EXHIBIT 10.3

July 8, 2003

Mr. David M. Willey
1221 Towlston Road
Great Falls, VA 22066

Re: Letter of Agreement

Dear Dave:

This Letter of Agreement (“Agreement”) sets forth the continuing income support
and benefits that you will receive from Capital One Financial Corporation
(“Capital One”) and/or its affiliates as a result of your voluntary resignation
from employment with Capital One and its affiliates (the “Capital One Group”)
effective March 1, 2003 (the “Separation Date”). This document also outlines
other benefits, terms and obligations associated with your separation.

1.   Resignation of Duties. Pursuant to your letter dated March 1, 2003, you
voluntarily resigned as Capital One’s Chief Financial Officer and as a member of
the Board of Directors of Capital One Federal Savings Bank and Capital One Bank
and you hereby confirm your voluntary resignation, effective as of the
Separation Date, from all other positions, titles, duties, authorities and
responsibilities with, arising out of or relating to your employment with the
Capital One Group, including any directorships or any fiduciary positions in
which you were serving at the request of, or appointment by, the Capital One
Group, and agree to execute all additional documents and take such further steps
as may be required to effectuate such resignations.   2.   Intellectual Property
Protection Agreement. Except as modified herein, the Intellectual Property
Protection Agreement by and between you and Capital One, made April 29, 1999
(the “IPPA”), shall remain in full force and effect according to its terms
(including the non-competition covenant set forth in Section 3 of the IPPA (the
“Non-Competition Covenant”) and the non-solicitation and confidentiality
provisions set forth therein). You and Capital One agree that the
Non-Competition Period (as defined in Section 3(d) of the IPPA) and the period
of the non-solicitation provision provided for in Section 4 of the IPPA shall
each begin on your Separation Date and end on February 28, 2005 (the “IPPA
Period”) in accordance with the terms of the IPPA. Pursuant to Section 5 of the
IPPA, Capital One has not elected to waive any portion of the Non-Competition
Covenant. You and Capital One also agree that your IPPA is hereby modified such
that you will not be entitled to receive

 

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

 

Mr. David M. Willey
July 8, 2003
Page 2

    any Incentive Payments (as defined in the IPPA) pursuant to the IPPA during
the IPPA Period or otherwise in connection with the Capital One Group’s
enforcement of the Non-Competition Covenant and other terms and provisions of
the IPPA.   3.   Consideration. As consideration for this Agreement, and
specifically, but without limitation, as consideration for your agreement to the
provisions under Paragraph 21 hereof (“General Release of Claims”) and for your
agreement to the modifications made hereunder to your IPPA, and subject to this
Agreement having become effective and irrevocable in accordance with its terms,
Capital One shall (i) pay to you, as soon as reasonably practicable after the
date on which this Agreement shall have become effective and irrevocable in
accordance with its terms (the “Effective Date”), a lump-sum amount, in cash,
equal to $217,569 (in reimbursement of the portion of your 2002 cash incentive,
otherwise paid in January 2003, which was forgone in connection with your
E-Grant V Options (as defined below)); (ii) pay to you (or to your estate in the
event of your death prior to February 28, 2005), on a semi-monthly basis, your
regular base pay at the rate of $380,000 per annum for the duration of the IPPA
Period; (iii) modify certain provisions of your stock options and restricted
stock as set forth in Paragraph 4 below; (iv) provide you with certain other
benefits as set forth in Paragraphs 5, 6, 9, 11 and 12 herein; and (v) preserve
certain gross-up payment obligations of Capital One to you as set forth in
Paragraph 24 herein. You will not be eligible to receive any annual cash
incentive, long-term incentive or other bonus award with respect to 2003 or any
year thereafter.   4.   Stock Options and Restricted Stock.   (a)   With respect
to all options that were outstanding and exercisable as of the Separation Date
granted to you pursuant to the Capital One Financial Corporation 1994 Stock
Incentive Plan (the “1994 Plan”) or the Capital One Financial Corporation 1999
Stock Incentive Plan (the “1999 Plan” and together with the 1994 Plan, the
“Plans”) and your related existing 1994 Plan Stock Option Agreements and 1999
Plan Stock Option Agreements, as applicable (the “Vested Option Agreements”),
regardless of exercise price (the “Expiring Vested Options”, each as identified
on Attachment A), such Expiring Vested Options, to the extent they then remained
outstanding, expired on June 1, 2003, in accordance with their terms.   (b)  
With respect to all options that were outstanding but not exercisable as of the
Separation Date granted to you pursuant to the Plans and your related existing
1994 Plan Stock Option Agreements and 1999 Plan Stock Option Agreements, as
applicable (the “Unvested Option Agreements”), with a current exercise price of
$50.00 or less (excluding the options granted to you pursuant to your 1994 Plan
Nonstatutory Stock Option Agreement dated October 18, 2001 and related 2001
Performance-Based Option Program Compensation Reduction Election Form (the
“E-Grant V Options”)) (the “Continuing Unvested Options”, each as identified on
Attachment B), such Continuing Unvested Options shall continue to become

 

