Exhibit 10.34

 

THE FIRST MARBLEHEAD CORPORATION

 

Incentive Stock Option Agreement
Granted Under 2003 Stock Incentive Plan

 

1.                                       GRANT OF OPTION.

 

This agreement evidences the grant by The First Marblehead Corporation, a
Delaware corporation (the “Company”), on            , 200   (the “Grant Date”)
to                   , an employee of the Company (the “Participant”), of an
option to purchase, in whole or in part, on the terms provided herein and in the
Company’s 2003 Stock Incentive Plan (the “Plan”), a total of                   
shares (the “Shares”) of common stock, $0.01 par value per share, of the Company
(“Common Stock”) at $           per Share.  Unless earlier terminated, this
option shall expire at 5:00 p.m., Eastern time, on                (the “Final
Exercise Date”).

 

It is intended that the option evidenced by this agreement shall be an incentive
stock option as defined in Section 422 of the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder (the “Code”).  Except as
otherwise indicated by the context, the term “Participant”, as used in this
option, shall be deemed to include any person who acquires the right to exercise
this option validly under its terms.

 

2.                                       VESTING SCHEDULE; FORFEITURE.

 

This option will become exercisable (“vest”) as to         % of the original
number of Shares on the              anniversary of the Grant Date and as to an
additional         % of the original number of Shares on each succeeding
anniversary of the Grant Date until the              anniversary of the Grant
Date.

 

The right of exercise shall be cumulative so that to the extent the option is
not exercised in any period to the maximum extent permissible it shall continue
to be exercisable, in whole or in part, with respect to all Shares for which it
is vested until the earlier of the Final Exercise Date or the termination of
this option under this Section 2, Section 3 hereof or the Plan.

 

The Participant agrees not to engage in a Competitive Action (as defined below)
from the date hereof through the first anniversary of the date of termination of
the Participant’s employment with the Company.  Notwithstanding any other
provision of this agreement, if on or prior to exercise of this option with
respect to any of the Shares, the Participant engages in a Competitive Action or
enters into, or has entered into, an agreement (written, oral or otherwise) to
engage in a Competitive Action, this option and all Shares issuable upon
exercise of this option shall be immediately forfeited, and the Participant
shall have no further rights with respect to such option or Shares. 
Notwithstanding any other provision of this agreement, in the event that the
Participant engages in a Competitive Action or enters into, or has entered into,
an agreement (written, oral or otherwise) to engage in a Competitive Action
after exercise of this option with respect to any of the Shares, but on or prior
to the first anniversary of the Participant’s termination of employment with the
Company, this option, to the extent not exercised, shall be immediately
forfeited, and the Participant shall have no further rights with respect to this
option or any Shares subject to this option and the Participant shall pay to the

 

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Company, upon demand by the Company, an amount equal to (i) the value, as of
each date of exercise of this option, of the number of Shares delivered to the
Participant pursuant to such exercise and (ii) the value of all dividends, if
any, paid to the Participant in respect of the Shares delivered to the
Participant on such date of exercise.  The Participant may satisfy the payment
obligation to the Company of the portion due under (i) above by returning the
Shares delivered to the Participant on all dates of exercise, provided that any
amounts due under (ii) above must be remitted to the Company in addition to the
return of the Shares.  The Participant acknowledges that the restriction on
engaging in a Competitive Action, in view of the nature of the business in which
the Company is engaged, is reasonable in scope (as to both the temporal and
geographical limits) and necessary in order to protect the legitimate business
interests of the Company, and that any violation thereof would result in
irreparable injuries to the Company.  The Participant acknowledges further that
the amounts required to be paid to the Company pursuant to this provision are
reasonable and are not liquidated damages nor shall they be characterized as
such and that the payment of such amounts shall not preclude the Company from
seeking any further remedies at law or in equity.

 

For purposes of this agreement, the Participant will be deemed to engage in a
“Competitive Action” if, either directly or indirectly, and whether as an
employee, consultant, independent contractor, partner, joint venturer or
otherwise, the Participant (i) engages in or directs any business activities, in
any geographical area where the Company or any subsidiary or parent of the
Company is engaged in business or outside of any such geographical area, in
either case, which are competitive with any business activities conducted by the
Company or any subsidiary or parent of the Company in such geographical area,
(ii) on behalf of any person or entity engaged in business activities
competitive with the business activities of the Company or any subsidiary or
parent of the Company, solicits or induces, or in any manner attempts to solicit
or induce, any person employed by, or as an agent of, the Company or any
subsidiary or parent of the Company to terminate such person’s employment or
agency relationship, as the case may be, with the Company or any subsidiary or
parent of the Company, (iii) diverts, or attempts to divert, any person, concern
or entity from doing business with the Company or any subsidiary or parent of
the Company or attempts to induce any such person, concern or entity to cease
being a customer of the Company or any subsidiary or parent of the Company or
(iv) makes use of, or attempts to make use of, the property or proprietary
information of the Company or any subsidiary or parent of the Company, other
than in the course of the performance of services to the Company or any
subsidiary or parent of the Company or at the direction thereof.  The
determination as to whether the Participant has engaged in a Competitive Action
(as defined herein) shall be made by the Compensation Committee of the Board of
Directors of the Company (the “Committee”) in its sole and absolute discretion. 
The Committee’s exercise or nonexercise of such discretion with respect to any
particular event or occurrence by or with respect to the Participant or any
other recipient of options, restricted stock units or other derivative
securities of the Company shall not in any way reduce or eliminate the authority
of the Committee to (i) determine that any event or occurrence by or with
respect to the Participant constitutes engaging in a Competitive Action or
(ii) determine the related Competitive Action date.

 

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3.                                       EXERCISE OF OPTION.

