Exhibit 10.3
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Capital One Financial Corporation
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Amended and Restated Change of Control Employment Agreement
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Each of the following executive officers of Capital One Financial Corporation
has entered into an Amended and Restated Change of Control Employment Agreement
in the form filed herewith:
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxx
Xxxx X. Xxxxxxxx, Xx.
CAPITAL ONE FINANCIAL CORPORATION
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AMENDED AND RESTATED CHANGE OF CONTROL EMPLOYMENT AGREEMENT
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AGREEMENT by and between CAPITAL ONE FINANCIAL CORPORATION, a Delaware
corporation (the "Company") and ___________________ (the "Executive"), dated as
of the 25/th/ day of January, 2000.
The Board of Directors of the Company (the "Board") has determined that it
is in the best interests 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.
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(a) The "Effective Date" shall be the first date during the "Change
of Control Period" (as defined in Section 1(b)) on which a Change of
Control occurs. Anything in this Agreement to the contrary notwithstanding,
if the Executive's employment with the Company is terminated or the terms
and conditions of the Executive's employment are adversely changed in a
manner which would constitute grounds for a termination of employment by
the Executive for Good Reason prior to the date on which a Change of
Control occurs, and it is reasonably demonstrated that such termination of
employment or
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adverse change (i) was at the request of a third party who has taken steps
reasonably calculated to effect the Change of Control or (ii) otherwise
arose within 12 months of and in connection with or anticipation of the
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 or adverse change.
(b) The "Change of Control Period" is the period commencing on the
date hereof and ending on the third anniversary of such date; 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
thereof is hereinafter referred to as the "Renewal Date"), the Change of
Control Period shall be automatically extended so as to terminate three
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
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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")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% (or, if
such shares are purchased from the Company, 40%) 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 "Company Voting Securities"), provided,
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however, that any acquisition by (x) the Company or any of its
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subsidiaries, or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (y) any corporation
with respect to which, immediately following such acquisition, more than
60% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, in the
aggregate by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company
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Common Stock and Company Voting Securities immediately prior to such
acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding Company Common
Stock and Company Voting Securities, as the case may be, shall not
constitute a Change of Control; or
(b) Individuals who constitute the Board as of the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board, provided that any individual becoming a director subsequent
to the date hereof whose appointment to fill a vacancy or to fill a new
Board position or 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 is in
connection with an actual or threatened election contest relating to the
election of the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act); or
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation (a "Business Combination"), in each case, with
respect to which all or substantially all of the individuals and entities
who were the respective beneficial owners of the Outstanding Company Common
Stock and Company Voting Securities immediately prior to such Business
Combination do not in the aggregate, immediately following such Business
Combination, beneficially own, directly or indirectly, more than 60% 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 in substantially the
same proportion as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and Company Voting
Securities, as the case may be; or
(d) (i) a complete liquidation or dissolution of the Company or (ii)
sale or other disposition of all or substantially all of the assets of the
Company other than to a corporation with respect to which, immediately
following such sale or disposition, more than 60% of, respectively, the
then outstanding shares of common stock and the
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combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, in the aggregate by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Company Voting Securities
immediately prior to such sale or disposition in substantially the same
proportion as their ownership of the Outstanding Company Common Stock and
Company Voting Securities, as the case may be, immediately prior to such
sale or disposition.
(e) Notwithstanding the foregoing, a Change of Control shall not
occur with respect to the Executive by reason of any event which would
otherwise constitute a Change of Control if, immediately after the
occurrence of such event, individuals including such Executive who were
executive officers of the Company immediately prior to the occurrence of
such event, own, directly or indirectly, on a fully diluted basis, (i) 15%
or more of the then outstanding shares of common stock of the Company or
any acquiror or successor to substantially all of the business of the
Company or (ii) 15% or more of the combined voting power of the then
outstanding voting securities of the Company or any acquiror or successor
to substantially all of the business of the Company entitled to vote
generally in the election of directors.
3. Employment Period. The Company hereby agrees to continue the
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Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company, for the period commencing on the Effective Date and ending on
the third anniversary of such date (the "Employment Period").
4. Terms of Employment.
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(a) Position and Duties.
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(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 90-day period
immediately preceding the Effective Date and (B) the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
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(ii) During the Employment Period, and excluding any periods of
vacation, sabbatical, and sick or similar 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.
