the case of any Section 16
Person, any election to receive cash shall be subject to any
applicable limitations under Rule 16b-3.

IV. RESTRICTED STOCK AWARDS

4.1. GRANTS

The Committee may, in its discretion, grant one or more Restricted
Stock Awards to any Eligible Employee. Each Restricted Stock Award Agreement
shall specify the number of Shares to be issued, the date of such issuance,
the consideration for such Shares (but not less than the minimum lawful
consideration) to be paid, if any, by the Participant and the restrictions
imposed on such Shares and the conditions of release or lapse of such
restrictions. Such restrictions shall not lapse earlier than six months
after the Award Date, except to the extent the Committee may otherwise
provide. Stock certificates evidencing shares of Restricted Stock pending
the lapse of the restrictions ("restricted shares") shall bear a legend
making appropriate reference to the restrictions imposed hereunder and shall
be held by the Corporation or by a third party designated by the Committee
until the restrictions on such shares shall have lapsed and the shares shall
have vested in accordance with the provisions of the Award and Section 1.8.
Upon issuance of the Restricted Stock Award, the Participant may be required
to provide such further assurance and documents as the Committee may require
to enforce the restrictions.

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4.2. RESTRICTIONS

(a) Pre-Vesting Restraints. Except as provided in Section 1.10 and
4.1, restricted shares comprising any Restricted Stock Award may
not be sold, assigned, transferred, pledged or otherwise disposed
of or encumbered either voluntarily or involuntarily, until such
shares have vested.

(b) Dividend and Voting Rights. Unless otherwise provided in the
applicable Award Agreement, a Participant receiving a Restricted
Stock Award shall be entitled to cash dividend and voting rights
for all shares issued even though they are not vested, provided
that such rights shall terminate immediately as to any restricted
shares which cease to be eligible for vesting.

(c) Cash Payments. If the Participant shall have paid or received
cash (including any dividends) in connection with the Restricted
Stock Award, the Award Agreement shall specify whether and to what
extent such cash shall be returned (with or without an earnings
factor) as to any restricted shares which cease to be eligible for
vesting.

(d) The maximum number of shares issued in the form of
Restricted Stock Awards, when added to the number of shares
reserved for issuance pursuant to Performance Share Awards
and the number of shares awarded in the form of Stock
Bonuses, may never exceed 1,000,000.

4.3. RETURN TO THE CORPORATION

Unless the Committee otherwise expressly provides, shares of
Restricted Stock that are subject to restrictions at the time of termination
of employment or are subject to other conditions to vest that have not been
satisfied by the time specified in the applicable Award Agreement shall not
vest and shall be returned to the Corporation in such manner and on such
terms as the Committee shall therein provide.

V. PERFORMANCE SHARE AWARDS AND STOCK BONUSES

5.1. GRANTS OF PERFORMANCE SHARE AWARDS

The Committee may, in its discretion, grant one or more Performance
Share Awards to any Eligible Employee based upon such factors, which in the
case of any Award to a Section 16 Person shall include but not be limited to
the contributions, responsibilities and other compensation of the person, as
the Committee shall deem relevant in light of the specific type and terms of
the Award. An Award Agreement shall specify the maximum number of Shares (if
any) subject to the Performance Share Award, the consideration (but not less
than the minimum lawful consideration) to be paid for any such Shares as may
be issuable to the Participant, the duration of the Award and the conditions
upon which delivery of any Shares or cash to the Participant shall be based.
The amount of Shares that may be deliverable pursuant to such Award shall

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be based upon the degree of attainment over a specified period (a
"performance cycle") as may be established by the Committee of such
measure(s) of the performance of the Corporation (or any part thereof) or the
Participant as may be established by the Committee. The Committee may
provide for full or partial credit, prior to completion of such performance
cycle or the attainment of the performance achievement specified in the
Award, in the event of the Participant's death, Retirement, or Total
Disability, a Change in Control Event or in such other circumstances as the
Committee, consistent with Section 7.10(c)(2), if applicable, may determine.

5.2. GRANTS OF STOCK BONUSES

The Committee may grant a stock bonus to any Eligible Employee to
reward exceptional or special services, contributions or achievements in the
manner and on such terms and conditions (including any restrictions on such
shares) as determined from time to time by the Committee.

The number of Shares so awarded shall be determined by the Committee.
The stock bonus may be granted independently or in lieu of a cash bonus.

5.3. DEFERRED PAYMENTS

The Committee may authorize for the benefit of any Eligible Employee
the deferral of any payment of cash or Shares that may become due or of cash
otherwise payable under this Plan, and provide for accreted benefits thereon
based upon such deferment, at the election or at the request of such
Participant, subject to the other terms of this Plan. Such deferral shall be
subject to such further conditions, restrictions or requirements as the
Committee may impose, subject to any then vested rights of Participants.

5.4 RESTRICTIONS

The maximum number of shares reserved for issuance pursuant to
Performance Share Awards, and the number of shares awarded as Stock Bonuses,
when aggregated with the number of shares issued in the form of Restricted
Stock may never exceed 1,000,000.

VI. TAX OFFSET BONUS RIGHTS

6.1. GRANTS

The Committee may, in its discretion, grant Tax Offset Bonus Rights to
selected Participants. Such rights shall be evidenced by Tax Offset Bonus
Rights agreements on the terms and conditions set forth in the Plan, which
agreements shall specify the amount or method of calculating the amount of
the rights being granted and may contain such other terms and conditions as
are not inconsistent with the purposes and provisions of the Plan. Each Tax
Offset Bonus Right must relate to a specific Nonqualified Stock Option
granted under Section II of the Plan. Tax Offset Bonus Rights granted in
relation to a specific Nonqualified Stock Option shall be granted either
concurrently or at such later time as determined by the Committee. The
amount of any Tax Offset Bonus Right may be, but is not required to be,
calculated as a specified percentage of the excess of the Fair Market Value
of a share of the Corporation's Common Stock on the date when the right is
exercised over the price per share under the Option exercised concurrently
with the exercise of such right.

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6.2. TAX OFFSET BONUS RIGHTS PERIOD

Each Tax Offset Bonus Right and all rights or obligations thereunder
shall expire upon the expiration of the related Nonqualified Stock Option.
In no event may a Tax Offset Bonus Right be exercised later than the tenth
anniversary of the date on which the Tax Offset Bonus Right is granted, and
shall be subject to earlier termination as hereinafter provided.

6.3. EXERCISE OF RIGHTS

Tax Offset Bonus Rights shall be exercisable to the extent, and only
to the extent, the related Nonqualified Stock Option is exercisable. Tax
Offset Bonus Rights shall only be exercisable concurrently with the exercise
of the related Nonqualified Stock Option; any exercise of the Nonqualified
Stock Option shall also be deemed an exercise of the equivalent number of Tax
Offset Bonus Rights.

Despite any other provision of the Plan, the Committee may impose such
conditions on exercise of Tax Offset Bonus Rights as may be required to
satisfy the requirements of Rule 16b-3 (or any successor rule), promulgated
by the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934.

Any exercise of a Tax Offset Bonus Right hereunder shall be made
beginning on the third business day following the date of release of the
financial data specified in paragraph (e)(1)(ii) of Rule 16b-3 of the
regulations promulgated under the Securities Exchange Act of 1934 and ending
on the twelfth business day following such date or at such other time as may
be permitted under an amendment or successor rule.

6.4. PAYMENTS

Upon the exercise of a Tax Offset Bonus Right, the Corporation shall
deliver to the person exercising such right the amount of the right being
exercised, calculated as specified in the Tax Offset Bonus Right agreement
with respect thereto. Payment shall be in either cash, Common Stock or a
combination thereof, as the Committees shall determine. No fractional shares
will be issued.

6.5. TERMINATION OF EMPLOYMENT

Unless otherwise determined by the Committee, in the event a
Participant ceases to be an employee of the Corporation for any reason, any
Tax Offset Bonus Right will be exercisable only to the extent that any
related Nonqualified Stock Option is exercisable under the applicable
provisions of the Plan and related Award Agreement.

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VII. OTHER PROVISIONS

7.1. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES

(a) Employment Status. Status as an Eligible Employee shall not be
construed as a commitment that any Award will be made under this
Plan to an Eligible Employee or to Eligible Employees generally.

(b) No Employment Contract. Nothing contained in this Plan (or in any
other documents related to this Plan or to any Award) shall confer
upon any Eligible Employee or Participant any right to continue in
the employ or other service of the Corporation or constitute any
contract or agreement of employment or other service, nor shall
interfere in any way with the right of the Corporation to change
such person's compensation or other benefits or to terminate the
employment of such person, with or without cause, but nothing
contained in this Plan or any document related hereto shall
adversely affect any independent contractual right of such person
without his or her consent thereto.

