10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-K

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: June 30, 2009
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                   to

Commission file number: 001-31825

THE FIRST MARBLEHEAD CORPORATION
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	04-3295311 (I.R.S. Employer Identification No.)
The Prudential Tower 800 Boylston Street, 34th Floor Boston, Massachusetts (Address of principal executive offices)	02199-8157 (Zip Code)

Registrant's telephone number, including area code: (617) 638-2000

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $.01 par value
(Title of each class) New York Stock Exchange
(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

          Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý

          Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o    No ý

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

          Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o    No o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer o Accelerated filer ý Non-accelerated filer o
(Do not check if a smaller
reporting company) Smaller reporting company o

          Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

          The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant (without admitting that any person whose shares are not included in the calculation is an affiliate) was approximately $76,492,930 based on the last reported sale price of the common stock on the New York Stock Exchange on December 31, 2008. For the purposes of the immediately preceding sentence, the term "affiliate" refers to each director, executive officer and greater than 10% stockholder of the registrant as of December 31, 2008.

          Number of shares of the registrant's common stock outstanding as of September 2, 2009: 99,199,926.

DOCUMENTS INCORPORATED BY REFERENCE

          The registrant intends to file a proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended June 30, 2009. Pursuant to Paragraph G(3) of the General Instructions to Form 10-K, information required by Items 10, 11, 12, 13 and 14 of Part III have been omitted from this report (except for information required with respect to our executive officers and code of ethics, which is set forth under "Executive Officers" and "Code of Ethics" in Part I of this annual report) and are incorporated by reference to the definitive proxy statement to be filed with the Securities and Exchange Commission.

THE FIRST MARBLEHEAD CORPORATION

ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended June 30, 2009

TABLE OF CONTENTS

PART I	1
ITEM 1. BUSINESS	1
ITEM 1A. RISK FACTORS	16
ITEM 1B. UNRESOLVED STAFF COMMENTS	37
ITEM 2. PROPERTIES	37
ITEM 3. LEGAL PROCEEDINGS	38
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	38
PART II	39
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	39
ITEM 6. SELECTED FINANCIAL DATA	41
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	43
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	69
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	71
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	115
ITEM 9A. CONTROLS AND PROCEDURES	115
ITEM 9B. OTHER INFORMATION	118
PART III	119
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	119
ITEM 11. EXECUTIVE COMPENSATION	119
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	119
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	119
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES	120
PART IV	121
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	121

        FIRSTMARBLEHEAD, ASTRIVE, LAUREL COLLEGIATE LOANS, MONTICELLO STUDENT LOANS, ASTRIVE ADVANTAGE and MONOGRAM are either registered trademarks or trademarks of The First Marblehead Corporation. All other trademarks, service marks or trade names appearing in this annual report are the property of their respective owners.

        In addition to historical information, this annual report includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and Section 27A of the Securities Act of 1933, as amended, or the Securities Act. For this purpose, any statements contained herein regarding our strategy, future operations and products, financial performance, future funding transactions, projected costs, future market position, prospects, plans, and outlook, other than statements of historical facts, are forward-looking statements. The words "anticipates," "believes," "estimates," "expects," "intends," "may," "observe," "plans," "projects," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot guaranty that we actually will achieve the plans, intentions or expectations expressed or implied in our forward-looking statements, which involve risks, assumptions and uncertainties. There are a number of important factors that could cause actual results, levels of activity, performance or timing of events to differ materially from those expressed or implied in the forward-looking statements we make. These important factors include our "critical accounting estimates" described in Item 7 of Part II of this annual report, and factors including, but not limited to, those set forth under the caption "Risk Factors" in Item 1A of Part I of this annual report. Although we may elect to update forward-looking statements in the future, we specifically disclaim any obligation to do so, even if our estimates change, and readers should not rely on those forward-looking statements as representing our views as of any date subsequent to September 2, 2009.

PART I

Item 1.    Business

We use the terms "First Marblehead," "FMC," "we," "us" and "our" in this annual report to refer to the business of The First Marblehead Corporation and its subsidiaries on a consolidated basis.

Overview

        We offer outsourcing services to national and regional financial institutions and educational institutions in the United States for designing and implementing private education loan programs. These loan programs are designed to be marketed to prospective student borrowers and their families directly or through educational institutions and to generate portfolios which may be held by the originating lender or financed in the capital markets. We offer a fully integrated suite of services, including our new Monogram loan product, as well as certain services on a stand alone, fee-for-service basis. In addition, we provide administrative and other services to securitization trusts that we have facilitated and asset servicing to the third-party owner of certain securitization trusts.

        Our bank subsidiary, Union Federal Savings Bank, which we refer to as Union Federal, is a federally chartered thrift that offers residential and commercial mortgage loans, and certain other banking products, and prior to fiscal 2009, offered private education loans. As a result of our ownership of Union Federal, we are a savings and loan holding company subject to regulation, supervision and examination by the U.S. Office of Thrift Supervision, or OTS.

General Developments

        During fiscal 2009, we took several measures to adjust our business in response to economic conditions, including capital markets dislocations and the declining credit performance of consumer-related loans. Most significantly, we redesigned our product offerings in an effort to attract lenders back into the market for private education loans. We also added fee-for-service offerings such as portfolio management and asset servicing. Finally, we revised our fee structures, made major changes to senior management and significantly reduced our operating expenses.

        Our new Monogram product offering has been designed to provide prospective lenders with flexible loan program features intended to meet their desired risk control and return objectives, while also providing borrowers with some ability to configure the terms of their private education loan to meet their financing needs. The product offering, the development of which was completed in August 2009, also incorporates refinements to our origination process, including an enhanced application interface, real-time borrower disclosures, an improved decisioning platform and robust client reporting. The success of the new product offering will be critical to growing and diversifying our revenues and client base. In lieu of a third-party guaranty, the Monogram product provides for funding and maintenance of segregated loan loss reserves by lenders, through fees paid partially or entirely by borrowers. We may contribute limited amounts to fund portfolio reserves. Union Federal is not expected to participate as a program lender during fiscal 2010 in light of regulatory constraints.

        During fiscal 2009, we revised our fee structure and developed additional services designed to provide us with fee-based income for the services we render, which we believe will improve our cash flows and reduce our dependence on the credit and capital markets. In the past, we did not charge separate fees for many of our services, but generally entered into agreements with clients giving us the exclusive right to securitize the private education loans that they did not intend to hold. As a result, we have historically derived substantially all of our income from structuring securitization transactions. Securitization refers to a technique of pooling loans and selling them to a special purpose, bankruptcy remote entity, typically a trust, which issues bonds backed by those loans to investors. Private education loan asset-backed securitizations have historically been our sole source of permanent financing for our clients' private education loan programs.

        We have been unable to access the securitization market since September 2007 as a result of market disruptions that began in the second quarter of fiscal 2008, accelerated during the third quarter

of fiscal 2008 and persist, to a lesser extent, as of September 2, 2009. That inability has not only negatively affected our financial results, it has resulted in many of our former lender clients holding private education loan portfolios longer than they had expected. In addition, in April 2008, The Education Resources Institute, Inc., or TERI, voluntarily filed a petition for relief under Chapter 11 of the United States Bankruptcy Code, or Bankruptcy Code. Our lender clients have in the past had the opportunity to mitigate their credit risk through a loan repayment guaranty by TERI, which is a private, not-for-profit Massachusetts organization. We refer in this annual report to TERI's bankruptcy proceedings as the TERI Reorganization. The capital market disruptions and the TERI Reorganization have negatively affected our client relationships and challenged our business prospects. For example, JPMorgan Chase Bank, N.A., Bank of America, N.A. and RBS Citizens, N.A. elected to terminate some or all of their agreements with us, which resulted in a significant reduction in our facilitated loan volumes during fiscal 2009 compared to prior fiscal years. In addition to the absence of revenue from new securitizations, our financial results for fiscal 2009 were negatively affected by significant write-downs of the estimated fair value of our service receivables and portfolio of private education loans held for sale.

        The following table presents certain financial and operating information as of and for the fiscal years ended June 30, 2009, 2008 and 2007. Substantially all of our financial results have been derived from servicing private education loans, which are considered to be in a single industry segment for financial reporting purposes. For additional information about our results of operations and financial condition, see "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in Item 7 of this annual report.

		Fiscal years ended June 30,
		2009			2008			2007
		(dollars in thousands)
Revenues from new securitizations		$	—		$	320,382		$	684,080
Total revenues		$	(290,006	)	$	(28,409	)	$	880,704
Net income (loss)		$	(363,020	)	$	(235,076	)	$	371,331
Total assets at fiscal year end		$	821,330		$	1,200,898		$	1,214,463
Approximate number of education loan applications facilitated			41,000			1,696,000			1,325,000
Approximate number of schools with loans facilitated			2,500			5,600			5,800
Principal amount of education loans facilitated:
	Approximate "make and sell" volume facilitated	$	83,375		$	4,520,034		$	3,873,048
	Approximate "make and hold" volume facilitated		183,211			483,966			419,480
	Total volume facilitated	$	266,586		$	5,004,000		$	4,292,528
Principal and accrued interest balance of education loans securitized		$	—		$	2,027,079		$	3,750,043
Principal balance of education loans facilitated and available to us at fiscal year end for later securitization		$	1,252,667		$	3,399,483		$	831,912

        We earned $320.4 million and $684.1 million in revenues from new securitizations during fiscal 2008 and 2007, respectively. These revenues were derived from securitization trusts that purchased private education loans from several lenders, including JPMorgan Chase Bank, N.A., Bank of America, N.A. and RBS Citizens, N.A.

        We remain focused on preserving capital and maximizing liquidity in these challenging market conditions. During fiscal 2009, we received $132.7 million in gross proceeds from an equity financing, and we greatly reduced our annual cash expenditure requirements through reductions in headcount, reductions in marketing expenditures, consolidation of office space and other cost saving initiatives that

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began in fiscal 2008. In addition, as of March 31, 2009, we sold the trust certificate, or Trust Certificate, of NC Residuals Owners Trust, which held our residual interests in The National Collegiate Student Loan Trusts, which we refer to in this annual report as the NCSLT Trusts. The NCSLT Trusts held substantially all of the TERI-guaranteed private education loans that we had previously securitized. The sale of the Trust Certificate is expected to generate a refund for income taxes previously paid and eliminate certain of our future tax liabilities, which would have had a material negative effect on our financial condition and liquidity. As a result of this sale, we are no longer entitled to receive residual cash flows from the NCSLT Trusts, and our financial results for fiscal 2009 included a write-down of our residuals receivables of $134.5 million as a result of the transaction. We continue to have rights to additional structural advisory fees and will earn asset servicing fees from the NCSLT Trusts, as well as additional structural advisory fees and residuals from certain trusts other than the NCSLT Trusts.

        In July 2009, we entered into a supervisory agreement with the OTS that requires us, among other things, to maintain Union Federal's regulatory capital ratios at specified levels. We refer to the agreement in this annual report as the Supervisory Agreement. Union Federal entered into a stipulation in July 2009 consenting to the issuance by the OTS of an order to cease and desist, which we refer to in this annual report as the Order. We are taking steps to address the matters identified by the OTS in the Supervisory Agreement and the Order and the requirements imposed on Union Federal and us by the OTS. See "Risks Relating to Regulatory Matters" in Item 1A of this annual report for additional details.

Market Opportunity

        Our business is focused on private education loan programs primarily for undergraduate and graduate students in the United States. Private education loans are funded by private sector lenders and are not guaranteed by the U.S. government. They are intended to be used by borrowers who have first utilized other sources of education funding, including federally guaranteed loan programs, grants and other aid. For the 2008-2009 academic year, we believe that there was a "funding gap" in post-secondary education in the United States of over $135 billion between the costs of attendance and these other sources of education funding. We believe that enrollment in post-secondary education institutions will continue to increase over the next several years, as will costs of attendance. As a result, we also believe that responsible private education loan products will continue to be necessary for students and their families after exhausting all available federal loan programs, scholarships, grants and other government aid.

        Our clients in the past have typically been lenders that desired to supplement their existing federal education loan or other consumer lending programs with a private education loan offering. In response to legislative changes that significantly reduced the profit margins of traditional non-governmental providers of federal loans, as well as proposed legislation that would eliminate the Federal Family Education Loan Program, or FFELP, many lenders have re-evaluated their business strategies related to education lending. We believe that general economic conditions, capital markets disruptions and the declining credit performance of consumer-related loans, including private education loans, have contributed to an overall reluctance by many lenders to focus on their education lending business segments. As a result, however, we believe that there is significant unmet demand for private education loans and generally less competition in addressing that demand. As market conditions for other consumer finance segments improve, we expect more lenders to focus on education lending and consider private education loans as part of an array of consumer lending products offered to their customers. One of our primary challenges is to convince national and regional lenders that they can address the market opportunity in a manner that meets their desired risk control and return objectives. A related challenge is to finance successfully through the capital markets loans generated through our Monogram product offering.

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        We offer specialized knowledge, experience and capabilities to assist clients in participating in the private education loan market. Our service offerings are intended to serve a range of potential client needs throughout the life cycle of a private education loan. For example, we can assist clients in developing all aspects of a private education loan program, or we can provide tailored loan origination, portfolio management and other services to meet specific needs.

Service Offerings

        The lifecycle of a private education loan, which can be over 20 years long, consists of a series of processes, many of which are highly regulated, and involves many distinct parties. As a result, the activities associated with designing, implementing, financing and administering private education loan programs are complex, resource intensive and costly.

        Through our Monogram product offering, we enable lenders to offer borrowers private education loans with competitive terms and clear pricing alternatives, but which are also structured to align product options made available to qualified applicants with their credit risk. The product does not involve a third-party guarantor, although it does provide for the funding and maintenance of segregated loss reserves by lenders, through fees to be paid partially or entirely by the borrower. The product offering can be structured to generate loan portfolios to be held by originating lenders or financed in the capital markets. In addition to offering a fully integrated suite of services through our Monogram product offering, we also offer clients tailored outsourced loan origination, portfolio management and other services.

Monogram Product Offering

        The Monogram product integrates all of our service offerings, including program design, marketing support, loan origination and portfolio management. The product enables our lender clients to customize their loan programs to meet their risk control and return objectives without a third-party guaranty. Specifically, the client can customize the range of loan terms offered to their qualified applicants, such as repayment options, loan limits and borrower pricing. The Monogram product is based on our proprietary origination risk score model, which was independently reviewed by a credit bureau. This model uses over 50 attributes from the borrower and cosigner to assign a specific level of credit risk to the application at the time of initial credit decisioning. A score is assigned to each application and governs the loan terms offered to applicants who have been conditionally approved for a loan. For example, higher risk applicants may not be eligible to defer principal and interest while in school. Our online application also provides a qualified applicant with some ability to configure loan terms, showing the financial effects of the choices using a real-time repayment calculator. The product can be structured to offer lenders either a "make and hold" or "make and sell" loan program. In "make and hold" loan programs, lenders finance the loans on their balance sheet and generally intend to continue to hold the loans through the scheduled repayment, prepayment or default. In "make and sell" loan programs, lenders intend to hold the loans on their balance sheet for some limited period of time before disposing of the loans in a capital markets transaction. We believe that the loans generated through the Monogram loan product will generally have shorter repayment terms, higher cosigner participation rates, and an increased percentage of borrowers making payments while in school compared to our past loan products.

        As part of the Monogram product offering, we will continue to monitor the performance of each loan account after origination and tailor default prevention and recovery strategies according to the performance pattern of those accounts. We have built a flexible infrastructure to support our portfolio management strategy, which requires extensive operational and data integration among the loan servicer, multiple default prevention and recovery agencies and us. Finally, we provide extensive customer service to each client, including ongoing analysis and robust reporting of loan performance data.

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        We may contribute limited amounts to fund portfolio reserves. The amount of any contribution offered to a particular lender would be determined by the anticipated size of the lender's program, the underwriting guidelines of the program and the particular terms of our business relationship with the lender. We believe this approach may provide lenders with increased confidence that we are committed to the quality of our new proprietary scoring models and risk mitigation and pricing strategies.

Program Design

        Lenders face an array of choices in attempting to satisfy their strategic and financial goals, as well as the needs of their borrowers. In designing loan programs, the factors that lenders generally consider include:

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borrower creditworthiness criteria, including acceptable origination risk scores, credit bureau ratings and cosigner requirements, as well as factors such as employment and income history and any past derogatory credit events;

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borrower eligibility criteria, including enrollment status and academic progress;

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loan limits, including minimum and maximum loan amounts on both an annual and aggregate basis;

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interest rates, including the frequency and method of adjustment;

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amount of fees charged to the borrower, including origination, guaranty and late fees;

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repayment terms, including maximum repayment term, minimum monthly payment amounts, rate reduction incentive programs, and deferment and forbearance options;

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appropriate loss reserve levels to ensure repayment of defaulted principal and interest payments;

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loan servicing, default management and collection arrangements;

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asset financing or loan disposition alternatives; and

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legal compliance with numerous federal laws and regulations, including but not limited to the Higher Education Opportunity Act of 2008, the Truth-in-Lending Act, or TILA, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Federal Trade Commission, or FTC, Act, the FTC Telemarketing Sales Rule, and numerous state laws that replicate and, in some cases, expand upon the requirements of federal laws.

        We help clients design their private education loan programs. Our design approach begins with a standard set of pricing options, legal agreements and third-party relationships that we can then customize for our clients in order to satisfy their particular needs. Although we assist lenders in selecting the underwriting criteria to be used in their loan programs, each lender has ultimate control over, and responsibility for, the selection of their underwriting criteria, and we are obligated to comply with the lender's criteria. While we are not separately compensated for our loan program design services, our ability to earn revenue is dependent on service fees we earn through loan origination and subsequent loan portfolio management services that we may provide pursuant to the program design.

Marketing Support

        In creating their loan marketing programs, institutions face choices in the channels and media available to them to reach potential borrowers, including financial aid offices, online advertising, direct mail campaigns, e-mail campaigns, telemarketing, and print, radio and television advertising. Historically, we provided marketing support services to our clients on a cost-reimbursement basis because we benefited from the higher volume of loans processed as a result of these marketing efforts. In the future, we expect to provide any marketing support on a fee-for-service basis.

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Loan Origination

        Prospective and current students and their families confront a complicated process in applying for financial aid. Because private education loans are often used to bridge the gap between the cost of attending an educational institution and available funds, including family resources and federal and state loans and grants, many borrowers must navigate multiple application processes. In order to respond to questions about these processes from borrowers, lenders and educational institutions must either invest in an appropriate infrastructure or outsource these services. We provide a staff of customer service personnel who have a thorough understanding of loan program terms as well as the advantages and disadvantages of our clients' private education loan programs, federal financial aid options and the financial aid process as a whole. In addition to a customer service function, we can provide personnel to respond to requests for loan materials and loan applications.

        We have developed proprietary processing platforms, applications and infrastructure, supplemented by customized vendor solutions, for use in providing loan processing services. We expect to provide processing services as either an integrated part of the new Monogram product or individually on a fee-for-service basis.

        Our systems have been designed to provide applicants with consumer protection disclosures required by law and regulation, as well as information helpful for making informed decisions about private education loans. For example, our new online application has been designed to give qualified applicants some ability to configure loan terms, showing the financial effects of the choices using a real-time repayment calculator. In addition, we continue to support our www.SmartBorrowing.org website. We established this website to provide an education-based environment for students and parents to gather information about financing college education. We designed it based on the principle that students should first consider scholarships, grants and federal and state aid options before seeking private education loans.

        In performing our loan origination services, we are required to comply with applicable laws and regulations in loan documentation, disclosure and processing. The lenders with whom we work generally assume responsibility for compliance with federal and state laws regarding loan documentation and disclosure. We, in turn, work with lenders to prepare lender-specific credit agreement templates. We maintain and utilize these templates, reflecting applicable legal requirements and lender preferences. We are then responsible for maintaining processes and systems that properly execute the lender's origination requirements and administer the credit agreement templates and required disclosures. We also deliver each lender's privacy policy and prepare and deliver truth-in-lending and various state law disclosures to borrowers.

        Our Monogram product is based on our proprietary origination risk score model, which uses over 50 attributes from the borrower and cosigner to assign a specific level of credit risk to the applicant. Once an applicant submits an application for processing, our customized third-party credit decision software can be configured for each client's specific program parameters, and analyzes, often within minutes, the submitted application. Application data are automatically sent to credit bureaus, which generate and return a credit report. The credit decision software then evaluates the applicant data and the credit report data and assigns a score to the applicant based on our risk score model. The score results in a credit decision and also governs the loan terms offered by the client, aligning product options made available to qualified applicants with their credit risk. This automated underwriting process can deliver a loan application decision, and accompanying credit agreement when applicable, within the same online session. We also enable applicants to submit applications by facsimile or mail. Applications with either incomplete information or information mismatches can be sent automatically to a credit analyst for review. We then communicate the initial determination to the applicant, including through e-mail, informing him or her whether the application is conditionally approved, rejected or in review. The applicant receives instructions for completing the loan application and funding process and is provided a website navigation link to check his or her loan status. To avoid

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unauthorized disclosure, access requires use of security protocols established during the application process. Simultaneously, our customer service platforms, including our automated voice response unit, online status and customer service applications are updated.

        Once a loan application is approved, we generate a credit agreement, a legal contract between the applicant, cosigner, if any, and lender which contains the terms and conditions of the loan, for the applicant based on lender- and product-specific templates. For those lenders and applicants that prefer electronic document delivery, a credit agreement and certain regulatory disclosures are created in the same online session. The credit agreement can be viewed, downloaded and printed by the applicant and faxed or mailed back to us. For those applicants who prefer paper documentation, we print and mail a pre-filled credit agreement to the applicant for him or her to sign and return to us by mail.

        Once we have obtained all applicant data, including the signed credit agreement, evidence of enrollment or required certifications from the school or applicant, and any required employment verification, we approve the application and disburse the loan funds on behalf of the lender, with funds made available to us by the lenders. Depending on the loan program and type of disbursement, funds are either sent to the borrower, to the school or to certain central disbursing agents, such as ELM Resources, which then pass the funds along to the school.

        We monitor developments in state and federal requirements for loan processing and implement changes to our systems and processes based on our analysis and input we receive from clients and industry groups. For example, we designed and made available to lenders a customer identification program in connection with their past private education loan programs that we will continue to use going forward. This identification program was designed to meet USA PATRIOT Act requirements that lenders gather identifying data, verify applicant identity and maintain records of the process. We also completed similar process improvements in the area of secure access to pending loan information, in order to comply with federal privacy and state identity theft laws. Contractual liability for identification of process requirements rests with the lenders in the program guidelines and liability for properly executing such requirements rests with us.

Portfolio Management

        Once loans are disbursed, holders of the loans will often outsource their servicing responsibilities to third-party providers. These third-party providers, which we refer to as portfolio vendors, include both loan servicers and collection agencies. Generally, loan servicers establish and maintain contact with borrowers whose loans are current and collection agencies establish and maintain contact with borrowers whose loans are delinquent or defaulted.

        The duties of the portfolio vendors include, for example, preparing repayment invoices, collecting payments from borrowers, maintaining records of borrower payments, responding to questions from borrowers relating to their loans and reporting information to the loan owner. In addition, portfolio vendors may perform skip-tracing services, make collections calls and conduct other collections activities, and report borrower delinquencies or defaults to credit bureaus. If borrower payments are deferred while the borrower is in school, the loan servicer typically provides monthly account information and educational materials to the student and any cosigner.

        Our portfolio management group manages approximately 15 portfolio vendors, including seven loan servicers. The Pennsylvania Higher Education Assistance Agency, or PHEAA, services a majority of the loans we have facilitated. No single collection agency services more than 20% of the loan portfolios that we manage.

        Following the TERI Reorganization, we developed a multi-faceted approach to portfolio management. To maximize the return on each portfolio, we re-score each account on a quarterly basis using our proprietary behavioral scoring model. The scoring model is designed to rank-order each account based on attributes related to creditworthiness and prepayment. The primary objective of the

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scoring model is to identify and control losses on high risk borrowers. This objective dictates the level of resources we apply to each account, including when the account is outsourced to a collection agency and which agency is used in that process. For example, certain collections agencies may specialize in early-stage delinquencies while others may specialize in the collection of defaulted loans. This process requires a highly integrated infrastructure among the loan servicers, collection agencies and us, in addition to extensive data analysis on each account as it moves through its lifecycle. We believe this approach will allow us to better identify and control losses over time.

        For stand-alone portfolio management services, we expect to charge a fee based on assets under management.

Loan Securitization

        Although some lenders originate loans and then hold them for the life of the loan, other lenders originate and then seek to dispose of the loans, either through a sale of whole loans or by means of a securitization. Whole loans can be purchased by other financial institutions, which may add them to an existing portfolio, or by entities that serve to warehouse the loans for some period of time, pending eventual securitization.

        In the past, we served as an intermediary between our clients and the capital markets. We formed bankruptcy remote, special purpose statutory trusts. The proceeds from bonds issued by the trusts were used to purchase private education loans from the originating lenders. The loans were used as security for repayment of the bonds. Our compensation for these services was in the form of structural advisory fees, as well as a residual interest in the securitization trusts.

        The recent conditions of the debt capital markets generally, and the asset backed securities, or ABS, market specifically, have resulted in a reduction in the new issuance volume of education loan ABS. According to industry sources, new issuances in the market totaled approximately $14.3 billion for the fiscal year ended June 30, 2009. Of that total, approximately $10.1 billion were backed by federally guaranteed education loans and $4.2 billion were backed by private education loans, none of which we facilitated. The new issuance volume of both federally guaranteed and private education loan ABS totaled approximately $28.1 billion in calendar 2008 and $52.6 billion in calendar 2007.

        Securitization historically provided several benefits to lenders and developed into a diverse, flexible funding mechanism for the financing of private education loan pools. Securitization enabled lender clients to sell potentially otherwise illiquid assets in both the public and private securities markets, and to limit credit and interest rate risk, and enabled the reallocation or transfer of risk through the use of derivative products such as interest rate swaps or caps, a senior-subordinated liability securities structure, financial guaranty insurance for the securities issued, loan guarantees from third-party debt guarantors, the tiering of maturities of securities issued and the issuance of several different types of bonds matching projected pool repayment characteristics. Although this flexibility added to the complexity of the funding process, it also enabled the originating lender to reduce the cost of financing and recycle capital, thereby improving the economics of the loan program and improving loan terms by passing incremental savings back to the borrower. The availability of many of these structural elements for originating lenders may decline or cease to exist due to economic factors.

        Securitizations require a high level of specialized knowledge and experience regarding both the capital markets generally, and the repayment characteristics and defaults on the part of borrowers specifically. The process of issuing ABS requires compliance with state and federal securities laws, as well as coordination among originating lenders, servicers, securities rating agencies, attorneys, securities dealers, loan guarantors, structural advisors, trust management providers and auditors.

        To date, we have structured and facilitated 38 securitizations consisting entirely of private education loans, with an original principal balance of approximately $17.5 billion. We have securitized loan pools using various financing structures, including both public offerings registered with the

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Securities and Exchange Commission, or SEC, and private placements, and have utilized various ABS, including commercial paper, London Interbank Offered Rate, or LIBOR, floating rate notes, auction-rate debt and senior-subordinated and third-party credit enhanced debt. In connection with our "make and sell" product, we historically entered into agreements with the originating lenders giving us the exclusive right to securitize their private education loans.

        The extensive database provided by our private education loan repayment statistics dating back to 1986 has been another key to optimizing the financing of the private education loan pools our clients generate. We have used this data to estimate the default, recovery and prepayment characteristics of the different types of loans that constitute a loan pool. We believe the historical data and our use of standard consumer credit score-based risk assessments has previously given comfort to the rating agencies, insurance providers, underwriters and securities investors, resulting in a more cost-effective securitization.

        While the current demand for securitizations backed by private education loans has been minimal, consisting mostly of transactions financed through the Term Asset-Backed Securities Loan Facility, or TALF, sponsored by the Federal Reserve Bank of New York, we plan to participate in future securitizations, subject to market acceptance. If we are able to facilitate securitizations in the future, we expect the structure and economics of the transactions to be substantially different than our past transactions. We expect lower revenues and additional cash requirements on our part and limited, if any, demand for subordinate tranches of ABS.

Asset Servicing

        Effective as of March 31, 2009, we entered into an asset services agreement with the purchaser of the Trust Certificate, pursuant to which we provide certain services to support its ownership of the residual interests in the NCSLT Trusts, including, among others, analysis and valuation optimization services and services relating to funding strategy. We refer to this agreement as the Asset Services Agreement in this annual report. We are entitled to certain asset servicing fees for these contractual services, although receipt of the fees is contingent upon distributions available to the owners of the residual interests of such trusts.

Trust Administration

        As administrator of the trusts we have facilitated, we monitor the performance of loan servicers and third-party collection agencies. In this capacity, we confirm compliance with servicing guidelines and review default prevention and collection activities. We receive administrative fees from the trusts, ranging from five to 20 basis points per year of the loan balance in the trust, for daily management and for the services we provide in obtaining information from the loan servicer and reporting this and other information to the parties related to the securitization.

Competition

        Although a number of competitors and potential competitors exited the private education loan industry as a result of market developments during fiscal 2008 and fiscal 2009, the industry remains competitive with a number of active participants. Although our subsidiary Union Federal is not, as of September 2, 2009, offering private education loans and therefore we do not compete directly with lenders for loan originations, we expect to derive revenue from the services that we provide to lenders for their private education loan programs. Based on the range of services we offer, we believe that our principal competitor is SLM Corporation, which is also known as Sallie Mae. Our business could be adversely affected if Sallie Mae's program to market private education loans continues to grow, or if Sallie Mae or Nelnet, Inc., which currently provides fee-based origination and servicing activities for non-federally guaranteed loans, seeks to market more aggressively to third parties the full range of services for products that we offer. Other private education loan originators include JPMorgan Chase

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Bank, N.A., Wells Fargo & Company, Discover Financial Services, and Student Loan Corporation, an 80% owned subsidiary of Citibank, N.A.

        To the extent that loan originators develop an internal capability to provide any of the services that we currently offer, demand for our services would decline. For example, a loan originator that has, or decides to develop, a portfolio management or capital markets function may not engage us for our services. In addition, to the extent that Union Federal provides private education loans directly to consumers, we could compete directly with clients and former clients. Historically, lenders in the education loan market have focused their lending activities on federal loans because of the relative size of the federal loan market and because the federal government guarantees repayment of those loans. As a result of the College Cost Reduction and Access Act of 2007, which significantly reduced the profit margins of traditional non-governmental providers of federal loans, and the proposed elimination of the FFELP, lenders may place additional emphasis on the private education loan market or develop an internal capability to conduct the services we provide, which could result in a decline in demand for our service offerings. We believe the most significant competitive factors in terms of developing private education loan products are technical and legal competence, cost, data relating to the performance of private education loans, risk analytics capabilities, capital markets experience, reliability, quality and speed of service. We differentiate ourselves from other service providers by the range of services we can provide our clients.

        Several of our current and potential competitors have longer operating histories and significantly greater financial, marketing, technical or other competitive resources, as well as greater name recognition than we do. As a result, our competitors or potential competitors may be able to adapt more quickly to new or emerging technologies and changes in customer requirements or may be able to devote greater resources to the promotion and sale of their services. In addition, competitors may be able to adopt more aggressive pricing policies in order to attract potential clients. We cannot assure you that we will be able to compete successfully with new or existing competitors. To remain competitive, we will need to continue to invest in information technology, sales and marketing, as well as legal, compliance and product development resources.

Proprietary Systems and Processes

        In addition to our proprietary database that tracks historical private education loan performance, we maintain advanced proprietary information processing systems. We use these information systems to analyze loan applications efficiently, expedite loan processing and enhance our loan securitization and default management services.

        Key benefits of our information processing systems include:

•

the ability to analyze and assess loan applications based on a variety of underwriting and product factors, including flexibility to adapt to different product parameters required in customized client implementations;

•

a batch transaction/application processing system that includes automated updating of an applicant's loan status that a borrower can access online or telephonically;

•

automated preparation and secure electronic delivery of loan documents, including credit agreements and certain legal disclosures;

•

online certification tools enabling financial aid offices to speed loan disbursement by quickly confirming student applicants' enrollment status and financial need;

•

online reporting tools enabling financial aid offices to track and sort information about student applicants and borrowers, including application status and disbursement dates;

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•

custom built data transmission techniques designed to ensure that data are compiled, integrated and properly migrated both across our enterprise and to external third parties such as servicers, collection and placement agencies and other third-party vendors; and

•

interfaces with internal accounting systems intended to ensure proper booking and tracking of loan information for our clients, as well as support for our capital markets group in its financing activities.

        We use a number of leading commercial products to secure, protect, manage and back-up data.

Intellectual Property

        We own the following federally registered trademarks: FIRSTMARBLEHEAD, ASTRIVE, MONTICELLO STUDENT LOANS, prepGATE, GATE, GATE Guaranteed Access to Education, and National Collegiate Trust. The federal registrations for these registered trademarks expire at various times between 2015 and 2019, but the registrations may be renewed for additional 10-year terms provided that we continue to use the trademarks. We have filed with the U.S. Patent and Trademark Office federal trademark applications with respect to existing or planned uses of the marks LAUREL COLLEGIATE LOANS, MONOGRAM and ASTRIVE ADVANTAGE. We filed a patent application in June 2007 relating to a method and system for administering linked loans between two parties.

Education Loan Market Seasonality

        Origination of education loans is generally subject to seasonal trends, with the volume of loan applications increasing with the approach of tuition payment dates. Historically, we have processed the greatest application volume during the summer months, as students seek to borrow money in order to pay tuition costs for the fall semester or the entire school year. We have also tended to process increased volume of loan applications during November, December and January, as students and their families seek to borrow money to pay tuition costs for the spring semester. Historically, this seasonality of loan originations has impacted the timing and size of securitization transactions, the amount of processing fees that we earned in a particular quarter and the level of expenses incurred to market and process the higher origination activity.

Union Federal Savings Bank

        In November 2006, we acquired Union Federal, a community savings bank located in North Providence, Rhode Island. Union Federal is a federally chartered thrift that offers residential and commercial mortgage loans, retail savings products, time deposit products and money market accounts. Union Federal has also funded a portion of our product offerings in the past, although it is not doing so as of September 2, 2009. Union Federal held variable-rate private education loans with $264.6 million in outstanding principal and interest as of June 30, 2009. In addition, Union Federal held approximately $9.5 million of mortgage loans as of June 30, 2009. We derived approximately $23.1 million of net interest income during fiscal 2009 from Union Federal, primarily from the private education loan portfolio. As a result of disruptions in the ABS market, we have been unable to facilitate the securitization of private education loans originated by Union Federal since September 2007.

        In July 2009, FMC entered into the Supervisory Agreement with the OTS, and Union Federal consented to the Order. The Supervisory Agreement requires us to maintain certain regulatory capital ratios at Union Federal and requires FMC to maintain an inter-company deposit at Union Federal of $30.0 million for as long as certain conditions exist. In addition, the Supervisory Agreement requires us to obtain OTS approval for certain transactions related to Union Federal and us. The Order requires Union Federal to develop a new three-year business plan, implement a liquidity plan and concentration reduction plan, provide notice to or obtain approval from the OTS before pursuing certain transactions

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and engage a third-party to evaluate Union Federal's private education loan portfolio. Union Federal is not expected to participate as a Monogram program lender during fiscal 2010 in light of regulatory constraints. See Note 23, "Subsequent Events—Supervisory Agreement and Order to Cease and Desist," in the notes to our consolidated financial statements included in Item 8 of this annual report for additional details.

Government Regulation

        We provide services in connection with the creation, management and disposition of private education loans, a form of consumer loan asset. This business is highly regulated at both the state and federal level, through statutes and regulations that focus upon:

•

licensure and examination of industry participants;

•

regulation and disclosure of consumer loan terms;

•

regulation of loan origination processing; and

•

licensure and general regulation of loan collection and servicing.

        Failure to conform to any of these statutes or regulations may result in civil and/or criminal fines, and may affect the enforceability of the underlying consumer loan assets.

        Many states have statutes and regulations that require licensure of small loan lenders, loan brokers and loan arrangers. Some of these statutes are drafted or interpreted to cover a broad scope of activities. We have not taken formal action regarding licensing or registration with any regulatory body outside the Commonwealth of Massachusetts, other than the OTS. While we believe that our prior consultations with regulatory counsel and, in some cases, local counsel identified all material licensing, registration and other regulatory requirements that could be applicable to us, legislative changes to state licensing schemes may raise potential concerns. Even if we are not physically present in a state, its regulators may take the position that registration or licensing is required because we provide services by mail, telephone, the Internet or other remote means.

        All of our operations relating to private education loan processing are located in Massachusetts. In 2001, we received determination letters from the Massachusetts Division of Banks confirming that the loan origination outsourcing services provided under contract to TERI by our subsidiary First Marblehead Education Resources, Inc., or FMER, were not subject to licensing under the Massachusetts Small Loan Act because FMER did not conduct a lending business with consumers in its own name and its processing centers were not generally open to the public. In May 2008, following the TERI Reorganization, we received an additional determination letter from the Massachusetts Division of Banks confirming that FMER's business of back office loan application processing, loan origination and loan underwriting functions on behalf of lenders was exempt from licensing under the Massachusetts Small Loan Act. The Massachusetts Small Loan Act requires any person that is engaged, for compensation, in the business of making small loans, or in aiding or assisting the borrower or the lender in procuring or making such loans, to obtain a license. Under the statute, the business of making small loans includes the making of loans of $6,000 or less with interest rates and expenses of more than 12% per year. The loans that we have facilitated include amounts as small as $1,000, and a portion of those loans have combined interest rates and fees exceeding 12%. We have provided outsourced private education loan origination services on a fee-for-service basis through FMER and Union Federal's subsidiary FM Loan Origination Services, LLC, or FMLOS. To the extent that these activities are conducted through Union Federal or FMLOS, we believe it is less likely that state regulatory requirements affecting loan brokers, small lenders and credit services organizations will be asserted. Operational restrictions imposed by federal regulators could, however, limit our ability to offer services through FMLOS on a fee-for-service basis.

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        We will continue to review state registration and licensing requirements that may become applicable to us in the future. As a result of providing portfolio management services, additional licensing requirements may apply to us. As a result of this continuing review, we may determine that registration or licensing is required in jurisdictions where we are not currently registered or licensed. In such a case, we may proceed with licensing or registration in the affected state, or we may attempt to restructure our activities through Union Federal or its operating subsidiary, or otherwise in a manner that we believe to be exempt from such licensing or registration.

        Compliance with state licensing requirements could involve additional costs, which could have a material adverse effect on our business. Our failure to comply with these laws could lead to, among other things:

•

curtailment of our ability to continue to conduct business in the relevant jurisdiction, pending processing of registration or a license application;

•

administrative enforcement actions;

•

class action lawsuits;

•

the assertion of legal defenses delaying or otherwise affecting the enforcement of loans; and

•

criminal and civil liability, each of which could have a material adverse effect on our business.

        Any of the foregoing could have a material adverse effect on our business. However, if required to obtain a license or to register, we do not anticipate difficulty meeting the licensing or registration requirements.

        While our licensing requirements are currently limited, the consumer assets with which we deal are subject to the full panoply of state and federal regulation, and a defect in such assets could affect our business. Similarly, the growing complexity of regulation of loan origination and collection may affect the cost and efficiency of our operations. We have sought to minimize the risk created by consumer loan regulation in a number of ways. The securitizations that we have facilitated have involved sales by financial institutions insured by the Federal Deposit Insurance Corporation, or FDIC, and other parties which represented and warranted that the assets in question were originated in compliance with all applicable law and were valid, binding and enforceable in accordance with their terms. Similarly, the securitization trusts have benefited from an assignment of representations and warranties made by the lender and by the applicable loan servicer regarding compliance with law in the origination and servicing of loan assets. TERI may nonetheless have recourse to us to the extent that a regulatory failure in loan origination of a TERI-guaranteed loan by us breached the standards of care under the master servicing agreement formerly in effect between TERI and us.

        The risk of noncompliance with regulatory requirements by our lender clients and their marketing partners has been highlighted by recent state and federal investigations into education loan marketing practices, particularly the payment of marketing fees directly to schools in exchange for loan referrals. None of our contracts with lenders or marketers involves the payment of fees to schools for loan volume. State and federal regulatory authorities have sought information from some of our former clients and us regarding the loan programs we have coordinated for them, and it is possible that some marketing or underwriting practices associated with the programs we coordinated and assets we securitized will be challenged as a result of such investigations. In August 2007, we announced that, as part of the New York Attorney General's investigation of several lending, educational and nonprofit institutions, we had received a subpoena for information regarding our role in the education loan industry. During fiscal 2008, we worked with the New York Attorney General's office regarding the investigation.

        The regulatory actions described above have also prompted state and federal legislation that will affect our operations. In August 2009, the Federal Reserve Board issued regulations to implement

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provisions of the Higher Education Opportunity Act, which was signed into law in August 2008. The regulations revise the number, timing, and content of disclosures required for private education loans by TILA and the Federal Reserve Board's implementing regulation for TILA, Regulation Z. Under the regulations, creditors that extend private education loans will be required to provide disclosures about loan terms and features on or with the loan application and will also be required to disclose information about federal education loan programs that may offer less costly alternatives to private education loans. Additional disclosures must be provided when the loan is approved and after loan acceptance but prior to loan disbursement. The Federal Reserve Board has also proposed model disclosure forms that creditors could use to comply with the new disclosure requirements. Compliance with the new regulations will be mandatory as of February 14, 2010.

        In delivering services, our operations must conform to consumer loan regulation that applies to lenders. This regulation includes, but is not limited to, compliance with the federal TILA, the Higher Education Opportunity Act of 2008, the Fair Credit Reporting Act, the USA PATRIOT Act, the Equal Credit Opportunity Act, the Gramm Leach Bliley Act, the FTC Act, the Fair Debt Collection Practices Act, and numerous state laws that replicate and expand upon the requirements of federal law. In addition, there is increasing regulation of the type of electronic loan application processing that we conduct, as well as regulation of access to and use of consumer information databases. A growing number of states are imposing disparate and costly requirements on our operations, including protections against identity theft, privacy protection and data security protection. The Fair and Accurate Credit Transactions Act of 2003 imposed significant federal law requirements on loan application processors, including requirements with respect to resolving address inconsistencies, responding to "red flags" of potential identity theft and processing identity theft notices, notices of adverse credit decisions based on credit scoring and other requirements that required both changes to automated loan processing and the creation of manual exception systems. These requirements strained, and future legislation or regulation may also strain, our systems. Failure to comply with these requirements will interfere with our ability to develop and market our new business model for processing services.

Employees

        During the last two quarters of fiscal 2008, we announced a reduction in our overall cost structure, including the reduction of headcount by over 600 employees. During fiscal 2009, we further reduced headcount by 145 employees. Following these reductions, we had 223 full-time employees at June 30, 2009, compared to 368 full-time employees as of June 30, 2008.

        We are not subject to any collective bargaining agreements, and we believe our relationships with our employees are good.

Our Corporate Information

        We were formed as a limited partnership in 1991 and were incorporated in Delaware in August 1994. Our principal executive offices are located at The Prudential Tower, 800 Boylston Street, 34^th Floor, Boston, Massachusetts 02199. The telephone number of our principal executive offices is (617) 638-2000.

Available Information

        Our Internet address is http://www.firstmarblehead.com. The contents of our website are not part of this annual report on Form 10-K, and our Internet address is included in this document as an inactive textual reference only. We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports available free of charge on our website as soon as reasonably practicable after we file such reports with, or furnish such reports to, the

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SEC. Alternatively, reports filed with or furnished to the SEC are available from the SEC on its website, www.sec.gov, by request from the Public Reference Room at 100 F Street, NE, Washington, D.C. 20549, or by phone at (800) SEC-0330.

Executive Officers

        The following table sets forth information regarding our executive officers, including their ages as of June 30, 2009.

Name	Age		Position
Daniel Meyers		46	Chief Executive Officer and President
Peter B. Tarr		58	Chairman of the Board of Directors
Kenneth Klipper		50	Managing Director, Chief Financial Officer, Treasurer and Chief Accounting Officer

        Set forth below is certain information regarding the business experience of each of the above-named persons.

Daniel Meyers has served as our Chief Executive Officer and President, and as a Director since September 2008. Mr. Meyers served as First Marblehead's Chief Executive Officer and Chairman of the Board from its incorporation in 1994 to September 2005 and as its President from November 2004 to September 2005. From 1980 to 1991, Mr. Meyers was involved in arbitrage and derivatives trading at EF Hutton, Prudential Bache Securities, LF Rothschild Unterberg Towbin and Commodities Corporation. He began working on ABS financings in 1986. He currently serves as the Chair of the Board of the Curry School of Education Foundation at the University of Virginia. He is also currently a member of the International Institute for Strategic Studies and serves on the Board of the Forum for the Future of Higher Education. Mr. Meyers received an A.B. in Economics from Brandeis University and completed the Owner President Management Program at the Harvard Graduate School of Business Administration.

Peter B. Tarr has served as Chairman of the Board of Directors since October 2005. Mr. Tarr served as our General Counsel from July 2005 to August 2008 and Vice Chairman of the Board of Directors from August 2005 until his election as Chairman. From 1986 to June 2005, Mr. Tarr was a senior partner in the corporate law department and a member of the Executive Committee at the law firm of Wilmer Cutler Pickering Hale and Dorr LLP. Mr. Tarr's practice focused on advising boards of directors on corporate governance, strategic transactions and public offerings of securities. Mr. Tarr received a B.A. from Yale College, an M.A.R. from Yale Divinity School and a J.D. from the University of Virginia School of Law.

Kenneth Klipper has served as our Chief Financial Officer and a Managing Director since September 2008, Treasurer and Chief Accounting Officer since November 2006 and as Senior Vice President, Finance from March 2005 to September 2008. From January 2003 to March 2005, Mr. Klipper served as the Chief Executive Officer of Brown Co., an online brokerage firm owned by JPMorgan at the time. From May 2002 to January 2003, Mr. Klipper served as the Chief Financial Officer of Park Street Capital, a private equity firm. From January 2000 to April 2002, Mr. Klipper served as the Chief Financial Officer of Tucker Anthony Sutro, Inc., a publicly traded securities brokerage firm. Prior to joining Tucker Anthony, Mr. Klipper served for five years as both the Chief Financial Officer and Controller for the securities brokerage unit of Fidelity Investments, and he held positions with KPMG LLP, a registered public accounting firm, for eleven years. Mr. Klipper received a B.S. from the University of Richmond and is a Certified Public Accountant.

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Code of Ethics

        We have adopted a code of conduct that applies to our employees and officers, including our principal executive officer, principal financial officer, principal accounting officer, or persons serving similar functions. We have also adopted a statement of business ethics that applies to our directors. We will provide a copy of our code of conduct and statement of business ethics for our board of directors to any person without charge, upon written request to: Corporate Secretary, The First Marblehead Corporation, The Prudential Tower, 800 Boylston Street, 34^th Floor, Boston, Massachusetts 02199. Our code of conduct and statement of business ethics for our board of directors, as well as our corporate governance guidelines and the charters of the standing committees of our board of directors, are posted on our website at www.firstmarblehead.com, and each of these documents is available in print to any stockholder who submits a written request to our corporate secretary. If we amend our code of conduct in the future or grant a waiver under our code of conduct to an officer or anyone functioning as our principal accounting officer, we intend to post information about such amendment or waiver on our website.

Item 1A.    Risk Factors

        Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below in addition to the other information included in this annual report. If any of the following risks actually occurs, our business, financial condition or results of operations would likely suffer. In that case, the trading price of our common stock could fall. Although we have grouped risk factors by category, the categories are not mutually exclusive. Risks described under one category may also apply to another category, and you should carefully read the entire risk factors section, not just any one category of risk factors.

Risks Related to Asset-Backed Securitizations and Other Funding Sources

We have historically derived a significant portion of our revenue and substantially all of our income from structuring securitization transactions; our financial results and future growth may continue to be adversely affected if we are unable to structure securitizations or alternative financings.

        In the past, we did not charge separate fees for many of our services, but generally entered into agreements with clients giving us the exclusive right to securitize the private education loans that they did not intend to hold. As a result, we have historically derived a significant portion of our revenue and substantially all of our income from structuring securitization transactions. We derived approximately $320.4 million and $684.1 million in revenue from new securitizations in fiscal 2008 and 2007, respectively.

        We did not complete a securitization during the second, third or fourth quarters of fiscal 2008, or during fiscal 2009, contributing to our net losses for each period. If we are able to facilitate the securitization of loans in the future, we expect the structure and economics of the transactions to be substantially different than our past transactions. We expect lower revenues and additional cash requirements on our part and limited, if any, demand for subordinate tranches of ABS. We have recently changed our fee structure with respect to our services and have developed additional services that are designed to provide us with fee-based income for the services we render. We will need to gain market acceptance of our Monogram loan product, new fee structure and additional services, in order to improve our cash flow and reduce our dependence on the credit and securitization markets. If we continue to be unable to access the ABS market, our revenues may continue to be adversely impacted and we may continue to generate net losses, which would further erode our liquidity position.

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A number of factors, some of which are beyond our control, have adversely affected and may continue to adversely affect our securitization activities and thereby adversely affect our results of operations.

        The success of our business may depend on our ability to structure securitizations or other financing transactions for our clients' loan portfolios. Several factors have had, and may continue to have, a material adverse effect on both our ability to structure financing transactions and the revenue we may generate for providing our structural advisory and other services, including the following:

•

persistent and prolonged disruption or volatility in the capital markets generally or in the private education loan ABS sector specifically, which could continue to restrict or delay our access to the capital markets;

•

our inability to structure and gain market acceptance for new products or services to meet new demands of ABS investors;

•

continuing degradation of the credit quality or performance of the loan portfolios of the trusts we have previously structured, which could reduce or eliminate investor demand for future securitizations that we facilitate, particularly for subordinate classes of ABS, or result in material, adverse modifications in rating agency assumptions, ratings or conclusions with respect to the securitization trusts;

•

rating agency action, including downgrades, of ABS that we have facilitated in the past or any occurrence of an event of default with respect to such securities, which could reduce demand for additional securitizations that we structure;

•

developments in connection with the TERI Reorganization, including the outcome of the challenges to the trusts' security interests;

•

unwillingness of investors to ascribe value to the TERI-guaranteed loan loss reserves or financial guarantees offered by other third parties;

•

the adequacy of the segregated reserves pledged to each securitization trust as collateral for TERI's guaranty obligations with respect to the loans held by the trust, including the validity and perfection of the trust's security interests and the replenishment of the reserves from recoveries on defaulted loans;

•

material breach of our obligations to clients, including securitization trusts and former or current lender clients;

•

the timing and size of private education loan asset-backed securitizations that other parties facilitate, or the adverse performance of, or other problems with, such securitizations, which could impact pricing or demand for our securitizations;

•

challenges to the enforceability of private education loans based on violations of federal or state consumer protection laws and related regulations, or imposition of penalties or liability on assignees of private education loans for violation of such laws and regulations; and

•

changes to bankruptcy laws that change the current non-dischargeable status of education-related loans, which could materially adversely affect recovery rates on defaulted loans.

        We have actually experienced, or are at particular risk of experiencing in the near term, the first seven factors listed above.

Capital markets dislocations, and the timing, size and structure of any future capital markets transactions, will greatly affect our quarterly financial results.

        Continuing dislocations in the capital markets, write-downs of our service receivables and the private education loans held by us and the size, structure or economic terms of our future capital

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markets transactions, if any, could increase the variability of our operating results on a quarterly basis. In addition, the sale or other disposition of Union Federal's private education loan portfolio could negatively affect our operating results for the quarter in which the transaction occurs. We are uncertain whether the fee structure that we have historically used will be used in any future securitization transaction. We expect the structure and pricing terms in future securitizations, if any, to be substantially less favorable than in the past. Developments in the TERI Reorganization, including the outcome of legal challenges to the trusts' security interests and resulting write-downs in our service receivables, could also contribute to increased variability of our operating results. Finally, our operating results may continue to be affected by the seasonality of education loan applications, which could affect the amount of loan processing fees that we earn in a particular quarter. Origination of education loans is generally subject to seasonal trends, with the volume of loan applications increasing with the approach of tuition payment dates.

We may need to pursue alternatives to securitizations, which may not be available or the terms of which may not be attractive.

        We have been unsuccessful in obtaining alternatives to securitization to finance our clients' loans. Other sources of funding have not been available to us. In addition, we are uncertain as of September 2, 2009 whether it will be feasible or advantageous to participate in TALF.

        Under the terms of our purchase agreements with lender clients, we generally have an obligation to use our best efforts to facilitate the purchase of a client's loans during a specified loan purchase period. The length of the loan purchase period varies by client and generally ranges from 195 days to 555 days following final loan disbursement. Our purchase agreements applicable to approximately $485.5 million of the facilitated loan volume available for securitization as of June 30, 2009 may be subject to liquidated damages provisions in the event that we fail to facilitate a securitization in breach of our obligations to certain former clients. The payment of liquidated damages and the amount of our potential liability with respect to such loans is dependent, in part, upon the outcome of the TERI Reorganization and is not determinable at this time. If we do not honor our contractual obligations, our value proposition would be compromised and prospective clients may not be interested in entering into business arrangements with us. In addition, our financial results would be adversely affected if we were required to pay damages.

In structuring and facilitating securitizations of our clients' loans, administering securitization trusts or as holders of rights to receive residual cash flows in non-NCSLT Trusts, we may incur liabilities to investors in the asset-backed securities those trusts issue.

        We have facilitated and structured a number of different special purpose trusts that have been used in securitizations to finance private education loans that our clients originate, including trusts that have issued auction rate notes. Under applicable state and federal securities laws, if investors incur losses as a result of purchasing ABS that those trusts issue, we could be deemed responsible and could be liable to those investors for damages. If we failed to cause the trusts or other transaction parties to disclose adequately all material information regarding an investment in the ABS or if the trust made statements that were misleading in any material respect in information delivered to investors, it is possible that we could be held responsible for that information or omission. Recent investigations by state attorneys general, and private litigation, have focused on auction rate securities, including the marketing and trading of such securities. It is possible that we could become involved in such matters in the future. In addition, under various agreements entered into with underwriters or financial guaranty insurers of those ABS, as well as certain lenders, we are contractually bound to indemnify those persons if investors are successful in seeking to recover losses from those parties and the trusts are found to have made materially misleading statements or to have omitted material information.

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        If we are liable for losses investors incur in any of the securitizations that we facilitate or structure and any insurance that we may have does not cover this liability or proves to be insufficient, our profitability or financial position could be materially adversely affected.

Risks Related to Our Financial Reporting and Liquidity

If the estimates we make, or the assumptions on which we rely, in preparing our financial statements prove inaccurate, our actual results may vary materially from those reflected in our financial statements.

        Historically, we have received structural advisory fees for our services in connection with securitization transactions. We have received an up-front portion of these structural advisory fees when the securitization trust purchases the loans. We are entitled to receive an additional portion of these structural advisory fees over time, based on the amount of loans outstanding in the trust from time to time over the life of the trust. We also have the right to receive a portion of any residual interests in certain trusts other than the NCSLT Trusts, and asset servicing fees from the NCSLT Trusts for additional services that we are contractually obligated to perform. As required under accounting principles generally accepted in the United States of America, or GAAP, we recognize as revenue an estimate of the fair value of the additional portion of the structural advisory fees and residuals at the time the securitization trust purchases the loans because these revenues are deemed to be earned before they are actually paid to us. Similarly, we are required under GAAP to recognize asset servicing fees as our services are performed; however, the receipt of the fees is contingent on distributions available to the owners of the residual interests of such trusts.

        We record additional structural advisory fees, asset servicing fees and residuals as receivables on our balance sheet at our estimate of their fair value. Because there are no quoted market prices for our service revenue receivables, we use discounted cash flow modeling techniques and certain assumptions to estimate fair value. We estimate the fair value both initially and in each subsequent quarter and reflect the change in our estimate of fair value in earnings for that period, as well as asset servicing fees earned for the period. Our key assumptions to estimate the fair value include: discount rates; the annual rate and timing of education loan prepayments; the trend of interest rates over the life of the loan pool, including the forward LIBOR curve; the expected annual rate and timing of loan defaults, and TERI's obligation and ability to pay default claims; expected recoveries of defaulted loans, including the use of recoveries to replenish segregated reserve accounts pledged to the securitization trusts by TERI to secure its guaranty obligations, or Pledged Accounts; the source and amount of guaranty payments made on defaulted loans; and the fees and expenses of the securitization trusts. Because our estimates rely on quantitative and qualitative factors, including macroeconomic indicators to predict prepayment, default and recovery rates, management's ability to determine which factors should be more heavily weighted in our estimates, and to accurately incorporate those factors into our estimates, are subjective and can have a material effect on valuations.

        We have adjusted our key accounting assumptions throughout fiscal 2009:

•

During the first quarter of fiscal 2009, we adjusted our key accounting assumptions, including our assumptions with regard to default and discount rates used in determining the value of our service receivables, which resulted in a $111.7 million pre-tax decrease in the value of those receivables.

•

During the second quarter of fiscal 2009, we further adjusted our key accounting assumptions, including our assumptions with regard to the auction rates and discount rates used in determining the value of our service receivables, which resulted in a $121.2 million pre-tax decrease in the value of those receivables.