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(i) Base Salary. During the Employment Period, the Executive
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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 by reason of
deferral and before any reduction for the amount of such annual base
salary which the Executive may have agreed to forgo in exchange for
the receipt of stock options from the Company, 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 at least annually and shall be increased at any time and from
time to time as shall be substantially consistent with increases in
base salary awarded in the ordinary course of business to other peer
executives of the Company and its affiliated
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companies. 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" includes any company controlled by,
controlling or under common control with the Company. Any payments of
the Executive's Annual Base Salary made under this Section 4(b)(i) may
be reduced to the extent provided in an election made by the Executive
to forgo any or all base salary otherwise payable in exchange for the
receipt of stock options from the Company. The Company shall maintain
an account (the "Stock Option Purchase Account"), the balance of
which, as of any date, shall be equal to the aggregate dollar amount
of base salary and bonuses that the Executive has agreed to forgo in
exchange for the receipt of such stock options, less the amount of
such base salary or bonuses or other compensation (including amounts
payable upon termination of employment) actually forgone.
(ii) Annual Bonus. In addition to any Annual Base Salary payable
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as hereinabove provided, the Executive shall be awarded, for each
fiscal year beginning or ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the sum of
the target award under the Company's Executive Annual Cash Incentive
Plan and any other target awards under any other similar annual
incentive plans (or if no such target award is designated under the
Company's Executive Annual Cash Incentive Plan or any similar plan,
the midpoint between the high and low bonus payable to the Executive
under such plan); provided, however, that such target or midpoint, as
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the case may be, shall not be less than such target or midpoint under
such plans in the year immediately preceding the Change of Control
(the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no
later than 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. Any payments of the Executive's Annual Bonus made under this
Section 4(b)(ii) may be reduced to the extent provided in an election
made by the
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Executive to forgo any or all bonus amounts otherwise payable in
exchange for the receipt of stock options from the Company.
(iii) Incentive, Savings and Retirement Plans. In addition to
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any Annual Base Salary and Annual Bonus payable as hereinabove
provided, the Executive shall be entitled to participate during the
Employment Period in all incentive, profit-sharing, savings and
retirement plans, practices, policies and programs (including any
stock-based plans) 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
incentive, savings and retirement benefit opportunities (including
under any stock-based plans), in each case, less favorable, in the
aggregate, except as required to comply with statutory requirements of
general application which limit the level of benefit opportunity, than
(A) 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 90-day
period immediately preceding the Effective Date or (B) if more
favorable to the Executive, those provided at any time after the
Effective Date to other peer executives of the Company and its
affiliated companies; provided that no award shall be granted or
contributions made under any such plan, practice, policy or program to
the extent the Executive has made an election to forgo awards or
contributions under such plan, practice, policy or program of the
Company in exchange for the receipt of stock options from the Company;
and provided further that any effect on the Executive's participation
or benefit level resulting from the Executive's not receiving an
Annual Base Salary as a result of an election made by the Executive to
forgo any or all base salary otherwise payable in exchange for the
receipt of stock options from the Company shall be governed by the
terms of those plans, practices, policies and programs of general
applicability.
(iv) Welfare Benefit Plans. During the Employment Period, the
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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
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companies (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life,
split-dollar life insurance, accidental death and travel accident
insurance plans and programs) to the extent generally applicable 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 (x) the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time during
the 90-day period immediately preceding the Effective Date or (y) if
more favorable to the Executive, those provided at any time after the
Effective Date generally to other peer executives of the Company and
its affiliated companies.
(v) Expenses. During the Employment Period, the Executive
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shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at any time during
the 90-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
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Executive shall be entitled to fringe benefits 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 90-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,
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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 90-day period
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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 and Other Paid Leave. During the Employment
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Period, the Executive shall be entitled to paid vacation and other
paid leave in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as
in effect at any time during the 90-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; provided that
such vacation or other leave may not be paid vacation or paid leave to
the extent provided in an election made by the Executive to forgo any
or all base salary otherwise payable in exchange for the receipt of
stock options from the Company.
5. Termination of Employment.
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(a) Death or Disability. The Executive's employment shall terminate
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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 13(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the Executive shall
not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" means 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 (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
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during the Employment Period for Cause. For purposes of this Agreement,
"Cause" means (i) an
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action taken by the Executive involving willful and wanton malfeasance
involving specifically a wholly wrongful and unlawful act, or (ii) the
Executive being convicted of a felony.