(c) Plan Not Funded. Awards payable under this Plan shall be payable
in Shares or from the general assets of the Corporation, and no
special or separate reserve, fund or deposit shall be made to
assure payment of such Awards. No Participant, Beneficiary or
other person shall have any right, title or interest in any fund
or in any specific asset (including shares of Common Stock except
as expressly otherwise provided) of the Corporation by reason of
any Award hereunder. Neither the provisions of this Plan (or of
any related documents), nor the creation or adoption of this Plan,
nor any action taken pursuant to the provisions of this Plan shall
create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Corporation and any
Participant, Beneficiary or other person. To the extent that a
Participant, Beneficiary or other person acquires a right to
receive payment pursuant to any Award hereunder, such right shall
be no greater than the right of any unsecured general creditor of
the Corporation.

7.2. ADJUSTMENTS; ACCELERATIONS

(a) Adjustments. If the outstanding shares of Common Stock are
changed into or exchanged for cash, other property or a different
number or kind of shares or securities of the Corporation, or if
additional shares or new or different securities are distributed
with respect to the outstanding shares of Common Stock, through a
reorganization or merger in which the Corporation is the surviving
entity, or through a combination, consolidation, recapitalization,
reclassification, stock split, stock dividend, reverse stock
split, stock consolidation, dividend or distribution of cash or
property to the shareholders of the Corporation or if there shall
occur any other extraordinary corporate transaction or event in
respect of the Common Stock or a sale of substantially all the
assets of the Corporation as an entirety which in the judgment of
the Committee materially affects the Common Stock, then the
Committee shall, in such manner and to such extent (if any) as it
deems appropriate and equitable (1) proportionately adjust any or
all terms of outstanding Awards including, but not limited to (A)
the number and kind of shares of Common Stock or other
consideration that is subject to or may be delivered under this
Plan and pursuant to outstanding Awards, (B) the consideration
payable with respect to Awards granted prior to

20
<PAGE>

any such change and the price, if any, paid in connection with
Restricted Stock Awards or (C) the performance standards
appropriate to any outstanding Awards; or (2) in the case of an
extraordinary dividend or other distribution, merger,
reorganization, consolidation, combination, sale of assets, split
up, exchange, or spin off, make provision for a cash payment or
for the substitution or exchange of any or all outstanding Awards
or the cash, securities or property deliverable to the holder
of any or all outstanding Awards based upon the distribution or
consideration payable to holders of Common Stock upon or in
respect of such event; provided, however, in each case, that with
respect to Awards of Incentive Stock Options, no such adjustment
shall be made which would cause the Plan to violate Section 422 or
424(a) of the Code or any successor provisions thereto.
Corresponding adjustments shall be made with respect to any Stock
Appreciation Rights based upon the adjustments made to the Options
to which they are related. In any of such events, the Committee
may take such action sufficiently prior to such event if necessary
to permit the Participant to realize the benefts intended to be
conveyed with respect to the underlying shares in the same manner
as is available to shareholders generally.

(b) Acceleration of Awards Upon Change in Control. As to any or all
Participants, upon the occurrence of a Change in Control Event (i)
each Option and Stock Appreciation Right shall become immediately
exercisable, (ii) Restricted Stock shall immediately vest free of
restrictions, and (iii) each Performance Share Award shall become
payable to the Participant; provided, however, that in no event
shall any Award be accelerated as to any Section 16 Person to a
date less than six months after the Award Date of such Award.
Notwithstanding the foregoing, prior to a Change in Control Event,
the Committee may determine that, upon its occurrence, there shall
be no acceleration of benefits under Awards or determine that only
certain or limited benefits under Awards shall be accelerated and
the extent to which they shall be accelerated, and/or establish a
different time in respect of such event for such acceleration. In
that event, the Committee will make provision in connection with
such transaction for continuance of the Plan and the assumption of
Options and Awards theretofore granted, or the substitution for
such with new Options and Awards covering the stock of a successor
employer corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to number and kind of shares and
prices. In addition, the Committee may override the limitations
on acceleration in this Section 7.2(b) by express provision in the
Award Agreement and may accord any Participant a right to refuse
any acceleration, whether pursuant to the Award Agreement or
otherwise, in such circumstances as the Committee may approve.
Any acceleration of Awards shall comply with applicable regulatory
requirements. including without limitation Section 422 of the
Code.

(c) Possible Early Termination of Accelerated Awards. If any Option
or other right to acquire Shares under this Plan has not been
exercised prior to (i) a dissolution of the Corporation, (ii) a
reorganization event described in Section 7.2(a) that the
Corporation does not survive, or (iii) the consummation of a
reorganization event described in Section 7.2(a) that results in a
Change in Control Event approved by the Board and no provision has
been made for the survival, substitution, exchange or other
settlement of such Option or right, such Option or right shall
thereupon terminate.

21
<PAGE>

7.3. EFFECT OF TERMINATION OF EMPLOYMENT

The Committee shall establish in respect of each Award granted to an
Eligible Employee the effect of a termination of employment on the rights and
benefits thereunder and in so doing may make distinctions based upon the
cause of termination, e.g., retirement, early retirement, termination for
cause, disability or death. Notwithstanding any terms to the contrary in an
Award Agreement or this Plan, the Committee may decide in its complete
discretion to extend the exercise period of an Award (although not beyond the
period described in Section 2.3(b)) and the number of shares covered by the
Award with respect to which the Award is exercisable or vested.

7.4. COMPLIANCE WITH LAWS

This Plan, the granting and vesting of Awards under this Plan and the
offer, issuance and delivery of Shares and/or the payment of money under this
Plan or under Awards granted hereunder are subject to compliance with all
applicable federal and state laws, rules and regulations (including, but not
limited to, state and federal securities laws and federal margin
requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Corporation,
be necessary or advisable in connection therewith. Any securities delivered
under this Plan shall be subject to such restrictions, and the person
acquiring such securities shall, if requested by the Corporation, provide
such assurances and representations to the Corporation as the Corporation may
deem necessary or desirable to assure compliance with all applicable legal
requirements.

7.5. TAX WITHHOLDING

(a) Cash or Shares. Upon any exercise, vesting, or payment of any
Award, the Corporation shall have the right at its option to (i)
require the Participant (or Personal Representative or
Beneficiary, as the case may be) to pay or provide for payment of
the amount of any taxes which the Corporation may be required to
withhold with respect to such transaction or (ii) deduct from any
amount payable in cash the amount of any taxes which the
Corporation may be required to withhold with respect to such cash
amount. In any case where a tax is required to be withheld in
connection with the delivery of Shares under this Plan, the
Committee may grant (either at the time of the Award or
thereafter) to the Participant the right to elect, or the
Committee may require (either at the time of the Award or
thereafter), pursuant to such rules and subject to such
conditions as the Committee may establish, to have the Corporation
reduce the number of shares to be delivered by the appropriate
number of shares valued at their then Fair Market Value, to
satisfy such withholding obligation.

(b) Tax Loans. The Committee may, in its discretion, authorize a loan
to an Eligible Employee in the amount of any taxes which the
Corporation may be required to withhold with respect to Shares
received (or disposed of, as the case may be) pursuant to a
transaction described in subsection (a) above. Such a loan shall
be for a term, at a rate of interest and pursuant to such other
terms and conditions as the Committee, under applicable law, may
establish and such loan need not comply with the provisions of
Section 1.9.

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<PAGE>

7.6. PLAN AMENDMENT, TERMINATION AND SUSPENSION

(a) Board Authorization. The Board may, at any time, terminate or,
from time to time, amend, modify or suspend this Plan, in whole or
in part. No Awards may be granted during any suspension of this
Plan or after termination of this Plan, but the Committee shall
retain jurisdiction as to Awards then outstanding in accordance
with the terms of this Plan. Any suspension will not affect the
expiration of the Plan set forth in Section 7.9.

(b) Shareholder Approval. If any amendment would materially increase
the aggregate number of securities that may be issued under this
Plan or materially modify the requirements as to eligibility for
participation in this Plan, then to the extent then required by
Rule 16b-3 to secure benefits thereunder or to avoid liability
under Section 16 of the Exchange Act (and Rules thereunder) or
required under Section 424 of the Code or any other applicable
law, or deemed necessary or advisable by the Board, such amendment
shall be subject to shareholder approval.

(c) Amendments to Awards. Without limiting any other express
authority of the Committee under, but subject to the express
limits of, this Plan, the Committee by agreement or resolution may
waive conditions of or limitations on Awards that the Committee in
the prior exercise of its discretion has imposed, without the
consent of the Participant, and may make other changes to the
terms and conditions of Awards that do not affect in any manner
materially adverse to the Participant his or her rights and
benefits under an Award.

(d) Limitations on Amendments to Plan and Awards. No amendment,
suspension or termination of the Plan or change of or affecting
any outstanding Award shall, without written consent of the
Participant, affect in any manner materially adverse to the
Participant any rights or benefits of the Participant or
obligations of the Corporation under any Award granted under this
Plan prior to the effective date of such change. Changes
contemplated by Section 7.2 shall not be deemed to constitute
changes or amendments for purposes of this Section 7.6.

7.7. PRIVILEGES OF STOCK OWNERSHIP

Except as otherwise expressly authorized by the Committee or this
Plan, a Participant shall not be entitled to any privilege of stock ownership
as to any Shares not actually delivered to and held of record by him or her.
No adjustment will be made for dividends or other rights as a shareholder for
which a record date is prior to such date of delivery.

