Exhibit 1.1
CAPITAL ONE FINANCIAL CORPORATION
(a Delaware corporation)
6,500,000 Shares of Common Stock
(par value $0.01 per share)
PURCHASE AGREEMENT
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January 18, 2001
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Dear Sirs:
Capital One Financial Corporation, a Delaware corporation (the "Company"),
confirms its agreement with J.P. Morgan Securities Inc. (the "Underwriter") with
respect to (i) the issue and sale by the Company, and the purchase by the
Underwriter, of six million five hundred thousand (6,500,000) shares of the
Company's common stock, par value $.01 per share and the preferred share
purchase rights (the "Rights") attached thereto created pursuant to the Rights
Agreement, dated as of November 16, 1995, (the "Rights Agreement"), between the
Company and First Chicago Trust Company of New York, as successor to Mellon
Bank, N.A., as Rights Agent (such common stock, together with the Rights, the
"Common Stock") and (ii) the grant by the Company to the Underwriter of the
option described in Section 2(b) hereof to purchase all or any part of nine
hundred seventy-five thousand (975,000) additional shares of Common Stock to
cover over-allotments, if any. The aforesaid six million five hundred thousand
shares of Common Stock (the "Initial Securities") to be purchased by the
Underwriter and all or any part of the nine hundred seventy-five thousand shares
of Common Stock subject to the option described in Section 2(b) hereof (the
"Option Securities") are hereinafter called, collectively, the "Securities".
1. Registration Statement and Prospectus. The Company has prepared and
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filed with the Securities and Exchange Commission (the "Commission") a combined
registration statement on Form S-3 (File Nos. 333-58577 and 333-85227) under the
Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act"), in respect of the registration of
certain of its securities (including the Securities), and the offering thereof
from time to time in accordance with Rule 415 promulgated under the Securities
Act (the "Registration Statement"). The Registration Statement has been declared
effective by the Commission. The prospectus included in the Registration
Statement, as supplemented as contemplated by Section 5(a) with a prospectus
supplement to reflect the terms of the offering of
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January 18, 2001
Page 2
the Securities (the "Prospectus Supplement"), including all documents
incorporated by reference therein, is referred to herein as the "Prospectus".
2. Agreements to Sell and Purchase.
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(a) On the basis of the representations and warranties contained in this
Agreement, and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the Underwriter and the Underwriter agrees to
purchase from the Company, at a price per share of $61.15 (the "Purchase
Price"), the Initial Securities.
(b) On the basis of the representations and warranties contained in this
Agreement, and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Underwriter to purchase up to an additional
975,000 shares of Common Stock, at the Purchase Price. The option granted
hereby will expire 30 days after the date hereof and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial Securities upon notice by the Underwriter to the Company setting forth
the number of Option Securities as to which the Underwriter is then exercising
the option and the time and date of payment and delivery for such Option
Securities. Any such time and date delivery for the Option Securities (a "Date
of Delivery") shall be determined by the Underwriter but shall not be later than
seven (7) business days after exercise of said option, nor in any event prior to
the Closing Date (as hereinafter defined).
3. Delivery of and Payment for Securities.
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(a) Delivery to the Underwriter of and payment for the Initial
Securities shall be made at 10:00 A.M., New York City time, on January 23, 2001,
or on such other date as may be agreed upon by the Company and the Underwriter
(the "Closing Date"), at such place as the Company and the Underwriter shall
agree. The Closing Date and the location of delivery of and the form of payment
for the Securities may be varied by agreement between the Underwriter and the
Company. In the event that any or all of the Option Securities are purchased by
the Underwriter, payment of the Purchase Price for, and delivery of certificates
for, such Option Securities shall be made at such place as the Company and the
Underwriter shall agree on each Date of Delivery as specified in the notice from
the Underwriter to the Company.
(b) Certificates for the Initial Securities and the Option Securities,
if any, shall be registered in such names and issued in such denominations as
the Underwriter shall request in writing not later than two full business days
prior to the Closing Date or the relevant Date of Delivery, as the case may be.
Such certificates shall be made available to the Underwriter for inspection not
later than 9:30 A.M., New York City time, on the business day next preceding the
Closing Date, or the relevant Date of Delivery, as the case may be.
Certificates in definitive form evidencing the Initial Securities and the Option
Securities, if any, shall be delivered to the Underwriter on the Closing Date or
the relevant Date of Delivery, as the case may be, against payment of the
Purchase Price therefor by wire payable in Federal (same-day) funds to the order
J.P. Morgan Securities Inc.
