Employment Agreement

Change in Control Agreement

Severance Agreement

 

 

 

EX-10.2 2 dex102.htm EXHIBIT 10.2

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”), made this 11th day of March 2009, is entered into by Capital One Financial Corporation, a Delaware corporation, with its principal place of business at 1680 Capital One Drive, McLean, Virginia together with its subsidiaries and affiliates, (the “Company” or “Capital One”), and [EXECUTIVE] (the “Executive”).

The Company desires to continue to employ the Executive, and the Executive desires to continue to be employed by the Company, in each case, on the terms and conditions set forth in this Agreement. In consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties agree as follows:

1. Effective Date and Coverage.

1.1 Effective Date. This Agreement shall be effective as of March 11, 2009 (the “Effective Date”).

1.2 Coverage. For purposes of this Agreement, “Capital One” or “the Company” shall mean Capital One Financial Corporation along with its direct and indirect affiliates and subsidiaries.

2. Term of Employment. The Company hereby agrees to continue to employ the Executive, and the Executive hereby accepts continued employment with the Company, upon the terms set forth in this Agreement. The term of employment under this Agreement shall be for the period (the “Employment Period”) commencing on the Effective Date and continuing until the earliest of (a) February 29, 2012, (b) the date on which the Company and its executives are no longer subject to the provisions of Section 111(b) of the Emergency Economic Stabilization Act of 2008, as amended and in effect as of the Effective Date (“EESA”) and any similar or successor statute or regulation, as each may be amended from time to time, or (c) the date on which the Executive’s employment is terminated by either party in accordance with the provisions of Section 5 of this Agreement.

3. Capacity. The Executive shall initially serve as a member of the Executive Committee of the Company. The Executive hereby agrees to undertake the duties and responsibilities inherent in such position and such other duties and responsibilities as the Company’s Board of Directors (the “Board”) or the Company’s Chief Executive Officer (the “CEO”) shall from time to time reasonably assign to the Executive. The Executive agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company (including, without limitation, the Capital One Financial Corporation Code of Business Conduct and Ethics and the provisions therein regarding conflicts of interest) and any changes thereto which may be adopted from time to time by the Company. Excluding any periods of vacation and sick or similar leave to which the Executive is entitled under the Company’s health, welfare and other benefits programs, the Executive agrees to devote the Executive’s entire business time, attention and energies to the business and interests of the Company during the Employment Period.


4. Compensation and Benefits.

4.1 Salary. Effective March 16, 2009 (the “Initial Salary Date”) and during the Employment Period, the Company shall pay the Executive, in periodic installments in accordance with the Company’s customary payroll practices, an annual salary (the “Salary”) at a rate of no less than         .        % of the total compensation paid to the Executive with respect to 2008; provided, that:

(a) only for the period beginning on the Initial Salary Date and ending December 31, 2009, the Salary shall be payable at a rate such that the total of (i) any salary paid to the Executive for the period beginning on January 1, 2009, and ending on the day immediately prior to the Initial Salary Date and (ii) any salary paid to the Executive for the period beginning on the Initial Salary Date and ending December 31, 2009, shall equal the Salary (or the pro rata portion thereof reflecting any period during which the Executive is not employed by the Company);

(b) the Salary shall automatically adjust pro rata to reflect any change in the Executive’s full-time or part-time work schedule; and

(c) during the Employment Period, the Executive’s Salary may be increased (but not decreased) by the independent members of the Board (the “Independent Directors”) from time to time pursuant to the Company’s normal performance review policies and practices for senior executives.

4.2 Incentives. During the Employment Period, the Executive will be eligible to earn annual incentives and long-term incentives under applicable Company plans or policies, as such plans or policies may be amended from time to time. Without limiting the generality of the forgoing and to the maximum extent permissible under the standards required to be promulgated by the U.S. Department of the Treasury (the “Treasury”) to implement Section 111(b)(3)(D)(i) of EESA (the “Restricted Stock Standards”), with respect to each fiscal year of the Company ending during the Employment Period, the Executive shall, subject to the determination of the Independent Directors, in their sole discretion, of the achievement of corporate and/or individual performance criteria established in good faith by the Independent Directors, be eligible to receive an annual incentive compensation award in an amount ranging from 0% to up to 50% of the Executive’s Salary for such fiscal year, which incentive compensation shall be payable in such form as determined by the Independent Directors, in their sole discretion, including in the form of restricted stock awards under Capital One’s 2004 Stock Incentive Plan, as amended and restated, or any successor plan. Such shares of restricted stock, if any, shall vest under the following terms and conditions:

(a) on the later of (i) the first, second and third anniversaries of the date of grant, in equal installments on each such anniversary, or (ii) the date on which all of the Company’s obligations to the U.S. federal government arising from financial assistance provided to the Company under Treasury’s Troubled Asset Relief Program (“TARP”) under EESA are redeemed or repaid (other than any warrants to acquire the Company’s common stock);

 

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(b) to the extent permitted under the Restricted Stock Standards, according to any additional provisions that are no less favorable to the Executive than the vesting provisions of the restricted stock awards granted on January 29, 2009, to executives similarly situated in the Company’s executive organization structure, including those provisions related to vesting upon death, Disability, Retirement or Change of Control (each as defined in the Corporation’s 2004 Stock Incentive Plan, as amended); and

(c) if the Executive’s employment is terminated for any reason (other than due to death, Disability or Retirement, in connection with a Change of Control, or for cause) during the Employment Period, then the portion of any such award that would have vested under paragraph (a)(i) or (b) above but for subclause (a)(ii) will remain outstanding and continue to vest according to paragraph (a)(i) or (b), as appropriate.

For purpose of this Agreement and to the extent permissible under the Restricted Stock Standards, the term “restricted stock” shall refer to units and/or shares of the Corporation’s common stock, in each case subject to vesting or transferability restrictions pursuant to this Agreement.

4.3 Benefits and Perquisites. During the Employment Period, the Executive will be eligible to participate in Company benefits and perquisites commensurate with those typically made available to similarly situated executives of the Company under applicable plans or policies of the Company, as such plans or policies are amended herein and may be amended from time to time, to the extent that the Executive’s position, tenure, salary, age, and other qualifications make the Executive eligible to participate.

4.4 Reimbursement of Expenses. During the Employment Period, the Company shall reimburse the Executive for all reasonable travel, entertainment and other expenses incurred or paid by the Executive in connection with, or related to, the performance of the Executive’s duties, responsibilities or services under this Agreement, in accordance with policies and procedures, and subject to limitations, adopted by the Company from time to time.

4.5 Withholding. All salary and other compensation payable to the Executive shall be subject to applicable taxes, and Capital One may withhold from any amounts payable to the Executive hereunder all federal, state, local or other taxes that it may reasonably determine are required or advisable to be withheld pursuant to any applicable law or regulation.

5. Termination of Employment. The Employment Period and the employment of the Executive by the Company pursuant to this Agreement shall terminate on the day any of the following occur (the “Termination Date”):

5.1 By the Company. At the election of the Company, for any reason, immediately upon written notice to the Executive.

5.2 By the Executive. At the election of the Executive, for any reason, immediately upon written notice to the Company.

5.3 Death or Disability. Upon the Executive’s death or Disability (as determined under the Company’s Employee Welfare Benefits Plan).

 

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6. Payments in Connection with Termination of Employment. Following the Termination Date, if any, the Company’s only obligation shall be to pay to the Executive the compensation and benefits otherwise payable to the Executive under Section 4 earned or accrued through the Termination Date, or to which the Executive is otherwise entitled as of the Termination Date under the terms of any other compensation or benefit plan, agreement or arrangement with the Company (written or unwritten) (each a “Benefit Plan”), including but not limited to the Benefit Plans set forth on Appendix A hereto, except as and to the extent (a) such Benefit Plans are specifically amended herein or from time to time pursuant to normal Company practices, including any amendment referred to in Section 7.1 hereof, and (b) limited by the standards required to be promulgated by Treasury to implement Section 111(b) of EESA and applicable to the Executive, as determined in the sole discretion of the Independent Directors.

7. Amendment of Certain Benefit Plans.

7.1 Acknowledgement. The Executive acknowledges that EESA may require the Company to amend certain of its Benefits Plans to ensure compliance therewith from time to time, and that the Company may require the Executive’s consent thereto.