7.8. EFFECTIVE DATE OF THE PLAN

This Plan shall be effective as of January 26, 1999, the date of Board
approval, subject to shareholder approval within 12 months thereafter.

23
<PAGE>

7.9. TERM OF THE PLAN

No Award shall be granted more than ten years after the effective date
of this Plan (the "termination date"). Unless otherwise expressly provided
in this Plan or in an applicable Award Agreement, any Award thereto granted
may extend beyond such date, and all authority of the Committee with respect
to Awards hereunder shall continue during any suspension of this Plan and in
respect of outstanding Awards on such termination date.

7.10. GOVERNING LAW; CONSTRUCTION; SEVERABILITY

(a) Choice of Law. This Plan, the Awards, all documents evidencing
Awards and all other related documents shall be governed by, and
construed in accordance with the laws of the State of California
applicable to contracts made and performed within such State,
except as such laws may be supplanted by the laws of the United
States of America, which laws shall then govern its effect and its
construction to the extent they supplant California law.

(b) Severability. If any provision shall be held by a court of
competent jurisdiction to be invalid and unenforceable, the
remaining provisions of this Plan shall continue in effect.

(i) It is the intent of the Corporation that this Plan and
Awards hereunder satisfy and be interpreted in a manner that in
the case of Participants who are or may be subject to Section 16
of the Exchange Act satisfies the applicable requirements of Rule
16b-3 so that such persons will be entitled to the benefits of
Rule 16b-3 or other exemptive rules under Section 16 of the
Exchange Act and will not be subjected to avoidable liability
thereunder. If any provision of this Plan or of any Award or any
prior action by the Committee would otherwise frustrate or
conflict with the intent expressed above, that provision to the
extent possible shall be interpreted and deemed amended so as to
avoid such conflict, but to the extent of any remaining
irreconcilable conflict with such intent as to such persons in the
circumstances, such provision shall be deemed void.

(ii) It is the further intent of the Corporation that options or
Stock Appreciation Rights with an exercise or base price not less
than Fair Market Value on the date of grant, that are granted to
or held by a Section 16 Person, shall qualify as performance-based
compensation under Section 162(m) of the Code, and this Plan shall
be interpreted consistent with such intent.

24
<PAGE>

7.11. CAPTIONS

Captions and headings are given to the sections and subsections of
this Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.

7.12. NON-EXCLUSIVITY OF PLAN

Nothing in this Plan shall limit or be deemed to limit the authority
of the Board or the Committee to grant awards or authorize any other
compensation, with or without reference to the Common Stock under any other
plan or authority.

<PAGE>

Exhibit 10.30

CITY NATIONAL CORPORATION

1999

VARIABLE BONUS PLAN

1. PURPOSE. The purpose of the City National Corporation Variable
Bonus Plan (the "Plan") is to provide annual cash awards to top management
that recognize and reward the achievement of corporate performance goals.

2. EFFECTIVE DATE OF PLAN. The Plan shall be effective as of January
1, 1999, upon approval of the Plan by the shareholders of City National
Corporation (the "Corporation").

3. PLAN ADMINISTRATION. The Plan shall be administered by the
Compensation and Directors Nominating Committee ("Committee") of the Board of
Directors, which shall consist of members appointed from time to time by the
Board of Directors. Each member of the Committee shall be an "outside
director" within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended ("the Code"). The Committee shall have full power and
authority, subject to the provisions of the Plan and applicable law, to (a)
establish, amend, suspend or waive such rules and regulations and appoint
such agents as it deems necessary or advisable for the proper administration
of the Plan, (b) construe, interpret and administer the Plan and any
instrument or agreement relating to the Plan, and (c) make all other
determinations and take all other actions necessary or advisable for the
administration of the Plan except that the Committee (but not the Board of
Directors) shall have no authority to take any action that would cause any
Award to any Participant to fail to qualify as "performance-based
compensation" under Section 162(m) of the Code. Unless otherwise expressly
provided in the Plan, each determination made and each action taken by the
Committee pursuant to the Plan or any instrument or agreement relating to the
Plan (a) shall be within the sole discretion of the Committee, (b) may be
made at any time, and (c) shall be final, binding and conclusive for all
purposes on all persons, including, but not limited to, Participants in the
Plan, their legal representatives and beneficiaries and employees of the
Corporation and its subsidiaries.

4. ELIGIBILITY. The Chief Executive Officer and all other officers
of the Corporation and its subsidiaries are eligible to participate in the
Plan, if designated by the Committee.

5. AWARDS. Prior to or within 90 days after the commencement of each
calendar year (the "Plan Year"), the Committee shall designate the following:

5.1. The officers who will participate (the "Participants") in
the Plan for the Plan Year.

5.2. The Corporate Financial Criteria, as defined herein, which
will apply to awards for the Plan Year.

<PAGE>

5.3. The Performance Goals, as defined herein, to be met by the
Corporation for Participants to earn awards for the Plan Year and a
payout matrix or formula for such Corporate Financial Criteria and
Performance Goals.

5.4. The award will be a bonus payment in an amount obtained by
multiplying the following amounts: (1) a Participant's annualized base
salary, as determined by the Committee, as of the first day of the Plan
Year, (2) a specified percentage (expressed as a decimal or fixed by a
formula which will determine such percentage) determined by the Committee
to apply to the Participant for the Plan Year.

The Committee may, after the 90th day of the Plan Year, designate
additional officers to participate in the Plan for the Plan Year (also
"Participants" for purposed hereof); provided, however, that: (i) any awards
earned by any such Participant for participation for such partial Plan Year
will be pro-rated based on the number of days during the Plan Year in which
the Participant participated in the Plan, and (ii) the Performance Goals for
such additional Participants will be established prior to or before the
expiration of 25% of the days remaining in such partial Plan Year.

A Participant (other than one who is party to an employment agreement
with the Corporation providing for a partial year bonus) who terminates
employment, either voluntarily or involuntarily, before the payment date for
awards for the Plan Year is thereby ineligible for an award under the Plan.

5.5. Anything in this Plan to the contrary notwithstanding, no
provisions of this Plan may be used to reduce any amounts due to any
Participant who is a party to an employment agreement with the
Corporation which provides for the payment of cash or other benefit in
the event of the Participant's death, disability, retirement or loss of
employment because of a reduction in the workforce, below the amounts so
provided in the employment agreement.

Awards under the Plan shall be paid to the Participants in cash.

6. CORPORATE FINANCIAL CRITERIA. For each Plan year, the Committee
shall designate one or more of the corporate financial criteria (the
"Corporate Financial Criteria") set forth in this Section 6 for use in
determining an award for a Participant for such Plan Year. Corporate
Financial Criteria shall consist of one or more, or a combination of, the
following financial measures: net income; earnings per share; return on
assets; return on equity; assets; assets under management and administration;
risk adjusted return on capital; Economic Value Added; (COPY TO COME)
provided, however, that the Committee retains the discretion to determine
whether an award will be paid under any one or more of such Corporate
Financial Criteria.

2
<PAGE>

7. PERFORMANCE GOALS. For each Plan Year, the Committee shall
establish specific, objective performance goals (the "Performance Goals"),
the outcome of which is substantially uncertain at the time so established,
for each of the Corporate Financial Criteria designated by the Committee for
the Plan Year, against which actual performance is to be measured to
determine the amount of awards. Performance Goals established by the
Committee may be described by means of a matrix or formula, providing for
goals resulting in the payment of awards under the Plan.

8. DETERMINATION & PAYMENT OF AWARDS

8.1. As soon as practicable after the end of the Plan Year, the
Committee will determine the amount of the award earned by each
Participant, based on application of the criteria specified in Section 6;
provided however that, except for Participants who have entered into an
employment agreement with the Corporation, the Committee may, in its sole
discretion, reduce the amount which would otherwise be payable under the
Plan. As to those Participants who have entered into employment
agreements with the Corporation, the Committee will not have the
discretion to reduce any bonus below any minimum amount provided in such
agreement. Payments will be made promptly after determination of the
awards by the Committee, unless payment of an award has been deferred
pursuant to Section 10.6 hereof. Such Committee determination must
include a certification in writing that the Performance Goals and any
other materials terms of the award were in fact satisfied; provided that
minutes of the Committee meeting (or any action by written consent) shall
satisfy the written certification requirement.

8.2. Notwithstanding anything herein to the contrary, the maximum
dollar amount that may be awarded under this Plan for any Plan Year to
any Participant may not exceed $3 million.

9. TERMINATION, SUSPENSION OR MODIFICATION OF THE PLAN. The Board of
Directors may at any time, with or without notice, terminate, suspend, or
modify the Plan in whole or in part, except that the Board of Directors shall
not amend the Plan in violation of the law or in contravention of Treasury
Regulation Section 1.162-27, promulgated under the Code, unless the Board of
Directors finds that such amendment is in the best interest of the
Corporation. The Committee is expressly permitted to make any amendments to
the Plan, which are not in violation of the law, that are required to conform
the Plan to the requirements of Section 162(m). The Committee may also
correct any defect, supply any omission or reconcile any inconsistency in the
Plan in the manner and to the extent it shall deem desirable to carry the
Plan into effect.

