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                                                                   EXHIBIT 10.26

                        THE FIRST MARBLEHEAD CORPORATION

                             1996 STOCK OPTION PLAN

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                        THE FIRST MARBLEHEAD CORPORATION

                             1996 STOCK OPTION PLAN

     1.    PURPOSES

     The purposes of this 1996 Stock Option Plan (the "Plan") are to: (i)
closely associate the interests of the officers, other employees and consultants
of The First Marblehead Corporation and its subsidiaries and affiliates
(collectively referred to as the "Company") with the stockholders by reinforcing
the relationship between participants' rewards and stockholder gains; (ii)
provide participants with an equity ownership in the Company commensurate with
Company performance; (iii) maintain competitive compensation levels; and (iv)
provide an incentive to officers and employees for continuous employment with
the Company. The Plan accomplishes these purposes by providing for the grant of
Incentive Stock Options and Nonstatutory Stock Options (collectively, as defined
below, "Options") to the Company's officers, employees and consultants.

     2.    ADMINISTRATION OF THE PLAN

     2.01  ADMINISTRATION BY COMMITTEE. The Plan shall be administered by the
Stock Option Committee (the "Committee") appointed by the Board of Directors of
the Company from time to time. Whenever options are granted to any person
subject to Section 16 of the Securities Exchange Act of 1934 (the "Exchange
Act"), each member of the Committee shall be a "disinterested person" within the
meaning of Rule 16b-3 under the Exchange Act.

     2.02  AUTHORITY. Within the limits of the Plan, the Committee shall
determine: the individuals to whom, and the times at which, Options shall be
granted; the type of Option and number of shares to be granted; the duration of
each Option; the price and method of payment for each Option; and the time or
times within which (during its term) all or portions of each Option may be
exercised.

     2.03  ADOPTION OF RULES; INTERPRETATION OF PLAN. The Committee may: (i)
establish such rules as it deems necessary for the proper administration of the
Plan; (ii) make such determinations and interpretations with respect to the Plan
and Options granted under it as may be necessary or desirable; and (iii) supply
any omission, reconcile any inconsistency and include such further provisions or
conditions in the Plan or any Option as it deems advisable. Decisions rendered
by the Committee shall be made in its sole discretion and shall be conclusive.
No member of the Committee shall be liable for any decision rendered in good
faith relating to the Plan or any award thereunder.

     3.    SHARES SUBJECT TO THE PLAN

     3.01  NUMBER AND TYPE OF SHARES. The aggregate number of shares of stock of
the Company which may be optioned under the Plan is One Hundred Thousand
(100,000) shares of the Company's Common Stock, $.10 par value, (the "Stock").

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     3.02  RESTORATION OF SHARES. If any option expires, is terminated
unexercised or is forfeited for any reason, the shares subject to such Option,
to the extent of such expiration, termination or forfeiture, shall again be
available for granting Options under the Plan, subject, however, in the case of
Incentive Stock Options, to any requirements under the Internal Revenue Code of
1986, as amended (the "Code").

     3.03  RESERVATION OF SHARES. The Company shall, at all times while the Plan
is in force, reserve such number of shares of Stock as will be sufficient to
satisfy the requirements of the Plan. Shares issued under the Plan may consist,
in whole or in part, of authorized but unissued shares or treasury shares.

     4.    GRANT OF OPTIONS; ELIGIBLE PERSONS

     4.01  TYPES OF OPTIONS. Options shall be granted under the Plan either as
incentive stock options ("Incentive Stock Options"), as defined in Section 422
of the Code, or as options which do not meet the requirements of Section 422
("Nonstatutory Stock Options"). Options may be granted from time to time by the
Committee, within the limits set forth in the Plan, to all employees of the
Company or of any parent corporation or subsidiary corporation of the Company
(as defined in Sections 424(e) and (f), respectively, of the Code) and, in the
case of Nonstatutory Stock Options, to consultants.

     4.02  DATE OF GRANT. The date of grant for each Option shall be the date on
which it is approved by the Committee, or such later date as the Committee may
specify. No Incentive Stock Options shall be granted hereunder after ten years
from the date on which the Plan was adopted by the Board or approved by the
stockholders, whichever is earlier.