January 18, 2001
Page 3
of the Company according to instructions provided to the Underwriter by the
Company in writing not later than one full business day prior to the Closing
Date or the relevant Date of Delivery, as the case may be.
4. Public Offering of Securities. The Company understands that the
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Underwriter proposes to make a public offering of the Securities on the terms
set forth in the Prospectus as soon as the Underwriter deems advisable after
this Agreement has been executed and delivered.
5. Agreements of the Company. The Company agrees:
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(a) To file the Prospectus with the Commission pursuant to Rule
424(b) not later than the second business day following the execution and
delivery of this Agreement.
(b) To advise the Underwriter promptly and, if requested by the
Underwriter, to confirm such advice in writing, (i) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information, (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, (iii) of the suspension of qualification of the
Securities for offering or sale in any jurisdiction, or the initiation of any
proceeding relating to (ii) or (iii), (iv) of the happening of any event during
the period referred to in paragraph (e) below which makes any statement of a
material fact made in the Registration Statement or the Prospectus untrue or
which requires the making of any additions to or changes in the Registration
Statement or the Prospectus in order to make the statements therein not
misleading or (v) when any amendment to the Registration Statement shall have
become effective or any subsequent supplement to the Prospectus shall have been
filed during the period referred to in paragraph (e) below. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal or lifting of such order at the earliest possible time.
(c) To furnish to the Underwriter, without charge, signed copies of
the Registration Statement as first filed with the Commission and of each
amendment to it, including all exhibits, and to furnish to the Underwriter such
number of conformed copies of the Registration Statement as so filed and of each
amendment to it, without exhibits, as the Underwriter may reasonably request.
(d) During the period specified in paragraph (e), not to file any
amendment or supplement to the Registration Statement or to make any amendment
or supplement to the Prospectus of which the Underwriter shall not previously
have been advised or to which the Underwriter shall reasonably object; and to
prepare and file with the Commission, promptly upon the Underwriter's reasonable
written request, any amendment to the Registration Statement or supplement to
the Prospectus which may be necessary or advisable in connection with the
distribution of the Securities by the Underwriter, and to use its best efforts
to cause any such post-effective amendment to the Registration Statement to
become promptly effective.
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January 18, 2001
Page 4
(e) For such period as in the opinion of counsel for the Underwriter
a prospectus is required by law to be delivered in connection with sales of the
Securities by an Underwriter or a dealer, to promptly furnish to the Underwriter
and each dealer as many copies of the Prospectus (and of any amendment or
supplement to the Prospectus) as the Underwriter or such dealer may reasonably
request.
(f) If during the period specified in paragraph (e) any event shall
occur as a result of which, in the opinion of counsel for the Underwriter, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with any law, forthwith to prepare and,
subject to paragraph (d) above, file with the Commission an appropriate
amendment or supplement to the Prospectus so that the statements in the
Prospectus, as so amended or supplemented, will not in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with law, and to furnish to the Underwriter and to such dealers as
the Underwriter shall specify, such number of copies thereof as the Underwriter
or dealers may reasonably request.
(g) Prior to any public offering of the Securities, to cooperate with
the Underwriter and counsel for the Underwriter in connection with the
registration or qualification of the Securities for offer and sale by the
Underwriter and by dealers under the state securities or Blue Sky laws of such
jurisdictions as the Underwriter may request, to continue such qualification in
effect so long as required for distribution of the Securities and to file such
consents to service of process or other documents as may be necessary in order
to effect such registration or qualification.
(h) To make generally available to its security holders as soon as
reasonably practicable an earnings statement covering a period of at least
twelve months after the effective date of the Registration Statement which shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 under
the Securities Act.