 

(A)                                  FORM OF EXERCISE.  EACH ELECTION TO
EXERCISE THIS OPTION SHALL BE IN THE FORM ATTACHED HERETO AS EXHIBIT A, SIGNED
BY THE PARTICIPANT, AND RECEIVED BY THE COMPANY AT ITS PRINCIPAL OFFICE,
ACCOMPANIED BY THIS AGREEMENT, AND PAYMENT IN FULL IN THE MANNER PROVIDED IN THE
PLAN.  THE PARTICIPANT MAY PURCHASE LESS THAN THE NUMBER OF SHARES COVERED
HEREBY, PROVIDED THAT NO PARTIAL EXERCISE OF THIS OPTION MAY BE FOR ANY
FRACTIONAL SHARE.

 

(B)                                 CONTINUOUS RELATIONSHIP WITH THE COMPANY
REQUIRED.  EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 3, THIS OPTION MAY NOT
BE EXERCISED UNLESS THE PARTICIPANT, AT THE TIME HE OR SHE EXERCISES THIS
OPTION, IS, AND HAS BEEN AT ALL TIMES SINCE THE GRANT DATE, AN EMPLOYEE OR
OFFICER OF, OR CONSULTANT OR ADVISOR TO, THE COMPANY OR ANY PARENT OR SUBSIDIARY
OF THE COMPANY AS DEFINED IN SECTION 424(E) OR (F) OF THE CODE (AN “ELIGIBLE
PARTICIPANT”).

 

(C)                                  TERMINATION OF RELATIONSHIP WITH THE
COMPANY.  IF THE PARTICIPANT CEASES TO BE AN ELIGIBLE PARTICIPANT FOR ANY
REASON, THEN, EXCEPT AS PROVIDED IN PARAGRAPHS (D), (E), AND (F) BELOW, THE
RIGHT TO EXERCISE THIS OPTION SHALL TERMINATE THREE MONTHS AFTER SUCH CESSATION
(BUT IN NO EVENT AFTER THE FINAL EXERCISE DATE), PROVIDED THAT THIS OPTION SHALL
BE EXERCISABLE ONLY TO THE EXTENT THAT THE PARTICIPANT WAS ENTITLED TO EXERCISE
THIS OPTION ON THE DATE OF SUCH CESSATION.

 

(D)                                 EXERCISE PERIOD UPON DEATH.  IF THE
PARTICIPANT DIES PRIOR TO THE FINAL EXERCISE DATE WHILE HE OR SHE IS AN ELIGIBLE
PARTICIPANT AND THE COMPANY HAS NOT TERMINATED SUCH RELATIONSHIP FOR “CAUSE” AS
SPECIFIED IN PARAGRAPH (F) BELOW, THIS OPTION SHALL BE EXERCISABLE, WITHIN THE
PERIOD OF ONE YEAR FOLLOWING THE DATE OF DEATH OF THE PARTICIPANT, BY AN
AUTHORIZED TRANSFEREE, PROVIDED THAT THIS OPTION SHALL BE EXERCISABLE ONLY TO
THE EXTENT THAT THIS OPTION WAS EXERCISABLE BY THE PARTICIPANT ON THE DATE OF
HIS OR HER DEATH, AND FURTHER PROVIDED THAT THIS OPTION SHALL NOT BE EXERCISABLE
AFTER THE FINAL EXERCISE DATE.

 

(E)                                  EXERCISE PERIOD UPON DISABILITY.  IF THE
PARTICIPANT BECOMES DISABLED (WITHIN THE MEANING OF SECTION 22(E) OF THE CODE)
PRIOR TO THE FINAL EXERCISE DATE WHILE HE OR SHE IS AN ELIGIBLE PARTICIPANT AND
THE COMPANY HAS NOT TERMINATED SUCH RELATIONSHIP FOR “CAUSE” AS SPECIFIED IN
PARAGRAPH (F) BELOW, THIS OPTION SHALL BE EXERCISABLE UNTIL THE FINAL EXERCISE
DATE, BY THE PARTICIPANT, PROVIDED THAT THIS OPTION SHALL BE EXERCISABLE ONLY TO
THE EXTENT THAT THIS OPTION WAS EXERCISABLE BY THE PARTICIPANT ON THE DATE OF
HIS OR HER DISABILITY, AND FURTHER PROVIDED THAT THIS OPTION SHALL NOT BE
EXERCISABLE AFTER THE FINAL EXERCISE DATE.

 

(F)                                    DISCHARGE FOR CAUSE.  IF THE PARTICIPANT,
PRIOR TO THE FINAL EXERCISE DATE, IS DISCHARGED BY THE COMPANY FOR “CAUSE” (AS
DEFINED BELOW), THE RIGHT TO EXERCISE THIS OPTION SHALL TERMINATE IMMEDIATELY
UPON THE EFFECTIVE DATE OF SUCH DISCHARGE.  FOR PURPOSES OF THIS SECTION 3(F),
“CAUSE” SHALL MEAN WILLFUL MISCONDUCT BY THE PARTICIPANT OR WILLFUL FAILURE BY
THE PARTICIPANT TO PERFORM HIS OR HER RESPONSIBILITIES TO THE COMPANY
(INCLUDING, WITHOUT LIMITATION, BREACH BY THE PARTICIPANT OF ANY PROVISION OF
ANY EMPLOYMENT, CONSULTING, ADVISORY, NONDISCLOSURE, NON-COMPETITION OR OTHER
SIMILAR AGREEMENT BETWEEN THE PARTICIPANT AND THE COMPANY), AS DETERMINED BY THE
COMPANY, WHICH DETERMINATION SHALL BE CONCLUSIVE.  THE PARTICIPANT SHALL BE
CONSIDERED TO HAVE BEEN DISCHARGED FOR “CAUSE” IF THE COMPANY DETERMINES, WITHIN
30 DAYS AFTER THE PARTICIPANT’S RESIGNATION, THAT DISCHARGE FOR CAUSE WAS
WARRANTED.