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

 

Mr. David M. Willey
July 8, 2003
Page 3

    exercisable during the period commencing on your Separation Date and ending
on March 6, 2006, as described in the related Unvested Option Agreements, as if
your employment with the Capital One Group had not terminated. The expiration
date for the Continuing Unvested Options shall be March 6, 2006, at which time
such Continuing Unvested Options, if unexercised, will automatically and
immediately expire. With respect to all options that were outstanding but not
exercisable as of the Separation Date granted to you pursuant to Unvested Option
Agreements with a current exercise price of $50.01 or more and the E-Grant V
Options (collectively, the “Expiring Unvested Options”, each as identified on
Attachment C), such Expiring Unvested Options will be deemed to have expired on
the Separation Date, in accordance with their terms.   (c)   Notwithstanding
anything in this Paragraph 4 to the contrary, in the event of your death at any
time prior to March 6, 2006, (i) with respect to any options that were
outstanding and exercisable on the date of your death, your estate, or the
person or persons to whom the rights under such options shall have passed by
will or the laws of descent and distribution, may exercise such options at any
time prior to the earlier of (x) the one-year anniversary of the date of your
death and (y) March 6, 2006, at which time such options, if unexercised, will
automatically and immediately expire and (ii) with respect to any such options
that were outstanding and not exercisable on the date of your death, such
options will expire on such date.   (d)   You understand that the modification
of the options as set forth herein may adversely affect the treatment of such
options under Section 422 of the Internal Revenue Code of 1986, as amended.  
(e)   Any option or any portion of an option not exercised as of the expiration
dates set forth herein shall be, or shall be deemed to have been, automatically
and immediately cancelled as of such dates.   (f)   Any option or any portion of
an option swapped after your Separation Date will not re-load.   (g)   With
respect to the shares of restricted stock granted to you pursuant to your 1994
Plan Restricted Stock Agreement (the “Restricted Stock Agreement”), dated
December 6, 2002 (24,370 shares), the restrictions on such shares shall continue
to lapse as described in the Restricted Stock Agreement, as if your employment
with the Capital One Group had not terminated; provided, that (x) a portion of
such shares, the fair market value of which Capital One determines in its sole
and absolute discretion to be sufficient to satisfy all applicable federal,
state and local withholding tax requirements attributable to the modifications
made to your restricted stock pursuant to this Paragraph 4(g), shall immediately
become transferable and all restrictions thereon shall lapse as of the Effective
Date and (y) such portion of such shares shall be returned to Capital One in
satisfaction of such withholding tax requirements as

 

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

 

Mr. David M. Willey
July 8, 2003
Page 4

    soon as administratively practicable after the Effective Date; and, provided
further, that upon your death all such shares shall immediately become
transferable and all restrictions thereon shall lapse.   (h)   Your Vested
Option Agreements, Unvested Option Agreements and Restricted Stock Agreement
shall each be deemed modified consistent with the foregoing provisions of this
Paragraph 4. However, other than as expressly provided, the foregoing provisions
of this Paragraph 4 are not intended to change in any manner the terms of any
options or restricted stock granted to you pursuant to the Vested Option
Agreements, the Unvested Option Agreements or Restricted Stock Agreement, as
applicable.   5.   Benefit Continuation.   (a)   For a portion of the IPPA
Period, you may be entitled to elect to exercise COBRA rights in accordance with
federal law. You will receive separate notice of any such COBRA rights. In the
event you elect COBRA coverage, Capital One will assume the cost of the
employer’s portion of the monthly premium and the 2% COBRA administrative fee
(such amounts together, the “COBRA Subsidy”) for each month you are enrolled
through August 31, 2004. You will pay the remaining balance of the COBRA premium
directly to the COBRA administrator. Capital One will reimburse you as soon as
reasonably practicable after the Effective Date for any amount of the COBRA
Subsidy you may have paid to Capital One prior thereto. In the event you
previously elected COBRA coverage, Capital One will continue your participation
in its group health plan, to the extent permitted by its terms, for the period
of September 1, 2004 through and including February 28, 2005, and will continue
to pay an amount equal to the COBRA Subsidy toward the cost of such continued
coverage each month you are enrolled. In the event your continued participation
in Capital One’s group health plan is not permitted by its terms following
August 31, 2004, for each month during the period of September 1, 2004 through
and including February 28, 2005 in which you are not enrolled in such group
health plan, Capital One will pay to you an amount equal to the COBRA Subsidy to
assist you in purchasing private medical insurance. Should you become covered
under another party’s health insurance plan or should you die between the
Separation Date and February 28, 2005, all payments by Capital One under this
Paragraph 5 shall immediately be terminated. You agree to notify Capital One
immediately of the date that you become covered under another party’s health
insurance plan.   (b)   If you wish to continue any optional supplemental life
insurance in effect as of your Separation Date, please contact Tom Scales at
(804) 934-8071. All other benefits, including but not limited to, those provided
under the Long Term Managed Income Protection plan, Short Term Managed Income
Protection plan, AD&D policy, the Associate Stock Purchase Plan and Associate
Savings Plan will be discontinued as of the Separation Date other than as
expressly provided for under this Agreement.