(i) To pay all costs, expenses, fees and taxes incident to (i) the
preparation, printing, filing and distribution under the Securities Act of the
Registration Statement (including financial statements and exhibits), each
preliminary prospectus and all amendments and supplements to any of them prior
to or during the period specified in paragraph (e), (ii) the printing and
delivery of the Prospectus and all amendments or supplements to it during the
period specified in paragraph (e), (iii) the printing and delivery of this
Agreement, the Preliminary and Supplemental Blue Sky Memoranda and all other
agreements, memoranda, correspondence and other documents printed and delivered
in connection with the offering of the Securities (including in each case any
disbursements of counsel for the Underwriter relating to such printing and
delivery), (iv) the registration or qualification of the Securities for offer
and sale under the securities or Blue Sky laws of the several states (including
in each case the fees and disbursements of counsel for the Underwriter relating
to such registration or qualification and memoranda relating thereto), (v)
filings and clearance with the National Association of
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January 18, 2001
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Securities Dealers, Inc. in connection with the offering, (vi) furnishing such
copies of the Registration Statement, the Prospectus and all amendments and
supplements thereto as may be requested for use in connection with the offering
or sale of the Securities by the Underwriter or by dealers to whom Securities
may be sold, (vii) the fees and expenses of any transfer agent or registrar for
the Securities, and (viii) the fees and expenses incurred in connection with the
listing of the Securities on the New York Stock Exchange.
(j) During the period beginning on the date hereof and ending on the
date that is ninety (90) days after the Closing Date, not to offer, sell,
contract to sell or otherwise dispose of any common stock of the Company, or
warrants or options to purchase common stock of the Company (other than (i) the
Securities, (ii) common stock or options to purchase the common stock of
the Company which are issued in connection with any employee benefit plan,
employee stock purchase plan or dividend reinvestment plan of the Company and
(iii) common stock issued upon the exercise of any previously issued option to
purchase the common stock of the Company), without the Underwriter's prior
written consent.
(k) During the period of five years after the date of this Agreement,
to furnish to you as soon as available a copy of each report or proxy statement
of the Company mailed to the security holders of the Company or filed with the
Commission, or to notify you that any such report or proxy statement has been so
mailed or filed, and to furnish to you such other publicly available information
concerning the Company as you may reasonably request.
(l) To use its best efforts to effect the listing of the Securities
on the New York Stock Exchange on or before the Closing Date.
(m) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Closing Date and to satisfy all conditions precedent to the delivery of the
Securities.
6. Representations and Warranties of the Company. The Company represents
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and warrants to the Underwriter that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the Commission.
(b) (i) Each part of the Registration Statement, when such part
became effective, did not contain and each such part, as amended or
supplemented, if applicable, as of the date such amendment becomes effective or
such supplement is filed with the Commission, as the case may be, will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) the Registration Statement and the Prospectus comply and, as
amended or supplemented, if applicable, as of the date such amendment becomes
effective or such supplement is filed with the Commission, as the case may be,
will comply in all material respects
J.P. Morgan Securities Inc.
January 18, 2001
Page 6
with the Securities Act, and (iii) the Prospectus does not contain and, as
amended or supplemented, if applicable, as of the date such amendment becomes
effective or such supplement is filed with the Commission, as the case may be,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph (b) do not apply to
statements or omissions in the Registration Statement or the Prospectus based
upon information relating to the Underwriter furnished to the Company in writing
by the Underwriter expressly for use therein.
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus or any
further amendment or supplement thereto, when such documents become effective or
are filed with the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
(d) The Company and each of its subsidiaries that is a "Significant
Subsidiary" within the meaning of such term as defined in Rule 1-02 of
Regulation S-X of the Commission and Capital One, F.S.B. (collectively, the
"Significant Subsidiaries") has been duly incorporated, is validly existing as a
corporation (or, in the case of Capital One Bank, as a bank chartered under the
laws of Virginia, and in the case of Capital One, F.S.B., as a federal savings
bank chartered under the federal laws of the United States) and in good standing
under the laws of its jurisdiction of incorporation and has the corporate power
and authority to carry on its business as it is currently being conducted and to
own, lease and operate its properties, and each is qualified and in good
standing as a foreign corporation authorized to do business in each jurisdiction
in which the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so qualified would
not have a material adverse effect on the Company and its subsidiaries, taken as
a whole.
(e) All outstanding shares of Common Stock have been duly authorized
and validly issued and are fully paid and nonassessable. All of the outstanding
shares of capital stock of, or other ownership interests in, each of the
Company's Significant Subsidiaries have been duly authorized and validly issued
and are fully paid and nonassessable, and are owned by the Company (other than
directors' qualifying shares of Capital One Bank), free and clear of any
security interest, claim, lien, encumbrance or adverse interest of any nature.
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January 18, 2001
Page 7
(f) The Securities have been duly authorized and when issued and
delivered by the Company pursuant to this Agreement against payment of the
consideration therefor set forth herein, such Securities will be validly issued
and fully paid and non-assessable.