     5.    FORMS OF OPTIONS

     Options granted hereunder shall be evidenced by a writing delivered to the
grantee specifying the terms and conditions thereof and containing such other
terms and conditions not inconsistent with the provisions of the Plan as the
Committee considers necessary or advisable to achieve the purposes of the Plan
or to comply with applicable tax and regulatory laws and accounting principles.
The form of such Options may vary among grantees.

     6.    OPTION PRICE

     6.01  INCENTIVE STOCK OPTIONS. In the case of Incentive Stock Options, the
price at which shares may from time to time be optioned shall be determined by
the Committee, provided that such price shall not be less than the fair market
value of the Stock on the date of granting as determined in good faith by the
Committee; and provided further that no Incentive Stock Option shall be granted
to any individual who owns stock of the Company or its parent or subsidiary
corporations in excess of the limitations set forth in Section 422(b)(6) of the
Code unless such option price is at least 110% of the fair market value of the
Stock on the date of the grant.

     6.02  NONSTATUTORY STOCK OPTIONS.  In the case of Nonstatutory Stock
Options, the price at which shares may from time to time be optioned shall be
determined by the Committee.

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     6.03  MANNER OF PAYMENT. To the extent permitted by law, the Committee, may
in its discretion, permit the option price to be paid in whole or in part by a
note or in installments or with shares of stock of the Company or such other
lawful consideration as the Committee may determine.

     7.    TERM OF OPTION AND DATES OF EXERCISE

     7.01  EXERCISABILITY. The Committee shall determine the term of all
Options, the time or times that Options may be exercised and whether they may be
exercised in installments; provided, however, that: (i) the term of each
Incentive Stock Option granted under the Plan shall not exceed a period of ten
years from the date of its grant; and (ii) no Incentive Stock Option shall be
granted to any individual who owns stock of the Company or its parent or
subsidiary corporations exceeds the limitations set forth in Section 422(b)(6)
of the Code unless the term of the Option does not exceed a period of five years
from the date of its grant.

     7.02  EFFECT OF TERMINATION OF EMPLOYMENT. Except to the extent otherwise
determined by the Committee in writing, the effect on an Option of the
termination of employment of a grantee and the extent to which the grantee or
his or her estate, legal representative, guardian, or beneficiary may exercise
rights thereunder, shall be as set forth below.

           (a) DEATH OF GRANTEE. Upon the death of the grantee, all rights,
     including those not yet vested on the date of death, shall immediately be
     vested and may be exercised by the grantee's estate or by a person who
     acquires the right to exercise such Option by bequest or inheritance or
     otherwise by reason of the death of the grantee; provided, however, that
     such exercise must occur within both the remaining effective term of the
     Option and within one year after the grantee's death.

           The provisions of this subsection (a) shall apply even if the
     grantee's employment may have terminated prior to death, but only to the
     extent such rights were otherwise exercisable pursuant to this Section 7.02
     at the date of death.

           (b) RETIREMENT OR DISABILITY. Upon termination of the grantee's
     employment by reason of retirement or permanent disability (as each is
     determined by the Committee), the grantee (or his or her guardian) may,
     within 36 months from the date of termination, exercise any Options to the
     extent such options are or become exercisable during such 36 month period.
     Notwithstanding the foregoing, the tax treatment available pursuant to
     Section 422 of the Code upon the exercise of an Incentive Stock Option will
     not be available to a grantee who exercises any Incentive Stock Options
     more than (i) 12 months after the date of termination due to permanent
     disability or (ii) three months after the date of termination due to
     retirement.

           (c) TERMINATION FOR CAUSE.  Upon termination of the grantee's
     employment for "cause" (as determined by the Committee), all Options not
     yet exercised by the grantee shall terminate immediately.

          (d) TERMINATION FOR OTHER REASONS. Upon the termination of the
     grantee's employment for reasons other than those set forth in subsections
     7.02(a), (b) and (c), the

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     Options will remain exercisable by the grantee for a period not extending
     beyond three months after the date of the termination of employment, but
     only to the extent of Options which are exercisable as of the date of such
     termination of employment.