 

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4.                                       VESTING UPON REORGANIZATION EVENT.

 

(A)                                  OPTION NOT ASSUMED.  IF A REORGANIZATION
EVENT (AS DEFINED IN THE PLAN) OCCURS AND THE ACQUIRING OR SUCCEEDING
CORPORATION (OR AN AFFILIATE THEREOF) DOES NOT AGREE TO ASSUME, OR SUBSTITUTE
FOR, THIS OPTION, THIS OPTION SHALL BECOME EXERCISABLE IN FULL BEGINNING TEN
BUSINESS DAYS BEFORE THE DATE OF CONSUMMATION OF THE REORGANIZATION EVENT AND
SHALL TERMINATE IMMEDIATELY PRIOR TO CONSUMMATION OF SUCH REORGANIZATION EVENT,
EXCEPT TO THE EXTENT EXERCISED BY THE PARTICIPANT BEFORE THE CONSUMMATION OF
SUCH REORGANIZATION EVENT; PROVIDED FURTHER, IN THE EVENT OF A REORGANIZATION
EVENT UNDER THE TERMS OF WHICH HOLDERS OF COMMON STOCK WILL RECEIVE UPON
CONSUMMATION THEREOF A CASH PAYMENT FOR EACH SHARE OF COMMON STOCK SURRENDERED
PURSUANT TO SUCH REORGANIZATION EVENT (THE “ACQUISITION PRICE”) AND THE
ACQUIRING OR SUCCEEDING CORPORATION (OR AN AFFILIATE THEREOF) DOES NOT AGREE TO
ASSUME, OR TO SUBSTITUTE FOR, THIS OPTION, THEN THIS OPTION SHALL TERMINATE UPON
CONSUMMATION OF SUCH REORGANIZATION EVENT AND THE PARTICIPANT SHALL RECEIVE, IN
EXCHANGE THEREFOR, A CASH PAYMENT EQUAL TO THE AMOUNT (IF ANY) BY WHICH (A) THE
ACQUISITION PRICE MULTIPLIED BY THE NUMBER OF SHARES OF COMMON STOCK SUBJECT TO
THIS OPTION (WHETHER OR NOT THEN EXERCISABLE), EXCEEDS (B) THE AGGREGATE
EXERCISE PRICE OF THIS OPTION.

 

(B)                                 OPTION ASSUMED.  IF A REORGANIZATION EVENT
(AS DEFINED IN THE PLAN) OCCURS AND THIS OPTION IS ASSUMED (AS DEFINED IN THE
PLAN) BY THE ACQUIRING OR SUCCEEDING CORPORATION (OR AN AFFILIATE THEREOF), THIS
OPTION (AS SO ASSUMED) SHALL CONTINUE TO BECOME EXERCISABLE IN ACCORDANCE WITH
THE ORIGINAL VESTING SCHEDULE SET FORTH IN THIS OPTION AND THIS OPTION (AS SO
ASSUMED) SHALL BECOME IMMEDIATELY EXERCISABLE IN FULL IF, ON OR PRIOR TO THE
SECOND ANNIVERSARY OF THE DATE OF THE CONSUMMATION OF THE REORGANIZATION EVENT,
THE PARTICIPANT’S EMPLOYMENT WITH THE COMPANY OR THE ACQUIRING OR SUCCEEDING
CORPORATION IS TERMINATED FOR GOOD REASON (AS DEFINED BELOW) BY THE PARTICIPANT
OR IS TERMINATED WITHOUT CAUSE (AS DEFINED BELOW) BY THE COMPANY OR THE
ACQUIRING OR SUCCEEDING CORPORATION.

 

(C)                                  DEFINITIONS.  FOR PURPOSES OF THIS
SECTION 4, (I) ”GOOD REASON” SHALL MEAN ANY SIGNIFICANT DIMINUTION IN THE
PARTICIPANT’S TITLE, AUTHORITY, OR RESPONSIBILITIES FROM AND AFTER SUCH
REORGANIZATION EVENT OR ANY REDUCTION IN THE ANNUAL CASH COMPENSATION PAYABLE TO
THE PARTICIPANT FROM AND AFTER SUCH REORGANIZATION EVENT OR THE RELOCATION OF
THE PLACE OF BUSINESS AT WHICH THE PARTICIPANT IS PRINCIPALLY LOCATED TO A
LOCATION THAT IS GREATER THAN 50 MILES FROM ITS LOCATION IMMEDIATELY PRIOR TO
SUCH REORGANIZATION EVENT AND (II) ”CAUSE” SHALL MEAN ANY (I) WILLFUL FAILURE BY
THE PARTICIPANT, WHICH FAILURE IS NOT CURED WITHIN 30 DAYS OF WRITTEN NOTICE TO
THE PARTICIPANT FROM THE COMPANY, TO PERFORM HIS OR HER MATERIAL
RESPONSIBILITIES TO THE COMPANY OR (II)  WILLFUL MISCONDUCT BY THE PARTICIPANT
WHICH AFFECTS THE BUSINESS REPUTATION OF THE COMPANY.

 

5.                                       TAX MATTERS.

 

(A)                                  WITHHOLDING.  NO SHARES WILL BE ISSUED
PURSUANT TO THE EXERCISE OF THIS OPTION UNLESS AND UNTIL THE PARTICIPANT PAYS TO
THE COMPANY, OR MAKES PROVISION SATISFACTORY TO THE COMPANY FOR PAYMENT OF, ANY
FEDERAL, STATE OR LOCAL WITHHOLDING TAXES REQUIRED BY LAW TO BE WITHHELD IN
RESPECT OF THIS OPTION.