7.2 Adjustment of Certain Benefit Calculations. The Executive acknowledges that certain provisions regarding payments, eligibility and/or limitations contained in the Benefit Plans were designed to confer benefits based on the compensation amounts applicable to the Executive prior to the Effective Date and that the Executive and the Company do not intend for this Agreement to substantially change the level of such benefits. Accordingly, the Executive and the Company agree that:

(a) Notional Compensation. To the extent that any Benefit Plan provides for any payment by the Company to the Executive or an account established for the benefit of the Executive, or any eligibility for or limitations on the Executive’s participation in such Benefit Plan, based upon the Executive’s base salary or total cash compensation during the Employment Period or after any Termination Date, then such payments, eligibility or limitations under each of the Benefit Plans listed on Appendix A hereto (other than the Capital One Financial Corporation 2002 Associate Stock Purchase Plan) attributable to (i) “salary” shall be based on [    %] of the Executive’s Salary (the “Notional Salary”) and (ii) “bonus” or “annual cash incentive” shall be based on [    %] of the Executive’s Salary (the “Notional Bonus”) (with “total annual cash compensation” or any similar term equal to the sum of the Notional Salary and the Notional Bonus).

(b) Associate Stock Purchase Plan. Notwithstanding any provision to the contrary set forth in the Capital One Financial Corporation 2002 Associate Stock Purchase Plan (the “ASPP”) and solely during the Employment Period, the Executive agrees that the Executive’s regular and special payroll deductions to purchase shares of the Company’s common stock under the ASPP may be limited to an annual maximum amount upon notice from the Company to the Executive from time to time, and that the Company will automatically cease such payroll deductions for the applicable calendar year if the Executive meets or exceeds such maximum amount.

 

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8. Miscellaneous.

8.1 Employment At-Will. The Company and Executive acknowledge and agree that each can terminate the employment relationship at any time, with or without prior notice, for any reason or for no reason. Executive has received no promise of continued employment or employment for any specific period of time except as set forth herein or pursuant to any agreement listed on Appendix A, and no employee of the Company, including without limitation the Company’s officers, has the authority to alter the at-will nature of the employment relationship except in a written employment contract signed by an authorized Company executive and by the Executive.

8.2 Notices. Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and delivered personally or sent by registered or certified mail, postage prepaid, addressed as follows (or if it is sent through any other method agreed upon by the parties):

If to the Employer:

Capital One Financial Corporation

1680 Capital One Drive

McLean, VA 22102-3491

Attention: General Counsel

                 Chief Human Resources Officer

If to the Executive: At the most recent address on file at the Company

or to such other address as any party hereto may designate by notice to the other, and shall be deemed to have been given upon receipt.

8.3 Entire Agreement. This Agreement constitutes the entire agreement between the parties relating to the subject matter of this Agreement, but, except as explicitly set forth in Section 6 and/or Section 7, does not amend, supersede or have any effect on any Benefit Plan in which the Executive participates or to which the Executive is a party as of the date hereof, including but not limited to the Benefit Plans set forth on Appendix A attached hereto.

8.4 Amendment. This Agreement may be amended or modified only by a written instrument signed by the party against whom or which enforcement of such waiver is sought.

8.5 Waivers. No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

8.6 Successors and Assigns. This Agreement is binding on and is for the benefit of the Executive and the Company and their respective successors, heirs, executors, administrators and other legal representatives. Neither this Agreement nor any right or obligation hereunder may be assigned by the Executive. The Executive specifically consents to the assignment of this Agreement, and all rights of the Company contained in the Agreement to any successor or assign of the Company.

 

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8.7 Governing Law. To ensure uniformity of the enforcement of this Agreement, and irrespective of the fact that either of the parties now is, or may become, a resident of a different state or country, this Agreement shall be governed by and construed in accordance with the laws of the headquarters of Capital One, the Commonwealth of Virginia, without regard to its principles of conflicts of law. Capital One and the Executive hereby consent and submit to the personal jurisdiction and venue of any state or federal court located in any city or county where Capital One has offices within the Commonwealth of Virginia for resolution of any and all claims, causes of action or disputes arising out of or related to this Agreement.

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

8.9 Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement.

8.10 Section 409A Compliance.

(a) The parties agree that this Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder (“Section 409A”) or an exemption from Section 409A. The Company shall undertake to administer, interpret, and construe this Agreement in a manner that does not result in the imposition on the Executive of any additional tax, penalty, or interest under Section 409A. Each payment under this Agreement shall be treated as a separate payment for purposes of Section 409A.

(b) With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A of the Code, all such payments shall be made on or before the last day of calendar year following the calendar year in which the expense occurred.

8.11 Severability. In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. If any provision of this Agreement or portion thereof is found by a Court of competent jurisdiction or other tribunal to be so broad so as to be unenforceable, such provision or portion thereof shall be interpreted to be only so broad as is enforceable.

8.12 Remedies. In the event a court or arbitration panel with final jurisdiction determines that the Company committed a breach of this Agreement entitling the Executive to an award of monetary damages, the Company agrees to indemnify the Executive for the Executive’s reasonable and appropriate legal fees incurred in connection with such court or arbitration proceedings.

[signature page follows]

 

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THE EXECUTIVE ACKNOWLEDGES THAT THE EXECUTIVE HAS CAREFULLY READ

THIS AGREEMENT AND UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS

IN THIS AGREEMENT.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above.

 

CAPITAL ONE FINANCIAL CORPORATION

By:

 

 

 

Richard D. Fairbank

Chairman and Chief Executive Officer

 

[EXECUTIVE]

 

 

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Appendix A

Benefit Plans

 

 

 

 

EX-10.1 2 dex101.htm FORM OF CHANGE OF CONTROL EMPLOYMENT AGREEMENT

Exhibit 10.1

CHANGE OF CONTROL EMPLOYMENT AGREEMENT

CHANGE OF CONTROL EMPLOYMENT AGREEMENT, dated as of the [        ] day of [                    ], [                    ] (this “Agreement”), by and between CAPITAL ONE FINANCIAL CORPORATION, a Delaware corporation (the “Company”), and [                    ] (the “Executive”).

WHEREAS, the Board of Directors of the Company (the “Board”), has determined that it is in the best interests of the Company and its stockholders 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 herein). 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 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 that ensure that the compensation and benefits expectations of the Executive will be satisfied and that provide the Executive with compensation and benefits arrangements that 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:

Section 1. Certain Definitions. (a) “Effective Date” means the first date during the Change of Control Period (as defined herein) on which a Change of Control occurs. Notwithstanding anything in this Agreement to the contrary, if the Executive’s employment with the Company is terminated within the 12 months prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment was (i) at the request of a third party that has taken steps reasonably calculated to effect such Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control (such a termination of employment, an “Anticipatory Termination”) and if such Change of Control is consummated, then for all purposes of this Agreement, “Effective Date” means the date immediately prior to the date of such termination of employment.

(b) “Change of Control Period” means the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that, commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof, the “Renewal Date”), unless previously terminated, 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.

(c) “Affiliated Company” means any company controlled by, controlling or under common control with the Company.

(d) “Change of Control” means:

(1) Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)


becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section 1(d), the following acquisitions of Outstanding Company Common Stock or Outstanding Company Voting Securities shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliated Company or (iv) any acquisition pursuant to a transaction that complies with Sections 1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C);

(2) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, 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 was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

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

 

 

 

 

 

 

Capital One Confidential

 

2

  

 


(4) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

Section 2. Employment Period. The Company hereby agrees to continue the Executive in its employ, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the second anniversary of the Effective Date (the “Employment Period”). The Employment Period shall terminate upon the Executive’s termination of employment for any reason.

Section 3. Terms of Employment. (aPosition and Duties. (1) During the Employment Period, (A) the Executive’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Effective Date, (B) the Executive’s services shall be performed at the office where the Executive was employed immediately preceding the Effective Date or at any other location less than 35 miles from such office, and (C) the Executive shall not be required to travel on Company business to a substantially greater extent than required during the 120 day period immediately prior to the Effective Date.