10. MISCELLANEOUS.

10.1. No Assignments. No award under this Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution, or levy of any kind,
either voluntary or involuntary, including any such liability which is
for alimony or other payments for the support of a spouse or former
spouse, or for any other relative of Participant prior to actually being
received by Participant or his/her designated beneficiary, and any
attempt to anticipate, alienate, sell,

3
<PAGE>

transfer, assign, pledge encumber, charge, or otherwise dispose of any
right to such award shall be void.

10.2. No Right of Employment. Neither the adoption of the Plan,
the determination of eligibility to participate in the Plan, nor the
granting of an award under the Plan shall confer upon any Participant any
right to continue in the employ of the Corporation or any of its
subsidiaries or to interfere in any way with the right of the Corporation
or the subsidiary to terminate such employment at any time.

10.3. Tax Withholding. The Corporation shall have the right to
withhold the amount of any tax attributable to amounts payable under the
Plan.

10.4. Governing Law. The Plan and all determinations under the
Plan shall be governed by and construed in accordance with the laws of
the State of California.

10.5. Other Plans. Nothing in this Plan shall be construed as
limiting the authority of the Committee, Board of Directors, the
Corporation or any subsidiary of the Corporation to establish any other
compensation plan, or as in any way limiting its or their authority to
pay bonuses or supplemental compensation to any persons employed by the
Corporation or a subsidiary of the Corporation, whether such person is a
Participant in this Plan and regardless of how the amount of such
compensation or bonuses is determined.

10.6. Deferrals of Awards. A Participant may elect to defer
payment of his/her cash award under the Plan if deferral of an award
under the Plan is permitted pursuant to the terms of a deferred
compensation program of the Corporation existing at the time the election
to defer is permitted to be made, and the Participant complies with the
terms of such program.

10.7. Section 162(m). It is the intention of the Corporation
that all payments made under the Plan shall fall within the
"performance-based compensation" exception contained in Section 162(m)
of the Code. Thus, unless the Board of Directors expressly determines
otherwise, and if any Plan provision is found not to be in compliance
with such exception, that provision shall be deemed to be amended so
that the provision does comply to the extent permitted by law, and in
every event, the Plan shall be construed in favor of its meeting the
"performance-based compensation" exception contained in Section 162(m)
of the Code.

<PAGE>

CITY NATIONAL BANK
EXECUTIVE DEFERRED COMPENSATION PLAN

<PAGE>

ARTICLE I
TITLE AND DEFINITIONS

1.1 TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

1.2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .1

ARTICLE II
PARTICIPATION

2.1 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . .3

ARTICLE III
DEFERRAL ELECTIONS

3.1 ELECTIONS TO DEFER COMPENSATION . . . . . . . . . . . . . . . . .3

3.2 INVESTMENT ELECTIONS. . . . . . . . . . . . . . . . . . . . . . .4

ARTICLE IV
DEFERRAL ACCOUNT

4.1 DEFFERAL ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . . .5

ARTICLE V
VESTING

5.1 DEFERRAL ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . . .5

ARTICLE VI
DISTRIBUTIONS

6.1 AMOUNT AND TIME OF DISTRIBUTION . . . . . . . . . . . . . . . . .6

6.2 FORM OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . .6

6.3 ELECTION TO RECEIVE PERIODIC INSTALLMENTS . . . . . . . . . . . .6

ARTICLE VII
ADMINISTRATION

7.1 COMMITTEE ACTION. . . . . . . . . . . . . . . . . . . . . . . . .6

7.2 POWERS AND DUTIES OF THE COMMITTEE. . . . . . . . . . . . . . . .6

7.3 CONSTRUCTION AND INTERPRETATION . . . . . . . . . . . . . . . . .7

7.4 INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . .7

7.5 COMPENSATION, EXPENSES AND INDEMNITY. . . . . . . . . . . . . . .7

7.6 QUARTERLY STATEMENTS. . . . . . . . . . . . . . . . . . . . . . .7

i
<PAGE>

ARTICLE VIII
MISCELLANEOUS

8.1 UNSECURED GENERAL CREDITOR. . . . . . . . . . . . . . . . . . . .8

8.2 RESTRICTION AGAINST ASSIGNMENT. . . . . . . . . . . . . . . . . .8

8.3 WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . . . . . .8

8.4 AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION. . . . . . . .8

8.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . .8

8.6 RECEIPT OR RELEASE. . . . . . . . . . . . . . . . . . . . . . . .8

8.7 PAYMENTS ON BEHALF OF PERSONS UNDER INCAPACITY. . . . . . . . . .9

8.8 HEADINGS, ETC. NOT PART OF AGREEMENT. . . . . . . . . . . . . . .9

ARTICLE IX
BENEFIT OFFSET

9.1 OFFSET FOR CERTAIN BENEFITS PAYABLE UNDER
SPLIT-DOLLAR LIFE INSURANCE POLICIES. . . . . . . . . . . . . . .9

ii
<PAGE>

CITY NATIONAL BANK
EXECUTIVE DEFERRED COMPENSATION PLAN

WHEREAS, City National Bank (the "Bank") desires to establish a
deferred compensation plan to provide supplemental retirement income benefits
for a select group of management and highly compensated employees through
deferrals of salary and bonuses, effective March 1, 1994; and

WHEREAS, it is believed that the adoption of this plan providing for
deferred compensation at the election of each executive will be in the best
interests of the Bank;

NOW, THEREFORE, it is hereby declared as follows:

ARTICLE I
TITLE AND DEFINITIONS

1.1 TITLE.

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

1.2 DEFINITIONS.

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

"Account" shall mean a Participant's Deferral Account.

"Bank" shall mean City National Bank, any successor corporation and
each corporation which is a member of a controlled group of corporations
(within the meaning of Section 414(b) of the Code) of which City National
Bank is a component member.

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

1
<PAGE>

select another custodian to hold the funds for the minor, then payment shall
be made to the duly appointed and currently acting guardian of the estate for
the minor or, if no guardian of the estate for the minor is duly appointed
and currently acting within 60 days after the date the amount becomes
payable, payment shall be deposited with the court having jurisdiction over
the estate of the minor.

"Board of Directors" or "Board" shall mean the Board of Directors of
the Bank.

"Bonus" shall mean any incentive compensation, consisting of any bonus
or commission, payable to a Participant in addition to the Participant's
Salary after reduction for any salary deferral contributions to a plan
qualified under Section 125 or Section 401(k) of the Code.

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

"Committee" shall mean the Company's Strategy and Planning Committee.

"Company" shall mean City National Corporation.

"Compensation" shall mean the Salary and Bonus that the Participant is
entitled to for services rendered to the Bank.

"Deferral Account" shall mean the bookkeeping account maintained by
the Committee for each Participant that is credited with amounts equal to (1)
the portion of the Participant's Salary that he or she elects to defer, (2)
the portion of the Participant's Bonus that he or she elects to defer, and
(3) interest pursuant to Section 4.1.

"Effective Date" shall mean March 1, 1994.

"Eligible Employee" shall mean each officer at the Senior Vice
President level or above who is regularly scheduled to work thirty or more
hours per week.

"Fund" or "Funds" shall mean one or more of the mutual funds or
contracts selected by the Committee pursuant to Section 3.2(b).

"Initial Election Period" for an Eligible Employee shall mean the
30-day period following the later of March 1, 1994 or the Eligible Employee's
date of hire.

"Interest Rate" shall mean, for each Fund, an amount equal to the net
rate of gain or loss on the assets of such Fund during each month reduced by
one-twelfth of one and one-half percentage points.

"Participant" shall mean any Eligible Employee who elects to defer
Compensation in accordance with Section 3.1.

"Payment Eligibility Date" shall mean the first day of the month
following the end of the quarter following the quarter in which a Participant
terminates employment or dies.

"Plan" shall mean the City National Bank Executive Deferred
Compensation Plan set forth herein, now in effect, or as amended from time to
time.

"Plan Year" shall mean the 12 consecutive month period beginning on
January 1, except that the first Plan Year shall be a short year beginning on
March 1, 1994 and ending on December 31, 1994.

"Salary" shall mean the Participant's annual base salary after
reduction for any salary deferral contributions to a plan qualified under
Section 125 or Section 401(k) of the Code.

"Tax Adjustment Factor" shall mean a number, determined by the
Committee, which is equal to one minus the sum of (1) the highest marginal
federal personal income tax rate then in effect and (2) the

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<PAGE>

effective highest marginal state income tax rate in the state in which the
Participant resides, net after the effect of the deduction for such state
income tax for federal income tax purposes.

ARTICLE II
PARTICIPATION

2.1 PARTICIPATION.

An Eligible Employee shall become a Participant in the Plan by
electing to defer all or a portion of his or her Compensation in accordance
with Section 3.1.

ARTICLE III
DEFERRAL ELECTIONS

3.1 ELECTIONS TO DEFER COMPENSATION.

(a) Initial Election Period. Each Eligible Employee may elect to
defer Compensation by filing with the Committee an election that conforms to
the requirements of this Section 3.1, on a form provided by the Committee, no
later than the last day of his or her Initial Election Period.

