THE FIRST MARBLEHEAD CORPORATION
Stock Unit Agreement
Granted Under 2003 Stock Incentive Plan
1. Grant of Award.
This Agreement evidences the grant by The First
Marblehead Corporation, a Delaware corporation (the Company) on ,
200 (the Grant Date) to (the Participant) of
restricted stock units of the Company (individually, an RSU and collectively,
the RSUs). Each RSU represents the
right to receive one share of the common stock, $0.01 par value per share, of
the Company (Common Stock) as provided in this Agreement. The shares of Common Stock that are issuable
upon vesting of the RSUs are referred to in this Agreement as Shares.
2. Vesting; Forfeiture.
award shall vest as to
of the original number of RSUs on the
anniversary of the Grant Date and as to an additional
of the original number of RSUs on each succeeding anniversary of the Grant Date
anniversary of the Grant Date.
the event that the Participants employment with the Company is terminated by
reason of death or disability, this award shall be fully vested. For this purpose, disability shall mean the
inability of the Participant, due to a medical reason, to carry out his duties
as an employee of the Company for a period of six consecutive months. In addition, if the Participants employment
with the Company is terminated by the Company for a reason other than Cause
(as defined below), then the number of RSUs which shall be vested shall be
determined as though the Participants employment had terminated on the day
that follows the anniversary of the Grant Date that next follows the date of
actual termination. For purposes of this
Section 2, Cause shall mean unsatisfactory job performance (as
determined by the Company), willful misconduct, fraud, gross negligence,
disobedience or dishonesty.
purposes of this Agreement, employment with the Company shall include
employment with a parent or subsidiary of the Company.
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
with the Company. If on or prior to a
Settlement Date (as defined below), 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, all of the RSUs and all Shares
issuable upon vesting of all RSUs subject to this Agreement shall be
immediately forfeited, and the Participant shall have no further rights with
respect to such RSUs or Shares. 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 the last Settlement Date but on or prior to the first
anniversary of the Participants termination of employment with the Company,
the Participant shall pay to the Company, upon demand by the Company, an amount
equal to (i) the value, as of each Settlement Date, of the number of
Shares delivered to the Participant represented by RSUs on such Settlement Date
and (ii) the value of all dividends, if any, paid to the Participant in
respect of the Shares delivered to the Participant on such Settlement
Date. 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 Settlement Dates,
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.
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 persons 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 Committees 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
stock options, RSUs 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.
3. Distribution of Shares.
Company will distribute to the Participant (or to the Participants estate in
the event that his or her death occurs after a vesting date but before
distribution of the corresponding Shares), as soon as administratively
practicable after each vesting date (each such date of distribution is
hereinafter referred to as a Settlement Date), the Shares of Common Stock
represented by RSUs that vested on such vesting date.
Company shall not be obligated to issue to the Participant the Shares upon the
vesting of any RSU (or otherwise) unless the issuance and delivery of such
Shares shall comply with all relevant provisions of law and other legal
requirements including, without limitation, any applicable federal or state
securities laws and the requirements of any stock exchange upon which shares of
Common Stock may then be listed.
4. Restrictions on Transfer.
The Participant shall not sell, assign, transfer, pledge,
hypothecate or otherwise dispose of, by operation of law or otherwise
(collectively transfer) any RSUs, or any interest therein, except by will or
the laws of descent and distribution.
5. Dividend and Other Shareholder Rights.
Except as set forth in the Plan, neither the
Participant nor any person claiming under or through the Participant shall be,
or have any rights or privileges of, a stockholder of the Company in respect of
the Shares issuable pursuant to the RSUs granted hereunder until the Shares
have been delivered to the Participant.
6. Provisions of the Plan; Reorganization Event.
Agreement is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this Agreement.
the occurrence of a Reorganization Event (as defined in the Plan), each RSU
(whether vested or unvested) shall become the right to receive the cash,
securities or other property that a Share was converted into or exchanged for
pursuant to such Reorganization Event.
If, in connection with a Reorganization Event, a portion of the cash,
securities and/or other property received upon the conversion or exchange of
the Shares is to be placed into escrow to secure indemnification or similar
obligations, the mix between the vested and unvested portion of such cash,
securities and/or other property that is placed into escrow shall be the same
as the mix between the vested and unvested portion of such cash, securities
and/or other property that is not subject to escrow. Notwithstanding the foregoing provisions,
this award shall be fully vested if, on or prior to the second anniversary of
the date of the consummation of the Reorganization Event, the Participants
employment with the Company or the Companys
successor is terminated for Good Reason (as defined
below) by the Participant or is terminated without Cause (as defined below) by
the Company or the Companys successor.
purposes of this Section 6, (i) Good Reason shall mean any
significant diminution in the Participants 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
7. Withholding Taxes; Section 83(b) Election.
Shares will be delivered pursuant to the vesting of an RSU 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.
Participant acknowledges that no election under Section 83(b) of the
Internal Revenue Code of 1986 may be filed with respect to this award.
Rights to Employment. The
Participant acknowledges and agrees that the vesting of the RSUs 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.
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 4
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.
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
(h) Amendment. This Agreement may be amended or modified
only by a written instrument executed by both the Company and the Participant.
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.
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 Participants 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.
Rights. The right of the Participant
to receive Common Stock pursuant to this Agreement is an unfunded and unsecured
obligation of the Company. The
Participant shall have no rights under this Agreement other than those of an
unsecured general creditor of the Company.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
THE FIRST MARBLEHEAD CORPORATION