(2) During the Employment Period, and excluding any periods of vacation 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. (1) Base Salary. During the Employment Period, the Executive shall receive an annual base salary (the “Annual Base Salary”) at an annual rate at least equal to 12 times the highest monthly base salary paid or payable, including any base salary that has been earned but deferred, to the Executive by the Company and the Affiliated Companies in respect of the 12-month period immediately preceding the month in which the Effective Date occurs. The Annual Base Salary shall be paid at such intervals as the Company pays executive salaries generally. During the Employment Period, the Annual Base Salary shall be reviewed at least annually, beginning no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date. Any increase in the Annual Base Salary

 

 

 

 

 

 

Capital One Confidential

 

3

  

 


shall not serve to limit or reduce any other obligation to the Executive under this Agreement. The Annual Base Salary shall not be reduced after any such increase and the term “Annual Base Salary” shall refer to the Annual Base Salary as so increased.

(2) Annual Bonus. In addition to the Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the “Annual Bonus”) in cash at least equal to the sum of the Executive’s target award under the Company’s Executive Annual Cash Incentive Plan or any similar or comparable bonus plan or a successor plan thereto, in each case for the Company’s fiscal year in which the Effective Date occurs (or, if no such target awards have been established under any such plans, the midpoint between the high and low bonuses payable to the Executive under such plans), provided, however, that any such targets or midpoints, as the case may be, shall not be less than such targets or midpoints under such plans for the fiscal year immediately prior to the year in which the Effective Date occurs (the “Recent Annual Bonus”). Each such Annual Bonus shall be paid no later than two and a half months after the end of the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus pursuant to an arrangement that meets the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

(3) Long-Term Cash and Equity Incentives, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all long-term cash incentive, equity incentive, savings and retirement plans, practices, policies, and programs applicable generally to other peer executives of the Company and the Affiliated Companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and the Affiliated Companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and the Affiliated Companies.

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

 

 

 

 

 

 

Capital One Confidential

 

4

  

 


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

(6) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, if applicable, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and the Affiliated Companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

(7) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and the Affiliated Companies at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

(8) Vacation and Other Paid Leave. During the Employment 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 the Affiliated Companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Companies.

Section 4. Termination of Employment. (a) Death or Disability. The Executive’s employment shall terminate automatically if the Executive dies 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”), it may give to the Executive written notice in accordance with Section 12(b) 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. “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 that 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 unreasonably withheld).

 

 

 

 

 

 

Capital One Confidential

 

5

  

 


(b) Cause. The Company may terminate the Executive’s employment during the Employment Period with or without Cause. “Cause” means:

(1) the willful and continued failure of the Executive to perform substantially the Executive’s duties (as contemplated by Section 3(a)(1)(A)) with the Company or any Affiliated Company (other than any such failure resulting from incapacity due to physical or mental illness or following the Executive’s delivery of a Notice of Termination for Good Reason), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company that specifically identifies the manner in which the Board or the Chief Executive Officer of the Company believes that the Executive has not substantially performed the Executive’s duties, or

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

For purposes of this Section 4(b), no act, or failure to act, on the part of the Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon (A) authority given pursuant to a resolution duly adopted by the Board, or if the Company is not the ultimate parent corporation of the Affiliated Companies and is not publicly-traded, the board of directors of the ultimate parent of the Company (the “Applicable Board”), (B) the instructions of the Chief Executive Officer of the Company (unless the Executive is the Chief Executive Officer at the time of any such instruction) or (C) the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Applicable Board (excluding the Executive, if the Executive is a member of the Applicable Board) at a meeting of the Applicable Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel for the Executive, to be heard before the Applicable Board), finding that, in the good faith opinion of the Applicable Board, the Executive is guilty of the conduct described in Section 4(b)(1) or 4(b)(2), and specifying the particulars thereof in detail.

(c) Good Reason. The Executive’s employment may be terminated during the Employment Period by the Executive for Good Reason or by the Executive voluntarily without Good Reason. “Good Reason” means:

(1) 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 3(a), or any action by the Company that 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 that is remedied by the Company promptly after receipt of notice thereof given by the Executive;

 

 

 

 

 

 

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(2) any failure by the Company to comply with any of the provisions of Section 3(b), other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by the Executive;

(3) the Company’s requiring the Executive (i) to be based at any office or location other than as provided in Section 3(a)(1)(B) of this Agreement or (ii) to travel on Company business to a substantially greater extent than required during the 120-day period immediately prior to the Effective Date;

(4) any other action or inaction that constitutes a material breach by the Company of this Agreement; or

(5) any failure by the Company to comply with and satisfy Section 10(c).

For purposes of this Section 4(c) of this Agreement, any good faith determination of Good Reason made by the Executive shall be conclusive. The Executive’s mental or physical incapacity following the occurrence of an event described above in clauses (1) through (5) shall not affect the Executive’s ability to terminate employment for Good Reason.

(d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b). “Notice of Termination” means a written notice that (1) indicates the specific termination provision in this Agreement relied upon, (2) 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 (3) if the Date of Termination (as defined herein) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination shall be not more than 30 days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s respective rights hereunder.

(e) Date of Termination. Date of Termination” means (1) if the Executive’s employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or such later date specified in the Notice of Termination, as the case may be, (2) if the Executive’s employment is terminated by the Company other than for Cause or Disability, the date on which the Company notifies the Executive of such termination, (3) if the Executive resigns without Good Reason, the date on which the Executive notifies the Company of such termination, and (4) if the Executive’s employment is terminated by reason of death or Disability, the date of death of the Executive or the Disability Effective Date, as the case may be. The Company and the Executive shall take all steps necessary (including with regard to any post-termination services by the Executive) to ensure that any termination described in this Section 4 constitutes a “separation from service” within the meaning of Section 409A of the Code, and notwithstanding anything contained herein to the contrary, the date on which such separation from service takes place shall be the “Date of Termination.”

 

 

 

 

 

 

Capital One Confidential

 

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Section 5. Obligations of the Company upon Termination. (a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, the Company terminates the Executive’s employment other than for Cause, death or Disability or the Executive terminates employment for Good Reason:

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

(A) the sum of (i) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid or otherwise deferred by the Executive, (ii) any accrued vacation pay to the extent not theretofore paid, (iii) any annual bonus earned (and not otherwise deferred) by the Executive for the most recently completed fiscal year prior to the Date of Termination to the extent not theretofore paid (the sum of the amounts described in subclauses (i), (ii) and (iii), the “Accrued Obligations”) and (iv) the product of (x) the higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or payable, including any bonus or portion thereof that has been earned but deferred (and annualized for any fiscal year consisting of less than 12 full months or during which the Executive was employed for less than 12 full months), for the most recently completed fiscal year, if any (such higher amount, 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 (the “Pro Rata Bonus”); and

(B) the amount equal to the product of (i) two and one-half and (ii) the sum of (x) the Executive’s Annual Base Salary and (y) the Highest Annual Bonus; and

(C) an amount equal to the sum of the employer contributions under the Company or its Affiliated Company’s (as applicable) qualified defined contribution plans and any excess or supplemental defined contribution plans in which the Executive participates as of the Date of Termination (or, if more favorable to the Executive, the plans as in effect immediately prior to the Effective Date) that the Executive would receive if the Executive’s employment continued for two and one-half years after the Date of Termination, assuming for this purpose that (i) the Executive’s benefits under such plans are fully vested, (ii) the Executive’s compensation in each of the two and one-half years is that required by Sections 3(b)(1) and 3(b)(2), (iii) the rate of any such employer contribution is equal to the maximum rate provided under the terms of the applicable plans for the year in which the Date of Termination occurs (or, if more favorable to the Executive, or in the event that as of the Date of Termination the rate of any such contribution for such year is not determinable, the rate of contribution under the plans for the plan year ending immediately prior to the Effective Date), and (iv) to the extent that the Company’s contributions are determined based on the contributions or deferrals of the Executive, that the Executive’s contribution or deferral elections, as appropriate, are those in effect immediately prior to the Date of Termination; and

 

 

 

 

 

 

Capital One Confidential

 

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(D) an amount equal to the employer contributions under the Company or its Affiliated Company’s (as applicable) qualified defined contribution plans in which the Executive participates or is otherwise being credited with service for purposes of vesting as of the Date of Termination that are forfeited by the Executive as of the Date of Termination but that would have vested under such plans if the Executive’s employment continued for two and one-half years after the Date of Termination; and