(b) General Rule. Subject to the limitations set forth in
paragraph (c) below, the amount of Compensation which an Eligible Employee
may elect to defer is as follows:

(1) Any percentage of Salary up to 50%; and/or

(2) Any percentage or dollar amount of Bonus up to 100%;

provided, however, that no election shall be effective to reduce the
Compensation payable to an Eligible Employee for a calendar year to an amount
which is less than the amount that the Bank is required to withhold from such
Eligible Employee for such calendar year for purposes of income tax and
employment tax (including Federal Insurance Contributions Act (FICA) tax)
withholding.

(c) Minimum Deferrals. For each of the first four Plan Years
during which the Eligible Employee is a Participant, the minimum percentage
which may be elected under paragraph (b)(1) of this Section 3.1 is 5%. This
5% minimum deferral for any Plan Year may be reduced to a lesser percentage
(but not below zero percent) if the Participant deferred any portion of his
or her Bonus paid in the preceding Plan Year. The amount of such reduction
shall be the number of percentage points determined by (1) dividing the
amount of the Bonus deferred in such preceding Plan Year by the amount of the
Participant's annual Salary at the beginning of the Plan Year to which the
minimum deferral applies and (2) multiplying by 100.

(d) Effect of Initial Election. An election to defer Compensation
during an Initial Election Period shall be effective with respect to Salary
earned during the first pay period beginning after the Initial Election
Period and to the Bonus payable for services performed during the Plan Year
following the Plan Year in which the election is made. Notwithstanding the
foregoing, for the first Plan Year only, an election made during the Initial
Election Period to defer a Bonus shall apply to the Bonus payable for
services performed during the calendar year ending December 31, 1994.

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<PAGE>

(e) Duration of Salary Deferral Election. Any Salary deferral
election made under paragraph (a) or paragraph (g) of this Section 3.1 shall
remain in effect, notwithstanding any change in the Participant's Salary,
until changed or terminated in accordance with the terms of this paragraph
(e); provided, however, that such election shall terminate for any Plan Year
for which the Participant is not an Eligible Employee. Subject to the
minimum deferral requirement of Section 3.1(c) and the limitations of Section
3.1(b), a Participant may increase, decrease or terminate his or her Salary
deferral election, effective for Salary earned during pay periods beginning
after any January 1, by filing a new election, in accordance with the terms
of this Section 3.1, with the Committee on or before the preceding December 1.

(f) Duration of Bonus Deferral Election. Any Bonus deferral
election made under paragraph (a) or paragraph (g) of this Section 3.1 shall
be irrevocable and shall apply only to the Bonus payable with respect to
services performed during the Plan Year for which the election is made. For
each subsequent Plan Year, an Eligible Employee may make a new election,
subject to the limitations set forth in Section 3.1, to defer a percentage of
his or her Bonus. Such election shall be on forms provided by the Committee
and shall be made before December 1 of the Plan Year for which the election
is to apply.

(g) Elections other than Elections during the Initial Election
Period. Subject to the limitations of paragraph (c) above, any Eligible
Employee who fails to elect to defer compensation during his or her Initial
Election Period may subsequently become a Participant, and any Eligible
Employee who has terminated a prior Salary deferral election may elect to
again defer Salary, by filing an election, on a form provided by the
Committee, to defer Compensation as described in paragraph (b) above. An
election to defer Salary must be filed on or before December 1 and will be
effective for Salary earned during pay periods beginning after the following
January 1. An election to defer Bonus for a Plan Year must be filed before
the December 1 preceding such Plan Year.

3.2 INVESTMENT ELECTIONS.

(a) At the time of making the deferral elections described in
Section 3.1, the Participant shall designate, on a form provided by the
Committee, which of the following types of mutual funds or contracts the
Participant's Account will be deemed to be invested in for purposes of
determining the amount of earnings to be credited to that Account:

(1) Emerging Growth Equity Fund;
(2) Balanced Assets Fund;
(3) Common Stock Fund;
(4) Real Estate Securities Fund;
(5) Capital Growth Bond Fund; or
(6) Money Market Fund.

In making the designation pursuant to this Section 3.2, the Participant may
specify that all or any 10% multiple of his Deferral Account be deemed to be
invested in one or more of the types of mutual funds or contracts listed
above. Effective as of the end of any calendar quarter, a Participant may
change the designation made under this Section 3.2 by filing an election, on
a form provided by the Committee, at least 30 days prior to the end of such
quarter. If a Participant fails to elect a type of fund under this Section
3.2, he or she shall be deemed to have elected the Money Market Fund.

(b) Although the Participant may designate the type of mutual funds
or contracts in paragraph (a) above, the Committee shall select from time to
time, in its sole discretion, a commercially

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<PAGE>

available fund or contract of each of the types described in paragraph (a)
above to be the Funds. The Interest Rate of each such commercially available
fund or contract shall be used to determine the amount of earnings to be
credited to Participants' Accounts under Article IV.

ARTICLE IV
DEFERRAL ACCOUNT

4.1 DEFERRAL ACCOUNT.

The Committee shall establish and maintain a Deferral Account for each
Participant under the Plan. Each Participant's Deferral Account shall be
further divided into separate subaccounts ("mutual fund subaccounts"), each
of which corresponds to a mutual fund or contract elected by the Participant
pursuant to Section 3.2(a). A Participant's Deferral Account shall be
credited as follows:

(a) As of the last day of each month, the Committee shall credit
the mutual fund subaccounts of the Participant's Deferral Account with an
amount equal to Salary deferred by the Participant during each pay period
ending in that month in accordance with the Participant's election under
Section 3.2(a); that is, the portion of the Participant's deferred Salary
that the Participant has elected to be deemed to be invested in a certain
type of mutual fund shall be credited to the mutual fund subaccount
corresponding to that mutual fund;

(b) As of the last day of the month in which the Bonus or partial
Bonus would otherwise have been paid, the Committee shall credit the mutual
fund subaccounts of the Participant's Deferral Account with an amount equal
to the portion of the Bonus deferred by the Participant's election under
Section 3.2(a); that is, the portion of the Participant's deferred Bonus that
the Participant has elected to be deemed to be invested in a particular type
of mutual fund shall be credited to the mutual fund subaccount corresponding
to that mutual fund; and

(c) As of the last day of each month, each mutual fund subaccount
of a Participant's Deferral Account shall be credited with earnings in an
amount equal to that determined by multiplying the balance credited to such
mutual fund subaccount as of the last day of the preceding month by the
Interest Rate for the corresponding Fund selected by the Bank pursuant to
Section 3.2(b).

ARTICLE V
VESTING

5.1 DEFERRAL ACCOUNT.

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

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<PAGE>

ARTICLE VI
DISTRIBUTIONS

6.1 AMOUNT AND TIME OF DISTRIBUTION.

Each Participant (or, in the case of his or her death, Beneficiary)
shall be entitled to receive a distribution of benefits under this Plan as
soon as practicable following his or her Payment Eligibility Date. The
amount payable to the Participant shall be the amount credited to his or her
Deferral Account as of his or her Payment Eligibility Date.

6.2 FORM OF DISTRIBUTION.

The form of the distribution of benefits to a Participant (or his or
her Beneficiary) shall be a cash lump sum payment.

6.3 ELECTION TO RECEIVE PERIODIC INSTALLMENTS.

Notwithstanding the provisions of Sections 6.1 and 6.2 of this Plan,
any participant may at any time make an irrevocable election, on a form
supplied by the Committee, to have his or her benefits paid in ten
substantially equal annual installments beginning on the Participant's
Payment Eligibility Date and continuing on or about January 1 of each
subsequent year; provided however, that such election shall not be effective
until the second anniversary of the date it is filed with the Committee.
Following the commencement of any installment distribution, the undistributed
amounts credited to the Participant's Account shall be credited quarterly
with interest at a rate equal to the mid-term applicable federal rate (for
quarterly compounding) published by the Internal Revenue Service pursuant to
Section 1274(d) of the Code for the month in which the Participant's
employment is terminated.

ARTICLE VII
ADMINISTRATION

7.1 COMMITTEE ACTION.

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

7.2 POWERS AND DUTIES OF THE COMMITTEE.

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

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

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<PAGE>

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

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

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

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

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

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

7.3 CONSTRUCTION AND INTERPRETATION.

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

7.4 INFORMATION.

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

7.5 COMPENSATION, EXPENSES AND INDEMNITY.

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

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

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

7.6 QUARTERLY STATEMENTS.

Under procedures established by the Committee, a Participant shall
receive a statement with respect to such Participant's Account on a quarterly
basis as of each March 31, June 30, September 30 and December 31 of each Plan
Year.

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<PAGE>

ARTICLE VIII
MISCELLANEOUS

8.1 UNSECURED GENERAL CREDITOR.

Participants and their Beneficiaries, heirs, successors, and assigns
shall have no legal or equitable rights, claims, or interest in any specific
property or assets of the Bank. No assets of the Bank shall be held under
any trust, or held in any way as collateral security for the fulfilling of
the obligations of the Bank under this Plan. Any and all of the Bank's
assets shall be, and remain, the general unpledged, unrestricted assets of
the Bank. The Bank's obligation under the Plan shall be merely that of an
unfunded and unsecured promise of the Bank to pay money in the future, and
the rights of the Participants and Beneficiaries shall be no greater than
those of unsecured general creditors.