 

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(B)                                 DISQUALIFYING DISPOSITION.  IF THE
PARTICIPANT DISPOSES OF SHARES ACQUIRED UPON EXERCISE OF THIS OPTION WITHIN TWO
YEARS FROM THE GRANT DATE OR ONE YEAR AFTER SUCH SHARES WERE ACQUIRED PURSUANT
TO EXERCISE OF THIS OPTION, THE PARTICIPANT SHALL NOTIFY THE COMPANY IN WRITING
OF SUCH DISPOSITION.

 

6.                                       NONTRANSFERABILITY OF OPTION.

 

This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.

 

7.                                       PROVISIONS OF THE PLAN.

 

This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.

 

8.                                       MISCELLANEOUS.

 

(A)                                  NO RIGHTS TO EMPLOYMENT.  THE PARTICIPANT
ACKNOWLEDGES AND AGREES THAT THE VESTING OF THIS OPTION PURSUANT TO SECTION 2
HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE AT THE WILL OF THE
COMPANY (NOT THROUGH THE ACT OF BEING HIRED OR PURCHASING SHARES HEREUNDER). 
THE PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE
OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL.

 

(B)                                 SEVERABILITY.  THE INVALIDITY OR
UNENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE
VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT, AND EACH
OTHER PROVISION OF THIS AGREEMENT SHALL BE SEVERABLE AND ENFORCEABLE TO THE
EXTENT PERMITTED BY LAW.

 

(C)                                  WAIVER.  ANY PROVISION FOR THE BENEFIT OF
THE COMPANY CONTAINED IN THIS AGREEMENT MAY BE WAIVED, EITHER GENERALLY OR IN
ANY PARTICULAR INSTANCE, BY THE BOARD OF DIRECTORS OF THE COMPANY.

 

(D)                                 BINDING EFFECT.  THIS AGREEMENT SHALL BE
BINDING UPON AND INURE TO THE BENEFIT OF THE COMPANY AND THE PARTICIPANT AND
THEIR RESPECTIVE HEIRS, EXECUTORS, ADMINISTRATORS, LEGAL REPRESENTATIVES,
SUCCESSORS AND ASSIGNS, SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN
SECTION 6 OF THIS AGREEMENT.

 

(E)                                  NOTICE.   ALL NOTICES REQUIRED OR PERMITTED
HEREUNDER SHALL BE IN WRITING AND DEEMED EFFECTIVELY GIVEN UPON PERSONAL
DELIVERY OR FIVE DAYS AFTER DEPOSIT IN THE UNITED STATES POST OFFICE, BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, ADDRESSED TO THE OTHER PARTY
HERETO AT THE ADDRESS SHOWN BENEATH HIS OR ITS RESPECTIVE SIGNATURE TO THIS
AGREEMENT, OR AT SUCH OTHER ADDRESS OR ADDRESSES AS EITHER PARTY SHALL DESIGNATE
TO THE OTHER IN ACCORDANCE WITH THIS SECTION 8(E).

 

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(F)                                    PRONOUNS.  WHENEVER THE CONTEXT MAY
REQUIRE, ANY PRONOUNS USED IN THIS AGREEMENT SHALL INCLUDE THE CORRESPONDING
MASCULINE, FEMININE OR NEUTER FORMS, AND THE SINGULAR FORM OF NOUNS AND PRONOUNS
SHALL INCLUDE THE PLURAL, AND VICE VERSA.

 

(G)                                 ENTIRE AGREEMENT.  THIS AGREEMENT AND THE
PLAN CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES, AND SUPERSEDES ALL
PRIOR AGREEMENTS AND UNDERSTANDINGS, RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT.

 

(H)                                 GOVERNING LAW.  THIS AGREEMENT SHALL BE
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO ANY APPLICABLE CONFLICTS OF LAWS.

 

(I)                                     PARTICIPANT’S ACKNOWLEDGMENTS.  THE
PARTICIPANT ACKNOWLEDGES THAT HE OR SHE: (I) HAS READ THIS AGREEMENT; (II) HAS
BEEN REPRESENTED IN THE PREPARATION, NEGOTIATION, AND EXECUTION OF THIS
AGREEMENT BY LEGAL COUNSEL OF THE PARTICIPANT’S OWN CHOICE OR HAS VOLUNTARILY
DECLINED TO SEEK SUCH COUNSEL; (III) UNDERSTANDS THE TERMS AND CONSEQUENCES OF
THIS AGREEMENT; (IV) IS FULLY AWARE OF THE LEGAL AND BINDING EFFECT OF THIS
AGREEMENT; AND (V) UNDERSTANDS THAT THE LAW FIRM OF WILMER CUTLER PICKERING HALE
AND DORR LLP, IS ACTING AS COUNSEL TO THE COMPANY IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THE AGREEMENT, AND IS NOT ACTING AS COUNSEL FOR THE
PARTICIPANT.

 

IN WITNESS WHEREOF, the Company has caused this option to be executed under its
corporate seal by its duly authorized officer.  This option shall take effect as
a sealed instrument.

 

 

THE FIRST MARBLEHEAD CORPORATION

 

 

Dated:

By:

 

 

 

Name:

 

 

 

 

 

Title:

 

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PARTICIPANT’S ACCEPTANCE

 

The undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof.  The undersigned hereby acknowledges receipt of a copy of
the Company’s 2003 Stock Incentive Plan.