(g) This Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the Company enforceable
in accordance with its terms (except as limited by (i) bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) equitable principles
of general applicability and as rights to indemnity and contribution hereunder
may be limited by applicable law).
(h) The Securities conform as to legal matters to the description
thereof contained in the Prospectus.
(i) Neither the Company nor any of its Significant Subsidiaries is in
violation of its respective charter or by-laws or in default in any material
respect in the performance of any obligation, agreement or condition contained
in any bond, debenture, note or other evidence of indebtedness material to the
Company and its subsidiaries, taken as a whole, or in any other agreement,
indenture or instrument material to the conduct of the business of the Company
and its subsidiaries, taken as a whole, to which the Company or any of its
Significant Subsidiaries is a party or by which it or any of its Significant
Subsidiaries or their respective property is bound.
(j) The execution, delivery and performance of this Agreement and
compliance by the Company with all the provisions hereof and the consummation of
the transactions contemplated hereby, including the issuance to the Underwriter
of the Securities, will not require any consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
governmental body (except as such may be required under the securities or Blue
Sky laws of the various states) and will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter or
by-laws of the Company or any of its subsidiaries or any material indenture,
agreement, or other instrument to which it or any of its subsidiaries is a party
or by which it or any of its subsidiaries or their respective property is bound,
or violate or conflict with any laws, administrative regulations or rulings or
court decrees applicable to the Company, any of its subsidiaries or their
respective property.
(k) Except as otherwise set forth in the Prospectus, there are no
material legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any of their respective property is
the subject, and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated. Each contract or document of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement is so described or filed as
required.
(l) The Company and each of its Significant Subsidiaries are in
compliance in all material respects with all laws administered by and
regulations of, as applicable, the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, the Office of Thrift
Supervision, the Virginia State Corporation Commission and any other federal or
state
J.P. Morgan Securities Inc.
January 18, 2001
Page 8
bank regulatory authority with jurisdiction over the Company or any of its
subsidiaries (each of the foregoing, a "Bank Regulatory Authority"), other than
where such failures to comply would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole. Neither the Company nor any of
its subsidiaries is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter or similar undertaking
to, or is subject to any order or directive by, or is a recipient of any
extraordinary supervisory letter from, or has adopted any board resolutions at
the request of, any Bank Regulatory Authority which restricts materially the
conduct of its business, or in any manner relates to its capital adequacy (other
than as described in the Prospectus), its credit policies or its management, nor
have any of them been advised by any Bank Regulatory Authority that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission, or any such board resolutions.
(m) The Company and each of its subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), as are necessary to own, lease and operate its
respective properties that are material to the Company and its subsidiaries,
taken as a whole, or to the conduct of the business of the Company and its
subsidiaries, taken as a whole; the Company and each of its subsidiaries has
fulfilled and performed all of its material obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permit; and, except as
described in the Prospectus, such permits contain no restrictions that are
materially burdensome to the Company and its subsidiaries, taken as a whole.
(n) Ernst & Young LLP are independent public accountants with respect
to the Company as required by the Securities Act.
(o) The financial statements, together with related schedules and
notes forming part of the Registration Statement and the Prospectus (and any
amendment or supplement thereto), present fairly the consolidated financial
position, results of operations and cash flows of the Company and its
subsidiaries on the basis stated in the Registration Statement at the respective
dates or for the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; and the other financial and statistical
information and data set forth in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) is, in all material respects,
accurately presented and prepared on a basis consistent with such financial
statements and the books and records of the Company.
(p) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "Investment Company Act").
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January 18, 2001
Page 9
(q) No holder of any security of the Company has the right to require
the Company to have any security owned by such holder included in the
Registration Statement.
(r) (i) Since the date of the latest audited financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus, there has not been any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, affairs or business prospects, whether or not
arising in the ordinary course of business, of the Company, (ii) since the date
of the latest audited financial statements included or incorporated by reference
in the Registration Statement and the Prospectus there has not been any material
adverse change, or any development involving a prospective material adverse
change, in the capital stock or in the long-term debt of the Company from that
set forth in the Registration Statement and Prospectus, and (iii) the Company
and its subsidiaries have no liability or obligation, direct or contingent,
which is material to the Company and its subsidiaries, taken as a whole, other
than those reflected in the Registration Statement and the Prospectus.