8.2 RESTRICTION AGAINST ASSIGNMENT.

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

8.3 WITHHOLDING.

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

8.4 AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION.

The Bank may amend, modify, suspend or terminate the Plan in whole or
in part, except that no amendment, modification, suspension or termination
shall have any retroactive effect to reduce any amounts allocated to a
Participant's Account. In the event that this Plan is terminated, the
distribution of the amounts credited to a Participant's Deferral Account
shall not be accelerated but shall be paid at such time and in such manner
determined under the terms of the Plan immediately prior to termination as if
the Plan had not been terminated.

8.5 GOVERNING LAW.

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

8.6 RECEIPT OR RELEASE.

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<PAGE>

Bank. The Committee may require such Participant or Beneficiary, as a
condition precedent to such payment, to execute a receipt and release to such
effect.

8.7 PAYMENTS ON BEHALF OF PERSONS UNDER INCAPACITY.

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

8.8 HEADINGS, ETC. NOT PART OF AGREEMENT.

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

ARTICLE IX
BENEFIT OFFSET

9.1 OFFSET FOR CERTAIN BENEFITS PAYABLE UNDER SPLIT-DOLLAR LIFE INSURANCE
POLICIES.

(a) Notwithstanding anything contained herein to the contrary, any
benefits payable under this Plan shall be offset by the value of benefits
received by the Participants under certain life insurance policies as set
forth in this Section. Participants in this Plan may own life insurance
policies (the "Policies") purchased on their behalf by the Company. The
exercise of ownership rights under these Policies by each Participant is,
however, subject to certain conditions (set forth in a "Split-Dollar Life
Insurance Agreement" between each Participant and the Company, pursuant to
which the Company holds a security interest on the Policy) and, if the
Participant fails to meet the conditions set forth in the Split-Dollar Life
Insurance Agreement, the Company may exercise its security interest in the
Policy and cause the Participant to lose certain benefits under the Policy.
In the event that a Participant satisfies the conditions specified in Section
4 or 5 of the Split-Dollar Life Insurance Agreement, so that the Participant
or his or her beneficiary under the Policy becomes entitled to exercise
rights free from the Company's security interest under one of those sections,
the value of those benefits shall constitute an offset to any benefits
otherwise payable under this Plan which accrued in years in which premiums
were paid on the Policy. As the case may be, this offset (the "Offset
Value") shall be equal to the value of benefits payable under the
Split-Dollar Life Insurance Agreement, that is, the cash surrender value of
the Policy or, in the case of Participant's death, the death benefit payable
to the beneficiary under the Policy. The Offset Value shall then be compared
to the Participant's Account, and the amounts credited to the Account shall
be reduced, but not to less than zero, by the Offset Value; provided,
however, that any portion of the Account which is attributable to
compensation deferred during Plan Years in which the Company did not pay
premiums on the Policy shall not be reduced by the Offset Value, and the
Committee shall maintain subaccounts of a Participant's Account to the extent
necessary to determine the portion of the Account which is subject to offset
and the portion which is not subject to offset.

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<PAGE>

divided by the Tax Adjustment Factor. This Offset Value shall then be
compared to the Participant's Account, and the amounts credited to the
Account shall be reduced, but not to be less than zero, by the Offset Value;
provided, however, that any portion of the Account which is attributable to
compensation deferred during Plan Years in which the Company did not pay
premiums on the Policy shall not be reduced by the Offset Value.

(c) The reduction described in Section 9.1(a) or 9.1(b) shall be
made as of the date on which the Participant or his or her beneficiary
becomes entitled to exercise rights under the Policy free of the Company's
security interest.

(d) In the event of an offset as described in this Section 9, any
election to receive distribution of the amount credited to a Participant's
Account in the form of installments shall be deemed to be revoked, and any
benefits which are or become payable under this Plan after such offset shall
be paid in a lump sum on the Participant's Payment Eligibility Date.

IN WITNESS WHEREOF, the Bank has caused this document to be executed
by its duly authorized officer on this 4th day of October, 1994.

CITY NATIONAL BANK

By: \s\ Marge Luttenbacher
Title: Executive Vice President-
Human Resources

<PAGE>

EMPLOYMENT AGREEMENT

AGREEMENT by and between City National Corporation, a Delaware
corporation (the "Company") and _________________ (the "Executive"), dated as
of ________________.

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
date hereof, and on each annual anniversary of such date (such date and each
annual anniversary

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<PAGE>

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) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20%
or more of either (i) the then outstanding shares of common stock of the
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 for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the 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

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<PAGE>

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 or 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
Busiess 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 - for
members of the Strategy and Planning Committee; second - for other members
of the Executive Committee] 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

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<PAGE>

be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles
from such location.

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

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

(b) COMPENSATION.

(i) BASE SALARY. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"), 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

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<PAGE>

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 executives 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 executives of the Company and its affiliated companies.

(v) EXPENSES. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices and

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<PAGE>

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 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 its 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
terminate 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

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<PAGE>

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 or 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 companies (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

(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.

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<PAGE>

(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 an 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

8
<PAGE>

circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such
notice, specifies that termination date (which date shall be not more than
thirty days after the giving of such notice). The failure by the Executive
or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact
or circumstance in enforcing the Executive's or the Company's rights
hereunder.

(e) DATE OF TERMINATION. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination
or any later date specified therein, as the case may be, (ii) if the
Executive's 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

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<PAGE>

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 - for members of the Strategy and Planning Committee; two - for
other members of the Executive Committee] 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 - for members of
the Strategy and Planning Committee; two - for other members of the Executive
Committee] 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 - for members of the Strategy and Planning
Committee; two - for other members of the Executive Committee] 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.

(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,

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<PAGE>

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 the Executive's 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 executives 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 obligation to the Executive other
than the obligation to pay

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<PAGE>

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, 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 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

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<PAGE>

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
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

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<PAGE>

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

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<PAGE>

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.

(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.

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<PAGE>
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.

(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: _______________________
_______________________
_______________________

IF TO THE COMPANY: City National Bank
400 North Roxbury Drive
Beverly Hills, CA 90210
Attention: Chief Executive Officer

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

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<PAGE>

received by the addressee.

(c) The invalidity or uneforceability 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)-(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.

----------------------------
[Name]

CITY NATIONAL CORPORATION

By
--------------------------

CITY NATIONAL CORPORATION
DIRECTOR DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS

PAGE
----
<S> <C>
ARTICLE I................................................................................................................1

TITLE AND DEFINITIONS....................................................................................................1

1.1 - Title...........................................................................................................1

1.2 - Definitions.....................................................................................................1

ARTICLE II...............................................................................................................4

PARTICIPATION............................................................................................................4

2.1 - Participation...................................................................................................4

ARTICLE III..............................................................................................................5

DEFERRAL ELECTIONS.......................................................................................................5

3.1 - Elections to Defer Compensation.................................................................................5

3.2 - Investment Elections............................................................................................5

ARTICLE IV...............................................................................................................7

DEFERRAL ACCOUNT.........................................................................................................7

4.1 - Deferral Account................................................................................................7

ARTICLE V................................................................................................................8

VESTING..................................................................................................................8

5.1 - Deferral Account...................................................................................................8

ARTICLE VI...............................................................................................................9

DISTRIBUTIONS............................................................................................................9

6.1 - Amount and Time of Distribution.................................................................................9

6.2 - Form of Distribution............................................................................................9

6.3 - Election to Receive Periodic Installments.......................................................................9

ARTICLE VII.............................................................................................................10

ADMINISTRATION..........................................................................................................10

7.1 Committee Action...............................................................................................10

7.2 Powers and Duties of the Committee.............................................................................10

7.3 Construction and Interpretation................................................................................10

7.4 Information....................................................................................................11

</TABLE>

-i-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(CONTINUED)
PAGE

<S> <C>
7.5 Compensation, Expenses and Indemnity...........................................................................11

7.6 Quarterly Statements...........................................................................................11

ARTICLE VIII............................................................................................................12

MISCELLANEOUS...........................................................................................................12

8.1 Unsecured General Creditor.....................................................................................12

8.2 - Restriction Against Assignment.................................................................................12

8.3 - Withholding....................................................................................................12

8.4 - Amendment, Modification, Suspension or Termination.............................................................12

8.5 - Governing Law..................................................................................................12

8.6 - Receipt or Release.............................................................................................13

8.7. - Payments on Behalf of Person Under Incapacity..................................................................13

8.8. - Headings, etc. Not Part of Agreement...........................................................................13

ARTICLE IX..............................................................................................................14

BENEFIT OFFSET..........................................................................................................14

9.1 - Offset for Certain Benefits Payable Under Split-Dollar Life Insurance Policies.................................14

</TABLE>

-ii-

<PAGE>

CITY NATIONAL CORPORATION
DIRECTOR DEFERRED COMPENSATION PLAN

WHEREAS, City National Corporation (the "Company") desires to establish
a deferred compensation plan to provide supplemental retirement income benefits
to its outside directors through deferrals of directors' fees, effective as of
April 1, 1994; and

WHEREAS, it is believed that the adoption of this plan providing for
deferred compensation at the election of each outside director will be in the
best interests of the Company;

NOW, THEREFORE, it is hereby declared as follows:

ARTICLE I
TITLE AND DEFINITIONS

1.1 - Title

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

1.2 - Definitions.