     7.03  OTHER CONDITIONS. The Committee may impose such conditions with
respect to the exercise of options, including conditions relating to applicable
federal or state securities laws or requiring the holder to enter into a Stock
Restriction Agreement, Non-Competition Agreement or other agreement as it
considers necessary or advisable.

     7.04  AMENDMENT OF OPTIONS. The Committee may amend, modify or terminate
any outstanding Option, including substituting therefor another Option of the
same or different type, changing the date of exercise or realization and
converting an Incentive Stock Option to a Nonstatutory Stock Option, provided
that the grantee's consent to such action shall be required unless the Committee
reasonably determines that the action, taking into account any related action,
would not materially and adversely affect the grantee.

     8.    MISCELLANEOUS

     8.01  GENERAL RESTRICTIONS. Each award under the Plan shall be subject to
the requirement that, if at any time the Committee shall determine that the
accomplishment of any of the following prerequisites is necessary or desirable
as a condition of, or in connection with, the granting of such award or the
issuance or purchase of Stock thereunder, then the prerequisite shall be
accomplished to the satisfaction of the Committee prior to the consummation of
such grant, issuance or sale. The prerequisite events, as may be determined by
the Committee, are: (i) the listing, registration or qualification of shares of
Stock on a securities exchange or under any state or federal law; (ii) the
consent or approval of any government regulatory body; or (iii) an agreement by
the grantee with respect to the disposition of shares of Stock.

     8.02  NON-TRANSFERABILITY. Options granted under the Plan shall not be
transferable by the grantee, except by will or the laws of descent and
distribution. Moreover, no option granted under the plan may be transferred
pursuant to a domestic relations order. Options shall be exercisable, during the
grantee's lifetime, only by the grantee or such permitted transferee.

     8.03  WITHHOLDING. The grantee shall pay to the Company, or make provision
satisfactory to the Committee for payment of, any taxes required by law to be
withheld in respect of any Options under the Plan no later than the date of the
event creating the tax liability. In the Committee's discretion, such tax
obligations may be paid in whole or in part in shares of Stock, including shares
retained from the exercise of the Option creating the tax obligation, valued at
the fair market value of the Stock on the date of delivery to the Company as
determined in good faith by the Committee. The Company and any parent
corporation or subsidiary corporation of the Company (as defined in Sections
424(e) and (f), respectively, of the Code) may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise due to
the grantee.

     8.04  NO RIGHT TO EMPLOYMENT. The grant of an Option shall not be construed
as giving a grantee the right to continued employment. Except as may otherwise
be limited by a written agreement between the Company and the grantee, the right
of the Company to terminate, at will,

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the grantee's employment with it at any time, free from any liability or claim
under the Plan, is specifically reserved by the Company and acknowledged by the
grantee.

     8.05  NON-UNIFORM DETERMINATIONS. The Committee's determinations under the
Plan (including, without limitation, determinations of the persons to be granted
awards, the form, amount and timing of such awards, the terms and provisions of
such awards and the agreements evidencing the same) need not be uniform and may
be made by it selectively among persons who receive, or are eligible to receive,
awards under the Plan, whether or not such persons are similarly situated.

     8.06  NO RIGHTS AS A STOCKHOLDER. Subject to the provisions of the
applicable Option, no grantee or any person claiming through a grantee shall
have any rights as a stockholder with respect to any shares of Stock to be
distributed under the Plan until the share certificates are duly issued by the
Company.

     8.07  ADJUSTMENTS. In the event of any change in the outstanding Stock by
reason of a stock dividend, split-up, combination or reclassification of shares,
recapitalization or other similar capital change, the Committee may
appropriately adjust: (i) the number of share of Stock which may be issued under
the Plan; (ii) the number of shares of Stock subject to Options theretofore
granted under the Plan; (iii) the option price of Options theretofore granted
under the Plan; or (iv) any and all other matters as may be deemed appropriate
by the Committee, the determination of which on such matters shall be
conclusive.