 

 

PARTICIPANT:

 

 

 

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

Address:

 

 

 

 

 

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Exhibit A

 

NOTICE OF STOCK OPTION EXERCISE

 

Date:                         

 

The First Marblehead Corporation

The Prudential Tower

800 Boylston Street, 34th Floor

Boston, MA  02199-8157

 

Attention:  Treasurer

 

Dear Sir or Madam:

 

I am the holder of a stock option granted to me under The First Marblehead
Corporation (the “Company”) 2003 Stock Incentive Plan on                     
for the purchase of                      shares of Common Stock of the Company
at a purchase price of $                     per share.

 

I hereby exercise my option to purchase                    shares of Common
Stock (the “Shares”), for which I have enclosed                      in the
amount of                 .  Please register my stock certificate as follows:

 

Name(s):

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

Tax I.D. #:

 

 

Very truly yours,

 

 

 

 

 

 

 

 

(Signature)

 

 

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THE FIRST MARBLEHEAD CORPORATION

 

Nonstatutory Stock Option Agreement
Granted Under 2003 Stock Incentive Plan

 

1.                                       GRANT OF OPTION.

 

This agreement evidences the grant by The First Marblehead Corporation, a
Delaware corporation (the “Company”), on            , 200   (the “Grant Date”)
to                   , an [employee], [consultant], [director] of the Company
(the “Participant”), of an option to purchase, in whole or in part, on the terms
provided herein and in the Company’s 2003 Stock Incentive Plan (the “Plan”), a
total of                    shares (the “Shares”) of common stock, $.01 par
value per share, of the Company (“Common Stock”) at $           per Share. 
Unless earlier terminated, this option shall expire at 5:00 p.m., Eastern time,
on                (the “Final Exercise Date”).

 

It is intended that the option evidenced by this agreement shall not be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the “Code”). 
Except as otherwise indicated by the context, the term “Participant”, as used in
this option, shall be deemed to include any person who acquires the right to
exercise this option validly under its terms.

 

2.                                       VESTING SCHEDULE; FORFEITURE.

 

This option will become exercisable (“vest”) as to         % of the original
number of Shares on the            anniversary of the Grant Date and as to an
additional           % of the original number of Shares at the end of each
successive               -month period following the            anniversary of
the Grant Date until the              anniversary of the Grant Date.

 

The right of exercise shall be cumulative so that to the extent the option is
not exercised in any period to the maximum extent permissible it shall continue
to be exercisable, in whole or in part, with respect to all Shares for which it
is vested until the earlier of the Final Exercise Date or the termination of
this option under this Section 2, Section 3 hereof or the Plan.

 

The Participant agrees not to engage in a Competitive Action (as defined below)
from the date hereof through the first anniversary of the date of termination of
the Participant’s employment with the Company.  Notwithstanding any other
provision of this agreement, if on or prior to exercise of this option with
respect to any of the Shares, the Participant engages in a Competitive Action or
enters into, or has entered into, an agreement (written, oral or otherwise) to
engage in a Competitive Action, this option and all Shares issuable upon
exercise of this option shall be immediately forfeited, and the Participant
shall have no further rights with respect to such option or Shares. 
Notwithstanding any other provision of this agreement, in the event that the
Participant engages in a Competitive Action or enters into, or has entered into,
an agreement (written, oral or otherwise) to engage in a Competitive Action
after exercise of this option with respect to any of the Shares, but on or prior
to the first anniversary of the Participant’s termination of employment with the
Company, this option, to the extent not exercised, shall be immediately
forfeited, and the Participant shall have no further rights with respect to this
option or any Shares subject to this option and the Participant shall pay to the

 

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Company, upon demand by the Company, an amount equal to (i) the value, as of
each date of exercise of this option, of the number of Shares delivered to the
Participant pursuant to such exercise and (ii) the value of all dividends, if
any, paid to the Participant in respect of the Shares delivered to the
Participant on such date of exercise.  The Participant may satisfy the payment
obligation to the Company of the portion due under (i) above by returning the
Shares delivered to the Participant on all dates of exercise, provided that any
amounts due under (ii) above must be remitted to the Company in addition to the
return of the Shares.  The Participant acknowledges that the restriction on
engaging in a Competitive Action, in view of the nature of the business in which
the Company is engaged, is reasonable in scope (as to both the temporal and
geographical limits) and necessary in order to protect the legitimate business
interests of the Company, and that any violation thereof would result in
irreparable injuries to the Company.  The Participant acknowledges further that
the amounts required to be paid to the Company pursuant to this provision are
reasonable and are not liquidated damages nor shall they be characterized as
such and that the payment of such amounts shall not preclude the Company from
seeking any further remedies at law or in equity.

 

For purposes of this agreement, the Participant will be deemed to engage in a
“Competitive Action” if, either directly or indirectly, and whether as an
employee, consultant, independent contractor, partner, joint venturer or
otherwise, the Participant (i) engages in or directs any business activities, in
any geographical area where the Company or any subsidiary or parent of the
Company is engaged in business or outside of any such geographical area, in
either case, which are competitive with any business activities conducted by the
Company or any subsidiary or parent of the Company in such geographical area,
(ii) on behalf of any person or entity engaged in business activities
competitive with the business activities of the Company or any subsidiary or
parent of the Company, solicits or induces, or in any manner attempts to solicit
or induce, any person employed by, or as an agent of, the Company or any
subsidiary or parent of the Company to terminate such person’s employment or
agency relationship, as the case may be, with the Company or any subsidiary or
parent of the Company, (iii) diverts, or attempts to divert, any person, concern
or entity from doing business with the Company or any subsidiary or parent of
the Company or attempts to induce any such person, concern or entity to cease
being a customer of the Company or any subsidiary or parent of the Company or
(iv) makes use of, or attempts to make use of, the property or proprietary
information of the Company or any subsidiary or parent of the Company, other
than in the course of the performance of services to the Company or any
subsidiary or parent of the Company or at the direction thereof.  The
determination as to whether the Participant has engaged in a Competitive Action
(as defined herein) shall be made by the Compensation Committee of the Board of
Directors of the Company (the “Committee”) in its sole and absolute discretion. 
The Committee’s exercise or nonexercise of such discretion with respect to any
particular event or occurrence by or with respect to the Participant or any
other recipient of options, restricted stock units or other derivative
securities of the Company shall not in any way reduce or eliminate the authority
of the Committee to (i) determine that any event or occurrence by or with
respect to the Participant constitutes engaging in a Competitive Action or
(ii) determine the related Competitive Action date.