•

During the third quarter of fiscal 2009, after the sale of the Trust Certificate, we further adjusted our key accounting assumptions, including our assumptions with regard to the discount rates and

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default rates used in determining the value of our service receivables, which resulted in a $6.8 million pre-tax decrease in the value of those receivables.

•

During the fourth quarter of fiscal 2009, we further adjusted our key accounting assumptions, including our assumptions with regard to the default rates, recoveries assumptions and discount rates used in determining the value of our service receivables, which resulted in a $7.5 million pre-tax decrease in the value of those receivables.

        In general, our adjustments during fiscal 2009 were necessary because securitization trusts had performed below our range of expectations, including with regard to delinquencies and defaults, dislocations in the capital markets that began in the second quarter of fiscal 2008 persisted through June 30, 2009 requiring significant adjustments to our discount rate, TERI's ability to pay claims is uncertain as a result of the TERI Reorganization, and the estimated cost of funding auction rate notes issued by several securitization trusts was projected to be higher than previously estimated. For a discussion of these changes and the sensitivity of the additional structural advisory fees and residuals to variations in our assumptions and estimates, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary—Application of Critical Accounting Policies and Estimates." We also made adjustments to certain key assumptions during fiscal 2008.

        If the actual performance of some or all of the securitization trusts were to vary appreciably from the adjusted assumptions we use, we may need to adjust further our key assumptions, which could materially affect our earnings in the period in which our assumptions change, and the actual additional structural advisory fees and residuals that we receive from the trusts and the actual asset servicing fees that we receive from the owner of the Trust Certificate, could be significantly less than reflected in our current financial statements. In addition, our securitization yields, or our structural advisory fees and residuals from a new securitization transaction expressed as a percentage of the total principal and accrued interest securitized, realized on future securitized transactions could decrease if the actual performance of some or all of the securitization trusts varies from the key assumptions we have historically used. In particular, economic, regulatory, competitive and other factors affecting prepayment, default and recovery rates on the underlying securitized loan portfolio, including full or partial prepayments, could cause or contribute to differences between the actual performance of the securitization trusts and our key assumptions. In addition, developments in the TERI Reorganization, including challenges to the trusts' security interests in collateral securing TERI's guaranty obligations or TERI's rejection of its guaranty agreements could cause us to adjust further our key assumptions. As of September 2, 2009, TERI had not rejected its guaranty obligations, although we expect TERI to do so in connection with its plan of reorganization. For purposes of estimating the fair value of our service receivables, we assumed at June 30, 2009 that the application of collateral will occur in accordance with existing agreements. The official committee of unsecured creditors, or Creditors Committee, is challenging the enforceability of certain trusts' security interests, which may result in a significant reduction of collateral available to the trusts. Finally, continuing dislocations in the capital markets have resulted in increased volatility in investors' yield requirements for ABS. If such conditions degrade, we may need to further adjust our key assumptions.

        We have no further obligation to support the obligations within the bankruptcy-remote securitization trusts with respect to our additional structural advisory fees or residuals in the securitizations we have facilitated. However, our fees are subordinate to securities issued to investors in such securitizations, and the trusts may fail to generate any cash flow for us if the securitized assets do not generate enough cash flow to pay debt holders in full or only generate enough cash flow to pay the debt holders. Our projected cash flows from service receivables from certain securitization trusts are expected to be eliminated entirely, and our projected cash flows from other securitization trusts could be impaired or eliminated, if default rates increase beyond our assumptions at June 30, 2009. We expect as of June 30, 2009 to receive additional structural advisory fees and residuals beginning five to

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22 years after the date of a particular securitization transaction. At March 31, 2009, we expected to receive such cash flows beginning five to 17 years after the date of a particular securitization.

        Our loans held for sale at June 30, 2009 consisted of $351.0 million in private education loans originated by Union Federal, $183.9 million of which remain on the balance sheet of Union Federal. Our loans held for sale are carried at the lower of cost or fair value. The fair value of loans held for sale is evaluated on a periodic basis. In the absence of readily determined market values, the fair value is estimated by management based on the present value of expected future cash flow from the loans held for sale. Under GAAP, we are required to reduce the carrying value of our private education loans if their fair value decreases below our cost. In such an event, we are required to write-down the carrying value of our private education loans, which would result in an increase in our non-interest expenses, and we may be required to provide additional regulatory capital to Union Federal. We recorded a valuation adjustment of approximately $138.2 million in fiscal 2009, and we may be required to make additional adjustments in the future.

Our liquidity could be adversely affected if the sale of the Trust Certificate does not result in the tax consequences that we expect.

        Effective March 31, 2009, we completed the sale of the Trust Certificate, representing our ownership interest in NC Residuals Owners Trust, in a transaction intended to improve our financial condition and liquidity. The sale of the Trust Certificate is expected to generate a cash refund for income taxes previously paid, as we have been required to pay income taxes on the expected residual cash flows from the NCSLT Trusts in excess of what we have actually received. In addition, we estimate that we would have been required to pay approximately $430 million in additional taxes over the remaining life of these residuals, with approximately $370 million to be paid prior to the residuals generating sufficient annual cash flows to offset the tax payments. As a result of the transaction, we expect to eliminate any tax obligations from these residuals. The U.S. federal and state income tax consequences are complex and uncertain. The Internal Revenue Service or a state taxing authority could challenge our tax positions in connection with the transactions, even after we receive any tax refunds. If such a challenge were successful, in whole or in part, we may not receive or keep a refund for taxes previously paid, or we may not eliminate our tax obligations relating to the residuals. In either case, our near-term financial condition and liquidity would be materially adversely affected. In addition, any investigation, audit or suit relating to the sale, including any such proceeding brought by the Internal Revenue Service, could result in substantial costs.

Changes in interest rates could affect the value of our additional structural advisory fees, asset servicing fees and residuals receivable, as well as demand for private education loans and our services.

        Private education loans typically carry floating interest rates tied to prevailing short-term interest rates. Higher interest rates would increase the cost of the loan to the borrower, which in turn, could cause an increase in default rates for outstanding education loans. In addition, higher interest rates, or the perception that interest rates could increase in the future, could cause an increase in prepayments, including full or partial prepayments. If the prepayment or default rates increase for the education loans held by the securitization trusts, we may experience a decline in the value of our additional structural advisory fees, asset servicing fees and residuals receivables, which could cause a decline in the price of our common stock and could cause future securitization transactions to be less profitable for us. In addition, an increase in interest rates could reduce borrowing for education generally, which, in turn, could cause the overall demand for our services to decline.

        LIBOR is the underlying rate for most of the trusts' assets and liabilities and changes in LIBOR can have a significant effect on the cash flows generated by each trust. Changes in the forward LIBOR curve affect the principal balances of education loans held by the trusts, particularly as interest is capitalized during loan deferment, which affects the net interest margin that the trust generates. In

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addition, certain trusts have issued a tranche of ABS that bears a fixed interest rate. A decrease in the forward LIBOR curve may result in a reduced spread on the fixed-interest tranche, which in turn decreases the estimated fair value of our service receivables. Significant changes to the forward LIBOR curve can also affect the estimated fair value of our additional structural advisory fees and asset servicing fees, which bear interest at the rate of LIBOR plus a spread to the extent such fees are accrued but unpaid by the trusts.

If sufficient funds to finance our business, including Union Federal, are not available to us when needed or on acceptable terms, then we may be required to delay, scale back or alter our strategy.

        We may require additional funds for our products, our operating expenses, the pursuit of regulatory approvals, acquisition opportunities and the expansion of our capabilities. Historically, we have satisfied our funding needs primarily through private education loan asset-backed securitizations. The securitization market has not been available to us and may not be available to us when needed in the future, and, if available, the terms may not be acceptable to us. We have also satisfied our funding needs through equity financings. We cannot be certain that additional public or private financing would be available in amounts or on terms acceptable to us, if at all. We also cannot assure you that our capital resources as of June 30, 2009 will be sufficient to satisfy our liquidity needs or capital funding requirements after fiscal 2010, particularly in the event of a prolonged dislocation in the private education loan ABS market or our failure to obtain a tax refund as a result of our sale of the Trust Certificate. Our short-term financing needs are subject to regulatory capital requirements related to Union Federal, including the requirement imposed by the Supervisory Agreement that FMC maintain Union Federal's regulatory capital ratios at specified levels. See Note 23, "Subsequent Events—Supervisory Agreement and Order to Cease and Desist," in the notes to our consolidated financial statements included under Item 8 of this annual report for additional details. Our short-term financing needs are also subject to amounts that we may determine to be necessary or appropriate to contribute to prospective clients to fund portfolio reserves related to new programs. Insufficient funds could require us to delay, scale back or eliminate certain of our products and further scale back our expenses.

Our assumptions regarding the future cost of funding of auction rate notes affect the valuation of our service receivables.

        We have facilitated five trusts that have issued auction rate notes to finance, in whole or in part, the purchase of private education loans. Interest rates for the auction rate notes are determined from time to time at auctions. We use a spread over one-month LIBOR to project the future cost of funding of the auction rate notes issued by each such trust in determining the value of our service receivables.

        Prior to the second quarter of fiscal 2008, the spread over one-month LIBOR that we used to estimate the future cost of funding was based on historical trends, then current auction rates for each trust and assumptions for future auction rates. During the second quarter of fiscal 2008, material deterioration of the debt capital markets resulted in actual auction rates that trended significantly higher than the rates we had assumed in the past. We also concluded that the higher actual auction rates would persist, resulting in a greater spread over LIBOR, for a longer period of time than we had previously estimated. Our assumption with regard to future auction rates, like our other key valuation assumptions, requires our subjective judgment and is susceptible to change.

        The interest rate on each outstanding auction rate note is limited by a maximum rate. The maximum rate is the least of three rates: a floating interest rate (generally one-month LIBOR plus a margin), a fixed interest rate and the maximum legally permissible rate. The margin applicable to the floating interest rate is dependent upon the then current ratings of the notes subject to an auction. If the notes are downgraded, the applicable margin, and the maximum floating rate, would increase. If the interest rate determined pursuant to the auction procedures would exceed the maximum rate, the interest rate for the applicable interest period would be set at the maximum rate, but the amount of

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the "excess" interest would accrue as "carryover interest." A noteholder's right to receive carryover interest is superior to our interests in the applicable securitization trust. As a result, our projected cash releases from securitization trusts that have issued auction rate notes, including the timing of receipt, could be materially adversely affected by increased costs of funding of auction rate notes, including the extent to which a trust accrues carryover interest.

Risks Related to the TERI Reorganization

The TERI Reorganization has had, and will likely continue to have, a negative effect on our client relationships, which will adversely affect our revenue and results of operations.

        We have historically structured and supported private education loan programs for commercial banks, including JPMorgan Chase Bank, N.A., Bank of America, N.A. and RBS Citizens, N.A. Following the TERI Reorganization, these clients elected to terminate some or all of their agreements with us. Our clients that have not terminated their agreements have instructed TERI to stop accepting applications for TERI-guaranteed loans. These actions resulted in a significant reduction in our facilitated loan volumes during fiscal 2009. In addition, we expect that the remaining guaranty agreements and loan origination agreements that TERI has with a significant number of our clients will be terminated in the context of the TERI Reorganization. Termination of the client's guaranty agreement or loan origination agreement with TERI would generally result in the termination of our agreements with that client.

        Our revenue, business and financial results will continue to suffer as a result until we can bring in new client origination volume.

        In addition, the TERI Reorganization, together with our inability to access the securitization market, has resulted in many of our former clients holding private education loan portfolios for longer than they had expected, which has negatively affected our client relationships and may affect market acceptance of our Monogram product offering or our stand-alone services. Finally, we may continue to incur significant legal costs related to the TERI Reorganization.

The TERI Reorganization will adversely affect our ability to facilitate the securitization of TERI-guaranteed loans, and could adversely affect our cash flows from the securitization trusts.

        In its role as guarantor in the private education lending market, TERI has agreed to reimburse lenders for unpaid principal and interest on defaulted loans. TERI has historically been the exclusive provider of borrower default guarantees for our clients' private education loans. We expect the TERI Reorganization to adversely affect our ability to facilitate the securitization of TERI-guaranteed loans. In particular, we expect investors to ascribe little or no value to the TERI guaranty beyond a trust's Pledged Account. As a result, in structuring future securitizations of loans guaranteed or formerly guaranteed by TERI, if any, we will likely be required to reduce or eliminate our up-front structural advisory fee in order to increase the level of reserves available to the trust. In addition, it is likely that we would need to obtain additional credit enhancement for any future securitizations of such loans, the cost of which would also result in lower revenues.

        To the extent the Pledged Account or other reserves available to a particular securitization trust were exhausted, or in the event that the security interests granted by TERI to the trusts are unperfected or otherwise unenforceable or compromised, and loan defaults continued to occur, that trust would have a claim as an unsecured creditor of TERI in the context of the TERI Reorganization. If TERI's general reserves are insufficient to satisfy the guaranty claims, loan defaults would have a further adverse effect on the amount or timing of cash flows that would otherwise be expected to be generated by the trust, which would adversely affect the value of our service receivables and our asset servicing fees.

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The Creditors Committee is challenging the enforceability of certain of the trusts' security interests, which may result in additional delay and expense, as well as a significant reduction in collateral available to the trusts.

        In June 2008, the United States Bankruptcy Court for the District of Massachusetts, or the Bankruptcy Court, entered an order approving a motion by TERI to honor its guaranty agreement obligations using cash in Pledged Accounts established for the benefit of certain securitization trusts. Beginning in July 2008, TERI resumed paying its obligations under the guaranty agreements with respect to defaulted loans from the trusts, but only using cash in the Pledged Account established for the benefit of the specific trusts that owned the defaulted loan. As of September 2, 2009, TERI is not permitted to satisfy its guaranty obligations using funds from TERI's general reserves. Funds in the Pledged Accounts of certain trusts have been exhausted, or are expected to be exhausted in the near term, at which point such trust will have a general unsecured claim against TERI.

        The Bankruptcy Court's June 2008 order, however, granted the parties' rights to challenge the trusts' security interests in the collateral other than the Pledged Accounts. In January 2009, the Creditors Committee filed an adversary complaint in the Bankruptcy Court against the owner trustee and indenture trustee of 17 securitization trusts, and against our subsidiary First Marblehead Data Services, Inc., or FMDS, as administrator of such trusts. The complaint generally alleges that the security interests granted by TERI to the trusts, excluding the security interests in the Pledged Accounts, are unperfected or may otherwise be avoided under the Bankruptcy Code. In particular, the complaint alleges that the trusts do not have enforceable rights to future recoveries on defaulted loans owned by TERI with an aggregate principal and accrued interest balance of approximately $600.0 million as of June 30, 2009, or in amounts owed or transferred by TERI to Pledged Accounts after the filing of TERI's petition for reorganization totaling approximately $34.5 million as of June 30, 2009. Effective February 13, 2009, pending resolution of the issues raised in the Creditors Committee's complaint, certain trusts suspended the transfer of defaulted loans to TERI and suspended requests for default claim payments from their respective Pledged Accounts. In March 2009, FMDS and the owner trustee filed a motion to dismiss the Creditors Committee's adversary complaint. The indenture trustee also filed a motion to dismiss, joining the arguments made in the motion filed by FMDS and the owner trustee. The Creditors Committee filed an opposition to the motion to dismiss in April 2009, together with an amended complaint naming the trusts themselves as defendants. In May, FMDS filed a response to the opposition and amended complaint. A hearing on the motion to dismiss is scheduled for September 29, 2009. We cannot at this time predict the timing, costs or outcome of the adversary proceeding, and did not adjust our accounting assumptions during fiscal 2009 regarding TERI.

        If the Creditors Committee or any other party is successful in challenging the trusts' security interests in the funds transferred to the Pledged Accounts after the filing of TERI's petition for reorganization or other collateral, the amount of pledged collateral available exclusively to a particular securitization trust to satisfy TERI's guaranty obligations to that trust would decrease materially. As a result, the trust's unsecured claims against TERI would increase proportionately. For example, recoveries from defaulted education loans transferred to TERI, which have historically been used to replenish a particular trust's Pledged Account, would instead become an asset of TERI's bankruptcy estate and other holders of claims. The settlement of the adversary complaint, in the context of a plan of reorganization or otherwise, could also result in a material decrease in the amount of pledged collateral available exclusively to a particular securitization trust. Any such decrease could adversely affect the estimated fair value of our service receivables.

Risks Related to Our Industry, Business and Operations

Challenges exist in implementing revisions to our business model.

        During fiscal 2009, we took several measures to adjust our business in response to economic conditions. Most significantly, we refined our loan program offerings and added fee-for-service offerings

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such as portfolio management and asset servicing. Successful sales of these products and services will be critical in order to grow our revenues and client base in the future. We have limited experience with the new product, the development of which was completed in August 2009. As of September 2, 2009, we have not fully deployed the product to any clients. We are uncertain of the level of interest from former or prospective clients with regard to the new product or offered services, particularly in the case of the Monogram product.

        Commercial banks have historically served as the initial funding sources for loans we manage and have been our principal clients. In the absence of securitizations, we are not able to provide to these banks the liquidity necessary to support long term funding of private education loans, and commercial banks are facing liquidity and credit challenges from other sources, in particular mortgage lending losses. In addition, the synergies that previously existed between federal loan marketing and private education loan marketing have been reduced by both the compression of margins in the federal program and regulatory restrictions on cross marketing of federal and private education loans, and in 2010, could face additional compression as a result of the elimination of the FFELP by the federal government. As a result, as of September 2, 2009, the private education loan business may generally be less attractive to commercial banks than in the past.

        In this environment, it is uncertain whether commercial banks will continue funding private education loans. Some of our former clients have exited the private education loan market completely. To the extent that commercial banks exit the private education loan market, the number of our prospective clients diminishes.

The outsourcing services market for education lending is competitive and if we are not able to compete effectively, our revenue and results of operations may be adversely affected.

        We offer our clients and prospective clients, national and regional financial institutions and educational institutions, services in structuring and supporting their private education loan programs. The outsourcing services market in which we operate includes a number of service providers, some of which have greater financial, technical and marketing resources, larger customer bases, greater name recognition and more established relationships with their clients than we have. Larger competitors with greater financial resources may be better able than we are to overcome capital markets dislocations, respond to the need for technological changes, compete for skilled professionals, build upon efficiencies based on a larger volume of loan transactions, fund internal growth and compete for market share generally. We may face competition from our clients or former clients if they choose, or acquire the ability to provide directly the services that we provide, or formerly provided, to them. In addition, to the extent that Union Federal provides private education loans directly to consumers, we would compete directly with clients and former clients. We may face competition from third parties who decide to expand their services to include the suite of services that we provide. Based on the range of services that we offer, we believe that Sallie Mae is our principal competitor. Our business could be adversely affected if Sallie Mae's program to market private education loans continues to grow, or if Sallie Mae or Nelnet, Inc., which currently provides fee-based services for non-federally guaranteed loans, seeks to market more aggressively to third parties the full range of services that we offer. Other private education loan originators include JPMorgan Chase Bank, N.A., Wells Fargo & Company, Discover Financial Services, and Student Loan Corporation, an 80% owned subsidiary of Citibank, N.A., that offer a similar range of services and/or products. If we are not able to compete effectively, our revenue and results of operations may be adversely affected. In addition, if third parties choose to provide the range of services that we provide, pricing for our services may become more competitive, which could lower our profitability.

        Historically, lenders in the education loan market have focused their lending activities on federal loans because of the relative size of the federal loan market and because the federal government guarantees repayment of these loans, thereby significantly limiting the lenders' credit risk. The demand for our services could decline if lenders place additional emphasis on the private education loan market and offer the services we provide in response to recent legislative initiatives affecting the availability and profitability of federal loans, including the proposed elimination of the FFELP.

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The growth of our business could be adversely affected by changes in government education loan programs or expansions in the population of students eligible for loans under government education loan programs.

        We focus our business exclusively on the market for private education loans, and more than 98% of our business is concentrated in products for post-secondary education. The availability and terms of loans that the government originates or guarantees affects the demand for private education loans because students and their families often rely on private education loans to bridge a gap between available funds, including family savings, grants and federal and state loans, and the costs of post-secondary education. The federal government currently places both annual and aggregate limitations on the amount of federal loans that any student can receive and determines the criteria for student eligibility. These guidelines are generally adjusted in connection with funding authorizations from the United States Congress for programs under the Higher Education Act. Recent federal legislation expands federal grant and loan assistance, which could weaken the demand for private education loans. In addition, legislation such as the College Cost Reduction and Access Act of 2007 has significantly reduced the profit margins of traditional providers of federal education loans, which could result in increased competition in the market for private education loans, which could adversely affect the volume of private education loans and the securitization transactions that we facilitate and structure and, as a result, the growth of our business.

        In May 2008, the "Ensuring Continued Access to Student Loans Act of 2008" was signed into law and contains provisions which might adversely impact the demand for private education loans and outsourcing services provided by us, availability and flow of funds for private education loans, and our liquidity position. Among other things, the Act:

•

permits a parent borrower under the federal PLUS loan program to defer repayment of the PLUS loan until six months after the student ceases to carry at least one-half the normal full-time academic workload;

•

extends eligibility for a PLUS loan to an applicant who, during the period beginning January 1, 2007 and ending December 31, 2008, has not been delinquent for more than 180 days on mortgage loan payments or medical bill payments nor more than 89 days delinquent on the repayment of any other debt, in any case, during such period; and

•

increases the loan limits for unsubsidized Stafford loans for undergraduate students.

        In August 2008, the "Higher Education Opportunity Act" was signed into law, which will:

•

add significant restrictions to the marketing of federal and private education loans; and

•

add significant compliance burdens to private education loan lenders by adding new truth-in-lending disclosures, procedures and rescission rights, as well as accompanying civil penalties.

Access to alternative means of financing the costs of education may reduce demand for private education loans.

        The demand for private education loans could weaken if student borrowers use other vehicles to bridge the gap between available funds and costs of post-secondary education. These vehicles include, among others:

•

home equity loans, under which families borrow money based on the value of their real estate;

•

pre-paid tuition plans, which allow students to pay tuition at today's rates to cover tuition costs in the future;

•

529 plans, which are state-sponsored investment plans that allow a family to save funds for education expenses; and

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•

education IRAs, now known as Coverdell Education Savings Accounts, under which a holder can make annual contributions for education savings.

        If demand for private education loans weakens, we would experience reduced demand for our services, which would seriously harm our financial results.

Continuation of the current economic conditions could adversely affect the private education loan industry.

        During the past year, rising unemployment rates and the unsteady financial sector have adversely affected many consumers and borrowers throughout the country. Some consumers may find that higher education is an unnecessary investment during turbulent economic times and defer enrollment in educational institutions until the economy improves thus decreasing education loan application and funding volumes. In addition, current borrowers may experience more trouble in repaying credit obligations which could increase loan delinquencies and defaults. Finally, many lending institutions have exited the private education loan business and may or may not seek our services to revive this line of business as the economy improves. If the adverse economic environment continues, our financial condition may deteriorate for any one of the foregoing reasons.

If our clients do not actively or successfully market and fund private education loans, our business will be adversely affected.

        We have in the past relied on, and will continue in the future to rely on, our clients to market and fund private education loans to student borrowers. If our clients do not devote sufficient time and resources to their marketing efforts, or if they are otherwise not successful in these efforts, then we may experience a reduction in the volume of loans that we process and securitize, and our business will be adversely affected.

        In addition, if the loans were marketed by our clients in a manner that is unfair or deceptive, or if the marketing, origination or servicing violated any applicable law, state unfair and deceptive practices acts could impose liability on a securitization trust holding the loan or create defenses to the enforceability of the loan. Investigations by the New York Attorney General, the Attorneys General of other states, the United States Congress or others could have a negative impact on lenders' desire to market private education loans. The Higher Education Opportunity Act of 2008 creates significant additional restrictions on the marketing of private education loans.

If we fail to manage effectively our cost reductions, our business could be disrupted and financial results could be adversely affected.

        During fiscal 2008 and fiscal 2009, we reduced headcount by over 800 employees, including departures of our former Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, Chief Information Officer and Chief Marketing Officer. Our cost reduction initiatives have placed and will continue to place a strain on our management, systems and resources at a critical point in our business and industry. We must continue to develop alternatives to the loan guaranty and origination services that TERI has historically provided to our clients, and we must refine our business development capabilities, our systems and processes and our access to financing sources. We must retain, train, supervise and manage our remaining employees during this period of change in our business.

        We currently outsource some borrower services and telesales functions in an effort to reduce costs, take advantage of technologies and effectively manage the seasonality associated with education loan volume. We rely on our vendors to provide high levels of service and support. Our reliance on these external vendors subjects us to risks associated with inadequate or untimely service and could result in fewer loans than we would experience if we performed the service functions in-house.

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        We cannot assure you that we will be able to:

•

expand our systems effectively;

•

successfully develop new products or services;

•

allocate our human resources optimally;

•

identify, hire and retain qualified employees or vendors; or

•

incorporate effectively the components of any business that we may acquire in our effort to achieve growth.

        We are dependent upon the retention of certain key employees and the loss of any such employees could adversely affect our business. If we are unable to manage our cost reductions, or if we lose key employees as a result, our operations and our financial results could be adversely affected.

If competitors acquire or develop a private education loan database or advanced loan information processing systems, our business could be adversely affected.

        We own a proprietary database of historical information on private education loan performance that we use to help us establish the pricing provisions of new products on behalf of lenders, determine the terms of securitization transactions and establish the fair value of the structural advisory fees, asset servicing fees and residuals that we recognize as revenue. We also have developed, and continue to develop as of September 2, 2009, a proprietary loan information processing system to enhance our application processing and loan origination capabilities. Our private education loan database and loan information processing system provide us with a competitive advantage in offering our services. Third parties could create or acquire databases and systems such as ours. For example, as lenders and other organizations in the private education loan market originate or service loans, they compile over time information for their own private education loan performance database. Our competitors and potential competitors may have originated or serviced a greater volume of private education loans than us over the past two fiscal years, which may have provided them with comparatively greater borrower or loan data or insights, particularly during the most recent economic cycle. If a third-party creates or acquires a private education loan database or develops a loan information processing system, our competitive positioning, ability to attract new clients and business could be adversely affected. As a result of the termination of our agreements with TERI in the context of the TERI Reorganization, we have lost access to continuing updates to the database of TERI-guaranteed loan performance data with regard to TERI-guaranteed loans that are neither held by securitization trusts facilitated by us nor Union Federal.

If we are unable to protect the confidentiality of our proprietary database and information systems and processes, the value of our services and technology will be adversely affected.

        We rely on trade secret laws and restrictions on disclosure to protect our proprietary database and information systems and processes. We have sought to limit TERI's rights to disclose its historical loan database in the context of the TERI Reorganization, and we have entered into confidentiality agreements with third parties and with some of our employees to maintain the confidentiality of our trade secrets and proprietary information. These methods may neither effectively prevent disclosure of our confidential information nor provide meaningful protection for our confidential information if there is unauthorized use or disclosure.

        We own no material patents. Accordingly, our technology, including our loan information processing systems, is not covered by patents that would preclude or inhibit competitors from entering our market. Monitoring unauthorized use of the systems and processes that we have developed is difficult, and we cannot be certain that the steps that we have taken will prevent unauthorized use of our technology. Furthermore, others may independently develop substantially equivalent proprietary

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information and techniques or otherwise gain access to our proprietary information. If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and services will be adversely affected.

The loan origination process is becoming increasingly dependent upon technological advancement, and we could lose clients and market share if we are not able to keep pace with rapid changes in technology.

        Our future success depends in part on our ability to process loan applications in an automated, error-free manner. The volume of loan originations that we are able to process is based in large part on the systems and processes we have implemented and developed. The loan origination process is becoming increasingly dependent upon technological advancement such as the ability to process loans over the Internet, accept electronic signatures and provide initial decisions instantly. Our future sucess also depends in part on our ability to develop and implement technology solutions that anticipate and keep pace with continuing changes in technology, industry standards and client preferences. We may not be successful in anticipating or responding to these developments on a timely basis. In addition, we expect to reduce our investment in technology during fiscal 2010 compared to past fiscal years. If competitors introduce products, services, systems and processes that are better than ours or that gain greater market acceptance, those that we offer or use may become obsolete or noncompetitive. In addition, if we fail to execute our clients' origination requirements or properly administer the clients' credit agreement templates or required disclosures, we could be subject to breach of contract claims and related damages. Any one of these circumstances could have a material adverse effect on our business reputation and ability to obtain and retain clients.

        We may be required to expend significant funds to develop or acquire new technologies. If we cannot offer new technologies as quickly as our competitors, we could lose clients and market share. We also could lose market share if our competitors develop more cost effective technologies than those we offer or develop.

Our business could be adversely affected if PHEAA fails to provide adequate or timely services or if our relationship with PHEAA terminates.

        As of June 30, 2009, PHEAA serviced a substantial majority of loans held by the securitization trusts that we administer. This arrangement allows us to avoid the overhead investment in servicing operations but requires us to rely on PHEAA to adequately service the trusts' education loans, including collecting payments, responding to borrower inquiries and communicating with borrowers whose loans have become delinquent. We periodically review the costs associated with establishing servicing operations to service loans. Our reliance on an external service provider for loan servicing subjects us to risks associated with inadequate or untimely services, including notice of developments in prepayments, delinquencies and defaults. A substantial increase in these rates could adversely affect our ability to access profitably the securitization markets for our clients' loans and the value of our additional structural advisory fees, asset servicing fees and residuals receivables. In addition, if PHEAA were to fail to comply with TERI's servicing guidelines in servicing securitized TERI-guaranteed private education loans, TERI would not be obligated to make guaranty payments on such loans, in which case PHEAA would be obligated to cure the noncompliance or purchase the loans. Such an event could have a negative impact on the value of our residuals, asset servicing fees and additional structural advisory fee receivables. If our relationship with PHEAA terminates, we would either need to expand or develop a relationship with another loan servicer, which could be time consuming and costly. In such event, our business could be adversely affected.

An interruption in or breach of our information systems may result in lost business.

        We rely heavily upon communications and information systems to conduct our business. Our systems and operations are potentially vulnerable to damage or interruption from network failure, hardware failure, software failure, power or telecommunications failures, computer viruses and worms,

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penetration of our network by hackers or other unauthorized users and natural disasters. Any failure or interruption, or breach in security, of our information systems or the third-party information systems on which we rely could cause underwriting or other delays and could result in fewer loan applications being received, slower processing of applications and reduced efficiency in loan processing. A failure, interruption or breach in security could also result in an obligation to notify clients in a number of states that require such notification, with possible civil liability resulting from such failure, interruption or breach. We cannot assure you that such failures, interruptions or breaches will not occur, or if they do occur that we or the third parties on whom we rely will adequately address them. The precautionary measures that we have implemented to avoid systems outages and to minimize the effects of any data or telephone systems interruptions may not be adequate, and we may not have anticipated or addressed all of the potential events that could threaten or undermine our information systems. The occurrence of any failure, interruption or breach could significantly impair the reputation of our brand, diminish the attractiveness of our services and harm our business.

If we experience a data security breach and confidential customer information is disclosed, we may be subject to penalties imposed by regulators, civil actions for damages and negative publicity, which could affect our customer relationships and have a material adverse effect on our business. In addition, current state and federal legislative proposals, if enacted, may impose additional requirements on us to safeguard confidential customer information, which may result in increased compliance costs.

        Recently, data security breaches suffered by well-known companies and institutions have attracted a substantial amount of media attention, prompting state and federal legislative proposals and regulatory rule-making to address data privacy and security. If some of the current proposals are adopted, we may be subject to more extensive requirements to protect the applicant and borrower information that we process in connection with the loans. Implementation of systems and procedures to address these requirements would increase our compliance costs. If we were to experience a data security breach, or if we or the securitization trusts that we administer otherwise improperly disclose confidential customer information, such breach or other disclosure could generate negative publicity about us and could adversely affect our relationships with our clients, including the lenders and educational institutions with which we do business. This could have a material adverse effect on our business. In addition, pending legislative proposals, if adopted, likely would result in substantial penalties for unauthorized disclosure of confidential consumer information. Failure to comply with those requirements could result in regulatory sanctions imposed on our client lenders and loss of business for us.

Risks Relating to Regulatory Matters

We are subject to regulation as a savings and loan holding company, and Union Federal Savings Bank is regulated extensively.

        As a result of our acquisition of Union Federal in November 2006, we became subject to regulation as a savings and loan holding company and our business is limited to activities that are financial or real-estate related. We have registered with the OTS and are required to file periodic reports. In addition, we are subject to examination by the OTS, which has certain types of enforcement powers over us, including the ability in certain circumstances to review and approve changes in management and compensation arrangements, issue additional cease-and-desist orders, force divestiture of Union Federal and impose civil and monetary penalties for violations of federal banking laws and regulations or for unsafe or unsound banking practices. Any such actions could adversely affect our reputation, liquidity or ability to execute our business plan.

        In addition, Union Federal is subject to extensive regulation, supervision and examination by the OTS and the FDIC. Such regulation covers all banking business, including activities and investments, lending practices, safeguarding deposits, capitalization, risk management policies and procedures,

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relationships with affiliated companies, efforts to combat money laundering, recordkeeping and conduct and qualifications of personnel. In particular, the failure to meet minimum capital requirements could initiate certain mandatory and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material adverse effect on our operations and financial statements. We have in the past been required to make capital infusions to Union Federal to support the private education loan portfolio held by Union Federal, and regulatory authorities could require additional capital infusions or take other corrective measures in the future.

        There is a risk that we could incur additional costs in complying with regulations applicable to savings and loan holding companies and savings banks, or significant penalties if we fail to comply. Our ability to comply with all applicable laws and rules depends largely on our establishment and maintenance of a system to ensure such compliance, as well as our ability to attract and retain qualified compliance personnel. Further reductions in staffing levels could make it difficult to retain experienced personnel to maintain adequate internal controls related to regulatory matters. If severe failures in internal controls occur, regulatory authorities could impose sanctions on Union Federal or us. We have relatively limited experience with these regulations, and we could in the future be subject to additional supervisory orders to cease and desist, civil monetary penalties or other actions due to claimed noncompliance, which could have an adverse effect on our business, financial condition and operating results.

Failure to comply with recent OTS enforcement agreements could adversely affect our business, financial condition and operating results

        In July 2009, we entered into the Supervisory Agreement with the OTS and Union Federal entered in to a stipulation consenting to the issuance by the OTS of the Order to cease and desist. The Supervisory Agreement requires us to, among other things:

•

maintain Union Federal's regulatory capital ratios at the greater of: (i) the capital ratios specified in Union Federal's business plan approved by the OTS in November 2006, (ii) the capital ratios specified in a future business plan found acceptable to OTS or (iii) the minimum regulatory capital requirements;

•

maintain a deposit at Union Federal in the amount of $30.0 million until the earlier to occur of the (i) sale of Union Federal or (ii) reduction of Union Federal's private education loan concentration ratio to 50% of Union Federal's Tier 1 capital plus allowances for loan losses;

•

obtain prior approval of the OTS before (i) engaging in any transaction with Union Federal or (ii) paying any cash dividends, repurchasing or redeeming any shares of its stock, incurring any debt exceeding $5.0 million or accepting any dividend or other payment representing a reduction in capital from Union Federal; and

•

obtain prior approval of the OTS in connection with any "golden parachute payment" and comply with notice requirements for certain changes in directors and senior executive officers.

        The Order requires Union Federal to, among other things:

•

submit to the Regional Director of the OTS within 60 days a new business plan covering fiscal years 2010, 2011 and 2012, reflecting Union Federal's proposed strategy, business activities and quarterly financial projections;

•

develop and implement a liquidity plan that contains strategies for ensuring that Union Federal maintains adequate short-term and long-term liquidity;

•

adopt a concentration reduction plan that would: (i) prevent Union Federal from originating private education loans until Union Federal reduces the concentration of private education loans to Tier 1 capital plus allowances for loan losses below 50% and (ii) require Union Federal to achieve such a reduction by December 31, 2009;

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•

engage within 60 days a qualified third-party provider, subject to approval of the Regional Director of the OTS, to perform an evaluation of the private education loans held by Union Federal as of March 31, 2009;

•

obtain prior approval of the OTS before increasing the dollar amount of brokered deposits;

•

provide the OTS with prior notice before (i) engaging in any transaction with an affiliate or (ii) entering into, renewing, extending or revising any contractual arrangement relating to compensation or benefits for any senior executive officer or director; and

•

obtain prior approval of the OTS in connection with any "golden parachute payment" and comply with notice requirements for certain changes in directors and senior executive officers.

        The terms of the Supervisory Agreement and the Order will remain in effect until terminated, modified or suspended by the OTS. These terms require a significant commitment from us of capital and management attention, which could be otherwise deployed.

        Although we and Union Federal each intend to take such actions as may be necessary to enable us to comply with our respective requirements, there can be no assurance that we will be able to comply fully with the provisions of the Supervisory Agreement or the Order, as applicable, or to do so within the timeframes required. Moreover, there can be no assurance that compliance with such requirements will not be more time consuming or more expensive than anticipated, or that efforts to comply with such requirements will not have adverse effects on the operations and financial condition of us or Union Federal. In particular, compliance with the Order to reduce the level of private education loans held by Union Federal by December 31, 2009 could require us to sell or otherwise dispose of the portfolio on terms that we would not otherwise consider acceptable, including the sale or other disposition of such loans at a significant loss, which would negatively affect our financial results in the quarter in which such transaction occurs. In addition, the limitations imposed on Union Federal's rates of private education loans to capital will foreclose meaningful participation by Union Federal in our new product offering in the near term.

        Failure to comply with the Supervisory Agreement or Order, or other supervisory directives, could subject us to further orders to cease and desist, significant civil monetary penalties, recovery of severance payments made to former employees, or other mandatory actions. Accordingly, any material failure to comply could have a material adverse effect on our business, financial condition and operating results.

We may become subject to state registration or licensing requirements. If we determine that we are subject to the registration or licensing requirements of any jurisdiction, our compliance costs could increase significantly and other adverse consequences may result.

        Many states have statutes and regulations that require the licensure of small loan lenders, loan brokers and loan arrangers. Some of these statutes are drafted or interpreted to cover a broad scope of activities. We have not taken formal action regarding licensing or registration with any regulatory body outside the Commonwealth of Massachusetts, other than the OTS. While we believe that our prior consultations with regulatory counsel and, in some cases local counsel, have identified all material licensing, registration and other regulatory requirements that could be applicable to us, legislative changes to state licensing schemes may raise potential concerns. In particular, subsequent legislation in one state could require licensure if we provide outsourced loan origination services in the future otherwise than through an operating subsidiary of Union Federal. Even if we are not physically present in a state, its regulators may take the position that registration or licensing is required because we provide services by mail, telephone, the Internet or other remote means.

        All of our operations relating to education loan processing are located in Massachusetts. In 2001, we received determination letters from the Massachusetts Division of Banks confirming that the loan origination outsourcing services provided under contract to TERI by FMER were not subject to

32

licensing under the Massachusetts Small Loan Act because FMER did not conduct a lending business with consumers in its own name and its processing centers were not generally open to the public. In May 2008, following the TERI Reorganization, we received an additional determination letter from the Massachusetts Division of Banks confirming that FMER's business of back office loan application processing, loan origination and loan underwriting functions on behalf of lenders was exempt from licensing under the Massachusetts Small Loan Act. The Massachusetts Small Loan Act requires any person that is engaged, for compensation, in the business of making small loans, or in aiding or assisting the borrower or the lender in procuring or making such loans, to obtain a license. Under the statute, the business of making small loans includes the making of loans of $6,000 or less with interest rates and expenses of more than 12% per year. The loans that we have facilitated include amounts as small as $1,000, and a portion of those loans have combined interest rates and fees exceeding 12%. We have provided outsourced private education loan origination services on a fee-for-service basis through FMER and Union Federal's subsidiary FMLOS. To the extent that these are conducted through Union Federal or FMLOS, we believe it is less likely that state regulatory requirements affecting loan brokers, small lenders and credit services organizations will be asserted. Operational restrictions imposed by federal regulators could, however, limit our ability to offer services through FMLOS on a fee-for-service basis.

        We will continue to review state registration and licensing requirements that may become applicable to us in the future. As a result of providing portfolio management services, additional licensing schemes may apply to us. As a result of this continuing review, we may determine that registration or licensing is required in jurisdictions where we are not currently registered or licensed. In such a case, we may proceed with licensing or registration in the affected state, or we may attempt to restructure our activities in a manner that we believe to be exempt from such licensing or registration.

        Compliance with state licensing requirements could involve additional costs, which could have a material adverse effect on our business. Our failure to comply with these laws could lead to, among other things:

•

curtailment of our ability to continue to conduct business in the relevant jurisdiction, pending processing of registration or a license application;

•

administrative enforcement actions;

•

class action lawsuits;

•

the assertion of legal defenses delaying or otherwise affecting the enforcement of loans; and

•

criminal as well as civil liability, each of which could have a material adverse effect on our business.

We may be exposed to liability for failures of third parties with which we do business to comply with the registration, licensing and other requirements that apply to them.

        Third parties with which we do, or have done, business, including federal and state chartered financial institutions, non-bank loan marketers, as well as TERI, are subject to registration, licensing and extensive governmental regulations, including Truth-in-Lending laws and other consumer protection laws and regulations. For example, some of the third-party marketers with which we have done or may do business may be subject to state registration or licensing requirements and laws and regulations, including those relating to small loans, loan brokers and credit services organizations. As a result of the activities that we conduct or may conduct for our clients, it may be asserted that we have some responsibility for compliance by third parties with which we do business with the laws and regulations applicable to them, whether on contractual or other grounds. If it is determined that we have failed to comply with our obligations with respect to these third parties, we could be subject to civil or criminal liability.

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Failure to comply with consumer protection laws could subject us to civil and criminal penalties or litigation, including class actions, and have a material adverse effect on our business.

        The federal government and state governments regulate extensively the financial institutions and other entities that originate loans in the private education loan market. These regulations include bankruptcy, tax, usury, disclosure, credit reporting, identity theft, privacy, fraud and abuse and other laws to protect borrowers. Changes in consumer protection laws or related regulations, or in the prevailing interpretations thereof, may expose us to litigation, result in greater compliance costs, adversely affect the collection of balances due on the loan assets held by securitization trusts or otherwise adversely affect our business. We could incur substantial additional expense complying with these requirements and may be required to create new processes and information systems. Moreover, changes in the consumer protection laws and related regulations, or in the prevailing interpretations thereof, could invalidate or call into question the legality of certain of our services and business practices.

        The risk of noncompliance with regulatory requirements by our lender clients and their marketing partners has been highlighted by recent state and federal investigations into education loan marketing practices, particularly the payment of marketing fees directly to schools in exchange for loan referrals. None of our contracts with lenders or marketers involves the payment of fees to schools for loan volume. State and federal regulatory authorities have sought information from some of our former clients and us regarding the loan programs we coordinated, and it is possible that some marketing or underwriting practices associated with the programs we coordinated and assets we securitized will be challenged as a result of such investigations. In August 2007, we announced that, as part of the New York Attorney General's ongoing investigation of several lending, educational, and nonprofit institutions, we had received a subpoena for information regarding our role in the education loan industry. During fiscal 2008, we worked with the New York Attorney General's office regarding the investigation.

        The regulatory actions described above have also prompted state and federal legislation that will affect our operations. In August 2009, the Federal Reserve Board issued regulations to implement provisions of the Higher Education Opportunity Act, which was signed into law in August 2008. The regulations revise the number, timing, and content of disclosures required for private education loans by TILA and the Federal Reserve Board's implementing regulation for TILA, Regulation Z. Under the regulations, creditors that extend private education loans will be required to provide disclosures about loan terms and features on or with the loan application and will also be required to disclose information about federal education loan programs that may offer less costly alternatives to private education loans. Additional disclosures must be provided when the loan is approved and after loan acceptance but prior to loan disbursement. The Federal Reserve Board has also proposed model disclosure forms that creditors could use to comply with the new disclosure requirements. Compliance with the new regulations will be mandatory as of February 14, 2010.

        Violations of the laws or regulations governing our operations, or the operations of our clients, could result in the imposition of civil or criminal penalties, the cancellation of our contracts to provide services or our exclusion from participating in education loan programs. These penalties or exclusions, were they to occur, would negatively impair our ability to operate our business. In addition, the loan assets held by securitization trusts that we have structured could be adversely impacted by violation of tax or consumer protection laws. In such event, the value of our residual interests or asset servicing fees could also be adversely impacted. In some cases, such violations may render the loan assets unenforceable.

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Recent litigation has sought to re-characterize certain loan marketers and other originators as lenders; if litigation on similar theories were successful against us or any third-party marketer we have worked with in the past, the loans that we securitize would be subject to individual state consumer protection laws.

        All of the lenders with which we work are federally-insured banks and credit unions and, therefore, are not subject to many state consumer protection laws, including limitations on certain interest rates, fees and other charges. In providing our private education loan services to our clients, we do not act as a lender, guarantor or loan servicer, and the terms of the loans that we securitize are regulated in accordance with the laws and regulations applicable to the lenders.

        The association between marketers of high-interest "payday" loans and tax-return anticipation loans, or TRAL, and out-of-state national banks has come under recent scrutiny. Recent litigation asserts that payday loan and TRAL marketers use out-of-state lenders in order to evade the usury and interest rate caps, and other consumer protection laws, imposed by the states where they do business. Such litigation has sought, successfully in some instances, to re-characterize the loan marketer as the lender for purposes of state consumer protection law restrictions. Similar civil actions have been brought in the context of gift cards. We believe that our activities, and the activities of third parties whose marketing on behalf of lenders has been coordinated by us, are distinguishable from the activities involved in these cases.

        Additional state consumer protection laws would be applicable to the loans we facilitate if we, or any third-party loan marketer whose activities we coordinated, were re-characterized as a lender, and the loans (or the provisions governing interest rates, fees and other charges) could be unenforceable. In addition, we could be subject to claims by consumers, as well as enforcement actions by regulators. Even if we were not required to cease doing business with residents of certain states or to change our business practices to comply with applicable laws and regulations, we could be required to register or obtain licenses or regulatory approvals that could impose a substantial cost on us. To date, there have been no actions taken or threatened against us on the theory that we have engaged in unauthorized lending. However, such actions could have a material adverse effect on our business.

Risks Relating to Ownership of Our Common Stock

The price of our common stock may be volatile.

        The trading price of our common stock may fluctuate substantially, depending on many factors, some of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose part or all of your investment in our shares of common stock. Those factors that could cause fluctuations include, but are not limited to, the following:

•

actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of securities analysts, including as a result of the timing, size or structure of any securitizations or alternative transactions;

•

difficulties we may encounter in structuring securitizations or alternative financings, including continued disruptions in the private education loan ABS market or demand for securities offered by trusts that we facilitate, or the loss of opportunities to structure securitization transactions;

•

any variance between the actual performance of the securitization trusts and the key assumptions that we have used to estimate the fair value of our additional structural advisory fees and residuals receivables;

•

changes in the key assumptions we use to estimate the fair value of our additional structural advisory fees, asset servicing fees, residuals receivables and education loans held for sale, including among others, discount, default and prepayment rates;

•

announcement by us, our competitors or our potential competitors of acquisitions, new products or services, significant contracts, commercial relationships or capital markets activities;

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•

the success of Monogram, our new product offering, or our fee-for-service offerings;

•

developments in the TERI Reorganization, including challenges to the trusts' security interests in collateral securing TERI's guaranty obligations or TERI's rejection of its guaranty agreements;

•

negative publicity about the private education loan market generally or us specifically;

•

regulatory developments or sanctions directed at Union Federal or us;

•

adverse rating agency actions with respect to the securitization trusts that we have facilitated;

•

price and volume fluctuations in the overall stock market and volatility in the ABS market, from time to time;

•

our failure to realize the tax benefits we expect from the sale of the Trust Certificate;

•

significant volatility in the market price and trading volume of financial services and process outsourcing companies;

•

general economic conditions and trends, including economic pressure on consumer asset classes such as private education loans;

•

legislative initiatives affecting federal or private education loans, including the federal budget and final regulations implementing Title X of the Higher Education Opportunity Act of 2008 that revise disclosure and procedural requirements for private education loans;

•

major catastrophic events;

•

purchases or sales of large blocks of our stock or other strategic investments involving us; or

•

departures or long-term unavailability of key personnel.

        In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been brought against that company. Due to the recent volatility of our stock price, we have in fact become the target of securities litigation. See Item 3 of this annual report, "Legal Proceedings," for additional detail.

        The securities litigation, as well as any future litigation, could result in substantial costs and divert management's attention and resources from our business.

Insiders have substantial control over us and could limit your ability to influence the outcome of key transactions, including a change of control.

        Our directors and executive officers, and entities affiliated with them, beneficially owned approximately 26.1% of the outstanding shares of our common stock as of June 30, 2009, excluding shares of preferred stock held by affiliates of GS Capital Partners, or GSCP, and convertible into 8,846,733 additional shares of our common stock. Affiliates of GSCP have agreed to hold shares of, and not to convert, the preferred stock if, after giving effect to any such conversion, they and their affiliates would own more than 9.9% of our outstanding shares of common stock. These stockholders, if acting together, could substantially influence matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. The concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.

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Some provisions in our restated certificate of incorporation and amended and restated by-laws may deter third-parties from acquiring us.

        Our restated certificate of incorporation and amended and restated by-laws contain provisions that may make the acquisition of our company more difficult without the approval of our board of directors, including the following:

•

only our board of directors, the chairman of our board of directors or our president may call special meetings of our stockholders;

•

our stockholders may take action only at a meeting of our stockholders and not by written consent;

•

we have authorized undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval;

•

our directors may be removed only for cause by the affirmative vote of a majority of the directors present at a meeting duly held at which a quorum is present, or by the holders of 75% of the votes that all stockholders would be entitled to cast in the election of directors; and

•

we impose advance notice requirements for stockholder proposals.

        These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control of our company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire.

Section 203 of the Delaware General Corporation Law may delay, defer or prevent a change in control that our stockholders might consider to be in their best interests.

        We are subject to Section 203 of the Delaware General Corporation Law which, subject to certain exceptions, prohibits "business combinations" between a Delaware corporation and an "interested stockholder," which is generally defined as a stockholder who becomes a beneficial owner of 15% or more of a Delaware corporation's voting stock, for a three-year period following the date that such stockholder became an interested stockholder. Section 203 could have the effect of delaying, deferring or preventing a change in control that our stockholders might consider to be in their best interests.

Item 1B.    Unresolved Staff Comments

        None.

Item 2.    Properties

        We lease buildings for our executive offices and operations. Our headquarters are located in Boston, Massachusetts, and we have additional offices in Medford, Massachusetts and North Providence, Rhode Island. The following table summarizes information with respect to the principal facilities that we lease:

Location	Principal activities	Area (sq. feet)		Lease expiration date
Boston, MA (Boylston Street)	Headquarters		51,972		2014
Medford, MA	Loan processing		153,136		2012
North Providence, RI	Union Federal		13,064		2010

        In addition, we have leased approximately 134,000 square feet of office space in Boston, Massachusetts pursuant to a lease with a term expiring in 2014. As of September 2, 2009, we do not occupy such office space, of which we have subleased approximately 88,051 square feet.

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        We do not anticipate significant difficulty in obtaining lease renewals or alternate space as needed.

Item 3.    Legal Proceedings

        In April and May 2008, seven purported class action lawsuits were filed against us and certain of our current and former officers and certain of our directors in the United States District Court for the District of Massachusetts. The plaintiffs alleged, among other things, that the defendants made false and misleading statements and failed to disclose material information in various SEC filings, press releases and other public statements. The complaints alleged various claims under the Exchange Act and Rule 10b-5 promulgated thereunder. The complaints sought, among other relief, class certification, unspecified damages, fees and such other relief as the court deemed just and proper. In August 2008, the court consolidated these cases and appointed lead plaintiffs and a lead counsel. In November 2008, a consolidated amended complaint was filed by the lead plaintiffs that contained allegations similar to the earlier complaints. On August 5, 2009, the court issued an order granting our motion to dismiss the plaintiffs' consolidated amended complaint. The court did not grant plaintiffs leave to re-plead; however, the plaintiffs have a right to appeal the dismissal.

        In addition, three federal derivative lawsuits, and one state derivative lawsuit, have been filed against certain of our current and former officers and directors and nominally against us in the United States District Court for the District of Massachusetts and Massachusetts Superior Court, respectively. The federal derivative suits were filed in May and June 2008, and the state derivative suit was filed in June 2008. The derivative complaints allege various violations of federal and state law, including violations of the Exchange Act, breaches of fiduciary duties, waste of corporate assets and unjust enrichment. The derivative complaints seek a monetary judgment, injunctive relief, restitution, disgorgement and a variety of purported corporate governance reforms. In August 2008, the federal court consolidated the federal derivative cases and stayed them pending resolution of the purported class actions described above. In August 2009, the state court stayed the state derivative action until October 2009. We plan to move for dismissal of the federal and state derivative actions in light of the dismissal of the purported class action in August 2009.

        We intend to continue to vigorously assert our defenses in these actions until they are finally and fully resolved. There can be no assurance, however, that plaintiffs will not succeed in appealing the dismissal of the purported class action or that we will be successful in defending the federal or state derivative actions. An adverse resolution of any of the lawsuits could have a material effect on our consolidated financial position and results of operations in the period in which a lawsuit is resolved. In addition, although we carry insurance for these types of claims, a judgment significantly in excess of our insurance coverage could materially and adversely affect our financial condition, results of operations and cash flows. We are not presently able to reasonably estimate potential losses, if any, related to the lawsuits. The securities litigation, as well as any future litigation, could result in substantial costs and divert management's attention and resources from our business.

Item 4.    Submission of Matters to a Vote of Security Holders

        None.

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PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information and Holders

        Our common stock is listed on the New York Stock Exchange under the trading symbol FMD. The following table sets forth the high and low sales prices of our common stock, as reported by the New York Stock Exchange, and cash dividends declared per then outstanding share of our common stock, for each quarterly period within our two most recent fiscal years.

	High		Low		Cash Dividends
Fiscal 2009
First Quarter	$	5.14	$	1.65	$	—
Second Quarter		2.85		0.58		—
Third Quarter		1.68		0.71		—
Fourth Quarter		2.71		1.23		—
Fiscal 2008
First Quarter	$	42.50	$	29.23	$	0.275
Second Quarter		41.77		11.01		0.120
Third Quarter		19.39		7.36		—
Fourth Quarter		8.25		2.51		—

        Computershare Trust Company, N.A. is the transfer agent and registrar for our common stock. As of the close of business on September 2, 2009, we had 60 holders of record of our common stock. This number does not include stockholders for whom shares are held in "street" or nominee name.

Performance Graph

        The following graph compares the cumulative five-year total return attained by stockholders of The First Marblehead Corporation's common stock relative to the cumulative total returns of the Dow Jones U.S. index and the Dow Jones U.S. Financial Services index. The graph tracks the performance of a $100 investment in our common stock and in each of the indices (with the reinvestment of all dividends) from June 30, 2004 to June 30, 2009.

39

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
Among The First Marblehead Corporation, The Dow Jones US Index
And The Dow Jones US Financial Services Index

*

$100 invested on June 30, 2004 in stock or index, including reinvestment of dividends.

        The information included under the heading "Performance Graph" is "furnished" and not "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed to be "soliciting material" subject to Regulation 14A or incorporated by reference in any filing under the Securities Act or the Exchange Act.

Dividends

        We did not declare any dividends during fiscal 2009, and we do not expect to declare any dividends in the foreseeable future. Any decision to pay future dividends will be made by our board of directors and will depend upon applicable regulatory approvals and our earnings, financial condition, capital and regulatory requirements and such other factors as the board of directors deems relevant.

Issuer Purchases of Equity Securities

        In April 2007, our board of directors authorized the repurchase of up to 10 million shares of common stock. The 10 million shares authorized for repurchase included approximately 3.4 million shares that remained available for repurchase under a previously authorized repurchase program. As of June 30, 2009, we had repurchased an aggregate of 1,169,100 shares under this program at an average price, excluding commissions, of $36.17 per share. We did not repurchase any shares of common stock pursuant to this program during the twelve months ended June 30, 2009 or 2008. Future repurchases pursuant to this program may require regulatory approval.

        During fiscal 2009, 72,452 shares were retained by us upon the vesting of employee restricted stock units in order to satisfy the applicable statutory minimum tax withholding obligations in connection with such vesting.

40

Item 6.    Selected Financial Data

        The following selected consolidated financial data should be read in conjunction with our consolidated financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this filing. We have derived the data from consolidated financial statements, which were audited by KPMG LLP, independent registered public accounting firm. The historical results presented here are not necessarily indicative of future results.