     8.08  EFFECT OF REORGANIZATION TRANSACTIONS. In the event of a
consolidation or merger of the Company with another corporation, or the sale or
exchange of all or substantially all of the assets of the Company, or a
reorganization or liquidation of the Company, each holder of an outstanding
Option shall be entitled to receive, upon exercise and payment in accordance
with the terms of the Option, the same shares, securities or property as he or
she would have been entitled to receive upon the occurrence of such event if he
or she had been, immediately prior to such event, the holder of the number of
shares of Stock purchasable under his or her Option; provided, however, that in
lieu of the foregoing the Company may, upon written notice to each holder of an
outstanding Option, provide that such Option shall terminate within a specified
number of days after the date of such notice unless theretofore exercised. In
connection with such notice, the Company may, in its discretion, accelerate or
waive any deferred exercise period. Options granted under this Plan may contain
such provisions as the Committee shall approve permitting part of all of such
Options to become exercisable without regard to any deferred exercise period in
the event of a change of control of the Company, as defined by the Committee.

     8.09  AMENDMENT OF PLAN.  The Committee may amend the Plan in the following
situations:

           (a) CHANGE IN LAW. The Committee may, without further action by the
     stockholders and without receiving further consideration from the
     participants, amend this Plan or condition or modify awards under this
     Plan, in response to changes in securities, tax or other laws or rules,
     regulations or regulatory interpretations thereof applicable to this Plan
     or to comply with stock exchange rules or requirements.

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           (b) OTHER AMENDMENTS. The Committee may at any time and from time to
     time terminate or modify or amend the Plan in any respect, except that,
     without stockholder approval, the Committee may not: (i) increase the
     maximum number of shares of Stock which may be issued under the Plan (other
     than increases pursuant to Section 8.07); (ii) extend the period during
     which any award may be granted or exercised; or (iii) extend the term of
     the Plan. The termination, modification or amendment of the Plan, except as
     provided in Section 8.09(a), shall not, without the consent of the grantee,
     materially and adversely affect the grantee's rights under an award
     previously granted.

     8.10  STOCKHOLDER APPROVAL. The Plan is subject to approval by the
stockholders of the Company by the affirmative vote of the holders of a majority
of the shares of capital stock of the Company entitled to vote thereon and
present or represented at a meeting duly held in accordance with the laws of the
State of Delaware or by any other action that would be given the same effect
under the laws of such jurisdiction. Such action shall be taken within twelve
(12) months from the date the Plan was adopted by the Board. In the event such
stockholder approval is not obtained, all Options granted under the Plan shall
be void and without effect.

     8.11  GOVERNINQ LAW.  The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the State of Delaware, except to the
extent preempted by federal law which, to that extent, shall govern.

     ADOPTED by the Board of Directors effective as of October 15, 1996.

Attest:                            /s/ Rodney G. Hoffman, Ass't Secretary
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                                                                   EXHIBIT 10.27

                        THE FIRST MARBLEHEAD CORPORATION

                            2002 DIRECTOR STOCK PLAN

1.   PURPOSE

     The purpose of this 2002 Director Stock Plan (the "Plan") of The First
Marblehead Corporation, a Delaware corporation (the "Company"), is to advance
the interests of the Company's stockholders by enhancing the Company's ability
to attract, retain and motivate non-employee directors who make (or are expected
to make) important contributions to the Company by providing such persons with
equity ownership opportunities and performance-based incentives and thereby
better aligning the interests of such persons with those of the Company's
stockholders.

2.   ELIGIBILITY

     Each director of the Company who is not an employee of the Company or any
parent or subsidiary of the Company ("Non-Employee Director") shall be eligible
to receive options (an "Award") under the Plan (a "Participant").

3.   ADMINISTRATION AND DELEGATION

     (a)   ADMINISTRATION BY BOARD OF DIRECTORS The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.

     (b)   APPOINTMENT OF COMMITTEES To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board to the
extent that the Board's powers or authority under the Plan have been delegated
to such Committee.