(c) Good Reason. The Executive's employment may be terminated during
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the Employment Period by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" means:
(i) The assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status,
offices, titles and reporting requirements), 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 that described in Section 4(a)(i)(B)
hereof;
(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 Agreement, any good faith determination of Good
Reason made by the Executive shall be conclusive. Anything in this 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
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or by the Executive for Good Reason shall be communicated by Notice of
Termination to the
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other party hereto given in accordance with Section 13(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) to the extent applicable sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). In the case of a termination of the Executive's employment for
Cause, a Notice of Termination shall include a copy of a resolution duly
adopted by the affirmative vote of not less than two-thirds of the entire
membership of the Board at a meeting of the Board called and held for the
purpose (after reasonable notice to the Executive and reasonable
opportunity for the Executive, together with the Executive's counsel, to be
heard before the Board prior to such vote), finding that in the good faith
opinion of the Board the Executive was guilty of conduct constituting
Cause. No purported termination of the Executive's employment for Cause
shall be effective without a Notice of Termination. The failure by the
Executive to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason shall not waive
any right of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing the Executive's rights
hereunder.
(e) Date of Termination. "Date of Termination" means the date of
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receipt of the Notice of Termination or any later date specified therein,
as the case may be; provided, however, that (i) 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 (ii) 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.
(f) Transition Period. "Transition Period" means the period
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commencing on the Date of Termination and ending on the thirty-six month
anniversary of the Date of Termination.
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6. Obligations of the Company upon Termination.
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(a) Death. If the Executive's employment is terminated by reason of
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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 the following obligations:
(i) payment of the Executive's Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (ii) payment of the product
of (x) the greater of (A) the annual bonus paid or payable, including by
reason of deferral and before any reduction for the amount of such bonus
which the Executive may have agreed to forgo in exchange for the receipt of
stock options from the Company (and annualized for any fiscal year
consisting of less than twelve full months or for which the Executive has
been employed for less than twelve full months), for the most recently
completed fiscal year and (B) the Recent Annual Bonus (such greater amount
hereafter 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
(iii) payment of any bonus earned or accrued by the Executive for the most
recently completed fiscal year prior to the Date of Termination and not yet
paid by the Company, any payment of any compensation previously deferred by
the Executive (together with any accrued interest thereon) and not yet paid
by the Company and any pay for vacation and sabbatical earned but not yet
taken (the amounts described in paragraphs (i), (ii) and (iii) are
hereafter referred to as "Accrued Obligations"). The amount of the
Company's payment obligations under paragraphs (i), (ii) and (iii) of the
Accrued Obligations shall be reduced by the amount of any such Annual Base
Salary or Annual Bonus, respectively, that the Executive had elected to
forgo in exchange for the receipt of stock options from the Company (the
"Net Accrued Obligations"). All Net 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. In addition, the Executive's
estate or designated beneficiaries shall be entitled to receive the
Executive's Annual Base Salary for the balance of the Employment Period;
provided that such payments of Annual Base Salary shall be reduced to the
extent provided in an election made by the Executive to forgo any or all
base salary otherwise payable in exchange for the receipt of stock options
from the Company; and provided
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further that such payments of Annual Base Salary shall be reduced by any
survivor benefits paid to the Executive's estate or designated beneficiary
under the Company's Cash Balance Pension Plan (the "Pension Plan").
Anything in this Agreement to the contrary notwithstanding, the Executive's
estate and family shall be entitled to receive benefits at least equal to
the most favorable benefits provided generally by the Company and any of
its affiliated companies to the estates and surviving families 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 generally with respect to other peer executives and their estates
and families at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death
generally with respect to other peer executives of the Company and its
affiliated companies and their families; provided that this sentence shall
not apply to benefits under any incentive, profit-sharing, savings and
retirement plans, practices, policies and programs (including any stock-
based plans) to the extent the Executive has made an election to forgo
awards or contributions under such plan, practice, policy or program of the
Company in exchange for the receipt of stock options from the Company.