				Fiscal years ended June 30,
				2009			2008			2007		2006		2005
				(in thousands)
Consolidated Statements of Income Data:
Service revenues:
	Up-front structural advisory fees			$	—		$	179,106		$	457,352	$	208,178	$	168,166
	Additional structural advisory fees:
		From new securitizations			—			24,304			43,984		33,685		27,520
		Trust updates			(57,157	)		(44,106	)		1,363		1,241		1,767
			Total additional structural advisory fees		(57,157	)		(19,802	)		45,347		34,926		29,287
	Asset servicing fees:
		Fee income			2,350			—			—		—		—
		Fee update			35			—			—		—		—
			Total asset servicing fees		2,385			—			—		—		—
	Residuals:
		From new securitizations			—			116,972			182,744		177,309		121,187
		Trust updates			(283,295	)		(488,832	)		29,548		28,239		17,593
			Total residuals		(283,295	)		(371,860	)		212,292		205,548		138,780
	Processing fees from TERI				3,050			126,540			134,845		106,072		78,200
	Administrative and other fees				19,908			31,985			21,497		8,848		3,544
			Total service revenues		(315,109	)		(54,031	)		871,333		563,572		417,977
	Net interest income				25,103			25,622			9,371		5,463		3,288
			Total revenues		(290,006	)		(28,409	)		880,704		569,035		421,265
Non-interest expenses:
	Compensation and benefits				42,232			96,735			111,364		89,214		67,608
	General and administrative expenses				80,438			254,439			141,591		98,593		76,568
	Unrealized losses on loans held for sale				138,163			7,373			—		—		—
		Total non-interest expenses			260,833			358,547			252,955		187,807		144,176
		Income (loss) from operations			(550,839	)		(386,956	)		627,749		381,228		277,089
		Other income			—			—			16		2,526		—
		Income (loss) before income taxes			(550,839	)		(386,956	)		627,765		383,754		277,089
Income tax expense (benefit)					(187,819	)		(151,880	)		256,434		147,794		117,424
Net income (loss)				$	(363,020	)	$	(235,076	)	$	371,331	$	235,960	$	159,665

41

		Fiscal years ended June 30,
		2009			2008			2007		2006		2005
		(in thousands, except per share data)
Income Per Share Data:
Net income (loss) per common share:
	Net income (loss) per share, basic	$	(3.66	)	$	(2.46	)	$	3.94	$	2.47	$	1.64
	Net income (loss) per share, diluted		(3.66	)		(2.46	)		3.92		2.45		1.59
Cash dividends declared per share			—			0.395			0.62		0.32		—
Weighted-average shares outstanding, basic			99,081			95,732			94,296		95,366		97,550
Weighted-average shares outstanding, diluted			99,081			95,732			94,845		96,258		100,206

	June 30,
	2009		2008		2007		2006		2005
	(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	158,770	$	70,280	$	95,937	$	75,711	$	193,796
Federal funds sold		14,326		80,215		10,334		—		—
Investments		8,450		70,629		128,650		67,250		—
Loans held for sale		350,960		497,324		37,052		—		—
Service receivables		67,522		411,183		809,668		551,567		309,590
Income taxes receivable		166,410		—		49,345		11,649		2,594
Total assets		821,330		1,200,898		1,214,463		770,346		558,193
Total liabilities		415,865		563,286		371,843		194,177		136,627
Total stockholders' equity		405,465		637,612		842,620		576,169		421,566

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our "Selected Financial Data" and consolidated financial statements and accompanying notes included in Item 8 of this annual report. In addition to the historical information, the discussion contains certain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those expressed or implied by the forward-looking statements due to applications of our critical accounting policies and factors including, but not limited to, those set forth under the caption "Risk Factors" in Item 1A of Part I of this annual report.

Executive Summary

Overview

        We offer outsourcing services to national and regional financial institutions and educational institutions for designing and implementing private education loan programs. These private education loan programs are designed to be marketed to prospective student borrowers and their families directly or through educational institutions and to generate portfolios intended to be held by the originating lender or financed in the capital markets. In addition, we provide administrative and other services to securitization trusts that we have facilitated, asset servicing to the third-party owner of certain securitization trusts and portfolio management services to a limited number of clients.

        We offer prospective clients the opportunity to outsource key components of their private education loan programs to us by providing a fully integrated suite of services, including our new Monogram product offering that allows clients to meet their desired risk control and return objectives. In addition, we offer the following services on a stand alone, fee-for-service basis:

•

Loan origination—We provide loan processing services to schools and lenders, from application intake through loan disbursement. We customize our services to meet the specific branding, pricing and underwriting requirements of our clients.

•

Portfolio management—We manage private education loan portfolios on behalf of their owners by employing risk analytics to monitor and manage the performance of the portfolio over time. As part of this service offering, we monitor portfolio performance metrics, work with our clients to manage the performance of third-party vendors and interface with rating agencies. Our infrastructure provides us with data that enables robust analytics, and we are able to customize collections strategies as needed to optimize loan performance.

•

Trust administration—As administrator for securitization trusts that we facilitated, we monitor the performance of the loan servicers and third-party collection agencies, including ensuring compliance with the servicing guidelines and review of default prevention and collections activities. In this capacity, we are responsible for reconciliation of funds among the third parties and the trusts. We also provide regular reporting to investors in the ABS issued by the trusts and other parties related to the trusts.

•

Asset Servicing—Our experience enables us to offer asset servicing such as residual analysis and valuation optimization services and strategies relating to asset funding.

•

Additional Services—From time to time, we may offer other services as needs arise, including services relating to loan marketing and loan financing.

        We also provide banking services such as residential and commercial mortgage loans, retail savings products, time deposit products and money market accounts through our subsidiary Union Federal, which is a federally chartered thrift regulated by the OTS. In the past, Union Federal has also offered private education loans directly to consumers.

43

        During fiscal 2009, we took several measures to adjust our business model in light of economic conditions. Most significantly, we refined our product offerings in an effort to attract lenders and educational institutions back into the market for private education loans. We also added fee-for-service offerings such as portfolio management and asset servicing. We also revised our fee structures, made major changes in senior management and significantly reduced our operating expenses.

        Our new Monogram product offering has been designed to strengthen the value of the resulting loan assets, through redesigned risk-based pricing, enhanced cosigner participation, and by aligning risk and product options to the specific credit profile of the student borrower and their cosigner. Additionally, given the current market conditions, we would anticipate originating a greater proportion of immediate-repayment loans, or loans for which payment of principal and interest begins shortly after final disbursement, and interest-only loans, or loans for which payment of interest begins shortly after disbursement but payment of principal is deferred during enrollment. The success of the new product will be critical to growing and diversifying our revenues and client base. In light of regulatory constraints, however, Union Federal is not expected to participate as a program lender during fiscal 2010.

        We also changed our fee structure with respect to our services and have developed additional services that would provide us with fee-based income as our services are provided. The revised fee structure is intended to improve our cash flow and reduce our dependence on the credit and capital markets and on any single guarantor or other credit enhancement provider. Significant uncertainty exists regarding the success or market acceptance of our new products and services and our ability to access the securitization markets. Nonetheless, we believe our new strategies combined with our capital, experience and industry knowledge should position us to compete effectively in a re-emerging private education loan marketplace.

        The historical driver of our results of operations and financial condition has been the volume of private education loans for which we provided outsourcing services from loan origination through securitization. Asset-backed securitizations have historically been our sole source of permanent financing for our clients' private education loan programs, and substantially all of our income has been derived from securitizations. Securitization refers to the technique of pooling loans and selling them to a special purpose, bankruptcy remote entity, typically a trust, which issues bonds backed by those loans to investors. In the past, we offered our clients a fully integrated suite of outsourcing services, but we did not charge separate fees for many of those services. Although we provided those various services without charging a separate fee, or at "cost" in the case of loan processing services, we generally entered into agreements with the lender clients giving us the exclusive right to securitize the private education loans that they did not intend to hold. For our past securitization services, we have been entitled to receive from the trusts up-front structural advisory fees, additional structural advisory fees over time and residual cash flows.

        We have been unable to access the securitization market since September 2007 as a result of market disruptions that began in the second quarter of fiscal 2008, accelerated during the third quarter of fiscal 2008 and, to a lesser extent, persist as of September 2, 2009. In addition, our lender clients previously had the opportunity to mitigate their credit risk through a loan repayment guaranty by TERI, and we historically received reimbursement from TERI for outsourced loan processing services we performed on TERI's behalf. In April 2008, TERI filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. The TERI Reorganization, together with capital markets dislocations, has had, and will likely continue to have, a material negative effect on our client relationships, facilitated loan volumes, our ability to structure loan securitizations, the value of our service receivables and our ability to realize fully the cost reimbursement and guaranty obligations of TERI. During fiscal 2009, we facilitated loans with an aggregate principal balance of $106.7 million and received $3.0 million in processing fees from TERI. In contrast, during fiscal 2008, we facilitated loans

44

with an aggregate principal balance of $4.9 billion and received $126.5 million in processing fees from TERI. We do not expect to receive processing fees from TERI in the future.

        In addition, credit performance of consumer-related loans generally, and the private education loans held by us and the various securitization trusts we have facilitated, have been adversely affected by general economic conditions in the United States, including increasing unemployment rates and reduced availability of consumer credit. During fiscal 2009, we increased the projected weighted-average gross default rates for the NCSLT Trusts by 417 basis points to 19.00% and credit-rating agencies took negative rating actions with respect to those trusts, resulting in write-downs of our service receivables. The portfolio of private education loans held by us has experienced a higher level of defaults than we originally projected. The interest rate, economic and credit environments may continue to have a material negative effect on the estimated value of our service receivables and loans held for sale. We recorded losses during fiscal 2009 of $138.2 million in connection with write-downs of the loans to their estimated fair value. In addition, we have committed to the OTS to reduce the level of private education loans held by Union Federal by December 31, 2009, which could result in the sale or other disposition of such education loans at a significant loss.

        We remain focused on preserving capital and maximizing liquidity in these challenging market conditions. During fiscal 2009, we received $132.7 million in gross proceeds from an equity financing, and we greatly reduced our annual cash expenditure requirements through reductions in headcount, consolidation of office space and other cost saving initiatives that began in fiscal 2008. In addition, as of March 31, 2009, we sold the Trust Certificate, which represented our residual interests in substantially all of the TERI-guaranteed private education loans that we had previously securitized. As a result of this transaction, we expect to generate a refund for income taxes previously paid and eliminate certain of our future tax liabilities, which would have had a material negative effect on our financial condition and liquidity. Also, we are no longer entitled to receive residual cash flows from the NCSLT Trusts, which represented substantially all of our residuals receivables; however, we continue to have rights to additional structural advisory fees and will earn asset servicing fees from the NCSLT Trusts, as well as additional structural advisory fees and residuals from certain trusts other than the NCSLT Trusts.

Business Trends and Uncertainties

        Beginning in late 2007 and continuing through the date of this annual report, general economic conditions in the United States have deteriorated. Credit performance of consumer-related loans generally, and the private education loans held by us and the various securitization trusts that we have facilitated, have been adversely affected and are continuing to deteriorate. In the broader markets, the current conditions have remained challenging, as a result of increasing unemployment rates, the lack of available consumer credit, securitization market disruptions and capital constraints and reluctance by lenders to participate in the private education loan market.

        Changes in any of the following factors have materially affected, and may continue to materially affect, our financial results:

•

the private education loan securitization market, including the costs or availability of financing, including the impact of government efforts such as the TALF, and market receptivity to private education loan asset-backed notes and auction rate notes, including notes backed by direct to consumer private education loans;

•

regulatory requirements applicable to Union Federal and us, including the Supervisory Agreement and the Order, which require, among other things, a reduction in the level of private education loans Union Federal holds by December 31, 2009 and maintenance by FMC of Union Federal's regulatory capital ratios at specified levels, and which prevents Union Federal from funding additional private education loans;

45

•

valuation adjustments relating to Union Federal's portfolio of private education loans held for sale;

•

our ability to recover federal income taxes previously paid on certain of our residuals receivables;

•

the demand for private education financing, which may be affected by limitations established by the federal government on the amount of federal loans that a student can receive, the terms and eligibility criteria for loans under the federal government's PLUS loan program and legislation recently passed or under consideration as of September 2, 2009;

•

the market acceptance of our Monogram product offering and our fee for service offerings;

•

the competition for providing private education financing and reluctance by lenders to participate in the private education loan market;

•

the general interest rate and consumer credit environments, including their effect on our assumed discount, net default and prepayment rates and the trusts' ability to recover principal and interest from borrowers;

•

our critical accounting policies and estimates;

•

applicable laws and regulations, which may affect the terms upon which lenders agree to make private education loans, recovery rates on defaulted education loans and the cost and complexity of our loan facilitation operations;

•

developments in connection with the TERI Reorganization, including approval of any plan of reorganization proposed by TERI or the Creditors Committee; and

•

actions taken by rating agencies, including changes to transaction assumptions, ratings actions on outstanding securitization transactions and/or modifications of credit enhancement levels.

        Dislocations in the debt capital markets persisted throughout fiscal 2009, and we did not complete a securitization transaction during the period. In addition, rating agencies have expressed concerns that direct to consumer loans will experience higher levels of defaults than school channel loans. A significant portion of the loans that we have facilitated for clients in the past, and all of our private education loans held for sale, are direct to consumer loans. We believe, however, that conditions in capital markets have begun to improve during the first quarter of fiscal 2010, including additional issuances of private education loan ABS pursuant to the TALF program. If we are able to facilitate the securitization of private education loans in the future, we expect the structure and economics of such a transaction to be substantially different from our past transactions. We expect lower revenues and additional cash requirements on our part and limited, if any, demand for subordinate tranches of ABS. We have pursued alternative means to finance our clients' loans and our loans held for sale, but other sources of funding have not been available to us.

        In July 2009, we entered into the Supervisory Agreement with the OTS, and Union Federal consented to the issuance by the OTS to Union Federal of the Order. Among other things, we agreed to reduce the level of private education loans held by Union Federal by December 31, 2009, and we agreed to submit to the OTS a new business plan for Union Federal covering fiscal years 2010, 2011 and 2012. We are uncertain whether we will be able to dispose of Union Federal's loan portfolio on acceptable terms, if at all. In addition, we are uncertain whether the OTS will approve the strategy and business activities that we propose for Union Federal, including the extent to which Union Federal will be permitted to originate private education loans. See Note 23, "Subsequent Events—Supervisory Agreement and Order to Cease and Desist," in the notes to our consolidated financial statements included under Item 8 of this annual report for additional details. Although we intend to take such actions as may be necessary to enable us to comply with the Supervisory Agreement and the Order, we

46

cannot assure you that we will be able to comply fully, or do so within the timeframes required. Moreover, compliance with the requirements may be more time consuming or more expensive than we anticipate, and efforts to comply with such requirements may have adverse effects on our operations and financial condition.

Application of Critical Accounting Policies and Estimates

        Our consolidated financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods. We base our estimates, assumptions and judgments on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates under varying assumptions or conditions.

        Our significant accounting policies are more fully described in Note 2, "Summary of Significant Accounting Policies," in the notes to our consolidated financial statements included under Item 8 of this annual report. On an ongoing basis, we evaluate our estimates and judgments, particularly as they relate to accounting policies that we believe are most important to the portrayal of our financial condition and results of operations, such as those involving recognition of service revenues and the valuation of our service receivables and portfolio of private education loans held for sale. We regard an accounting estimate or assumption underlying our financial statements to be a "critical accounting estimate" where:

•

the nature of the estimate or assumption is material due to the level of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and

•

the impact of the estimates and assumptions on our financial condition or operating performance is material.

        We have discussed our accounting policies with the audit committee of our board of directors, and we believe that our estimates relating to the recognition and valuation of our securitization-related revenue and receivables and asset servicing revenue and receivables, as described below, fit the definition of critical accounting estimates. We also consider our policy with respect to the determination of whether or not to consolidate the financial results of the securitization trusts that we facilitate and the valuation of the portfolio of private education loans held by Union Federal to be critical accounting policies.

Service Revenue and Receivables

        We have historically structured and facilitated securitization transactions for our clients through a series of bankruptcy remote, special purpose statutory trusts. Through the securitization process, the trusts obtain private education loans from the originating lenders or their assignees, which relinquish to the trust their ownership interest in the loans. The debt instruments that the trusts issue to finance the purchase of these private education loans are obligations of the trusts, rather than our obligations or those of originating lenders or their assignees. We have received several types of fees in connection with our past securitization services:

•

Up-front structural advisory fees.    We received a portion of the structural advisory fees at the time the securitization trust purchased the loans.

•

Additional structural advisory fees.    We are entitled to receive a portion of the structural advisory fees over time, based on the amount of loans outstanding in the trust from time to time over the life of the trust.

47

•

Asset servicing fees.    For NCLST Trusts for which we were previously entitled to receive a portion of the residual interests, we are now entitled to receive asset servicing fees based on services we are contractually obligated to perform on behalf of the new residual interest owners. Receipt of such fees is contingent upon distributions available to the owners of the residual interests of such trusts. See Note 4, "Sale of Trust Certificate and Related Transactions," in the notes to our consolidated financial statements included under Item 8 of this annual report for additional details.

•

Residuals.    We also have the right to receive a portion of the residual interests, if any, generated by various securitization trusts other than the NCSLT Trusts. This right is junior in priority to the rights of the holders of the debt sold in the securitizations and additional structural advisory fees.

        As required under GAAP, we recognize the fair value of additional structural advisory fees and residuals as revenue at the time the securitization trust purchases the private education loans, as they are deemed to be earned at the time of the securitization but before we actually receive payment. These amounts are deemed earned because evidence of an arrangement exists, we have provided the services, the fee is fixed and determinable based upon a discounted cash flow analysis, there are no future contingencies or obligations and collection is reasonably assured. For asset servicing fees, we earn additional fees as the services are performed; however, the receipt of the fees is contingent on distributions available to the owners of the residual interests of the trusts subject to these services. Under GAAP, we are required to estimate the fair value of the additional structural advisory fees, asset servicing fees and residuals receivables as if they are investments in securities classified as trading, similar to retained interests in securitizations. In subsequent periods, we reevaluate the estimated fair value of these receivables and recognize the change in fair value as servicing revenue in the period in which the change in estimate occurs.

        Because there are no quoted market prices for our additional structural advisory fees, asset servicing fees, residuals receivables or private education loans held for sale, we use discounted cash flow modeling techniques and the following key assumptions to estimate their values:

•

expected annual rate and timing of loan defaults, and TERI's obligation and ability to pay default claims, if applicable;

•

expected recoveries of defaulted loans, including recoveries to replenish trusts' Pledged Accounts;

•

the annual rate and timing of private education loan prepayments;

•

the discount rate, which we use to calculate the present value of our future cash flows;

•

the trend of interest rates over the life of the loan pool, including the forward LIBOR curve and the spread between LIBOR and auction rates, if applicable;

•

fees and expenses of the securitization trusts; and

•

in the case of private education loans held for sale, the proportion of equity to financing and borrowing costs and a buyer's expected rate of return.

        We base our estimates on our proprietary historical data, publicly available third-party data and our industry experience, adjusting for specific product and borrower characteristics such as loan type and borrower creditworthiness. We also monitor trends in loan performance over time and make adjustments we believe are necessary to value properly our receivables balances and private education loans at each balance sheet date.

        At June 30, 2009 and 2008, the aggregate outstanding principal balance of the debt issued by the NCSLT Trusts was $12.8 billion and $13.9 billion, respectively. The underlying assets in the NCSLT

48

Trusts were TERI-guaranteed private education loans, of which approximately 33.2% were in deferment, 6.8% were in forbearance and 60.0% were in repayment status as of June 30, 2009. Approximately 88.7% of the loans in repayment status as of June 30, 2009 were current, 5.4% were between 31 and 90 days past due, 3.7% were between 91 and 180 days past due, and 2.2% were greater than 180 days past due. As of June 30, 2009, the cumulative gross default rate with regard to loans in, and loans that have previously been in, repayment status was 10.3% for the aggregate loans in the NCSLT Trusts. We have posted to our website, and filed as exhibit 99.1 to this annual report, static pool data as of June 30, 2009, including actual borrower payment status, delinquency, cumulative loss and prepayment data as of June 30, 2009 for certain securitization trusts that we have facilitated. We have also posted to our website, and filed as exhibit 99.2 to this annual report, a supplemental presentation of certain historical trust performance data, including channel specific loans available for securitization by fiscal quarter, parity ratios by trust, net recovery rates by trust, FICO score rates by year of origination and by channel, payment status by trust and six-month rolling prepayment rates by trust.

        Because our fair value estimates rely on quantitative and qualitative factors, including historical data and macroeconomic indicators to predict prepayment, default and recovery rates, management's ability to determine which factors should be more heavily weighted in our estimates, and our ability to accurately incorporate those factors into our loan performance assumptions, can have a material effect on our valuations.

        Default and Recovery Rates.    The net default rate is calculated as the weighted average for all of our private education loan securitization trusts of:

•

the estimated cumulative principal balance, including capitalized interest and fees, of defaulted private education loans over the life of a trust, which we refer to as the endpoint default, minus the estimated net cumulative amount of recoveries (reduced by costs of recovery) on defaulted loans over the life of the trust; divided by

•

the original principal balance of the loans.

        A securitization trust may have a life of over 24 years, based on a lifecycle for private education loans that includes borrowers' in-school deferment, grace, repayment and forbearance periods. Higher levels of loan defaults are generally expected to occur in the early years of a trust, as loans enter repayment. Recoveries on defaulted loans are expected to lag defaults by months or years, with cumulative recoveries increasing gradually over an extended period of time later in the life of a trust. As a result, at a single point in time, particularly early in the life of a trust, a trust may experience an actual net default rate that is higher than the estimated endpoint net default rate for that trust. For the same reason, we assess the actual current net default rates against an expected default timing curve, which reflects the expected speed of defaults over the life of a trust. The shape of the default curve is based in part on our proprietary database of loan performance information, reflecting data through a variety of economic cycles, and influences the estimated endpoint defaults, which in turn influence the net default rate.

        Prepayment Rates.    We compute prepayments as the difference between the total amount of payments, both principal and interest, received from or on behalf of a borrower and the amount of principal and interest billed to the borrower during the same period. To convert this dollar amount into a rate, we divide these amounts by the dollar amounts that could possibly have been repaid during that period and annualize the result. This approach results in a rate that is expressed as a conditional prepayment rate, or CPR. The CPR is essentially an estimate of the likelihood that a loan will be prepaid during a period, given that it has not previously defaulted or been prepaid in full. The prepayment rate can be significantly different at different points in time over the life of a trust, or any pool of loans, because the prepayment rate for a given cohort of loans will vary with their seasoning, credit quality, prevailing interest rates and availability of consumer credit.

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        A loan in deferment is expected to have a low likelihood of being prepaid. A loan is expected to have a higher likelihood of being prepaid during the first, compared to the second, year of repayment. However, after the second year, as a loan becomes more seasoned, the likelihood of a prepayment is expected to increase further, as borrowers increase their earning power and their ability to partially or fully prepay their loans, or as they establish better credit.

        Discount Rate—Additional Structural Advisory Fees.    We base the discount rate that we use to estimate the fair value of our additional structural advisory fees on a spread over the 10-year U.S. Treasury Note rate. The spread represents our estimate of the risk premium related to the additional structural advisory fees. In developing the spreads, we primarily consider yield curves for certain composite indices for BBB- and BB-rated corporate bond indices with 10-year maturities, as well as yields, including indicative yields, in the broader ABS marketplace during the fiscal year.

        Discount Rate—Asset Servicing Fees and Residuals.    In determining an appropriate discount rate for valuing our asset servicing fee receivables and the remaining residual interests, we consider a number of factors, including market data made available to us on spreads on federally guaranteed loans and private education loans as well as rates used in the much broader ABS market. We also evaluate yield curves for corporate subordinated debt with maturities similar to the weighted-average life of our residuals. In developing our discount rates during fiscal 2009, we considered, among other things, spreads in subordinate tranches of actual federal loan ABS issuances and actual transactions involving other ABS asset classes, as well as indicative spreads, not supported by actual transactions, in subordinate tranches of private education loan ABS.

        Auction Rate Note Interest Rates.    Prior to fiscal 2009, we facilitated five trusts that issued auction rate notes to finance the purchase of private education loans. Interest rates for the auction rate notes are determined from time to time at auction. We use a spread over one-month LIBOR to project the future cost of funding of the auction rate notes issued by each such trust. The spread over LIBOR used to estimate the future cost of funding was based on historical trends, then-current market conditions or then-current rates paid by the trusts.

        During fiscal 2008 and fiscal 2009, failed auctions occurred and persisted with respect to auction rate notes issued by each of the five securitization trusts. As a result of the failed auctions, the auction rate notes bear interest at a contractual maximum spread over one-month LIBOR, based on the ratings assigned to the notes by certain rating agencies. During fiscal 2009, the ratings assigned to the auction rate notes were downgraded, resulting in an increase in that maximum spread. In addition, the insurance financial strength rating assigned to Ambac Assurance Corporation, or Ambac, which provides credit enhancement for certain auction rate notes, was downgraded in fiscal 2009, resulting in a further downgrading of the ratings assigned to certain of our auction rate notes. We assumed at June 30, 2009 that all auction rate notes would continue to bear interest at their current maximum spreads until their expected maturity dates.

        If auctions do not fail, but the interest rate determined pursuant to the auction procedures exceeds the maximum rate, the interest rate for the applicable interest period would be set at the maximum rate. The amount of the "excess" interest would accrue as "carryover interest." A noteholder's right to receive carryover interest is superior to our additional structural advisory fees, asset servicing fees and residual interest in the applicable securitization trust. As a result, our projected cash releases from securitization trusts that have issued auction rate notes, including the timing of receipt, could be materially adversely affected. In estimating the fair value of our service receivables, we have assumed that no trust will accrue carryover interest.

        Forward LIBOR Curve.    LIBOR is the underlying rate for most of the trusts' assets and liabilities and can have a significant effect on the cash flows generated by each trust. Changes in the forward LIBOR curve affect the principal balances of education loans held by the trusts, particularly as interest

50

is capitalized during loan deferment, which affects the net interest margin that the trust generates. In addition, certain trusts have issued a tranche of ABS that bears a fixed interest rate. A decrease in the forward LIBOR may result in a reduced spread on the fixed-interest tranche, which in turn decreases the estimated fair value of our service receivables. Significant changes to the forward LIBOR curve can also affect the estimated fair value of our additional structural advisory fees and asset servicing fees, which bear interest at the rate of LIBOR plus a spread to the extent such fees are accrued but unpaid by the trusts.

        TERI's Obligation and Ability to Pay Claims.    The indentures relating to the securitization trusts specify certain circumstances, which we refer to as Trigger Events, upon the occurrence of which payments that would otherwise be due in respect of additional structural advisory fees and residuals would instead be directed to the holders of the notes issued by the trusts until the conditions causing the Trigger Event cease to exist or all notes, and related interest, are paid in full. Under the indentures, a Trigger Event generally occurs when the cumulative gross defaults of loans held by such trust exceed a specified level. As a result of the TERI Reorganization, in the third quarter of fiscal 2008, we adjusted our assumptions to assume that amounts available to pay a trust's default claims will be limited to amounts available from the trust's Pledged Account, assuming that recoveries on defaulted loans would replenish such Pledged Account. Previously, we assumed that TERI would pay default claims on a timely basis and that no default Trigger Event would occur. Although the overall expected cash flows generated by the trusts improved as a result of the higher priority of repayment of the notes, the expected timing of cash payments to us with respect to additional structural advisory fees and residuals was delayed, reducing their estimated fair value. We did not adjust our assumptions regarding TERI's obligation and ability to pay claims during fiscal 2009 notwithstanding the adversary complaint filed by the Creditors Committee challenging certain security interests and the expected rejection, in the context of a plan of reorganization, of TERI's guaranty obligations to existing lenders and the NCSLT Trusts.

        Loans Held for Sale.    In April 2009, Union Federal sold to FMC substantially all of its economic interest in a warehouse facility provided by a third-party lender. Loans used to secure the education loan warehouse facility are subject to call provisions by the third-party lender; therefore, we do not have the ability to hold the loans to maturity. We also classify Union Federal's education loan portfolio as held for sale. Our intent is to dispose of Union Federal's private education loans in accordance with OTS requirements. Loans held for sale are carried at the lower of cost or fair value. In the absence of quoted market values, we have utilized a cash flow model for estimating fair value, similar to the model used for valuing our service receivables utilizing assumptions and techniques previously described.

        In addition to the relevant loan performance and interest rate assumptions described above, the model determines an estimated fair value based on the following:

•

percentage of the purchase price that is financed by debt versus buyer equity,

•

a buyer's estimated return on equity,

•

a lender's interest rate on the debt,

•

gross default and recovery rates on the pool of loans, and

•

collateral performance criteria necessary to garner TALF financing.

        These estimates are based on historical and third-party data and our industry experience. The extent of buyers' equity versus debt is assumed to be similar to the TALF margin requirement for investments of this duration. The assumption for lenders' cost of debt is based on market observations of recent securitizations of education loan portfolios that have similar characteristics to our loan portfolio.

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Sensitivity Analysis

        Increases in our estimates of defaults, prepayments and discount rates, as well as decreases in default recovery rates and the multi-year forward estimates of LIBOR, would have a negative effect on the value of our additional structural advisory fees as well as our asset servicing fees receivable and our loans held for sale. Private education loan prepayments include either full or partial payments by a borrower in advance of the maturity schedule specified in the credit agreement. If amounts in the Pledged Accounts were unavailable to pay the trusts' default claims or if recoveries on defaulted loans were not used to replenish the Pledged Accounts, or if net defaults increase beyond the level of expected third-party reimbursement assumptions, then these changes will have an additional negative effect on the value of these assets. LIBOR is the reference rate for a substantial majority of the loan assets and, we believe, a reasonable index for borrowings of the trusts and loan purchaser.

        We have included a sensitivity analysis in Note 7, "Service Receivables," in the notes to our consolidated financial statements included under Item 8 of this annual report. This analysis is intended to show the sensitivity of our fair value estimates of our additional structural advisory fees to the significant inputs used in our discounted cash flow model. The analysis presents our loan performance and discount rate assumptions at June 30, 2009 and changes to the estimated fair value of our additional structural advisory fees as of June 30, 2009 that would result from changes in our assumptions. See Note 7, under the heading "Service Receivables," in the notes to our consolidated financial statements included under Item 8 of this annual report for additional information.

Consolidation

        Our consolidated financial statements include the accounts of The First Marblehead Corporation and its subsidiaries, after eliminating inter-company accounts and transactions. We have not consolidated the financial results of the securitization trusts purchasing loans that we have facilitated.

        At June 30, 2009 and 2008, each of the securitization trusts created after January 31, 2003 has met the criteria to be a qualified special-purpose entity, or QSPE, as defined by the Financial Accounting Standards Board, or FASB, Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. Accordingly, we did not consolidate these existing securitization trusts in our financial statements. In addition, the securitization trusts created prior to January 31, 2003 in which we hold a variable interest that could result in us being considered the primary beneficiary of such trust, have been amended in order for them to be considered QSPEs.

        On June 12, 2009, FASB issued Financial Accounting Standard 166, Accounting for Transfers of Financial Assets- an amendment of FASB Statement 140, which we refer to as FAS 166, and Financial Accounting Standard 167, Amendments to FASB Interpretation No. 46(R), which we refer to as FAS 167. Both statements are effective beginning with our financial statements for fiscal year 2011. FAS 166 removes the concept of a QSPE from FASB Statement 140 and removes the exception from applying FASB Interpretation No. 46 (revised as FASB Interpretation No. 46(R) in December 2003), Consolidation of Variable Interest Entities, to qualifying special-purpose entities.

        FAS 167 amends FASB Interpretation No. 46(R) to require an enterprise to perform an analysis to determine whether the enterprise's variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics:

•

The power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance; and

•

The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.

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        As of September 2, 2009, we are evaluating the impact that adoption of these statements will have on our consolidated financial condition and results of operations.

Results of Operations

Years ended June 30, 2009, June 30, 2008 and June 30, 2007

Summary

        The following table summarizes our results of operations for the fiscal years ended June 30, 2009, 2008 and 2007:

	Fiscal years ended June 30,								Change between periods
	2009			2008			2007		2009-2008			2008-2007
	(in thousands, except per share data)								(in thousands, except per share data)
Service revenues	$	(315,109	)	$	(54,031	)	$	871,333	$	(261,078	)	$	(925,364	)
Net interest income		25,103			25,622			9,371		(519	)		16,251
Total revenues		(290,006	)		(28,409	)		880,704		(261,597	)		(909,113	)
Non-interest expense		260,833			358,547			252,955		(97,714	)		105,592
Income (loss) before income taxes		(550,839	)		(386,956	)		627,765		(163,883	)		(1,014,721	)
Income tax (benefit) expense		(187,819	)		(151,880	)		256,434		(35,939	)		(408,314	)
Net income (loss)		(363,020	)		(235,076	)		371,331		(127,944	)		(606,407	)
Net income (loss) per share, diluted	$	(3.66	)	$	(2.46	)	$	3.92	$	(1.20	)	$	(6.38	)
Diluted average shares outstanding		99,081			95,732			94,845		3,349			887

        On a fully diluted basis, we reported a net loss per share of $3.66 for fiscal 2009, compared with a net loss per share of $2.46 in fiscal 2008. The higher net loss per share for fiscal 2009 is, in part, attributable to our inability to access the securitization markets to generate new revenue. We did not facilitate any new securitization transactions in fiscal 2009. We facilitated two securitization transactions during the first quarter of fiscal 2008. In addition, we recorded further write-downs of our service receivables in fiscal 2009 due to current market conditions and the sale of the Trust Certificate. We ceased providing loan processing services to TERI and marketing services to many clients in fiscal 2009, causing a significant decrease in our cost reimbursement and other fee revenues; however, the decrease in these service revenues was largely offset by a decrease in the related expenses. In total, revenues in fiscal 2009 decreased by $261.6 million from fiscal 2008. Partially offsetting the decrease in revenue, total non-interest expenses decreased $97.7 million over the same period. The cessation of services for TERI and marketing services for other clients, combined with reductions in headcount and other cost-savings initiatives, reduced non-interest expenses by $228.5 million during fiscal 2009, however, the write-down of our private education loans held for sale increased non-interest expenses to $138.2 million from $7.4 million in fiscal 2008.

        During fiscal 2008, we recorded a net loss per share of $2.46, on a fully diluted basis, compared with net income of $3.92 per share in fiscal 2007. The loss in fiscal 2008 reflected a $925.4 million decrease in service revenues from the prior period coupled with a $105.6 million increase in non-interest expenses. Lower revenue in fiscal 2008 as compared to fiscal 2007 was due in large part to lower securitization volumes and the write-downs of the service receivables for increases in discount, prepayment and default rates, partially offset by an increase in marketing revenue. The increase in non-interest expenses in fiscal 2008 included severance costs, higher marketing and advertising expenses associated with the increase in marketing revenues, and higher liquidity fees and loan origination costs.

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Service Revenues

        The following table summarizes the changes in our service revenues for the fiscal years ended June 30, 2009, 2008 and 2007:

			Fiscal years ended June 30,									Change between periods
			2009			2008			2007			2009-2008			2008-2007
			(in thousands except rates)									(in thousands)
Up-front structural advisory fees			$	—		$	179,106		$	457,352		$	(179,106	)	$	(278,246	)
Up-front structural advisory fee yield on new securitizations(1)				—			8.8	%		12.2	%
Change in up-front structural advisory fees attributable to:
	Securitization volumes												(179,106	)		(209,392	)
	Fee yield and loan mix(1)												—			(69,123	)
	Receipt of cost of issuance funds												—			269
		Total change											(179,106	)		(278,246	)
Additional structural advisory fees:
	From new securitizations			—			24,304			43,984			(24,304	)		(19,680	)
	Trust updates			(57,157	)		(44,106	)		1,363			(13,051	)		(45,469	)
		Total additional structural advisory fees		(57,157	)		(19,802	)		45,347			(37,355	)		(65,149	)
Additional structural advisory fee yield on new securitizations(1)				—			1.2	%		1.2	%
Change in additional structural advisory fees attributable to:
	Securitization volumes												(24,304	)		(20,288	)
	Fee yield and loan mix(1)												—			608
	Trust updates												(13,051	)		(45,469	)
		Total change											(37,355	)		(65,149	)
Asset servicing fees:
	Fee income			2,350			—			—			2,350			—
	Fee update			35			—			—			35			—
		Total asset servicing fees		2,385			—			—			2,385			—
Residuals:
	From new securitizations			—			116,972			182,744			(116,972	)		(65,772	)
	Trust updates			(283,295	)		(488,832	)		29,548			205,537			(518,380	)
		Total residuals		(283,295	)		(371,860	)		212,292			88,565			(584,152	)
Residual yield on new securitizations(1)				—			5.8	%		4.9	%
Change in residual income attributable to:
	Securitization volumes												(116,972	)		(84,016	)
	Fee yield and loan mix(1)												—			18,244
	Trust updates												205,537			(518,380	)
		Total change											88,565			(584,152	)
Processing fees from TERI				3,050			126,540			134,845			(123,490	)		(8,305	)
Administrative and other fees				19,908			31,985			21,497			(12,077	)		10,488
Total service fee revenue			$	(315,109	)	$	(54,031	)	$	871,333		$	(261,078	)	$	(925,364	)
Total income on new securitizations			$	—		$	320,382		$	684,080		$	(320,382	)	$	(363,698	)
Volume of loans securitized				—			2,027,079			3,750,043			(2,027,079	)		(1,722,964	)
Total yield on new securitizations(1)				—			15.8	%		18.2	%

(1)

The yields presented in the table are dependent on a number of factors, including the mix of loans between marketing channels that are included in a particular securitization, the average life of loans, which can be impacted by prepayments, the time of year that the loans are securitized and the relative mix of loans from

54

students with various expected terms to graduation, the structure of, and prevailing market conditions at the time of, a securitization, the marketing fees which our clients earn on loans we securitize for them, and a number of other factors. Therefore, readers are cautioned that the yields above are not indicative of yields that we will be able to achieve in future securitizations.

Up-front structural advisory fees

        Historically, we received up-front structural advisory fees at the time a securitization trust purchased the loans. In exchange for these fees, we structured the debt securities sold in the securitization, coordinated the attorneys, accountants, trustees, loan servicers, loan originators and other transaction participants and prepared cash flow modeling for rating agencies as needed. We did not record any up-front structural advisory fees in fiscal 2009 because we did not facilitate any securitizations during the period. We recorded $179.1 million in up-front structural advisory fees in fiscal 2008 related to two securitizations of TERI-guaranteed loans that we facilitated during the first quarter of fiscal 2008. For the securitizations facilitated during the first quarter of fiscal 2008, up-front structural advisory fees were equal to 8.8% of the aggregate principal and accrued interest of the loans securitized, down from 12.2% of loans securitized during fiscal 2007. We are uncertain as of September 2, 2009 whether the fee structure that we have historically received will be used in any future securitization transactions. In particular, market conditions may dictate that we reduce or forgo our up-front structural advisory fee in connection with securitizations, if any, that we are able to facilitate in the near-term. In fiscal 2007, we recorded $457.4 million in up-front structural advisory fees due to a higher volume of loans securitized during that period as compared to prior or subsequent periods. In addition, the private education securitization trusts that we facilitated in fiscal 2007 issued BBB-rated securities, resulting in a higher up-front structural advisory fee yield compared to the securitization trusts we facilitated in fiscal 2008, which did not issue BBB-rated securities.

Additional structural advisory fees

        We are entitled to receive additional structural advisory fees over time, based on the amount of loans outstanding in the trusts from time to time over the life of the trusts, with no further requirement for service on our part. In the case of the NCSLT Trusts, this portion accumulates monthly in each trust from the date of a securitization at a rate of 15 to 30 basis points per year plus accrued interest on earned but unpaid fee income. We record the net present value, or estimated fair value, of these fees as a structural advisory fee receivable on the balance sheet. We generally become entitled to receive this additional portion, plus interest, once the ratio of assets to liabilities in the particular NCSLT Trust, which we refer to as the Parity Ratio, reaches a stipulated level, which ranges from 103% to 105.5%. The stipulated Parity Ratio levels may be raised if certain trust characteristics change. The level applicable to a particular trust is determined at the time of securitization. Actual Parity Ratios at June 30, 2009 ranged from 92.88% to 98.94%. Please refer to exhibit 99.2 to this annual report for additional information on actual trust Parity Ratios as of June 30, 2009.

        Additional structural advisory fees recognized in the income statement represent the change in fair value during the period in the structural advisory fee receivable, less cash received, if any. The estimated fair value of structural advisory fee receivables is based on the net present value of the future cash flows due to us from the trusts. To estimate the amount and timing of the cash flows of these fees, we use a discount rate and estimate the amount and timing of cash flows of each trust, taking into consideration default and recovery rates, prepayments, recoverability from third-party guarantors, operating expenses of the trust and trust performance assumptions, the trend of contractual and market interest rates over the life of the loan pool, the cost of funding outstanding auction rate notes, and the probability of delays due to the existence of Trigger Events, which generally occur when the cumulative gross defaults of loans held by a trust exceed a specified level. These assumptions are based on historical and third-party data and our industry experience.

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        On a quarterly basis, we update our estimate of the fair value of our structural advisory fee receivable. We expect, as of June 30, 2009, to begin to receive these fees approximately five to 22 years after the date of a particular securitization transaction. However, for many of the trusts, the bankruptcy filing of their loans' primary guarantor, TERI, and the securitization market disruptions over the last two years have constituted Trigger Events. These events may significantly delay the receipt of fees. We estimate the trend of interest rates over the life of the loan pool using an implied forward LIBOR curve, and an assumed spread between LIBOR and auction rates, to estimate trust cash flows.

        For fiscal 2009, we recorded losses from trust updates for additional structural advisory fees of $57.2 million, compared to losses from trust updates of $44.1 million for fiscal 2008. The higher losses in fiscal 2009 reflect further increases in the assumed discount rate, net default rates and auction rate notes spreads, and a decrease in the forward LIBOR curve, and resulted in a $66.5 million decrease in the fair value of the receivables during fiscal 2009, offset in part by accretion of $9.4 million for the passage of time. Fiscal 2008 service revenue also included $24.3 million of revenue attributable to new securitizations. See "—Service Revenues Receivables Assumptions" below for a discussion of each assumption.

        We recorded losses of $19.8 million related to additional structural advisory fees for fiscal 2008, a decrease of $65.1 million when compared to income of $45.3 million for fiscal 2007. Of this decrease, $19.7 million was due to lower securitization volumes and $55.7 million was due to increases in the assumed discount, prepayment and default rates and a decrease in the forward LIBOR curve, offset somewhat by accretion of $10.3 million for the passage of time.

        The following table summarizes the changes in our estimate of the fair value of the additional structural advisory fees receivable for the fiscal years ended June 30, 2009, 2008 and 2007:

				Fiscal years ended June 30,
				2009			2008			2007
				(in thousands)
Fair value at beginning of period				$	113,842		$	133,644		$	88,297
	Additions from new securitizations				—			24,304			43,984
	Cash received from trust distributions				(1,555	)		—			—
	Trust updates:
		Passage of time (fair value accretion)			9,362			10,258			7,503
		Decrease (increase) in average prepayment rate			3,127			(3,168	)		(3,529	)
		Increase in discount rate assumptions			(23,022	)		(41,555	)		—
		Increase in timing and average default rate			(11,262	)		(2,910	)		—
		Decrease in recovery assumption			(9,416	)		—			—
		Increase in auction rate notes spread			(13,087	)		(140	)		—
		Decrease in forward LIBOR curve			(12,517	)		(5,442	)		—
		Other factors, net			(342	)		(1,149	)		(2,611	)
			Net change from trust updates		(57,157	)		(44,106	)		1,363
Fair value at end of period				$	55,130		$	113,842		$	133,644

Residuals and the Sale of the Trust Certificate; Asset Servicing Fees

        Historically, as we facilitated the securitizations of loan pools, we were entitled to receive a portion of the residual cash flows, if any, generated by the various securitization trusts. We recorded the estimated fair value of these residual cash flows on our balance sheet as residuals receivables. Residual fees recognized in the income statement represent the change during the period in the estimated fair value of residuals receivable. The estimated fair value is based on the net present value of the future cash flows due to us from the trusts related to our residual interest ownerships.

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        During fiscal 2009, we recorded losses on residuals receivables of $283.3 million, compared with losses of $371.9 million in fiscal 2008 and income of $212.3 million in fiscal 2007. The losses in fiscal 2009 reflect our inability to access the securitization markets to generate new revenue and our write-off of residuals receivables related to the sale of the Trust Certificate of NC Residuals Owners Trust, which held substantially all of the TERI-guaranteed loans facilitated by us.

        We sold the Trust Certificate effective March 31, 2009. Under the terms of the sale, we are no longer entitled to receive any amounts related to the residual interests in these trusts. At the time of the sale, we reduced our residuals receivables by $134.5 million, in addition to net write-downs of $148.8 million recorded prior to the sale for changes in assumptions regarding discount rates, prepayment rates, net default rates and auction rate notes spread prior to the sale and fourth quarter adjustments to residuals of trusts not part of the sale. See "—Service Revenues Receivables Assumptions" below for a discussion of each assumption. We continue to have the right to receive a portion of the residual interests, if any, generated by various securitization trusts other than the NCSLT Trusts. This right is junior in priority to the rights of the holders of the debt sold in the securitizations and additional structural advisory fees.

        Losses in fiscal 2008 included write-downs of $488.8 million partially offset by $117.0 million generated by two securitizations. The write-downs in fiscal 2008 reflected TERI's inability to pay claims, increases in the assumed discount, default and prepayment rates, increases in the spread on auction rate notes and a decrease in the forward LIBOR curve. In fiscal 2007, additions from new securitizations were higher, consistent with the higher level of loans securitized, and adverse changes in assumptions had less effect on the estimated fair value of our residuals receivables.

        We entered into the Asset Services Agreement with the purchaser of the Trust Certificate and VCG Securities, LLC, pursuant to which we have agreed to provide certain services to the purchaser to support its ownership of the NCSLT Trust residuals, including, among others, analysis and valuation optimization services and services relating to funding strategy. We are entitled to asset servicing fees for these services to the extent that amounts payable to the holder of the NCSLT Trust residuals are paid from distributions made by each of the NCSLT Trusts on each payment date. See Note 4, "Sale of Trust Certificate and Related Transactions," in the notes to our consolidated financial statements included in Item 8 of this annual report for additional details. During fiscal 2009, we recorded $2.4 million in asset servicing fees as the net present value of our receivable under the Asset Services Agreement.

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        The following table summarizes the changes in our estimate of the fair value of the residuals receivables for the fiscal years ended June 30, 2009, 2008 and 2007:

				Fiscal years ended June 30,
				2009			2008			2007
				(in thousands)
Fair value at beginning of period				$	293,255		$	665,115		$	452,823
	Additions from new securitizations				—			116,972			182,744
	Trust updates:
		Passage of time (fair value accretion)			20,453			75,070			66,428
		Decrease (increase) in average prepayment rates			11,336			(34,765	)		(36,236	)
		Increase in discount rate assumptions			(82,571	)		(129,169	)		—
		(Increase) decrease in timing and average default rate			(50,108	)		(49,929	)		26,680
		Increase in auction rate notes spread			(31,779	)		(93,813	)		—
		Decrease in forward LIBOR curve			(22,009	)		(17,590	)		—
		TERI's inability to pay claims			—			(219,553	)		—
		Decrease to reflect disposition			(134,481	)		—			—
		Increase in trust expenses			—			(9,026	)		—
		Other factors, net			5,864			(10,057	)		(27,324	)
			Net change from trust updates		(283,295	)		(488,832	)		29,548
Fair value at end of period				$	9,960		$	293,255		$	665,115

Service Revenues Receivables Assumptions

        The following table shows the approximate weighted-average assumptions for discount rates and loan performance:

	June 30,									Change between periods
	2009			2008			2007			2009-2008			2008-2007
Discount rate-additional structural advisory fees		12.53	%		9.72	%		7.02	%		2.81	%		2.70	%
Discount rate-asset servicing fees and residuals		17.00			14.88			11.81			2.12			3.07
Gross default rate		19.00			14.83			9.38			4.17			5.45
Net default rate		11.40			7.71			5.63			3.69			2.08
Recovery rate		40.00			48.00			40.00			(8.00	)		8.00
Prepayment rate		8.01			8.40			8.00			(0.39	)		0.40

        Discount Rate—Additional Structural Advisory Fees.    During fiscal 2009, we increased the discount rate spread over the 10-year U.S. Treasury Note rate by 325 basis points, to 900 basis points. In increasing the discount rate, we considered, among other things, overall significant widening in spreads in the ABS marketplace, as well as increases in indicative spreads on subordinate private education loan securities. The 10-year U.S. Treasury Note rate decreased by 44 basis points during the same period, to 3.53% at June 30, 2009. As a result, we applied a discount rate of 12.53% for purposes of estimating the fair value of the additional structural advisory fees. The increase in the discount rate during fiscal 2009 resulted in a decrease of $23.0 million in the estimated fair value of additional structural advisory fees. During fiscal 2008, we increased the discount rate spread over the 10-year U.S. Treasury Note from 200 basis points to 575 basis points. The 10-year U.S. Treasury Note rate decreased by 105 basis points during the same period resulting in a discount rate of 9.72% up from 7.02% at June 30, 2007, in response to the deterioration in the market for structured and corporate debt. The effect of the increase was a $41.6 million decrease in the estimated fair value during fiscal 2008.

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        Discount Rate—Asset Servicing Fees and Residuals.    At June 30, 2009, we used a weighted-average discount rate of 17.00% for purposes of estimating the fair value of our asset servicing fee receivables and the remaining residual interests on our balance sheet. The weighted-average discount rate used to estimate the fair value of residuals receivables related to the NCSLT Trusts at the date of sale of the Trust Certificate was 18.4%. These rates are up from the weighted-average discount rates used at June 30, 2008 and 2007 of 14.88% and 11.81%, respectively. The increases over the two fiscal years were in response to the deterioration of the ABS market and revised assumptions about TERI's ability to pay claims. Losses related to the increases in the weighted-average discount rates used for residuals were $82.6 million and $129.2 million in fiscal 2009 and 2008, respectively.

        Default and Recovery Rates.    We increased the weighted-average gross default rate assumptions used to estimate the fair value of our residuals and additional structural advisory fees receivables as a result of the trusts' actual default experience and general economic pressure on all consumer asset classes over the last two fiscal years. The weighted-average gross default rate at June 30, 2009 was 19.00%, up from 14.83% at June 30, 2008 and 9.38% at June 30, 2007. The increases in the weighted-average gross default rate assumptions resulted in decreases in the estimated fair value of our additional structural advisory fee receivables of $11.3 million and $2.9 million in fiscal 2009 and 2008, respectively, and decreases in the estimated fair value of residual receivables of $50.1 million and $49.9 million in fiscal 2009 and 2008, respectively.

        During fiscal 2009, we reduced the recovery rate from 48% to 40%. In addition, we lengthened the recovery timetable we use from nine years to 15 years as a result of changing the methodology used to determine both the endpoint as well as the timing of cash recoveries. The decrease in the recovery rate resulted in a decrease of $9.4 million in the value of our additional structural advisory fees. Our assumed weighted-average net default rates were 11.40%, 7.71% and 5.63% at June 30, 2009, 2008 and 2007, respectively.

        Auction Rate Notes Spread.    During fiscal 2008 and fiscal 2009, failed auctions occurred and persisted with respect to auction rate notes issued by each of the five securitization trusts. As a result of the failed auctions, the auction rate notes bear interest at a maximum spread over one-month LIBOR, based on the ratings assigned to the notes by certain rating agencies. During fiscal 2009, the ratings assigned to the auction rate notes were downgraded, resulting in an increase in the maximum spread. In addition, the insurance financial strength rating assigned to Ambac, which provides credit enhancement for certain auction rate notes, was downgraded in fiscal 2009, resulting in a further downgrading of the ratings assigned to certain of our auction rate notes. These events resulted in increases of 100 to 200 basis points on the interest rates on those auction rate notes to the maximum amount under the terms of the agreements. We assumed at June 30, 2009 and 2008 that those auction rate notes would continue to bear interest at their respective maximum rates until their expected maturity dates, which resulted in a $13.1 million decrease in the estimated fair value of additional structural advisory fees and $31.8 million for residuals during fiscal 2009, and a decrease of $93.8 million in the estimated fair value of residuals during fiscal 2008.

        Prepayment Rates.    In response to a historically low prepayment rate, the current interest rate environment and limited availability of consumer credit, we adjusted our prepayment assumption during fiscal 2009 by extending the period during which decreased prepayments were expected to persist. As of June 30, 2009, we assumed that the current prepayment rate will persist until June 30, 2010 and then gradually revert to historical norms during the ensuing 12 months. These changes resulted in an increase in the estimated fair value of our additional structural advisory fees receivable of $3.1 million and an increase of $11.3 million for residuals during fiscal 2009. During fiscal 2008, we had anticipated a higher level of prepayments in response to actual experience which resulted in a decrease in our estimates of additional structural advisory fees and residuals of $3.2 million and $34.8 million, respectively.

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        Forward LIBOR Curve.    LIBOR is the underlying rate for most of the trusts' assets and liabilities and can have a significant effect on the cash flows generated by each trust. Changes in the forward LIBOR curve affect the principal balances of education loans held by the trusts, particularly as interest is capitalized during loan deferment, which affects the net interest margin that the trust generates. In addition, certain trusts have issued a tranche of ABS that bear a fixed interest rate. A decrease in the forward LIBOR curve may result in a reduced spread on the fixed-interest tranche, which in turn decreases the estimated fair value of our service receivables. Significant changes to the forward LIBOR curve can also affect the estimated fair value of our additional structural advisory fees, which bear interest at the rate of LIBOR plus 150 basis points to the extent such fees are accrued but unpaid by the trusts. Decreases in the forward LIBOR curve resulted in decreases in the estimated fair value of additional structural advisory fees of $12.5 million and $5.4 million in fiscal 2009 and 2008, respectively, and decreases in the estimated fair value of residuals of $22.0 million and $17.6 million in fiscal 2009 and 2008, respectively.

        TERI's Ability to Pay Claims.    The change in our assumptions with regard to TERI's ability to pay claims resulted in a decrease of $219.6 million in the estimated fair value of our residuals receivable during fiscal 2008. No changes were made to our assumptions regarding TERI's ability to pay claims during fiscal 2009.

Processing fees from TERI

        Historically, we provided outsourcing services for TERI, including loan origination, customer service, default processing, default prevention and administrative services at cost under a master servicing agreement. We recognized TERI's reimbursement of our expenses for these services as revenue. During fiscal 2008 and fiscal 2007, we received $126.5 million and $134.8 million, respectively, in processing fees from TERI pursuant to a master servicing agreement. In June 2008, in the context of the TERI Reorganization, the Bankruptcy Court entered an order approving a motion by TERI to reject the master servicing agreement effective as of May 31, 2008, but provided for a transition services agreement between TERI and us with a term through September 29, 2008. As a result, our reimbursement from TERI for fiscal 2009 was $3.0 million, a decrease of $123.5 million. We do not expect to receive a material amount of processing fees from TERI in the future. In addition, we have filed a general unsecured claim with regard to $16.0 million of processing fees from TERI that were due, but unpaid, prior to the filing of TERI's bankruptcy petition. The decrease in fiscal 2008 compared to fiscal 2007 was primarily due to the impact of the TERI Reorganization, partially offset by an increase in reimbursable expenses required to process a higher volume of loans actively disbursed during fiscal 2008 compared to fiscal 2007.

Administrative and other fees

        Administrative and other fees decreased to $19.9 million in fiscal 2009 from $32.0 million in fiscal 2008 and $21.5 million in fiscal 2007. Administrative and other fees include trust administration fees generated from the daily management and information gathering and reporting services for parties related to securitization trusts, marketing fee reimbursements upon the securitization of certain private education loans, and in fiscal year 2009, stand-alone fee-based loan origination and processing fees and loan portfolio default prevention services.

        Administrative and other fees decreased by $12.1 million in fiscal 2009 from fiscal 2008. Marketing fees decreased by $19.8 million to $4.8 million in fiscal 2009 due to the termination of contracts with many clients as a result of the TERI Reorganization. Trust administration fees remained flat at $7.3 million during each of fiscal 2009 and fiscal 2008. Stand-alone fee-based loan origination and processing fees and default prevention services, new in fiscal 2009, were $5.7 million.

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        During fiscal 2008, we experienced a $10.5 million increase in administrative and other fees from fiscal 2007. The increase primarily related to a $9.0 million increase in reimbursed marketing expenses and marketing fees, and to a lesser extent, a $1.5 million increase in trust administration fees from $5.8 million in fiscal 2007 to $7.3 million in fiscal 2008 as a result of higher private education loan balances in the securitization trusts.

Net Interest Income

        Net interest income decreased to $25.1 million in fiscal 2009 from $25.6 million in fiscal 2008 and up from $9.4 million in fiscal 2007. Interest income from cash equivalents, investments and federal funds sold decreased by $6.7 million. The decrease in interest income was due primarily to sharp reductions in market rates compared to the prior year and lower volume due to the use of cash for operating expenses and taxes. Interest income from loans held for sale increased due to higher volume resulting from our inability to access the securitization markets. Interest expense decreased year over year by $0.3 million, due to lower volume and rates for deposits and lower rates on borrowings under the loan warehouse facility, largely offset by higher volume for the loan warehouse facility.

        During fiscal 2008, interest income from loans held for sale increased by $32.5 million over fiscal 2007 due to a higher average volume of loans held for sale as a result of our inability to access the securitization markets. Higher interest income was partially offset by higher interest expense as a result of funding required to support loan balances.