(s) The Company meets the eligibility requirements promulgated under
the Securities Act for use of a registration statement on Form S-3.
(t) The net proceeds to the Company from the offering and sale of the
Securities will be applied as set forth in the Prospectus.
7. Indemnification.
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(a) The Company agrees to indemnify and hold harmless the Underwriter
and each person, if any, who controls the Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages, liabilities and judgments caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to the Underwriter furnished in writing to the Company by or on behalf of the
Underwriter expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of the Underwriter from whom the person asserting any such
losses, claims, damages and liabilities and judgments purchased Securities, or
any person controlling the Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of the Underwriter to
such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Securities to such person, and if the
Prospectus (as so amended and
J.P. Morgan Securities Inc.
January 18, 2001
Page 10
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or judgment.
(b) In case any action shall be brought against the Underwriter or
any person controlling the Underwriter, based upon any preliminary prospectus,
the Registration Statement or the Prospectus or any amendment or supplement
thereto and with respect to which indemnity may be sought against the Company,
the Underwriter shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses.
The Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Underwriter
or such controlling person unless (i) the employment of such counsel shall have
been specifically authorized in writing by the Company, (ii) the Company shall
have failed to assume the defense and employ counsel or (iii) the named parties
to any such action (including any impleaded parties) include both the
Underwriter or such controlling person and the Company and the Underwriter or
such controlling person shall have been advised by such counsel that there may
be one or more legal defenses available to it which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to assume the defense of such action on behalf of the
Underwriter or such controlling person, it being understood, however, that the
Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses (as are customary for New York City law firms in the case of
retention of such a firm) of more than one separate firm of attorneys (in
addition to any local counsel) for the Underwriter and such controlling persons,
which firm shall be designated in writing by the Underwriter and that all such
reasonable fees and expenses (as are customary for New York City law firms in
the case of retention of such a firm) shall be reimbursed as they are incurred).
The Company shall not be liable for any settlement of any such action effected
without its written consent but if settled with the written consent of the
Company, the Company agrees to indemnify and hold harmless the Underwriter and
any such controlling person from and against any loss or liability by reason of
such settlement. Notwithstanding the immediately preceding sentence, if in any
case where the reasonable fees and expenses of counsel are at the expense of the
indemnifying party and an indemnified party shall have requested the
indemnifying party to reimburse the indemnified party for such fees and expenses
of counsel as incurred, such indemnifying party agrees that it shall be liable
for any settlement of any action effected without its written consent if (i)
such settlement is entered into more than ten business days after the receipt by
such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall have failed to reimburse the indemnified party in accordance with
such request for reimbursement (except to the extent there is a good faith
dispute as to the reasonableness of the legal fees and legal expenses of counsel
retained by such indemnified party (taking into account in such case the
customary fees and expenses of New York City law firms for representations of
this type, if such indemnified party has retained such a firm)) prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of
J.P. Morgan Securities Inc.
January 18, 2001
Page 11
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(c) The Underwriter agrees to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the Underwriter but only with reference
to information relating to the Underwriter furnished in writing by or on behalf
of the Underwriter expressly for use in the Registration Statement, the
Prospectus or any preliminary prospectus. The Underwriter confirms that the
statements set forth in [the third paragraph and second sentence of the fourth
paragraph under the heading "Underwriting" in the prospectus supplement and the
statements set forth in the second to the last paragraph of the cover page of
the prospectus supplement constituting part of the Prospectus], were furnished
in writing to the Company by or on behalf of the Underwriter expressly for use
therein. In case any action shall be brought against the Company, any of its
directors, any such officer or any person controlling the Company based on the
Registration Statement, the Prospectus or any preliminary prospectus and in
respect of which indemnity may be sought against the Underwriter, the
Underwriter shall have the rights and duties given to the Company (except that
if the Company shall have assumed the defense thereof, the Underwriter shall not
be required to do so, but may employ separate counsel therein and participate in
the defense thereof but the fees and expenses of such counsel shall be at the
expense of the Underwriter), and the Company, its directors, any such officers
and any person controlling the Company shall have the rights and duties given to
the Underwriter, by Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriter on the other hand from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Underwriter in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Underwriter shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company, and the total underwriting discounts and commissions received by the
Underwriter, bear to the total price to the public of the Securities, in each
case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company and the Underwriter shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
J.P. Morgan Securities Inc.