 

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

 

Mr. David M. Willey
July 8, 2003
Page 5

6.   Executive Life Insurance Program. Capital One will continue to pay the
employer portion of the premiums associated with your life insurance coverage
under the Capital One Executive Life Insurance Program (the “ELIP”) through the
earlier of the date you become eligible to receive coverage under a group life
insurance program not sponsored by Capital One and the conclusion of the IPPA
Period. You will be responsible for the employee portion of the premiums. You
will have ninety (90) days from the date Capital One’s contributions end to
determine whether to continue independently your current life insurance coverage
amount or a lesser amount under the ELIP in accordance with the terms of the
ELIP. At the commencement of such ninety (90) day period, you will receive
notification directly from Lander & Associates regarding your choices for
continuing coverage. For such ninety (90) day period, you shall be solely
responsible for any premiums or other costs associated with your participation
in the ELIP. In the event Capital One replaces the ELIP with another death
benefit program, Capital One will provide coverage to you under such death
benefit program comparable to your coverage under the ELIP immediately prior to
its replacement through the earlier of the date you become eligible to receive
coverage under a group life insurance program not sponsored by Capital One and
the conclusion of the IPPA Period; provided that you shall be responsible for
the employee portion of any premiums or costs associated with such death benefit
program in accordance with the terms and conditions thereof; provided further
that if you are not eligible to participate in such death benefit program,
Capital One shall otherwise arrange for comparable life insurance coverage and
you shall be responsible for any premiums or costs associated with such coverage
comparable to the employee portion of premiums or costs under such death benefit
program. In such case, when your coverage ends pursuant hereto, Capital One will
provide you with information regarding your choices for continuing coverage, if
any, under such death benefit program. You agree to notify Capital One
immediately of the date that you become eligible to receive coverage under a
group life insurance program not sponsored by Capital One.   7.   Associate
Savings Plan. You will be considered a terminated participant under Capital
One’s Associate Savings Plan as of the Separation Date. All of your deductions,
as well as Capital One’s contributions (including, without limitation, the basic
contribution, the company match based on your pre-tax deductions, and any
performance contributions), made on your behalf with respect to the Associate
Savings Plan shall cease as of the Separation Date. Please refer to the exit
paperwork for details on your options upon termination with respect to the
Associate Savings Plan.   8.   Excess Savings Plan. The vested value in your
account under Capital One’s Excess Savings Plan will be distributed directly to
you in accordance with the plan’s provisions beginning no later than September
30, 2003. Please consult your Executive Compensation Program Guide for more
information.

 

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

 

Mr. David M. Willey
July 8, 2003
Page 6

9.   Executive Financial Services. You may use the full, unused portion of the
current program year’s annual allowance provided for under the Executive
Financial Services Program (the “EFSP”) for any tax preparation or other
financial services which were started with Ernst & Young, LLP as of your
Separation Date, but which have not yet been completed. Any unfinished tax
planning or financial services as described above must be completed by
September 30, 2003. You will not receive any further annual allowance under the
EFSP.   10.   Return of Company Assets. All assets of the Capital One Group
(including, but not limited to confidential information, telephones, fax
machines, personal computers, corporate credit cards and phone cards) must be
returned to Capital One upon execution of this Agreement, except as specifically
provided for herein or as authorized by Capital One. By signing and returning
this Agreement, you represent and certify that, except as authorized by Capital
One, you have left with, or returned to, Capital One all memoranda, notes,
documents, business plans, customer lists, computer programs, computer discs,
CD_ROMS and any other records, of any kind, and any and all copies thereof
(whether written or electronic), made or compiled, in whole or in part, by you,
or made available to you during the course of your employment with the Capital
One Group.   11.   Automobile. Capital One will continue to provide you with
your leased automobile (including payment of all reasonable related expenses and
charges) until May 30, 2003, in accordance with Capital One’s applicable policy.
  12.   Home Security System. Capital One will continue to pay the monthly
monitoring fee for your home security system through and including the
expiration date of the current contract with the service provider.   13.  
Notice of Certain Events. You agree to notify Capital One if you accept
employment with or begin to perform services, directly or indirectly, for any
person or entity, at any time during the IPPA Period. You also agree to notify
Capital One if, during the IPPA Period, the nature of your employment changes,
the identity of your employer changes, you are promoted or transferred to a new
position or you become covered under another party’s health or life insurance
plan. This notice shall be sent immediately upon the occurrence of any event
requiring such notice and shall be sent to:

 

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

 

Mr. David M. Willey
July 8, 2003
Page 7

          Frank G. LaPrade, III     Deputy General Counsel     Capital One
Financial Corporation     11013 West Broad Street     Glen Allen, Virginia 23060
    (804) 967-1185

    Any such notice shall describe the event requiring such notice in reasonably
sufficient detail to enable Capital One to determine whether you are complying
with the terms and restrictions set forth in this Agreement and the IPPA (as
modified hereby).   14.   Address of Record. You have provided the address
listed below as your address of record for receipt of mailings from Capital One:

          David M. Willey     1221 Towlston Road     Great Falls, VA 22066

    If the address changes, you agree to immediately notify Capital One in
writing of your new address of record.   15.   Confidentiality.   (a)   You
agree that the fact, terms and conditions of this Agreement and the IPPA (as
modified hereby) are strictly confidential, and, with the exception of your
spouse, counsel and tax advisors, or except to the extent required by (i) an
order of a court having jurisdiction or under subpoena from an appropriate
government agency (in which event, you will use your best efforts to consult
with Capital One prior to responding to any such order or subpoena) or
(ii) applicable law (as determined in Capital One’s sole and absolute
discretion), shall not be disclosed to any other person, entities or
organizations, whether or not employed by the Capital One Group. Notwithstanding
anything herein to the contrary, you (and each of your representatives or other
agents) may disclose to any and all persons, without limitation of any kind, the
U.S. federal income tax treatment and tax structure with respect to the payments
and benefits to be provided to you pursuant to this Agreement and all materials
of any kind (including opinions or other tax analyses) that are provided to you
or your representatives or other agents, as the case may be, relating to such
tax treatment and tax structure. For this purpose, “tax structure” means any
facts relevant to the U.S. federal income tax treatment with respect to the
payments and benefits to be provided to you pursuant to this Agreement.

 

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

 

Mr. David M. Willey
July 8, 2003
Page 8

(b)   In addition, you agree not to use for your own benefit or for the benefit
of others, or divulge to others, including without limitation, future employers,
in any manner whatsoever, any of Capital One’s Confidential Information (as
defined below), except as expressly authorized by Capital One and except as may
be required by law or legal process. In the event you are requested by subpoena,
court order, investigative demand, search warrant or other legal process to
disclose the Confidential Information of Capital One, you will immediately
notify Capital One of such request and will not disclose any Confidential
Information unless and until Capital One has expressly authorized you to do so
in writing or has had a full opportunity to object to such a request and to
litigate the matter. For the purposes of this Agreement, “Confidential
Information” means information and materials which identify or concern past,
present or future customers, businesses or plans, or constitute, embody or
relate to research, development, financial accounting, programming and systems,
inventions, databases, product designs, product implementations, modeling
techniques, models, testing, test results, customer lists, marketing strategies,
business plans, existing or potential new lines of business, credit policies and
practices, accounts of customers or associates of the Capital One Group or any
other information or materials made or furnished by the Capital One Group.
Confidential Information may be written, oral, electronic, recorded on tape or
in any other media, and includes without limitation, information embodied in
documents, drawings, graphs, charts, presentations, recordings, microfiche,
tapes, computer programs, computer discs, CD_ROMs and other data compilations.
Additionally, unless Capital One advises you to the contrary in writing,
Confidential Information shall include all software, hardware and other
information supplied to the Capital One Group by third parties that is used by
the Capital One Group in its business. The foregoing is not intended to change
in any manner your obligations with respect to confidential information set
forth and defined in Section 2 of the IPPA.   16.   Cooperation. If requested by
the Capital One Group, you hereby agree to reasonably cooperate (including by
attending meetings) with respect to any claim, arbitral hearing, lawsuit,
action, proceeding or governmental or internal investigation relating to the
business of the Capital One Group prior to the Separation Date and to provide
full and complete disclosure to the Capital One Group in response to any inquiry
in connection with any such matters. Capital One agrees to reimburse you for
your reasonable expenses incurred in connection with such cooperation; provided
that Capital One shall not be obligated to reimburse your expenses in connection
with any proceeding in which you or your interests are, in whole or in part, as
determined by Capital One, adverse to those of the Capital One Group, or if such
proceeding involves, in whole or in part, your violation of any obligation which
you owed to the Capital One Group during the course of or in connection with
your employment thereby.   17.   Non-Disparagement. You shall not make any
statements or release any information (or encourage others to make any
statements or release any information)

 

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

 

