EXHIBIT 10.10.2
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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:
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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
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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 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
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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 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
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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 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.
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3. Employment Period. The Company hereby agrees to continue the Executive
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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
second 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.
(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
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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 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
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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 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
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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 companies (including, without
limitation, medical, prescription, dental, disability,
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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 shall
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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 personal secretarial
and other assistance, at least
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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 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
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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 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
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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.
(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 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
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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 twenty-four month
anniversary of the Date of Termination.
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
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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. 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 reason
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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. Anything in this Agreement to the contrary notwithstanding,
the Executive shall be entitled after the Disability Effective Date to
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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 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:
(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) two 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;
(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 duration of the Transition Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue
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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 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
Transition 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; and
(iii) The Company shall provide the Executive with outplacement
services (including office support and secretarial services), from a
vendor determined by the Company, at a cost not to exceed $30,000.
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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.
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
in which there is a reasonable basis for the claims or defenses asserted by the
Executive and such claims and defenses are asserted by the Executive in good
faith (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
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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;
provided, however, that the Company shall not be obligated to pay any such fees
and expenses, and the Executive shall be obligated to return any such fees and
expenses that were advanced, if a court of competent jurisdiction determines
that the Executive was terminated for Cause.
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
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
-20-
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
-21-
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
-22-
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 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 ▇▇▇
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 ▇▇▇ 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
-23-
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). 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.
(e) Payments or distributions by the Company to or for the benefit of
the Executive pursuant to any "incentive stock options" (within the meaning
of Section 422 of the Code) granted to the Executive which are vested as of
the date hereof shall be "Excluded Payments." In the event that Payments
which include Excluded Payments are subject to Excise Tax, the
determinations made pursuant to Section 9(b) above shall be calculated with
respect to all Payments (including any Excluded Payments), but any
resulting Gross-Up Payment required to be made by the Company shall be
reduced by the product of the Gross-Up Payment multiplied by a fraction the
numerator of which is the Excluded Payments and the denominator of which is
all Payments (including the Excluded Payments).
10. Confidential Information. The Executive shall hold in a fiduciary
------------------------
capacity for the
-24-
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. The
obligations of this Section 10 are in addition to and do not supersede any other
confidentiality obligations of the Executive to the Company.
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 assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
-25-
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
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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
-26-
received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such federal, state 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".
-27-
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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