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        The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities for the fiscal years ended June 30, 2009, 2008 and 2007. This table reflects the net interest margin for average interest-bearing assets.

Consolidated average balance sheet, interest and rates
(Taxable-equivalent rates⁽¹⁾)

	Fiscal years ended June 30,
	2009							2008							2007
	Average daily balance		Interest		Rate			Average daily balance		Interest		Rate			Average daily balance		Interest		Rate
	(in thousands, except rates)
Assets
Cash and cash equivalents—taxable	$	110,426	$	907		0.82	%	$	86,508	$	3,185		3.68	%	$	123,078	$	6,310		5.13	%
Cash and cash equivalents—tax exempt		4,081		63		2.35			16,224		512		4.86			14,055		475		5.20
Federal funds sold		44,852		469		1.05			54,272		1,761		3.24			5,880		328		5.58
Investments—taxable		8,935		472		5.28			10,575		562		5.31			9,184		485		5.28
Investments—tax exempt		65,403		1,110		2.61			117,656		3,671		4.80			78,988		2,860		5.57
Loans held for sale		507,889		38,646		7.61			336,975		32,656		9.69			1,651		188		11.39
Mortgage loans held to maturity		10,727		575		5.36			11,914		758		6.36			8,076		513		6.35
Total interest-earning assets		752,313		42,242		5.80			634,124		43,105		7.34			240,912		11,159		5.36
Cash and cash equivalents		1,248							451							571
Service receivables		181,589							735,257							674,455
Other assets		111,651							84,935							68,909
Total assets	$	1,046,801						$	1,454,767						$	984,847
Liabilities
Time and savings accounts	$	130,183		3,885		2.98	%	$	162,594		7,262		4.47	%	$	22,749		1,075		4.73	%
Money market accounts		48,076		1,419		2.95			7,848		240		3.06			—		—		—
Warehouse line of credit		244,042		10,993		4.50			189,343		9,250		4.89			—		—		—
Other short-term borrowings		22,194		128		0.58			—		—		—			—		—		—
Other interest-bearing liabilities		12,141		714		5.88			11,043		731		6.62			12,741		713		5.60
Total interest-bearing liabilities		456,636		17,139		3.75			370,828		17,483		4.71			35,490		1,788		5.04
Non-interest-bearing deposits		3,482							66							188
All other liabilities		11,772							240,116							227,504
Total liabilities		471,890							611,010							263,182
Stockholders' equity		574,911							843,757							721,665
Total liabilities and stockholders' equity	$	1,046,801						$	1,454,767						$	984,847
Net interest—bearing assets	$	752,313						$	634,124						$	240,912
Net interest income			$	25,103						$	25,622						$	9,371
Net interest margin						3.34	%						4.04	%						3.89	%

(1)

Taxable-equivalent rate is a method of presentation in which the tax savings achieved by investing in tax-exempt securities are included in interest revenue for purposes of calculating the yield. This method facilitates the comparison of the performance of tax-exempt and taxable securities. The adjustment is computed using a federal income tax rate of 35%, adjusted for applicable state income taxes, net of the related federal tax benefit.

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Analysis of changes in net interest income

	From 2008 to 2009 due to change in									From 2007 to 2008 due to change in
	Volume			Rate			Net change			Volume			Rate			Net change
	(in thousands)
Cash and cash equivalents—taxable	$	880		$	(3,158	)	$	(2,278	)	$	(1,875	)	$	(1,250	)	$	(3,125	)
Cash and cash equivalents—tax exempt		(383	)		(66	)		(449	)		73			(36	)		37
Federal funds sold		(306	)		(986	)		(1,292	)		2,703			(1,270	)		1,433
Investments—taxable		(86	)		(4	)		(90	)		72			5			77
Investments—tax exempt		(1,630	)		(931	)		(2,561	)		1,400			(589	)		811
Loans held for sale		23,016			(17,026	)		5,990			38,093			(5,625	)		32,468
Mortgage loans held to maturity		(75	)		(108	)		(183	)		244			1			245
Total interest income								(863	)								31,946
Time and savings accounts		(1,448	)		(1,929	)		(3,377	)		6,608			(421	)		6,187
Money market accounts		1,232			(53	)		1,179			240			—			240
Warehouse line of credit		2,672			(929	)		1,743			9,250			—			9,250
Other short-term borrowings		128			—			128			—			—			—
Other interest-bearing liabilities		84			(101	)		(17	)		(96	)		114			18
Total interest expense								(344	)								15,695
Net (decrease) increase in net interest income							$	(519	)							$	16,251

Non-interest Expenses

        Total non-interest expenses decreased to $260.8 million in fiscal 2009 from $358.5 million in fiscal 2008, a change of $97.7 million. Excluding the write down of loans held for sale, non-interest expenses decreased to $122.7 million in fiscal 2009 from $351.2 million in fiscal 2008, a change of $228.5 million across all categories of expenses. Non-interest expenses were $253.0 million in fiscal 2007. The following table reflects non-interest expenses for the fiscal years ended June 30, 2009, 2008 and 2007.

		Fiscal years ended June 30,						Change between periods
		2009		2008		2007		From 2008 to 2009			From 2007 to 2008
		(in thousands, except employee data)						(in thousands, except employee data)
Compensation and benefits		$	42,232	$	96,735	$	111,364	$	(54,503	)	$	(14,629	)
General and administrative expenses:
	Depreciation and amortization		17,800		19,633		16,498		(1,833	)		3,135
	Third-party services		29,991		66,652		57,175		(36,661	)		9,477
	Occupancy and equipment		16,699		28,752		26,044		(12,053	)		2,708
	Marketing coordination		3,482		100,754		28,850		(97,272	)		71,904
	Other		12,466		38,648		13,024		(26,182	)		25,624
Subtotal—general and administrative expenses			80,438		254,439		141,591		(174,001	)		112,848
Unrealized losses on loans held for sale			138,163		7,373		—		130,790			7,373
Total non-interest expenses		$	260,833	$	358,547	$	252,955	$	(97,714	)	$	105,592
Total number of employees at fiscal year-end			223		368		1,028		(145	)		(660	)

        Compensation and Benefits Expenses.    Compensation and benefits decreased to $42.2 million in fiscal 2009 from $96.7 million in fiscal 2008 and $111.4 million in fiscal 2007. The decrease over the

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three year period was primarily the result of reductions in personnel and a decrease in incentive compensation related to both the reduction in personnel and overall company performance. We reduced headcount by 145 employees and 660 employees, during fiscal 2009 and fiscal 2008, respectively.

        General and Administrative Expenses.    General and administrative expenses decreased to $80.4 million in fiscal 2009 from $254.4 million in fiscal 2008 as a result of decreases in several categories of expenses. The overall decrease in marketing coordination expense was primarily due to the termination by clients of their marketing coordination agreements, largely as a result of the TERI Reorganization. The overall decrease in loan volumes reduced the need for and expenses related to external call centers, professional and consulting services, and other costs for loan origination and liquidity and guaranty fees included in other expenses. In addition, the reduced headcount in fiscal 2009 resulted in lower occupancy and equipment costs.

        General and administrative expenses increased during fiscal 2008 from fiscal 2007 primarily due to the high volume of marketing services provided in fiscal 2008, as well as higher loan liquidity fees and loan origination expenses included in other expenses.

        Unrealized Losses on Loans Held for Sale.    Unrealized losses on loans held for sale were $138.2 million in fiscal 2009, compared with $7.4 million for fiscal 2008 and no losses for fiscal 2007. The increase during fiscal 2009 was due to increases in assumptions for the discount rate, default rate, the anticipated cost of funds and a decrease in the assumption for recoveries. These assumptions may differ from the assumptions used for our service revenue receivables. The default rate used for our loan portfolio is higher than that of the NCSLT Trusts based on borrower characteristics. See Note 6, "Loans Held for Sale," in the notes to our consolidated financial statements included under Item 8 of this annual report for additional information.

Income Tax (Benefit) Expense

        Income tax benefit increased to $187.8 million during fiscal 2009 from $151.9 million in fiscal 2008 and an income tax expense of $256.4 million in fiscal 2007. The increase in income tax benefit was primarily the result of an increase in the amount of pre-tax losses between periods. During fiscal 2009, our effective tax rate, or the income tax benefit as a percentage of pre-tax loss, decreased to 34.10% from an effective tax rate of 39.25% for fiscal 2008. Our effective tax rate was 40.85% in fiscal 2007. The decrease in our effective tax rate between fiscal 2009 and fiscal 2008 was primarily due to our inability to utilize state net operating losses primarily in the Commonwealth of Massachusetts, which does not provide for a carry back or a carry forward. The decrease in our effective tax rate between fiscal 2008 and fiscal 2007 was primarily due to the change in the relative sources of total revenues. Our up-front structural advisory fees decreased and our residual revenues, which have a lower effective tax rate, were a greater proportion of our loss before taxes during fiscal 2008 as compared to fiscal 2007.

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Financial Condition, Liquidity and Capital Resources

        We expect to fund our long-term liquidity requirements through revenues from operations and through issuances of common stock, promissory notes or other securities. We expect to assess our financing alternatives periodically and access the capital markets opportunistically. If our existing resources are insufficient to satisfy our liquidity requirements, or if we were to enter into a strategic arrangement with another company, we may need to sell additional equity or debt securities. Any sale of additional equity or convertible debt securities may result in additional dilution to our stockholders, and we cannot be certain that additional public or private financing will be available in amounts or on terms acceptable to us, if at all. If we are unable to obtain this additional financing, we may be required to further delay, reduce the scope of, or eliminate one or more aspects of our operational activities, which could harm our business.

        Our actual liquidity and capital funding requirements may depend on a number of factors, including:

•

the extent to which our services and products, including our new Monogram product offering, gain market acceptance and remain competitive;

•

the timing, size, structure and terms of any securitization or other funding transactions that we structure, as well as the composition of the loan pool being securitized;

•

the timing and magnitude of income tax payments created by our service receivables and receipt of income tax receivables based on the sale of the Trust Certificate;

•

the extent to which we contribute amounts to fund portfolio reserves in connection with our Monogram product;

•

regulatory capital requirements applicable to Union Federal (see "—Support of Subsidiary Bank" below);

•

the amount and timing of receipt of additional structural advisory fees, asset servicing fees and residuals;

•

our operating and information systems needs;

•

damages that we may owe former clients as a result of a failure to securitize their loans;

•

the extent to which we repurchase shares of our common stock or pay cash dividends to our stockholders; and

•

the availability of education loans or grants through federal programs.

        Liquidity would be required for capital expenditures, working capital, business development expenses, costs associated with alternative financing transactions, general corporate expenses, repurchases of our common stock, quarterly cash dividends and maintaining the regulatory capital of our bank subsidiary, Union Federal. In order to preserve capital and maximize liquidity in challenging market conditions, we have taken four broad measures:

•

In August 2008, we received aggregate gross proceeds of approximately $132.7 million from the sale of preferred stock to affiliates of GSCP. The proceeds from the sale of preferred stock significantly improved our ability to meet our short-term liquidity requirements.

•

In March 2009, we sold the Trust Certificate, which represented our residual interests in trusts holding substantially all of the TERI guaranteed loans that we had previously securitized. This disposition should result in a significant refund in fiscal 2010 of taxes previously paid, and the sale is expected to eliminate any future federal and state tax liabilities associated with the NCSLT Trust residuals. However, the tax consequences of the sale are not certain.

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•

Throughout the fiscal year, we have reduced headcount and marketing coordination and operational expenses.

•

Finally, our board of directors has eliminated regular quarterly cash dividends and repurchases of our common stock for the foreseeable future.

        We had combined cash, cash equivalents, federal funds sold and investments of $181.5 million and $221.1 million, at June 30, 2009 and June 30, 2008, respectively.

        Net cash used in operating activities was $56.3 million for fiscal 2009, reflecting the funding of operations. Net cash used in operating activities in fiscal 2008 of $456.1 million reflecting a net use of $479.0 million by Union Federal to generate private education loans. Cash provided by operating activities in fiscal 2007 of $195.5 million reflected up-front fees related to the higher securitization volume less funding of operations.

        Cash provided by investing activities of $127.3 million in fiscal 2009 was primarily due to the net reduction in federal funds sold and investments that was used to finance operating activities. Cash used by investing activities of $20.6 million in fiscal 2008 and $76.5 million in fiscal 2007 reflected a higher volume of investments, primarily in variable-rate demand notes, and equipment purchases.

        Cash provided by financing activities reflected the net issuance proceeds of series B non-voting convertible preferred stock of $125.9 million in fiscal 2009, largely offset by a reduction in deposit levels. At the request of the OTS, we reduced the level of broker deposits at Union Federal by $125.2 million, some of which we were able to offset by increases in other types of deposits. The Order requires Union Federal to obtain prior approval of the OTS before increasing the dollar amount of brokered deposits. Cash provided by financing activities in fiscal 2008 reflected the build-up of the deposit balance at Union Federal, borrowings made under the education loan warehouse facility to fund the private education loans reflected in cash used by operating activities, and the issuance of common stock. Cash used in fiscal 2007 of $98.8 million reflected purchases of our stock under a stock repurchase plan and a higher dividend payout to shareholders.

        The following table summarizes our time deposits >$100,000 by maturity at June 30, 2009:

	(in thousands)
Within three months	$	9,524
Three to six months		31,707
Six months to one year		2,371
Over one year		535
	$	44,137

        The maturities of these deposits are not directly indicative of future timing of cash needed for financing activities because they do not take into account the clients that will rollover their funds into new time deposits or into other types of deposit accounts.

        We remain uncertain about future regulatory capital requirements relating to Union Federal and the extent to which we may contribute amounts to fund portfolio reserves pursuant to our Monogram product. However, we believe, based on our operating plan that we have sufficient liquidity to fund our operations through fiscal 2010.

Support of Subsidiary Bank

        Union Federal is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements would initiate certain mandatory and possibly additional discretionary actions by the regulators that, if undertaken, could have a direct material effect on our liquidity. Under capital adequacy guidelines and the regulatory framework for

66

prompt corrective action, Union Federal must meet specific capital guidelines that involve quantitative measures of Union Federal's assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification, however, are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

        Union Federal's equity capital was $84.3 million at June 30, 2009. Quantitative measures established by regulation to ensure capital adequacy require Union Federal to maintain minimum amounts and ratios of total capital and Tier 1 capital to risk-weighted assets (each as defined in the regulations). See Note 22, "Union Federal Regulatory Capital Requirements," in the notes to our consolidated financial statements included under Item 8 of this annual report for Union Federal quantitative measures.

        In July 2009, FMC entered into the Supervisory Agreement and Union Federal consented to the Order, pursuant to which FMC and Union Federal agreed to comply with certain requirements imposed by the OTS, including reducing the level of private education loans held by Union Federal, which could adversely affect our operations and financial condition. See Note 23, "Subsequent Events—Supervisory Agreement and Order to Cease and Desist," in the notes to our consolidated financial statements included under Item 8 of this annual report for additional details.

Treasury Stock

        We had treasury stock of $184.2 million and $184.0 million at June 30, 2009 and 2008, respectively. Our treasury stock balance was primarily derived from the repurchases of our common stock in open market transactions, although we are not repurchasing more stock for the foreseeable future. Treasury stock also includes shares of our stock withheld from employees to satisfy statutory minimum withholding obligations as equity compensation awards vest.

        In April 2007, our board of directors authorized the repurchase of up to 10 million shares of common stock. As of June 30, 2009, we repurchased an aggregate of 1,169,100 shares under this program at an average price paid per share, excluding commissions, of $36.17 per share under this repurchase program. We did not repurchase any shares of common stock pursuant to this program during the twelve months ended June 30, 2009 or 2008.

Contractual Obligations

        In July 2007, Union Federal's subsidiary, UFSB Private Loan SPV, LLC, or UFSB-SPV, entered into a $300.0 million education loan warehouse facility with a third-party conduit lender to fund the purchase of private education loans by UFSB-SPV from Union Federal. The facility provided interim financing which we used to fund the disbursement of private education loans by Union Federal. At June 30, 2009 and June 30, 2008, $230.1 million and $242.9 million, respectively, were outstanding under the facility. Under the facility, UFSB-SPV pledged the purchased private education loans as collateral for the advances it received from the conduit lender. The conduit lender's recourse to us under the indenture is limited to the private education loans pledged as collateral. The TERI Reorganization, and subsequent TERI ratings downgrades, resulted in events of termination under the indenture relating to the facility. As a result, the facility termination date was declared, UFSB-SPV is not eligible for further borrowings under the facility, and the conduit lender may elect to accelerate repayment of notes outstanding under the facility. In fiscal 2009, additional events of termination occurred under the indenture relating to the one- and three-month default ratios on the underlying portfolio. In April 2009, Union Federal sold substantially all of its economic interest in the facility to a newly formed subsidiary of FMC. As a result of the transaction, the private education loans held by UFSB-SPV, and the related indebtedness to the conduit lender, were eliminated from Union Federal's balance sheet, which accommodated regulatory capital compliance under the regulations of the OTS. See Note 12, "Education Loan Warehouse Facility and Other Liabilities and Unused Lines of Credit,"

67

in the notes to our consolidated financial statements included under Item 8 of this annual report for more information on the facility termination.

        In November 2008, Union Federal entered into an agreement with the Federal Reserve Bank of Boston to provide a credit facility to fund operations. At June 30, 2009, there was no balance outstanding under the facility. Effective October 19, 2009, as a result of changes enacted by the Federal Reserve Bank of Boston, Union Federal will be able to borrow up to 83% of the outstanding principal balance of its private education loans in a current repayment status. Previously, Union Federal could borrow up to 60% of the outstanding principal balance of its private education loans in a current repayment status. The interest rate on the facility is variable based on the Federal Reserve Bank of Boston's stated rates. At June 30, 2009, we had $145.8 million available for borrowings from the Federal Reserve Bank discount window through Union Federal.

        In addition, we had $11.8 million available for borrowing under an unused line of credit with the Federal Home Loan Bank of Boston. There were no borrowings outstanding with either institution at June 30, 2009. We expect an increase in amounts available for borrowings through the discount window after October 19, 2009, as a result of the changes enacted by the Federal Reserve Bank of Boston. As a requirement under the line of credit, we own $505 of Federal Home Loan Bank stock included in other assets in the balance sheet.

        We entered into two ten-year 6% fixed notes payable agreements with TERI in June 2001 to fund the acquisition of TERI's loan processing operations and loan database. Principal and interest are payable in monthly aggregate installments of $0.1 million ending June 20, 2011. The outstanding principal balance of the notes payable at June 30, 2009 was $3.0 million.

        In addition to our notes payable to TERI, we have future cash obligations under various types of contracts. We lease office space and office equipment under long-term operating and capital leases. The table below summarizes the dollar amounts of our contractual obligations as of June 30, 2009 for the periods specified:

	Contractual obligations
Fiscal years ending June 30,	Long-term debt		Operating lease obligations		Capital lease obligations		Total
	(in thousands)
2010	$	1,937	$	10,182	$	3,361	$	15,480
2011		1,019		10,119		1,604		12,742
2012		—		9,121		—		9,121
2013		—		7,185		—		7,185
2014		—		5,846		—		5,846
Beyond 2014		—		350		—		350
Total	$	2,956	$	42,803	$	4,965	$	50,724

Off-Balance Sheet Transactions

        We offer outsourcing services in connection with private education loan programs, from program design through securitization of the loans. We have structured and facilitated the securitization of private education loans for our clients through a series of bankruptcy remote, special purpose trusts.

        The principal uses of these trusts have been to generate sources of liquidity for our clients' and Union Federal's assets sold into such trusts and make available more funds to students and colleges. See "—Executive Summary—Application of Critical Accounting Policies and Estimates—Consolidation" for a discussion of our determination to not consolidate these securitization trusts.

68

Inflation

        Inflation was not a material factor in either revenue or operating expenses during the periods presented.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

        In the ordinary course of business, we are subject to interest-rate risk and credit risk. Interest-rate risk applies to all of our interest-bearing assets and liabilities as well as service revenue receivables. Credit risk is primarily related to loans held for sale, service revenue receivables, mortgage loans, cash equivalents and investments.

Interest-Rate Risk

        The interest-rate characteristics of our interest-bearing assets are driven by the nature, volume and duration of our interest-bearing liabilities. Generally, our interest-bearing liabilities are either variable-rate instruments or are of a short duration and are subject to frequent repricing at maturity.

        Less than 2% of our customer deposits at Union Federal have fixed interest rates in excess of twelve months. Approximately 83% of the deposits have fixed interest rates of six months or less. Deposit pricing is subject to weekly examination by a committee of senior bank management and representatives from corporate finance, and risk and compliance management. The committee looks at pricing of competitors and inflows and outflows of deposit balances at the customer level. Pricing decisions are made based on the desired volume of deposits in each given duration and product type.

        Outstanding borrowings under the education loan warehouse facility carry interest at prime plus 2% and reprice daily. None of our other liabilities bear interest.

        The frequent repricing of our liabilities drives our investment decisions. All of our private education loans, and approximately 70% of our mortgage loans, have variable interest rates. Excess cash is primarily invested in federal funds sold and U.S. federal agency mortgage-backed securities, depending on the expected timing of time deposit turnover and other cash needs.

        The matching of the interest-rate characteristics and duration of assets and liabilities mitigates interest-rate risk with respect to net interest revenue. However, we are still subject to interest-rate risk because as interest rates decline, the spreads between our assets and liabilities narrow and net interest income declines.

        The fair value of private education loans held for sale will fluctuate due to variance in prepayments and discount rates, as well as the multi-year forward estimates of the LIBOR rate, which is the reference rate for the loan assets and assumed borrowings, and buyer's equity assumptions used in our cash flow model. We frequently monitor these assumptions and their effect on the estimated fair value of these assets. We believe that we have adequately addressed interest-rate risks in our cash flow models.

Credit Risk

        We manage cash and investments conservatively. The primary objective of our investment policy is the preservation of capital. Therefore, cash, cash equivalents and short-term investments are only placed in AA-rated or better investment vehicles, federal funds sold or government agency mortgage-backed securities.

        Union Federal offers conventional conforming and non-conforming fixed and variable interest rate first and second residential mortgage loans, as well as commercial real estate loans. We base underwriting criteria primarily on credit score, consumer credit file information, and collateral characteristics, and all mortgage loans are underwritten to be saleable to institutional investors. Union

69

Federal does not offer high loan-to-value second mortgages, option adjustable rate mortgages, or sub-prime mortgage products.

        Private education loans are not offered through Union Federal as of the date of this annual report. We use default prevention and early awareness procedures to mitigate credit risk on the portfolio and are considering selling the Union Federal portfolio in connection with a recent order by the OTS. See Note 23, "Subsequent Events—Supervisory Agreement and Order to Cease and Desist," in the notes to our consolidated financial statements included under Item 8 of this annual report for additional information.

        Our assumptions regarding defaults and recoveries of loans securitized and TERI's obligation and ability to pay claims on defaulted loans affect the expected timing of cash payments to us in respect of additional structural advisory fees, asset servicing fees and residual cash flows, and our estimates of their fair value.

        If we were to determine that recoveries with respect to a trust's defaulted education loans would be unavailable to replenish the trust's Pledged Account, the estimated value of our additional structural advisory fees would be reduced. In addition, increases in our estimates of defaults, as well as decreases in default recovery rates would have a negative effect on the value of our additional structural advisory fees.

70

Item 8.    Financial Statements and Supplementary Data

Financial Statements

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
The First Marblehead Corporation:

        We have audited the accompanying consolidated balance sheets of The First Marblehead Corporation and subsidiaries (the "Company") as of June 30, 2009 and 2008, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for each of the years in the three-year period ended June 30, 2009. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2009 and 2008, and the results of their operations and their cash flows for each of the years in the three-year period ended June 30, 2009, in conformity with U.S. generally accepted accounting principles.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of June 30, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated September 3, 2009 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ KPMG LLP

Boston, Massachusetts
September 3, 2009

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THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, 2009 and 2008

(in thousands, except per share data)

			2009			2008
ASSETS
Cash and cash equivalents			$	158,770		$	70,280
Federal funds sold				14,326			80,215
Investments				8,450			70,629
Loans held for sale				350,960			497,324
Service receivables:
	Structural advisory fees			55,130			113,842
	Residuals			9,960			293,255
	Asset servicing fees			2,385			—
	Other			47			4,086
		Total service receivables		67,522			411,183
Property and equipment, net				19,929			37,681
Goodwill and intangibles, net				1,931			3,657
Other prepaid expenses				3,571			15,377
Mortgage loans held to maturity, net				9,515			10,754
Income taxes receivable				166,410			—
Net deferred tax asset				13,124			—
Other assets				6,822			3,798
	Total assets		$	821,330		$	1,200,898
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
	Deposits		$	154,462		$	244,113
	Accounts payable and accrued expenses			21,512			20,543
	Education loan warehouse facility			230,137			242,899
	Income taxes payable			—			31,275
	Net deferred tax liability			—			10,385
	Other liabilities			9,754			14,071
		Total liabilities		415,865			563,286
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.01 per share; 20,000 shares authorized at June 30, 2009 and June 30, 2008; 133 shares issued and outstanding at June 30, 2009 and no shares issued and outstanding at June 30, 2008				1			—
Common stock, par value $0.01 per share; 250,000 shares authorized at June 30, 2009 and June 30, 2008, 106,768 and 106,456 shares issued at June 30, 2009 and June 30, 2008, respectively; 99,125 and 98,886 shares outstanding at June 30, 2009 and June 30, 2008, respectively				1,068			1,065
Additional paid-in capital				431,461			300,498
Retained earnings				156,913			519,933
Treasury stock, 7,643 and 7,570 shares held at June 30, 2009 and June 30, 2008, respectively, at cost				(184,246	)		(183,993	)
Accumulated other comprehensive income				268			109
		Total stockholders' equity		405,465			637,612
		Total liabilities and stockholders' equity	$	821,330		$	1,200,898

See accompanying notes to consolidated financial statements.

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THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal years ended June 30, 2009, 2008 and 2007

(in thousands, except per share amounts)

				2009			2008			2007
Service revenues:
	Up-front structural advisory fees			$	—		$	179,106		$	457,352
	Additional structural advisory fees:
		From new securitizations			—			24,304			43,984
		Trust updates			(57,157	)		(44,106	)		1,363
			Total additional structural advisory fees		(57,157	)		(19,802	)		45,347
	Asset servicing fees:
		Fee income			2,350			—			—
		Fee update			35			—			—
			Total asset servicing fees		2,385			—			—
	Residuals:
		From new securitizations			—			116,972			182,744
		Trust updates			(283,295	)		(488,832	)		29,548
			Total residuals		(283,295	)		(371,860	)		212,292
	Processing fees from TERI				3,050			126,540			134,845
	Administrative and other fees				19,908			31,985			21,497
			Total service revenues		(315,109	)		(54,031	)		871,333
	Net interest income				25,103			25,622			9,371
		Total revenues			(290,006	)		(28,409	)		880,704
Non-interest expenses:
	Compensation and benefits				42,232			96,735			111,364
	General and administrative expenses				80,438			254,439			141,591
	Unrealized losses on loans held for sale				138,163			7,373			—
			Total non-interest expenses		260,833			358,547			252,955
Income (loss) from operations					(550,839	)		(386,956	)		627,749
	Other income				—			—			16
Income (loss) before income taxes					(550,839	)		(386,956	)		627,765
Income tax (benefit) expense					(187,819	)		(151,880	)		256,434
Net income (loss)				$	(363,020	)	$	(235,076	)	$	371,331
	Net income (loss) per share, basic			$	(3.66	)	$	(2.46	)	$	3.94
	Net income (loss) per share, diluted				(3.66	)		(2.46	)		3.92
Cash dividends declared per share					—			0.395			0.62
Weighted-average shares outstanding, basic					99,081			95,732			94,296
Weighted-average shares outstanding, diluted					99,081			95,732			94,845

See accompanying notes to consolidated financial statements.

73

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Fiscal years ended June 30, 2009, 2008 and 2007

(in thousands, except per share amounts)

		Non-voting convertible preferred stock issued						Common stock
																									Accumulated other comprehensive income, net of tax
								Issued					In treasury
																			Additional paid-in capital			Retained earnings					Total stockholders' equity
		Shares			Amount			Shares			Amount		Shares			Amount
Balance at June 30, 2006			—		$	—			100,334		$	1,004		(5,770	)	$	(121,545	)	$	217,620		$	479,090		$	—	$	576,169
Comprehensive income
	Net income		—			—			—			—		—			—			—			371,331			—		371,331
	Accumulated other comprehensive income, net		—			—			—			—		—			—			—			—			64		64
Total comprehensive income			—			—			—			—		—			—			—			—			—		371,395
	Options exercised		—			—			439			4		—			—			1,362			—			—		1,366
	Stock issuance through employee stock purchase plan		—			—			37			—		—			—			886			—			—		886
	Net stock issuance from vesting of restricted stock units		—			—			67			1		—			—			(1	)		—			—		—
	Repurchase of common stock		—			—			—			—		(1,762	)		(61,525	)		—			—			—		(61,525	)
	Stock-based compensation		—			—			—			—		—			—			6,493			—			—		6,493
	Cash dividends declared ($0.62 per share)		—			—			—			—		—			—			—			(58,321	)		—		(58,321	)
	Cash paid in lieu of fractional shares in effecting stock split		—			—			(3	)		—		—			—			—			(147	)		—		(147	)
	Tax benefit from employee stock options		—			—			—			—		—			—			6,304			—			—		6,304
Balance at June 30, 2007			—			—			100,874			1,009		(7,532	)		(183,070	)		232,664			791,953			64		842,620
Comprehensive income (loss)
	Net loss		—			—			—			—		—			—			—			(235,076	)		—		(235,076	)
	Accumulated other comprehensive income, net		—			—			—			—		—			—			—			—			45		45
Total comprehensive loss			—			—			—			—		—			—			—			—			—		(235,031	)
	Issuance of preferred stock		60			59,800			—			—		—			—			(208	)		—			—		59,592
	Conversion of preferred stock to common stock		(60	)		(59,800	)		5,320			54		—			—			59,746			—			—		—
	Options exercised		—			—			5			—		—			—			17			—			—		17
	Stock issuance through employee stock purchase plan		—			—			45			—		—			—			883			—			—		883
	Net stock issuance from vesting of restricted stock units		—			—			212			2		(38	)		(923	)		(2	)		—			—		(923	)
	Stock-based compensation		—			—			—			—		—			—			7,015			—			—		7,015
	Cash dividends declared ($0.395 per share)		—			—			—			—		—			—			—			(36,944	)		—		(36,944	)
	Tax benefit from employee stock options		—			—			—			—		—			—			383			—			—		383
Balance at June 30, 2008			—			—			106,456			1,065		(7,570	)		(183,993	)		300,498			519,933			109		637,612
Comprehensive income (loss)
	Net loss		—			—			—			—		—			—			—			(363,020	)		—		(363,020	)
	Accumulated other comprehensive income, net		—			—			—			—		—			—			—			—			159		159
Total comprehensive loss			—			—			—			—		—			—			—			—			—		(362,861	)
	Issuance of preferred stock		133			1			—			—		—			—			125,857			—			—		125,858
	Net stock issuance from vesting of restricted stock units		—			—			312			3		(73	)		(253	)		(3	)		—			—		(253	)
	Stock-based compensation		—			—			—			—		—			—			7,285			—			—		7,285
	Tax expense from employee stock options		—			—			—			—		—			—			(2,176	)		—			—		(2,176	)
Balance at June 30, 2009			133		$	1			106,768		$	1,068		(7,643	)	$	(184,246	)	$	431,461		$	156,913		$	268	$	405,465

See accompanying notes to consolidated financial statements.

74

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal years ended June 30, 2009, 2008 and 2007

(in thousands)

				2009			2008			2007
Cash flows from operating activities:
Net income (loss)				$	(363,020	)	$	(235,076	)	$	371,331
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
	Depreciation and amortization				17,800			19,633			16,326
	Net deferred tax expense (benefit)				(23,509	)		(237,363	)		103,508
	Stock-based compensation expense				7,285			7,015			6,493
	Unrealized losses on loans held for sale				138,163			7,373			—
	Loss on disposal of property and equipment				2,114			2,058			112
	Structural advisory fee distributions				1,555			—			—
	Goodwill impairment				1,701			3,177			—
	Change in assets/liabilities:
		Loans held for sale			8,201			(478,972	)		(19,935	)
		Structural advisory fees			57,157			19,802			(45,347	)
		Asset servicing fees			(2,385	)		—			—
		Residuals			283,295			371,860			(212,292	)
		Other service receivables			4,039			6,823			(462	)
		Income taxes receivable			(166,410	)		49,345			(37,696	)
		Other prepaid expenses			11,806			11,527			(9,611	)
		Other assets			(3,024	)		3,389			(1,309	)
		Accounts payable and accrued expenses, income taxes payable and other liabilities			(31,045	)		(6,671	)		24,397
			Net cash (used in) provided by operating activities		(56,277	)		(456,080	)		195,515
Cash flows from investing activities:
	Net change in federal funds sold				65,889			(69,881	)		(10,334	)
	Dispositions of investments				95,938			91,366			70,809
	Purchases of investments				(33,600	)		(33,300	)		(116,206	)
	Payments for intangible assets				(750	)		—			(471	)
	Purchases of property and equipment				(1,387	)		(9,115	)		(20,014	)
	Payments to TERI for loan database updates				—			(227	)		(248	)
	Net change in loans held to maturity				1,239			573			—
			Net cash provided by (used in) investing activities		127,329			(20,584	)		(76,464	)
Cash flows from financing activities:
	Net change in deposits				(89,651	)		190,590			17,395
	Increase (decrease) in education loan warehouse facility				(12,762	)		242,899			—
	Payment of capital lease obligations				(3,578	)		(4,639	)		(3,980	)
	Payment of notes payable to TERI				—			(851	)		(803	)
	Tax (expense) benefit from stock-based compensation				(2,176	)		383			6,304
	Issuances of common stock, net				—			900			2,252
	Issuance of non-voting convertible preferred stock, net				125,858			59,592			—
	Repurchases of common stock				(253	)		(923	)		(61,525	)
	Cash dividends on common stock and cash paid in lieu of fractional shares				—			(36,944	)		(58,468	)
			Net cash provided by (used in) financing activities		17,438			451,007			(98,825	)
Net increase (decrease) in cash and cash equivalents					88,490			(25,657	)		20,226
Cash and cash equivalents, beginning of year					70,280			95,937			75,711
Cash and cash equivalents, end of year				$	158,770		$	70,280		$	95,937
Supplemental disclosures of cash flow information:
	Interest paid			$	16,151		$	16,237		$	1,788
	Income taxes paid				41,622			51,772			180,737
Supplemental disclosure of non-cash activities:
	Acquisition of property and equipment through capital leases			$	—		$	7,478		$	723
	Conversion of series A non-voting convertible preferred stock to common stock				—			59,800			—
	Reclassification of mortgages from held for sale to held to maturity				—			11,327			—

See accompanying notes to consolidated financial statements.

75

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(1) Nature of Business

        Unless otherwise indicated or unless the context of the discussion requires otherwise, all references in these Notes to Consolidated Financial Statements to "we", "us", "our" or similar references mean The First Marblehead Corporation (FMC) and its subsidiaries on a consolidated basis.

        We offer outsourcing services to national and regional financial institutions and educational institutions for designing and implementing private education loan programs. In addition, we provide administrative and other services to securitization trusts that we have facilitated, asset servicing to the third-party owner of certain of those securitization trusts (NCSLT Trusts) and portfolio management services to a limited number of clients. Our subsidiary Union Federal Savings Bank (Union Federal) is a federally chartered thrift that, prior to fiscal 2009, offered private education loans directly to consumers and continues to offer residential and commercial mortgage loans, retail savings products, time deposit products and money market accounts. As a result of our ownership of Union Federal, we are a savings and loan holding company subject to regulation, supervision and examination by the U.S. Office of Thrift Supervision (OTS). Substantially all of our financial results have been derived from these activities, which are considered to be in a single industry segment for financial reporting purposes.

        Historically, we have structured and facilitated the securitization of private education loans generated by our clients through a series of bankruptcy remote, special purpose statutory trusts. Through the securitization process, the trusts obtained loans from the originating lenders or their assignees, which relinquished to the trust their ownership interest in the loans. The debt instruments that the trusts issued to finance the purchase of these private education loans are obligations of the trusts, not obligations of us or the originating lenders or their assignees. For our past securitization services, we were entitled to receive from the trusts up-front structural advisory fees, additional structural advisory fees over time and residual cash flows expected to be generated by the trusts. During fiscal 2009, we began to receive service fees for stand-alone services for loan origination and default prevention and collections services.

Business Trends, Uncertainties and Outlook

        Asset-backed securitizations have been our sole source of permanent financing for clients' private education loan programs. Recent conditions of the debt capital markets generally, and the asset-backed securities (ABS) market specifically, rapidly deteriorated during the second quarter of fiscal 2008. This deterioration accelerated during the third quarter of fiscal 2008 and has persisted, to a lesser extent, through September 2, 2009. Our business has been and continues to be materially adversely impacted by these market dynamics, including an inability to access the securitization market or alternative financing facilities. We did not complete a securitization transaction during fiscal 2009, and we expect that the structure and pricing terms in future financing transactions, if any, to be substantially less favorable than in the past.

        In addition, credit performance of consumer-related loans generally, and the private education loans held by us and the various securitization trusts we have facilitated, have been adversely affected by general economic conditions in the United States, including increasing unemployment rates and less availability of consumer credit. During fiscal 2009, we increased the projected weighted-average gross

76

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(1) Nature of Business (Continued)

default rates for the NCSLT Trusts by 417 basis points to 19.0%, and the portfolio of private education loans held by us has experienced a higher level of defaults than we originally projected. Credit rating agencies have taken negative rating actions with respect to certain securitizations that we previously facilitated, and the interest rate, economic and credit environments may continue to have a material negative effect on the estimated value of our service receivables and loans held for sale.

        Our lender clients previously had the opportunity to mitigate their credit risk through a loan repayment guaranty by The Education Resources Institute, Inc. (TERI), a not-for-profit organization. TERI guaranteed the loans held by the NCSLT Trusts, and we historically received reimbursement from TERI for outsourced loan processing services we performed on TERI's behalf. In April 2008, TERI filed a voluntary petition for relief (TERI Reorganization) under Chapter 11 of the United States Bankruptcy Code (Bankruptcy Code). The TERI Reorganization has had, and will likely continue to have, a material negative effect on our client relationships, facilitated loan volumes, our ability to structure loan securitizations, the value of our service receivables, and our ability to realize fully the cost reimbursement and guaranty obligations of TERI. See Note 3, "TERI Reorganization," for more information on the TERI Reorganization and its impact on our operations.

        During fiscal 2009, we implemented a plan to adjust our business model and address some of the uncertainties facing us. We made major changes in senior management and significantly reduced our operating expenses. In addition, we sold the trust certificate (Trust Certificate) of our subsidiary NC Residuals Owners Trust, formerly known as GATE Holdings, Inc., effective as of March 31, 2009. NC Residuals Owners Trust owned residual interests in the NCSLT Trusts, which held substantially all of the TERI-guaranteed private education loans facilitated by us. The sale of the Trust Certificate is expected to generate a refund for income taxes previously paid and eliminate certain of our future tax liabilities, which would have had a material negative effect on our financial condition and liquidity. As a result of the sale of the Trust Certificate, however, we are no longer entitled to receive residuals from the NCSLT Trusts. We continue to have rights to additional structural advisory fees from the NCSLT Trusts, as well as additional structural advisory fees and residuals from trusts other than the NCSLT Trusts.

        We significantly refined our product offerings and added fee-for-service offerings such as portfolio management and asset servicing. Our new Monogram product has been designed to provide prospective lenders with flexible product features intended to meet their desired risk control and return objectives, while also providing borrowers with some ability to configure the terms of their private education loan. The Monogram product, which was completed in August 2009, also incorporates refinements to our origination process, including an enhanced application interface and additional disbursement and data capabilities. The success of the new product will be critical to growing and diversifying our revenues and client base. In light of regulatory constraints, however, Union Federal is not expected to participate as a program lender during fiscal 2010.

        We also changed our fee structure with respect to our services and have developed additional services that will provide us with fee-based income as our services are provided. The revised fee structure is intended to improve our cash flow and reduce our dependence on the credit and capital markets and on any single guarantor or other credit enhancement provider.

77

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(1) Nature of Business (Continued)

        Our near term financial performance and future growth depend in large part on our ability to successfully market our new product and transition to more fee-based revenues. We are uncertain whether former, current or prospective clients will be interested in the new product offering, particularly in the current economic environment. Union Federal is not, as of September 2, 2009, able to fund private education loan originations due to a current lack of funding capacity, and it will be necessary for Union Federal to obtain regulatory clearance before offering such a product. See Note 23, "Subsequent Events—Supervisory Agreement and Order to Cease and Desist," for additional details.

Revenue Concentration

        We did not facilitate any securitizations during fiscal 2009. In fiscal 2008, we earned $320,382 in securitization-related revenues from the trusts used to securitize private education loans. The securitization trusts facilitated during the first quarter of fiscal 2008 purchased private education loans from several lenders, including JPMorgan Chase Bank, N.A., Bank of America, N.A., RBS Citizens, N.A. and Union Federal. We did not recognize more than 10% of total revenue from any other client in fiscal 2008.

Servicing Concentration

        As of June 30, 2009, there were seven loan servicers providing loan services to trusts that we facilitated. Servicers provide administrative services relating to loans, including processing deferment and forbearance requests, sending out account statements and accrual notices, responding to borrower inquiries, and collecting and crediting payments received from borrowers. As of June 30, 2009, Pennsylvania Higher Education Assistance Agency (PHEAA) serviced a significant majority of the loans for which we facilitated origination. PHEAA also operates under the name American Education Services.

(2) Summary of Significant Accounting Policies

Use of Estimates

        The preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other factors. Actual results may differ from these estimates under varying assumptions or conditions. On an ongoing basis, we evaluate our estimates and judgments, particularly as they relate to accounting policies that we believe are most important to the portrayal of our financial condition and results of operations. Material estimates that are particularly susceptible to change relate to the recognition of service revenues and the valuation of our service receivables and portfolio of private education loans held for sale.

78

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

(a) Cash and Cash Equivalents

        All highly liquid debt instruments purchased with original maturities of three months or less on the date of purchase are considered cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value.

(b) Investments

        Investments in marketable debt securities are classified as either held to maturity or available for sale. Held-to-maturity investments are carried at amortized cost. Available-for-sale investments are carried at fair value with after-tax net unrealized gains and losses recorded in other comprehensive income, a component of stockholders' equity.

(c) Loans Held for Sale

        Loans held for sale are carried at the lower of cost or fair value. The fair value of loans held for sale is evaluated on a periodic basis. In the absence of readily determined market values, the fair value is estimated by management based on the present value of expected future cash flows from the loans held for sale. These estimates are based on historical and third-party data and our industry experience with the assumptions for, among other things, default rates, recovery rates on defaulted loans, prepayment rates, the proportion of buyer's equity to financing and the corresponding weighted-average cost of capital commensurate with the risks involved. Delinquent loans (greater than 90 days past due) and loans in default (greater than 120 days past due) are fully reserved. If readily determined market values became available, or if actual performance were to vary appreciably from management's estimates, the fair value of the loans would need to be further adjusted, which could result in material differences from the recorded carrying amounts. Changes in the carrying value of loans held for sale are recorded as a separate component of non-interest expense.

        If a private education loan is delinquent by greater than 90 days, the accrual of interest income on that loan is discontinued until the loan is brought current or paid. Past due status is based on the contractual terms of the credit agreement between the lender and the borrowers.

(d) Property and Equipment

        Leasehold improvements, computers, software and other equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are recorded in general and administrative expenses and are calculated using the straight-line method over the estimated useful lives of the assets or the remaining terms of the lease. Maintenance and repairs are charged to general and administrative expense as incurred, while major leasehold improvements are capitalized and amortized over the lesser of their estimated useful life or the remaining terms of the lease.

        Costs related to internal-use software development projects are capitalized if the software is expected to yield long-term operational benefits, such as operational efficiencies and/or incremental revenue streams.

79

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

(e) Goodwill and Intangible Assets

        Goodwill represents the excess of the cost of an acquisition over the fair value of the net tangible and other intangible assets acquired. Other intangible assets represent purchased assets that can be distinguished from goodwill because of contractual rights or because the asset can be exchanged on its own or in combination with a related contract, asset or liability. Goodwill is not amortized, but is subject to annual impairment tests. Intangible assets are amortized on a straight-line basis generally over the period of the related contract or customer agreement. Amortization is recorded in general and administrative expenses. Impairment of goodwill is recorded when the carrying value of a reporting unit, including its allocation of goodwill, exceeds its estimated fair value. Impairment of intangible assets is recorded when the carrying value of the intangible asset exceeds the cumulative expected cash inflows related to the contract or customer agreement over its remaining useful life. Impairment charges are recorded as general and administrative expenses.

(f) Mortgage Loans Held to Maturity

        Loan origination fees, net of certain direct organization costs, are deferred and recognized as an adjustment of the related loan yield using the interest method. If a mortgage loan is delinquent by greater than 90 days, the accrual of interest income on that loan is discontinued until the loan is brought current or paid. Past due status is based on the contractual terms. An allowance for loan losses is established through a charge to non-interest expense. When management believes that the collection of a loan's principal balance is unlikely, the principal amount is charged to the allowance. Recoveries are credited to the allowance as amounts are recovered.

(g) Fair Value of Financial Instruments

        The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 159, Fair Value Options for Financial Assets and Financial Liabilities, an amendment of FASB No. 115 (SFAS No. 159), which became effective for us beginning in the first quarter of fiscal 2009. SFAS No. 159 permits entities to measure many financial instruments and certain other items at fair value that were not previously required to be measured at fair value. We did not elect to measure additional assets and liabilities at fair value upon adoption of this statement. Therefore, there was no impact to our financial condition or results of operations as a result of adoption.

        Fair value is defined as the price that would be received in the sale of an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. A three-level valuation hierarchy is used to qualify fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date:

        Level 1.    Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 1 assets and liabilities include debt and equity securities and derivative financial instruments actively traded on exchanges, as well as U.S. Treasury securities and U.S. Government and agency mortgage-backed securities that are actively traded in highly liquid over-the-counter markets.

80

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

        Level 2.    Observable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs that are observable or can be corroborated, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 assets and liabilities include debt instruments that are traded less frequently than exchange traded securities and derivative instruments whose model inputs are observable in the market or can be corroborated by market observable data. Examples in this category are certain variable and fixed rate non-agency mortgage-backed securities, corporate debt securities and derivative contracts.

        Level 3.    Inputs to the valuation methodology are unobservable but significant to the fair value measurement. Examples in this category include interests in certain securitized financial assets or certain private equity investments.

        Fair value is applied to eligible assets based on quoted market prices, where available. For financial instruments for which quotes from recent exchange transactions are not available, fair value is based on discounted cash flow analysis and comparison to similar instruments. Discounted cash flow analysis is dependent upon estimated future cash flows and the level of interest rates.

        The methods used for current fair value calculations may not be indicative of net realizable value or reflective of future fair values. If readily determined market values became available or if actual performance were to vary appreciably from assumptions used, assumptions may need to be adjusted, which could result in material differences from the recorded carrying amounts. We believe our methods of determining fair value are appropriate and consistent with other market participants. However, the use of different methodologies or different assumptions to value certain financial instruments could result in a different estimate of fair value.

(h) Revenue Recognition

Structural Advisory Fees

        We have recognized as service revenues structural advisory fees for structuring and facilitating the securitization of the private education loans held by various securitization trusts, principally the NCSLT Trusts. We have received a portion of these fees as an up-front structural advisory fee at the time of securitization. We are also entitled to receive additional structural advisory fees over time, based on the amount of loans outstanding in the trusts from time to time over the life of the trusts.

        Additional structural advisory fees receivables are carried at fair value. In the absence of readily determined market values, we update our estimates of the fair value of structural advisory fee receivables on a quarterly basis, based on the present value of expected future cash flows. Our estimates consider changes in discount rates, the estimated operational expenses for the separate securitization trusts and trust performance assumptions, including the expected annual rate and timing of loan defaults, TERI's obligation and ability to pay default claims, expected recoveries on defaulted loans, including use of recoveries to replenish the segregated reserve accounts pledged to the securitization trusts by TERI to secure its guaranty obligations (Pledged Accounts), the annual rate and timing of education loan prepayments, the trend of contractual and market interest rates over the life

81

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

of the loan pool, including the forward London Interbank Offered Rate (LIBOR), the cost of funding outstanding auction rate notes, the existence of Trigger Events (defined below) and the discount rate commensurate with the risk involved. These assumptions are based on historical and third-party data, and our industry experience.

        The indentures relating to the securitization trusts specify certain circumstances (Trigger Events) upon the occurrence of which payments that would otherwise be due in respect of additional structural advisory fees and residuals would instead be directed to the holders of the notes issued by the trusts until the condition causing the Trigger Event ceases to exist or all notes, and related interest, are paid in full. Under the indentures, a Trigger Event generally occurs when the cumulative gross defaults of loans held by such trust exceed a specified level.

        If readily determined market values became available or if actual performance were to vary appreciably from assumptions used, assumptions may need to be adjusted, which could result in material differences from the recorded carrying amounts. Changes to the value of these receivables are recorded in the statement of operations as additional structural advisory fees-trust updates. We generally become entitled to receive these additional fees, plus interest, once the ratio of trust assets to trust liabilities reaches a stipulated level, which ranges from 103% to 105.5%. As further described in Note 3, "TERI Reorganization," our receipt of these fees may be significantly delayed as a result of the TERI Reorganization, thereby creating a deeper discount on the receivables.

Asset Servicing Fees and Residuals

        We have the right to receive a portion of the residual interests, if any, generated by securitization trusts other than the NCSLT Trusts. This right is junior in priority to the rights of the holders of the debt sold in the securitizations and additional structural advisory fees. As a result of the sale of the Trust Certificate, we are no longer entitled to residuals receivables from the NCSLT Trusts. See Note 4, "Sale of Trust Certificate and Related Transactions," for additional details.

        In conjunction with the sale of the Trust Certificate, we have entered into an asset services agreement (Asset Services Agreement) with the third-party purchaser of the Trust Certificate. As compensation for our services, we are entitled to a monthly asset servicing fee based on the aggregate outstanding principal balance of the loans owned by the NCLST Trusts. Our receipt of the fees, however, is contingent upon distributions available to the third-party owners of the residual interests in the NCSLT Trusts. See Note 4, "Sale of Trust Certificate and Related Transactions," for further detail regarding the sale and related fees.

        The fair values of asset servicing fees and residuals receivables were estimated by management using the same assumptions used for structural advisory fees receivables, with the exception of the discount rate which was adjusted to be commensurate with the risks involved. Changes in the fair value of asset servicing fee receivables and residuals are recognized as service revenues.

82

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

Processing Fees from TERI

        Processing fees from TERI have historically consisted of reimbursement of expenses incurred relating to services performed on behalf of TERI and are recognized in the same period that the expense is incurred.

Administrative and Other Fees

        Administrative fees are received from the securitization trusts for services performed in administering securitization trusts, including the daily management of the trusts, coordination of loan servicers and reporting information to the parties related to the securitization. The fees are based upon a percentage of the outstanding principal balance of the loan principal of each of the trusts. The fees vary with each separate securitization and are recognized in service revenue when earned, as administrative services are provided.

        During the fourth quarter of fiscal 2009, we began receiving fees from certain securitization trusts under a special servicing agreement. These fees are paid by the securitization trusts for the performance by us of default prevention services and management of private education loan collections. Such fees are based, in part, upon the reimbursement of expenses, and are recognized as the expenses are incurred.

Interest Income

        Interest income is recognized using the effective interest method.

(i) Stock-based compensation

        We record compensation expense equal to the estimated fair value on the grant date of options granted to purchase common stock, on a straight-line basis over the options' vesting period. We record compensation expense for equity-based awards other than stock options based on the timing of vesting.

        We use a Black-Scholes option pricing model to determine the fair value of options granted. The fair values of equity-based awards other than options, such as restricted stock units, are based on the price of our common stock on the date of grant.

(j) Income Taxes

        In determining a quarterly provision for income taxes, the estimated annual effective tax rate is based on expected annual income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate. The estimated annual effective tax rate also includes our best estimate of the ultimate outcome of tax audits.

        The asset and liability method of accounting is utilized for recognition of income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized in connection with the tax effects of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards. Deferred tax assets and

83

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as tax expense (benefit) in the period that includes the enactment date. A deferred tax asset valuation allowance is established if it is considered more likely than not that all or a portion of the deferred tax assets will not be realized.

(k) Net Income (Loss) Per Share

        Basic net income (loss) per share is computed by dividing net income (loss) by the basic weighted-average number of shares of common stock outstanding for the periods presented. Diluted net income (loss) per share is computed by dividing net income (loss) by the basic weighted-average shares and common stock equivalent shares outstanding during the period. The weighted-average shares and common stock equivalent shares outstanding have been determined in accordance with the treasury stock method. Common stock equivalents consist of shares issuable upon the exercise of outstanding stock options, the exercise of options to purchase stock under employee stock purchase plans and the vesting of restricted stock units.

(l) Consolidation

        Our consolidated financial statements include the accounts of The First Marblehead Corporation and its subsidiaries, after eliminating inter-company accounts and transactions. We have not consolidated the financial results of the securitization trusts purchasing loans that we have facilitated.

        At June 30, 2009 and 2008, each of the securitization trusts created after January 31, 2003, has met the criteria to be a qualified special-purpose entity (QSPE) as defined by FASB Statement No. 140, Accounting for the Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. Accordingly, we did not consolidate these existing securitization trusts in our financial statements. In addition, the securitization trusts created prior to January 31, 2003 in which we hold a variable interest that could result in our being considered the primary beneficiary of such trusts, have been amended in order for them to be considered QSPEs.

        On June 12, 2009, FASB issued Financial Accounting Standard 166, Accounting for Transfers of Financial Assets, an Amendment of FASB Statement 140 (FAS 166) and Financials Accounting Standard 167, Amendments to FASB Interpretation No. 46(R) (FAS 167). Both statements are effective beginning with our financial statements for fiscal year 2011. FAS 166 removes the concept of a QSPE from FASB Statement 140 and removes the exception from applying FASB Interpretation No. 46 (revised as FASB Interpretation No. 46(R) in December 2003), Consolidation of Variable Interest Entities, to qualifying special-purpose entities.

        FAS 167 amends FASB Interpretation No. 46(R) to require an enterprise to perform an analysis to determine whether the enterprise's variable interest or interests gives it a controlling financial interest

84

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics:

•

The power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance; and

•

The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.

        As of September 2, 2009, we are evaluating the impact that adoption of these statements will have on our consolidated financial condition and results of operations.

(3) TERI Reorganization

        TERI is a private, not-for-profit Massachusetts organization as described under section 501(c)(3) of the Internal Revenue Code. In its role as guarantor in the private education lending market, TERI agreed to reimburse lenders or securitization trusts for unpaid principal and interest on defaulted loans. Historically, TERI was the exclusive third-party provider of borrower default guarantees for our clients' private education loans.

        Historical Relationship.    In 2001, we acquired TERI's historical database and loan processing operations, but not its investment assets or guaranty liabilities. In connection with the transaction, we entered into a series of agreements with respect to loan processing services, database updates and the securitization of TERI-guaranteed loans. These agreements included a master servicing agreement (Master Servicing Agreement), a database supplementation and sale agreement (Database Agreement) and a master loan guaranty agreement (Master Loan Guaranty Agreement). Pursuant to the Master Servicing Agreement, TERI engaged us to provide certain loan origination, default prevention, claims and default management services. Under TERI's agreements with lenders, lenders delegated their loan origination functions to TERI, and TERI had the right to subcontract these functions to us. Pursuant to the Database Agreement, TERI provided updated information to us regarding the performance of the education loans it had guaranteed, so that we could continue to supplement and enhance the database that we purchased from TERI.

        Under the terms of the Master Loan Guaranty Agreement, we granted TERI a right of first refusal to provide a third-party loan guaranty under existing and future private education loan programs that we facilitated, as well as new loan programs jointly created by us and TERI. In addition, we agreed to provide a beneficial interest for TERI in a portion of the residual value of securitization trusts that purchase TERI-guaranteed loans. The Master Loan Guaranty Agreement generally provided that the guaranty fees earned by TERI upon the disbursement of education loans would be placed by TERI in segregated reserve accounts to be held as collateral to secure TERI's obligation to pay the principal and interest on defaulted education loans. These accounts were generally held by third-party financial institutions for the benefit of the program lender until the education loans were securitized, at which point the accounts were pledged to the securitization trust that purchased the loans. The Master Loan Guaranty Agreement, as it had been implemented through guaranty agreements with individual

85

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(3) TERI Reorganization (Continued)

lenders, entitled TERI to retain a portion of its guaranty fees as an administrative fee rather than place them in the Pledged Accounts.