Mr. David M. Willey
July 8, 2003
Page 9

  that disparages or defames the Capital One Group or any of its directors or
officers or otherwise adversely affects the reputation of the Capital One Group
or any of its directors or officers. In addition, you shall not make any
statements or release any information (or encourage others to make any
statements or release any information) to current or prospective employees of
the Capital One Group that criticizes or otherwise undermines the Capital One
Group’s business or strategy, management processes or governance or any of its
directors or officers. Notwithstanding the foregoing, nothing herein shall
prohibit you from making truthful statements when required by order of a court
or other body having jurisdiction or as otherwise required by law.   18.  
Outstanding Liabilities. Notwithstanding anything herein to the contrary, any
liabilities you may have to the Capital One Group, including, without
limitation, any liabilities in respect of outstanding loans or advances by the
Capital One Group and any liabilities to reimburse the Capital One Group for any
personal expenses (such as for taxis, car service or meals) that you have
charged to the Capital One Group, must be paid in full before payment of any
amounts will be made to you under this Agreement or Capital One may, at its
option, deduct any such amounts from any payment to be made to you pursuant to
this Agreement, to the extent permitted by applicable law.   19.   General
Release of Claims. In consideration of the payments and other consideration
provided for in this Agreement, that being good and valuable consideration, the
receipt, adequacy and sufficiency of which are acknowledged by you, you, on your
own behalf and on behalf of your agents, administrators, representatives,
executors, successors, heirs, devisees and assigns (collectively, the “Releasing
Parties”), do hereby fully release, remise, acquit and forever discharge Capital
One and its parent, subsidiary and affiliated corporations, organizations and
entities, including without limitation CAPITAL ONE FINANCIAL CORPORATION,
CAPITAL ONE BANK, CAPITAL ONE, F.S.B., CAPITAL ONE SERVICES, INC., CAPITAL ONE
AUTO FINANCE, PEOPLEFIRST, INC., and AMERIFEE CORPORATION INC., and each of
them, and all of their respective past, present and future divisions,
departments, units, affiliates, partners, joint ventures, stockholders,
predecessors, successors, assigns, insurers, officers, directors, employees,
agents, representatives, attorneys and independent contractors of all such
released corporations, organizations and entities (collectively, the “Released
Parties”), and each of them, jointly and severally, from any and all claims,
rights, demands, debts, obligations, losses, causes of action, actions, suits,
controversies, setoffs, affirmative defenses, counterclaims, third party
actions, damages, penalties, costs, expenses, attorneys’ fees, liabilities and
indemnities of any kind or nature whatsoever (collectively, the “Claims”),
whether known or unknown, suspected or unsuspected, accrued or unaccrued,
whether at law, equity, administrative, statutory or otherwise, and whether for
injunctive relief, back pay, fringe benefits, reinstatement, reemployment, or
compensatory, punitive or any other

 

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

 

Mr. David M. Willey
July 8, 2003
Page 10

    kind of damages, which any of the Releasing Parties ever have had in the
past or presently have against the Released Parties, and each of them, arising
from or relating to your employment with Capital One or the termination of that
employment or any circumstances related thereto, or any other matter, cause or
thing whatsoever, including without limitation all claims arising under or
relating to employment, employment contracts, employee benefits or purported
employment discrimination or violations of civil rights of whatever kind or
nature, including without limitation all claims arising under Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Acts of
1866 and/or 1871, the Americans With Disabilities Act of 1990, the Age
Discrimination in Employment Act (“ADEA”), Executive Order 11246, the Equal Pay
Act of 1963, the Rehabilitation Act of 1973, the Family and Medical Leave Act of
1993, any state human rights act, or any other applicable federal, state or
local employment discrimination statute, law or ordinance, including, without
limitation any disability claims under any such laws. You further agree that you
will not file or permit to be filed on your behalf any such Claim. However, the
Releasing Parties are not releasing rights they have, if any, under any
qualified employee retirement plan or under this Agreement nor are the Releasing
Parties releasing any rights or claims that may arise after the date on which
you sign this Agreement. In addition, you are not releasing any rights to, or
claims for, indemnification from Capital One pursuant to (x) its Restated
Certificate of Incorporation and Restated Bylaws or (y) Capital One’s Board of
Directors’ Resolutions, dated November 1, 2002 and December 6, 2002, and any
undertaking signed by the Executive in connection therewith, to the extent such
indemnification by Capital One is permitted by federal or Delaware law. Those
rights, and only those rights, survive unaffected by this Agreement.
Notwithstanding any provision of this Agreement to the contrary, this release is
not intended to interfere with your right to file a charge with the Equal
Employment Opportunity Commission (the “EEOC”) in connection with any claim you
believe you may have against Capital One or its affiliates. However, by
executing this Agreement, you hereby waive the right to recover in any
proceeding you may bring before the EEOC or any state human rights commission or
in any proceeding brought by the EEOC or any state human rights commission on
your behalf. In addition, this release is not intended to interfere with your
right to challenge that your waiver of any and all potential ADEA claims
pursuant to this Agreement is a knowing and voluntary waiver, notwithstanding
your specific representation that you have entered into this Agreement
(including this release) knowingly and voluntarily.   20.   Waiver of ADEA
Rights and Claims/Opportunity for Review. You understand that this Agreement
specifically releases and waives all rights and claims you may have under ADEA
prior to the date on which you sign this Agreement. You agree and acknowledge
that your execution of this Agreement is completely voluntary and that you have
been advised to consult with an attorney prior to executing this Agreement to
ensure that you fully and thoroughly understand its legal significance. You
understand that you may consider whether to agree to the terms contained in

 

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

 