 

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3.                                       EXERCISE OF OPTION.

 

(A)                                  FORM OF EXERCISE.  EACH ELECTION TO
EXERCISE THIS OPTION SHALL BE IN THE FORM ATTACHED HERETO AS EXHIBIT A, SIGNED
BY THE PARTICIPANT, AND RECEIVED BY THE COMPANY AT ITS PRINCIPAL OFFICE,
ACCOMPANIED BY THIS AGREEMENT, AND PAYMENT IN FULL IN THE MANNER PROVIDED IN THE
PLAN.  THE PARTICIPANT MAY PURCHASE LESS THAN THE NUMBER OF SHARES COVERED
HEREBY, PROVIDED THAT NO PARTIAL EXERCISE OF THIS OPTION MAY BE FOR ANY
FRACTIONAL SHARE.

 

(B)                                 CONTINUOUS RELATIONSHIP WITH THE COMPANY
REQUIRED.  EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 3, THIS OPTION MAY NOT
BE EXERCISED UNLESS THE PARTICIPANT, AT THE TIME HE OR SHE EXERCISES THIS
OPTION, IS, AND HAS BEEN AT ALL TIMES SINCE THE GRANT DATE, AN EMPLOYEE OFFICER
OR DIRECTOR OF, OR CONSULTANT OR ADVISOR TO, THE COMPANY OR ANY OTHER ENTITY THE
EMPLOYEES, OFFICERS, DIRECTORS, CONSULTANTS, OR ADVISORS OF WHICH ARE ELIGIBLE
TO RECEIVE OPTION GRANTS UNDER THE PLAN (AN “ELIGIBLE PARTICIPANT”).

 

(C)                                  TERMINATION OF RELATIONSHIP WITH THE
COMPANY.  IF THE PARTICIPANT CEASES TO BE AN ELIGIBLE PARTICIPANT FOR ANY
REASON, THEN, EXCEPT AS PROVIDED IN PARAGRAPHS (D) AND (E) BELOW, THE RIGHT TO
EXERCISE THIS OPTION SHALL TERMINATE THREE MONTHS AFTER SUCH CESSATION (BUT IN
NO EVENT AFTER THE FINAL EXERCISE DATE), PROVIDED THAT THIS OPTION SHALL BE
EXERCISABLE ONLY TO THE EXTENT THAT THE PARTICIPANT WAS ENTITLED TO EXERCISE
THIS OPTION ON THE DATE OF SUCH CESSATION.

 

(D)                                 EXERCISE PERIOD UPON DEATH OR DISABILITY. 
IF THE PARTICIPANT DIES OR BECOMES DISABLED (WITHIN THE MEANING OF
SECTION 22(E)(3) OF THE CODE) PRIOR TO THE FINAL EXERCISE DATE WHILE HE OR SHE
IS AN ELIGIBLE PARTICIPANT AND THE COMPANY HAS NOT TERMINATED SUCH RELATIONSHIP
FOR “CAUSE” AS SPECIFIED IN PARAGRAPH (E) BELOW, THIS OPTION SHALL BE
EXERCISABLE, WITHIN THE PERIOD OF ONE YEAR FOLLOWING THE DATE OF DEATH OR
DISABILITY OF THE PARTICIPANT, BY THE PARTICIPANT (OR IN THE CASE OF DEATH BY AN
AUTHORIZED TRANSFEREE), PROVIDED THAT THIS OPTION SHALL BE EXERCISABLE ONLY TO
THE EXTENT THAT THIS OPTION WAS EXERCISABLE BY THE PARTICIPANT ON THE DATE OF
HIS OR HER DEATH OR DISABILITY, AND FURTHER PROVIDED THAT THIS OPTION SHALL NOT
BE EXERCISABLE AFTER THE FINAL EXERCISE DATE.

 

(E)                                  DISCHARGE FOR CAUSE.  IF THE PARTICIPANT,
PRIOR TO THE FINAL EXERCISE DATE, IS DISCHARGED BY THE COMPANY FOR “CAUSE” (AS
DEFINED BELOW), THE RIGHT TO EXERCISE THIS OPTION SHALL TERMINATE IMMEDIATELY
UPON THE EFFECTIVE DATE OF SUCH DISCHARGE.  “CAUSE” SHALL MEAN WILLFUL
MISCONDUCT BY THE PARTICIPANT OR WILLFUL FAILURE BY THE PARTICIPANT TO PERFORM
HIS OR HER RESPONSIBILITIES TO THE COMPANY (INCLUDING, WITHOUT LIMITATION,
BREACH BY THE PARTICIPANT OF ANY PROVISION OF ANY EMPLOYMENT, CONSULTING,
ADVISORY, NONDISCLOSURE, NON-COMPETITION OR OTHER SIMILAR AGREEMENT BETWEEN THE
PARTICIPANT AND THE COMPANY), AS DETERMINED BY THE COMPANY, WHICH DETERMINATION
SHALL BE CONCLUSIVE.  THE PARTICIPANT SHALL BE CONSIDERED TO HAVE BEEN
DISCHARGED FOR “CAUSE” IF THE COMPANY DETERMINES, WITHIN 30 DAYS AFTER THE
PARTICIPANT’S RESIGNATION, THAT DISCHARGE FOR CAUSE WAS WARRANTED.