        TERI Reorganization.    On April 7, 2008, TERI filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code. The TERI Reorganization has had, and will likely continue to have, a material negative effect on our client relationships, facilitated loan volumes, our ability to structure loan securitizations, the value of our service receivables and our ability to realize fully TERI's cost reimbursement and guaranty obligations. In April 2008, we received notice that Bank of America, N.A. and RBS Citizens, N.A. elected to terminate their agreements with us, and certain of our clients, in the case of RBS Citizens, N.A., as a result of the TERI Reorganization. In addition, JPMorgan Chase Bank, N.A., Bank of America, N.A. and Union Federal have entered into stipulations in the context of the TERI Reorganization relating to the termination of their agreements with TERI and the settlement of related claims. As a result of these actions, Bank of America, N.A., JPMorgan Chase Bank, N.A. and Union Federal do not have any further obligations to sell, and we do not have any further obligation to purchase, certain private education loans. Generally, neither RBS Citizens, N.A. nor we have any further obligations to sell or purchase private education loans under the various loan programs previously funded by RBS Citizens, N.A.

        We expect that the remaining guaranty agreements or loan origination agreements that TERI has with a significant number of its clients will be terminated in the context of the TERI Reorganization. Termination of a client's guaranty agreement or loan origination agreement with TERI would generally result in the termination of their agreements with us. As a result, we expect our note purchase agreements with additional clients to terminate as the TERI Reorganization evolves. We also expect the TERI Reorganization to continue to materially adversely affect our ability to facilitate the securitization of TERI-guaranteed loans. If we are able to facilitate securitizations of TERI-guaranteed loans in the future, our up-front structural advisory fee yields would decline and market conditions would likely dictate that we obtain additional credit enhancement for such securitizations, the cost of which would result in lower revenues and additional cash requirements.

        Termination of Master Agreements.    In June 2008, the United States Bankruptcy Court for the District of Massachusetts (Bankruptcy Court) entered an order approving a motion by TERI to reject the Master Servicing Agreement, the Database Agreement and the Master Loan Guaranty Agreement, as well as a marketing services agreement pursuant to which we provided certain marketing-related services to TERI. As a result of the order, each of the agreements, as amended or supplemented to date, was terminated effective as of May 31, 2008. The order also approved a motion by TERI to enter into a transition services agreement, which expired on September 29, 2008.

        We facilitated a significantly lower level of loan volume during fiscal 2009 compared to past fiscal years as a result of, among other factors, conditions in the debt capital markets and the TERI Reorganization. As a result of the TERI Reorganization, our clients instructed TERI to stop accepting applications or suspended their marketing of TERI-guaranteed loans during fiscal 2008, which resulted in a significant reduction in processing fees from TERI. During fiscal 2009, we facilitated loans with an aggregate principal balance of $266,586, of which $159,879 was not TERI-guaranteed, and received $3,050 in processing fees from TERI. During fiscal 2008, we facilitated loans with an aggregate

86

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(3) TERI Reorganization (Continued)

principal balance of $5,004,000, of which $65,833 was not TERI-guaranteed, and received $126,540 in processing fees from TERI.

        See Note 13, "Commitments and Contingencies—TERI Reorganization—Challenge to Security Interests" for further discussion relating to the TERI Reorganization.

(4) Sale of Trust Certificate and Related Transactions

        On March 31, 2009, NC Residuals Owners Trust was formed by the statutory conversion of our wholly-owned subsidiary, GATE Holdings, Inc. As a result of the conversion, we became the sole legal and beneficial owner of the Trust Certificate. NC Residuals Owners Trust, together with its wholly-owned subsidiary, owned certain certificates of beneficial ownership interests (Residuals) of the NCSLT Trusts. The NCSLT Trusts are the holders of substantially all TERI-guaranteed loans facilitated by us.

        Effective March 31, 2009, we entered into, among other agreements, a purchase agreement (Purchase Agreement) with VCG Owners Trust, a newly formed statutory trust (Purchaser), and VCG Securities, LLC (Vanquish Investor). Additionally we entered into the Asset Services Agreement and a data sharing and license agreement (Data Agreement) with these parties, also effective March 31, 2009. The Purchaser and Vanquish Investor are affiliates of Vanquish Capital Management LLC.

        Pursuant to the Purchase Agreement, we transferred the Trust Certificate to the Purchaser effective as of March 31, 2009. As a result, the Purchaser became the indirect owner of the Residuals that were formerly owned by us indirectly through NC Residuals Owners Trust. In consideration for the sale, the Purchaser and Vanquish Investor agreed to bear all future federal and state tax liabilities associated with the Residuals. As a result of the sale, we expect to receive a refund for federal income taxes paid on income that we had not yet received and are no longer entitled to receive.

        Pursuant to the Asset Services Agreement, we have agreed to provide certain asset servicing to the Purchaser to support the Purchaser's ownership of the Residuals, including, among others, analysis and valuation optimization services and services relating to funding strategy. As compensation for services, we are entitled to an asset servicing fee, calculated as a percentage of the aggregate outstanding principal balance of loans outstanding in the trusts. Although this fee is earned monthly, our right to receive the fee is contingent on distributions made to the holders of the Residuals. Distributions made by each of the NCSLT Trusts will be allocated as follows:

•

commencing with the first calendar month in which residual cash flows are paid, and for each payment date during the next 60 calendar months from that date, we will receive 60% of the residual cash flows;

•

for each payment date after that, we will receive 40% of residual cash flows until all earned but unpaid asset servicing fees are paid in full; and

•

thereafter, once all earned but unpaid fees have been received, we will receive our monthly fee, paid in full.

87

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(4) Sale of Trust Certificate and Related Transactions (Continued)

        We will not receive any asset servicing fees until the Purchaser has begun to receive residual cash flows.

        Pursuant to the Data Agreement, the Purchaser has agreed to share with and license to us certain deidentified private education loan data. In consideration of a one-time license fee of $750, the Purchaser granted to us a limited, exclusive, irrevocable, perpetual license to retain and use monthly updates to such data for any lawful purpose. This license will survive the termination of the Asset Services Agreement or the Data Agreement for any reason. Unless sooner terminated by the Purchaser, the Purchaser will continue to provide monthly data updates until the earlier of (i) the date the residual cash flows of the NCSLT Trusts are equal to zero or (ii) 25 years from the date of the agreement.

(5) Cash and Cash Equivalents; Investments

        The following table summarizes our cash and cash equivalents:

	June 30,
	2009		2008
Money market funds	$	156,179	$	67,944
Non-interest-bearing deposits		2,591		2,336
Total cash and cash equivalents	$	158,770	$	70,280
Compensating balances included in money market funds	$	886	$	7,550

        Compensating balances relate to the leasing of equipment and are included in a segregated cash account in our name, the minimum balance of which is equal to the outstanding lease value. In addition, Union Federal was required to maintain minimum balances with correspondent banks of $100 at June 30, 2009 and 2008.

        We utilize the services of a related party, an institutional money management firm, Milestone Capital Management, LLC (MCM), a wholly-owned subsidiary of Milestone Group Partners, under an investment management agreement. MCM receives a fee for services it performs under this agreement. Members of the immediate family of one of FMC's directors owned approximately 65% of Milestone Group Partners as of June 30, 2009. At June 30, 2009, approximately $59,983 of money market funds were invested by MCM. At June 30, 2008, approximately $70,432 of investments and cash equivalents were invested by MCM, and $30,866 of cash equivalents were invested in a money market fund managed by MCM.

        Prior to May 2009, investments primarily consisted of variable rate demand notes that were redeemable as interest rates reset. In June 2009, we disposed of these investments. As of June 30, 2009 investments consisted solely of mortgage-backed securities held by Union Federal classified as available for sale. The carrying value of available-for-sale securities was $8,450 and $70,629, including unrealized gains of $268 and $109 as of June 30, 2009 and 2008 respectively.

88

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(6) Loans Held for Sale

        The following table reflects the carrying value of education loans held for sale:

		June 30,
		2009			2008
Principal and interest of loans		$	526,542		$	504,697
Fair value adjustment			(175,582	)		(7,373	)
Net carrying value		$	350,960		$	497,324
Principal and interest of loans:
	Delinquent (>90 days past due)	$	17,329		$	762
	In default (>120 days past due)		15,112			610
	Pledged as collateral under education loan warehouse facility		261,923			251,528

	Fiscal years ended June 30,
	2009		2008		2007
Unrealized losses for fiscal year	$	138,163	$	7,373	$	—
Interest on delinquent and defaulted loans included in income		278		—		—
Interest on delinquent and defaulted loans foregone		638		—		—

        We classify our private education loan portfolio as held for sale. Loans used to secure the education loan warehouse facility are subject to call provisions by the third-party lender; therefore, we do not have the ability to hold those loans to maturity. Our intent is to dispose of the remaining loans on Union Federal's balance sheet to mitigate risks to Union Federal in conjunction with requests made by the OTS. Loans held for sale are carried at the lower of cost or fair value.

        During fiscal 2009, we received $30,046 of segregated reserves held by TERI as part of the TERI Reorganization. Upon receipt of such reserves from TERI, we reduced the fair value of the education loans.

        All private education loans held for sale have variable rates.

(7) Service Receivables

        Additional structural advisory fees, asset servicing fees and residuals receivables represent the estimated fair value of service receivables expected to be collected over the life of the various separate securitization trusts, principally the NCSLT Trusts, which have purchased private education loans facilitated by us. The fees are expected to be paid directly from the various securitization trusts. Following the sale of the Trust Certificate (Note 4), we continue to have rights to additional structural advisory fees but not residuals receivables from the NCSLT Trusts. We continue to be entitled to residuals receivables from trusts other than the NCSLT Trusts.

89

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(7) Service Receivables (Continued)

        At June 30, 2009 and 2008, the aggregate outstanding principal balance of the debt issued by the NCSLT Trusts was $12,773,676 and $13,896,525, respectively. The underlying assets in the NCSLT Trusts were TERI—guaranteed private education loans, of which approximately 33.2% were in deferment, 6.8% were in forbearance and 60.0% were in repayment status as of June 30, 2009. Approximately 88.7% of the loans in repayment status as of June 30, 2009 were current, 5.4% were between 31 and 90 days past due, 3.7% were between 91 and 180 days past due, and 2.2% were greater than 180 days past due. As of June 30, 2009, the cumulative gross default rate with regard to loans in, and loans that have previously been in, repayment status was 10.3% for the aggregate loans in the NCSLT Trusts.

        The following table shows the approximate weighted-average assumptions for loan performance and discount rates of the NCSLT Trusts at June 30, 2009, 2008 and 2007:

	June 30,
	2009			2008			2007
Discount rate-additional structural advisory fees		12.53	%		9.72	%		7.02	%
Discount rate-asset servicing fees and residuals		17.00			14.88			11.81
Gross default rate		19.00			14.83			9.38
Net default rate		11.40			7.71			5.63
Recovery rate		40.00			48.00			40.00
Prepayment rate		8.01			8.40			8.00

        Default Rates.    During fiscal 2009, we increased the weighted-average gross default rate assumptions used to estimate the fair value of our additional structural advisory fees, asset servicing fees and residuals receivables from 14.83% to 19.00%, as a result of the trusts' actual default experience and general economic conditions on all consumer asset classes. We also increased our assumed weighted-average net default rate from 7.71% to 11.40% during fiscal 2009, which reflects the increase in the gross default rate and a decrease in the recovery rate. During fiscal 2009, the increase in the default rate combined with the decrease in the recovery rate assumptions resulted in a decrease in the estimated fair value of our additional structural advisory fees receivable of $20,678, and a decrease in the estimated fair value of our residuals receivables of $50,108. During fiscal 2008, the increase in the net default rate assumptions resulted in a decrease in the estimated fair value of our additional structural advisory fees receivable of $2,910 and a decrease in the estimated fair value of our residuals receivables of $49,929.

        Prepayment Rates.    In response to a historically low prepayment rate, the current interest rate environment and limited availability of consumer credit, we adjusted our prepayment assumption during fiscal 2009 by extending the period during which decreased prepayments were expected to persist. As of June 30, 2009, we assumed that the current prepayment rate will persist until June 30, 2010 and then eventually revert to historical norms during the ensuing 12 months. During fiscal 2009, these changes resulted in an increase in the estimated fair value of our additional structural advisory fees of $3,127 and an $11,336 increase in the estimated fair value of our residuals receivables. During fiscal 2008, we had assumed a higher prepayment rate than in fiscal 2007 due to activity we were seeing in the market,

90

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(7) Service Receivables (Continued)

which resulted in a decrease in the estimated fair value of our additional structural advisory fees of $3,168 and a $34,765 decrease in the estimated fair value of our residuals receivables.

        Discount Rate—Additional Structural Advisory Fees.    We have historically based the discount rate that we use to estimate the fair value of our additional structural advisory fees on a spread over the 10-year U.S. Treasury Note rate. During fiscal 2009, we increased the discount rate spread by 325 basis points, to 900 basis points. In increasing the discount rate spread, we considered, among other things, increasing yield curves for certain composite indices for BBB- and BB-rated corporate bond indices with 10-year maturities, as well as increases in the broader ABS marketplace during the year. The 10-year U.S. Treasury Note rate decreased by 44 basis points during the fiscal year, to 3.53% at June 30, 2009. As a result, we applied a discount rate of 12.53% for purposes of estimating the fair value of the additional structural advisory fees, which resulted in a net decrease of $23,022 in the estimated fair value of our additional structural advisory fees during fiscal 2009. During fiscal 2008, we increased the discount rate spread over the 10-year U.S. Treasury Note from 200 basis points to 575 basis points. The 10-year U.S. Treasury Note rate decreased by 105 basis points during the same period resulting in a discount rate of 9.72% up from 7.02% at June 30, 2007, in response to the deterioration in the market for structured and corporate debt. The effect of the increase was a $41,555 decrease in the estimated fair value during fiscal 2008.

        Discount Rate—Asset Servicing Fee and Residuals.    In determining an appropriate discount rate for valuing our asset servicing fees receivable and residuals, we historically have considered a number of factors, including market data made available to us on spreads on federally guaranteed loans and private education loans as well as rates used in the much broader ABS market. We also evaluate yield curves for corporate subordinated debt with maturities similar to the weighted-average life of our residuals. At June 30, 2009, we used a weighted-average discount rate of 17.00% for purposes of estimating the fair value of our asset servicing fee receivable and the remaining residual interests on our balance sheet. The weighted-average discount rate used to estimate the fair value of residuals receivables related to the NCSLT Trusts at the date of sale of the Trust Certificate was 18.4%. These rates are up from the weighted-average discount rates used at June 30, 2008 and 2007 of 14.88% and 11.81%, respectively. The increases over the two fiscal years were in response to the deterioration of the ABS market and revised assumptions about TERI's ability to pay claims. Losses related to the increase in the weighted-average discount rates used for residuals were $82,571 and $129,169 in fiscal 2009 and 2008, respectively.

        Auction Rates.    Five securitization trusts that we facilitated issued auction rate notes to finance the purchase of private education loans. During fiscal 2009 and 2008, failed auctions occurred and persisted with respect to auction rate notes issued by each of the five securitization trusts. As a result of the failed auctions, the auction rate notes bear interest at a maximum spread over one-month LIBOR, which is based on the ratings assigned to such auction rate notes. During fiscal 2009, the ratings assigned to the auction rate notes were downgraded, resulting in an increase in the maximum spread. In addition, the insurance financial strength rating assigned to Ambac Assurance Corporation, which provides credit enhancement for certain auction rate notes, was downgraded in fiscal 2009, resulting in a further downgrading of the ratings assigned to certain of our auction rate notes. We assumed at

91

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(7) Service Receivables (Continued)

June 30, 2009 that all auction rate notes would continue to bear interest at their respective then-current maximum spreads until their expected maturity dates. These assumptions resulted in a decrease of $13,087 and $140 in the estimated fair value of our additional structural advisory fees during fiscal 2009 and 2008, respectively, and a decrease of $31,779 and $93,813 in the estimated fair value of our residuals during fiscal 2009 and 2008, respectively.

        The following table shows changes in the estimated fair value of our structural advisory fees receivables during the fiscal years ended June 30, 2009, 2008 and 2007:

				Fiscal years ended June 30,
				2009			2008			2007
Fair value at beginning of period				$	113,842		$	133,644		$	88,297
	Additions from new securitizations				—			24,304			43,984
	Cash received from trust distributions				(1,555	)		—			—
	Trust updates:
		Passage of time (fair value accretion)			9,362			10,258			7,503
		Decrease (increase) in average prepayment rate			3,127			(3,168	)		(3,529	)
		Increase in discount rate assumptions			(23,022	)		(41,555	)		—
		Increase in timing and average default rate			(11,262	)		(2,910	)		—
		Decrease in recovery assumption			(9,416	)		—			—
		Increase in auction rate notes spread			(13,087	)		(140	)		—
		Decrease in forward LIBOR curve			(12,517	)		(5,442	)		—
		Other factors, net			(342	)		(1,149	)		(2,611	)
			Net change from trust updates		(57,157	)		(44,106	)		1,363
Fair value at end of period				$	55,130		$	113,842		$	133,644

92

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(7) Service Receivables (Continued)

        The following table shows changes in the estimated fair value of our residuals receivables during the fiscal years ended June 30, 2009 and 2008:

				Fiscal years ended June 30,
				2009			2008			2007
Fair value at beginning of period				$	293,255		$	665,115		$	452,823
	Additions from new securitizations				—			116,972			182,744
	Trust updates:
		Passage of time (fair value accretion)			20,453			75,070			66,428
		Decrease (increase) in average prepayment rates			11,336			(34,765	)		(36,236	)
		Increase in discount rate assumptions			(82,571	)		(129,169	)		—
		(Increase) decrease in timing and average default rate			(50,108	)		(49,929	)		26,680
		Increase in auction rate notes spread			(31,779	)		(93,813	)		—
		Decrease in forward LIBOR curve			(22,009	)		(17,590	)		—
		TERI's inability to pay claims			—			(219,553	)		—
		Decrease to reflect disposition			(134,481	)		—			—
		Increase in trust expenses			—			(9,026	)		—
		Other factors, net			5,864			(10,057	)		(27,324	)
			Net change from trust updates		(283,295	)		(488,832	)		29,548
Fair value at end of period				$	9,960		$	293,255		$	665,115

        Increases in our estimates of defaults, prepayments and discount rates, as well as decreases in default recovery rates and the multi-year forward estimates of LIBOR, have a negative effect on the value of our additional structural advisory fees. Education loan prepayments include either full or partial payments by a borrower in advance of the maturity schedule specified in the credit agreement. If amounts in the Pledged Accounts are unavailable to pay the trusts' default claims or if recoveries on defaulted loans are not used to replenish such Pledged Accounts, or if net defaults increase beyond the level of expected third-party reimbursement assumptions, then these changes will have an additional negative effect on the value of our additional structural advisory fees. LIBOR is the reference rate for a substantial majority of the loan assets and, we believe, a reasonable index for borrowings of the trusts.

        We assumed that the trusts would not receive funds in excess of the Pledged Accounts and we did not adjust our assumptions regarding TERI during the fiscal year ended June 30, 2009. As part of its plan of reorganization, we expect TERI to reject its guaranty obligations entirely. As of September 2, 2009, TERI had not filed its plan of reorganization. As a consequence, it is uncertain how collateral securing such obligations will be treated or applied to satisfy TERI's obligations. See Note 13, "Commitments and Contingencies—TERI Reorganization—Challenges to Security Interests."

93

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(7) Service Receivables (Continued)

        The following tables show our loan performance and discount rate assumptions and additional structural advisory fee balances at June 30, 2009 and estimated changes that would result from changes in our assumptions. The effect on the fair value of the structural advisory fees are based on variations of 10% or 20%, except for the forward LIBOR rates, which are based on variations of 1% and 2% from the forward LIBOR rates at June 30, 2009.

        The sensitivities presented below are hypothetical and should be used with caution. The effect of each change in assumption must be calculated independently, holding all other assumptions constant. Because the key assumptions may not in fact be independent, the net effect of simultaneous adverse changes in key assumptions may differ materially from the sum of the individual effects calculated below.

		Percentage change in assumptions						Management assumption and receivables balance at June 30, 2009			Percentage change in assumptions
Structural advisory fees		Down 20%			Down 10%						Up 10%			Up 20%
Default rate:
	Management assumption(1)		17.04	%		18.03	%		19.00	%		19.95	%		20.88	%
	Total structural advisory fees	$	57,870		$	56,492		$	55,130		$	53,885		$	52,832
	Change in receivables balance		4.97	%		2.47	%					(2.26	)%		(4.17	)%
Default recovery rate:
	Management assumption		32.00	%		36.00	%		40.00	%		44.00	%		48.00	%
	Total structural advisory fees	$	53,537		$	54,277		$	55,130		$	56,244		$	57,158
	Change in receivables balance		(2.89	)%		(1.55	)%					2.02	%		3.68	%
Annual prepayment rate:
	Management assumption		6.41	%		7.21	%		8.01	%		8.81	%		9.61	%
	Total structural advisory fees	$	56,471		$	55,785		$	55,130		$	54,449		$	53,997
	Change in receivables balance		2.43	%		1.19	%					(1.24	)%		(2.06	)%
Discount rate:
	Management assumption		10.03	%		11.28	%		12.53	%		13.79	%		15.04	%
	Total structural advisory fees	$	74,918		$	64,248		$	55,130		$	47,332		$	40,660
	Change in receivables balance		35.89	%		16.54	%					(14.14	)%		(26.25	)%

		Change in assumption								Change in assumption
		Down 200 basis points			Down 100 basis points			Receivables balance		Up 100 basis points			Up 200 basis points
Forward LIBOR rates:
	Total structural advisory fees	$	45,670		$	49,982		$	55,130	$	61,049		$	67,905
	Change in receivables balance		(17.16	)%		(9.34	)%				10.74	%		23.17	%

(1)

The percentage change in assumptions applies to future projected defaults in the portfolio after taking into account actual defaults occurring in the portfolio through June 30, 2009. As a result, application of the nominal 10% or 20% variation results in a change in the management assumption that is less than 10% or 20% of 19.00%.

94

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(8) Property and Equipment

	June 30,
	2009			2008			Useful life
Equipment	$	18,409		$	19,454		3 - 5 years
Software		34,287			35,174		3 years
Software under development		1,017			366
Leasehold improvements		12,692			13,762		lesser of 5 years or lease term
Capital leases (equipment, furniture and fixtures)		18,682			21,024		lease term
Furniture and fixtures		2,493			2,493		5 - 7 years
		87,580			92,273
Less accumulated depreciation and amortization		(67,651	)		(54,592	)
Total property and equipment, net	$	19,929		$	37,681

        We lease office space and equipment under non-cancelable operating leases expiring at various times through April 2014. Gross rent expense under operating leases, for the periods ended June 30, 2009, 2008 and 2007 was approximately $8,698, $13,026 and $11,105, respectively. Rent expense is reduced by sublease revenue of $2,758, $933 and $655 for the years ended June 30, 2009, 2008 and 2007, respectively.

        The future minimum lease payments required under capital and operating leases for each of the five fiscal years subsequent to June 30, 2009 and thereafter are as follows:

Fiscal years ending June 30,	Capital leases			Operating leases
2010	$	3,361		$	10,182
2011		1,604			10,119
2012		—			9,121
2013		—			7,185
2014		—			5,846
Thereafter		—			350
Total minimum lease payments		4,965		$	42,803
Less amounts representing interest		(187	)
Present value of future minimum lease payments		4,778
Less current portion		(3,368	)
Long-term portion	$	1,410

95

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(8) Property and Equipment (Continued)

        The amounts we are entitled to receive under non-cancelable subleases of office space for each of the five fiscal years subsequent to June 30, 2009 are as follows:

Fiscal years ending June 30,	Sublease payments
2010	$	2,501
2011		4,118
2012		4,193
2013		4,215
2014		3,544
Total	$	18,571

(9) Goodwill and Intangible Assets

        Goodwill consisted of the fair value of certain acquired assets, net of liabilities assumed, in connection with our acquisitions of TERI's loan processing operations in 2001 and Union Federal in 2006. Goodwill has been written off in full, resulting in impairment charges of $1,701 and $3,177 during the fiscal years ended June 30, 2009 and 2008, respectively.

        Intangible assets include amounts related to the loan database acquired and a core deposit intangible as a result of the acquisition of Union Federal. Costs related to monthly database updates are capitalized and amortized over five years.

(10) Mortgage Loans Held to Maturity

        The following table summarizes the characteristics of our mortgage loans held to maturity at June 30, 2009 and 2008:

	June 30,
	2009			2008
Variable rate loans	$	7,117		$	7,662
Fixed rate loans		2,968			3,378
		10,085			11,040
Allowance for loan losses		(562	)		(277	)
Deferred fees		(8	)		(9	)
Mortgage loans held to maturity, net	$	9,515		$	10,754

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THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(11) Deposits

        The following table summarizes our deposits:

	June 30,
	2009							2008
	Year-end amount		Annual average balance		Weighted- average rate			Year-end amount		Annual average balance		Weighted- average rate
Deposits:
Time and savings deposits	$	103,653	$	130,183		2.98	%	$	212,666	$	162,594		4.47	%
Money market accounts		49,045		48,076		2.95			31,381		7,848		3.06
Non-interest bearing deposits		1,764		3,482					66		66
	$	154,462						$	244,113

        Included in time deposits in the preceding table are brokered deposits totaling $25,000 and $150,194 at June 30, 2009 and 2008, respectively. At June 30, 2008, money market deposits included $31,323 deposited by TERI and pledged to Union Federal to secure TERI's guaranty obligations with regard to the TERI-guaranteed education loans held by Union Federal. At June 30, 2009, time deposits with maturities greater than one year were $1,841.

(12) Education Loan Warehouse Facility and Other Liabilities and Unused Lines of Credit

        In July 2007, UFSB Private Loan SPV, LLC (UFSB-SPV), a subsidiary of Union Federal, entered into a $300,000 education loan warehouse facility with a third-party conduit lender to fund the purchase of private education loans by UFSB-SPV from Union Federal. At June 30, 2009 and 2008, borrowings of $230,137 and $242,899, respectively, were outstanding under the facility. UFSB-SPV has pledged the purchased education loans as collateral for the advances it received from the third-party conduit lender. The conduit lender's recourse under the indenture is limited to the education loans pledged as collateral. At June 30, 2009 and 2008, the outstanding principal and interest of the collateral was $261,923 and $251,528, respectively, and the estimated fair value of the education loans held as collateral was $167,100 and $247,840, respectively.

        The TERI Reorganization and subsequent TERI ratings downgrades have resulted in events of termination under the indenture relating to the facility. As a result, the facility termination date was declared, and UFSB-SPV is not eligible for further borrowings under the facility. The conduit lender may elect to accelerate repayment of notes outstanding under the facility, which would cause the conduit lender to take possession of the collateral. The facility termination date had been scheduled to occur on July 16, 2008. Under the indenture, the facility termination date commences a liquidation period that ends on the date immediately following the later of July 14, 2010 or the date on which the principal and interest on all outstanding notes, and all amounts otherwise payable by UFSB-SPV in connection with the facility, are paid in full. Principal and interest payments received by us on the loan collateral are used to satisfy the debt service requirements of the facility. In addition, in connection with Union Federal's settlement of claims against TERI's bankruptcy estate, approximately $15,714 of the settlement amount was allocated to the education loans pledged as collateral and was subsequently

97

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(12) Education Loan Warehouse Facility and Other Liabilities and Unused Lines of Credit (Continued)

applied to reduce amounts outstanding under the warehouse facility. Additional information on the TERI Reorganization is included in Note 3.

        In April 2008, we entered into a letter agreement pursuant to which we agreed that UFSB-SPV would pay higher fees to the conduit lender in consideration for acknowledgement by the conduit lender that the interest on the notes issued under the facility would not increase to an alternative rate set forth in the indenture (Default Rate) unless and until the conduit lender delivered further notice. In April 2009, the conduit lender delivered notice to us and, as a result, the interest rate on the outstanding notes increased to the Default Rate, the daily Prime rate plus 200 basis points, beginning in the fourth quarter of fiscal 2009. UFSB-SPV will pay lower fees, however, as a result of such election.

        In April 2009, Union Federal received approval from the OTS to sell substantially all of its economic interest in UFSB-SPV to a newly formed subsidiary of FMC. Union Federal received $2,904 in consideration for the sale and granted FMC its voting and management rights with respect to UFSB-SPV. As part of the transaction, FMC agreed to indemnify Union Federal against certain claims and expenses, including potential master servicing fee deficiencies and claims resulting from origination errors. As a result of the transaction, the private education loans held by UFSB-SPV, and the related indebtedness to the conduit lender, were eliminated from Union Federal's balance sheet and for purposes of regulatory capital compliance under the regulations of the OTS. See Notes 22 and 23 for additional information on Union Federal.

        We entered into two ten-year 6% fixed notes payable agreements with TERI in June 2001 to fund the acquisition of TERI's loan processing operations and loan database. Principal and interest are payable in monthly aggregate installments of $88 ending June 20, 2011. The outstanding principal balance of the notes payable at June 30, 2009 was $2,956.

        Principal payments due on notes payable to TERI in each fiscal year subsequent to June 30, 2009 are as follows:

Fiscal years ending:
2010	$	1,937
2011		1,019
	$	2,956

        In November 2008, Union Federal entered into an agreement with the Federal Reserve Bank of Boston to provide a credit facility to fund operations. At June 30, 2009, there was no balance outstanding under the facility. Union Federal has pledged private education loans as collateral for the advances it received from the facility lender. Previously, Union Federal could borrow up to 75% of the outstanding principal of private education loans in a current repayment status. Effective April 27, 2009, as a result of changes enacted by the Federal Reserve Bank of Boston, Union Federal can borrow up to 60% of the outstanding principal of private education loans in a current repayment status. The interest rate on the facility is variable based on the Federal Reserve Bank of Boston's stated rates, which was 0.50% at June 30, 2009.

98

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(12) Education Loan Warehouse Facility and Other Liabilities and Unused Lines of Credit (Continued)

        At June 30, 2009, we had $145,845 available for borrowings from the Federal Reserve Bank discount window through Union Federal. In addition, we had $11,758 available for borrowing under an unused line of credit with the Federal Home Loan Bank of Boston. There were no borrowings outstanding with either institution at June 30, 2009. As a requirement under the line of credit, we own $505 of Federal Home Loan Bank stock included in other assets in the balance sheet.

(13) Commitments and Contingencies

(a) Securities Litigation

        In April and May 2008, seven purported class action lawsuits were filed against us and certain of our current and former officers and certain of our directors in the United States District Court for the District of Massachusetts. The plaintiffs alleged, among other things, that the defendants made false and misleading statements and failed to disclose material information in various Securities and Exchange Commission filings, press releases and other public statements. The complaints alleged various claims under the Securities Exchange Act of 1934, as amended (Exchange Act) and Rule 10b-5 promulgated thereunder. The complaints sought, among other relief, class certification, unspecified damages, fees and such other relief as the court deems just and proper. In August 2008, the court consolidated these cases and appointed lead plaintiffs and a lead counsel. In November 2008, a consolidated amended complaint was filed by the lead plaintiffs that contained allegations similar to the earlier complaints. On August 5, 2009, the court issued an order granting our motion to dismiss the plaintiffs' consolidated amended complaint. The court did not grant plaintiffs leave to re-plead; however, plaintiffs have a right to appeal the summary judgment.

        In addition, in May 2008, three federal derivative lawsuits were filed against certain of our current and former officers and directors and nominally against us in the United States District Court for the District of Massachusetts. The complaints are purportedly brought on our behalf to remedy alleged violations of federal and state law, including violations of the Exchange Act, breaches of fiduciary duties, waste of corporate assets and unjust enrichment, which allegedly occurred between August 2006 and May 2008 or June 2008, as applicable. The complaints seek a monetary judgment, injunctive relief, restitution, disgorgement and a variety of purported corporate governance reforms. In August 2008, the court consolidated the federal derivative cases and stayed them pending resolution of the purported class actions described above. A state derivative action was also filed in Massachusetts Superior Court in June 2008. The complaint is purportedly brought on our behalf to remedy alleged violations of federal and state law, including breaches of fiduciary duties, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment, which allegedly occurred between August 2006 and June 2008. The complaint seeks a monetary judgment, injunctive relief, restitution, disgorgement, and costs and disbursements of the action. In August 2009, the court stayed the case until October 2009. We plan to move for dismissal of the federal and state derivative actions in light of the dismissal of the purported class action in August 2009.

        We intend to continue to vigorously assert defenses in each of the actions until they are fully and finally resolved. There can be no assurance, however, that plaintiffs will not succeed in appealing the dismissal of the purported class action or that we will be successful in defending the federal or state derivative actions. An adverse resolution of any of the lawsuits could have a material effect on our

99

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(13) Commitments and Contingencies (Continued)

consolidated financial position and results of operations in the period in which a lawsuit is resolved. In addition, although we carry insurance for these types of claims, a judgment significantly in excess of our insurance coverage could materially and adversely affect our financial condition, results of operations and cash flows. We are not able presently to reasonably estimate potential losses, if any, related to the lawsuits.

        In addition, we are involved from time to time in routine legal proceedings occurring in the ordinary course of business. In the opinion of management, final disposition of these proceedings is not expected to have a material adverse effect on our financial condition or results of operations.

(b) Agreements with Lender Clients

        At June 30, 2009, the principal balance of loans facilitated and available to us for securitization was $1,252,667. Under the terms of purchase agreements with lender clients, we generally have an obligation to use our best efforts to facilitate the purchase of the client's private education loans during a specified loan purchase period. The length of the loan purchase period varies by client and generally ranges from 195 days to 555 days following final loan disbursement. Under the terms of certain of our purchase agreements, if we fail to facilitate a purchase in breach of our obligations, our liability would be limited to liquidated damages of one percent of the total principal amount of the loans as to which the loan purchase period had expired. Those purchase agreements that limit our liability to liquidated damages generally provide that our obligation to close a securitization is subject to the condition that no "market disruption event" has occurred. Under certain of these purchase agreements, the TERI Reorganization constitutes a "market disruption event," suspending our contractual obligation to close a securitization. Any liquidated damages would be due at expiration of the relevant loan purchase period, which would not occur for a period of time after the market disruption event ceases. Purchase agreements applicable to approximately $485,518 of the facilitated loan volume available for securitization as of June 30, 2009 may be subject to liquidated damages provisions in the event we fail to facilitate a securitization in breach of our obligations to certain former clients. The payment of liquidated damages and the amount of our potential liability with respect to such loans is dependent, in part, upon the outcome of the TERI Reorganization and is not determinable at this time.

        Although we generally have an obligation to use our best efforts to facilitate the purchase of the clients' loans during a specified loan purchase period, no amounts have been accrued in the financial statements as a result of the market disruption clauses and the TERI Reorganization.

(c) TERI Reorganization—Challenge to Security Interests

        In June 2008, the Bankruptcy Court entered an order approving a motion by TERI to purchase defaulted loans using cash in the Pledged Accounts. Beginning in July 2008, TERI resumed paying its obligations under the guaranty agreements with respect to defaulted loans from the trusts, but only using cash in the Pledged Account established for the benefit of the specific trust that owned the defaulted loan. As of September 2, 2009, TERI is not permitted to satisfy its guaranty obligations using funds from TERI's general reserves. Funds in the Pledged Accounts of certain trusts have been exhausted, or are expected to be exhausted in the near term, at which point such trust will have a general unsecured claim against TERI. A successful challenge to the security interests could therefore decrease materially the value of our additional structural advisory fees or our asset servicing fees.

100

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(13) Commitments and Contingencies (Continued)

        The Bankruptcy Court's June 2008 order granted the parties' rights to challenge the trusts' security interests in the collateral other than the Pledged Accounts. In January 2009, the official committee of unsecured creditors of TERI (Creditors Committee) filed an adversary complaint in the Bankruptcy Court against the owner trustee and indenture trustee of 17 securitization trusts, and against our subsidiary First Marblehead Data Services, Inc. (FMDS) as administrator of such trusts. The complaint generally alleges that the security interests granted by TERI to the trusts, excluding the security interests in the Pledged Accounts, are unperfected or may otherwise be avoided under the Bankruptcy Code. In particular, the complaint alleges that the trusts do not have enforceable rights to future recoveries on defaulted loans owned by TERI with an aggregate principal and accrued interest balance of approximately $599,962 as of June 30, 2009, or in amounts owed or transferred by TERI to Pledged Accounts after the filing of TERI's petition for reorganization totaling approximately $34,522 as of June 30, 2009. In March 2009, FMDS and the owner trustee filed a motion to dismiss the Creditors Committee's adversary complaint. The indenture trustee also filed a motion to dismiss, joining the arguments made in the motion filed by FMDS and the owner trustee. The Creditors Committee filed an opposition to the motions to dismiss in April 2009, together with an amended complaint naming the trusts themselves as defendants. FMDS filed a response to the opposition and amended complaint in May 2009. We have not adjusted our accounting assumptions as of June 30, 2009 in response to the adversary proceeding.

        If the Creditors Committee or any other party is successful in challenging the trusts' security interests in the funds transferred to the Pledged Accounts after the filing of TERI's petition for reorganization or other collateral, the amount of pledged collateral available exclusively to a particular securitization trust to satisfy TERI's guaranty obligations to that trust would decrease materially. As a result, the trust's unsecured claims against TERI would increase proportionately. For example, recoveries from defaulted education loans transferred to TERI, which have historically been used to replenish a particular trust's Pledged Account, would instead become an asset of TERI's bankruptcy estate and available to satisfy administrative claims of TERI's bankruptcy estate and other holders of claims in accordance with the priorities established by the Bankruptcy Code. Recoveries from defaulted loans not transferred to TERI, however, would remain available to the trusts.

(14) Stockholders' Equity

Investment Agreement

        In December 2007, we entered into an investment agreement (Investment Agreement) with GS Parthenon A, L.P. and GS Parthenon B, L.P., affiliates of GS Capital Partners (Parthenon Purchasers), pursuant to which we sold 60 shares of newly designated series A non-voting convertible preferred stock, $0.01 par value per share (Series A Preferred Stock), at a purchase price of $1,000 per share. Pursuant to the Investment Agreement, we also sold, after receipt of applicable regulatory approvals and determinations and satisfaction of other closing conditions, 133 shares of newly-created series B non-voting convertible preferred stock, $0.01 par value per share (Series B Preferred Stock), at a purchase price of $1,000 per share. We granted to GS Parthenon A, L.P. the right to designate one representative to our Board of Directors and provided to the Parthenon Purchasers required and incidental rights to register under the Securities Act of 1933, as amended, any common stock obtained from the conversion of preferred stock.

101

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(14) Stockholders' Equity (Continued)

        The Series B Preferred Stock is convertible, at the option of the holders, into 8,847 shares of common stock, at a conversion price of $15.00 per share. Dividends would be paid on the Series B Preferred Stock when, as and if, and in the same amounts (on an as-converted basis), declared on the common stock. Upon liquidation, dissolution or winding up of our operations, holders of Series B Preferred Stock would have the right to receive an amount equal to $0.01 per share of Series B Preferred Stock, plus the amount of any declared but unpaid dividends thereon. After payment of this amount, holders of the Series B Preferred Stock would be entitled to participate (on an as-converted basis) with the common stock in the distribution of remaining assets.

        We received aggregate gross proceeds of approximately $192,500 from the sale of the Series A Preferred Stock and the Series B Preferred Stock pursuant to the Investment Agreement. In January 2008, the Parthenon Purchasers elected to convert their Series A Preferred Stock into an aggregate of 5,320 shares of common stock.

2003 Employee Stock Purchase Plan

        In October 2003, the Board of Directors and stockholders approved the 2003 employee stock purchase plan (ESPP). A total of 600 shares of common stock were authorized for issuance under the ESPP. The ESPP permitted eligible employees to purchase shares of common stock at the lower of 85% of the fair market value of the common stock at the beginning or at the end of each offering period. Participation was voluntary. Under the ESPP, 45 and 37 shares were issued during fiscal 2008 and 2007, respectively. In April 2008, the Board of Directors, which administers the ESPP, terminated the offering period that began on January 1, 2008 and indefinitely suspended the ESPP. As a result, no shares were issued in fiscal 2009 under the ESPP. At June 30, 2009, 406 shares were available for future purchase under the ESPP.

Treasury Stock

        Treasury stock was $184,246 and $183,993 at June 30, 2009 and 2008, respectively. The balance was primarily derived from repurchases of common stock in open market transactions. Treasury stock also includes shares of common stock withheld from employees to satisfy statutory minimum withholding obligations as equity compensation awards vest. As of June 30, 2009, we repurchased an aggregate of 7,526 shares at an average price, excluding commissions, of $24.27 per share, under various repurchase programs approved by the Board of Directors, including the program described below.

        In April 2007, our board of directors authorized the repurchase of up to 10,000 shares of common stock. The 10,000 shares authorized for repurchase included approximately 3,393 shares that remained available for repurchase under a previously authorized repurchase program. As of June 30, 2009, we repurchased an aggregate of 1,169 shares under this program at an average price paid per share, excluding commissions, of $36.17 per share. We did not repurchase any shares of common stock pursuant to this program during the twelve months ended June 30, 2009 or 2008. Future repurchases pursuant to this program may require regulatory approval.

102

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(15) Fair Value of Financial Instruments

        A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

        Cash equivalents consist of money market funds with available quoted market prices on active markets that we classify as Level 1 of the valuation hierarchy.

        The investments are mortgage-backed securities that are marked to market using an independent third party and are classified as Level 2 in the hierarchy.

        Market prices are not available for our loans held for sale, structural advisory fees receivables, asset servicing fees receivables or residuals receivables. As a result, we base the fair value utilizing internally-developed discounted cash flow models which include assumptions regarding prepayment rates, net default rates, the LIBOR forward interest rate curve, operational expenses, and auction rate note interest rates. These assets are classified within Level 3 of the valuation hierarchy.

        The following table presents the financial instruments carried at fair value as of June 30, 2009, by caption on the consolidated balance sheet and by Statement of Financial Accounting Standards No. 157, Fair Value Measurement, valuation hierarchy described above.

Assets measured at fair value on a recurring and nonrecurring basis at June 30, 2009:	Level 1		Level 2		Level 3		Total carrying value
Recurring:
Cash equivalents	$	106,056	$	—	$	—	$	106,056
Investments		—		8,450		—		8,450
Structural advisory fees		—		—		55,130		55,130
Asset servicing fees		—		—		2,385		2,385
Residuals		—		—		9,960		9,960
Non-recurring:
Loans held for sale		—		—		350,960		350,960
	$	106,056	$	8,450	$	418,435	$	532,941

        Please see Note 6, "Loans Held for Sale," for information with respect to loans held for sale and Note 7, "Service Receivables," for a roll forward of the structural advisory fees and residuals receivables.

103

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(16) Net Interest Income

        The following table reflects the components of net interest income for the fiscal years ended June 30, 2009, 2008 and 2007.

		Fiscal years ended June 30,
		2009		2008		2007
Interest income
	Cash and cash equivalents—taxable	$	907	$	3,185	$	6,310
	Cash and cash equivalents—tax exempt		63		512		475
	Federal funds sold		469		1,761		328
	Investments—taxable		472		562		485
	Investments—tax exempt		1,110		3,671		2,860
	Loans held for sale		38,646		32,656		188
	Mortgage loans held to maturity		575		758		513
	Total interest-earning assets		42,242		43,105		11,159
Interest expense
	Savings account deposits		1,862		2,383		1,042
	Money market account deposits		1,419		240		—
	Brokered deposits		2,023		4,879		33
	Warehouse line of credit		10,993		9,250		—
	Other short-term borrowings		128		—		—
	Other interest-bearing liabilities		714		731		713
	Total interest-bearing liabilities		17,139		17,483		1,788
Net Interest income		$	25,103	$	25,622	$	9,371

(17) Stock-Based Compensation

2003 Stock Incentive Plan and 2002 Director Stock Plan

        We have a stock-based incentive compensation plan that was approved by the Board of Directors and stockholders in 2003 (2003 Plan). In addition, we have a director stock plan that was approved by the Board of Directors and stockholders in 2002 (2002 Plan).

        Under the 2003 Plan, the Board of Directors, or one or more sub-committees of the Board, may grant options or other stock based awards to employees, directors, consultants or advisors. As of June 30, 2009, 4,050 shares of common stock had been reserved for issuance under the 2003 Plan, and 280 shares of common stock were issuable upon the exercise or vesting of awards granted under the 2003 Plan. No awards under the 2003 Plan were granted to employees in the fiscal year ended June 30, 2009 or 2008. At June 30, 2009, 3,266 shares were available for future grant under the 2003 Plan.

        Under the 2002 Plan, we may grant non-statutory stock options to non-employee members of our Board of Directors for up to 300 shares of common stock. As of June 30, 2009, 168 shares of common stock were issuable upon exercise of awards granted under the 2002 Plan. In 2006, the Board of Directors suspended new awards under the 2002 Plan and adopted a program under the 2003 Plan for

104

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(17) Stock-Based Compensation (Continued)

grants of stock units to non-employee directors. Under the program, each non-employee director will receive:

•

on the date of his or her initial election to the Board of Directors, 3 stock units under the 2003 Plan; and

•

an annual grant of 3 stock units under the 2003 Plan on September 20 of each year, if the non-employee director has then served on the Board of Directors for at least 180 days.

        In each case, each stock unit represents the right to receive one share of common stock.

        The following table summarizes information about stock options outstanding under the 2003 Plan and the 2002 Plan at June 30, 2009:

Exercise prices	Number outstanding		Weighted- average remaining contractual life		Weighted- average exercise price		Number exercisable
$0.67		6		1.00	$	0.67		6
$3.33		25		3.22		3.33		25
$8.10		30		4.19		8.10		30
$10.00		6		4.28		10.00		6
$19.04		30		6.22		19.04		30
$32.97		36		5.22		32.97		36
		133		4.61		16.19		133

2008 Meyers' Option Plan

        The Board of Directors elected Daniel Meyers as President and Chief Executive Officer and as a member of the Board of Directors, effective September 1, 2008. In connection with the election, the Board of Directors and a subcommittee of the Compensation Committee of the Board of Directors approved the grant on August 18, 2008 (Grant Date) of stock options to Mr. Meyers to purchase (a) 2,000 shares of common stock, at an exercise price of $6.00 per share, that will vest and become exercisable as to 25% of the shares underlying the stock option on each of the first, second, third and fourth anniversaries of the Grant Date ($6.00 Stock Options); (b) 2,000 shares of common stock, at an exercise price of $12.00 per share, that vested and became exercisable in full on November 30, 2008; and (c) 2,000 shares of common stock, at an exercise price of $16.00 per share, that vested and became exercisable in full on November 30, 2008. Any unvested stock options will vest and become exercisable in full (a) if the closing sale price of the common stock is at least 150% of the exercise price of the applicable option for a period of five consecutive trading days (assuming the trading on each day is not less than 90% of the average daily trading volume for the prior three months prior to such five day period), (b) in the event of Mr. Meyers's death or disability, as defined in his employment agreement, or (c) in the event that Mr. Meyers' employment is terminated by us without Cause, as defined in his employment agreement, or by Mr. Meyers with Good Reason, as defined in his employment agreement.

105

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(17) Stock-Based Compensation (Continued)

In addition, subject to certain conditions set forth in his employment agreement, the $6.00 Stock Options may be exercised beginning 90 days after the Grant Date prior to vesting, provided that the unvested shares issued will be held in escrow by us and will be subject to a repurchase option by us. Each of the stock options will expire ten (10) years from the Grant Date. The stock options were not granted under any of our existing stockholder-approved incentive plans.

        For purposes of grants made in fiscal 2009 to Mr. Meyers, we estimated the fair value of each option grant at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

Assumption	2009
Expected risk-free interest rate		3.31	%
Expected dividend yield		—
Volatility		75
Expected average life in years		6

        The weighted-average grant date fair market value of stock options granted during fiscal 2009, based on the Black-Scholes option pricing model, was $2.70.

Stock Option Activity

        The following table presents stock option activity for the fiscal years ended June 30, 2009, 2008 and 2007:

		Number of options			Weighted- average exercise price per share
Outstanding options at June 30, 2006			697		$	5.85
	Granted		—			—
	Exercised (aggregate intrinsic value of $17,805)		(438	)		3.11
	Canceled		(23	)		4.67
Outstanding options at June 30, 2007			236			11.08
	Granted		—			—
	Exercised (aggregate intrinsic value of $142)		(5	)		3.33
	Canceled		(8	)		3.33
Outstanding options at June 30, 2008			223			11.53
	Granted		6,000			11.33
	Canceled		(90	)		4.67
Outstanding and exercisable at June 30, 2009			6,133			11.44

106

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(17) Stock-Based Compensation (Continued)

        The following table presents restricted stock unit activity for the fiscal years ended June 30, 2009, 2008 and 2007.

		Number of restricted stock units			Weighted- average grant date fair value per share
Outstanding restricted stock units at June 30, 2006			583		$	23.43
	Granted		379			34.23
	Common stock issued at vest date		(67	)		33.97
	Canceled		(54	)		30.70
Outstanding restricted stock units at June 30, 2007			841			27.79
	Granted		388			33.15
	Common stock issued at vest date		(212	)		42.14
	Canceled		(295	)		38.08
Outstanding restricted stock units at June 30, 2008			722			28.86
	Granted		21			3.30
	Common stock issued at vest date		(312	)		24.00
	Canceled		(151	)		33.07
Outstanding restricted stock units at June 30, 2009			280			30.07

        As of June 30, 2009, there was $17,166 of total unrecognized compensation cost related to non-vested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of approximately 3 years.

(18) Defined Contribution Plans—401(k)

        We sponsor a 401(k) retirement savings plan for the benefit of all full time employees. Eligible employees can join the plan after three months of employment. Investment decisions are made by individual employees. At our option, we can contribute to the plan for the benefit of employees. Employee and employer contributions vest immediately. We have made contributions of $1,086, $2,803 and $3,093 during the fiscal years ended June 30, 2009, 2008 and 2007, respectively.

107

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(19) General and Administrative Expenses

        The following table reflects components of general and administrative expenses for the fiscal years ended June 30, 2009, 2008 and 2007:

		Fiscal years ended June 30,
		2009		2008		2007
General and administrative expenses:
	Depreciation and amortization	$	17,800	$	19,633	$	16,498
	Third-party services		29,991		66,652		57,175
	Occupancy and equipment		16,699		28,752		26,044
	Marketing coordination		3,482		100,754		28,850
	Other		12,466		38,648		13,024
Total		$	80,438	$	254,439	$	141,591

(20) Income Taxes

        We are subject to U.S. federal income tax, as well as income tax in multiple U.S. state and local jurisdictions. The Internal Revenue Service completed an examination of our U.S. income tax return for the year ended June 30, 2004. Our state income tax returns for the year ended June 30, 2004, and state and federal income tax returns for the years ended June 30, 2005, 2006, 2007 and 2008, remain subject to examination.

        Components of income tax expense (benefit) attributable to income from operations for the fiscal years ended June 30, 2009, 2008 and 2007 were as follows:

			Fiscal years ended June 30,
			2009			2008			2007
Current:
	Federal		$	(177,807	)	$	72,550		$	118,067
	State			13,497			12,933			34,859
		Total current tax expense (benefit)		(164,310	)		85,483			152,926
Deferred:
	Federal			(15,353	)		(199,976	)		81,899
	State			(8,156	)		(37,387	)		21,609
		Total deferred tax expense (benefit)		(23,509	)		(237,363	)		103,508
		Income tax (benefit) expense	$	(187,819	)	$	(151,880	)	$	256,434

        The sale of NC Residuals Owners Trust and the net operating losses are expected to generate a cash refund for taxes previously paid, resulting in an income tax receivable of approximately $166,410 at June 30, 2009.

108

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(20) Income Taxes (Continued)

        The following table reconciles the expected federal income tax expense (benefit) (computed by applying the federal statutory tax rate to income (loss) before taxes) to recorded income tax expense (benefit) for the fiscal years ended June 30, 2009, 2008 and 2007:

		Fiscal years ended June 30,
		2009			2008			2007
Computed federal tax expense (benefit)		$	(192,794	)	$	(135,435	)	$	219,718
State tax, net of federal benefit			3,472			(15,895	)		36,704
Other			1,503			(550	)		12
	Income tax expense (benefit)	$	(187,819	)	$	(151,880	)	$	256,434

        The tax effects of temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases that give rise to significant deferred tax assets and deferred tax liabilities were as follows:

		June 30,
		2009			2008
Deferred tax assets:
	Residual fees, net	$	5,331		$	35,729
	Deferral of unrealized loss on loans held for sale		25,687			—
	Depreciation and amortization		3,202			—
	Deferred compensation		1,434			3,082
	Other		3,109			2,282
	Total net deferred tax asset		38,763			41,093
Deferred tax liability:
	Structural advisory fees		(21,813	)		(47,639	)
	Deferred recognition for tax purposes of intercompany income		(2,887	)		(3,290	)
	Asset servicing fees		(939	)		—
	Depreciation and amortization		—			(549	)
	Total deferred tax liability		(25,639	)		(51,478	)
	Net deferred tax asset (liability)	$	13,124		$	(10,385	)

        We have determined that no valuation allowance is necessary for the deferred tax assets because it is more likely than not that these assets will be realized through future reversals of existing temporary differences and available tax planning strategies. We will continue to review the criteria related to the recognition of deferred tax assets on a regular basis.

109

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(20) Income Taxes (Continued)

Unrecognized Tax Benefits

        As a result of changes in the estimated fair value of our service receivables since June 30, 2007 and the sale of the Trust Certificate as of March 31, 2009, the related unrecognized tax benefit decreased significantly. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at June 30, 2007	$	32,319
Reductions related to positions taken in prior years		(31,590	)
Expiration of statute of limitations		(419	)
Increase related to positions taken in current year		6,128
Balance at June 30, 2008		6,438
Increase related to positions taken in prior years		4,864
Increase related to positions taken in current year		10,856
Balance at June 30, 2009	$	22,158

        Included in the balance at June 30, 2009, are $14,402 of net unrecognized tax benefits that, if recognized, would favorably affect our effective income tax rate. During the year ended June 30, 2009, we accrued approximately $202 of interest. At June 30, 2009, we had approximately $2,058 accrued for interest and no amount accrued for the payment of penalties. Included in the balance at June 30, 2008, are $4,185 of net unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate. We recognize interest and penalties (if any) in income tax expense when incurred. During the year ended June 30, 2008, we accrued approximately $1,298 of interest. At June 30, 2008, we had approximately $1,856 accrued for interest and no amount accrued for the payment of penalties.

110

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(21) Net Income (Loss) per Share

        The following table sets forth the computation of basic and diluted net income (loss) per share of common stock for the fiscal years ended June 30, 2009, 2008 and 2007:

			Fiscal years ended June 30,
			2009			2008			2007
Net income (loss)			$	(363,020	)	$	(235,076	)	$	371,331
Shares used in computing net income (loss) per common share—basic				99,081			95,732			94,296
Effect of dilutive securities:
	Stock options			—			—			253
	Restricted stock units			—			—			296
	Preferred stock			—			—			—
		Dilutive potential common shares		—			—			549
Shares used in computing net income (loss) per common share—diluted				99,081			95,732			94,845
Net income (loss) per common share:
	Basic		$	(3.66	)	$	(2.46	)	$	3.94
	Diluted			(3.66	)		(2.46	)		3.92
Anti-dilutive securities				8,177			945			549

        Anti-dilutive securities include restricted stock units, Series B Preferred Stock and stock options for which the conversion or exercise price exceeds fair market value at the report date.

(22) Union Federal Regulatory Capital Requirements

        Union Federal is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by the regulators that, if undertaken, could have a direct material effect on our financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Union Federal must meet specific capital guidelines that involve quantitative measures of Union Federal's assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors. Union Federal's equity capital was $84,286 at June 30, 2009.

111

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(22) Union Federal Regulatory Capital Requirements (Continued)

        Quantitative measures established by regulation to ensure capital adequacy require Union Federal to maintain minimum amounts and ratios of total capital and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined).

		Regulatory Guidelines
								June 30,
					Well Capitalized
		Minimum						2009			2008
Risk-based capital ratios:
	Tier 1 capital		4	%		6	%		37.86	%		22.08	%
	Total capital		8			10			37.91			22.14
Tier 1 leverage ratio			4			5			34.51			18.43

        As of June 30, 2009 and 2008, Union Federal was well capitalized under the regulatory framework for prompt corrective action. In July 2009, FMC and Union Federal agreed to comply with certain requirements imposed by the OTS that could adversely affect our operations and financial condition. See Note 23, "Subsequent Events—Supervisory Agreement and Order to Cease and Desist," for additional details.

(23) Subsequent Events

        We have evaluated events subsequent to the balance sheet date through September 2, 2009, for purposes of disclosure.

Supervisory Agreement and Order to Cease and Desist

        On July 2, 2009, FMC entered into a supervisory agreement (Supervisory Agreement) with the OTS and Union Federal entered into a stipulation consenting to the issuance by the OTS of an order to cease and desist (Order).