(E) the amount equal to the product of (i) the sum of the Company’s or any of its Affiliated Company’s (as applicable) employer contributions under the Company’s health care and life insurance plans in which the Executive actively participates as of the Date of Termination (or, if more favorable to the Executive, the plans as in effect immediately prior to the Effective Date), with such total amount increased by 9.1% for projected cost increases during the two and one-half year period following the Date of Termination, and (ii) two and one-half, plus an additional amount equal to the income and employment taxes on such amount so that after the payment of all taxes on such payment the Executive retains an amount equal to the amount determined under this Section 5(a)(1)(E); and

(2) for purposes of determining the Executive’s vested status or percentage, as applicable, under any supplemental or excess defined contribution plan maintained by the Company or its Affiliated Companies in which the Executive participates or is otherwise being credited with service for purposes of vesting as of the Date of Termination, the Executive shall be credited with two and one-half years of additional service credit from the Date of Termination; and

(3) the Company shall take such actions as are necessary to cause the Executive and/or the Executive’s family to continue to be eligible to participate in the Company’s health care and life insurance benefit plans that the Executive would be eligible to participate in if the Executive continued as an active employee two and one-half years after the Executive’s Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy (the “Benefit Continuation Period”), with the Executive to pay the full cost of premiums for such participation at the rate applicable to active employees of the Company, to the extent the Executive elects in writing to continue such coverage within 60 days after the Date of Termination. For purposes of determining eligibility (but not the time of commencement of benefits or eligibility for any employer premium subsidy) of the Executive for access to retiree welfare benefits pursuant to the retiree welfare benefit plans of the Company as in effect immediately prior to the Effective Date (or, if more favorable to the Executive, the plans as in effect at the end of the Benefit Continuation Period) (the “Retiree Coverage”), the Executive shall be considered to have remained employed until the end of the Benefit Continuation Period and to have retired on the last day of such period, and the Company shall take such actions as are necessary to cause the Executive to be eligible to commence participating in the applicable retiree welfare benefit plans as of the applicable benefit commencement date. To the extent the Executive is not eligible for Retiree Coverage at the end of the Benefit Continuation Period (after taking into account the immediately preceding sentence), following the Benefit Continuation Period, the Executive shall be

 

 

 

 

 

 

Capital One Confidential

 

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eligible to elect continued health coverage as provided under Section 4980B of the Code or other applicable law (“COBRA Coverage”), as if the Executive’s employment with the Company had terminated as of the end of such period, and the Company shall take such actions as are necessary to cause such COBRA Coverage not to be offset by the provision of benefits under this Section 5(a)(3) and to cause the period of COBRA Coverage to commence at the end of the Benefit Continuation Period; and

(4) the Company shall, at its sole expense as incurred, provide the Executive with outplacement services the scope and provider of which shall be selected by the Executive in the Executive’s sole discretion, provided that the cost of such outplacement shall not exceed $30,000; and provided, further, that such outplacement benefits shall end not later than the last day of the second calendar year that begins after the Date of Termination; and

(5) except as otherwise set forth in the last sentence of Section 6, to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any Other Benefits (as defined in Section 6) in accordance with the terms of the underlying plans or agreements.

Notwithstanding the foregoing provisions of this Section 5(a)(1) and except as otherwise provided in Section 12(g) or Section 12(h), in the event that the Executive is a “specified employee” within the meaning of Section 409A of the Code (as determined in accordance with the methodology established by the Company as in effect on the Date of Termination) (a “Specified Employee”), amounts that would otherwise be payable and benefits that would otherwise be provided under Section 5(a)(1) during the six-month period immediately following the Date of Termination (other than the Accrued Obligations) shall instead be paid, with interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code (“Interest”), or provided on the first business day after the date that is six months following the Executive’s “separation from service” within the meaning of Section 409A of the Code (the “Delayed Payment Date”).

(b) Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, the Company shall provide the Executive’s estate or beneficiaries with (i) the Accrued Obligations, (ii) the Pro Rata Bonus, and (iii) the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement. The Accrued Obligations and the Pro Rata Bonus shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of the Other Benefits, the term “Other Benefits” as utilized in this Section 5(b) shall include, without limitation, and the Executive’s estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and the Affiliated Companies to the estates and beneficiaries of peer executives of the Company and the Affiliated Companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive’s estate and/or the Executive’s beneficiaries, as in effect on the date of the Executive’s death with respect to other peer executives of the Company and the Affiliated Companies and their beneficiaries.

 

 

 

 

 

 

Capital One Confidential

 

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(c) Disability. If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, the Company shall provide the Executive with (i) the Accrued Obligations, (ii) the Pro Rata Bonus, and (iii) the timely payment or delivery of the Other Benefits in accordance with the terms of the underlying plans or agreements, and shall have no other severance obligations under this Agreement. The Accrued Obligations and the Pro Rata Bonus shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination, provided, that in the event that the Executive is a Specified Employee, the Pro Rata Bonus shall be paid, with Interest, to the Executive on the Delayed Payment Date. With respect to the provision of the Other Benefits, the term “Other Benefits” as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and the Affiliated Companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect at any time thereafter generally with respect to other peer executives of the Company and the Affiliated Companies and their families.

(d) Cause; Other Than for Good Reason. If the Executive’s employment is terminated for Cause during the Employment Period, the Company shall provide the Executive with the Accrued Obligations and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, the Company shall provide to the Executive the Accrued Obligations and the Pro Rata Bonus and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement. In such case, all the Accrued Obligations and the Pro Rata Bonus shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination, provided, that in the event that the Executive is a Specified Employee, the Pro Rata Bonus shall be paid, with Interest, to the Executive on the Delayed Payment Date.

Section 6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or the Affiliated Companies and for which the Executive may qualify, nor, subject to Section 9(a)(2) and Section 12(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any other contract or agreement with the Company or the Affiliated Companies. Amounts that are vested benefits or that the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any other contract or agreement with the Company or the Affiliated Companies at or subsequent to the Date of Termination (“Other Benefits”) shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement. Without limiting the generality of the foregoing, the Executive’s resignation under this Agreement with or without Good Reason, shall in no way affect the Executive’s ability to terminate employment by reason of the Executive’s “retirement” under any compensation and benefits plans, programs or arrangements of the Company or the Affiliated Companies, including without limitation any retirement or pension plans or arrangements or to be eligible to receive benefits under any compensation or benefit plans, programs or arrangements of the Company or the Affiliated Companies, including without limitation any retirement or pension plan or arrangement of the Company

 

 

 

 

 

 

Capital One Confidential

 

11

  

 


or the Affiliated Companies or substitute plans adopted by the Company or its successors, and any termination which otherwise qualifies as Good Reason shall be treated as such even if it is also a “retirement” for purposes of any such plan. Notwithstanding the foregoing, if the Executive receives payments and benefits pursuant to Section 5(a) of this Agreement, the Executive shall not be entitled to any severance pay or benefits under any severance plan, program or policy of the Company and the Affiliated Companies, unless otherwise specifically provided therein in a specific reference to this Agreement, or to any payments or benefits under any Intellectual Property Protection Agreement between the Executive and the Company or one of its Affiliated Companies (the “IPPA”) that is in effect as of immediately prior to the Effective Date.

Section 7. Full Settlement; Legal Fees. 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 that the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay as incurred (within 10 days following the Company’s receipt of an invoice from the Executive), at any time from the Effective Date of this Agreement through the Executive’s remaining lifetime (or, if longer, through the 20th anniversary of the Effective Date) to the full extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus, in each case, Interest. In order to comply with Section 409A of the Code, in no event shall the payments by the Company under this Section 7 be made later than the end of the calendar year next following the calendar year in which such fees and expenses were incurred, provided, that the Executive shall have submitted an invoice for such fees and expenses at least 10 days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred. The amount of such legal fees and expenses that the Company is obligated to pay in any given calendar year shall not affect the legal fees and expenses that the Company is obligated to pay in any other calendar year, and the Executive’s right to have the Company pay such legal fees and expenses may not be liquidated or exchanged for any other benefit. Notwithstanding anything contained herein to the contrary, in no event shall the Executive be entitled to the payment of legal fees under this Section 7 in connection with an enforcement action by the Company of the Executive’s obligations under the IPPA (as modified by Section 9(a) of this Agreement).