(b) Disability. If the Executive's employment is terminated by
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reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive,
other than for Net Accrued Obligations. All Net Accrued Obligations shall
be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination. In addition, the Executive shall be entitled to receive the
Executive's Annual Base Salary for the balance of the Employment Period;
provided that such payments of Annual Base Salary shall be reduced to the
extent provided in an election made by the Executive to forgo any or all
base salary otherwise payable in exchange for the receipt of stock options
from the Company; and provided further that such payments of Annual Base
Salary shall be reduced by any benefits paid to the Executive under the
Company's disability plans. Anything in this Agreement to the contrary
notwithstanding, 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
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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
90-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; provided that this
sentence shall not apply to benefits under any incentive, profit-sharing,
savings and retirement plans, practices, policies and programs (including
any stock-based plans) to the extent the Executive has made an election to
forgo awards or contributions under such plan, practice, policy or program
of the Company in exchange for the receipt of stock options from the
Company.
(c) Cause; Other than for Good Reason. If the Executive's employment
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shall be terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive Annual Base Salary through the Date of
Termination, plus the amount of any bonus earned or accrued by the
Executive for the most recently completed fiscal year prior to the Date of
Termination and any compensation previously deferred by the Executive, in
each case to the extent theretofore unpaid. The amount of the Company's
payment of such Annual Base Salary shall be reduced by the amount of any
such Annual Base Salary that the Executive has elected to forgo in exchange
for the receipt of stock options from the Company. If the Executive
terminates employment during the Employment Period other than for Good
Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Net Accrued Obligations. All applicable amounts
due to the Executive pursuant to this Section 6(c) shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
(d) Good Reason; Other Than for Cause or Disability. If, during the
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Employment Period, the Company shall terminate the Executive's employment
other than for Cause or Disability, or if the Executive shall terminate
employment under this Agreement for Good Reason:
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(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) All Net Accrued Obligations; and
(B) The product of (x) three and (y) the sum of (i) Annual
Base Salary and (ii) the Highest Annual Bonus; and
(C) an amount equal to any unvested account balance in any
defined contribution plan, and any supplemental and excess
retirement plans with respect thereto, that would have vested had
the Executive's employment with the Company continued for the
duration of the Transition Period; and
(D) an amount equal to the contributions and accrued
earnings that would have been made under any defined contribution
plan, and any supplemental and excess retirement plans with
respect thereto, had the Executive's employment with the Company
continued for the duration of the Transition Period and had the
Executive contributed to such plans at the highest rate permitted
by such plans, calculated assuming that the terms of such plans
are no less favorable than those in effect during the 90-day
period immediately prior to the Effective Date, or if more
favorable to the Executive, those in effect generally at any time
thereafter with respect to such plans for other peer executives
of the Company and its affiliated companies; and
(ii) For the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, 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 this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies applicable generally to other peer
executives and their families during the 90-day period immediately
preceding the Effective Date or, if more favorable
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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. For purposes of determining eligibility
of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to
have remained employed for the duration of the Employment Period and
to have retired on the last day of such period. In lieu of the
benefits provided for in this Section 6(d)(ii), the Executive may
elect within 60 days of the Date of Termination to be paid an amount
in cash equal to the present value of such benefits on an after-tax
basis. In determining present value, a discount rate equal to the
federal mid-term rate under Section 1274(d) of the Internal Revenue
Code of 1986, as amended (the "Code") shall be utilized. The right to
continued benefits granted to the Executive and/or his family pursuant
to this Section 6(d)(ii) shall be in addition to any right of
continued coverage under any of the plans, programs, practices and
policies described in Section 4(b)(iv) of this Agreement which the
Executive and/or his family may be entitled to under the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA") upon any loss of
coverage under such plans, programs, practices and policies.
The amount payable by the Company to the Executive pursuant to Section
6(d)(i)(B) above will be reduced by any remaining balance in the Stock Option
Purchase Account; provided that such reduction will not be made to the extent
that the remaining balance is paid to the Company pursuant to any other
repayment provision in any other agreement.
7. Non-exclusivity of Rights. Except as otherwise specifically provided
-------------------------
in this Agreement, nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus, incentive
or other plans, programs, policies or practices, provided by the Company or any
of its affiliated companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may have
under any other agreements 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 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 except as
explicitly modified by this Agreement.
-17-
8. Full Settlement. The Company's obligation to make the payments
---------------
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, and no amounts
earned by the Executive at such other employment or otherwise shall reduce, the
amounts payable to the Executive under any of the provisions of this Agreement.