January 18, 2001
Page 12
information supplied by the Company or the Underwriter and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by any
method of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or judgments referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which the Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Conditions of Underwriter's Obligations. The obligation of the
---------------------------------------
Underwriter to purchase the Securities under this Agreement is subject to the
satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained
in this Agreement shall be true and correct on the Closing Date and each Date of
Delivery with the same force and effect as if made on and as of the Closing Date
and each Date of Delivery.
(b) The Prospectus shall have been filed with the Commission in
accordance with Section 5(a), and at the Closing Date and each Date of Delivery
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been commenced
or shall be pending before or contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date or the relevant Date of Delivery, as the case may be,
there shall not have been any downgrading, nor shall any notice have been given
of any intended or potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change, in the rating
accorded any of the Company's securities by any "nationally recognized
statistical rating organization" as such term is defined for purposes of Rule
436(g)(2) under the Securities Act.
(d) (i) Since the date of the latest audited financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus, there shall not have been any material adverse change, or any
development involving a prospective material adverse
J.P. Morgan Securities Inc.
January 18, 2001
Page 13
change, in the condition, financial or otherwise, or in the earnings, affairs or
business prospects, whether or not arising in the ordinary course of business,
of the Company, (ii) since the date of the latest audited financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus there shall not have been any material adverse change, or any
development involving a prospective material adverse change, in the capital
stock or in the long-term debt of the Company from that set forth in the
Registration Statement and Prospectus, (iii) the Company and its subsidiaries
shall have no liability or obligation, direct or contingent, which is material
to the Company and its subsidiaries, taken as a whole, other than those
reflected in the Registration Statement and the Prospectus and (iv) on the
Closing Date or the relevant Date of Delivery, as the case may be, the
Underwriter shall have received a certificate dated the Closing Date, signed by
the Vice President, Corporate Accounting and Reporting, confirming the matters
set forth in paragraphs (a), (b), (c) and (d) of this Section 8.
(e) The Underwriter shall have received on the Closing Date and each
Date of Delivery an opinion (satisfactory to the Underwriter and counsel for the
Underwriter), dated the Closing Date or the relevant Date of Delivery, as the
case may be, of John G. Finneran, Jr., Esq., Executive Vice President, General
Counsel and Corporate Secretary of the Company, to the effect that:
(i) the Company and each of its Significant Subsidiaries has
been duly incorporated, is validly existing as a corporation (or, in the
case of Capital One Bank, as a bank chartered under the laws of Virginia,
and in the case of Capital One, F.S.B., as a federal savings bank
chartered under the federal laws of the United States) in good standing
under the laws of its jurisdiction of incorporation and has the corporate
power and authority required to carry on its business as it is currently
being conducted and to own, lease and operate its properties;
(ii) the Company and each of its Significant Subsidiaries is
duly qualified and is in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature of its business
or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
(iii) all of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's Significant Subsidiaries have
been duly and validly authorized and issued and are fully paid and
non-assessable, and are owned of record and, to the best knowledge of such
counsel, beneficially by the Company (other than directors' qualifying
shares of Capital One Bank), free and clear, to the best of such counsel's
knowledge, of any security interest, claim, lien, encumbrance or adverse
interest of any nature;
(iv) all outstanding shares of Common Stock have been duly
authorized and are validly issued and are fully paid and nonassessable; the
Securities have been duly authorized, and when issued and delivered by the
Company pursuant to this Agreement
J.P. Morgan Securities Inc.