Mr. David M. Willey
July 8, 2003
Page 11

    this Agreement for a period of twenty-one (21) days after the date of this
Agreement during which time you should consult with counsel. You agree that any
changes made to this Agreement, whether material or immaterial, will not restart
the running of such twenty-one (21) day period. You further acknowledge and
understand that you may revoke this Agreement within seven (7) days after its
execution by you and that this Agreement is not effective or enforceable until
such revocation period has expired and you have not revoked this Agreement
during such seven (7) day period. To revoke this Agreement, you must deliver a
written revocation to Frank G. LaPrade, III at the address set forth above under
Paragraph 13. If you exercise your right to revoke hereunder, you shall forfeit
your right to receive any of the payments and benefits to be provided to you
pursuant to this Agreement as set forth in Paragraph 3 above.   21.   Effect of
Violation.   (a)   In connection with the events underlying the matters
referenced in, related to or arising from the Security and Exchange Commission’s
(the “SEC”) Wells notice, dated February 13, 2003, regarding the SEC’s intention
to recommend that a civil action be brought against you and Joy S. Willey, in
the event that (i) a final adjudication (regardless of whether any appeal may be
available) by a court in any civil action brought by the SEC or in any criminal
action brought by any United States Attorney’s Office establishes any violation
of federal securities laws or regulations or other wrongdoing on your part or
(ii) you make an admission of any violation of federal securities laws or
regulations or other wrongdoing to the SEC or to any United States Attorney’s
Office, you understand and agree that, as of the date of such adjudication or
admission (the “Finding Date”), Capital One’s obligations to you regarding the
modification of your Continuing Unvested Options and restricted stock as set
forth in Paragraph 4 hereof shall be void and, with respect to any Continuing
Unvested Options outstanding on the Finding Date or any restricted stock
remaining subject to restrictions on the Finding Date, you agree that you will
(i) immediately forfeit the right to exercise any and all such Continuing
Unvested Options and such Continuing Unvested Options shall automatically and
immediately be cancelled and (ii) immediately forfeit any and all such shares of
restricted stock. In the event that you exercised Continuing Unvested Options
prior to the Finding Date or the restrictions on shares of restricted stock
lapsed prior to the Finding Date, you shall pay to Capital One within ten
(10) days after the Finding Date an amount equal to the sum of (x) with respect
to each share of stock received upon the exercise of such Continuing Unvested
Option, the excess of the fair market value of a share of stock on the date of
exercise over the exercise price per share with respect to such Continuing
Unvested Option and (y) with respect to each such share of restricted stock
(including any share of restricted stock returned to Capital One in satisfaction
of withholding taxes pursuant to Paragraph 4(g) hereof), the fair market value
of such share on the date the restrictions on such share lapsed. For purposes of
this Agreement, “fair market value” shall have the meaning set forth in the 1994
Plan.

 

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

 

Mr. David M. Willey
July 8, 2003
Page 12

(b)   You understand and agree that in the event (x) Capital One determines that
(i) you have not complied in all respects with the terms and conditions of this
Agreement and the IPPA (as modified hereby) or (ii) any act(s) or omission(s) by
you prior to the Separation Date could have given rise to a termination of your
employment with the Capital One Group for Cause (as defined in the IPPA) (each
such determination to be made solely and conclusively by Capital One in its
absolute discretion) or (y) there is (A) a final adjudication (including any
appeal) by a court, (B) final determination by a regulatory body or
(C) admission by you to any court or regulatory body that you violated any
federal or state banking or securities law prior to the Separation Date (other
than with respect to the matters covered in Paragraph 21(a) above), as of the
date of such determination, adjudication or admission (the “Determination
Date”), Capital One’s obligations to you for all payments and benefits provided
for under this Agreement as set forth in Paragraph 3(i), (ii), (iv) and
(v) above shall be void and you shall be required to immediately forfeit, and
reimburse Capital One within ten (10) days after the Determination Date for, any
and all such payments and benefits provided to you by Capital One prior to and
including the Determination Date, except as otherwise prohibited by ADEA or
regulations thereunder, and all reasonable costs and attorneys’ fees incurred by
Capital One in defending any action brought by you in violation of, or brought
by Capital One to enforce, this Agreement or the IPPA (as modified hereby). With
respect to any determination made by Capital One under clause (x) of this
Paragraph 21(b), Capital One shall provide you with notice of such determination
ten days prior to the Determination Date, and such notice shall include a brief
explanation of the reasons for such determination.   (c)   You agree that the
amounts set forth in this Paragraph 21 shall be in addition to any other damages
or relief to which Capital One may be entitled. You further acknowledge that any
violation of this Agreement or the IPPA (as modified hereby) by you will result
in irreparable harm to the Capital One Group which cannot be fully and
adequately addressed by the award of monetary damages, consent to the issuance
of a temporary restraining order and preliminary and permanent injunctive relief
as appropriate remedies for violation of this Agreement or the IPPA (as modified
hereby) by you, and agree not to contest the entry of same if sought by the
Capital One Group.   22.   No Further Payments or Benefits. You understand and
agree that you will not receive any payments or benefits from the Capital One
Group after the Separation Date, except as expressly provided for under this
Agreement. Furthermore, you acknowledge that, except for the payments made by
Capital One as expressly provided for under this Agreement, you are not entitled
to any payment in the nature of severance or termination pay from the Capital
One Group.   23.   No Admission of Liability. This Agreement is solely for the
purpose of amicably resolving all outstanding issues between you and the Capital
One Group, and you

 

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

 