4.   STOCK AVAILABLE FOR AWARDS

     Subject to adjustment under Section 6, Awards may be made under the Plan
for up to 50,000 shares of common stock, $.01 par value per share, of the
Company (the "Common

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Stock"). If any Award expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part or results in
any Common Stock not being issued, the unused Common Stock covered by such Award
shall again be available for the grant of Awards under the Plan. All options
granted under the Plan shall be non-statutory options not entitled to special
tax treatment under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"). Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.

5.   TERMS, CONDITIONS AND FORM OF OPTIONS

     Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board shall from time to time approve, which
agreements shall comply with and be subject to the following terms and
conditions:

     (a)   OPTION GRANTS Each person who is a Non-Employee Director at September
20, 2002 (the " Effective Date") and each person who subsequently becomes a
Non-Employee Director shall be automatically granted (i) an option to purchase
1,000 shares of Common Stock on the date of which the later of the following
events occurs: (A) the Effective Date; or (B) the date on which such person
first becomes a Non-Employee Director, whether through election by the
stockholders of the Company or appointment by the Board and (ii) an option to
purchase 1,000 shares of Common Stock on September 20th of each year, beginning
on September 20, 2003, if on such date he or she shall have served on the Board
for at least one hundred eighty (180) days. Each date of grant of an option
pursuant to this Section 5(a) is hereinafter referred to as an "Option Grant
Date."

     (b)   OPTION EXERCISE PRICE The option exercise price per share for each
option granted under the Plan shall equal (i) until the Common Stock is
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the fair market value of Common Stock, as determined (or in a manner
approved by) the Board in good faith ("Fair Market Value"), on the Option Grant
Date or (ii) when the Common Stock is registered under the Exchange Act, the
closing price of the Common Stock on the New York Stock Exchange, as published
in THE WALL STREET JOURNAL, on the last trading day immediately preceding the
Option Grant Date. If no sales of Common Stock were made on the last trading day
immediately preceding the Option Grant Date, the price of the Common Stock for
purposes hereof shall be the reported price for the next preceding day on which
such sales were made.

     (c)   TRANSFERABILITY OF OPTIONS Except as the Board may otherwise
determine or provide in an option granted under the Plan, any option granted
under the Plan shall 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 life of the
Participant, shall be exercisable only by the Participant. References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.

     (d)   VESTING PERIOD Each option granted pursuant to Section 5(a) above
shall be fully vested on the Option Grant Date.

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     (e)   TERMINATION Each option shall terminate, and may no longer be
exercised, on the earlier of (i) the date ten years after the Option Grant Date
of such option or (ii) the date which is 90 days after the date on which the
Participant ceases to serve as a member of the Board.

     (f)   EXERCISE OF OPTION Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(g) for the number of
shares for which the Option is exercised.

     (g)   PAYMENT UPON EXERCISE Common Stock purchased upon the exercise of an
Option granted under the Plan shall, unless otherwise prohibited by applicable
law, be paid for as follows:

           (1)  in cash or by check, payable to the order of the Company;

           (2)  except as the Board may, in its sole discretion, otherwise
provide in an option agreement, by (A) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price and any required tax
withholding or (B) delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the exercise price and
any required tax withholding;

           (3)  when the Common Stock is registered under the Exchange Act, by
delivery of shares of Common Stock owned by the Participant valued at their Fair
Market Value, provided (A) such method of payment is then permitted under
applicable law and (B) such Common Stock, if acquired directly from the Company
was owned by the Participant at least six months prior to such delivery;

           (4)  to the extent permitted by law and the Board, in its sole
discretion by (A) delivery of a promissory note of the Participant to the
Company on terms determined by the Board, or (B) payment of such other lawful
consideration as the Board may determine; or

           (5)  by any combination of the above permitted forms of payment.

     (h)   SUBSTITUTE OPTIONS In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2.

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6.   ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS

     (a)   CHANGES IN CAPITALIZATION In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan
and (ii) the number and class of securities and exercise price per share subject
to each outstanding Option shall be appropriately adjusted by the Company (or
substituted Awards may be made, if applicable) to the extent the Board shall
determine, in good faith, that such an adjustment (or substitution) is necessary
and appropriate. If this Section 6(a) applies and Section 6(c) also applies to
any event, Section 6(c) shall be applicable to such event, and this Section 6(a)
shall not be applicable.

