exv10w3



 



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




 






 






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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.




 






 






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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.



 






 






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July 8, 2003

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	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.



 






 






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July 8, 2003

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	(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)



 






 



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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



 






 






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July 8, 2003

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	 	 	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




 






 






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July 8, 2003

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	 	 	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.




 






 






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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