        The Supervisory Agreement requires FMC to, among other things:

•

maintain Union Federal's regulatory capital ratios at the greater of: (i) the capital ratios specified in Union Federal's business plan approved by the OTS in November 2006, (ii) the capital ratios projected in a business plan found acceptable to OTS or (iii) the minimum regulatory capital requirements;

•

maintain a deposit at Union Federal in the amount of $30,000 until the earlier to occur of the (i) sale of Union Federal and (ii) reduction of Union Federal's private education loan concentration ratio to 50% of Union Federal's Tier 1 capital plus allowances for loan losses;

•

obtain prior approval of the OTS before (i) engaging in any transaction with Union Federal or (ii) paying any cash dividends, repurchasing or redeeming any shares of its stock, incurring any debt exceeding $5,000 or accepting any dividend or other payment representing a reduction in capital from Union Federal; and

•

obtain prior approval of the OTS in connection with any "golden parachute payment" and comply with notice requirements for certain changes in directors and senior executive officers.

112

THE FIRST MARBLEHEAD CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2009, 2008 and 2007

(dollars and shares in thousands, except per share amounts)

(23) Subsequent Events (Continued)

        The Order requires Union Federal to, among other things:

•

submit to the Regional Director of the OTS within 60 days a new business plan covering fiscal years 2010, 2011 and 2012, reflecting Union Federal's proposed strategy, business activities and quarterly financial projections;

•

develop and implement a liquidity plan that contains strategies for ensuring that Union Federal maintains adequate short-term and long-term liquidity;

•

adopt a concentration reduction plan that would: (i) prevent Union Federal from originating private education loans until Union Federal reduces the concentration of private education loans to Tier 1 capital plus allowances for loan losses below 50% and (ii) require Union Federal to achieve such a reduction by December 31, 2009;

•

engage within 60 days a qualified third-party provider, subject to approval of the Regional Director of the OTS, to perform an evaluation of the private education loans held by Union Federal as of March 31, 2009;

•

obtain prior approval of the OTS before increasing the dollar amount of brokered deposits;

•

provide the OTS with prior notice before (i) engaging in any transaction with an affiliate or (ii) entering into, renewing, extending or revising any contractual arrangement relating to compensation or benefits for any senior executive officer or director; and

•

obtain prior approval of the OTS in connection with any "golden parachute payment" and comply with notice requirements for certain changes in directors and senior executive officers.

        The terms of the Supervisory Agreement and the Order will remain in effect until terminated, modified or suspended by the OTS.

113

Supplementary Data

Unaudited Quarterly Information

        The table below summarizes unaudited quarterly information for each of the three months in the fiscal years ended June 30, 2009 and 2008:

		Three months ended
		September 30, 2008			December 31, 2008			March 31, 2009			June 30, 2009
		(in thousands, except per share data)
Total revenues		$	(84,904	)	$	(86,095	)	$	(130,616	)	$	11,609
Non-interest expenses			60,930			59,138			74,972			65,793
Income tax benefit			(52,938	)		(51,846	)		(64,934	)		(18,101	)
Net loss		$	(92,896	)	$	(93,387	)	$	(140,654	)	$	(36,083	)
Net loss per share:
	Basic	$	(0.94	)	$	(0.94	)	$	(1.42	)	$	(0.36	)
	Diluted		(0.94	)		(0.94	)		(1.42	)		(0.36	)

		Three months ended
		September 30, 2007		December 31, 2007			March 31, 2008			June 30, 2008
		(in thousands, except per share data)
Total revenues		$	379,962	$	(122,810	)	$	(251,788	)	$	(33,773	)
Non-interest expenses			97,501		73,693			123,547			63,806
Income tax expense (benefit)			113,641		(78,828	)		(145,785	)		(40,908	)
Net income (loss)		$	168,820	$	(117,675	)	$	(229,550	)	$	(56,671	)
Net income (loss) per share:
	Basic	$	1.81	$	(1.26	)	$	(2.36	)	$	(0.57	)
	Diluted		1.80		(1.26	)		(2.36	)		(0.57	)

Quarterly revenue, operating results and profitability have varied and are expected to continue to vary on a quarterly basis primarily because of the timing, size and structure of the securitizations that we facilitate, if any. In fiscal 2008, we facilitated two securitizations in the first quarter and none in the remaining quarters. In fiscal 2009, we did not facilitate any securitization transactions.

114

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

        None.

Item 9A.    Controls and Procedures

Disclosure Controls and Procedures

        Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2009. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2009, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

115

Management's Annual Report on Internal Control over Financial Reporting

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

        The management of The First Marblehead Corporation and subsidiaries (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

•

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

•

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

•

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of June 30, 2009. In making this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.

        Based on our assessment, management concluded that, as of June 30, 2009, the Company's internal control over financial reporting is effective based on those criteria.

        The Company's independent auditors have issued an audit report on the Company's assessment of its internal control over financial reporting. That report appears on page 117 of this annual report.

/s/ DANIEL MEYERS
Chief Executive Officer and President

/s/ KENNETH KLIPPER
Managing Director, Chief Financial Officer, Treasurer and Chief Accounting Officer

116

Attestation Report of our Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
The First Marblehead Corporation:

        We have audited The First Marblehead Corporation's internal control over financial reporting as of June 30, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The First Marblehead Corporation's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management's report on internal control over financial reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, The First Marblehead Corporation maintained, in all material respects, effective internal control over financial reporting as of June 30, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of The First Marblehead Corporation and subsidiaries as of June 30, 2009 and 2008, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for each of the years in the three-year period ended June 30, 2009, and our report dated September 3, 2009 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Boston, Massachusetts
September 3, 2009

117

Change in Internal Control Over Financial Reporting

        No change in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, occurred during the fourth quarter of the fiscal year ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.    Other Information

        Not applicable.

118

PART III

        Pursuant to Paragraph G(3) of the General Instructions to Form 10-K, information required by Part III (Items 10, 11, 12, 13 and 14) is being incorporated by reference herein from our definitive proxy statement to be filed with the SEC within 120 days of the end of the fiscal year ended June 30, 2009 in connection with our 2009 annual meeting of stockholders, which we refer to below as our 2009 Proxy Statement.

Item 10.    Directors, Executive Officers and Corporate Governance

        The information required by this item with respect to our executive officers and code of ethics is included in Item 1 of Part I of this report.

        The information required by this item with respect to directors will be contained in our 2009 Proxy Statement under the caption "Discussion of Proposals—Proposal One: Election of Directors" and is incorporated in this report by reference.

        The information required by this item with regard to Section 16(a) beneficial ownership reporting compliance will be contained in our 2009 Proxy Statement under the caption "Other Information—Section 16(a) Beneficial Ownership Reporting Compliance" and is incorporated in this report by reference.

        The information required by this item with respect to corporate governance matters will be contained in our 2009 Proxy Statement under the caption "Information About Corporate Governance—Board Committees" and is incorporated in this report by reference. Complete copies of the audit committee charter, as well as our corporate governance guidelines and the charters of the compensation committee and nominating and corporate governance committees, are available on our website at www.firstmarblehead.com. Alternatively, paper copies of these documents may be obtained free of charge by writing to Investor Relations, The First Marblehead Corporation, The Prudential Tower, 800 Boylston Street, 34^th Floor, Boston, Massachusetts 02199 or e-mailing Investor Relations at info@firstmarblehead.com.

Item 11.    Executive Compensation

        The information required by this item will be contained in our 2009 Proxy Statement under the captions "Information About Corporate Governance" and "Information About Our Executive Officers" and is incorporated in this report by this reference.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

        The information required by this item with regard to security ownership of certain beneficial owners and management will be contained in our 2009 Proxy Statement under the caption "Other Information—Principal Stockholders" and is incorporated in this report by reference.

        The information required by this item with regard to securities authorized for issuance under equity compensation plans will be contained in our 2009 Proxy Statement under the caption "Information About Corporate Governance" and is incorporated in this report by reference.

Item 13.    Certain Relationships and Related Transactions, and Director Independence

        The information required by this item with regard to certain relationships and related-person transactions will be contained in our 2009 Proxy Statement under the caption "Information About Our Executive Officers" and is incorporated in this report by reference.

119

        The information required by this item with regard to director independence will be contained in our 2009 Proxy Statement under the caption "Information About Corporate Governance" and is incorporated in this report by reference.

Item 14.    Principal Accountant Fees and Services

        The information required by this item will be contained in our 2009 Proxy Statement under the caption "Discussion of Proposals—Proposal Three: Ratification of Appointment of Independent Registered Public Accounting Firm" and is incorporated in this report by reference.

120

PART IV

Item 15.    Exhibits and Financial Statement Schedules

(a)

The following documents are filed as part of this annual report:

(1)

Financial Statements.

        The consolidated financial statements are included as Item 8 herein and are filed as part of this annual report. The consolidated financial statements include the reports made in Item 9A herein.

(2)

Financial Statement Schedules.

        None.

(3)

Exhibits.

        The exhibits set forth on the Exhibit Index following this annual report are filed as part of this annual report. This list of exhibits identifies each management contract or compensatory plan or arrangement required to be filed as an exhibit to this annual report.

121

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on September 3, 2009.

THE FIRST MARBLEHEAD CORPORATION
By:	/s/ DANIEL MEYERS  Daniel Meyers Chief Executive Officer and President

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on September 3, 2009:

Signature	Title(s)
/s/ DANIEL MEYERS  Daniel Meyers	Chief Executive Officer, President and Director (Principal Executive Officer)
/s/ KENNETH KLIPPER   Kenneth Klipper	Managing Director, Chief Financial Officer, Treasurer and Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer)
/s/ PETER B. TARR   Peter B. Tarr	Chairman of the Board
/s/ STEPHEN E. ANBINDER  Stephen E. Anbinder	Director
/s/ WILLIAM R. BERKLEY   William R. Berkley	Director
/s/ DORT A. CAMERON III  Dort A. Cameron III	Director
/s/ HENRY CORNELL   Henry Cornell	Director

122

Signature	Title(s)
/s/ GEORGE G. DALY  George G. Daly	Director
/s/ PETER S. DROTCH   Peter S. Drotch	Director
/s/ WILLIAM D. HANSEN  William D. Hansen	Director

123

EXHIBIT INDEX

Number	Description
3.1(1)	Restated Certificate of Incorporation of the Registrant, as amended
3.2(2)	Amended and Restated By-laws of the Registrant
10.1.1(3)††	Amended and Restated Private Student Loan Servicing Agreement, dated as of September 28, 2006, between the Registrant and Pennsylvania Higher Education Assistance Agency
10.1.2††	Amendments to Amended and Restated Private Student Loan Servicing Agreement, dated as of September 28, 2006, between the Registrant and Pennsylvania Higher Education Assistance Agency
10.2(2)#	1996 Stock Option Plan, as amended
10.3(2)#	2002 Director Stock Plan
10.4(2)#	2003 Employee Stock Purchase Plan
10.5(4)#	2003 Stock Incentive Plan, as amended
10.6(1)#	Executive Incentive Compensation Plan
10.7(5)#	Form of Non-statutory Stock Option Agreement evidencing grants under the 2002 Director Stock Plan
10.8(6)#	Forms of Incentive Stock Option Agreement and Non-statutory Stock Option Agreement evidencing grants under the 2003 Stock Incentive Plan
10.9#	Form of Restricted Stock Unit Agreement evidencing grants under the 2003 Stock Incentive Plan
10.10(7)#	Employment Agreement, dated as of August 18, 2008, between the Registrant and Daniel Meyers
10.11(7)#	Indemnification Agreement, dated August 18, 2008, between the Registrant and Daniel Meyers
10.12(6)#	Letter Agreement, dated June 10, 2005, between the Registrant and Peter B. Tarr
10.13#	Letter Agreement, dated February 25, 2005, between the Registrant and Kenneth Klipper
10.14(8)#	Letter Agreement, dated June 27, 2006, between the Registrant and Stephen E. Anbinder
10.15#	Letter Agreement, dated March 2, 2008, between the Registrant and Andrew J. Hawley
10.16#	Letter Agreement, dated June 30, 2008, between the Registrant and Sandra M. Stark
10.17(9)#	Letter Agreement, dated September 11, 2008, between the Registrant and Jack L. Kopnisky
10.18(10)#	Letter Agreement, dated September 30, 2008, between the Registrant and Anne P. Bowen
10.19(10)#	Letter Agreement, dated September 30, 2009, between the Registrant and Greg D. Johnson
10.20(10)#	Letter Agreement, dated October 3, 2008, between the Registrant and John A. Hupalo
10.21#	Non-Statutory Stock Option Agreement for $6.00 stock options between the Registrant and Daniel Meyers

124

Number	Description
10.22#	Non-Statutory Stock Option Agreement for $12.00 stock options between the Registrant and Daniel Meyers
10.23#	Non-Statutory Stock Option Agreement for $16.00 stock options between the Registrant and Daniel Meyers
10.24(6)#	Restricted Stock Unit Agreement, dated July 11, 2005, between the Registrant and Peter B. Tarr
10.25(1)#	Summary of Director Compensation
10.26(11)	Form of Invention, Non-disclosure, Non-competition and Non-solicitation Agreement
10.27	Indenture of Lease, dated September 5, 2003, between the Registrant and BP Prucenter Acquisition LLC, as amended
10.28	Commercial Lease, dated August 13, 2004, between the Registrant and Cabot Road Partners, LLC, as amended
10.29.1(12)	Investment Agreement, dated as of December 21, 2007, among the Registrant, GS Parthenon A, L.P. and GS Parthenon B, L.P.
10.29.2(13)	Amendment No. 1 dated as of January 30, 2008, to the Investment Agreement, dated as of December 21, 2007, among the Registrant, GS Parthenon A, L.P. and GS Parthenon B,  L.P.
10.29.3(7)	Amendment No. 2, dated August 18, 2008, to the Investment Agreement, dated as of December 21, 2007, among the Registrant, GS Parthenon A, L.P. and GS Parthenon B, L.P.
10.30(12)	Amended and Restated Registration Rights Agreement, dated as of December 21, 2007, among the Registrant, GS Parthenon A, L.P., GS Parthenon B, L.P. and the other holders named therein
10.31(14)	Time Sharing Agreement, dated February 4, 2009, between the Registrant and Sextant Holdings, LLC
10.32(15)	Purchase Agreement, dated as of March 31, 2009, among the Registrant, VCG Owners Trust and VCG Securities LLC
10.33(15)	Letter Agreement, dated as of March 31, 2009, delivered by Vanquish Advisors LLC to the Registrant
10.34(15)	Asset Services Agreement, dated as of March 31, 2009, among the Registrant, First Marblehead Education Resources, Inc., VCG Owners Trust and VCG Securities LLC
10.35(15)	Data Sharing and License Agreement, dated as of March 31, 2009, between the Registrant and VCG Owners Trust
10.36(15)	Indemnification Agreement, dated as of March 31, 2009, between the Registrant, VCG Owners Trust and VCG Securities LLC
10.37(16)	Supervisory Agreement, dated as of July 2, 2009, between the Registrant and the Office of Thrift Supervision
10.38(16)	Office of Thrift Supervision Order to Cease and Desist, dated as of July 2, 2009, in the matter of Union Federal Savings Bank

125

Number	Description
10.39(16)	Office of Thrift Supervision Stipulation and Consent to Issuance of Order to Cease and Desist, dated as of July 2, 2009, in the matter of Union Federal Savings Bank
21.1	List of Subsidiaries
23.1	Consent of KPMG LLP
31.1	Chief Executive Officer—Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Chief Financial Officer—Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Chief Executive Officer—Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Chief Financial Officer—Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1(17)	Static pool data as of June 30, 2009
99.2(17)	Supplemental presentation dated June 30, 2009

(1)

Incorporated by reference to the exhibit to the Registrant's annual report on Form 10-K filed with the SEC on August 29, 2008.

(2)

Incorporated by reference to the exhibits to the Registrant's registration statement on Form S-1 (File No. 333-108531).

(3)

Incorporated by reference to the exhibit to the Registrant's quarterly report on Form 10-Q filed with the SEC on November 8, 2006.

(4)

Incorporated by reference to the exhibit to the Registrant's current report on Form 8-K filed with the SEC on October 31, 2005.

(5)

Incorporated by reference to the exhibits to the Registrant's annual report on Form 10-K filed with the SEC on September 15, 2004.

(6)

Incorporated by reference to the exhibits to the Registrant's annual report on Form 10-K filed with the SEC on September 7, 2005.

(7)

Incorporated by reference to the exhibits to the Registrant's current report on Form 8-K filed with the SEC on August 18, 2008.

(8)

Incorporated by reference to the exhibit to the Registrant's current report on Form 8-K filed with the SEC on June 30, 2006.

(9)

Incorporated by reference to the exhibit to the Registrant's current report on Form 8-K filed with the SEC on September 17, 2008.

(10)

Incorporated by reference to the exhibits to the Registrant's current report on Form 8-K filed with the SEC on October 6, 2008.

(11)

Incorporated by reference to the exhibit to the Registrant's quarterly report on Form 10-Q filed with the SEC on November 8, 2005.

126

(12)

Incorporated by reference to the exhibits to the Registrant's current report on Form 8-K filed with the SEC on December 27, 2007.

(13)

Incorporated by reference to the exhibit to the Registrant's current report on Form 8-K filed with the SEC on February 4, 2008.

(14)

Incorporated by reference to the exhibit to the Registrant's quarterly report on Form 10-Q filed with the SEC on February 9, 2009.

(15)

Incorporated by reference to the exhibits to the Registrant's current report on Form 8-K filed with the SEC on April 6, 2009.

(16)

Incorporated by reference to the exhibits to the Registrant's current report on Form 8-K filed with the SEC on July 2, 2009.

(17)

Incorporated by reference to the exhibits to the Registrant's current report on Form 8-K filed with the SEC on August 17, 2009.

††

Confidential treatment has been granted or requested for certain provisions of this Exhibit pursuant to Rule 24b-2 promulgated under the Securities Exchange Act of 1934.

#

This Exhibit is a management contract or compensatory plan or arrangement.

127

EX-10.1.2

Exhibit 10.1.2

Execution version

Confidential treatment omitted and filed separately with the Securities and Exchange

Commission.  Asterisks denote omissions.

FIRST AMENDMENT TO THE

AMENDED AND RESTATED

PRIVATE STUDENT LOAN SERVICING AGREEMENT

BETWEEN

PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY

AND

THE FIRST MARBLEHEAD CORPORATION

THIS FIRST AMENDMENT is made as of this 4th day of March, 2008, by and between Pennsylvania Higher Education Assistance Agency, a public corporation and governmental instrumentality organized under the laws of the Commonwealth of Pennsylvania, having an address at 1200 North Seventh Street, Harrisburg, Pennsylvania, 17102 (“Servicer”), and The First Marblehead Corporation, having an address at 800 Boylston Street, 34th Floor, Boston, Massachusetts 02199 (“FMC”). Capitalized terms used herein without definition have the meanings assigned to them in the Servicing Agreement (as defined below).

RECITALS

WHEREAS, the parties previously entered into an Amended and Restated Private Student Loan Servicing Agreement dated as of September 28, 2006 (the “Servicing Agreement”), which sets forth the terms for the servicing of student loans owned by SPEs and serviced by the Servicer; and

WHEREAS, in order to facilitate its funding of student loans, Union Federal Savings Bank, a federal savings bank organized under the laws of United States of America and having a place of business at 1565 Mineral Springs Avenue, North Providence, Rhode Island 02904 (“UFSB”) and certain other Program Lenders (collectively, the “Originating Lenders”) may arrange to sell pools of Committed Student Loans from time to time to SPV (as defined herein).

WHEREAS, pursuant to the Loan Agreement (as defined herein), the SPV will grant to the Collateral Agent (as defined herein), for the benefit of the Administrative Agent (as defined herein) as agent for the Lender (as defined herein), a security interest in, among other things, the Pledged Student Loans (as defined herein) and the related Student Loan files for the purpose of securing the due and punctual payment of all amounts due from the SPV to the Lender and the Administrative Agent under the terms of the Loan Agreement.

WHEREAS, the Collateral Agent desires that the Servicer hold such Student Loan files and any other documents related thereto as the custodian for, and bailee of, the Collateral Agent, for the benefit of the Administrative Agent, as agent for the Lender;

WHEREAS, Servicer and FMC now wish to amend certain provisions contained in the Agreement; and

WHEREAS, Servicer and FMC otherwise wish to retain all terms and provisions in the

Agreement and to continue to exercise their rights and fulfill their duties thereunder.

NOW THEREFORE, in consideration of the mutual covenants contained herein and other valuable consideration, and intending to be legally bound, the parties agree as follows:

1.Definitions.  The following new definitions are hereby added to the Servicing Agreement to read as follows:

“1.52       “Administrative Agent” means Goldman Sachs Mortgage Company in its capacity as administrative agent under the Loan Agreement.

1.53         “Administrator” means First Marblehead Data Services, Inc. in its capacity as administrator of the SPV pursuant to that certain administration agreement dated as of March 4, 2008 by and among the SPV, the Collateral Agent and the Administrator.

1.54         “Collateral Agent” means  U.S. Bank National Association in its capacity as collateral agent under the Loan Agreement.

1.55         “Interim Sale” means a transaction in which the Originating Lenders will indirectly sell Pledged Student Loans the SPV periodically, but not more than eight times per calendar month.

1.56         “Lender” means Goldman Sachs Mortgage Company in its capacity as lender under the Loan Agreement.

1.57         “Loan Agreement” means that certain master loan agreement, dated as of March 4, 2008, among the SPV, as borrower, Goldman Sachs Mortgage Company, as Administrative Agent and Lender, and U.S. Bank National Association, as Collateral Agent.

1.58         “Pledged Student Loan” means a student loan originated by an Originating Lender which has been indirectly sold to the SPV and which is pledged to the Collateral Agent under a security agreement among the SPV, the Collateral Agent and the Administrative Agent; provided, however, that any student loans released pursuant to the Loan Agreement from the lien created pursuant to such security agreement shall not be deemed to be a Pledged Student Loan.

1.59         “SPV” means FMC Private Loan SPV Trust, a Delaware trust having an address at 800 Boylston Street, Boston, MA 02199, c/o First  Marblehead Data Services, Inc.”

2.Appointment of the Custodian.  The following is added as a second paragraph of Section 4.04 of the Servicing Agreement:

“Subject to the terms and conditions hereof and of the Loan Agreement, the Servicer is hereby appointed, and the Servicer hereby accepts such appointment and agrees to act as custodian, bailee and collateral agent on behalf of the SPV and the Collateral Agent for the benefit of the Administrative Agent, as agent for the Lender, to maintain exclusive custody of the Original Credit Agreements pertaining to the Pledged Student Loans from time to time pledged under the Loan Agreement in order to perfect the ownership interest of the Borrower (as defined in the Loan Agreement) and the security interest of the Collateral Agent for the benefit of the Administrative Agent, as agent for the Lender, in the Pledged Student Loans and other items in the Student Loan files evidencing the Pledged Student Loans and any and all proceeds of the

2

foregoing.  In performing its duties hereunder, the Servicer agrees to act with reasonable skill and attention, using that standard of skill and attention that the Servicer would exercise with respect to the files relating to all comparable loans or other receivables that it services or holds for itself or others under applicable industry custom.”

3.Interim Sales To SPV.  A new Section 4.03(e) is hereby added to the Servicing Agreement as follows:

“Pursuant to the terms of this Agreement, as amended, one or more Originating Lenders may periodically make Interim Sales to SPV.  No examination of any loan documents by Servicer shall be required in connection with an Interim Sale.  Any Pledged Student Loan sold to SPV shall continue to be Serviced pursuant to the terms of this Agreement.”

4.Collections. Section 4.13 of the Servicing Agreement is hereby amended by adding the following as the last sentence thereof:

“Notwithstanding the foregoing, for purposes of this Section 4.13, SPV shall be regarded as the Owner of a Pledged Student Loan following an Interim Sale of such Pledged Student Loan, until the Pledged Student Loan is sold in a Securitization Transaction.  FMC and/or Administrator may elect to have amounts on deposit transferred into any account established for FMC or SPV by Servicer, subject to the operational capabilities of Servicer.”

5.Reporting. Section 4.16 is hereby amended by adding the following as the last sentence thereof:

“For purposes of this section, with respect to each Pledged Student Loan involved in an Interim Sale, the term ‘Owner’ means the SPV following an Interim Sale of a Pledged Student Loan, until the Pledged Student Loan is sold in a Securitization Transaction. In addition, Servicer shall provide Administrator with additional reporting as reasonably requested from time to time.  FMC and Administrator agree that Servicer may invoice such additional reporting as Ad Hoc Projects/Reporting charges pursuant to Section VI(4.) of the Fee Schedule.”

6.Redesignation. Sections 13.02 and 13.03 of the Servicing Agreement are hereby redesignated as Sections 13.03 and 13.04 thereof respectively, but shall otherwise remain in full force and effect without amendment.

7.SPV Provisions. A new Section 13.02 is hereby added to the Servicing Agreement to read as follows:

“13.02. Assignment to SPV. The parties contemplate that, prior to a sale of Pledged Student Loans in a Securitization Transaction pursuant to this Agreement, one or more Originating Lenders and SPV may periodically engage in an  Interim Sale. After each Interim Sale and except as otherwise set forth in this Agreement,  SPV shall be considered the Owner for purposes of this Agreement with respect to each Pledged Student Loan sold in each Interim Sale until a Securitization Transaction including such loans is completed.  The Originating Lenders involved will assign any claims they have under this Agreement with respect to prior Servicing of said Pledged Student Loans to SPV in connection with an Interim Sale, and Servicer agrees to any such assignment of rights under this Agreement.  SPV shall also assume all the rights and responsibilities of FMC with respect to the loans purchased by SPV.  In addition, with respect to each Interim Sale:

(a)           The date for such Interim Sale shall be established by mutual agreement of the

3

parties (with Administrator acting on behalf of the SPV);

(b)           Pledged Student Loans to be sold in each Interim Sale shall be identified using a process and parameters established jointly by the parties (with Administrator acting on behalf of the SPV); and

(c)           Servicer shall reflect in its servicing system that the Pledged Student Loans sold in the Interim Sale are owned by SPV. Servicer may, at its discretion, reflect such ownership of SPV through inclusion of a suffix or modified lender code in Servicer’s system.”

8.Fees.  The following is hereby added to the end of Section 8.01 of the Agreement:

“All fees owed under this Agreement by SPV shall be paid by FMC or the Administrator on behalf of the SPV. Notwithstanding the foregoing, Servicer shall provide a separate line item in invoices for fees attributable to SPV. It is also understood that, for purposes of Conversion Fees, Section III of the Fee Schedule, an Interim Sale shall be considered an “Interim Account—On System; Waived Exam,” for which no conversion fee is owed.”

9.Notices.  Section 15.01 of the Agreement is hereby amended to replace the term “If to FMC:” with the term “If to FMC or SPV:”

10.Owner Pays All Fees.  A new sentence is added to the end of the first paragraph of the Fee Schedule as follows:

“All fees to be paid pursuant to this Agreement by SPV shall be paid by FMC or the Administrator on behalf of the SPV. Notwithstanding the foregoing, Servicer shall provide a separate line item in invoices for fees attributable to  SPV.”

11.Interim Account — On System.  Section III(2) of the Fee Schedule is deleted in its entirety and replaced as follows:

“2.  Interim Account — On System

All Interim Sales to SPV shall be included in this category.

a.	Full Note Exam:	$[**] per loan
b.	Waived Exam:	[**]”

12.           SPV Fee.  New items 11, 12, 13, 14, 15 and 16 are hereby added to Miscellaneous Fees, Section VI of the Fee Schedule, as follows:

“11. Interim Sale:	$[**] per Lender Code, per Interim Sale (Includes one Loan Sale Report)
12. Reversal of Interim Sale:	$[**] per Interim Sale Reversal
13. Preliminary Loan Sale Reports:	$[**] per Preliminary Loan Sale Report after delivery of the first Loan Sale Report
14. Computer Programmer	$[**] per hour (when FMC provides the trigger file)
15. Financing Legal Services	$[**] per hour
16. Borrower Sale Notification	$[**] per letter, unless FMC directs Servicer not to send letter”

4

13.Full Force and Effect. As amended herein, the Servicing Agreement remains in full force and effect.

14.Counterparts. This First Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.

[Remainder of page intentionally blank]

5

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the month, day and the year first-above written.

PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY	THE FIRST MARBLEHEAD CORPORATION
/s/ James L. Preston	/s/ Anne P. Bowen
James L. Preston	Anne P. Bowen
Interim President and CEO	Executive Vice President
March 4, 2008	March 4, 2008

Approved as to form and legality:

/s/ Jason L. Swartley

PHEAA Legal Counsel

/s/ Robert A. Mulle

Deputy Attorney General

ACKNOWLEDGED AND AGREED:
FMC PRIVATE LOAN SPV TRUST
By:	Wilmington Trust Company, not in its individual capacity but solely as Owner Trustee
By:
	Name:
	Title:

March 4, 2008

SECOND AMENDMENT TO THE

AMENDED AND RESTATED

PRIVATE STUDENT LOAN SERVICING AGREEMENT

BETWEEN

PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY

AND

THE FIRST MARBLEHEAD CORPORATION

THIS SECOND AMENDMENT is made as of this 12th day of February, 2009, by and between Pennsylvania Higher Education Assistance Agency, a public corporation and governmental instrumentality organized under the laws of the Commonwealth of Pennsylvania, having an address at 1200 North Seventh Street, Harrisburg, Pennsylvania, 17102 (“Servicer”), and The First Marblehead Corporation, having an address at 800 Boylston Street, 34th Floor, Boston, Massachusetts 02199 (“FMC”). Capitalized terms used herein without definition have the meanings assigned to them in the Servicing Agreement (as defined below).

RECITALS

WHEREAS, the parties previously entered into an Amended and Restated Private Student Loan Servicing Agreement dated as of September 28, 2006, as amended by the First Amendment dated March 4, 2008 (collectively, the “Servicing Agreement”), which sets forth the terms for the servicing of student loans owned by SPEs and serviced by the Servicer; and

WHEREAS, FMC has requested Serviver to increase correspondence with co-borrowers on a portfolio of loans which are guaranteed by The Education Resources Institute (“TERI”), and are either owned by an SPE or SPV, or owned by a lender who has an agreement to sell said Student Loans to an SPE or SPV (the “TERI Portfolio”).

WHEREAS, FMC and Servicer executed a Statement of Work on March 20, 2008, to create the functionality necessary for the segmentation of the TERI Portfolio.

WHEREAS, FMC has agreed to pay for the additional correspondence to be made pursuant to the guidelines established by FMC, whereby co-borrowers on loans held in the TERI Portfolio would now receive up to three additional pieces of correspondence;

WHEREAS, Servicer and FMC now wish to amend certain provisions contained in the Agreement; and

WHEREAS, Servicer and FMC otherwise wish to retain all terms and provisions in the Agreement and to continue to exercise their rights and fulfill their duties thereunder.

NOW THEREFORE, in consideration of the mutual covenants contained herein and other valuable consideration, and intending to be legally bound, the parties agree as follows:

1.Borrower Correspondence.  The following is added as a second paragraph of Section 4.12 of the Servicing Agreement:

“FMC and Servicer have instituted the functionality to identify specific TERI-guaranteed loans with criteria established by FMC, which will increase correspondence to the co-borrowers for these loans.  This functionality was created pursuant to a Statement of Work, dated March 20, 2008, which is attached as Exhibit D to this Agreement, and is incorporated herein.”

2.Segmentation Correspondence Fee.  New item 17 is hereby added to Miscellaneous Fees, Section VI of the Fee Schedule, as follows:

“17. Segmentation Correspondence Fee: $[**] per correspondence, for all lenders”

3.Rescission of the First Amendment. The First Amendment executed by FMC and Servicer on March 4, 2008, is hereby rescinded ab initio.

4.Full Force and Effect. As amended herein, the Servicing Agreement remains in full force and effect.

5.Counterparts. This Second Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.

[Remainder of page intentionally blank]

2

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the month, day and the year first-above written.

PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY		THE FIRST MARBLEHEAD CORPORATION
/s/ James L. Preston		/s/ David Lubets
James L. Preston		David Lubets
President and CEO		Managing Director
Date:	2/10/09	Date:	1/28/09
Approved as to form and legality:
/s/ Jason L. Swartley
PHEAA Legal Counsel
/s/ Robert A. Mulle
Deputy Attorney General

Execution Version

THIRD AMENDMENT TO THE

AMENDED AND RESTATED

 PRIVATE STUDENT LOAN SERVICING AGREEMENT

BETWEEN

PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY

AND

THE FIRST MARBLEHEAD CORPORATION

THIS THIRD AMENDMENT is made as of this 30th day of April, 2008, by and between Pennsylvania Higher Education Assistance Agency, a public corporation and governmental instrumentality organized under the laws of the Commonwealth of Pennsylvania, having an address at 1200 North Seventh Street, Harrisburg, Pennsylvania, 17102 (“Servicer”), and The First Marblehead Corporation, having an address at 800 Boylston Street, 34th Floor, Boston, Massachusetts 02199 (“FMC”). Capitalized terms used herein without definition have the meanings assigned to them in the Servicing Agreement (as defined below).

RECITALS

WHEREAS, the Servicing Agreement adopts Servicing Guidelines for loans owned by FMC or any Permitted Assignee (including any Special Purpose Entity) that purchases such Student Loans or any interest therein from a Program Lender or from another Permitted Assignee in a Securitization Transaction; and

WHEREAS,  FMC, First Marblehead Data Services, Inc. (“FMDS”), as administrator for the Permitted Assignees, SPV, and Special Purpose Entities holding Student Loans, and Servicer desire to clarify the servicing requirements for loans that have been outsourced to NCO Financial System, Inc. (“NCO”) for collections activities; and

WHEREAS, the intent of this Amendment is to assure Servicer will not be held responsible for any violation of the Servicing Guidelines that may occur while the Student Loan was outsourced to NCO.

NOW THEREFORE, in consideration of the mutual covenants contained herein and other valuable consideration, and intending to be legally bound, the parties agree as follows:

1.Definitions.  The following new definitions are hereby added to the Servicing Agreement to read as follows:

“NCO” means NCO Financial System, Inc.

2.Due Diligence Activities. The following Section 4.21 is hereby added to the Servicing Agreement as follows:

“4.21The parties acknowledge and agree that due diligence and skip tracing activities contemplated by the Delinquency and Default and Skip Tracing sections of the Servicing Guidelines, as amended (the “Delinquency Guidelines”) during the 31st through 60th day of delinquency (the “Subject Delinquency Period”) for Student Loans owned by a Special Purpose Entity or SPV shall be performed by NCO and

not by Servicer (each such loan, for that 30-day time period, and for the purpose of due diligence activities only, an “NCO Outsourced Loan”). More specifically:

a.For any NCO Outsourced Loan, Servicer shall not be responsible for performing the Delinquency Guidelines for the Subject Delinquency Period.

b.For any Student Loan not outsourced to NCO, Servicer will be responsible for delinquency servicing and skip tracing requirement for loans 31-60 days delinquent.

c.Servicer shall maintain responsibility for filing for pre-claims assistance in accordance with the Servicing Guidelines, with the information that exists on the Servicer’s system as of day 60.

d.For any NCO Outsourced Loan, Servicer will not be responsible for initiating skip-tracing activities during the Subject Delinquency Period.  Servicer shall update contact information within its system, if in the normal course of business Servicer or NCO obtains or receives new contact information.

e.For any NCO Outsourced Loan, Servicer will remain responsible for all loan servicing activities other than the Delinquency Guidelines, including but not limited to, the processing of deferments, forbearance, and MGRS forms, general correspondence, and borrower payments.

f.For rolling delinquent accounts, i.e., NCO Outsourced Loans which have Borrower payments applied that result in the account falling into the prior delinquency bucket or being brought current, Servicer will follow the Servicing Guidelines, which state that in the event of a rolling account, the servicer will resume scheduled delinquency servicing activities at the point in which the delinquency rolls into the previous delinquency bucket.  Servicer will not be required to make up missed due diligence activities in the bucket the delinquency rolls into if the day delinquent in which the servicing resumes is after the first scheduled activity.

g.Servicer shall remain responsible for the reporting of loan information to the credit bureaus for all Student Loans in compliance with the Servicing Guidelines, with the information that exists on the Servicer’s system as of the day of reporting.

h.For any NCO Outsourced Loan for which the Guarantor assesses a servicing penalty at time of claim payment, Servicer shall not be held responsible for any portion of the penalty that relates to the performance or non-performance by NCO of the Delinquency Guidelines during the Subject Delinquency Period.  FMC will be responsible for payment to Loan Owner for any servicing penalty assessed by the Guarantor due to NCO’s servicing.

i.For any NCO Outsourced Loan for which the Guarantor rejects the claim due to three or more servicing violations, Servicer shall not be held responsible for any portion of the penalties that relate to the performance or non-performance by NCO of the Delinquency Guidelines during the Subject Delinquency Period.  Servicer will provide cure servicing to any loans for which the claim was rejected where at least one of the servicing violations was due to the performance or non-performance of Servicer.  Servicer may provide cure servicing to any loans for which the claim was rejected where at least none of the servicing violations was due to the performance or non-performance of Servicer.

3.Full Force and Effect. As amended herein and as previously amended, the Servicing Agreement remains in full force and effect.

4.Counterparts. This First Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.

2

[Remainder of page intentionally blank]

3

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the month, day and the year first-above written.

PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY			THE FIRST MARBLEHEAD CORPORATION
/s/ James L. Preston			/s/ Anne P. Bowen
James L. Preston			Anne P. Bowen
President and CEO			Executive Vice President
April 30, 2008			April 30, 2008
Approved as to form and legality:
/s/ Jason L. Swartley
PHEAA Legal Counsel
/s/ Robert a. Mulle 10/10/08
Deputy Attorney General
ACKNOWLEDGED AND AGREED:
FIRST MARBLEHEAD DATA SERVICES, As Administrator for the Owner
By:	Rosalyn Bonaventure
By:	/s/ Rosalyn Bonaventure
	Name:	Rosalyn Bonaventure
	Title:	President

4

Execution Copy

FOURTH AMENDMENT TO THE

AMENDED AND RESTATED

PRIVATE STUDENT LOAN SERVICING AGREEMENT

BETWEEN

PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY

AND

THE FIRST MARBLEHEAD CORPORATION

THIS FOURTH AMENDMENT is made as of this 21 day of January, 2009 (the “Fourth Amendment”), by and between Pennsylvania Higher Education Assistance Agency, a public corporation and governmental instrumentality organized under the laws of the Commonwealth of Pennsylvania, having an address at 1200 North Seventh Street, Harrisburg, Pennsylvania, 17102 (“Servicer”), and The First Marblehead Corporation, having an address at 800 Boylston Street, 34th Floor, Boston, Massachusetts 02199 (“FMC”). Capitalized terms used herein without definition have the meanings assigned to them in the Servicing Agreement (as defined below), as amended.

RECITALS

WHEREAS, the parties entered into that certain Amended and Restated Private Student Loan Servicing Agreement dated September 28, 2006 (the “Servicing Agreement”);

WHEREAS,  the parties entered into that certain Third Amendment to Servicing Agreement dated April 30, 2008 to outsource certain due diligence services from Servicer to NCO Financial System, Inc. (“NCO”), as set forth therein; and

WHEREAS, the parties desire to expand the services provided by NCO as set forth herein.

NOW THEREFORE, in consideration of the mutual covenants contained herein and other valuable consideration, and intending to be legally bound, the parties agree as follows:

1.Due Diligence Activities. The parties hereby amend and restate Section 4.21 of the Agreement by deleting it in its entirety and inserting the following in place thereof and in substitution therefor:

“4.21The parties acknowledge and agree that the activities contemplated by the Delinquency and Default and Skip Tracing sections of the Servicing Guidelines, as amended (the “Delinquency Guidelines”) during the 31st through 120th day of delinquency (the “Subject Delinquency Period”) for Student Loans owned by a Special Purpose Entity (“SPE”) or SPV shall be performed by NCO and not by Servicer (each such loan, for that 90-day time period, and for the purpose of due diligence activities only, an “NCO Outsourced Loan”), unless otherwise agreed by the parties. More specifically:

a.For any NCO Outsourced Loan, Servicer shall not be responsible for performing the Delinquency Guidelines for the Subject Delinquency Period.

b.For any Student Loan not outsourced to NCO, Servicer will be responsible for delinquency servicing and skip tracing requirement for loans 31-60 days delinquent.

c.Servicer shall maintain responsibility for filing for pre-claims assistance in accordance with the Servicing Guidelines (except as modified by written instruction from FMC and the SPEs), with the information that exists on the Servicer’s system as of day 60.

d.For any NCO Outsourced Loan, Servicer will not be responsible for initiating skip-tracing activities during the Subject Delinquency Period.  Servicer shall update contact information within its system, if in the normal course of business Servicer or NCO obtains or receives new contact information.

e.For any NCO Outsourced Loan, Servicer will remain responsible for all loan servicing activities other than the Delinquency Guidelines, including but not limited to, the processing of deferments, forbearance, and MGRS forms, general correspondence, and borrower payments.

f.For rolling delinquent accounts, i.e., NCO Outsourced Loans which have Borrower payments applied that result in the account falling into the prior delinquency bucket or being brought current, Servicer will follow the Servicing Guidelines, which state that in the event of a rolling account, the servicer will resume scheduled delinquency servicing activities at the point in which the delinquency rolls into the next delinquency bucket.  Servicer will not be required to make up missed due diligence activities in the bucket the delinquency rolls into if the day delinquent on which the servicing resumes is after the first scheduled activity.

g.Servicer shall remain responsible for the reporting of loan information to the credit bureaus for all Student Loans in compliance with the Servicing Guidelines, with the information that exists on the Servicer’s system as of the day of reporting.

h.For any NCO Outsourced Loan for which the Guarantor assesses a servicing penalty at time of claim payment, Servicer shall not be held responsible for any portion of the penalty that relates to the performance or non-performance by NCO of the Delinquency Guidelines during the Subject Delinquency Period.  FMC will be responsible for payment to Loan Owner for any servicing penalty assessed by the Guarantor due to NCO’s servicing.

i.For any NCO Outsourced Loan for which the Guarantor rejects the claim due to three or more servicing violations, Servicer shall not be held responsible for any portion of the penalties that relate to the performance or non-performance by NCO of the Delinquency Guidelines during the Subject Delinquency Period.  Servicer will provide cure servicing to any loans for which the claim was rejected where at least one of the servicing violations was due to the performance or non-performance of Servicer.  Servicer may provide cure servicing to any loans for which the claim was rejected where at least none of the servicing violations was due to the performance or non-performance of Servicer.

j.For all Student Loans, Servicer shall remain responsible for sending Final Demand letters at the 120th day of delinquency to both the Borrower and Cosigner, if any.”

k.In all situations where NCO performed or performs activities which include procedures not in compliance with the Remote Access, Confidentiality and Indemnification Agreement, and such activities have an impact on Servicer’s due diligence obligations or cause incorrect information to exist on Servicer’s system, FMC, the SPEs and/or SPVs waive any and all servicing violations that may result.

3.Section IV of Exhibit C “Service Level Agreements” is hereby amended by deleting the first two bullets referencing “Collection Contacts” and “Promise to Pay”, thereby leaving only the “Skip-Trace” bullet in that Section.

4.Full Force and Effect. As amended herein and as previously amended, the Servicing Agreement remains in full force and effect.

5.Counterparts. This Fourth Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the month, day and the year first-above written.

PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY			THE FIRST MARBLEHEAD CORPORATION
/s/ James L. Preston			/s/ Michael Plunkett
Name:		James L. Preston	Name:	Michael Plunkett
Title:		President and CEO	Title:	Managing Director
Date:		12/10/08	Date:	8 Dec 08
Approved as to form and legality:
/s/ Jason L. Swartley
PHEAA General Counsel
/s/ Robert A. Mulle
Deputy Attorney General
ACKNOWLEDGED AND AGREED:
FIRST MARBLEHEAD DATA SERVICES, As Administrator for the Owner
By:	Rosalyn Bonaventure
By:	/s/ Rosalyn Bonaventure
	Name:  Rosalyn Bonaventure
	Title:    President

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EX-10.9

Exhibit 10.9

THE FIRST MARBLEHEAD CORPORATION

Restricted 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                            (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.

a)This award shall vest as to

                                                .

b)In the event that the Participant’s employment with the Company is terminated by reason of death or disability, this award shall be fully vested and the date that the Participant’s employment terminates shall be a vesting date.  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 Participant’s 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 Participant’s 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.

c)For purposes of this Agreement, employment with the Company shall include employment with a parent or subsidiary of the Company.

d)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.  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 RSU’s 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 Participant’s 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.

e)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 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.

a)The Company will distribute to the Participant (or to the Participant’s estate in the event that his or her death occurs 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”), but in no event later than 60 days after such vesting date, the Shares of Common Stock represented by RSUs that vested on such vesting date.

b)The 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.

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

b)Upon the occurrence of a Reorganization Event (as defined in the Plan, provided that such event also constitutes a change in ownership or effective control of the Company or a change in ownership of a substantial portion of the Company’s assets for purposes of Section 409A of the Internal Revenue Code), 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 such 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 such Reorganization Event, the Participant’s employment with the Company or the Company’s 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 Company’s successor.

c)For purposes of this Section 6, (i) “Good Reason” shall mean any significant diminution in the Participant’s title, authority, or responsibilities from and after such Reorganization Event or any material 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, provided that such diminution, reduction or relocation is not cured within 30 days of written notice to the Company from the Participant 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.

7)Withholding Taxes; Section 83(b) Election.

a)No 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.

b)The Participant acknowledges that no election under Section 83(b) of the Internal Revenue Code of 1986 may be filed with respect to this award.

8)Miscellaneous.

a)No Rights to Employment; Forfeiture of Unvested RSUs upon Employment Termination.  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 (i) 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 and (ii) in the event that the Participant ceases to be employed by the Company for any reason or no reason, except as otherwise provided in Section 2 or Section 6 above, all of the RSUs that are unvested as of the time of such employment termination shall be forfeited immediately and automatically to the Company, without the payment of any consideration to the Participant, effective as of such termination.

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 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.

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)Amendment.  This Agreement may be amended or modified only by a written instrument executed by both the Company and the Participant.

i)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.

j)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.

k)Unfunded 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.

l)Section 409A.  If and to the extent any portion of any distribution of Common Stock hereunder to a Participant in connection with his or her employment termination is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, as determined by the Company in accordance with its procedures, by which determination the Participant (through accepting the Award) agrees that he or she is bound, such portion of the distribution shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Code Section 409A) (the “New Payment Date”), except as Code Section 409A may then permit.  The aggregate of any shares of Common Stock that otherwise would have been distributed to the Participant during the period between the date of separation from service and the New Payment Date shall be distributed to the Participant in a lump sum on such New Payment Date, and any remaining distributions will be made on their original schedule.  The Company makes no representations or warranty and shall have no liability to the Participant or any other person if any provisions of or distributions under this Award are determined to constitute nonqualified deferred compensation subject to Code Section 409A but do not to satisfy the conditions of that section.

m)Regulatory Condition.  Any distribution, acceleration, vesting or payment of benefits to a Participant pursuant to this Agreement or otherwise, is and shall be subject to and conditioned upon prior compliance with all applicable provisions and requirements, including prior regulatory approval requirements, if applicable, of 12 U.S.C. § 1828(k) and any regulations promulgated thereunder.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

THE FIRST MARBLEHEAD CORPORATION
By:
	Name:
	Title:
«First_Name» «Last_Name»
«Address_1»
«City», «State» «Zip»

EX-10.13

Exhibit 10.13

	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

EX-10.15

Exhibit 10.15

[First Marblehead Letterhead]

February 12, 2008 (as amended 2/28/08)

Andrew Hawley
[address]

Dear Andy:

In connection with the termination of your employment with The First Marblehead Education Resources, Inc. (the “Company”) on February 29, 2009, you are eligible to receive the severance benefits described in the “Description of Severance Benefits” attached to this letter agreement as Attachment A if you sign and return this letter agreement to me no earlier than February 29, 2008 but by March 3, 2008 and it becomes binding between you and the Company.  By signing and returning this letter agreement, you will be entering into a binding agreement with the Company and will be agreeing to the terms and conditions set forth in the numbered paragraphs below, including the release of claims set forth in paragraph 3.  Therefore, you are advised to consult with an attorney before signing this letter agreement and you may take up to twenty-one (21) days to do so.  If you sign this letter agreement, you may change your mind and revoke your agreement during the seven (7) day period after you have signed it.  If you do not so revoke, this letter agreement will become a binding agreement between you and the Company upon the expiration of the seven (7) day revocation period.

If you choose not to sign and return this letter agreement by March 3, 2008 or if you revoke your acceptance of this letter agreement during the revocation period, you shall not receive any severance benefits from the Company.  You will, however, receive payment on your termination for your final wages and any unused vacation time accrued through the Termination Date (as defined herein).  Also, regardless of signing this letter agreement, if eligible, you may elect to continue receiving group medical insurance pursuant to the federal “COBRA” law, 29 U.S.C. § 1161 et seq.  All premium costs for “COBRA” shall be paid by you on a monthly basis for as long as, and to the extent that, you remain eligible for COBRA continuation.  You should consult the COBRA materials to be provided by the Company for details regarding these benefits.  All other benefits, including life insurance and long-term disability, will cease upon your Termination Date.

The following numbered paragraphs set forth the terms and conditions which will apply if you timely sign and return this letter agreement and do not revoke it within the seven (7) day revocation period:

1.Termination Date - Your effective date of termination from the Company is February 29, 2008 (the “Termination Date”).

2.Description of Severance Benefits - The severance benefits paid to you if you timely sign, return and do not revoke this letter agreement are described in the “Description of Severance Benefits” attached as Attachment A (the “severance benefits”).

3.Release - In consideration of the payment of the severance benefits, which you acknowledge you would not otherwise be entitled to receive, you hereby fully, forever, irrevocably and unconditionally release, remise and discharge the Company, its officers, directors, stockholders, corporate affiliates, subsidiaries, parent companies, successors and assigns, agents and employees (each in their individual and corporate capacities) (hereinafter, the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses (including attorneys’ fees and costs), of every kind and nature which you ever had or now have against the Released Parties, including, but not limited to, those claims arising out of your employment with and/or separation from the Company, including, but not limited to, all claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e etseq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 etseq., the Americans With Disabilities Act of 1990, 42 U.S.C. § 12101 etseq., the Family and Medical Leave Act, 29 U.S.C. § 2601 etseq., the Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 etseq., Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, 18 U.S.C. § 1514(A), the Rehabilitation Act of 1973, 29 U.S.C. § 701 etseq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 etseq., the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 etseq., the Massachusetts Fair Employment Practices Act., M.G.L. c. 151B, § 1 etseq., the Massachusetts Civil Rights Act, M.G.L. c. 12, §§ 11H and 11I, the Massachusetts Equal Rights Act, M.G.L. c. 93, § 102 and M.G.L. c. 214, § 1C, the Massachusetts Labor and Industries Act, M.G.L. c. 149, § 1 etseq., the Massachusetts Privacy Act, M.G.L. c. 214, § 1B, and the Massachusetts Maternity Leave Act, M.G.L. c. 149, § 105D, all as amended; all common law claims including, but not limited to, actions in tort, defamation and breach of contract; all claims to any non-vested ownership interest in the Company, contractual or otherwise, including, but not limited to, claims to stock or stock options; and any claim or damage arising out of your employment with or separation from the Company (including a claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not expressly referenced above; provided, however, that nothing in this Agreement prevents you from filing, cooperating with, or participating in any proceeding before the EEOC or a state Fair Employment Practices Agency (except that you acknowledge that you may not be able to recover any monetary benefits in connection with any such claim, charge or proceeding).

4.Invention, Non-Disclosure, Non-Competition and Non-Solicitation Obligations — You acknowledge and reaffirm your obligation to keep confidential and not to disclose any and all non-public information concerning the Company which you acquired during the course of your employment with the Company, including, but not limited to, any non-public information concerning the Company’s business affairs, business prospects and financial condition, as is stated more fully in the Invention, Non-Disclosure, Non-Competition and Non-Solicitation Agreement you executed on September 9, 2005. In response to your concerns regarding the non-competition provisions of the agreement, the Company will not consider it a violation of the non-competition provisions of the Agreement for you to accept a position by or consulting for a financial services company that does not specifically offer student loans provided that you do not violate any other

2

provisions of the Agreement.  Where a financial services company has multiple lines of business including the provision of student loans, the Company will not consider it a violation of the Agreement for you to accept a position with or enter into a consulting relationship relating solely to a line of business that does not engage in the provision of student loans provided that you do not violate any other provisions of the Agreement.  While the Company has no interest in unnecessarily limiting your future opportunities, it believes that any employment or consulting relationship for a student loans business (whether public or private) would inevitably require you to disclose information the Company considers confidential.

5.Return of Company Property - You confirm that you have returned to the Company all keys, files, records (and copies thereof), equipment (including, but not limited to, computer hardware, software and printers, wireless handheld devices, cellular phones, pagers, etc.), Company identification, Company vehicles and any other Company-owned property in your possession or control and have left intact all electronic Company documents, including but not limited to, those that you developed or helped develop during your employment.  You further confirm that you have cancelled all accounts for your benefit, if any, in the Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone and/or pager accounts and computer accounts.

6.Business Expenses and Compensation - - You acknowledge that you have been reimbursed by the Company for all business expenses incurred in conjunction with the performance of your employment and that no other reimbursements are owed to you.  You further acknowledge that you have received payment in full for all services rendered in conjunction with your employment by the Company and that no other compensation is owed to you except as provided herein.

7.Non-Disparagement - You understand and agree that, as a condition for payment to you of the consideration herein described, you shall not make any false, disparaging or derogatory statements to any media outlet, industry group, financial institution or current or former employee, consultant, client or customer of the Company regarding the Company or any of its directors, officers, employees, agents or representatives or about the Company’s business affairs and financial condition.  The Company in turn agrees not to make any false, disparaging or derogatory statements about you.

8.Amendment - This letter agreement shall be binding upon the parties and may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by duly authorized representatives of the parties hereto.  This letter agreement is binding upon and shall inure to the benefit of the parties and their respective agents, assigns, heirs, executors, successors and administrators.

9.Waiver of Rights - No delay or omission by the Company in exercising any right under this letter agreement shall operate as a waiver of that or any other right.  A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

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10.Validity - - Should any provision of this letter agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this letter agreement.

11.Confidentiality — To the extent permitted by law, you understand and agree that, as a condition for payment to you of the severance benefits herein described, the terms and contents of this letter agreement, and the contents of the negotiations and discussions resulting in this letter agreement, shall be maintained as confidential by you and your agents and representatives and shall not be disclosed to any third party except to the extent required by federal or state law or as otherwise agreed to in writing by the Company.

12.Cooperation — You agree to cooperate with the Company in the investigation, defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company.  Your cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with the Company’s counsel to prepare for discovery or any mediation, arbitration, trial, administrative hearing or other proceeding or to act as a witness when reasonably requested by the Company at mutually agreeable times and at locations mutually convenient to you and the Company.  You also agree to cooperate with the Company in the transitioning of your work, and will be available to the Company for this purpose or any other purpose reasonably requested by the Company.

13.Tax Provision — In connection with the severance benefits provided to you pursuant to this letter agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and you shall be responsible for all applicable taxes with respect to such severance benefits under applicable law.  You acknowledge that you are not relying upon advice or representation of the Company with respect to the tax treatment of any of the severance benefits set forth in Attachment A.

14.Nature of Agreement - You understand and agree that this letter agreement is a severance agreement and does not constitute an admission of liability or wrongdoing on the part of the Company.

15.Acknowledgments - You acknowledge that you have been given at least twenty-one (21) days to consider this letter agreement, including Attachment A, and that the Company advised you to consult with an attorney of your own choosing prior to signing this letter agreement.  You understand that you may revoke this letter agreement for a period of seven (7) days after you sign this letter agreement, and the letter agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period.  You understand and agree that by entering into this letter agreement you are waiving any and all rights or claims you might have under The Age Discrimination in Employment Act, as amended by The Older Workers Benefit Protection Act, and that you have received consideration beyond that to which you were previously entitled.

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16.Voluntary Assent - You affirm that no other promises or agreements of any kind have been made to or with you by any person or entity whatsoever to cause you to sign this letter agreement, and that you fully understand the meaning and intent of this letter agreement.  You state and represent that you have had an opportunity to fully discuss and review the terms of this letter agreement with an attorney.  You further state and represent that you have carefully read this letter agreement, including Attachment A, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign your name of your own free act.

17.Applicable Law - This letter agreement shall be interpreted and construed by the laws of the Commonwealth of Massachusetts, without regard to conflict of laws provisions.  You hereby irrevocably submit to and acknowledge and recognize the jurisdiction of the courts of the Commonwealth of Massachusetts, or if appropriate, a federal court located in Massachusetts (which courts, for purposes of this letter agreement, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this letter agreement or the subject matter hereof.

18.Entire Agreement - This letter agreement, including Attachment A, contains and constitutes the entire understanding and agreement between the parties hereto with respect to your severance benefits and the settlement of claims against the Company and cancels all previous oral and written negotiations, agreements, commitments and writings in connection therewith.  Nothing in this paragraph, however, shall modify, cancel or supersede your obligations set forth in paragraph 4 herein.

If you have any questions about the matters covered in this letter agreement, please call me at (617) 638-2079.

Very truly yours,
The First Marblehead Education Resources, Inc.
By:	/s/ Robin Camara
	Robin Camara
	Senior Vice President, Human Resources

I hereby agree to the terms and conditions set forth above and in the attached Description of Severance Benefits.  I have been given at least twenty-one (21) days to consider this letter agreement and I have chosen to execute this on the date below.  I intend that this letter agreement become a binding agreement between me and the Company if I do not revoke my acceptance in seven (7) days.