Section 8. Certain Additional Payments by the Company.

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, but excluding any income taxes and penalties imposed pursuant to Section

 

 

 

 

 

 

Capital One Confidential

 

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409A of the Code, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 8(a), if it shall be determined that the Executive is entitled to the Gross-Up Payment, but that the Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to the Executive and the amounts payable under this Agreement shall be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing the payments and benefits under the following sections in the following order and only to the extent necessary: (i) Section 5(a)(4), (ii) Section 5(a)(1)(B), (iii) Section 5(a)(1)(C), (iv) Section 5(a)(1)(D), (v) Section 5(a)(1)(E); (vi) Section 5(a)(1)(A)(iv), (vii) Section 5(a)(2) and (viii) Section 5(a)(3). For purposes of reducing the Payments to the Safe Harbor Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amount payable under this Agreement would not result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable under this Agreement shall be reduced pursuant to this Section 8(a). The Company’s obligation to make Gross-Up Payments under this Section 8 shall not be conditioned upon the Executive’s termination of employment.

(b) Subject to the provisions of Section 8(c), all determinations required to be made under this Section 8, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Deloitte & Touche or such other nationally recognized certified public accounting firm as may be designated by the Executive (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Company should have been made (the “Underpayment”), consistent with the calculations required to be made hereunder. An Underpayment can result from a claim by the Internal Revenue Service or from a determination by the Accounting Firm. In the event the Company exhausts its remedies pursuant to Section 8(c) and the Executive thereafter is required to make a payment of any Excise Tax, or in the event the Accounting Firm otherwise determines that an Underpayment has occurred, 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.

(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 10 business days after the Executive is informed in writing of such claim. The Executive 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

 

 

 

 

 

 

Capital One Confidential

 

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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 the Company desires to contest such claim, the Executive shall:

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

(2) 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,

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

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

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 8(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either pay the tax claimed to the appropriate taxing authority on behalf of the Executive and direct the Executive to sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that, if the Company pays such claim and directs the Executive to sue for a refund, the Company shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such payment or with respect to any imputed income in connection with such payment; and provided, further, 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 the 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 a Gross-Up Payment or payment by the Company of an amount on the Executive’s behalf pursuant to Section 8(c), the Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 8(c), if applicable) promptly pay to the Company the

 

 

 

 

 

 

Capital One Confidential

 

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amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after payment by the Company of an amount on the Executive’s behalf pursuant to Section 8(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 the amount previously paid shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

(e) Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm’s determination; provided that, the Gross-Up Payment shall in all events be paid no later than the end of the Executive’s taxable year next following the Executive’s taxable year in which the Excise Tax (and any income or other related taxes or interest or penalties thereon) on a Payment are remitted to the Internal Revenue Service or any other applicable taxing authority or, in the case of amounts relating to a claim described in Section 8(c) that does not result in the remittance of any federal, state, local and foreign income, excise, social security and other taxes, the calendar year in which the claim is finally settled or otherwise resolved. Notwithstanding any other provision of this Section 8, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of any Gross-Up Payment, and the Executive hereby consents to such withholding.

(f) Definitions. The following terms shall have the following meanings for purposes of this Section 8.

(i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(ii) “Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

(iii) A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

(iv) The “Safe Harbor Amount” means 2.99 times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.

Section 9. Restrictive Covenants. (a) If, as of immediately prior to the Effective Date, the Executive is a party to an IPPA, the restrictive covenants set forth in the IPPA and the enforcement provisions thereof shall continue in full force and effect as if set forth herein in their entirety and Section 9(b) shall be inapplicable to the Executive; provided, however, that, notwithstanding anything to the contrary contained herein or in the IPPA, following the Effective Date, (1) the Non-Competition Period and the period of application of the No Solicitation of

 

 

 

 

 

 

Capital One Confidential

 

15

  

 


Employees covenant under the IPPA shall be limited to one year from the Executive’s Date of Termination (or such shorter period as shall apply consistent with the Company’s ability to waive the non-competition covenant pursuant to the IPPA), (2) the Executive shall not be entitled to receive any payments or benefits under the IPPA upon a termination of employment for any reason, and (3) in no event shall an asserted violation of the IPPA constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

(b) If the Executive is not party to an IPPA as of immediately prior to the Effective Date, following the Effective Date, 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 the Affiliated Companies, and their respective businesses, which information, knowledge or data shall have been obtained by the Executive during the Executive’s employment by the Company or the Affiliated Companies and which information, knowledge or data 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 or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those persons designated by the Company. In no event shall an asserted violation of this Section 9(b) constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

Section 10. 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 other 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. Except as provided in Section 10(c), without the prior written consent of the Executive this Agreement shall not be assignable by the Company.

(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. “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

Section 11. 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. Prior to the Effective Date, the Company may establish a trust pursuant to a trust agreement and may 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; provided, however, that the trust shall not be funded if the funding thereof would result in taxable income to the Executive by reason of Section 409A(b) of the Code; and provided, further, that in no event shall any trust assets at any time be located or transferred outside of the United States, within the meaning of Section 409A(b) of the Code. Any fees and expenses of the trustee shall be paid by the Company.

 

 

 

 

 

 

Capital One Confidential

 

16

  

 


Section 12. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified other 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:

At the most recent address on file at the Company.

if to the Company:

Capital One Financial Corporation

1680 Capital One Drive

McLean, Virginia 22102

Attention: General Counsel

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

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

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

(e) The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f) The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is “at will” and, subject to Section 1(a), prior to the Effective Date, the Executive’s employment may be terminated by either the Executive or

 

 

 

 

 

 

Capital One Confidential

 

17

  

 


the Company at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement. From and after the date hereof, this Agreement shall supersede the Amended and Restated Change of Control Employment Agreement between the Company and the Executive. From and after the Effective Date, except as specifically provided herein including Section 9(a) of this Agreement with respect to the IPPA (as modified by Section 9(a)), this Agreement shall supersede any other severance or separation pay agreement or employment agreement containing severance provisions between the Executive and the Company or its Affiliated Companies.

(g) Notwithstanding any provision in this Agreement to the contrary, in the event of an Anticipatory Termination, any payments that are deferred compensation within the meaning of Section 409A of the Code that the Company shall be required to pay pursuant to Section 5(a)(1) of this Agreement shall be paid as follows: (i) if such Change of Control is a “change in control event” within the meaning of Section 409A of the Code, (A) except as provided in clause (B) of this Section 12(g)(i), on the date of such Change of Control, or (B) if the Executive is a Specified Employee and the Delayed Payment Date is later than the Change of Control, on the Delayed Payment Date, and (ii) if such Change of Control is not a “change in the ownership or effective control” of the Company or “a change in the ownership of a substantial portion of the assets” of the Company (each as defined in Section 409A of the Code and the regulations thereunder as in effect from time to time), (A) except as provided in clause (B) of this Section 12(g)(ii), on the first business day following the 12-month anniversary of the date of such Anticipatory Termination (the “Payment Date”), or (B) if the Executive is a Specified Employee and the Delayed Payment Date is later than the date of such Change of Control, on the Delayed Payment Date. In the event of an Anticipatory Termination, any payments or benefits that are not deferred compensation within the meaning of Section 409A of the Code that the Company shall be required to pay or provide pursuant to Section 5(a) of this Agreement shall be paid or shall commence being provided on the date of the Change of Control. Interest with respect to the period, if any, from the date of the Change of Control until the actual date of payment shall be paid on any delayed cash amounts.

(h) Notwithstanding Section 5(a)(1) of this Agreement and if the Executive is party to an IPPA, in the event the Change of Control is not a “change in the ownership or effective control” of the Company or “a change in the ownership of a substantial portion of the assets” of the Company (as defined in Section 12(g) above), the payments under Section 5(a)(1)(B) shall be paid as follows: (1) the amount equal to the sum of (A) one times the Executive’s Annual Base Salary and (B) the amount of the employer portion of health care premiums plus the 2% administrative fee (as provided for under the IPPA) (the “Installment Amount”) shall be paid in installments during the one-year period following the Date of Termination on the same payment schedule as payments under the IPPA are normally made, and (2) the amount determined under Section 5(a)(1)(B) minus the Installment Amount shall be paid in a lump sum, in each case, subject to delayed payment and with Interest until the Delayed Payment Date if the Executive is a Specified Employee.

