Exhibit
10.17


 


	
  

  	
  First
  Marblehead Corporation

  
	
   

  
	
  The Prudential Tower

  
	
  800 Boylston Street - 34th Floor

  
	
  Boston, MA 02199-8157

  
	
  Tel 617.638.2000 or
  800.895.4283

  
	
  Fax 617.638.2100 or
  866.255.4583

  
	
   

  
	
  230
  Park Avenue, 10th Floor 

  
	
  New
  York, NY 10169

  
	
  Tel
  212.808.7225

  
	
  Fax
  212.808.7226

  



 


February 25, 2005


 


Kenneth Klipper


[address]


 


Dear Ken:


 


The First Marblehead
Corporation (FMC) is pleased to offer you the position of Senior Vice
President, Finance reporting to Donald Peck, Executive Vice President and Chief
Financial Officer.


 


Your direct annual
compensation will be $270,000, paid on a semi-monthly basis at a rate of
$11,250, (gross) per pay period. You will also be eligible to participate in
the Company’s incentive bonus plan. Under this plan you are eligible for a
bonus of up to 50% of earned salary for the performance year. This is a
discretionary plan which provides rewards for Company performance and your
personal contribution to it. First Marblehead aligns the performance review and
bonus cycle with the business fiscal year ending June 30. Your first
performance review under these plans will be June, 2005. The effective date for
merit increase and any bonus awards you become eligible for is September 1.
Any awards for fiscal year 2005 will be pro-rated from your start date. You
will also participate in the First Marblehead long term incentive program. It
is our intention to award you a grant of 4,000 Restricted Stock Units subject
to the terms and conditions of the plan and Board of Director approval. Each
Restricted Stock Unit represents the right to receive one share of common stock
of the Company. Restricted Stock Units vest at one third on the third
anniversary of the grant date, one third on the fourth anniversary of the grant
date and the final third on the fifth anniversary of the grant date.
Instruments of grant and plan documents will be provided to you after Board
approval. Please note that this letter does not constitute an employment
contract or a contract for a specific term of employment and that the
employment relationship is at will.


 


As a condition of hire,
First Marblehead requires that all employees sign an Invention and
Non-Disclosure/Non-Compete Agreement (enclosed). Due to the nature of our
business, this offer is contingent on satisfactory results of a credit check
the company runs on prospective employees to make sure they are not in default
on any student loans. Also, as required by the Immigration Reform and Control
Act of 1976, you will be expected to provide proof of eligibility to work in
the United States.


 

















 


We offer a comprehensive
benefits program. You may select health coverage through an HMO or PPO from
Blue Cross/Blue Shield, as well as dental coverage through Delta Dental
Premier. The company subsidizes the cost of these plans at a rate of 80% for
family and 90% for individuals. In addition, FMC provides Group Life Insurance
at two times your base salary as well as Short Term and Long Term Disability
coverage at no cost to you. You are eligible for coverage on the first of the
month following your first day of employment. Other benefits include a 401 K
plan with a dollar-for-dollar match up to 6% of salary contributed and the
Company’s employee stock purchase program subject to the eligibility
requirements of these plans. We offer accrual of vacation up to fifteen days,
eight paid holidays, two floating holidays and five sick days per year.


 


This is an exciting time
for First Marblehead and your addition to our management team is most welcome.
Please acknowledge this offer by signing one copy of this offer letter and
returning it to me. This offer is made today and will expire on March 4,
2005. We look forward to hearing from you.


 


Sincerely,


 


	
  /s/ Robin L. Camara

  	
   

  	
   

  
	
  Robin L. Camara

  	
   

  	
   

  
	
  Senior Vice-President,
  Human Resources

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Kenneth Klipper

  
	
   

  	
   

  	
  KENNETH
  KLIPPER

  



 


	
  Encls:

  	
  Invention and
  Non-Disclosure/Non-Compete Agreement

  
	
   

  	
  Copy of this Offer
  Letter

  



 


cc: Don Peck


 














 





 


September 1,
2010


 


Kenneth
S. Klipper


c/o
The First Marblehead Corporation


800
Boylston Street, 34th Floor


Boston,
MA 02199


 


Dear
Ken:


 


Reference
is made to that certain letter agreement dated February 25, 2005 (the “Offer
Letter”) between The First Marblehead Corporation (“First Marblehead”) and
you.  This letter sets forth certain
additional provisions relating to your employment with First Marblehead, which
provisions supplement or supersede, as applicable, the terms of the Offer
Letter.