 

4.                                       VESTING UPON REORGANIZATION EVENT.

 

(A)                                  OPTION NOT ASSUMED.  IF A REORGANIZATION
EVENT (AS DEFINED IN THE PLAN) OCCURS AND THE ACQUIRING OR SUCCEEDING
CORPORATION (OR AN AFFILIATE THEREOF) DOES NOT AGREE TO ASSUME, OR

 

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SUBSTITUTE FOR, THIS OPTION, THIS OPTION SHALL BECOME EXERCISABLE IN FULL
BEGINNING TEN BUSINESS DAYS BEFORE THE DATE OF CONSUMMATION OF THE
REORGANIZATION EVENT AND SHALL TERMINATE IMMEDIATELY PRIOR TO CONSUMMATION OF
SUCH REORGANIZATION EVENT, EXCEPT TO THE EXTENT EXERCISED BY THE PARTICIPANT
BEFORE THE CONSUMMATION OF SUCH REORGANIZATION EVENT; PROVIDED FURTHER, IN THE
EVENT OF A REORGANIZATION EVENT UNDER THE TERMS OF WHICH HOLDERS OF COMMON STOCK
WILL RECEIVE UPON CONSUMMATION THEREOF A CASH PAYMENT FOR EACH SHARE OF COMMON
STOCK SURRENDERED PURSUANT TO SUCH REORGANIZATION EVENT (THE “ACQUISITION
PRICE”) AND THE ACQUIRING OR SUCCEEDING CORPORATION (OR AN AFFILIATE THEREOF)
DOES NOT AGREE TO ASSUME, OR TO SUBSTITUTE FOR, THIS OPTION, THEN THIS OPTION
SHALL TERMINATE UPON CONSUMMATION OF SUCH REORGANIZATION EVENT AND THE
PARTICIPANT SHALL RECEIVE, IN EXCHANGE THEREFOR, A CASH PAYMENT EQUAL TO THE
AMOUNT (IF ANY) BY WHICH (A) THE ACQUISITION PRICE MULTIPLIED BY THE NUMBER OF
SHARES OF COMMON STOCK SUBJECT TO THIS OPTION (WHETHER OR NOT THEN EXERCISABLE),
EXCEEDS (B) THE AGGREGATE EXERCISE PRICE OF THIS OPTION.

 

(B)                                 OPTION ASSUMED.  IF A REORGANIZATION EVENT
(AS DEFINED IN THE PLAN) OCCURS AND THIS OPTION IS ASSUMED (AS DEFINED IN THE
PLAN) BY THE ACQUIRING OR SUCCEEDING CORPORATION (OR AN AFFILIATE THEREOF), THIS
OPTION (AS SO ASSUMED) SHALL CONTINUE TO BECOME EXERCISABLE IN ACCORDANCE WITH
THE ORIGINAL VESTING SCHEDULE SET FORTH IN THIS OPTION AND THIS OPTION (AS SO
ASSUMED) SHALL BECOME IMMEDIATELY EXERCISABLE IN FULL IF, ON OR PRIOR TO THE
SECOND ANNIVERSARY OF THE DATE OF THE CONSUMMATION OF THE REORGANIZATION EVENT,
THE PARTICIPANT’S EMPLOYMENT WITH THE COMPANY OR THE ACQUIRING OR SUCCEEDING
CORPORATION IS TERMINATED FOR GOOD REASON (AS DEFINED BELOW) BY THE PARTICIPANT
OR IS TERMINATED WITHOUT CAUSE (AS DEFINED BELOW) BY THE COMPANY OR THE
ACQUIRING OR SUCCEEDING CORPORATION.

 

(C)                                  DEFINITIONS.  FOR PURPOSES OF THIS
SECTION 4, (I) “GOOD REASON” SHALL MEAN ANY SIGNIFICANT DIMINUTION IN THE
PARTICIPANT’S TITLE, AUTHORITY, OR RESPONSIBILITIES FROM AND AFTER SUCH
REORGANIZATION EVENT OR ANY REDUCTION IN THE ANNUAL CASH COMPENSATION PAYABLE TO
THE PARTICIPANT FROM AND AFTER SUCH REORGANIZATION EVENT OR THE RELOCATION OF
THE PLACE OF BUSINESS AT WHICH THE PARTICIPANT IS PRINCIPALLY LOCATED TO A
LOCATION THAT IS GREATER THAN 50 MILES FROM ITS LOCATION IMMEDIATELY PRIOR TO
SUCH REORGANIZATION EVENT AND (II) “CAUSE” SHALL MEAN ANY (I) WILLFUL FAILURE BY
THE PARTICIPANT, WHICH FAILURE IS NOT CURED WITHIN 30 DAYS OF WRITTEN NOTICE TO
THE PARTICIPANT FROM THE COMPANY, TO PERFORM HIS OR HER MATERIAL
RESPONSIBILITIES TO THE COMPANY OR (II)  WILLFUL MISCONDUCT BY THE PARTICIPANT
WHICH AFFECTS THE BUSINESS REPUTATION OF THE COMPANY.

 

5.                                       WITHHOLDING.

 

No Shares will be issued pursuant to the exercise of this option unless and
until the Participant pays to the Company, or makes provision satisfactory to
the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.

 

6.                                       NONTRANSFERABILITY OF OPTION.

 

This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent

 

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and distribution, and, during the lifetime of the Participant, this option shall
be exercisable only by the Participant.