(i) Within the time period permitted by the applicable Treasury Regulations, the Company may, in consultation with the Executive, modify the Agreement, in the least restrictive manner necessary and without any diminution in the value of the payments to the Executive, in order to cause the provisions of the Agreement to comply with the requirements of Section 409A of the Code, so as to avoid the imposition of taxes and penalties on the Executive pursuant to Section 409A of the Code.

 

 

 

 

 

 

Capital One Confidential

 

18

  

 


IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from the Board, 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.

 

 

 

 

 

[Executive]

 

CAPITAL ONE FINANCIAL CORPORATION

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

Capital One Confidential

 

19

  

 

 

 

 

 

EX-10.4 9 d258810dex104.htm EXHIBIT 10.4

Exhibit 10.4

Capital One Financial Corporation

Executive Severance Plan

Amended and Restated, effective July 16, 2011

Section I. In General

Capital One Financial Corp., on behalf of itself and its wholly-owned subsidiaries (collectively, “Capital One” or the “Company”), hereby amends and restates the plan document for the Capital One Financial Corporation Executive Severance Plan, effective as of July 16, 2011, as it may be amended from time to time (the “Plan”), to provide eligible associates who have been involuntarily terminated due to job elimination or poor performance as determined by the Plan Administrator in its discretion, with a reasonable amount of financial security so as to allow a smooth transition to other employment. The group of eligible associates covered by the Plan constitutes a select group of management or highly compensated employees.

The Plan as set forth herein applies to all associates whose termination of employment occurs on or after July 16, 2011. For any associate who is terminated on or before July 15, 2011, benefits under the Plan will be based on the terms of the Plan in effect at the time of the associate’s termination, as applicable. The severance benefit that applies to an eligible associate will depend upon the associate’s job level as set forth below.

In order to receive any benefits under the Plan, an associate must also execute and not revoke a legally binding general release of claims in a form acceptable to the Plan Administrator (a “Release”) within the period designated in the Release. The Release will not be deemed to affect legal claims or rights that cannot under any circumstances be validly waived or released under law, such as a claim for vested benefits under a qualified retirement plan.

Notwithstanding the above, any associate otherwise eligible under the Plan who has not signed a non-solicitation of employee agreement with Capital One, as determined by the Plan Administrator, restricting such associate from soliciting other associates for a two year period following such associate’s separation from service, shall be required to execute a non-solicitation of employee covenant in a form acceptable to Capital One as part of the Release.

Notwithstanding the above, the Plan Administrator (or its designee) may in its sole and unfettered discretion designate an associate as severance-eligible if the associate is otherwise qualified under the Plan, but is involuntarily terminated for reasons other than job elimination or poor performance. Such exception shall not be made to an associate terminated for cause, as determined by the Plan Administrator. Further, no such exception or designation shall be binding as to any other associate not so designated, nor shall it purport to amend the Plan or otherwise create a separate right to eligibility under the Plan. In the event the Plan Administrator designates someone as eligible under the Plan for reasons other than job elimination or poor performance, the Plan Administrator may also determine what benefit(s) shall be provided to such associate.


Section II. Eligibility

Notwithstanding the above, to be eligible for benefits under the Plan, an associate must meet all of the following eligibility requirements (and not be ineligible for benefits as provided below):

 

 

Be a full-time associate on the U.S. payroll designated by the Plan Administrator as terminated due to job elimination or poor performance, or be a part-time associate on the U.S. payroll designated by the Plan Administrator as terminated due to job elimination.

 

 

 

Notwithstanding the foregoing, if an associate who is designated as part-time at the time of his notification of separation was designated as full time (defined as “Standard Hours” of 33 or more hours per week) for more than 50% of the 12-month period immediately prior to the separation date, the associate will be eligible to receive benefits whether he is terminated due to job elimination or poor performance. In such case, all benefits will be paid based on the base pay the associate received on the last day of the period in which he was classified as a full-time associate, but in no event later than the base pay in effect on July 15, 2011. For associates hired on or after July 16, 2011, base pay means the associate’s regular rate of base pay in effect upon date of hire, as determined by the Plan Administrator.

 

 

 

For purposes of this Plan, a part-time associate is defined as an associate whose “Standard Hours” in the Company’s system of record are 20 or greater, but less than 33 hours per week at the time the associate is notified of his separation. Standard Hours are the number of hours associates are scheduled to work each week, as maintained in Capital One’s system of record. Standard Hours are used to determine benefits eligibility and are maintained by managers in Capital One’s system of record. Standard Hours may not be reflective of actual hours worked in any given week.

 

 

 

To be eligible for benefits provided due to poor performance, an associate must have been employed by the Company for a period of 6 consecutive months immediately prior to his separation date.

 

 

The associate must be classified by the Company in one of the following internal job levels at the time of his termination of employment: Vice President (“VP”); Managing Vice President (“MVP”); Senior Vice President (“SVP”); Executive Vice President (“EVP”); or Executive Committee Member (“EC”). If an associate is classified in any other position, he is not eligible under the Plan.

 

 

Generally, the Plan Administrator must designate the associate as terminated by Capital One due to job elimination or poor performance. For these purposes, the Plan Administrator retains the discretion to determine whether severance benefits are payable in cases where jobs are being eliminated due to outsourcing, the sale of all or a portion of Capital One’s business or assets or another corporate transaction having similar effect.

 

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The associate must continue to work for Capital One and perform in a satisfactory manner until the associate’s services are no longer required.

 

 

The associate must return all Capital One property immediately upon termination of employment. Property includes, but is not limited to, confidential information, telephones, fax machines, personal computers, blackberries or similar technology, corporate credit and phone cards, all memoranda, notes, documents, business plans, customer lists, computer programs and any other records. This also includes any copies made or compiled by the associate or made available to the associate during his employment with Capital One.

An associate is not eligible for any Plan benefits if:

 

 

The associate is classified by Capital One as a part-time associate with Standard Hours in the Company’s system of record of less then 20 hours per week at the time of his termination, or is classified as a temporary worker (including, but not limited to, individuals engaged as contingent labor, contractors or other non-associate labor) as determined by the Plan Administrator.

 

 

The associate’s employment is terminated for Cause, as determined by the Plan Administrator in its discretion or for any other reason not deemed by the Plan Administrator to be eligible under the Plan. For purposes of this Plan, cause shall be defined as the willful and continued failure by the associate to perform substantially his duties with Capital One or misconduct, as determined by the Plan Administrator (including by way of example, violation of any Capital One rules, policy, or any law or regulation).

 

 

The associate voluntarily terminates employment with Capital One for any reason, including any claim of a “good reason termination” or “constructive termination” or any similar separation not designated by the Plan Administrator, in its discretion, as involuntary.

 

 

The associate is not legally eligible for employment with Capital One, as provided under any applicable law or regulation.

 

 

The associate declines reassignment to a comparable employment position as an employee of Capital One, or as otherwise determined by the Plan Administrator. The Plan Administrator will determine, in its discretion, whether an employment position within Capital One is comparable. The Plan Administrator may document, in writing, such comparability determinations, and may further adopt written guidelines for determining comparability. The Plan Administrator will apply such guidelines in a uniform and non-discriminatory manner with respect to similarly-situated individuals.

 

 

The associate is eligible for severance-type benefits under another severance plan or agreement sponsored by the Company.

An associate who meets the Plan’s eligibility requirements and meets all other conditions for the receipt of benefits under the Plan may be referred to hereinafter as a “participant”.

 

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Section III. Severance Benefits

 

 

A.

Severance Payment

A participant’s cash severance benefits (“Severance Payment”) will be determined as set forth in the applicable Appendix to the Plan.

Any Severance Payment payable to a participant shall be offset dollar-for-dollar by any amounts payable to the participant under any Intellectual Property Protection Agreement, Non-Competition Agreement, or similar agreement (collectively, “NCA”).