 


In
consideration for your continued service to First Marblehead, and affirmation
of your obligations under that certain Invention, Non-Disclosure,
Non-Competition and Non-Solicitation Agreement that you executed on February 28,
2005:


 


·                  Your direct annual base
compensation will be $390,000, less all applicable taxes and withholdings, paid
on a semi-monthly basis at a rate of $16,250 (gross) per pay period.


 


·                  Any cash bonus under First
Marblehead’s discretionary incentive bonus plan will be paid to you no later
than March 15th of the calendar year following the calendar year in which
such cash bonus was earned.


 


·                  In the event that your employment is
terminated by First Marblehead for a reason other than “Cause” (as defined
below), subject to the execution and non-revocation (if applicable) by you of a
waiver and release acceptable to First Marblehead (the “Release”) within 60
days following your termination of employment, First Marblehead will provide
you with the Severance Benefits (as defined below).


 


·                  Following the consummation of a
Reorganization Event (as defined below), in the event that you terminate your
employment for Good Reason (as defined below) on or prior to the second
anniversary date of the date of consummation of such Reorganization Event, and
subject to the execution and non-revocation (if applicable) by you of the
Release within 60 days following your termination of employment, First
Marblehead will provide you with the Severance Benefits.  For the avoidance of doubt, unless a
Reorganization Event is consummated in the future, you will not be entitled to
Severance Benefits in the event that you terminate your employment for Good
Reason.


 


800 BOYLSTON STREET · 34TH FLOOR · BOSTON, MASSACHUSETTS 02199 · TEL: 617.638.2000


 

















 


·                  The Severance Benefits will begin on the
first payroll period after the Release becomes binding; provided that if the 60th day following your termination date occurs in
the calendar year following your termination, then the Severance Benefits will
commence no earlier than the first payroll period that is after January 1
of such subsequent calendar year (the “Payment Start Date”).


 


·                  The payment of any severance amounts pursuant
to this Offer Letter shall be subject to the terms and conditions set forth in
Appendix A.


 


For
purposes of the foregoing:


 


·                  The term “First Marblehead”
shall include The First Marblehead Corporation and any successor following a
Reorganization Event.


 


·                  The term “Cause” shall mean,
as determined by First Marblehead in its sole discretion, (i) the willful
failure by you to perform your employment duties that has continued more than
thirty days following written notice from First Marblehead of such
non-performance, (ii) any act of dishonesty, fraud, willful misconduct,
gross negligence or disobedience on your part in the performance of your
employment duties, or (iii) your conviction of a felony involving moral
turpitude.


 


·                  The term “Severance Benefits”
shall mean (i) severance pay in the form of continuation of your base
salary at the then-current annualized rate, in accordance with First Marblehead’s
normal payroll procedures, and less all applicable state and federal taxes, for
the six month period commencing on the Payment Start Date (the “Severance
Period”), and (ii) payment on your behalf during the Severance Period of
the share of the premiums then paid by First Marblehead for group medical
insurance for active and similarly situated employees who receive the same type
of coverage, provided you are eligible for and elect to continue group medical
insurance pursuant to the federal “COBRA” law, 29 U.S.C. § 1161 et seq.


 


·                  The term “Reorganization
Event” shall mean a Reorganization Event as defined in First Marblehead’s 2003
Stock Incentive Plan, as amended, provided that such event also constitutes a
change in ownership or effective control of First Marblehead or a change in
ownership of a substantial portion of First Marblehead’s assets for purposes of
Section 409A of the Internal Revenue Code of 1986, as amended.


 


·                  The term “Good Reason” shall
mean any significant diminution in your title, authority, or responsibilities
from and after such Reorganization Event or any material reduction in the
annual cash compensation payable to you from and after such Reorganization
Event or the relocation of the place of business at


 

















 


which you are principally located to a location that is greater than 50
miles from its location immediately prior to such Reorganization Event,
provided that such diminution, reduction or relocation is not cured within 30
days of written notice to First Marblehead from you.


 


Except
as modified by this letter, all other terms and conditions of your Offer Letter
shall remain in full force and effect. 
In particular, your employment with First Marblehead remains at-will,
meaning that either you or First Marblehead may terminate the employment
relationship at any time, for any reason or no reason, with or without Cause
and with or without notice.