 

7.                                       PROVISIONS OF THE PLAN.

 

This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.

 

8.                                       MISCELLANEOUS.

 

(A)                                  NO RIGHTS TO EMPLOYMENT.  THE PARTICIPANT
ACKNOWLEDGES AND AGREES THAT THE VESTING OF THIS OPTION PURSUANT TO SECTION 2
HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE AT THE WILL OF THE
COMPANY (NOT THROUGH THE ACT OF BEING HIRED OR PURCHASING SHARES HEREUNDER). 
THE PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE
OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL.

 

(B)                                 SEVERABILITY.  THE INVALIDITY OR
UNENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE
VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT, AND EACH
OTHER PROVISION OF THIS AGREEMENT SHALL BE SEVERABLE AND ENFORCEABLE TO THE
EXTENT PERMITTED BY LAW.

 

(C)                                  WAIVER.  ANY PROVISION FOR THE BENEFIT OF
THE COMPANY CONTAINED IN THIS AGREEMENT MAY BE WAIVED, EITHER GENERALLY OR IN
ANY PARTICULAR INSTANCE, BY THE BOARD OF DIRECTORS OF THE COMPANY.

 

(D)                                 BINDING EFFECT.  THIS AGREEMENT SHALL BE
BINDING UPON AND INURE TO THE BENEFIT OF THE COMPANY AND THE PARTICIPANT AND
THEIR RESPECTIVE HEIRS, EXECUTORS, ADMINISTRATORS, LEGAL REPRESENTATIVES,
SUCCESSORS AND ASSIGNS, SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN
SECTION 6 OF THIS AGREEMENT.

 

(E)                                  NOTICE.   ALL NOTICES REQUIRED OR PERMITTED
HEREUNDER SHALL BE IN WRITING AND DEEMED EFFECTIVELY GIVEN UPON PERSONAL
DELIVERY OR FIVE DAYS AFTER DEPOSIT IN THE UNITED STATES POST OFFICE, BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, ADDRESSED TO THE OTHER PARTY
HERETO AT THE ADDRESS SHOWN BENEATH HIS OR ITS RESPECTIVE SIGNATURE TO THIS
AGREEMENT, OR AT SUCH OTHER ADDRESS OR ADDRESSES AS EITHER PARTY SHALL DESIGNATE
TO THE OTHER IN ACCORDANCE WITH THIS SECTION 8(E).

 

(F)                                    PRONOUNS.  WHENEVER THE CONTEXT MAY
REQUIRE, ANY PRONOUNS USED IN THIS AGREEMENT SHALL INCLUDE THE CORRESPONDING
MASCULINE, FEMININE OR NEUTER FORMS, AND THE SINGULAR FORM OF NOUNS AND PRONOUNS
SHALL INCLUDE THE PLURAL, AND VICE VERSA.

 

(G)                                 ENTIRE AGREEMENT.  THIS AGREEMENT AND THE
PLAN CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES, AND SUPERSEDES ALL
PRIOR AGREEMENTS AND UNDERSTANDINGS, RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT.

 

5

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(H)                                 GOVERNING LAW.  THIS AGREEMENT SHALL BE
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO ANY APPLICABLE CONFLICTS OF LAWS.

 

(I)                                     PARTICIPANT’S ACKNOWLEDGMENTS.  THE
PARTICIPANT ACKNOWLEDGES THAT HE OR SHE: (I) HAS READ THIS AGREEMENT; (II) HAS
BEEN REPRESENTED IN THE PREPARATION, NEGOTIATION, AND EXECUTION OF THIS
AGREEMENT BY LEGAL COUNSEL OF THE PARTICIPANT’S OWN CHOICE OR HAS VOLUNTARILY
DECLINED TO SEEK SUCH COUNSEL; (III) UNDERSTANDS THE TERMS AND CONSEQUENCES OF
THIS AGREEMENT; (IV) IS FULLY AWARE OF THE LEGAL AND BINDING EFFECT OF THIS
AGREEMENT; AND (V) UNDERSTANDS THAT THE LAW FIRM OF WILMER CUTLER PICKERING HALE
AND DORR LLP, IS ACTING AS COUNSEL TO THE COMPANY IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THE AGREEMENT, AND IS NOT ACTING AS COUNSEL FOR THE
PARTICIPANT.

 

IN WITNESS WHEREOF, the Company has caused this option to be executed under its
corporate seal by its duly authorized officer.  This option shall take effect as
a sealed instrument.

 

 

THE FIRST MARBLEHEAD CORPORATION

 

 

 

 

Dated:

By:

 

 

 

Name:

 

 

 

 

 

Title:

 

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PARTICIPANT’S ACCEPTANCE

 

The undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof.  The undersigned hereby acknowledges receipt of a copy of
the Company’s 2003 Stock Incentive Plan.

 

 

PARTICIPANT:

 

 

 

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

Address:

 

 

 

 

 

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Exhibit A

 

NOTICE OF STOCK OPTION EXERCISE

 

Date:                           

 

The First Marblehead Corporation
The Prudential Tower

800 Boylston Street, 34th Floor

Boston, MA  02199-8157

Attention:  Treasurer

 

Dear Sir or Madam:

 

I am the holder of a stock option granted to me under The First Marblehead
Corporation (the “Company”) 2003 Stock Incentive Plan on                     
for the purchase of                      shares of Common Stock of the Company
at a purchase price of $                     per share.

 

I hereby exercise my option to purchase                    shares of Common
Stock (the “Shares”), for which I have enclosed                      in the
amount of                 .  Please register my stock certificate as follows:

 

Name(s):

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

Tax I.D. #:

 

 

Very truly yours,

 

 

 

 

 

 

 

 

(Signature)

 

 

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