/s/ Andrew J. Hawley	Date	3/2/08
Andrew Hawley

To be returned no earlier than February 29, 2008 but by March 3, 2008.

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ATTACHMENT A

DESCRIPTION OF SEVERANCE BENEFITS

Severance:  The Company will pay you severance pay in the form of continuation of your base salary, less all applicable state and federal taxes, for nine (9) months (the “Severance Pay Period”).  This severance will begin on March 1, 2008 and will conclude on November 30, 2008.  This severance pay will be paid in accordance with the Company’s normal payroll procedures but in no event earlier than the eighth (8th) day after execution of this letter agreement and provided that you do not revoke this letter agreement.

Benefits:  Effective as of the Termination Date, you shall be considered to have elected to continue receiving group medical insurance pursuant to the federal “COBRA” law, 29 U.S.C. § 1161 et seq.  During the nine (9) months following your Termination Date, from March 1, 2008 to November 30, 2008, the Company shall continue to pay the share of the premium for such coverage that is paid by the Company for active and similarly-situated employees who receive the same type of coverage.  The remaining balance of any premium costs, and all premium costs after November 30, 2008, shall be paid by you on a monthly basis for as long as, and to the extent that, you remain eligible for COBRA continuation.  You should consult the COBRA materials to be provided by the Company for details regarding these benefits.

Restricted Stock Units:  Per the terms of your Restricted Stock Agreement granted under the 2003 Stock Incentive Plan, The Company will vest 19,125 Restricted Stock Units as of your Termination Date.  This includes 7,500 units that would have vested on May 1, 2008, 4,125 that would have vested on August 15, 2008 and 7,500 units that would have vested on May 1, 2009.  No shares will be delivered pursuant to the vesting of RSU’s unless and until you pay to the Company, or make provisions 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.

Outplacement:  The Company will provide you an allowance up to $30,000 to cover any and all executive outplacement, career counseling or career transition services you may utilize during the twelve (12) month period following your Termination Date.  You should submit any invoicing for said services directly to the Company and the Company will pay for said services directly to the provider.

All other benefits, including life insurance and long-term disability, will cease upon the Termination Date.

EX-10.16

Exhibit 10.16

May 6, 2008 (As amended on May 29, 2008.)

Sandra Stark

[address]

Dear Sandy:

In connection with the termination of your employment with The First Marblehead Education Resources, Inc. (the “Company”) on June 30, 2008, you are eligible to receive the severance benefits described in the “Description of Severance Benefits” attached to this letter agreement as Attachment A if you sign and return this letter agreement to me no earlier than June 30, 2008 and it becomes binding between you and the Company. By signing and returning this letter agreement and not revoking your acceptance, you will be entering into a binding agreement with the Company and will be agreeing to the terms and conditions set forth in the numbered paragraphs below, including the release of claims set forth in paragraph 3. Therefore, you are advised to consult with an attorney before signing this letter agreement and you may take up to forty-five (45) days to do so. If you sign this letter agreement, you may change your mind and revoke your agreement during the seven (7) day period after you have signed it. If you do not so revoke, this letter agreement will become a binding agreement between you and the Company upon the expiration of the seven (7) day revocation period.

If you choose not to sign and return this letter agreement by June 30, 2008 or if you revoke your acceptance of this letter agreement during the revocation period, you shall not receive any severance benefits from the Company. You will, however, receive payment on your termination for your final wages and any unused vacation time accrued through the Termination Date (as defined herein). Also, regardless of signing this letter agreement, if eligible, you may elect to continue receiving group medical insurance pursuant to the federal “COBRA” law, 29 U.S.C. § 1161 et seq. All premium costs for “COBRA” shall be paid by you on a monthly basis for as long as, and to the extent that, you remain eligible for COBRA continuation. You should consult the COBRA materials to be provided by the Company for details regarding these benefits. All other benefits, including life insurance and long-term disability, will cease upon your Termination Date.

The following numbered paragraphs set forth the terms and conditions which will apply if you timely sign and return this letter agreement and do not revoke it within the seven (7) day revocation period:

1.Termination Date- Your effective date of termination from the Company is June 30, 2008 (the “Termination Date”).

2.Description of Severance Benefits- The severance benefits paid to you if you timely sign, return, and do not revoke this letter agreement are described in the “Description of Severance Benefits” attached as Attachment A (the “severance benefits”).

The First Marblehead Corporation

806 Boylston Street, 34th Floor

Boston, MA 02199

Phone 800 895.4283

www.firstmarblehead.com

Creating Solutions for Education Finance

3.Release - In consideration of the payment of the severance benefits, which you acknowledge you would not otherwise be entitled to receive, you hereby fully, forever, irrevocably and unconditionally release, remise and discharge the Company, its officers, directors, stockholders, corporate affiliates, subsidiaries, parent companies, successors and assigns, agents and employees (each in their individual and corporate capacities) (hereinafter, the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses (including attorneys’ fees and costs), of every kind and nature which you ever had or now have against the Released Parties, including, but not limited to, those claims arising out of your employment with and/or separation from the Company, including, but not limited to, all claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the Americans With Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, 18 U.S.C. § 1514(A), the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., the Massachusetts Fair Employment Practices Act., M.G.L. c. 151B, § 1 et seq., the Massachusetts Civil Rights Act, M.G.L. c. 12, §§ 11H and 11I, the Massachusetts Equal Rights Act, M.G.L. c. 93, § 102 and M.G.L. c. 214, § 1C, the Massachusetts Labor and Industries Act, M.G.L. c. 149, § 1 et seq., the Massachusetts Privacy Act, M.G.L. c. 214, § 1B, and the Massachusetts Maternity Leave Act, M.G.L. c. 149, § 105D, all as amended; all common law claims including, but not limited to, actions in tort, defamation and breach of contract; all claims to any non-vested ownership interest in the Company, contractual or otherwise, including, but not limited to, claims to stock or stock options; and any claim or damage arising out of your employment with or separation from the Company (including a claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not expressly referenced above; provided, however, that nothing in this Agreement prevents you from filing, cooperating with, or participating in any proceeding before the EEOC or a state Fair Employment Practices Agency (except that you acknowledge that you may not be able to recover any monetary benefits in connection with any such claim, charge or proceeding).

4.Invention, Non-Disclosure, Non-Competition and Non-Solicitation Obligations - You acknowledge and reaffirm your obligation to keep confidential and not to disclose any and all non-public information concerning the Company which you acquired during the course of your employment with the Company, including, but not limited to, any non-public information concerning the Company’s business affairs, business prospects and financial condition, as is stated more fully in the Invention, Non-Disclosure, Non-Competition and Non-Solicitation Agreement you executed on December 5, 2005.

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5.Return of Company Property - You confirm that you have returned to the Company all keys, files, records (and copies thereof), equipment (including, but not limited to, computer hardware, software and printers, wireless handheld devices, cellular phones, pagers, etc.), Company identification, Company vehicles and any other Company-owned property in your possession or control and have left intact all electronic Company documents, including but not limited to, those that you developed or helped to develop during your employment. You further confirm that you have cancelled all accounts for your benefit, if any, in the Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone and/or pager accounts and computer accounts.

6.Business Expenses and Compensation - You acknowledge that you have been reimbursed by the Company for all business expenses incurred in conjunction with the performance of your employment and that no other reimbursements are owed to you. You further acknowledge that you have received payment in full for all services rendered in conjunction with your employment by the Company and that no other compensation is owed to you except as provided herein.

7.Non-Disparagement - You understand and agree that, as a condition for payment to you of the consideration herein described, you shall not make any false, disparaging or derogatory statements to any media outlet, industry group, financial institution or current or former employee, consultant, client or customer of the Company regarding the Company or any of its directors, officers, employees, agents or representatives or about the Company’s business affairs and financial condition.

8.Amendment - This letter agreement shall be binding upon the parties and may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by duly authorized representatives of the parties hereto. This letter agreement is binding upon and shall inure to the benefit of the parties and their respective agents, assigns, heirs, executors, successors and administrators.

9.Waiver of Rights - No delay or omission by the Company in exercising any right under this letter agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

10.Validity - Should any provision of this letter agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this letter agreement.

11.Confidentiality - - To the extent permitted by law, you understand and agree that as a condition for payment to you of the severance benefits herein described, the terms and contents of this letter agreement, and the contents of the negotiations and discussions resulting in this letter agreement, shall be maintained as confidential by you and your agents and representatives and shall not be disclosed to any third party except to the extent required by federal or state law or as otherwise agreed to in writing by the Company.

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12.Cooperation - You agree to cooperate with the Company in the investigation, defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company. Your cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with the Company’s counsel to prepare for discovery or any mediation, arbitration, trial, administrative hearing or other proceeding or to act as a witness when reasonably requested by the Company at mutually agreeable times and at locations mutually convenient to you and the Company. You also agree to cooperate with the Company in the transitioning of your work, and will be available to the Company for this purpose or any other purpose reasonably requested by the Company.

13.Tax Provision - In connection with the severance benefits provided to you pursuant to this letter agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and you shall be responsible for all applicable taxes with respect to such severance benefits under applicable law. You acknowledge that you are not relying upon advice or representation of the Company with respect to the tax treatment of any of the severance benefits set forth in Attachment A.

14.Nature of Agreement - - You understand and agree that this letter agreement is a severance agreement and does not constitute an admission of liability or wrongdoing on the part of the Company.

15.Eligibility for Severance Program. Attached to this letter agreement as Attachment B is a description of (i) any class, unit or group of individuals covered by the program of severance benefits which the Company has offered to you, and any applicable time limits regarding such severance benefit program; and (ii) the job title and ages of all individuals eligible or selected for such severance benefit program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or who were not selected for such severance benefit program.

16.Acknowledgments - You acknowledge that you have been given at least forty-five (45) days to consider this letter agreement, including Attachments A and B, and that the Company advised you to consult with an attorney of your own choosing prior to signing this letter agreement. You understand that you may revoke this letter agreement for a period of seven (7) days after you sign this letter agreement, and the letter agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period. You understand and agree that by entering into this letter agreement you are waiving any and all rights or claims you might have under The Age Discrimination in Employment Act, as amended by The Older Workers Benefit Protection Act, and that you have received consideration beyond that to which you were previously entitled.

17.Voluntary Assent - You affirm that no other promises or agreements of any kind have been made to or with you by any person or entity whatsoever to cause you to sign this letter agreement, and that you fully understand the meaning and intent of this letter agreement. You state and represent that you have had an opportunity to fully discuss and review the terms of this letter agreement, including Attachments A and B, with an attorney. You further state and represent that you have carefully read this letter

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agreement, including Attachments A and B, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign your name of your own free act.

18.Applicable Law - This letter agreement shall be interpreted and construed by the laws of the Commonwealth of Massachusetts, without regard to conflict of laws provisions. You hereby irrevocably submit to and acknowledge and recognize the jurisdiction of the courts of the Commonwealth of Massachusetts, or if appropriate, a federal court located in Massachusetts (which courts, for purposes of this letter agreement, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this letter agreement or the subject matter hereof.

19.Entire Agreement - This letter agreement, including Attachments A and B, contains and constitutes the entire understanding and agreement between the parties hereto with respect to your severance benefits and the settlement of claims against the Company and cancels all previous oral and written negotiations, agreements, commitments and writings in connection therewith. Nothing in this paragraph, however, shall modify, cancel or supersede your obligations set forth in paragraph 4 herein.

If you have any questions about the matters covered in this letter agreement, please call me at (617) 638-2079.

Very truly yours,

The First Marblehead Education Resources, Inc.

/s/ Robin Camara

Robin Camara

Senior Vice President, Human Resources

I hereby agree to the terms and conditions set forth above and in Attachments A and B. I have been given at least forty-five (45) days to consider this letter agreement (including Attachments A and B) and I have chosen to execute this on the date below. I intend that this letter agreement become a binding agreement between me and the Company if I do not revoke my acceptance in seven (7) days.

/s/ Sandra Stark	Date	June 30, 2008
Sandra Stark

To be returned no earlier than June 30, 2008.

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ATTACHMENT A

DESCRIPTION OF SEVERANCE BENEFITS

Severance: The Company will pay you severance pay in the form of continuation of your base salary, less all applicable state and federal taxes, for six (6) months (the “Severance Pay Period”). This severance will begin on July 1, 2008 and will conclude on December 31, 2008. This severance pay will be paid in accordance with the Company’s normal payroll procedures but in no event earlier than the eighth (8th) day after execution of this letter agreement and provided that you do not revoke this agreement.

Benefits: Effective as of the Termination Date, you shall be considered to have elected to continue receiving group medical insurance pursuant to the federal “COBRA” law, 29 U.S.C. § 1161 et seq. During the six (6) months following your Termination Date, from July 1, 2008 to December 31, 2008, the Company shall continue to pay the share of the premium for such coverage that is paid by the Company for active and similarly-situated employees who receive the same type of coverage. The remaining balance of any premium costs, and all premium costs after December 31, 2008, shall be paid by you on a monthly basis for as long as, and to the extent that, you remain eligible for COBRA continuation. You should consult the COBRA materials to be provided by the Company for details regarding these benefits.

Restricted Stock Units: Per the terms of your Restricted Stock Agreement granted under the 2003 Stock Incentive Plan, The Company will vest 10,500 Restricted Stock Units on July 1, 2008, the day following your Termination Date. This includes 4,500 units that would have vested on August 15, 2008, and 6,000 units that would have vested on January 24, 2009. No shares will be delivered pursuant to the vesting of RSU’s unless and until you pay to the Company, or make provisions 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.

Outplacement: Executive outplacement services will be arranged for you with Keystone/Essex Partners. The use of the outplacement services must occur within the twelve (12) month period following your Termination Date. The cost of these outplacement services will be paid by the Company.

All other benefits, including life insurance and long-term disability, will cease upon the Termination Date.

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EX-10.21

Exhibit 10.21

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

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condition continues to exist; and (v) the Participant terminates his employment 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;

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(iii)to the extent approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board (“Fair Market Value”), provided (x) such method of payment is then permitted under applicable law, (y) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (z) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

(iv)to the extent permitted by applicable law and approved by the Board, in its sole discretion, by payment of such other lawful consideration as the Board may determine; or

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

(c)Termination of Relationship with the Company.  If the Participant ceases to be an employee, officer or director 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”) for any reason, then, except as provided in paragraphs 3(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 or Disability.  If the Participant dies or becomes Disabled prior to the Final Exercise Date while he is an Eligible Participant and the Company has not terminated such relationship for “Cause” as specified in paragraph 3(f) 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, 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, the right to exercise this option shall terminate immediately upon the effective date of such discharge.

(f)Termination by Company without Cause or by Participant for Good Reason.  In the event the Participant’s employment is terminated by the Company without Cause or the Participant terminates his employment for Good Reason and the Participant enters into a binding general release of claims in favor of the Company (other than any claims with respect to Termination Payments), this option shall be exercisable until the Final Expiration Date.

4.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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5.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.

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 dividend or distribution to holders of Common Stock other than an ordinary cash dividend, the number and class of securities and exercise price per share of this option shall be equitably adjusted by the Company (or substituted awards may be made, if applicable) in the manner determined by the Board.  Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to this option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), and if the Participant exercises this option (in whole or in part) between the record date and the distribution date for such stock dividend, he shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

(b)Reorganization Events.

(i)“Reorganization Event” shall mean:  (i) 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 (ii) any exchange of all of the Common Stock of the Company for cash, securities or other property.

(ii)In connection with a Reorganization Event, this option shall be assumed, or a substantially equivalent option shall be substituted, by the acquiring or succeeding corporation or other entity, or an affiliate thereof that, directly or indirectly, owns and controls 100% of the equity interests in such acquiring or succeeding corporation or other entity (any of the foregoing, a “Successor”).  This option shall be considered assumed if, following consummation of the Reorganization Event, this option confers the right to purchase at the Exercise Price, for each share of Common Stock subject to this option immediately prior to the consummation of the Reorganization Event, the consideration 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; provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of a Successor (or equivalent equity interests in any Successor that is not a corporation), the consideration to be received upon the exercise of this option shall consist solely of common stock of a Successor (or equivalent equity interests in any Successor that is not a corporation) equivalent in value (as determined by the Board in good faith) to the per share consideration

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received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.  For purposes of this Section 6(b)(ii), “affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended.

(iii)“Roll-In Transaction” shall mean any transaction, series of transactions or other arrangement pursuant to which two or more holders of more than 1% but less than all of the issued and outstanding Common Stock (assuming for these purposes the conversion of any securities convertible into Common Stock) or other equity interests of the Company agree or are allowed to exchange or contribute their existing equity (“Participating Holders”) and in consideration of such exchange or contribution continue, directly or indirectly through any holding company or other affiliate, as an equity owner in the Company or its successor in the Reorganization Transaction.  For purposes of the definition of Roll-In Transaction in this Section 6(b)(iii), each holder and any “affiliates” thereof (as such term is defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, but which term shall also include with respect to any individual holder any trust or similar entity for the benefit of any spouse or lineal descendant of such individual) shall be considered as a single holder.

(iv)With respect to any Reorganization Event in connection with which there is no “Roll-In Transaction”: (A) the Participant shall not be entitled to any equitable relief with respect to any actual or threatened breach or violation of the obligations set forth in Section 6(b)(ii) (a “Section 6(b)(ii) Breach”) (including, without limitation, (x) specific performance of such obligations, or (y) an order or injunction requiring or seeking the rescission of, modification of, or prevention of the entry into or consummation of, a Reorganization Event or seeking to prevent any Section 6(b)(ii) Breach, and (B) the Participant hereby relinquishes and expressly waives any right to seek or obtain any such equitable relief and hereby expressly acknowledges that his sole remedy for any Section 6(b)(ii) Breach shall be money damages, but such money damages shall nonetheless be calculated solely for the purposes of such calculation as if the Participant was entitled to specific performance of the obligations contained herein, taking into account (by way of example and without limitation) any negative tax impact to the Participant of a payment of money damages as compared to such assumed specific performance, and no such calculation shall be deemed speculative.

(v)Notwithstanding any other provision herein, with respect to any Reorganization Event in connection with which there is a Roll-In Transaction, provided that the Participant, as a condition to the assumption or substitution of this option, enters into any shareholder, stock transfer restriction, put or call, voting or similar agreement that all Participating Holders execute in connection with such Roll-In Transaction with respect to the consideration to be received by the Participant upon the exercise of this option as so assumed or substituted pursuant to Section 6(b)(ii), the parties expressly acknowledge and agree that monetary damages would not be an adequate remedy for a Section 6(b)(ii) Breach and that the Participant shall be entitled to specific performance of the obligation to have this option assumed or substituted as set forth in Section 6(b)(ii); provided, however, that the Participant shall nonetheless not be entitled to an order or injunction requiring or seeking the rescission of, modification of, or prevention of the entry into or consummation of, such Roll-In Transaction or seeking to prevent any Section 6(b)(ii) Breach and the Participant hereby relinquishes and expressly waives any right to seek or obtain any such order or injunction.

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(vi)Nothing contained in this agreement shall in any way modify any of the Participant’s rights or remedies as a holder of Common Stock of the Company, nor shall the Participant’s exercise of such rights or remedies solely in his capacity as a holder of Common Stock be deemed a breach or violation of this agreement.

7.Conditions on Delivery of Stock.  The Company will not be obligated to deliver any shares of Common Stock pursuant to this agreement until (a) all conditions of this option have been met or removed to the satisfaction of the Company, (b) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (c) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

8.Miscellaneous.

(a)No Right To Employment or Other Status.  The grant of this option shall not be construed as giving the Participant the right to continued employment or any other relationship with the Company.  The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with the Participant free from any liability or claim under this option, except as expressly provided herein.

(b)No Rights As Stockholder.  The Participant or designated beneficiary shall have no rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to this option until becoming the record holder of such shares.

(c)Governing Law.  The provisions of this agreement shall be governed by and interpreted in accordance with the laws of State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

(d)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.

(e)Entire Agreement.  This agreement constitutes the entire agreement between the parties, and supersedes all prior agreements and understandings, relating to the subject matter of this agreement.

(f)Amendment.  This agreement may be amended or modified only by a written instrument executed by both the Company and the employee.

[Remainder of Page Intentionally Left Blank; Signature Page Follows.]

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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: August 18, 2008	By:	/s/ William R. Berkley
		Name:	William R. Berkley
		Title:	Lead Director

PARTICIPANT’S ACCEPTANCE

The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof.

PARTICIPANT:
/s/ Daniel Meyers
Address:	Suite 1380, 800 Boylston St.
	Boston, MA 02199

EX-10.22

Exhibit 10.22

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 $12.00 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.

This option will vest and become fully exercisable upon the occurrence of any of the following:

(a)November 16, 2008;

(b)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);

(c)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

(d)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 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

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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.

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 extent approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board (“Fair Market Value”), provided (x) such method of payment is then permitted under applicable law, (y) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (z) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

(iv)to the extent permitted by applicable law and approved by the Board, in its sole discretion, by payment of such other lawful consideration as the Board may determine; or

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

(c)Termination of Relationship with the Company.  If the Participant ceases to be an employee, officer or director 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”) for any reason, then, except as provided in paragraphs 3(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 or Disability.  If the Participant dies or becomes Disabled prior to the Final Exercise Date while he is an Eligible Participant and the Company has not terminated such relationship for “Cause” as specified in paragraph 3(f) below, this option

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shall be exercisable, within the period of one year following the date of death or disability of the Participant by the Participant, 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, the right to exercise this option shall terminate immediately upon the effective date of such discharge.

(f)Termination by Company without Cause or by Participant for Good Reason.  In the event the Participant’s employment is terminated by the Company without Cause or the Participant terminates his employment for Good Reason and the Participant enters into a binding general release of claims in favor of the Company (other than any claims with respect to Termination Payments), this option shall be exercisable until the Final Expiration Date.

4.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.

5.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.

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 dividend or distribution to holders of Common Stock other than an ordinary cash dividend, the number and class of securities and exercise price per share of this option shall be equitably adjusted by the Company (or substituted awards may be made, if applicable) in the manner determined by the Board.  Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to this option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), and if the Participant exercises this option (in whole or in part) between the record date and the distribution date for such stock dividend, he shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

(b)Reorganization Events.

(i)“Reorganization Event” shall mean:  (i) any merger or consolidation of the

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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 (ii) any exchange of all of the Common Stock of the Company for cash, securities or other property.

(ii)In  connection with a Reorganization Event, this option shall be assumed, or a substantially equivalent option shall be substituted, by the acquiring or succeeding corporation or other entity, or an affiliate thereof that, directly or indirectly, owns and controls 100% of the equity interests in such acquiring or succeeding corporation or other entity (any of the foregoing, a “Successor”).  This option shall be considered assumed if, following consummation of the Reorganization Event, this option confers the right to purchase at the Exercise Price, for each share of Common Stock subject to this option immediately prior to the consummation of the Reorganization Event, the consideration 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; provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of a Successor (or equivalent equity interests in any Successor that is not a corporation), the consideration to be received upon the exercise of this option shall consist solely of common stock of a Successor (or equivalent equity interests in any Successor that is not a corporation) equivalent in value (as determined by the Board in good faith) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.  For purposes of this Section 6(b)(ii), “affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended.

(iii)“Roll-In Transaction” shall mean any transaction, series of transactions or other arrangement pursuant to which two or more holders of more than 1% but less than all of the issued and outstanding Common Stock (assuming for these purposes the conversion of any securities convertible into Common Stock) or other equity interests of the Company agree or are allowed to exchange or contribute their existing equity (“Participating Holders”) and in consideration of such exchange or contribution continue, directly or indirectly through any holding company or other affiliate, as an equity owner in the Company or its successor in the Reorganization Transaction.  For purposes of the definition of Roll-In Transaction in this Section 6(b)(iii), each holder and any “affiliates” thereof (as such term is defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, but which term shall also include with respect to any individual holder any trust or similar entity for the benefit of any spouse or lineal descendant of such individual) shall be considered as a single holder.

(iv)With respect to any Reorganization Event in connection with which there is no “Roll-In Transaction”: (A) the Participant shall not be entitled to any equitable relief with respect to any actual or threatened breach or violation of the obligations set forth in Section 6(b)(ii) (a “Section 6(b)(ii) Breach”) (including, without limitation, (x) specific performance of such obligations, or (y) an order or injunction requiring or seeking the rescission of, modification of, or prevention of the entry into or consummation of, a Reorganization Event or seeking to prevent any Section 6(b)(ii) Breach, and (B) the Participant hereby relinquishes and expressly waives any right to seek or obtain any such equitable relief and hereby expressly acknowledges that his sole remedy for any Section 6(b)(ii) Breach shall be money damages, but such money damages shall nonetheless be calculated solely for the purposes of such calculation as if the

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Participant was entitled to specific performance of the obligations contained herein, taking into account (by way of example and without limitation) any negative tax impact to the Participant of a payment of money damages as compared to such assumed specific performance, and no such calculation shall be deemed speculative.

(v)Notwithstanding any other provision herein, with respect to any Reorganization Event in connection with which there is a Roll-In Transaction, provided that the Participant, as a condition to the assumption or substitution of this option, enters into any shareholder, stock transfer restriction, put or call, voting or similar agreement that all Participating Holders execute in connection with such Roll-In Transaction with respect to the consideration to be received by the Participant upon the exercise of this option as so assumed or substituted pursuant to Section 6(b)(ii), the parties expressly acknowledge and agree that monetary damages would not be an adequate remedy for a Section 6(b)(ii) Breach and that the Participant shall be entitled to specific performance of the obligation to have this option assumed or substituted as set forth in Section 6(b)(ii); provided, however, that the Participant shall nonetheless not be entitled to an order or injunction requiring or seeking the rescission of, modification of, or prevention of the entry into or consummation of, such Roll-In Transaction or seeking to prevent any Section 6(b)(ii) Breach and the Participant hereby relinquishes and expressly waives any right to seek or obtain any such order or injunction.

(vi)Nothing contained in this agreement shall in any way modify any of the Participant’s rights or remedies as a holder of Common Stock of the Company, nor shall the Participant’s exercise of such rights or remedies solely in his capacity as a holder of Common Stock be deemed a breach or violation of this agreement.

7.Miscellaneous.

(a)No Right To Employment or Other Status.  The grant of this option shall not be construed as giving the Participant the right to continued employment or any other relationship with the Company.  The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with the Participant free from any liability or claim under this option, except as expressly provided herein.

(b)No Rights As Stockholder.  The Participant or designated beneficiary shall have no rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to this option until becoming the record holder of such shares.

(c)Governing Law.  The provisions of this agreement shall be governed by and interpreted in accordance with the laws of State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

(d)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.

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(e)Entire Agreement.  This agreement constitutes the entire agreement between the parties, and supersedes all prior agreements and understandings, relating to the subject matter of this agreement.

(f)Amendment.  This agreement may be amended or modified only by a written instrument executed by both the Company and the employee.

[Remainder of Page Intentionally Left Blank; Signature Page Follows.]

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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: August 18, 2008	By:	/s/ William R. Berkley
	Name:		William R. Berkley
	Title:		Lead Director

PARTICIPANT’S ACCEPTANCE

The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof.

PARTICIPANT:
/s/ Daniel Meyers
Address:	Suite 1380, 800 Boylston St.
	Boston, MA 02199

EX-10.23

Exhibit 10.23

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 $16.00 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.

This option will vest and become fully exercisable upon the occurrence of any of the following:

(a)November 16, 2008;

(b)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);

(c)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

(d)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 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

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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.

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 extent approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board (“Fair Market Value”), provided (x) such method of payment is then permitted under applicable law, (y) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (z) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

(iv)to the extent permitted by applicable law and approved by the Board, in its sole discretion, by payment of such other lawful consideration as the Board may determine; or

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

(c)Termination of Relationship with the Company.  If the Participant ceases to be an employee, officer or director 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”) for any reason, then, except as provided in paragraphs 3(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 or Disability.  If the Participant dies or becomes Disabled prior to the Final Exercise Date while he is an Eligible Participant and the Company has not terminated such relationship for “Cause” as specified in paragraph 3(f) below, this option

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shall be exercisable, within the period of one year following the date of death or disability of the Participant by the Participant, 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, the right to exercise this option shall terminate immediately upon the effective date of such discharge.

(f)Termination by Company without Cause or by Participant for Good Reason.  In the event the Participant’s employment is terminated by the Company without Cause or the Participant terminates his employment for Good Reason and the Participant enters into a binding general release of claims in favor of the Company (other than any claims with respect to Termination Payments), this option shall be exercisable until the Final Expiration Date.

4.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.

5.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.

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 dividend or distribution to holders of Common Stock other than an ordinary cash dividend, the number and class of securities and exercise price per share of this option shall be equitably adjusted by the Company (or substituted awards may be made, if applicable) in the manner determined by the Board.  Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to this option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), and if the Participant exercises this option (in whole or in part) between the record date and the distribution date for such stock dividend, he shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

(b)Reorganization Events.

(i)“Reorganization Event” shall mean:  (i) any merger or consolidation of the

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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 (ii) any exchange of all of the Common Stock of the Company for cash, securities or other property.

(ii)In  connection with a Reorganization Event, this option shall be assumed, or a substantially equivalent option shall be substituted, by the acquiring or succeeding corporation or other entity, or an affiliate thereof that, directly or indirectly, owns and controls 100% of the equity interests in such acquiring or succeeding corporation or other entity (any of the foregoing, a “Successor”).  This option shall be considered assumed if, following consummation of the Reorganization Event, this option confers the right to purchase at the Exercise Price, for each share of Common Stock subject to this option immediately prior to the consummation of the Reorganization Event, the consideration 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; provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of a Successor (or equivalent equity interests in any Successor that is not a corporation), the consideration to be received upon the exercise of this option shall consist solely of common stock of a Successor (or equivalent equity interests in any Successor that is not a corporation) equivalent in value (as determined by the Board in good faith) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.  For purposes of this Section 6(b)(ii), “affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended.

(iii)“Roll-In Transaction” shall mean any transaction, series of transactions or other arrangement pursuant to which two or more holders of more than 1% but less than all of the issued and outstanding Common Stock (assuming for these purposes the conversion of any securities convertible into Common Stock) or other equity interests of the Company agree or are allowed to exchange or contribute their existing equity (“Participating Holders”) and in consideration of such exchange or contribution continue, directly or indirectly through any holding company or other affiliate, as an equity owner in the Company or its successor in the Reorganization Transaction.  For purposes of the definition of Roll-In Transaction in this Section 6(b)(iii), each holder and any “affiliates” thereof (as such term is defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, but which term shall also include with respect to any individual holder any trust or similar entity for the benefit of any spouse or lineal descendant of such individual) shall be considered as a single holder.

(iv)With respect to any Reorganization Event in connection with which there is no “Roll-In Transaction”: (A) the Participant shall not be entitled to any equitable relief with respect to any actual or threatened breach or violation of the obligations set forth in Section 6(b)(ii) (a “Section 6(b)(ii) Breach”) (including, without limitation, (x) specific performance of such obligations, or (y) an order or injunction requiring or seeking the rescission of, modification of, or prevention of the entry into or consummation of, a Reorganization Event or seeking to prevent any Section 6(b)(ii) Breach, and (B) the Participant hereby relinquishes and expressly waives any right to seek or obtain any such equitable relief and hereby expressly acknowledges that his sole remedy for any Section 6(b)(ii) Breach shall be money damages, but such money damages shall nonetheless be calculated solely for the purposes of such calculation as if the

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Participant was entitled to specific performance of the obligations contained herein, taking into account (by way of example and without limitation) any negative tax impact to the Participant of a payment of money damages as compared to such assumed specific performance, and no such calculation shall be deemed speculative.

(v)Notwithstanding any other provision herein, with respect to any Reorganization Event in connection with which there is a Roll-In Transaction, provided that the Participant, as a condition to the assumption or substitution of this option, enters into any shareholder, stock transfer restriction, put or call, voting or similar agreement that all Participating Holders execute in connection with such Roll-In Transaction with respect to the consideration to be received by the Participant upon the exercise of this option as so assumed or substituted pursuant to Section 6(b)(ii), the parties expressly acknowledge and agree that monetary damages would not be an adequate remedy for a Section 6(b)(ii) Breach and that the Participant shall be entitled to specific performance of the obligation to have this option assumed or substituted as set forth in Section 6(b)(ii); provided, however, that the Participant shall nonetheless not be entitled to an order or injunction requiring or seeking the rescission of, modification of, or prevention of the entry into or consummation of, such Roll-In Transaction or seeking to prevent any Section 6(b)(ii) Breach and the Participant hereby relinquishes and expressly waives any right to seek or obtain any such order or injunction.

(vi)Nothing contained in this agreement shall in any way modify any of the Participant’s rights or remedies as a holder of Common Stock of the Company, nor shall the Participant’s exercise of such rights or remedies solely in his capacity as a holder of Common Stock be deemed a breach or violation of this agreement.

7.Miscellaneous.

(a)No Right To Employment or Other Status.  The grant of this option shall not be construed as giving the Participant the right to continued employment or any other relationship with the Company.  The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with the Participant free from any liability or claim under this option, except as expressly provided herein.

(b)No Rights As Stockholder.  The Participant or designated beneficiary shall have no rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to this option until becoming the record holder of such shares.

(c)Governing Law.  The provisions of this agreement shall be governed by and interpreted in accordance with the laws of State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

(d)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.

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(e)Entire Agreement.  This agreement constitutes the entire agreement between the parties, and supersedes all prior agreements and understandings, relating to the subject matter of this agreement.

(f)Amendment.  This agreement may be amended or modified only by a written instrument executed by both the Company and the employee.

[Remainder of Page Intentionally Left Blank; Signature Page Follows.]

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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: August 18, 2008	By:	/s/ William R. Berkley
	Name:		William R. Berkley
	Title:		Lead Director

PARTICIPANT’S ACCEPTANCE

The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof.

PARTICIPANT:
/s/ Daniel Meyers
Address:	Suite 1380, 800 Boylston St.
	Boston, MA 02199

EX-10.27

Exhibit 10.27

PRUDENTIAL CENTER

INDEX TO LEASE

FROM

BP PRUCENTER ACQUISITION LLC

TO

THE FIRST MARBLEHEAD CORPORATION

TABLE OF CONTENTS

		PAGE
ARTICLE I	BASIC LEASE PROVISIONS AND ENUMERATIONS OF EXHIBITS
1.1	INTRODUCTION	1
1.2	BASIC DATA	1
1.3	ENUMERATION OF EXHIBITS	4
ARTICLE II	PREMISES	5
2.1	DEMISE AND LEASE OF PREMISES	5
2.2	APPURTENANT RIGHTS AND RESERVATIONS	6
2.3	RIGHT OF FIRST OFFER	7
ARTICLE III	LEASE TERM AND EXTENSION OPTIONS	10
3.1	TERM	10
3.2	EXTENSION OPTION	10
ARTICLE IV	CONDITION OF PREMISES; ALTERATIONS	12
4.1	SUBSTANTIAL COMPLETION	12
4.2	TENANT’S COMPLETION REMEDIES	19
4.3	QUALITY AND PERFORMANCE OF WORK	19
4.4	SPECIAL ALLOWANCE	20
4.5	PAYMENT OF TENANT PLAN EXCESS COSTS	21
4.6	COMPLIANCE WITH LAW	22
ARTICLE V	ANNUAL FIXED RENT AND ELECTRICITY	23
5.1	FIXED RENT	23
5.2	ALLOCATION OF ELECTRICITY CHARGES	24
5.3	LANDLORD’S RECAPTURE RIGHT	24
ARTICLE VI	TAXES	25
6.1	DEFINITIONS	25
6.2	TENANT’S SHARE OF REAL ESTATE TAXES	26
ARTICLE VII	LANDLORD’S REPAIRS AND SERVICES	27
7.1	STRUCTURAL REPAIRS	27
7.2	OTHER REPAIRS TO BE MADE BY LANDLORD	28
7.3	SERVICES TO BE PROVIDED BY LANDLORD	28
7.4	OPERATING COSTS DEFINED	28
7.5	TENANT’S ESCALATION PAYMENTS	34
7.6	NO DAMAGE	36
ARTICLE VIII	TENANT’S REPAIRS	38
8.1	TENANT’S REPAIRS AND MAINTENANCE	38

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ARTICLE IX	ALTERATIONS	38
9.1	LANDLORD’S APPROVAL	38
9.1.1	CERTAIN ALTERATIONS	39
9.2	CONFORMITY OF WORK	40
9.3	PERFORMANCE OF WORK, GOVERNMENTAL PERMITS AND INSURANCE	40
9.4	LIENS	41
9.5	NATURE OF ALTERATIONS	41
9.6	INCREASES IN TAXES	43
ARTICLE X	PARKING	43
10.1	PARKING PRIVILEGES	43
10.2	PARKING CHARGES	44
10.3	GARAGE OPERATION	44
10.4	LIMITATIONS	45
ARTICLE XI	CERTAIN TENANT COVENANTS	45
ARTICLE XII	ASSIGNMENT AND SUBLETTING	49
12.1	RESTRICTIONS ON TRANSFER	49
12.2	EXCEPTIONS FOR AFFILIATED ENTITIES	50
12.3	LANDLORD’S TERMINATION RIGHT	50
12.4	CONSENT OF LANDLORD	51
12.5	TENANT’S NOTICE	53
12.6	PROFIT ON SUBLEASING OR ASSIGNMENT	54
12.7	ADDITIONAL CONDITIONS	54
ARTICLE XIII	INDEMNITY AND COMMERCIAL GENERAL LIABILITY INSURANCE	56
13.1	TENANT’S INDEMNITY	56
13.1A	LANDLORD’S INDEMNITY OF TENANT	56
13.2	COMMERCIAL GENERAL LIABILITY INSURANCE	56
13.3	TENANT’S PROPERTY INSURANCE	57
13.4	NON-SUBROGATION	57
13.5	TENANT’S RISK	58
13.6	LANDLORD’S INSURANCE	58
ARTICLE XIV	FIRE, CASUALTY AND TAKING	58
14.1	DAMAGE RESULTING FROM CASUALTY	58
14.2	UNINSURED CASUALTY	59
14.3	RIGHTS OF TERMINATION FOR TAKING	60
14.4	AWARD	61
ARTICLE XV	DEFAULT	61
15.1	TENANT’S DEFAULT	61

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15.2	TERMINATION; RE-ENTRY	63
15.3	CONTINUED LIABILITY; RE-LETTING	63
15.4	LIQUIDATED DAMAGES	64
15.5	WAIVER OF REDEMPTION	65
15.6	LANDLORD’S DEFAULT	65
ARTICLE XVI	MISCELLANEOUS PROVISIONS	66
16.1	WAIVER	66
16.2	CUMULATIVE REMEDIES	66
16.3	QUIET ENJOYMENT	67
16.4	SURRENDER	67
16.5	BROKERAGE	67
16.6	INVALIDITY OF PARTICULAR PROVISIONS	68
16.7	PROVISIONS BINDING, ETC.	68
16.8	RECORDING	8
16.9	NOTICES AND TIME FOR ACTION	69
16.10	WHEN LEASE BECOMES BINDING	69
16.11	PARAGRAPH HEADINGS	70
16.12	RIGHTS OF MORTGAGEE	70
16.13	RIGHTS OF GROUND LESSOR	71
16.14	NOTICE TO MORTGAGEE AND GROUND LESSOR	71
16.15	ASSIGNMENT OF RENTS	71
16.16	STATUS REPORT AND FINANCIAL STATEMENTS	73
16.17	SELF-HELP	73
16.18	HOLDING OVER	74
16.19	ENTRY BY LANDLORD	74
16.20	TENANT’S PAYMENTS	75
16.21	LATE PAYMENT	75
16.22	COUNTERPARTS	75
16.23	ENTIRE AGREEMENT	75
16.24	LANDLORD LIABILITY	76
16.25	NO PARTNERSHIP	76
16.26	SECURITY DEPOSIT	76
16.27	GOVERNING LAW	79
16.28	WAIVER OF TRIAL BY JURY	79
16.29	ROOFTOP ANTENNA	79
16.30	SIGNAGE	83
16.31	STORAGE SPACE; GENERATOR SPACE	83

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PRUDENTIAL CENTER

THIS INSTRUMENT IS AN INDENTURE OF LEASE in which the Landlord and the Tenant are the parties hereinafter named, and which relates to space in the building known as the Prudential Tower, Boston, Massachusetts.

The parties to this instrument hereby agree with each other as follows:

ARTICLE I

BASIC LEASE PROVISIONS AND ENUMERATIONS OF EXHIBITS

1.1INTRODUCTION. The following sets forth the basic data and identifying Exhibits elsewhere hereinafter referred to in this Lease, and, where appropriate, constitute definitions of the terms hereinafter listed.

1.2BASIC DATA.

Execution Date:	September 5, 2003
Landlord:	BP Prucenter Acquisition LLC
Present Mailing Address of Landlord:	c/o Boston Properties Limited Partnership 111 Huntington Avenue - Suite 300 Boston, Massachusetts 02199-7610
Landlord’s Construction Representative:	Jon Randall or Gretchen McGill
Tenant:	The First Marblehead Corporation, a Delaware corporation
Present Mailing Address of Tenant:	30 Little Harbor Marblehead, Massachusetts 01945
Tenant’s Construction Representative:	Robert Campbell
Design and Construction Schedule:
Authorization to Proceed Date:	September 15, 2003

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Estimated Commencement Date:	December 1, 2003
Outside Damages Date:	June 1, 2004
Outside Completion Date:	September 1, 2004
Term or Lease Term: (sometimes called the “Original Lease Term”)	One hundred twenty-four (124) calendar months (plus the partial month, if any, immediately following the Commencement Date), unless extended or sooner terminated as hereinafter provided.
Extension Option:	Two (2) periods of five (5) years as provided in and on the terms set forth in Section 3.2 hereof.
Lease Year:	A period of twelve (12) consecutive calendar months, commencing on the Rent Commencement Date and on each succeeding anniversary of the Rent Commencement Date.
Commencement Date:	As defined in Section 3.1 hereof.
Rent Commencement Date:	Subject to the provisions of Section 5.1(B), the date four (4) months after the Commencement Date
Premises:	The entirety of the thirty-fourth (34th) floor of the Building, in accordance with the floor plan annexed hereto as Exhibit D and incorporated herein by reference, as further defined and limited in Section 2.1 hereof.
Rentable Floor Area of the Premises:	26,296 square feet
Annual Fixed Rent:
	(a) During the Initial Term:

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Lease Year	Rent psf		Annual Fixed Rent		Monthly Payment
1-3	$	34.00	$	894,064.00	$	74,505.33
4-6	$	36.00	$	946,656.00	$	78,888.00
7-expiration of Initial Term	$	38.00	$	999,248.00	$	83,270.67

	(b) During the extension option period(s) (if any and if exercised), as determined pursuant to Section 3.2.
Tenant Electricity:	See Section 5.2
Additional Rent:	All charges and other sums payable by Tenant to Landlord or its affiliates or agents as set forth in this Lease, other than the Annual Fixed Rent.
Initial Minimum Limits of Tenant’s Commercial General Liability Insurance:	$4,000,000 combined single limit per occurrence on a per location basis. provided however, that Tenant may satisfy this requirement with a $2,000,000 base commercial general liability policy with a $2,000,000 umbrella insurance policy.
Total Rentable Floor Area of the Building:	1,226,539 square feet
Building:	For the purposes of this Lease, the Building shall mean the building commonly known as The Prudential Tower located in the Prudential Center (as hereinafter defined) as the same may be altered, expanded, reduced or otherwise changed by Landlord from time to time.
Prudential Center:	For purposes of this Lease, the Prudential Center shall mean the land described on Exhibit A and the buildings, garages and other improvements thereon, commonly known as Prudential Center, as depicted on the plan attached hereto as Exhibit A-1, as

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	the same may be altered, expanded, reduced or otherwise changed from time to time.
Permitted Use:	General office use.
PruOwner:	Each owner of record or tenant under a ground lease, from time to time, of all or any portion of the Prudential Center.
Broker:	Trammell Crow Company
Security Deposit:	Five Hundred Thousand and 00/100 ($500,000.00) Dollars, subject to reduction in accordance with Section 16.26

1.3ENUMERATION OF EXHIBITS. The following Exhibits attached hereto are a part of this Lease, are incorporated herein by reference, and are to be treated as a part of this Lease for all purposes. Undertakings contained in such Exhibits are agreements on the part of Landlord and Tenant, as the case may be, to perform the obligations stated therein to be performed by Landlord and Tenant, as and where stipulated therein.

Exhibit A	—	Legal Description of the Prudential Center
Exhibit A-1	—	Plan Depicting the Prudential Center
Exhibit B	—	Tenant Plan and Working Drawing Requirements
Exhibit B-1	—	Plans and Construction Schedule
Exhibit C	—	Landlord’s Services
Exhibit D	—	Floor Plan
Exhibit E	—	Form of Commencement Date Agreement
Exhibit F	—	Location of Reserved Parking Stalls
Exhibit G	—	Intentionally Omitted
Exhibit H	—	Broker Determination of Prevailing Market Rent
Exhibit I	—	List of Mortgagees

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ARTICLE II

PREMISES

2.1DEMISE AND LEASE OF PREMISES. Landlord hereby demises and leases to Tenant, and Tenant hereby hires and accepts from Landlord, the Premises in the Building, excluding exterior faces of exterior walls, the common stairways and stairwells, elevators and elevator walls, mechanical rooms, electric and telephone closets, janitor closets, and pipes, ducts, shafts, conduits, wires and appurtenant fixtures serving exclusively or in common other parts of the Building, and if the Premises includes less than the entire rentable area of any floor, excluding the common corridors, elevator lobbies and toilets located on such floor. Tenant hereby agrees with Landlord that, upon not less than ninety (90) days’ notice from Landlord made after the third anniversary of the Commencement Date, Tenant shall relocate from the Premises then demised to Tenant under this Lease (the “Original Premises”) to other premises (the “Relocated Premises”) within the Building and upon such relocation the Relocated Premises shall become the premises demised under this Lease and wherever the term “Premises” is used herein the same thereafter shall mean and refer to the Relocated Premises. The Relocated Premises shall (i) be on a floor in the Building higher than the floor containing the Original Premises, and (ii) contain similar finishes as the Premises and the same level of fit-out, and approximately the same Rentable Square Footage as the Premises and the same number of work stations, offices, breakrooms and reception areas as are contained in the Premises as of the date Tenant receives Landlord’s notice of relocation. In no event shall Tenant be required to pay more Annual Fixed Rent or Additional Rent for the Relocated Premises than it would have had to pay for the Original Premises. Landlord, at its sole cost and expense, shall perform the partitioning of the Relocated Premises and shall place the same into substantially equivalent condition to that in which the Original Premises were in prior to such relocation, including all telecommunications wiring and cabling. Landlord shall also reimburse Tenant for Tenant’s reasonable out-of-pocket moving expenses in so relocating to the Relocated Premises including all costs for moving Tenant’s furniture, equipment, supplies and other personal property, as well as the cost of printing and distributing change of address notices to Tenant’s customers and one month’s supply of stationery showing the new address, upon billing therefor from Tenant (which billing shall include reasonable evidence thereof in the form of paid invoices, receipts and the like). Landlord shall cooperate with Tenant to minimize the disruption to Tenant’s business caused by the relocation.. Landlord shall also reimburse Tenant for the reasonable cost of the time spent by Tenant’s employees in connection with the construction of and relocation to the Relocated Premises. Tenant shall not be required to vacate the Original Premises and to relocate to the Relocated Premises until the Relocated Premises shall be demonstrated, to Tenant’s reasonable satisfaction, to be substantially complete subject to punch list

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items and items of long lead time. Only one such relocation request may be made during the term of this Lease. Upon any such relocation the Tenant shall enter into an amendment to this Lease confirming such relocation, but the Tenant’s failure to enter into such amendment shall not affect in any manner the relocation of the Premises demised under this Lease from the Original Premises to the Relocated Premises.

2.2APPURTENANT RIGHTS AND RESERVATIONS.

(A)Subject to Landlord’s or any other PruOwner’s right to change or alter any of the following in Landlord’s discretion as herein provided, Tenant shall have, as appurtenant to the Premises, the non-exclusive right to use in common with others, but not in a manner or extent that would materially interfere with the normal operation and use of the Building as a multi-tenant office building and subject to reasonable rules of general applicability to tenants of the Building from time to time made by Landlord or any other PruOwner of which Tenant is given reasonable prior notice: (i) the common lobbies, corridors, stairways, and elevators of the Building, and the pipes, ducts, shafts, conduits, wires and appurtenant meters and equipment serving the Premises in common with others, (ii) the loading areas serving the Building and the common walkways and driveways necessary for access to the Building, (iii) if the Premises include less than the entire rentable floor area of any floor, the common toilets, corridors and elevator lobby of such floor and (iv) the plazas and other common areas of the Prudential Center as Landlord or any other PruOwner makes the same available from time to time; and no other appurtenant rights and easements. Notwithstanding anything to the contrary herein, Landlord has no obligation to allow any particular telecommunication service provider to have access to the Building or to the Premises, but Landlord agrees not to unreasonably withhold its consent to particular providers. If Landlord permits such access, Landlord may condition such access upon the payment to Landlord by the service provider of fees assessed by Landlord in its sole discretion, provided that no such fees shall be assessed unless such service provider provides telecommunication service to more than one tenant in the Building. Landlord agrees that any of the following providers are acceptable to Landlord, and will not be required to pay any such access fees: BellAtlantic; Shared Technologies, Inc., MFS, Comcast, Teleport Communications and Cablevision of Boston.

(B)Landlord reserves for its benefit and the benefit of any other PruOwner the right from time to time, without unreasonable interference with Tenant’s use: (i) to install, use, maintain, repair, replace and relocate for service to the Premises and other parts of the Building, or either, pipes, ducts, conduits, wires and appurtenant fixtures, wherever located in the Premises or the Building, and (ii) to alter or relocate any other common facility, provided that substitutions are substantially equivalent or better. Installations, replacements and relocations

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referred to in clause (i) above shall be located so far as practicable in the central core area of the Building, above ceiling surfaces, below floor surfaces or inside the perimeter walls of the Premises. Except in the case of emergencies, Landlord agrees to use all reasonable efforts to give, or cause such PruOwner to give, Tenant reasonable advance notice of any of the foregoing activities which require work in the Premises. In making any entry into the Premises, Landlord shall use reasonable efforts to minimize interference with the Tenant’s use and enjoyment of the Premises.

(C)Landlord reserves and excepts for its benefit and the benefit of any other PruOwner all rights of ownership and use in all respects outside the Premises, including without limitation, the Building and all other structures and improvements and plazas and common areas in the Prudential Center, except that at all times during the term of this Lease Tenant shall have a reasonable means of access from a public street to the Premises. Without limitation of the foregoing reservation of rights by Landlord, it is understood that in its sole discretion Landlord or any other PruOwner, as the case may be, shall have the right to change and rearrange the plazas and other common areas, to change, relocate and eliminate facilities therein, to erect new buildings thereon, to permit the use of or lease all or part thereof for exhibitions and displays and to sell, lease or dedicate all or part thereof to public use; and further that Landlord or any other PruOwner, as the case may be, shall have the right to make changes in, additions to and eliminations from the Building and other structures and improvements in the Prudential Center, the Premises excepted; provided however that Tenant, its employees, agents, clients, customers, and invitees shall at all times have reasonably direct access to the Building and Premises. Landlord is not under any obligation to permit individuals without proper building identification to enter the Building after 6:00 p.m.

2.3RIGHT OF FIRST OFFER.

(A)Subject to the provisions of Sections 2.3(C) and 2.3(D) below, provided that at the time that any separately demised portion of the thirty-fifth (35th) floor of the Building (each such portion being referred to as an “RFO Space”) first becomes available for reletting (i) there exists no “Event of Default” (defined in Section 15.1), (ii) this Lease is still in full force and effect, and (iii) Tenant has neither assigned this Lease nor sublet more than twenty percent (20%) of the Rentable Floor Area of the Premises (except for an assignment or subletting permitted without Landlord’s consent under Section 12.2 hereof), Landlord agrees not to enter into a lease to relet the RFO Space without first giving to Tenant an opportunity to lease such space for the RFO Annual Fixed Rent as determined by Landlord. An RFO Space shall be deemed to be available for reletting when Landlord, in its sole judgment, determines that: (x) such RFO Space will be vacated by the tenant of such RFO Space, (y) Landlord intends to offer such area

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for lease, and (z) all rights to lease such RFO Space which are superior to Tenant’s rights under this Section 2.3 have lapsed unexercised in accordance with this Section 2.3 or have been irrevocably waived. When the RFO Space becomes so available for reletting, Landlord shall notify Tenant of the availability of such space and shall advise Tenant of the RFO Annual Fixed Rent and other business terms upon which Landlord is willing to lease the RFO Space (“Landlord’s Notice”). If Tenant wishes to exercise Tenant’s right of first offer, Tenant shall do so, if at all, by giving Landlord notice (“Tenant’s RFO Exercise Notice”) of Tenant’s desire to lease the entire amount of such space (it being agreed that Tenant has no right to lease less than the entire amount of the RFO Space) on the terms provided herein within fifteen (15) days after receipt of Landlord’s Notice to Tenant of the availability of such space and Landlord’s quotation of the RFO Annual Fixed Rent and business terms, time being of the essence. If Tenant shall timely give such notice the same shall constitute an agreement to enter into an instrument in writing to lease such space within thirty (30) days thereafter upon all of the same terms and conditions in this Lease except for the provisions of this Section, the Annual Fixed Rent which shall be equal to the RFO Annual Fixed Rent as quoted by Landlord, such other business terms set forth in Landlord’s Notice and those provisions hereof which are inappropriate to the business agreement. If Tenant shall fail to timely give Tenant’s RFO Exercise Notice with respect to an RFO Space, time being of the essence in respect to such exercise, Landlord shall be free for two hundred seventy (270) days after the date of Landlord’s Notice to Lease such RFO Space, upon economic terms, taken as a whole, not less than ninety percent (90%) of the economic terms, taken as a whole, contained in Landlord’s Notice, and without again offering such space to Tenant for lease (it being agreed that if Landlord does not so lease such space during such two hundred seventy (270) day period or if Landlord proposes to lease such space upon economic terms, taken as a whole, less than ninety percent (90%) of the economic terms, taken as a whole contained in Landlord’s Notice during such two hundred seventy (270) day period, the terms of this Section shall continue to apply to the RFO Space).

(B)If Tenant shall exercise any such right of first offer and if, thereafter, the then occupant of the RFO Space wrongfully fails to deliver possession of such premises at the time when its tenancy is scheduled to expire, commencement of the term of Tenant’s occupancy and lease of such additional space shall, in the event of such holding over by such occupant, be deferred until possession of the additional space is delivered to Tenant. The failure of the then occupant of such premises to so vacate shall not constitute or default or breach by Landlord and shall not give Tenant any right to terminate this Lease or to deduct from, offset against or withhold Annual Fixed Rent or additional rent (or any portions thereof). However, Landlord agrees to use good faith efforts (which shall be limited to the commencement and prosecution of eviction proceedings but shall not require the

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taking of any appeal) to cause the then occupant of the RFO Space to vacate such space when its tenancy expires.

(C)As of the date hereof, the entire thirty-fifth (35th) floor of the Building as well as other premises in the Building are leased to The Gillette Company (The Gillette Company, as well as any successor to The Gillette Company which holds the tenant’s interest under The Gillette Company’s lease with Landlord, as such lease may be extended, amended or renewed, being hereinafter referred to as the “Existing Tenant”). Such existing lease and the term thereof, including, but not limited to, the original term thereof, options to extend the term thereof, any expansion options and any amendments thereto is hereinafter called the “Existing Lease”. Notwithstanding anything to the contrary herein contained, Tenant’s rights to lease the RFO Space shall be subject and subordinate (i) to the Existing Lease and the rights of the Existing Tenant thereunder, and (ii) to any other rights which Landlord may grant to the Existing Tenant in the future, pursuant to amendments to the Existing Lease or otherwise, all of which rights are prior to the rights of Tenant under this Section.

(D)Notwithstanding anything to the contrary herein contained, and in addition to the prior rights of the Existing Tenant as set forth in the preceding paragraph, Tenant’s rights to lease the RFO Space shall be subject and subordinate to (i) the rights, as of the Execution Date of this Lease, of any existing tenants (“Other RFO Tenants”) under existing leases with Landlord (“Other RFO Tenant Leases”) for space in the Building to lease the RFO Space, and to Landlord’s right to grant to any Other RFO Tenants a grace period (for the purpose of exercising such rights) of up to an additional thirty (30) days beyond the last day which such Other RFO Tenant has to exercise such rights. Other RFO Tenants include any entity which becomes the holder of the tenant’s interest under an Other RFO Tenant Lease; and (ii) the right of any tenant of the RFO Space (“RFO Existing Tenant”) to exercise any right which it has under its lease to extend or renew the term of its lease of the RFO Space. If any Other RFO Tenants or any RFO Existing Tenants lease the RFO Space pursuant to the Prior RFO Rights, Tenant shall have no right to lease such RFO Space pursuant to this Section 2.3 until such space again becomes available for relet, subject to, and in accordance with the provisions of this Section 2.3. Landlord represents that as of the Execution Date hereof, to the actual knowledge of David Provost, Vice President, Leasing, without further inquiry, the only Other RFO Tenants are the Existing Tenant and Digitas LLC.