January 18, 2001
Page 14
against payment of the consideration therefor set forth herein, such
Securities will be duly and validly issued, fully paid and non-assessable;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the Registration Statement has become effective under the
Securities Act, no stop order suspending its effectiveness has been issued
and no proceedings for that purpose are, to the knowledge of such counsel,
pending before or contemplated by the Commission;
(vii) the statements under the caption "Description of Common
Stock" in the Prospectus and under the caption "Description of Registrant's
Securities to be Registered" in each of the Form 8-A filed on August 24,
1994 and the Form 8-A filed on November 16, 1995, insofar as they purport
to constitute a summary of the terms of the Common Stock (including the
Securities), and under the caption "Supervision, Regulation and Other
Matters" in the Prospectus, as amended or supplemented, and Item 15 of Part
II of the Registration Statement, insofar as such statements constitute a
summary of legal matters, documents or proceedings referred to therein,
fairly present the terms of such Common Stock and the information called
for with respect to such legal matters, documents and proceedings;
(viii) to the best of such counsel's knowledge, neither the
Company nor any of its Significant Subsidiaries is in violation of its
respective charter or by-laws or in default in any material respect in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or other evidence of indebtedness material to the
Company and its subsidiaries, taken as a whole, or in any other agreement,
indenture or instrument material to the conduct of the business of the
Company and its subsidiaries, taken as a whole, to which the Company or any
of its Significant Subsidiaries is a party or by which it or any of its
Significant Subsidiaries or their respective property is bound;
(ix) the execution, delivery and performance of this Agreement,
compliance by the Company with all the provisions hereof, and the
consummation of the transactions contemplated hereby, including the
issuance to the Underwriter of the Securities, will not require any
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body (except as such may
be required under the securities or Blue Sky laws of the various states or
such, the failure of which to obtain, would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole) and will not
conflict with or constitute a breach of any of the terms or provisions of,
or a default under, the charter or by-laws of the Company or any of its
subsidiaries or any agreement, indenture or other instrument known to such
counsel to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or their respective properties
is bound, or materially
J.P. Morgan Securities Inc.
January 18, 2001
Page 15
violate or conflict with any laws, administrative regulations or rulings or
court decrees applicable to the Company or any of its subsidiaries or their
respective properties, other than such breaches, defaults, violations or
conflicts that would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole);
(x) such counsel does not know of any legal or governmental
proceeding pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of their respective property is
subject which is required to be described in the Registration Statement or
the Prospectus and is not so described, or of any contract or other
document, which is required to be described in the Registration Statement
or the Prospectus or is required to be filed as an exhibit to the
Registration Statement which is not described or filed as required;
(xi) to the best of such counsel's knowledge, the Company and
each of its Significant Subsidiaries are in compliance in all material
respects with all laws administered by applicable Bank Regulatory
Authorities, other than where such failures to comply would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, and neither the Company nor any of its subsidiaries is a party to
any written agreement or memorandum of understanding with, or a party to
any commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any extraordinary supervisory letter
from, or has adopted any board resolutions at the request of, any Bank
Regulatory Authority which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy (other than as
described in the Prospectus), its credit policies or its management, nor
have any of them been advised by any Bank Regulatory Authority that it is
contemplating issuing or requesting (or is considering the appropriateness
of issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or
similar submission, or any such board resolutions;
(xii) the Company and each of its subsidiaries has such permits
as are necessary to own, lease and operate its respective properties that
are material to the Company and its subsidiaries, taken as a whole, or to
the conduct of the business in the manner described in the Prospectus; to
the best of such counsel's knowledge, the Company and each of its
subsidiaries has fulfilled and performed all of its material obligations
with respect to such permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of the
holder of any such permit, subject in each case to such qualification as
may be set forth in the Prospectus; and, except as described in the
Prospectus, such permits contain no restrictions that are materially
burdensome to the Company and its subsidiaries, taken as a whole;
(xiii) the Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act;
J.P. Morgan Securities Inc.
January 18, 2001
Page 16
(xiv) The documents incorporated by reference in the Prospectus
as amended or supplemented (other than the financial statements, related
schedules and other financial and statistical data contained therein, as to
which such counsel need express no opinion), when they were filed with the
Commission, complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder;
(xv) (1) the Registration Statement and the Prospectus and any
supplement or amendment thereto (except for financial statements and other
financial and statistical information contained therein as to which no
opinion need be expressed) comply as to form in all material respects with
the Securities Act, and (2) such counsel has no reason to believe that
(except for financial statements and other financial and statistical
information contained therein, as aforesaid, and except for that part of
the Registration Statement that constitutes the Form T-1) the Registration
Statement and the prospectus included therein at the time the Registration
Statement became effective contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus, as amended or supplemented, if applicable (except for financial
statements and other financial and statistical information contained
therein, as aforesaid) contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
In giving such opinion with respect to the matters covered by clause (xv)
such counsel may state that his opinion and belief are based upon his
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and review and discussion of the
contents thereof, or upon the participation of attorneys under his supervision
but are without independent check or verification except as specified.
The opinion of John G. Finneran, Jr., Esq., described in paragraph (e)
above shall be rendered to the Underwriter at the request of the Company and
shall so state therein.