     (b)   LIQUIDATION OR DISSOLUTION In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date.

     (c)   REORGANIZATION EVENTS

           (1)  DEFINITION A "Reorganization Event" shall mean: (A) any merger
or consolidation of the Company with or into another entity as a result of which
all of the Common Stock of the Company is converted into or exchanged for the
right to receive cash, securities or other property or (B) any exchange of all
of the Common Stock of the Company for cash, securities or other property
pursuant to a share exchange transaction.

           (2)  CONSEQUENCES OF A REORGANIZATION EVENT ON OPTIONS Upon the
occurrence of a Reorganization Event, or the execution by the Company of any
agreement with respect to a Reorganization Event, the Board shall provide that
all outstanding Options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof). For purposes hereof, an Option shall be considered to be assumed if,
following consummation of the Reorganization Event, the Option confers the right
to purchase, for each share of Common Stock subject to the Option immediately
prior to the consummation of the Reorganization Event, the consideration
(whether cash, securities or other property) received as a result of the
Reorganization Event by holders of Common Stock for each share of Common Stock
held immediately prior to the consummation of the Reorganization Event (and if
holders were offered a choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding shares of Common Stock);
provided, however, that if the consideration received as a result of the
Reorganization Event is not solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company may, with the consent of the
acquiring or succeeding corporation, provide for the consideration to be
received upon the exercise of Options to consist solely of common stock of the
acquiring or succeeding corporation (or an affiliate thereof) equivalent in fair
market value to the per share consideration received by holders of outstanding
shares of Common Stock as a result of the Reorganization Event.

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     Notwithstanding the foregoing, if the acquiring or succeeding corporation
(or an affiliate thereof) does not agree to assume, or substitute for, such
Options, then the Board shall, upon written notice to the Participants, provide
that all then unexercised Options will become exercisable in full as of a
specified time prior to the Reorganization Event and will terminate immediately
prior to the consummation of such Reorganization Event, except to the extent
exercised by the Participants before the consummation of such Reorganization
Event; provided, however, that 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"), then the Board may instead
provide that all outstanding Options shall terminate upon consummation of such
Reorganization Event and that each 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
such outstanding Options (whether or not then exercisable), exceeds (B) the
aggregate exercise price of such Options. To the extent all or any portion of an
Option becomes exercisable solely as a result of the first sentence of this
paragraph, upon exercise of such Option the Participant shall receive shares
subject to a right of repurchase by the Company or its successor at the Option
exercise price. Such repurchase right (1) shall lapse at the same rate as the
Option would have become exercisable under its terms and (2) shall not apply to
any shares subject to the Option that were exercisable under its terms without
regard to the first sentence of this paragraph.

7.   MISCELLANEOUS

     (a)   NO RIGHT TO CONTINUE AS A DIRECTOR Neither the Plan, nor the granting
of an option nor any other action taken pursuant to the Plan, shall constitute
or be evidence of any agreement or understanding, express or implied, that the
Company will retain the Participant as a Non-Employee Director for any period of
time.

     (b)   NO STOCKHOLDER'S RIGHTS FOR OPTIONS A Participant shall have no
rights as a stockholder with respect to the shares covered by his or her option
until the date of the issuance to him or her of a stock certificate therefor,
and no adjustment will be made for dividends or other rights (except as provided
in Section 6) for which the record date is prior to the date such certificate is
issued.

     (c)   COMPLIANCE WITH SECURITIES LAWS Each option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject to such option
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, or the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
thereunder, such option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable to
the Board. Nothing herein shall be deemed to require the Company to apply for or
to obtain such listing, registration or qualification, or to satisfy such
condition.

                                       -5-
<Page>

     (d)   AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization and changing the vesting schedule, provided that the Participant's
consent to such action shall be required unless the Board determines that the
action, taking into account any related action, would not materially and
adversely affect the Participant.

     (e)   AMENDMENT OF PLAN The Board may amend, suspend or terminate the Plan
or any portion thereof at any time.

     (f)   GOVERNING LAW The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.

                                       -6-

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