The Severance Payment shall be paid to the participant in a lump sum within 60 days of Capital One’s receipt of participant’s fully executed Release (but to the extent the payment is intended to be subject to the short-term deferral rule under Section 409A of the Internal Revenue Code of 1986, in no event later than March 15th of the year after the associate’s termination of employment occurs); provided, however, that if the NCA non-competition provisions are enforced by Capital One, one-half of the Severance Payments (but in no event more than the amount specified in Treasury Regulation section 1.409A-1(b)(9)(iii)(A) as of the participant’s termination of employment) shall be paid to the participant in a lump sum following the end of the non-competition period under the NCA (but in no event later than 30 days following the end of the non-competition period), and the balance shall be paid to the participant in a lump sum within 60 days following the participant’s termination of employment.

 

 

B.

Corporate Incentive Plan Annual Cash Bonus

If the associate is involuntarily terminated due to job elimination, and such termination occurs within the last three months of the performance period used to determine the associate’s Corporate Incentive Plan Annual Cash Bonus (“Annual Cash Bonus”), he will be eligible for a prorated Annual Cash Bonus based on the mid-point of the target bonus range. The Annual Cash Bonus will be prorated based on his period of employment in that performance period. If the associate is involuntarily terminated due to job elimination after the last day of the performance period but before the Annual Cash Bonus is paid, the associate will be paid his full Annual Cash Bonus. The amount of the Annual Cash Bonus will be based on the mid-point of the associate’s target bonus range, or if bonuses have been approved by the Board of Directors at the time of separation, the actual approved Annual Cash Bonus amount.

If the associate’s termination is for reasons other than job elimination, the associate will not receive an Annual Cash Bonus.

The amount (if any) payable pursuant to this paragraph shall be subject to the same Annual Cash Bonus corporate and Board of Director approval and adjustment process applicable to employees generally and will be paid at the time Annual Cash Bonuses are normally paid to associates, no later than March 15th of the calendar year following the year the Annual Cash Bonus is earned.

 

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C.

Outplacement services

Outplacement services may be provided to eligible associates. The Plan Administrator will determine what services will be offered and for how long they will be available.

 

 

D.

Subsidized COBRA Coverage Payment

Eligible associates can elect to continue their health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and receive subsidized coverage from Capital One pursuant to the terms set forth in Appendices A through E, as applicable.

In such case, Capital One will directly pay the COBRA administrator on the participant’s behalf an amount equal to the employer-paid health care coverage premium in effect at that time, plus a 2% administrative fee. The participant will remain responsible for the remainder of the COBRA premium. The participant’s COBRA coverage subsidy from Capital One will continue for the period set forth in the applicable Appendix. Participants on an NCA will receive the greater of the COBRA benefit provided under the NCA or the Plan, but not both.

 

 

E.

Executive Life Insurance

Executives covered under the Executive Life Insurance Program will continue to be provided term coverage (but not accidental death and dismemberment insurance) for 12 months following termination of employment at the same coverage level in effect immediately before termination.

Section IV. Plan Administration

Capital One has designated the Capital One Compensation Committee (the “Compensation Committee”) as the Plan Administrator, which is the named fiduciary of the Plan and has the discretionary power to administer the Plan. The Plan Administrator’s discretionary powers include, but are not limited to, the power to:

 

 

Make and enforce such rules and regulations as the Plan Administrator deems necessary or proper for the efficient administration of the Plan;

 

 

Make and approve any exceptions under the Plan, including but not limited to increasing or decreasing amounts payable under the Plan and granting benefits to associates who terminate for reasons other than job elimination or poor performance;

 

 

Interpret the Plan, to decide all questions concerning the Plan, including without limitation the right to remedy possible ambiguities, inconsistencies, or omissions, by general rule or particular decision, and to determine the eligibility of any person to participate in the Plan and the entitlement of any person to any benefits under the Plan; and

 

5


 

Appoint other persons to render it advice and assist it in administering the Plan and to designate other persons to carry out any of its responsibilities under the Plan.

Benefits shall be payable to a participant only if the Plan Administrator so determines in its discretion. Any interpretation, decision, or determination made by the Plan Administrator in good faith shall be final and binding on all persons claiming benefits under the Plan. The Plan Administrator may delegate all or any portion its duties hereunder to one or more individuals or committees and, to the extent of such delegation, any reference herein to the Plan Administrator shall include a reference to such individual or committee.

The Plan Administrator has designated the Chief Human Resource Officer the discretion to make and approve exceptions under the Plan for benefits provided to associates at the level of Executive Vice President and below.

Notwithstanding the above, the Capital One Board of Directors must approve all benefits payable under the Plan to members of the Executive Committee, including any exceptions provided under the Plan.

Section V. Claims Procedures

An individual who does not receive benefits to which he believes he is entitled under the Plan may file a written claim for such benefits with the Plan Administrator. The written claim should include the benefits being claimed and the reason(s) the claimant believes he is entitled to such benefits. The claimant may designate, in writing on such form as may be provided by the Plan Administrator or is otherwise acceptable to the Plan Administrator, an authorized representative to act on his behalf in pursuing the claim or a subsequent appeal. The claimant must exhaust his rights under these claims procedures before he may file suit to recover any benefits claimed.

Within 90 days of filing a claim, the claimant will receive written notice of the grant or denial of the claim. If special circumstances require an extension of time to consider the claim, the claimant will be notified in writing of the need for an extension prior to the expiration of the initial 90-day period. The notice of extension will explain the reasons for the extension and will indicate a date by which the Plan Administrator expects to make a decision. The extension may not exceed 90 days, for a total of 180 days from the date the claim was initially filed.

If the claim is being denied, the notice will explain the reason for the denial, cite the Plan provisions on which it is based, describe the procedure for appealing the decision, and explain the claimant’s right to file suit under section 502 of ERISA following denial of the claim on appeal. The notice also will describe any additional material or information necessary to demonstrate eligibility for the benefits requested.

Within 60 days of receiving a denial notice, the claimant may submit a written appeal to the Plan Administrator requesting a review of the denial. During this 60-day period, the claimant may also review and receive copies of relevant documents and may submit written issues, comments and additional information to the Plan Administrator. The Plan Administrator will consider all new information submitted by the claimant without regard to whether the information was submitted or considered during the initial claim.

 

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Within 60 days after the request for review is received, a decision on appeal will be made. If special circumstances require an extension of time to consider the appeal, the claimant will be notified in writing of the need for an extension prior to the expiration of the initial 60-day period. The notice of extension will explain the reasons for the extension and will indicate a date by which the Plan Administrator expects to make a decision. The extension may not exceed 60 days, for a total of 120 days from the date the appeal was initially filed. If the claim is being denied upon appeal, the claimant will receive a written decision, including the basis for the decision, references to the Plan provisions on which the decision is based, a statement that the claimant has a right to receive copies of all documents relevant to the claim, and an explanation of the claimant’s right to sue under section 502(a) of ERISA following the denial on appeal. To the extent permitted by law, the decision of the Plan Administrator on appeal is final and binding on all parties.

Notwithstanding the above, any claims or appeals brought by an Executive Committee member shall be reviewed and determined by the Board of Directors and not the Plan Administrator.

In no event may any legal or equitable action for benefits under the Plan be brought in a court of law or equity with respect to any claim for benefits more than one (1) year after the final denial of the appeal by the Plan Administrator (or, as applicable, the Board of Directors).

Section VI. Amendment and Termination

The Plan may be amended in whole or in part, prospectively or retroactively, at any time and from time to time, by action of the Compensation Committee. The Compensation Committee will effect any such amendment by adopting a resolution setting forth, or incorporating the specific terms of, the amendment or by approving the amendment itself. Notwithstanding the foregoing, no amendment to the Plan will apply to change the amount of any Severance Payment that begins before the amendment is adopted (or made effective, if later). The appropriate officers of Capital One may take all actions necessary or appropriate to implement any amendment to the Plan.

Capital One’s Human Resources Division (the “Human Resources Division”) has been authorized by the Compensation Committee to make technical and conforming amendments to the Plan and any other amendments that do not result in an annual cost to Capital One reasonably estimated by the Human Resources Division to be in excess of $500,000. The Human Resources Division will effect any such amendment by adopting the specific amendment.