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

"Account" shall mean a Participant's Deferral Account.

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

"Bank" shall mean City National Bank and any successor corporation.

1
<PAGE>

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

"Board of Directors" or "Board" shall mean the Board of Directors of
the Company.

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

"Committed" shall mean the Company's Strategy and Planning Committee.

"Company" shall mean City National Corporation, any successor
corporation and each corporation which is a member of a controlled group of
corporations (within the meaning of Section 414(b) of the Code) of which City
National Corporation is a component member.

"Compensation" shall mean the Participant's Annual Retainer and Meeting
Fees.

"Deferred Account" shall mean the bookkeeping account maintained by the
Committee for each Participant that is credited with amounts equal to the
portion of the Participant's Annual Retainer and Meeting Fees that he or she
elects to defer and interest pursuant to Section 4.1.

"Director" shall mean a member of the Board of Directors of the Company
or a member of the board of directors of the Bank.

"Effective Date" shall mean April 1, 1994.

"Eligible Director" shall mean each Director who is not an employee of
the Company, the Bank or any subsidiary of the Company or Bank.

"Fund" or "Funds" shall mean one or more of the mutual funds or
contracts selected by the Committee pursuant to Section 3.2(b).

"Interest Rate" shall mean, for each Fund, an amount equal to the net
rate of gain or loss on the assets of such Fund during each month reduced by
one-twelfth of one and one-half percentage points.

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

2
<PAGE>

"Participant" shall mean any Eligible Director who elects to defer Compensation
in accordance with Section 3.1.

"Payment Eligibility Date" shall mean the first day of the month
following the end of the quarter following the quarter in which a Participant
terminates employment or dies.

"Plan" shall mean the City National Corporation Director Deferred
Compensation Plan set forth herein, now in effect, or as amended from time to
time.

"Plan Year" shall mean the 12 consecutive month period beginning on
January 1, except that the first Plan Year shall be a short year beginning on
April 1, 1994 and ending on December 31, 1994.

"Tax Adjustment Factor" shall mean a member, determined by the
Committee, which is equal to one minus the sum of (1) the highest marginal
federal personal income tax rate then in effect and (2) the effective highest
marginal state income tax rate in the state in which the Participant resides,
net after the effect of the deduction for such state income tax or federal
income tax purposes.

3
<PAGE>

ARTICLE II
PARTICIPATION

2.1 - Participation.

An Eligible Director shall become a Participant in the Plan by electing
to defer all or a portion of his or her Compensation in accordance with Section
3.1.

4
<PAGE>

ARTICLE III
DEFERRAL ELECTIONS

3.1 - Elections to Defer Compensation.

(a) General Rule. Subject to the limitations set forth in
paragraph (c) below, an Eligible Director may elect to defer all or any
percentage of his or her Annual Retainer and/or all or any percentage of his or
her Meeting Fees.

(b) Deferral Election. Each Eligible Director may elect to defer
Compensation for the following Plan Year by filing with the Committee an
election that conforms to the requirements of this Section 3.1, on a form
provided by the Committee, no later than December 1 of the immediately preceding
Plan Year. With respect to the short Plan Year beginning April 1, 1994, an
election must be filed with the Committee no later than March 31, 1994. Any such
election shall be irrevocable during the Plan Year to which it applies.

(c) Minimum Deferrals. For each of the first four Plan Years
during which the Eligible Director is a Participant, the minimum amount of
Compensation which must be deferred under paragraph (a) of this Section 3.1 is
$10,000.

(d) Duration of Deferral Election. Any election made under this
Plan to defer Compensation shall remain in effect until changed or terminated by
filing a new election with the Committee in accordance with the terms of this
Section 3.1, which new election shall be effective for Compensation earned in
the subsequent Plan Year. Notwithstanding the foregoing, a Participant's
election to defer Compensation under this Plan shall cease upon such
Participant's ceasing to be an Eligible Director.

3.2 - Investment Elections.

(a) At the time of making the deferral elections described in Section
3.1, the Participant shall designate, on a form provided by the Committee, which
of the following types of mutual funds or contracts the Participant's Account
will be deemed to be invested in for purposes of determining the amount of
earnings to be credited to that Account:

1) Emerging Growth Equity Fund;
2) Balanced Assets Fund;
3) Common Stock Fund;
4) Real Estate Securities Fund;
5) Capital Growth Bond Fund; or
6) Money Market Fund.

In making the designation pursuant to this Section 3.2, the Participant may
specify that all or any 10% multiple of his Deferral Account be deemed to be
invested in one or more of the types of mutual funds or contracts listed above.
Effective as of the end of any calendar quarter, a Participant may change the
designation made under this Section 3.2 by filing an election, on a form
provided by the Committee, at least 30 days prior to the end of such quarter. If
a Participant fails to elect a type of fund under this Section 3.2, he or she
shall be deemed to have elected the Money Market Fund.

5
<PAGE>

(b) Although the Participant may designate the type of mutual funds or
contracts in paragraph (a) above, the Committee shall select from time to time,
in its sole discretion, a commercially available fund or contract of each of the
types described in paragraph (a) above to be the Funds. The Interest Rate of
each such commercially available fund or contract shall be used to determine the
amount of earnings to be credited to Participants' Accounts under Article IV.

6
<PAGE>

ARTICLE IV
DEFERRAL ACCOUNT

4.1 - Deferral Account.

The Committee shall establish and maintain a Deferral Account for each
Participant under the Plan. Each Participant's Deferral Account shall be further
divided into separate subaccounts ("mutual funds subaccounts"), each of which
corresponds to a mutual fund or contract elected by the Participant pursuant to
Section 3.2(a). A Participant's Deferral Account shall be credited as follows:

(a) As of the last day of each month, the Committee shall credit
the mutual fund subaccounts of the Participant's Deferral Account with an amount
equal to the Compensation which the Director has elected to defer which would
have otherwise been paid to the Director during that month, that is, the portion
of the Participant's deferred Compensation that the Participant has elected to
be deemed to be invested in a certain type of mutual fund shall be credited to
the mutual fund subaccount corresponding to that mutual fund; and

(b) As of the last day of each month, each mutual fund subaccount
of a Participant's Deferral Account shall be credited with earnings in an amount
equal to that determined by multiplying the balance credited to such mutual fund
subaccount as of the last day of the preceding month by the Interest Rate for
the corresponding Fund selected by the Committee pursuant to Section 3.2(b).

7
<PAGE>

ARTICLE V
VESTING

5.1 - Deferral Account.

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

8
<PAGE>

ARTICLE VI
DISTRIBUTIONS

6.1 - Amount and Time of Distribution.

Each Participant (or, in the case of his or her death, Beneficiary)
shall be entitled to receive a distribution of benefits under this Plan as soon
as practicable following his or her Payment Eligibility Date. The amount payable
to the Participant shall be the amount credited to his or her Deferral Account
as of his or her Payment Eligibility Date.

6.2 - Form of Distribution.

The form of the distribution of benefits to a Participant (or his or
her Beneficiary) shall be a cash lump sum payment.

6.3 - Election to Receive Periodic Installments.

Notwithstanding the provisions of Section 6.1 and 6.2 of this Plan, any
Participant may at any time make an irrevocable election, on a form supplied by
the Committee, to have his or her benefits paid in ten substantially equal
annual installments beginning on the Participant's Payment Eligibility Date and
continuing on or about January 1 of each subsequent year; provided however, that
such election shall not be effective until the second anniversary of the date it
is filed with the Committee. Following the commencement of any installment
distribution, the undistributed amounts credited to the Participant's Account
shall be credited quarterly with interest at a rate equal to the mid-term
applicable federal rate (for quarterly compounding) published by the Internal
Revenue Service pursuant to Section 1274(d) of the Code for the month in which
the Participant's employment is terminated.

9
<PAGE>

ARTICLE VII
ADMINISTRATION

7.1 Committee Action.

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

7.2 Powers and Duties of the Committee.

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

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

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

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

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

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

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

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

7.3 Construction and Interpretation.

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

10
<PAGE>

7.4 Information.

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

7.5 Compensation, Expenses and Indemnity.

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

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

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

7.6 Quarterly Statements.

11
<PAGE>

ARTICLE VIII
MISCELLANEOUS

8.1 Unsecured General Creditor.

Participants and their Beneficiaries, heirs, successors, and assigns shall have
no legal or equitable rights, claims, or interest in any specific property or
assets of the Company. No assets of the Company shall be held under any trust,
or held in any way as collateral security for the fulfilling of the obligations
of the Company under this Plan. Any and all of the Company's assets shall be,
and remain, the general unpledged, unrestricted assets of the Company. The
Company's obligation under the Plan shall be merely that of an unfunded and
unsecured promise of the Company to pay money in the future, and the rights of
the Participants and Beneficiaries shall be no greater than those of unsecured
general creditors.

