Exhibit 99.4
THE FIRST MARBLEHEAD CORPORATION
Non-Statutory Stock Option
Agreement
1.
Grant of
Option .
This agreement evidences the grant
by The First Marblehead Corporation, a Delaware corporation (the
“Company”), on August 18, 2008 (the “Grant
Date”) to Daniel Maxwell Meyers, an employee of the Company
(the “Participant”), of an option to purchase, in whole
or in part, on the terms provided herein, a total of 2,000,000
shares (the “Shares”) of common stock, $.01 par value
per share, of the Company (“Common Stock”) at $6.00 per
Share (the “Exercise Price”). Unless earlier
terminated, this option shall expire at 5:00 p.m., Eastern
Time, on August 17, 2018 (the “Final Exercise
Date”). For purposes of this Agreement, the
“Vesting Commencement Date” shall be August 18,
2008.
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.
This option is not granted under the
Company’s 2003 Stock Incentive Plan, as amended, or any other
stockholder approved stock incentive plan of the
Company.
2.
Vesting
Schedule .
(a)
Option
Exercise Schedule .
(i)
Except as
provided in paragraph 2(a)(ii) below, this option will become
exercisable (“vest”) as to 25% of the original number
of Shares on the first anniversary of the Vesting
Commencement Date and as to an additional 25% of the original
number of Shares on each successive anniversary
following the
first anniversary of the Vesting Commencement Date until the fourth
anniversary of the Vesting Commencement Date.
(ii)
Notwithstanding
the provisions of paragraph 2(a)(i) above, this option will
vest and become fully exercisable prior to the fourth anniversary
of the Vesting Commencement Date upon the occurrence of any of the
following:
(x)
in the event that the closing sale
price of the Common Stock on the New York Stock Exchange (or such
other national securities exchange on which the Common Stock is
then traded) is at least 150% of the Exercise Price for a period of
five consecutive trading days (assuming the trading on such day is
not less than 90% of the average daily trading volume for the three
months prior to such five-day period);
(y)
in the event the Participant dies or
becomes Disabled. For purposes of this Agreement,
“Disabled” shall mean the Participant is unable to
perform the essential functions of the Participant’s then
existing position or
positions with the Company with or
without reasonable accommodation for a period of 180 days (which
need not be consecutive) in any 12-month period. If any
question shall arise as to whether during any period the
Participant is Disabled so as to be unable to perform the essential
functions of the Participant’s then existing position or
positions with or without reasonable accommodation, the Participant
may submit to the Company a certification in reasonable detail by a
physician mutually acceptable to the Participant or the
Participant’s guardian, on the one hand, and the Company, on
the other, as to whether the Participant is so Disabled or how long
such disability is expected to continue, and such certification
shall for the purposes of this agreement be conclusive of the
issue; or
(z)
In the event the Participant’s
employment is terminated by the Company without “Cause”
(as defined below) or the Participant terminates his employment for
“Good Reason” (as defined below) and the Participant
enters into a binding general release of claims in favor of the
Company, other than claims with respect to Termination Payments (as
defined below).
“ Cause ” shall mean:
(i) the willful failure by the Participant to perform his
duties under the Employment Agreement which has continued for more
than 30 days following written notice of such non-performance from
the Board and which failure to perform has had a materially adverse
effect on the financial condition of the Company, (ii) any act
of dishonesty, intentional fraud or willful misconduct on the part
of the Participant in the performance of his duties hereunder, or
(iii) the Participant’s conviction of a felony involving
moral turpitude. For purposes of clause (i) hereof, no
act, or failure to act, on the Participant’s part shall be
deemed “willful” unless done, or omitted to be done, by
the Participant without reasonable belief that the
Participant’s act or failure to act, was in the best interest
of the Company. A determination of Cause shall only be made
at a meeting of the Board called and held for such purpose if the
Board (acting by majority vote of those voting) determines in good
faith that the Executive is guilty of conduct that constitutes
Cause as defined herein.
“ Good Reason ” shall mean that the
Participant has complied with the “Good Reason Process”
(hereinafter defined) following the occurrence of any of the
following events: (i) a material diminution in the
Participant’s responsibilities, authority or duties;
(ii) a material diminution in the Participant’s Base
Salary without the Participant’s prior written consent;
(iii) a material change in the geographic location at which
the Participant provides services to the Company without the
Participant’s prior written consent; or (iv) the
material breach of this Agreement by the Company. “
Good Reason Process ”
shall mean that (i) the Participant reasonably determines in
good faith that a “Good Reason” condition has occurred;
(ii) the Participant notifies the Company in writing of the
occurrence of the Good Reason condition within 60 days of the
occurrence of such condition; (iii) the Participant cooperates
in good faith with the Company’s efforts, for a period of 30
days following such notice (the “ Cure Period ”), to remedy the
condition; (iv) notwithstanding such efforts, the Good Reason
condition continues to exist; and (v) the Participant
terminates his employment
2
within 60 days after the end of the
Cure Period. If the Company cures the Good Reason condition
during the Cure Period, Good Reason shall be deemed not to have
occurred.
“ Termination Payments ” shall mean
any payments or benefits to which the Participant is otherwise
entitled under the terms of any employment agreement,
indemnification agreement, equity or bonus agreement with, or
benefit plan of, the Company pursuant to the terms
thereof.
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 Section 3
hereof.
(b)
Early Exercise
Alternative . Notwithstanding the
exercisability schedule set forth in paragraph 2(a), the
Participant may beginning 90 days after the Date of Grant elect to
exercise this option as to the unvested Shares (in addition to the
vested Shares) if simultaneously with such exercise the Participant
enters into a Stock Restriction Agreement with the Company in the
form attached hereto as Exhibit A (the “Stock
Restriction Agreement”). The Stock Restriction
Agreement provides for a vesting schedule comparable to that set
forth in this Section 2 and provides, among other things, that
the unvested Shares shall be subject to a right of repurchase in
favor of the Company in the event that the Participant’s
employment by the Company is terminated by the Company for Cause or
by the Participant without Good Reason.
3.
Exercise of
Option .
(a)
Form of
Exercise . Each election to
exercise this option shall be in writing, 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 paragraph 3(b) below. 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 or for fewer than ten whole shares.
(b)
Payment Upon
Exercise . Common Stock
purchased upon the exercise of this option shall be paid for as
follows:
(i)
in cash or by
check, payable to the order of the Company;
(ii)
to the extent
permitted by applicable law, by (x) 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 (y) 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;
(iii)
to the
ex