Mr. David M. Willey
July 8, 2003
Page 13

  represent and warrant that any payments or benefits provided to you under the
terms of this Agreement do not constitute an admission by Capital One or any of
the Released Parties that it has violated any law or legal obligation with
respect to any aspect of your employment or separation therefrom.   24.  
Integration/Effect on Prior Agreements. This Agreement constitutes the final and
complete agreement between the parties relating to the subject matter hereof,
and you agree and stipulate that no other representations have been made by the
Capital One Group or any of its officers or directors to you except those
expressly set forth herein, and that this Agreement resolves all outstanding
issues arising from or relating to your employment with the Capital One Group,
and that you will not receive anything further from the Capital One Group except
as provided herein. In addition, except as expressly provided for herein, this
Agreement is intended to replace in its entirety any prior agreements between
you and the Capital One Group relating to the terms of your employment
(including, without limitation, the severance provisions thereof), other than
(x) the IPPA which shall expressly remain in full force and effect according to
its terms (including the Non-Competition Covenant and the non-solicitation and
confidentiality provisions set forth therein) as modified hereby, (y) with
respect to any rights to or claims for indemnification from Capital One, Capital
One’s (1) Restated Certificate of Incorporation and Restated Bylaws and
(2) Board of Directors’ Resolutions dated November 1, 2002 and December 6, 2002,
to the extent such indemnification by Capital One is permitted by federal or
Delaware law and (z) the Undertaking executed by the Executive on October 31,
2002. With respect to the Amended and Restated Change of Control Employment
Agreement dated as of January 25, 2000, by and between you and Capital One, such
Change of Control Employment Agreement shall be null and void and all
obligations of the parties thereto shall terminate as of the Separation Date,
except for those obligations with respect to certain gross-up payments set forth
in Section 9 thereof which are made a part of this Agreement as though set forth
herein. Furthermore, you hereby acknowledge that the termination of your
employment with the Capital One Group did not occur at the request of a third
party who has taken steps reasonably calculated to effect a change of control of
Capital One and has not otherwise arisen in connection with or in anticipation
of a change of control of Capital One.   25.   Choice of Law/Forum Selection. 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 Commonwealth of Virginia without regard to its
principles of conflicts of law. Capital One and you hereby submit to the
jurisdiction and venue of any state or federal court located within the
Commonwealth of Virginia for resolution of any such claims, causes of action or
disputes arising out of, related to or concerning this Agreement. You further
agree that any claims, causes of action, or disputes arising out of, relating to
or concerning

 

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

 

Mr. David M. Willey
July 8, 2003
Page 14

  this Agreement shall only have jurisdiction and venue in the state or federal
courts of the Commonwealth of Virginia.   26.   Modification. This Agreement may
only be modified, amended or revised by a writing signed by both parties.   27.
  No Waiver. Any waiver by the Capital One Group of any provision of this
Agreement in any instance must be in writing and shall not be deemed a waiver of
such provision in the future.   28.   Severability. It is the intent of the
parties that the provisions of this Agreement be enforced to the fullest extent
permissible under applicable law. If any provision of this Agreement shall be
adjudged by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not invalidate any other provision of this Agreement. The
parties agree that if a court of competent jurisdiction adjudges any provision
of this Agreement to be invalid or unenforceable, such court shall modify such
provision so that it is enforceable to the extent permitted by applicable law
and consistent with the parties’ intent.   29.   Assignability. This Agreement
is personal to you and shall not be assignable by you without prior written
consent from Capital One. Capital One may assign this Agreement to any other
person or entity at its sole and absolute discretion.   30.   Successor. This
Agreement and all promises made herein shall survive the execution of this
Agreement and shall be binding upon and inure to the benefit of the parties and
their respective successors, assigns, heirs, administrators, representatives,
and executors, as applicable.   31.   Taxes. Capital One may withhold from any
payments made under this Agreement, or require you to pay to Capital One, all
applicable federal, state and local taxes, including but not limited to income,
employment and social insurance taxes, as shall be required by law, as
determined by Capital One in its sole and absolute discretion, in connection
with this Agreement, including without limitation, any such taxes required to be
withheld as a result of the modifications made to your restricted stock in
Paragraph 4 herein.   32.   Headings. The headings in this Agreement are
included for convenience only and shall not constitute a part of this Agreement
nor shall they affect its meaning, construction or effect.

 

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

 

Mr. David M. Willey
July 8, 2003
Page 15

33.   Opportunity for Review. You agree and acknowledge that your execution of
this Agreement is completely voluntary and that you have been advised to consult
with an attorney prior to executing this Agreement to ensure that you fully and
thoroughly understand its legal significance. Accordingly, the rule of
construction to the effect that ambiguities are resolved against the drafting
party shall not be employed in the interpretation of this Agreement. Rather, the
terms of this Agreement shall be construed fairly as to both parties hereto and
not in favor of or against either party.   34.   Counterparts. This Agreement
may be executed in any number of counterparts and by different parties on
separate counterparts, each of which counterpart, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.