8.2 - Restriction Against Assignment.

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

8.3 - Withholding.

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

8.4 - Amendment, Modification, Suspension or Termination.

The Company may amend, modify, suspend or terminate the Plan in whole
or in part, except that no amendment, modification, suspension or termination
shall have any retroactive effect to reduce any amounts allocated to a
Participant's Account. In the event that this Plan is terminated, the
distribution of the amounts credited to a Participant's Deferred Account shall
not be accelerated but shall be paid at such time and in such manner determined
under the terms of the Plan immediately prior to termination as if the Plan had
not been terminated.

8.5 - Governing Law.

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

12
<PAGE>

8.6 - Receipt or Release.

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

8.7. - Payments on Behalf of Person Under Incapacity.

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

8.8. - Headings, etc. Not Part of Agreement.

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

13
<PAGE>

ARTICLE IX
BENEFIT OFFSET

9.1 - Offset for Certain Benefits Payable Under Split-Dollar Life Insurance
Policies.

(a) Notwithstanding anything contained herein to the contrary, any
benefits payable under this Plan shall be offset by the value of benefits
received by the Participants under certain life insurance policies as set forth
in this Section. Participants in this Plan may own life insurance policies (the
"Policies") purchased on their behalf by the Company. The exercise of ownership
rights under these Policies by each Participant is, however, subject to certain
conditions (set forth in a "Split-Dollar Life Insurance Agreement" between each
Participant and the Company, pursuant to which the Company holds a security
interest on the Policy) and, if the Participant fails to meet the conditions set
forth in the Split-Dollar Life Insurance Agreement, the Company may exercise its
security interest in the Policy and cause the Participant to lose certain
benefits under the Policy. In the event that a Participant satisfies the
conditions specified in Section 4 or 5 of the Split-Dollar Life Insurance
Agreement, so that the Participant or his or her beneficiary under the Policy
becomes entitled to exercise rights free from the Company's security interest
under one of those sections, or the Company's security interest is otherwise
released, the value of those benefits shall constitute an offset to any benefits
otherwise payable under this Plan which accrued in years in which premiums were
paid on the Policy. As the case may be, this offset (the "Offset Value") shall
be equal to the value of benefits payable under the Split-Dollar Life Insurance
Agreement, that is, the cash surrender value of the Policy or, in the case of
Participant's death, the death benefit payable to the beneficiary under the
Policy. The Offset Value shall then be compared to the Participant's Account,
and the amounts credited to the Account shall be reduced, but not to less than
zero, by the Offset Value; provided, however, that any portion of the Account
which is attributable to compensation deferred during Plan Years in which the
Company did not pay premiums on the Policy shall not be reduced by the Offset
Value, and the Committee shall maintain subaccounts of a Participant's Account
to the extent necessary to determine the portion of the Account which is subject
to offset and the portion which is not subject to offset.

(b) If the Policy in subsection (a) is not on the life of the
Participant and the insured dies prior to distribution of benefits under this
Plan, then the value of the benefits received by the participant under the
Policy will offset the Participant's Account under this Plan to the extent
described herein. This offset ("Offset Value") shall be equal to the amount of
death benefit payable to the Participant divided by the Tax Adjustment Factor.
This Offset Value shall then be compared to the Participant's Account, and the
amounts credited to the Account shall be reduced, but not to be less than zero,
by the Offset Value; provided, however, that any portion of the Account which is
attributable to compensation deferred during Plan Years in which the Company did
not pay premiums on the Policy shall not be reduced by the Offset Value.

(c) The reduction described in Section 9.1(a) or 9.1(b) shall be
made as of the date on which the Participant or his or her beneficiary becomes
entitled to exercise rights under the Policy free of the Company's security
interest.

(d) In the event of an offset as described in this Section 9, any
election to receive distribution of the amount credited to a Participant's
Account in the form of installments shall be

14
<PAGE>

deemed to be revoked, and any benefits which are or become payable under this
Plan after such offset shall be paid in a lump sum on the Participant's Payment
Eligibility Date.

IN WITNESS WHEREOF, the Corporation has caused this document to be
executed by its duly authorized officer on this 7th day of June, 1995.

CITY NATIONAL CORPORATION

BY: /s/ BRAM GOLDSMITH
-------------------------------------

Title: CHAIRMAN / CEO
----------------------------------

<PAGE>

Exhibit 11.1

CITY NATIONAL CORPORATION

COMPUTATION OF EARNINGS PER SHARE

FOR THE YEAR ENDED DECEMBER 31,

1999 1998 1997
------------------ ------------------ ------------------
<S> <C> <C> <C>
Basic
Net Income............................................ $ 108,107,000 $ 96,228,000 $ 80,133,000
================== ================== ==================

Diluted

Net Income............................................ $ 108,107,000 $ 96,228,000 $ 80,133,000
================== ================== ==================

Average Common Shares Outstanding..................... 46,885,182 46,865,713 46,545,276
Average Treasury Shares Outstanding................... 1,202,468 508,221 526,788
------------------ ------------------ ------------------
Net Average Common Shares Outstanding................. 45,682,714 46,357,492 46,018,488
Stock Option Dilution Adjustment...................... 1,255,416 1,783,518 1,790,765
------------------ ------------------ ------------------
Shares Outstanding and Equivalents.................... 46,938,130 48,141,010 47,809,253
================== ================== ==================
Diluted Earnings Per Share............................ $ 2.30 $ 2.00 $ 1.68
================== ================== ==================
</TABLE>

<PAGE>

Exhibit 21

Parent and subsidiaries

City National Corporation
City National Financial Services, Inc. (99.5%)
City National Bank
City National Mortgage Company (Inactive)
City National Properties, Inc. (Inactive)
City National Securities, Inc.
San Diego Real Estate Management, Inc. (37.64%)
City National International Insurance Holdings, Inc.
City National Insurance Company, Ltd.
Citinational Real Estate, Inc.
Citinational Bancorporation

City National Corporation is a corporation organized under the laws of the State
of Delaware. City National Financial Services, Inc. is a corporation organized
under the laws of the State of California and is 99.5% owned by City National
Corporation with the remaining 0.5% owned by City National Bank. City National
Bank is a national banking association organized under the laws of the United
States of America. Each of the other above-named subsidiaries is a corporation
organized under the laws of the State of California. Registrant owns 100% of the
outstanding capital stock of City National Bank ("Bank"). The Bank owns 37.64%
of San Diego Real Estate Management, Inc. and 100% of the outstanding common
stock of City National Mortgage Company, City National Properties, Inc., City
National Securities, Inc., City National International Insurance Holdings, Inc.,
and Citinational Real Estate, Inc.. City National Insurance Holdings, Inc. owns
100% of City National Insurance Company, Ltd. and Citinational Real Estate, Inc.
owns 100% of Citinational Bancorporation.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
City National Corporation:

We consent to incorporation by reference in the registration statements (Nos.
33-32543, 33-38029, 33-60668, 333-01993 and 333-87719) on Form S-8 of City
National Corporation and subsidiaries of our report dated January 13, 2000,
except as to note 15 of notes to the consolidated financial statements, which
is as of February 29, 2000, relating to the consolidated balance sheet as of
December 31, 1999 and 1998 and the related consolidated statements of income
and comprehensive income, changes in shareholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1999, which
report appears in the December 31, 1999 Annual Report on Form 10-K of City
National Corporation.

KPMG LLP

March 23, 2000

<PAGE>
<ARTICLE> 9

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 233,178
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 57,000
<TRADING-ASSETS> 27,714
<INVESTMENTS-HELD-FOR-SALE> 1,102,092
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 5,490,669
<ALLOWANCE> 134,077
<TOTAL-ASSETS> 7,213,619
<DEPOSITS> 5,669,409
<SHORT-TERM> 592,211
<LIABILITIES-OTHER> 76,900
<LONG-TERM> 303,453
0
0
<COMMON> 46,885
<OTHER-SE> 524,761
<TOTAL-LIABILITIES-AND-EQUITY> 7,213,619
<INTEREST-LOAN> 399,891
<INTEREST-INVEST> 65,209
<INTEREST-OTHER> 5,346
<INTEREST-TOTAL> 470,446
<INTEREST-DEPOSIT> 93,214
<INTEREST-EXPENSE> 148,441
<INTEREST-INCOME-NET> 322,005
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 3,696
<EXPENSE-OTHER> 241,803
<INCOME-PRETAX> 167,414
<INCOME-PRE-EXTRAORDINARY> 167,414
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,107
<EPS-BASIC> 2.37
<EPS-DILUTED> 2.30
<YIELD-ACTUAL> 5.56
<LOANS-NON> 26,701
<LOANS-PAST> 4,033
<LOANS-TROUBLED> 3,075
<LOANS-PROBLEM> 8,781
<ALLOWANCE-OPEN> 138,754<F1>
<CHARGE-OFFS> 19,528
<RECOVERIES> 14,851
<ALLOWANCE-CLOSE> 134,077
<ALLOWANCE-DOMESTIC> 134,077
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>INCREASED BY $3,415, ADJUSTMENT FOR THE AMERICAN PACIFIC BANK ACQUISITION
</FN>

</TABLE>