Capital One has no obligation to maintain the Plan for any particular length of time, and reserves the right to discontinue or, by action of its Board of Directors, to terminate the Plan, partially or in its entirety, as of any date specified by the Board of Directors (or its delegate) by duly adopted written instrument.

Section VII. Miscellaneous

A. Compliance with Obligations

To the fullest extent permitted by applicable law, if the participant violates any provision of this Plan, any confidentiality, intellectual property, non-competition, non-solicitation, or

 

7


other covenant or agreement with Capital One (including, without limitation, the Non-Competition Agreement in any respect (or challenges the enforceability of any such covenant or agreement in any in any administrative proceeding, arbitration, or litigation)), fails to repay any amounts owed to Capital One (including, without limitation, overpayment of salary, bonus, vacation pay, severance benefits or personal expenditures on a Capital One credit card), or violates the terms of the Release, or it is subsequently determined that the participant’s employment could have been terminated for Cause (as determined in the Plan Administrator’s reasonable discretion), all benefits hereunder shall cease and, except as otherwise required by the Age Discrimination in Employment Act of 1967, as amended, the Plan shall be entitled to cease paying benefits, reduce benefits, and/or recover any benefits previously paid by remedies including, without limitation, the equitable remedy of constructive trust.

B. Impact of Other Benefits on Severance Benefits

If a participant will receive benefits pursuant to a disability certification under the Capital One’s disability benefit program as defined in its Summary Plan Description or pursuant to a Workers’ Compensation certification, such benefits shall have no impact on Severance Payment provided hereunder, and Severance Payment provided under this Plan shall have no impact on such disability or Worker’s Compensation benefits.

C. Interaction with WARN Act

This Plan is not intended to duplicate payments already required by the Worker Adjustment and Retraining Notification Act or any similar state or local law requiring prior notice of plant closing or mass layoff (collectively, “WARN”). Therefore, notwithstanding any of the above, benefits payable under the Plan will be reduced by any payments required to be provided to eligible associates pursuant to WARN, without regard to whether the associate asserts such rights. Continued payment of compensation for services performed during a notice period, however, will not count against any benefits payable under the Plan.

D. Taxation

Cash payments under this Plan are treated as wages for federal income tax purposes. Capital One makes appropriate arrangements to take deductions from Plan payments for withholding taxes. The associate is responsible for all taxes on Plan benefits to the extent that no taxes are withheld, irrespective of whether withholding is required.

Payments under this Plan are intended to be excluded from coverage under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). However, notwithstanding any provision of this Plan to the contrary, if, at the time of the participant’s termination of employment, he is a “specified employee” as defined in Section 409A of the Code, and one or more of the payments or benefits received or to be received by the participant pursuant to this Plan would constitute deferred compensation subject to Section 409A, such payment or benefit under this Plan shall be delayed until the earlier of (a) the date that is six (6) months following the participant’s termination of employment, or (b) the participant’s death. The provisions of this paragraph shall only apply to the extent required to avoid the participant’s incurrence of any penalty tax or interest under Section 409A of the Code or any regulations or Treasury guidance promulgated thereunder. In addition, if any provision of this Plan

 

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would cause the participant to incur any penalty tax or interest under Section 409A of the Code or any regulations or Treasury guidance promulgated thereunder, Capital One may reform such provision to maintain to the maximum extent practicable the original intent of the applicable provision without violating the provisions of Section 409A of the Code.

E. Re-employment with Capital One

In the event a participant is rehired as a Capital One associate between his separation date and the period of time used to calculate his Severance Payment (as defined in Appendices A through E, as applicable), the participant will be required to repay a pro-rated portion of the Severance Payment received as a condition of reemployment with Capital One. The amount of the repayment will be based on the number of days between the participant’s separation date and the date of reemployment (“Period of Separation”), and will be an amount equal to the difference between (i) the Severance Payment received; and (ii) that portion of the Severance Payment that is calculated based on the Period of Separation.

By way of example, if an associate received a Severance Payment equal to 12 months of his regular base pay, and is re-hired eight months after his separation date, as a condition of reemployment, the associate will be required to repay Capital One an amount equal to four months of his regular base pay, as defined in Appendices A through E.

Notwithstanding the above, if an associate receives payment under an NCA, only that portion of Severance Payment not offset by the NCA payment will be subject to the terms of this provision.

The Plan Administrator may, in its discretion, establish procedures regarding timing and method(s) of repayment, and may, in its discretion, make exceptions to any such procedures, as necessary or applicable.

F. Funding of the Plan

Associates do not pay for coverage under the Plan, and the benefits provided under the Plan are paid solely from Capital One’s general assets. Capital One is not required to maintain any fund or to segregate any amount for the benefit of any associate under the Plan, and no associate has any claim against, right to, or security or other interest in, any fund, account or asset of Capital One from which any Plan payment may be made.

G. Payments to Estates

If a participant dies before receiving all Severance Payment due under the Plan, any remaining payments are made to the participant’s estate.

H. Plan Document Governs

The extent of eligibility for Plan benefits is governed solely and in all respects by the terms of the Plan. The Plan Administrator has ultimate authority to interpret the Plan.

 

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I. Severability

If any Plan provision is held illegal or invalid for any reason, such illegality or invalidity does not affect remaining parts of the Plan, and the Plan is applied as if the illegal or invalid provision was never part of the Plan.

J. Gender

Whenever any words are used herein in the masculine, feminine or neuter gender, they shall be construed as though they were also used in another gender in all cases where they would so apply, and whenever any words are used herein in the singular or plural form, they shall be construed as though they were also used in the other form in all cases where they would so apply.

K. Overpayment or Wrongful Receipt

In the event of the overpayment to or wrongful receipt of any amounts by a participant pursuant to this Plan, the Plan shall be entitled to recovery of such funds by remedies including, without limitation, the equitable remedy of constructive trust.

L. Not an Employment Contract

Nothing in this Plan or any action taken with respect to it shall be construed as an employment contract or confer upon any person the right to continue employment with Capital One.

M. Plan Year

The records of the Plan shall be maintained on the basis of a 12-month period beginning on each January 1 and ending each December 31.

N. Governing Law

The Plan is construed, administered and regulated in accordance with the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, and to the extent not preempted thereby, in accordance with Virginia laws.

Adoption of the Plan

To record the adoption of the Amended and Restated Plan document, effective as of July 16, 2011, Capital One has caused this document to be signed by its duly authorized officer on the date set forth below.

 

CAPITAL ONE FINANCIAL CORPORATION

By:

 

/s/ Frederick C. Knowles

Title:

 

SVP, Enterprise Human Resources

Date:

 

July 14, 2011

 

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Appendix

Executive Committee (EC)*

The severance benefits for an EC member holding a President or “C” role title shall be the following amount or such lesser amount as determined by the Administrator:

 

 

 

Severance Payment in an amount up to 30% of the associate’s Target Total Compensation (“TTC”) as defined in the most recent Total Compensation Statement Capital One provided the associate prior to the associate’s termination; plus

 

 

 

Subsidized COBRA coverage for a period of 18 months; plus

 

 

 

If NCA Non-Competition Provisions are enforced, an amount up to 90% of the Severance Payment (“Release of Claims Payment”).

For purposes hereof, TTC with respect to a Performance Year shall mean the cash value of all target amounts designated as being part of the Executive’s annual compensation by the Company in the most recent Total Compensation Statement (or any similar document setting forth the Executive’s total annual compensation) for that Performance Year. TTC shall not include retention awards, spot bonus awards, sign-on bonuses, special equity awards, the value of Company provided benefits, pay associated with perquisites or relocation, and other bonuses and incentives not communicated as part of the Executive’s total target annual compensation as set forth in his Total Compensation Statement. Performance Year shall mean the 12-month period of time over which an Executive’s Target Total Compensation is calculated, as designated by the Company. At the discretion of the Plan Administrator, Severance Payments may also be deemed to include all or a portion of commissions and sales incentive pay.

Any Severance Payments shall be offset dollar-for-dollar by amounts payable to the participant under any applicable NCA. No Release of Claims Payment shall be offset by payments under an NCA.

 

*

Refers to internal job levels as determined by the Plan Administrator.

 

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