(f) The Underwriter shall have received on the Closing Date and each
Date of Delivery an opinion, dated the Closing Date or the relevant Date of
Delivery, as the case may be, of Simpson Thacher & Bartlett, counsel for the
Underwriter, as to the matters referred to in clauses (iv), (v), (vii) (but only
with respect to the statements under the caption "Description of Common Stock")
and (xiv) of the foregoing paragraph (e). In giving such opinion with respect
to the matters covered by clause (xiv) such counsel may state that their opinion
and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but are without independent
check or verification except as specified.
J.P. Morgan Securities Inc.
January 18, 2001
Page 17
(g) The Underwriter shall have received a letter on and as of the
Closing Date and each Date of Delivery, in form and substance satisfactory to
the Underwriter, from Ernst & Young LLP, independent public accountants, with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus and substantially in the form
and substance of the letter delivered to the Underwriter by Ernst & Young LLP on
the date of this Agreement.
(h) As of the Closing Date, the Securities shall have been approved
for listing on the New York Stock Exchange.
(i) The Company shall not have failed at or prior to the Closing Date
or any relevant Date of Delivery to perform or comply with any of the agreements
herein contained and required to be performed or complied with by the Company at
or prior to the Closing Date or any relevant Date of Delivery.
9. Effective Date of Agreement and Termination.
-------------------------------------------
(a) This Agreement shall become effective upon the execution of this
Agreement.
(b) This Agreement may be terminated at any time prior to the Closing
Date by the Underwriter by written notice to the Company if any of the following
has occurred: (i) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change (including, without
limitation, the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority) in the condition, financial or otherwise, of the Company
and its subsidiaries or the earnings, affairs, or business prospects of the
Company or any of its subsidiaries taken as a whole, whether or not arising in
the ordinary course of business, which would, in the Underwriter's judgment,
make it impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus, (ii) any outbreak or escalation of hostilities
or other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Underwriter's judgment, is material and adverse and would, in the
Underwriter's judgment, make it impracticable to market the Securities on the
terms and in the manner contemplated in the Prospectus, (iii) the suspension or
material limitation of trading in securities on the New York Stock Exchange, the
American Stock Exchange or the NASDAQ National Market System, or limitation on
prices on any such exchange or National Market System or (iv) the taking of any
action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in the Underwriter's opinion has a material
adverse effect on the financial markets in the United States.
(c) If on the Closing Date or any relevant Date of Delivery, the
Underwriter shall fail or refuse to purchase any Securities which it is
obligated to purchase hereunder, other
J.P. Morgan Securities Inc.
January 18, 2001
Page 18
than pursuant to Section 9(b), it shall not be relieved of liability to the
Company for damages occasioned by its failure or refusal.
10. Miscellaneous.
-------------
(a) Notices given pursuant to any provision of this Agreement shall be
addressed as follows: (a) if to the Company, to Capital One Financial
Corporation, c/o Capital One Services, Inc., 8000 Jones Branch Drive, McLean,
Virginia 22102, Attention: Treasurer, and (b) if to the Underwriter, to J.P.
Morgan Securities Inc., 60 Wall Street, New York, New York, 10260, Attention:
Syndicate Department, or in any case to such other address as the person to be
notified may have requested in writing.
(b) The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, its officers
and directors and of the Underwriter set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will survive
delivery of and payment for the Securities, regardless of (i) any investigation,
or statement as to the results thereof, made by or on behalf of the Underwriter
or by or on behalf of the Company, the officers or directors of the Company or
any controlling person of the Company, (ii) acceptance of the Securities and
payment for them hereunder, or (iii) termination of this Agreement.
(c) If this Agreement shall be terminated by the Underwriter because
of any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, the Company agrees to
reimburse the Underwriter for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by it.
(d) Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriter, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Securities from the Underwriter merely because of such purchase.
(e) This Agreement shall be governed and construed in accordance with
the laws of the State of New York.
(f) This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
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J.P. Morgan Securities Inc.
January 18, 2001
Page 19
Please confirm by execution below that the foregoing correctly sets forth the
agreement between the Company and the Underwriter.
Very truly,
CAPITAL ONE FINANCIAL CORPORATION
By: /s/ Susanna K. Tisa
_____________________________________________
Name: Susanna K. Tisa
_____________________________________________
Title: Vice President, Capital Markets and Treasurer
_____________________________________________
J.P. MORGAN SECURITIES INC.
By: /s/ Michael Tiedman
_____________________________________________
Name: Michael Tiedman
_____________________________________________
Title: Vice President
_____________________________________________