The Company agrees to pay, 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 Section 9
of this Agreement), plus in each case interest at the applicable federal rate
provided for in Section 7872(f)(2) of the Code.
9. Certain Additional Payments by the Company.
------------------------------------------
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (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 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.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the
assumptions not specified herein to be used in arriving at such
determinations, shall be made by the Company's certified public accounting
firm immediately prior to the Effective Date (the "Accounting Firm"). Such
-18-
determination shall be made within fifteen business days after request
therefor by notice from the Executive or the Company to such firm and to
the other party hereto. In making such determination with respect to any
matter which is uncertain, the Accounting Firm shall adopt the position
which it believes more likely than not would be adopted by the Internal
Revenue Service. The Accounting Firm shall provide detailed supporting
calculations with respect to its determination both to the Company and the
Executive within such fifteen business day period. All fees and expenses of
the Accounting Firm under this Section 9(b) shall be borne solely by the
Company. The initial Gross-Up Payment, if any, as determined pursuant to
this Section 9(b), shall be paid by the Company to the Executive within
five days of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the Executive,
it shall furnish the Executive with a written opinion that failure to
report the Excise Tax on the Executive's applicable federal income tax
return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be final, binding
and conclusive upon the Company and the Executive, except as provided in
the following sentences of this Section 9(b). As a result of 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") or that Gross-Up Payments which have been made by the
Company should not have been made ("Excess Gross-Up Payment"), consistent
with the calculations required to be made hereunder. Either party hereto
can request a redetermination by the Accounting Firm. An Underpayment can
result from a claim by the Internal Revenue Service or from a determination
by the Accounting Firm. In the event that the Internal Revenue Service
makes a claim and 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 promptly determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive. In the event
that the Accounting Firm determines that an Underpayment has occurred, the
Accounting Firm shall promptly determine the amount of the Underpayment,
which shall be promptly paid by the Company to or for the benefit of the
-19-
Executive. An Excess Gross-Up Payment can result from a determination by
the Internal Revenue Service or the Accounting Firm. If the Accounting Firm
makes an Excess Gross-Up Payment determination, it must furnish the
Executive with a written opinion that the basis for its determination would
be accepted by the Internal Revenue Service and that the Executive has a
right to a refund of taxes or credit against taxes with respect to the
Excess Gross-Up Payment. The Executive shall promptly repay to the Company
an amount equal to the reduction in aggregate taxes due by the Executive
resulting from such determination by the Internal Revenue Service or the
Accounting Firm, provided that the Executive shall only be required to
repay any portion of such amount that had been paid to the Internal Revenue
Service to the extent that and when the Executive receives a refund from
the Internal Revenue Service (or is entitled and able to utilize such
amount as a credit against other taxes due).
(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 a 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 the Executive gives such notice
to the Company (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that 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
-20-
(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 taxes, including, without limitation, 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
xxx for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and xxx 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 taxes, including, without limitation, 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
to 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).
-21-
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 representatives 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,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall an asserted
violation of the provisions of this Section 10 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement.
11. Successors.
----------
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(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
-22-
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
12. Funding. This Agreement constitutes an unfunded, unsecured obligation
-------
of the Company and any payments made hereunder shall be made from the general
assets of the Company. However, the Company has established a trust pursuant to
a trust agreement and shall make contributions to such trust in accordance with
the terms and conditions of such trust agreement for the purpose of assisting
the Company in meeting its payment obligations under this Agreement.
13. 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:
-------------------
To the address shown on the Company's records for tax reporting
purposes.
If to the Company:
-----------------
Capital One Financial Corporation
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Officer-in-Charge,
Human Resources Division
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
-23-
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof or the failure to assert any right the Executive may have
hereunder, including, without limitation, the right to terminate employment
for Good Reason pursuant to Section 5(c)(i)-(v), shall not be deemed to be
a waiver of such provision or right or any other provision or right
thereof.
(f) This Agreement contains the entire understanding of the Company
and the Executive with respect to the subject matter hereof and supercedes
in its entirety any prior Change of Control Agreement by and between the
Company and the Executive. Until the Effective Date, subject to the terms
of any other employment agreement between the Executive and the Company,
the Executive shall continue to be an "employee at will".
-24-
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.
_____________________________________
CAPITAL ONE FINANCIAL CORPORATION
By __________________________________
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