If the terms of this Agreement are acceptable to you, please indicate your
agreement by signing below and returning the original to Frank G. LaPrade, III,
Capital One Financial Corporation, 11013 West Broad Street, Glen Allen, VA
23060. Please be advised that the terms offered in this Agreement shall be
automatically withdrawn if this Agreement is not executed by the close of
business on July 31, 2003.

If you have any questions, please contact me directly.

Sincerely,

/s/ Richard D. Fairbank

Richard D. Fairbank
Chief Executive Officer

You are advised to discuss the benefits and obligations outlined in this
Agreement, including the provision relating to your general release of claims,
with an attorney or advisor of your choice.

Agreed to and accepted by:

Mr. David M. Willey
July 8, 2003

          /s/ David M. Willey       July 31, 2003

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

 

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

David M. Willey   Date

 

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

 

Acknowledgment

          On the 31st day of July 2003, before me personally came David
M.Willey, who, being by me duly sworn, did depose and say that he resides at
1221 Towlston Road and did acknowledge and represent that he has had an
opportunity to consult with attorneys and other advisers of his choosing
regarding the Letter of Agreement attached hereto, that he has reviewed all of
the terms of such Agreement and that he fully understands all of its provisions,
including, without limitation, the general release and waiver set forth therein.

/s/ JASON D. ALLEY

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

Notary Public

Date: 7/31/2003         Commission Expires: 9/30/2007        

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

 

ATTACHMENT A

EXPIRING VESTED OPTIONS

  •   3 options granted pursuant to the 1994 Plan Incentive Stock Option
Agreement dated January 23, 1997     •   1,785 options granted pursuant to the
1994 Plan Nonstatutory Stock Option Agreement dated April 27, 1998     •   2,493
options granted pursuant to the 1994 Plan Nonstatutory Stock Option Agreement
dated June 11, 1998 (EntrepreneurGrant III)     •   2,430 options granted
pursuant to the 1994 Plan Nonstatutory Stock Option Agreement dated July 27,
1998     •   300 options granted pursuant to the 1999 Plan Nonstatutory Stock
Option Agreement dated April 29, 1999     •   2,745 options granted pursuant to
the 1994 Plan Nonstatutory Stock Option Agreement dated May 4, 1999     •  
1,764 options granted pursuant to the 1994 Plan Nonstatutory Stock Option
Agreement dated May 4, 1999     •   1,038 options granted pursuant to the 1994
Plan Nonstatutory Stock Option Agreement dated May 5, 1999     •   4,500 options
granted pursuant to the 1994 Plan Nonstatutory Stock Option Agreement dated
May 5, 1999     •   2,606 options granted pursuant to the 1994 Plan Nonstatutory
Stock Option Agreement dated February 7, 2000     •   24,000 options granted
pursuant to the 1994 Plan Nonstatutory Stock Option Agreement dated May 30, 2000
    •   4,232 options granted pursuant to the 1994 Plan Nonstatutory Stock
Option Agreement dated June 2, 2000     •   6,890 options granted pursuant to
the 1994 Plan Nonstatutory Stock Option Agreement dated August 24, 2000

A-1

 

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

 

  •   6,130 options granted pursuant to the 1994 Plan Nonstatutory Stock Option
Agreement dated September 8, 2000     •   5,371 options granted pursuant to the
1994 Plan Nonstatutory Stock Option Agreement dated September 13, 2000     •  
9,227 options granted pursuant to the 1994 Plan Nonstatutory Stock Option
Agreement dated May 21, 2001     •   58,333 options granted pursuant to the 1994
Plan Nonstatutory Stock Option Agreement dated October 18, 2001     •   2,038
options granted pursuant to the 1994 Plan Incentive Stock Option Agreement dated
December 13, 2001     •   32,962 options granted pursuant to the 1994 Plan
Nonstatutory Stock Option Agreement dated December 13, 2001     •   1,631
options granted pursuant to the 1994 Plan Nonstatutory Stock Option Agreement
dated May 9, 2002

A-2

 

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

 

ATTACHMENT B

CONTINUING UNVESTED OPTIONS

  •   12,000 options granted pursuant to the 1994 Plan Nonstatutory Stock Option
Agreement dated May 30, 2000     •   116,667 options granted pursuant to the
1994 Plan Nonstatutory Stock Option Agreement dated October 18, 2001     •  
4,076 options granted pursuant to the 1994 Plan Incentive Stock Option Agreement
dated December 13, 2001     •   65,924 options granted pursuant to the 1994 Plan
Nonstatutory Stock Option Agreement dated December 13, 2001     •   2,929
options granted pursuant to the 1994 Plan Incentive Stock Option Agreement dated
December 6, 2002     •   40,971 options granted pursuant to the 1994 Plan
Nonstatutory Stock Option Agreement dated December 6, 2002

B-1

 

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

 

ATTACHMENT C

EXPIRING UNVESTED OPTIONS

  •   132,708 options granted pursuant to the 1994 Plan Nonstatutory Stock
Option Agreement dated April 29, 1999 (EntrepreneurGrant IV)     •   90,643
options granted pursuant to the 1994 Plan Nonstatutory Stock Option Agreement
dated October 18, 2001 (EntrepreneurGrant V)

C-1