 


Please
note that First Marblehead’s obligations under this letter agreement may be
subject to regulatory review and approval. You acknowledge that the provisions
of this letter agreement shall not be binding on First Marblehead unless and
until all required regulatory approvals have been received.


 


Please
acknowledge your acceptance of the foregoing by signing in the space provided
below and returning the signed letter to me.


 


Very
truly yours,


 


	
  /s/
  Jo-Ann Burnham

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Jo-Ann
  Burnham

  	
   

  
	
  Managing
  Director, Human Resources

  	
   

  
	
   

  	
   

  
	
   

  	
  AKNOWLEDGED
  AND AGREED

  
	
   

  	
   

  
	
   

  	
  /s/
  Kenneth S. Klipper

  
	
   

  	
  Kenneth
  S. Klipper

  



 

















 


Appendix A


 


Compliance with Section 409A


 


Subject
to the provisions in this Appendix A, any severance payments or benefits under your offer letter shall begin only upon the date of your “separation
from service” (determined as set forth below) which occurs on or after the date of termination of your employment.  The following rules shall apply with
respect to distribution of the payments and benefits, if any, to be provided to you under your offer letter.


 


1.             It is intended that each installment of the severance
payments and benefits provided under your offer letter shall be treated as a separate “payment” for
purposes of Section 409A of the Internal Revenue Code and the guidance
issued thereunder (“Section 409A”). 
Neither you nor the Company shall have the right to accelerate or defer
the delivery of any such payments or benefits except to the extent specifically
permitted or required by Section 409A.


 


2.             If, as of the date of your “separation from service”
from the Company, you are not a “specified employee” (within the meaning of Section 409A),
then each installment of the severance payments and benefits shall be made on
the dates and terms set forth in your offer
letter.


 


3.             If, as of the date of your “separation from service”
from the Company, you are a “specified employee” (within the meaning of Section 409A),
then:


 


a.             Each installment of the severance payments and benefits
due under your offer letter
that, in accordance with the dates and terms set forth herein, will in all
circumstances, regardless of when the separation from service occurs, be paid
within the short-term deferral period (as defined in Section 409A) shall
be treated as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to
the maximum extent permissible under Section 409A; and


 


b.             Each installment of the severance payments and benefits
due under your offer letter
that is not described in paragraph 3(a) above and that would, absent this
subsection, be paid within the six-month period following your “separation from
service” from the Company shall not be paid until the date that is six months
and one day after such separation from service (or, if earlier, your death),
with any such installments that are required to be delayed being accumulated
during the six-month period and paid in a lump sum on the date that is six
months and one day following your separation from service and any subsequent
installments, if any, being paid in accordance with the dates and terms set
forth herein; provided, however, that the preceding provisions of
this sentence shall not apply to any installment of severance payments and
benefits if and to the maximum extent that such installment is deemed to be
paid under a separation pay plan that does not provide for a deferral of
compensation by reason of the application of Treasury
Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an
involuntary separation from service). 
Any installments that qualify for the exception under Treasury
Regulation Section 1.409A-


 

















 


1(b)(9)(iii) must be
paid no later than the last day of the second taxable year following the
taxable year in which the separation from service occurs.


 


4.             The determination of whether
and when your separation from service from the Company has occurred shall be
made in a manner consistent with, and based on the presumptions set forth in,
Treasury Regulation Section 1.409A-1(h). 
Solely for purposes of this paragraph
4, “Company” shall include all persons with whom the Company would be
considered a single employer as determined under Treasury Regulation Section 1.409A-1(h)(3).


 


5.             All
reimbursements and in-kind benefits provided under your offer letter shall be made or provided in accordance with the
requirements of Section 409A to the extent that such reimbursements or
in-kind benefits are subject to Section 409A, including, where applicable,
the requirements that (i) any reimbursement is for expenses incurred
during your lifetime (or during a shorter period of time specified in your offer letter), (ii) the amount
of expenses eligible for reimbursement during a calendar year may not affect
the expenses eligible for reimbursement in any other calendar year, (iii) the
reimbursement of an eligible expense will be made on or before the last day of
the calendar year following the year in which the expense is incurred and (iv) the
right to reimbursement is not subject to set off or liquidation or exchange for
any other benefit.


 


6.             Notwithstanding anything herein to
the contrary, the Company shall have no liability to you or to any other person
if the payments and benefits provided in your offer letter that are intended to be exempt from or compliant
with Section 409A are not so exempt or compliant.