(E)Tenant’s rights under this Section 2.3 shall expire on, and Landlord shall have no obligation to deliver a Landlord’s Notice to Tenant after, the date that is twelve (12) months prior to the scheduled termination date of this Lease.

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ARTICLE III

LEASE TERM AND EXTENSION OPTIONS

3.1TERM The Term of this Lease shall be the period specified in Section 1.2 hereof as the “Lease Term”, unless sooner terminated or extended as herein provided. If Section 1.2 provides for a fixed Commencement Date, then the Commencement Date of the Lease Term hereof shall be such date. Otherwise, the Lease Term hereof shall commence on, and the Commencement Date shall be, the first to occur of:

(a)The day on which the Premises are delivered by Landlord to Tenant; or

(b)The date upon which Tenant commences use of the Premises for business purposes (the parties hereby agreeing that the installation of Tenant’s furniture, fixtures and equipment shall not be considered to be business purposes).

Where the Landlord is to perform work to the Premises as provided in Article IV, the Premises shall be considered delivered by the Landlord to the Tenant on the day when the Premises are deemed to be substantially complete, as defined in Section 4.1 hereof.

As soon as may be convenient after the Commencement Date has been determined, Landlord and Tenant agree to join with each other in the execution, in the form of Exhibit E hereto, of a written Commencement Date Agreement in which the Commencement Date and specified Lease Term of this Lease shall be stated. If Tenant shall fail to execute such Agreement (or notify Landlord in writing of its objections thereto) within fifteen (15) days after Tenant’s receipt of Landlord’s request to Tenant to enter into such Agreement, the Commencement Date and Lease Term shall be as reasonably determined by Landlord in accordance with the terms of this Lease.

3.2EXTENSION OPTION.

(A)On the conditions (which conditions Landlord may waive by written notice to Tenant) that at the time of exercise of the herein described option to extend (i) there exists no “Event of Default” (defined in Section 15.1), (ii) this Lease is still in full force and effect, and (iii) Tenant has neither assigned this Lease nor sublet more than twenty percent (20%) of the Rentable Floor Area of the Premises (except for an assignment or subletting permitted without Landlord’s consent under Section 12.2 hereof), Tenant shall have the right to extend the Term hereof upon all the same terms, conditions, covenants and agreements herein contained (except for the Annual Fixed Rent which shall be adjusted during the option period as hereinbelow set forth and except that there shall be no further option to

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extend beyond the two (2) Extended Terms referenced in this Section 3.2(A)) for two (2) periods of five (5) years as hereinafter set forth. Each option period is sometimes herein referred to as the “Extended Term.” Notwithstanding any implication to the contrary Landlord has no obligation to make any additional payment to Tenant in respect of any construction allowance or the like or to perform any work to the Premises as a result of the exercise by Tenant of any such option.

(B)No earlier than ninety (90) days prior to the Extension Notice Date, as hereinafter defined, Tenant may request that Landlord designate the Annual Fixed Rent payable in respect of the Extended Term in question, and Landlord shall designate the Annual Fixed Rent payable during the Extended Term in question (“Landlord’s Rent Quotation”) within thirty (30) days thereafter but Landlord shall not be required to make such designation more than seventeen (17) months prior to the commencement of the Extended Term in question. If at the expiration of thirty (30) days after the date when Landlord provides such quotation to Tenant (the “Negotiation Period”), Landlord and Tenant have not reached agreement on a determination of an Annual Fixed Rent for such Extended Term and executed a written instrument extending the Term of this Lease pursuant to such agreement, then the provisions of Section 3.2(C) below shall apply.

(C)If Tenant desires to exercise an option to extend the Term, then Tenant shall give notice (“Tenant’s Extension Exercise Notice”) to Landlord, not earlier than fifteen (15) months nor later than twelve (12) months prior to the expiration of the then Term of this Lease (as it may have been previously extended) (the Extension Notice Date”) exercising such option to extend. If Tenant shall not have timely given Tenant’s Extension Exercise Notice on or before the date twelve (12) months prior to the expiration of the then Term of this Lease (as it may have been previously extended), then such option shall be void and of no further force and effect. If Tenant does not agree with Landlord’s Rent Quotation, then Tenant shall have the right, for thirty (30) days following the expiration of the Negotiation Period but not later than the date twelve (12) months prior to the expiration of the then Term of this Lease (as it may have been previously extended), to make a request to Landlord for a broker determination (the “Broker Determination”) of the Prevailing Market Rent (as defined in Exhibit H) for such Extended Term, which Broker Determination shall be made in the manner set forth in Exhibit H. If Tenant shall have timely given Tenant’s Extension Exercise Notice and shall timely have requested the Broker Determination, then the Annual Fixed Rent for such Extended Term shall be ninety-five percent (95%) of the Prevailing Market Rent as determined by the Broker Determination. If Tenant shall have timely given Tenant’s Extension Exercise Notice but shall not have timely requested the Broker Determination, then the Annual Fixed Rent during the applicable Extended Term shall be equal to Landlord’s Rent Quotation.

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(D)Upon the giving of the Exercise Notice by Tenant to Landlord exercising Tenant’s applicable option to extend the Lease Term in accordance with the provisions of Section 3.2 (C) above, then this Lease and the Lease Term hereof shall automatically be deemed extended, for the applicable Extended Term, without the necessity for the execution of any additional documents, except that Landlord and Tenant agree to enter into an instrument in writing setting forth the Annual Fixed Rent for the applicable Extended Term as determined in the relevant manner set forth in this Section 3.2; and in such event all references herein to the Lease Term or the Term of this Lease shall be construed as referring to the Lease Term, as so extended, unless the context clearly otherwise requires, and except that there shall be no further option to extend the Lease Term. Notwithstanding anything contained herein to the contrary, in no event shall Tenant have the right to exercise more than one extension option at a time and, further, Tenant shall not have the right to exercise its second extension option unless it has duly exercised its first extension option and in no event shall the Lease Term hereof be extended for more than ten (10) years after the expiration of the Original Lease Term hereof.

ARTICLE IV

CONDITION OF PREMISES; ALTERATIONS

4.1SUBSTANTIAL COMPLETION.

(A)PLANS AND CONSTRUCTION PROCESS.

(1)PREPARATION OF THE PLANS. No later than dates set forth in Exhibit B-1, Tenant shall submit the specified plans to Landlord, or otherwise take the action specified. Landlord hereby acknowledges receipt and approval of the Permit/GMP Plans for the work to be performed by Landlord to prepare the Premises for Tenant’s occupancy (“Landlord’s Work”), provided, however, that the Landlord shall have no responsibility for the installation or connection of Tenant’s computer, telephone, other communication equipment, systems or wiring, unless otherwise agreed by Landlord in writing. By not later than the date set forth in Exhibit B-1, Tenant shall also submit full construction drawings for Landlord’s Work, which plans and specifications (the “Construction Plans”) shall contain at least the information required by, and shall conform to the requirements of, Exhibit B. Landlord shall have no obligation to perform Landlord’s Work until the Construction Plans shall have been presented to it and approved by it. Provided that the Construction Plans shall contain at least the information required by, and shall conform to the requirements of, Exhibit B, Landlord shall not unreasonably withhold or delay its approval of the Construction Plans. However, Landlord’s determination of matters relating to material aesthetic issues relating to alterations or changes visible from the common areas, or from the exterior of the Building at street level, shall be in Landlord’s sole discretion.

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Within five (5) days after Landlord’s receipt of Tenant’s request for approval of the Construction Plans (as well as receipt of the plans to be approved), Landlord shall notify Tenant as to whether Landlord approves the Construction Plans. If Landlord disapproves such plans, such notice shall state the grounds for such disapproval with reasonable specificity.

(1A)COST OF LANDLORD’S WORK. Landlord shall engage Shawmut Design & Construction, or another contractor reasonably acceptable to Tenant, to perform Landlord’s Work. Landlord shall be paid a fee, equal to four percent (4%) of the “Cost of the Work.” (as hereinafter defined) to compensate Landlord for the construction management services which Landlord provides with respect to the performance of Landlord’s Work. As used herein, “Cost of the Work” shall be defined as the total project costs for Landlord’s Work, including both hard and soft costs. The costs of Landlord’s Work shall be paid as set forth in Section 4.1(A)(2) below.

(2)TENANT PLAN EXCESS COSTS. To the extent such costs exceed the Tenant Allowance set forth in Section 4.4, such excess costs are hereinafter referred to as “Tenant Plan Excess Costs” and shall be paid by Tenant in accordance with Section 4.5. Tenant shall notify Landlord in writing, within three (3) business days of receipt by Tenant of Landlord’s statement of Tenant Plan Excess Costs, of either its approval thereof and its authorization to Landlord to proceed with Landlord’s Work in accordance with the Construction Plans in the event Landlord had no objection to the Construction Plans, or changes in the Construction Plans prepared by Tenant’s architect which shall be responsive to any objections raised by Landlord. In the event of the latter modification, Landlord shall, as soon as practicable after Landlord obtains price quotations for any changes in the Construction Plans, quote to Tenant all changes in Tenant Plan Excess Costs resulting from said plan modifications and whether Landlord approves the revised Construction Plans. Tenant shall, within three (3) business days after receipt of Landlord’s revised quotation of Tenant Plan Excess Costs submit to Landlord any revisions to the Construction Plans required by Landlord.

(3)AUTHORIZATION TO PROCEED DATE. Tenant shall, on or before the Authorization to Proceed Date, give Landlord written authorization to proceed with Landlord’s Work in accordance with Tenant’s approved Construction Plans (“Notice to Proceed”). In addition, Tenant shall, on or before the Authorization to Proceed Date, execute and deliver to Landlord any applications or other documentation required in order to obtain all permits and approvals necessary for Landlord to commence and complete Landlord’s Work on a timely basis (“Permit Documentation”). The Authorization to Proceed Date shall be extended on a day for day basis for each day of Landlord Delay. For purposes hereof, “Landlord Delay” shall mean a failure by Landlord to respond to plan submissions within the time frames or to the reasonableness standards set forth in Section 4.1(A)(1).

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(4)CHANGE ORDERS. Tenant shall have the right, in accordance herewith, to submit for Landlord’s approval change proposals subsequent to Landlord’s approval of the Construction Plans and Tenant’s approval of the Tenant Plan Excess Costs, if any (each, a “Change Proposal”). Landlord agrees to respond to any such Change Proposal within such time as is reasonably necessary (taking into consideration the information contained in such Change Proposal) after the submission thereof by Tenant, advising Tenant of any anticipated costs (“Change Order Costs”) associated with such Change Proposal, as well as an estimate of any delay which would likely result in the completion of the Landlord’s Work if a Change Proposal is made pursuant thereto (“Landlord’s Change Order Response”). Tenant shall have the right to then approve or withdraw such Landlord’s Change Order Response within three(3) days after receipt of such Landlord’s Change Order Response. If Tenant fails to respond to Landlord’s Change Order Response within such three (3) day period, such Change Proposal shall be deemed withdrawn. If Tenant approves such Change Proposal, then such Change Proposal shall be deemed a “Change Order” hereunder and if the Change Order is made, then the Change Order Costs associated with the Change Order, if any, shall be deemed additions to the Tenant Plan Excess Costs and shall be paid in the same manner as Tenant Plan Excess Costs are paid as set forth in Section 4.5.

(5)TENANT RESPONSE TO REQUESTS FOR INFORMATION AND APPROVALS. Except to the extent that another time period is expressly herein set forth, Tenant shall respond to any reasonable request from Landlord, Landlord’s architect, Landlord’s contractor and/or Landlord’s Construction Representative for approvals or information in connection with Landlord’s Work, within two (2) business days of Tenant’s receipt of such request, except that if the information requested is not readily available, Tenant shall so inform Landlord within two (2) business days of Tenant’s receipt of such request, whereupon Tenant shall respond to such request as soon as possible, but in no event more than ten (10) days after Tenant’s receipt of such request.

(6)TIME OF THE ESSENCE. Time is of the essence in connection with Tenant’s obligations under this Section 4.1.

(B)TENANT DELAY.

(1)A “TENANT DELAY” shall be defined as the following:

(a)Tenant’s failure to timely comply with the Plans and Construction Schedule set forth in Exhibit B-1 attached hereto, including without limitation Tenant’s failure to give authorization to Landlord to proceed with Landlord’s Work on or before the Authorization to Proceed Date (as the same may be

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extended as provided above) or to provide all required Permit Documentation to Landlord on or before the Authorization to Proceed Date; or

(b)Tenant’s failure timely to respond to any reasonable request from Landlord, Landlord’s architect, Landlord’s contractor and/or Landlord’s Construction Representative within the time periods set forth in this Article IV (including, without limitation, Section 4.1(A)(5) above);

(c)Tenant’s failure to pay the Tenant Plan Excess Costs in accordance with Section 4.5;

(d)Any delay due to items of work for which there is a long lead time in obtaining the materials therefor or which are specially or specifically manufactured, produced or milled for the work in or to the Premises and require additional time for receipt or installation, but only with respect to items as to which Landlord notifies Tenant in writing at the time that Landlord approves Tenant’s plans and/or change orders related thereto that such items are long lead time items;

(e)Any delay due to changes, alterations or additions required or made by Tenant after Landlord approves Tenant’s Construction Plans including, without limitation, Change Orders. With respect to any Tenant Delay under this clause (e), no period of time prior to the date that Landlord notifies Tenant of a Tenant Delay shall be considered to be a Tenant Delay; or

(f)Any other delays caused by Tenant, Tenant’s contractors, architects, engineers or anyone else engaged by Tenant in connection with the preparation of the Premises for Tenant’s occupancy, including, without limitation, utility companies and other entities furnishing communications, data processing or other service, equipment, or furniture. With respect to any Tenant Delay under this clause (f), no period of time prior to the date that Landlord notifies Tenant of a Tenant Delay shall be considered to be a Tenant Delay.

The Tenant Delays defined in clauses (a), (b) and (c) of this Section 4.1(B)(1) are sometimes hereinafter referred to as “Accelerated Rent Tenant Delays”, the Tenant Delays defined in clauses (d), (e), and (f) of this Section 4.1(B)(1) are sometimes hereinafter referred to as “Other Tenant Delays”. Landlord agrees to give Tenant status reports from time to time upon Tenant’s written request of the status of any of the items set forth in this Section 4.1(B)(1).

(2)TENANT OBLIGATIONS WITH RESPECT TO TENANT DELAYS.

(a)Tenant covenants that no Tenant Delay shall delay commencement of the Term or the obligation to pay Annual Fixed Rent or Additional Rent,

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regardless of the reason for such Tenant Delay or whether or not it is within the control of Tenant or any such employee. Landlord’s Work shall be deemed substantially completed as of the date when Landlord’s Work would have been substantially completed but for any Tenant Delays, as certified by the project architect or Landlord’s architect, in the exercise of its professional judgment.

(b)If any Accelerated Rent Tenant Delays occur: (i) Tenant shall, for the purpose of reimbursing Landlord for lost rent due to Landlord’s inability to proceed with Landlord’s Work as scheduled, pay to Landlord an amount (“Accelerated Rent Payment”) equal to one day of Annual Fixed Rent and Additional Rent for each day of Accelerated Rent Tenant Delay, (ii) the Estimated Commencement Date shall be extended by each day of Accelerated Rent Tenant Delay, and (iii) if the Commencement Date occurs before the Estimated Commencement Date, then any Accelerated Rent Payment paid by Tenant shall be credited against the Annual Fixed Rent and Additional Rent payable by Tenant in respect of the period commencing as of the Commencement Date and ending as of the Estimated Commencement Date.

(c)Tenant shall reimburse Landlord the amount, if any, by which the cost of Landlord’s Work is increased as the result of any Tenant Delay in excess of the amounts paid under Section 4.1(B)(2)(b) above and not otherwise credited to Tenant under said Section 4.1(B)(2)(b). Notwithstanding the foregoing, no amounts shall be due from Tenant pursuant to this Section 4.1(B)(2)(c) unless and until the total cost of Landlord’s Work, including any increases therein due to Tenant Delay, exceeds the Tenant Allowance, as defined in Section 4.4 hereof.

(d)Any amounts due from Tenant to Landlord under this Section 4.1(B)(2) shall be due and payable within thirty (30) days of billing therefor, and shall be considered to be Additional Rent. Nothing contained in this Section 4.1(B)(2) shall limit or qualify or prejudice any other covenants, agreements, terms, provisions and conditions contained in this Lease.

(C)SUBSTANTIAL COMPLETION OF LANDLORD’S WORK.

(1)LANDLORD’S OBLIGATIONS. Subject to Tenant Delays and delays due to Force Majeure, as defined in Section 14.1, Landlord shall use reasonable speed and diligence to have Landlord’s Work substantially completed on or before the Estimated Commencement Date, but Tenant shall have no claim against Landlord for failure so to complete construction of Landlord’s Work in the Premises, except for the right to terminate this Lease, without further liability to either party, in accordance with the provisions hereinafter specified in Section 4.2.

(2)DEFINITION OF SUBSTANTIAL COMPLETION. The Premises shall be treated as having been substantially completed on the date that Landlord notifies Tenant

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(which notice may be by facsimile) that both of the following have occurred:

(a)Landlord’s Work, together with common facilities for access and services to the Premises, has been completed (or would have been completed except for Tenant Delays, as determined in accordance with Section 4.1(B)(2)(a)) except for Punch List Items, as hereinafter defined, and

(b)Permission has been obtained (or would have been obtained except for Tenant Delays) from the applicable governmental authority, to the extent required by law, for occupancy by Tenant of the Premises for the Permitted Use.

In the event of any dispute as to the date on which Landlord’s Work has been substantially completed, the reasonable determination of Landlord’s architect as to such date shall be deemed conclusive and binding on both Landlord and Tenant.

Landlord agrees to notify Tenant, from time to time upon Tenant’s written request, of Landlord’s estimate of when Landlord’s Work will be substantially completed.

(3)PUNCH LIST ITEMS AND INCOMPLETE WORK.

(a)“Punch List Items” shall be defined as those items of work and adjustment of equipment and fixtures in the Premises, the incompleteness of which does not cause material interference with Tenant’s use of the Premises, or access thereto, and which can be completed after Tenant commences its occupancy of the Premises without causing material interference with Tenant’s use of the Premises or access thereto. The Punch List Items shall be set forth in a so-called punch list prepared and signed by Tenant and Landlord (provided, however, that Landlord and Tenant shall use good faith efforts to arrange for a mutually acceptable time to walk through the Premises and compile the punch list. If despite such good faith efforts Landlord and Tenant are unable to agree upon a mutually acceptable time, Landlord shall give Tenant reasonable advance notice of the time when Landlord intends to walk through the Premises and compile the punch list, and if Tenant does not accompany Landlord on such walk-through, Tenant shall be bound by the punch list compiled by Landlord).

(b)Landlord shall complete as soon as conditions practically permit the Punch List items and any long-lead time items which were not complete as of the substantial completion of the Premises, and Tenant shall cooperate with Landlord in providing access as may be required to complete such work in a normal manner. Landlord agrees to perform such completion work in a manner so as not to unreasonably interfere with Tenant’s use of the Premises, provided, however, that such work shall be performed during normal business hours unless Tenant elects to pay the excess cost for performing such work after normal

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business hours.

(4)EARLY ACCESS BY TENANT. Landlord shall permit Tenant access for installing Tenant’s trade fixtures in portions of the Premises prior to substantial completion when it can be done without material interference with remaining work or with the maintenance of harmonious labor relations. Any such access by Tenant shall be at upon all of the terms and conditions of the Lease (other than the payment of Annual Fixed Rent) and shall be at Tenant’s sole risk, and Landlord shall not be responsible for any injury to persons or damage to property resulting from such early access by Tenant.

(5)PROHIBITION ON ACCESS BY TENANT PRIOR TO ACTUAL SUBSTANTIAL COMPLETION. If, prior to the date that the Premises are in fact actually substantially complete, the Premises are deemed to be substantially complete pursuant to the provisions of this Section 4.1 (i.e. and the Commencement Date has therefore occurred), Tenant shall not (except with Landlord’s consent) be entitled to take possession of the Premises for the Permitted Use until the Premises are in fact actually substantially complete. Notwithstanding the foregoing, Landlord agrees to permit such occupancy of the Premises by Tenant provided that, in Landlord’s reasonable opinion, such occupancy will not materially interfere with or delay the completion of Landlord’s Work, nor will such occupancy endanger the safety of persons or property.

(6)SPECIAL PROVISION CONCERNING POTENTIAL VERIZON STRIKE. The parties acknowledge that the employees of Verizon, a major provider of telecommunication services in the greater Boston area, are threatening to strike imminently. Notwithstanding anything to the contrary herein contained, the parties agree as follows:

(i)If Tenant submits a work order for Tenant’s telecommunication services reasonably satisfactory to Landlord on or before September 5, 2003; and

(ii)The installation and/or connection of Tenant’s telecommunication services is delayed due to an actual Verizon strike; and

(iii)As a result, Tenant is unable to use the Premises for the Permitted Use because it lacks telecommunication services; then

(iv)There shall be no Annual Fixed Rent due hereunder during the period, not to exceed seventy-five (75) days, after the Commencement Date and before Tenant has sufficient telecommunications services to be able to use the Premises for the Permitted Use.

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4.2TENANT’S COMPLETION REMEDIES.

(A)TENANT’S TERMINATION RIGHT. If the Commencement Date shall not have occurred on or before the Outside Completion Date as set forth in Section 1.2 hereof (which date shall be extended automatically for such periods of time as Landlord is prevented from proceeding with or completing the same by reason of Force Majeure as defined in Section 14.1, as well as for any Tenant Delay, without limiting Landlord’s other rights on account thereof), Tenant shall have the right to terminate this Lease by giving notice to Landlord of Tenant’s desire to do so at any time before such completion and within the time period from the Outside Completion Date (as so extended) until the date which is thirty (30) days subsequent to the Outside Completion Date (as so extended); and, upon the giving of such notice, the Term of this Lease shall cease and come to an end without further liability or obligation on the part of either party unless, within thirty (30) days after receipt of such notice, the Commencement Date occurs. Each day of Tenant Delay shall be deemed conclusively to cause an equivalent day of delay by Landlord in substantially completing Landlord’s Work, and thereby automatically extend for each such equivalent day of delay the date of the Outside Completion Date.

(B)LIQUIDATED DAMAGES. Notwithstanding anything to the contrary herein contained, if the Commencement Date does not occur on or before the Outside Damages Date as set forth in Section 1.2 hereof (which date shall be extended automatically for such periods of time as Landlord is prevented from proceeding with or completing the same by reason of Force Majeure as defined in Section 14.1, as well as for any Tenant Delay, without limiting Landlord’s other rights on account thereof), then Tenant shall be entitled, as liquidated damages which are payable as the result of such delay in the Commencement Date, to a rent credit (“Rent Credit”), against the first installment(s) of Annual Fixed Rent and other charges payable under the Lease, equal to Two Thousand Four Hundred Eighty-Three and 51/00 Dollars ($2,483.51) times the number of days in the period commencing as of the Outside Damages Date (as it may be extended in accordance with this Paragraph (B)) and terminating on the Commencement Date (determined as set forth in Section 3. hereof). At Landlord’s sole election, in lieu of giving Tenant the Rent Credit, Landlord may, on or before the date on which Tenant would have been entitled to receive such Rent Credit, pay to Tenant a cash payment in the amount of such Rent Credit. Tenant shall have no right to the Rent Credit or any payments pursuant to this Paragraph (B), if Tenant exercises its right to terminate the Lease pursuant to Section 4.1(A).

(C)The remedies set forth in this Section 4.2 are Tenant’s sole and exclusive rights and remedies based upon any delay in the performance of Landlord’s Work.

4.3QUALITY AND PERFORMANCE OF WORK. All construction work required or permitted by this Lease shall be done in a good and workmanlike manner and

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in compliance with all applicable laws, ordinances, rules, regulations, statutes, by-laws, court decisions, and orders and requirements of all public authorities (“Legal Requirements”) and all Insurance Requirements (as defined in Section 9.1 hereof). All of Tenant’s work shall be coordinated with any work being performed by or for Landlord and in such manner as to maintain harmonious labor relations. Each party may inspect the work of the other at reasonable times and shall promptly give notice of observed defects. Each party authorizes the other to rely in connection with design and construction upon approval and other actions on the party’s behalf by any Construction Representative of the party named in Section 1.2 or any person hereafter designated in substitution or addition by notice to the party relying. Except to the extent to which Tenant shall have given Landlord notice of respects in which Landlord has not performed Landlord’s construction obligations under this Article IV (if any) not later than the end of the eleventh (11th) full calendar month next beginning after the Commencement Date, Tenant shall be deemed conclusively to have approved Landlord’s construction and shall have no claim that Landlord has failed to perform any of Landlord’s obligations under this Article IV (if any). Landlord agrees to correct or repair at its expense items which are then incomplete or do not conform to the work contemplated under the Construction Plans and as to which, in either case, Tenant shall have given notice to Landlord, as aforesaid.

4.4SPECIAL ALLOWANCE

(A)Landlord shall provide to Tenant a special allowance equal to $1,709,240.00, being the product of (i) $65.00 and (ii) the Rentable Floor Area of the Premises (the “Tenant Allowance”), in accordance with and subject to the provisions of this Section 4.4. The Tenant Allowance shall be used and applied by Landlord solely on account of the cost of Landlord’s Work. In no event shall Landlord’s obligations to pay or reimburse Tenant for any of the costs of Landlord’s Work which exceed the total Tenant Allowance. Notwithstanding the foregoing, Landlord shall be under no obligation to apply any portion of the Tenant Allowance for any purposes other than as provided in this Section 4.4.

(B)In addition, in the event that (i) Tenant is in default under this Lease, or (ii) there are any liens against Tenant’s interest in the Lease or against the Building or the Site arising out of any work performed by Tenant or any litigation in which Tenant is a party which are not bonded to the reasonable satisfaction of Landlord, then, from and after the date of such event (“Event”), Landlord shall have no further obligation to fund any portion of the Tenant Allowance until such default has been cured or waived in writing or such lien has been released or bonded over to Landlord’s reasonable satisfaction.

(C)Further, in no event shall Landlord be required to make application of any portion of the Tenant Allowance on account of any supervisory fees, overhead,

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management fees or other payments to Tenant, or any partner or affiliate of Tenant. In the event that the costs of Landlord’s Work are less than the Tenant Allowance, Tenant shall not be entitled to any payment or credit nor shall there be any application of the same toward Annual Fixed Rent or Additional Rent owed by Tenant under this Lease.

(D)In addition to the foregoing Tenant Allowance, Landlord shall also provide Tenant with an allowance (“Initial Fit Allowance”) of up to $2,629.60, being the product of (i) $0.10 and (ii) the Rentable Floor Area of the Premises, toward the cost of initial fit plans.

(E)Provided that no Event of Default has occurred hereunder at the time that Tenant requests any requisition on account of the Initial Fit Allowance, Landlord shall pay the cost of the work shown on each requisition (as hereinafter defined) submitted by Tenant to Landlord within twenty (20) days of submission thereof by Tenant to Landlord.

For the purposes hereof, a “requisition” shall mean written documentation showing in reasonable detail the costs of the initial fit plans prepared for Tenant. Each requisition shall be accompanied by evidence reasonably satisfactory to Landlord that (if applicable) all work covered by previous requisitions has been fully paid by Tenant.

(F)Notwithstanding anything to the contrary herein contained:

(i)Landlord shall have no obligation to advance funds on account of the Initial Fit Allowance unless and until Landlord has received the requisition in question.

(ii)Landlord shall have no obligation to pay the Initial Fit Allowance in respect of any requisition submitted after the date six (6) months after substantial completion of the Premises.

(iii)Tenant shall not be entitled to any unused portion of the Tenant Allowance of Initial Fit Allowance.

4.5PAYMENT OF TENANT PLAN EXCESS COSTS. To the extent, if any, that there are Tenant Plan Excess Costs, Tenant shall pay Landlord the Monthly Improvement Cost Payment (as hereinafter defined), as Additional Rent, in order to repay Landlord for the amount of such Tenant Plan Excess Costs up to the Maximum Amount, as hereinafter defined (the “Amortization Amount”) as provided herein. However, in the event that the Tenant Plan Excess Costs exceed $525,920.00 (being the product of (i) $20.00 and (ii) the Rentable Floor Area of the Premises) (“Maximum Amount”), then Tenant shall pay to Landlord, as

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Additional Rent, prior to the commencement of Landlord’s Work, all such Tenant Plan Excess Costs in excess of the Maximum Amount.

Tenant shall reimburse Landlord, as Additional Rent, for the Amortization Amount amortized on a direct reduction basis over one hundred twenty-three (123) months at an interest rate of nine percent (9%) per annum in one hundred twenty-three (123) monthly payments (“Monthly Improvement Cost Payments”) payable on the first day of each month following the Commencement Date (provided that if the Commencement Date is the first day of a month such payments shall commence on the Commencement Date) in the same manner as provided in the Lease for the payment of Annual Fixed Rent. By way of example, if the Amortization Amount equals $262,960.00, Tenant shall make 123 Monthly Improvement Cost Payments of $3,280.96 each.

Neither the Amortization Amount nor the Monthly Improvement Cost Payments shall be abated or reduced for any reason whatsoever (including, without limitation, untenantability of the Premises or termination of the Lease). Without limiting the foregoing, the rent abatement provisions of Article XIV of the Lease shall not apply to the Amortization Amount or the Monthly Improvement Cost Payments. Since the payment of the Amortization Amount represents a reimbursement to Landlord of costs which Landlord will incur in connection with the construction of the Premises, if there is any default (beyond the expiration of any applicable grace periods) of any of Tenant’s obligations under the Lease (including, without limitation, its obligation to pay the Monthly Improvement Cost Payments) or if the term of this Lease is terminated for any reason whatsoever prior to the termination of the term of the Lease, Tenant shall pay to Landlord, immediately upon demand, the unamortized balance of the Amortization Amount. Tenant’s obligation to pay the unamortized balance of the Amortization Amount shall be in addition to all other rights and remedies which Landlord has based upon any default of Tenant under the Lease, and Tenant shall not be entitled to any credit or reduction in such payment based upon amounts collected by Landlord from reletting the Premises after the default of Tenant.

4.6COMPLIANCE WITH LAW. Landlord represents to Tenant that, to the best of Landlord’s actual knowledge, the Building was constructed in accordance with the provisions of the Legal Requirements applicable to the Building as of the construction of the Building, and Landlord has not received any notices from any governmental authorities alleging that the Building is currently in violation of any Legal Requirement (except to the extent, if any, that Landlord may have received any such notice and corrected the violation claimed therein). Landlord shall use reasonable efforts to make the common areas of the Building and the “Base Building” (as hereinafter defined) (including the Base Building areas in the Premises) comply with Legal Requirements, provided that the foregoing shall not apply to (i) requirements of such Legal Requirements resulting from the use of, or

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additions, alterations or improvements in, any tenant space in the Building, including the Premises, and (ii) any additions, alterations and improvements (including the Landlord’s Work, as more fully set forth below) in any tenant space in the Building, including the Premises. For purposes of this Section 4.6, “Base Building” shall mean the structural elements of the Building and the heating, ventilating and air conditioning, electrical and plumbing systems and equipment bringing primary service to the tenant spaces in the Building. Landlord agrees that to the extent that Landlord receives notice that the common areas and/or the Base Building are not in compliance with Legal Requirements, Landlord shall, when, if and in the manner permitted or required by Legal Requirements, remedy such non-compliance at its sole cost and expense, except to the extent that the cost of such compliance may be properly included in Operating Expenses..

Tenant acknowledges that it is preparing the Construction Plans, and that Landlord has no responsibility whatsoever for the compliance of the Construction Plans with Applicable Laws. Landlord agrees to perform Landlord’s Work in accordance with the Construction Plans. Except to the extent due to Landlord’s failure to perform Landlord’s Work in accordance with the Construction Plans, Landlord shall have no responsibility for the compliance of Landlord’s Work with Applicable Laws.

Tenant at Tenant’s expense shall be responsible for (i) the compliance of any addition, alterations or improvements performed by or for Tenant or any assignee or subtenant of Tenant, including the Landlord’s Work except to the extent set forth in the preceding paragraph (“Tenant Improvements”) with the Federal Americans With Disabilities Act (the “ADA”), and (ii) compliance with the ADA required because of “Tenant’s Specific Use of the Premises” (as defined below) or Tenant Improvements. The term “Tenant’s Specific Use of the Premises” as used herein shall not refer to the general office use of the Premises, but shall refer to the specific products and operations Tenant and any assignee or subtenant of Tenant use in the Premises and the manner in which Tenant and any assignee or subtenant of Tenant use such products and conduct such operations.

4.7DISPUTES.Any dispute between the parties with respect to the provisions of this Article IV shall be submitted to arbitration in accordance with Section 16.32.

ARTICLE V

ANNUAL FIXED RENT AND ELECTRICITY

5.1FIXED RENT. Tenant agrees to pay to Landlord, or as directed by Landlord at such place as Landlord shall from time to time designate by notice, on the Rent Commencement Date, and thereafter monthly, in advance, on the first day of each and every calendar month during the Original Lease Term, a sum equal to one-twelfth (1/12) of the Annual Fixed Rent specified in Section 1.2 hereof and on the

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first day of each and every calendar month during each Extended Term (if exercised), a sum equal to one-twelfth of the Annual Fixed Rent as determined in Section 3.2 for the applicable Extended Term. Until notice of some other designation is given, Annual Fixed Rent and all other charges for which provision is herein made shall be paid by remittance to or to the order of BOSTON PROPERTIES LIMITED PARTNERSHIP, Agents at P.O. Box 3557, Boston, Massachusetts 02241-3557, and all remittances received by BOSTON PROPERTIES LIMITED PARTNERSHIP, as Agents as aforesaid, or by any subsequently designated recipient, shall be treated as a payment to Landlord.

Annual Fixed Rent for any partial month shall be paid by Tenant to Landlord at such rate on a pro rata basis, and, if the Rent Commencement Date shall be other than the first day of a calendar month, the first payment of Annual Fixed Rent which Tenant shall make to Landlord shall be a payment equal to a proportionate part of such monthly Annual Fixed Rent for the partial month from the Rent Commencement Date to the first day of the succeeding calendar month.

Additional Rent payable by Tenant on a monthly basis, as elsewhere provided in this Lease, likewise shall be prorated, and the first payment on account thereof shall be determined in similar fashion and shall commence on the Rent Commencement Date and other provisions of this Lease calling for monthly payments shall be read as incorporating this undertaking by Tenant.

Notwithstanding that the payment of Annual Fixed Rent payable by Tenant to Landlord shall not commence until the Rent Commencement Date, Tenant shall be subject to, and shall comply with, all other provisions of this Lease as and at the times provided in this Lease.

The Annual Fixed Rent and all other charges for which provision is made in this Lease shall be paid by Tenant to Landlord without setoff, deduction or abatement.

5.2ALLOCATION OF ELECTRICITY CHARGES.   The Premises shall be separately metered for electricity, at Landlord’s expense, and Tenant shall pay for all electricity charges directly to the supplier of the same.

5.3LANDLORD’S RECAPTURE RIGHT. Notwithstanding anything to the contrary in the Lease contained, if Tenant shall abandon or vacate the Premises for a period of no less than three hundred sixty-five (365) days, then Landlord shall have the right to terminate this Lease upon written notice to Tenant.

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ARTICLE VI

TAXES

6.1DEFINITIONS.  With reference to the real estate taxes referred to in this Article VI, it is agreed that terms used herein are defined as follows:

(a)“Tax Year” means the 12-month period beginning July 1 each year during the Lease Term or if the appropriate Governmental tax fiscal period shall begin on any date other than July 1, such other date.

(b)“Landlord’s Tax Expenses Allocable to the Premises” means the same proportion of Landlord’s Tax Expenses as Rentable Floor Area of Tenant’s Premises bears to 100% of the Total Rentable Floor Area of the Building.

(c)“Landlord’s Tax Expenses” with respect to any Tax Year means the aggregate “real estate taxes” (hereinafter defined) with respect to that Tax Year, reduced by any net abatement receipts with respect to that Tax Year; provided, however, that if in any Tax Year an abatement has been obtained on account of vacancies in the Building, or if the real estate taxes had initially been assessed in an amount to reflect such vacancies then Landlord’s Tax Expenses shall be determined to be an amount equal to the taxes which would normally be expected to have been assessed had occupancy been ninety-five percent (95%) as of the reference date or period on which or in relation to which such assessment was made. For this purpose, taxes on properties comparable to the Building may be used as a reference if such properties were occupied at ninety-five percent (95%) more or less during the relevant period.

(d)“Real estate taxes” means all taxes and special assessments of every kind and nature and user fees and other like fees assessed by any Governmental authority on, or allocable to (i) the Building or (ii) the land, open areas, public areas and amenities, plazas, common areas and other non-leasable areas of the Prudential Center (for the purposes of this Subsection (d) “Common Areas”) which the Landlord shall be obligated to pay because of or in connection with the ownership, leasing or operation of the Building and reasonable expenses of and fees for any formal or informal proceedings for negotiation or abatement of taxes (collectively, Abatement Expenses”), which Abatement Expenses shall be excluded from Base Taxes. The amount of special taxes or special assessments to be included shall be limited to the amount of the installment (plus any interest other than penalty interest payable thereon) of such special tax or special assessment required to be paid during the year in respect of which such taxes are being determined. There shall be excluded from such taxes all income, estate, succession, inheritance and transfer taxes; provided, however, that if at any time during the Lease Term the present system of ad valorem taxation of real property shall be changed so that in lieu of, or

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in addition to, the whole or any part of the ad valorem tax on real property, there shall be assessed on Landlord a capital levy or other tax on the gross rents received with respect to the Building, or a Federal, State, County, Municipal, or other local income, franchise, excise or similar tax, assessment, levy or charge (distinct from any now in effect in the jurisdiction in which the Prudential Center is located) measured by or based, in whole or in part, upon any such gross rents, then any and all of such taxes, assessments, levies or charges, to the extent so measured or based, shall be deemed to be included within the term “real estate taxes” but only to the extent that the same would be payable if the Building, were the only property of Landlord. To the extent that the Building is not separately assessed for real estate tax purposes, but is assessed as part of a larger parcel, then the Landlord shall make a reasonable allocation as to the amount of the real estate taxes that should be allocated to the Building for the purposes of determination of the Tenant’s share of increases in real estate taxes under this Lease. The Landlord’s allocation, if made in good faith and for which Landlord has a reasonable basis shall be final, absent manifest error, provided that such allocation is consistently applied throughout the Lease. For the purposes of this Lease, real estate taxes shall include any payment in lieu of taxes or any payments made under Chapter 121A of the Massachusetts General Laws or any similar law.

(e)“Base Taxes” means Landlord’s Tax Expenses (hereinbefore defined) for fiscal tax year 2004 (that is the period beginning July 1, 2003 and ending June 30, 2004).

(f)“Base Taxes Allocable to the Premises” means the same proportion of Base Taxes as the Rentable Floor Area of Tenant’s Premises bears to 100% of the Total Rentable Floor Area of the Building.

(g)If during the Lease Term the Tax Year is changed by applicable law to less than a full 12-month period, the Base Taxes and Base Taxes Allocable to the Premises shall each be proportionately reduced.

6.2TENANT’S SHARE OF REAL ESTATE TAXES. If with respect to any full Tax Year or fraction of a Tax Year falling within the Lease Term Landlord’s Tax Expenses Allocable to the Premises for a full Tax Year exceed Base Taxes Allocable to the Premises or for any such fraction of a Tax Year exceed the corresponding fraction of Base Taxes Allocable to the Premises (such amount being hereinafter referred to as the “Tax Excess”), then Tenant shall pay to Landlord, as Additional Rent, the amount of such Tax Excess. Payments by Tenant on account of the Tax Excess shall be made monthly at the time and in the fashion herein provided for the payment of Annual Fixed Rent. The amount so to be paid to Landlord shall be an amount from time to time reasonably estimated by

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Landlord to be sufficient to provide Landlord, in the aggregate, a sum equal to the Tax Excess, ten (10) days at least before the day on which tax payments by Landlord would become delinquent. Not later than ninety (90) days after Landlord’s Tax Expenses Allocable to the Premises are determinable for the first such Tax Year or fraction thereof and for each succeeding Tax Year or fraction thereof during the Lease Term, Landlord shall render Tenant a statement in reasonable detail certified by a representative of Landlord showing for the preceding year or fraction thereof, as the case may be, real estate taxes allocated to the Building, abatements and refunds, if any, of any such taxes and assessments, expenditures incurred in obtaining such abatement or refund, the amount of the Tax Excess, the amount thereof already paid by Tenant and the amount thereof overpaid by, or remaining due from, Tenant for the period covered by such statement. Within thirty (30) days after the receipt of such statement, Tenant shall pay any sum remaining due. Any balance shown as due to Tenant shall be credited against Annual Fixed Rent next due, or promptly refunded to Tenant if the Lease Term has then expired and Tenant has no further obligation to Landlord. Expenditures for legal fees and for other expenses incurred in obtaining an abatement or refund may be charged against the abatement or refund before the adjustments are made for the Tax Year.

To the extent that real estate taxes shall be payable to the taxing authority in installments with respect to periods less than a Tax Year, the statement to be furnished by Landlord shall be rendered and payments made on account of such installments.

ARTICLE VII

LANDLORD’S REPAIRS AND SERVICES

AND TENANT’S ESCALATION PAYMENTS

7.1STRUCTURAL REPAIRS. Except for (a) normal and reasonable wear and use and (b) damage caused by fire or casualty and by eminent domain, Landlord shall, throughout the Lease Term, at Landlord’s sole cost and expense, keep and maintain, or cause to be kept and maintained, in good order, condition and repair the following portions of the Building: the structural portions of the roof, the exterior and load bearing walls, the foundation, the structural columns and floor slabs and other structural elements of the Building; provided however, that Tenant shall pay to Landlord, as Additional Rent, the cost of any and all such repairs which may be required as a result of repairs, alterations, or installations made by Tenant or any subtenant, assignee, licensee or concessionaire of Tenant or any agent, servant, employee or contractor of any of them or to the extent of any loss, destruction or damage caused by the omission or negligence of Tenant, any assignee or subtenant or any agent, servant, employee, customer, visitor or contractor of any of them.

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7.2OTHER REPAIRS TO BE MADE BY LANDLORD. Except for (a) normal and reasonable wear and use and (b) damage caused by fire or casualty and by eminent domain, and except as otherwise provided in this Lease, and subject to provisions for reimbursement by Tenant as contained in Section 7.5, Landlord agrees to keep and maintain, or cause to be kept and maintained, in good order, condition and repair the common areas and facilities of the Building, including heating, ventilating, air conditioning, plumbing and other Building systems equipment servicing the Premises, except that Landlord shall in no event be responsible to Tenant for (a) the condition of glass in and about the Premises (other than for glass in exterior walls for which Landlord shall be responsible unless the damage thereto is attributable to Tenant’s negligence or misuse, in which event the responsibility therefor shall be Tenant’s), or (b) any condition in the Premises or the Building caused by any act or neglect of Tenant or any agent, employee, contractor, assignee, subtenant, licensee, concessionaire or invitee of Tenant. Without limitation, Landlord shall not be responsible to make any improvements or repairs to the Building or the Premises other than as expressly provided in this Lease (including, without limitation, in Article IV, Section 7.1 and Section 7.2 hereof).

7.3SERVICES TO BE PROVIDED BY LANDLORD. In addition, and except as otherwise provided in this Lease and subject to provisions for reimbursement by Tenant as contained in Section 7.5 and Tenant’s responsibilities in regard to electricity as provided in Section 5.2, Landlord agrees to furnish services, utilities, facilities and supplies as set forth in Exhibit C hereto equal in quality comparable to those customarily provided by landlords in high quality Class A office buildings in Boston. In addition, Landlord agrees to furnish, at Tenant’s expense, reasonable additional Building operation services which are usual and customary in similar buildings in Boston, and such additional special services as may be mutually agreed upon by Landlord and Tenant, upon reasonable and equitable rates from time to time established by Landlord. Tenant agrees to pay to Landlord, as Additional Rent, the cost of any such additional Building services requested by Tenant and for the cost of any additions, alterations, improvements or other work performed by Landlord in the Premises at the request of Tenant within thirty (30) days after being billed therefor.

7.4OPERATING COSTS DEFINED. “Operating Expenses Allocable to the Premises” means the same proportion of the Operating Expenses for the Building (as hereinafter defined) as Rentable Floor Area of the Premises bears to 100% of the Total Rentable Floor Area of the Building. “Base Operating Expenses” means Operating Expenses for the Building for calendar year 2004 (that is the period beginning January 1, 2004 and ending December 31, 2004). Base Operating Expenses shall not include market-wide cost increases due to extraordinary circumstances, including but not limited to, Force Majeure (as defined in Section

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14.1), boycotts, strikes, conservation surcharges, embargoes or shortages. “Base Operating Expenses Allocable to the Premises” means the same proportion of Base Operating Expenses as the Rentable Floor Area of Tenant’s Premises bears to 100% of the Total Rentable Floor Area of the Building. “Operating Expenses for the Building” means the cost of operation of the Building and the Building’s share of the cost of operating other areas of the Prudential Center as more specifically provided below in Section 7.4, including those incurred in discharging the obligations under Sections 7.2 and 7.3; however there shall be excluded from the Operating Expenses for the Building the cost of operation of (x) the Garage, and (y) any retail areas of the Prudential Center which are outside the Building, except to the extent the costs attributable to the retail areas may be included in Operating Expenses pursuant to Section 7.4(i). In addition, such costs shall exclude payments of debt service and any other mortgage charges, brokerage commissions, salaries of executives and owners not directly employed in the management or operation of the Building, the general overhead and administrative expenses of the home office of Landlord or Landlord’s managing agent, and costs of special services rendered to tenants (including Tenant) for which a separate charge is made, but shall include, without limitation:

(a)compensation, wages and all fringe benefits, workmen’s compensation insurance premiums and payroll taxes paid to, for or with respect to all persons for their services in the operating, maintaining, managing, insuring or cleaning of the Building or the Prudential Center, up to and including the level of general manager;

(b)payments under service contracts with independent contractors for operating, maintaining or cleaning of the Building or the Prudential Center;

(c)steam, water, sewer, gas, oil, electricity and telephone charges (excluding such utility charges separately chargeable to tenants for additional or separate services and electricity charges paid by Tenant in the manner set forth in Section 5.2) and costs of maintaining letters of credit or other security as may be required by utility companies as a condition of providing such services;

(d)cost of maintenance, cleaning and repairs and replacements(other than repairs reimbursed from contractors under guarantees);

(e)cost of snow removal and care of landscaping;

(f)cost of building and cleaning supplies and equipment;

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(g)premiums for insurance carried with respect to the Building or Prudential Center (including, without limitation, liability insurance, insurance against loss in case of fire or casualty and of monthly installments of Annual Fixed Rent and any Additional Rent which may be due under this Lease and other leases of space in the Building for not more than twelve (12) months in the case of both Annual Fixed Rent and Additional Rent and, if there be any first mortgage on the Building, including such insurance as may be required by the holder of such first mortgage);

(h)management fees at reasonable rates consistent with the type of occupancy and the services rendered, provided that the amount of such fees included in Operating Expenses shall not exceed four percent (4%) of the gross receipts of the Building;

(i)the Building’s share (as reasonably determined by Landlord) of Operating Expenses for the Building (as herein defined in this Section 7.4) related to the operation of the open areas, public areas and amenities, plazas, common areas, facilities and other non-leasable areas of the Prudential Center and other mixed use common area maintenance costs incurred by Landlord or any other PruOwner and allocated to the Building and any shuttle buses and other like amenities, for use of tenants of the Building either alone or in common with tenants of other buildings in the Prudential Center (“Common PruCenter Costs”). Landlord agrees that it will not change the procedures which it is presently (i.e. as of the Execution Date of this Lease) using to allocate Common PruCenter Costs, unless there are changes in the uses in the Prudential Center or other changes in the operation of the Prudential Center which constitute, in Landlord’s reasonable judgment, a basis for changing such allocation procedures;

(j)depreciation for capital improvements (x) to reduce Operating Expenses if Landlord reasonably shall have determined that the annual reduction in Operating Expenses shall exceed depreciation therefor plus Imputed Interest (as defined below) or (y) to comply with Legal Requirements first enacted or promulgated and in effect after the Commencement Date (plus, in the case of both (x) and (y), an interest factor (“Imputed Interest”), reasonably determined by Landlord, as being the interest rate then charged for long term mortgages by institutional lenders on like properties within the general locality in which the Building is located), and in the case of both (x) and (y) depreciation shall be determined by dividing the original cost of such capital expenditure by the number of years of useful life of the capital item acquired, which useful life shall be determined reasonably by Landlord in accordance with generally accepted accounting principles and practices in effect at the time of acquisition of the capital item, consistently applied; provided, however, if Landlord reasonably concludes

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on the basis of engineering estimates that a particular capital expenditure will effect savings in other Operating Expenses, including, without limitation, energy related costs, and that such projected savings will, on an annual basis (“Projected Annual Savings”), exceed the annual depreciation and Imputed Interest therefor, then and in such event the amount of depreciation for such capital expenditure shall be increased to an amount equal to the Projected Annual Savings; and in such circumstance, the increased depreciation (in the amount of the Projected Annual Savings) shall be made for such period of time as it would take to fully amortize the cost of the item in question, together with Imputed Interest, in equal monthly payments, each in the amount of 1/12th of the Projected Annual Savings, with such payment to be applied first to interest and the balance to principal; and

(k)all other reasonable and necessary expenses paid in connection with the operating, cleaning and maintenance of the Building or the Prudential Center or said common areas and facilities and properly chargeable against income.

Notwithstanding the foregoing, in determining the amount of Operating Expenses for the Building for any calendar year or portion thereof falling within the Lease Term, if less than ninety-five percent (95%) of the Rentable Area of the Building shall have been occupied by tenants at any time during the period in question, then, at Landlord’s election, those components of Operating Expenses which vary based on occupancy (excluding Landlord’s Tax Expenses) for such period shall be adjusted to equal the amount such components of Operating Expenses would have been for such period had occupancy been ninety-five percent (95%) throughout such period.

Notwithstanding the foregoing, the following shall be excluded from Operating Expenses for the Building:

(i)repair costs in connection with other buildings in the Prudential Center (provided that this clause (i) shall not be deemed to exclude costs associated with the Arcade);

(ii)All capital expenditures and depreciation, except as otherwise explicitly provided in this Section 6.2;

(iii)Leasing fees or commissions, advertising and promotional expenses, legal fees, the cost of tenant improvements, build out allowances, moving expenses, assumption of rent under existing leases and other concessions incurred in connection with leasing space in the Building or in Prudential Center;

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(iv)Interest on indebtedness, debt amortization, ground rent, and refinancing costs for any mortgage or ground lease of the Building or the Prudential Center, provided however, that the foregoing shall not exclude the inclusion of the amortization and interest permitted to be included in Operating Expenses on account of capital improvements under Section 6.2(j) above;

(v)Legal, auditing, consulting and professional fees and other costs, (other than those legal, auditing, consulting and professional fees and other costs incurred in connection with the normal and routine maintenance and operation of the Building and/or the Prudential Center), including, without limitation, those: (i) paid or incurred in connection with financings, refinancings or sales of any Landlord’s interest in the Building or the Prudential Center, (ii) relating to specific disputes with tenants, and (iii) relating to any special reporting required by securities laws

(vi)Costs incurred in performing work or furnishing services for any tenant (including Tenant), whether at such tenant’s or Landlord’s expense, to the extent that such work or services is in excess of any work or service that Landlord is obligated to furnish to Tenant at Landlord’s expense (e.g., if Landlord agrees to provide extra cleaning to another tenant, the cost thereof would be excluded since Landlord is not obligated to furnish extra cleaning to Tenant);

(vii)The cost of any item or service to the extent reimbursable to Landlord by insurance required to be maintained under the Lease, by any tenant, or any third party, such as the cost of supplying electricity for plugs and lights in a tenant’s premises;

(viii)Landlord’s general corporate overhead, including costs relating to accounting, payroll, legal and computer services to the extent rendered in locations outside the Building or Prudential Center;

(ix)Insurance premiums to the extent any tenant causes Landlord’s existing insurance premiums to increase or requires Landlord to purchase additional insurance because of such tenant’s use of the Building for other than office purposes;

(x)Any costs expressly excluded from Operating Expenses or real estate taxes elsewhere in this Lease or included as real estate taxes;

(xi)Overhead and profit increment paid to Landlord, to affiliates or partners of Landlord, partners or affiliates of such partners, or affiliates of Landlord

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for goods and/or services in the Building or Prudential Center to the extent the same exceeds the costs or the overhead profit increment, as the case may be, of such goods and/or services rendered by unaffiliated third parties on a competitive basis in comparable buildings (provided however, that this clause (xi) shall not apply to the management fee);

(xii)Payments for rented equipment, the cost of which equipment would constitute a capital expenditure if the equipment were purchased to the extent that such payments exceed the amount which could have been included in Operating Expenses had Landlord purchased such equipment rather than leasing such equipment;

(xiii)Penalties, damages, and interest for late payment or violations of any obligations of Landlord, including, without limitation, taxes, insurance, equipment leases and other past due amounts;

(xiv)Contributions to charitable organizations;

(xv)Costs incurred in removing the property of former tenants or other occupants of the Building;

(xvi)The cost of testing, remediation or removal of “Hazardous Materials” (as defined in Section 11.2) in the Building or on the Prudential Center required by “Hazardous Materials Laws” (as defined in Section 11.2), provided however, that with respect to the testing, remediation or removal of any material or substance which, as of the Commencement Date, was not considered, as a matter of law, to be a Hazardous Material, but which is subsequently determined to be a Hazardous Material as a matter of law, the costs thereof shall be included in Operating Expenses, subject, however, to Section 6.2(j) to the extent that such cost is treated as a capital expenditure;

(xvii)The cost of acquiring, installing, moving or restoring objects or art;

(xviii)Wages, salaries, or other compensation paid to any executive employees above the grade of general manager at the Prudential Center, except that if any such employee performs a service which would have been performed by an outside consultant (and the cost of which service would otherwise have been includable in Operating Expenses), the compensation paid to such employee for performing such service shall be included in Operating Expenses, to the extent only that the cost of such service does not exceed competitive cost of such service had such service been rendered by an outside consultant;

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(xix)Costs, including permit, license and inspection costs, incurred in renovating or otherwise improving, decorating, painting or redecorating space for tenants or other occupants of the Building or Prudential Center;

(xx)The net (i.e. net of the reasonable costs of collection) amount recovered by Landlord under any warranty or service agreement from any contractor or service provider shall be credited against Operating Costs;

(xxi)The cost of installation of, space preparation for and subsidizing the operation of any amenities of the Prudential Center (the parties hereby agreeing that this clause (xxi) shall not be deemed to exclude the cost of subsidizing the operation of the shuttle bus service as described above); or

(xxii)Costs of mitigation or impact fees or subsidies (however characterized), imposed or incurred prior to the date of this Lease or imposed or incurred solely as a result of another tenant’s or tenants’ use of their Premises.

7.5TENANT’S ESCALATION PAYMENTS. (A) If with respect to any calendar year falling within the Lease Term, or fraction of a calendar year falling within the Lease Term at the beginning or end thereof, the Operating Expenses Allocable to the Premises (as defined in Section 7.4) for a full calendar year exceed Base Operating Expenses Allocable to the Premises (as defined in Section 7.4) or for any such fraction of a calendar year exceed the corresponding fraction of Base Operating Expenses Allocable to the Premises (such amount being hereinafter referred to as the “Operating Cost Excess”), then Tenant shall pay to Landlord, as Additional Rent, on or before the thirtieth (30th) day following receipt by Tenant of the statement referred to below in this Section 7.5, the amount of such excess.

(B)Payments by Tenant on account of the Operating Cost Excess shall be made monthly at the time and in the fashion herein provided for the payment of Annual Fixed Rent. The amount so to be paid to Landlord shall be an amount from time to time reasonably estimated by Landlord to be sufficient to cover, in the aggregate, a sum equal to the Operating Cost Excess for each calendar year during the Lease Term.

(C)No later than one hundred twenty (120) days after the end of the first calendar year or fraction thereof ending December 31 and of each succeeding calendar year during the Lease Term or fraction thereof at the end of the Lease Term, Landlord shall render Tenant a statement in reasonable detail and according to usual accounting practices consistently applied from year to year certified by a representative of Landlord, showing for the preceding calendar year or fraction thereof, as the case may be, the Operating Expenses for the Building and the Operating Expenses Allocable to the Premises. Said statement to be rendered to Tenant also shall show for the preceding year or fraction thereof, as the case may

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be, the amounts already paid by Tenant on account of Operating Cost Excess and the amount of Operating Cost Excess remaining due from, or overpaid by, Tenant for the year or other period covered by the statement.

If such statement shows a balance remaining due to Landlord, Tenant shall pay same to Landlord on or before the thirtieth (30th) day following receipt by Tenant of said statement. Any balance shown as due to Tenant shall be credited against Annual Fixed Rent next due, or promptly refunded to Tenant if the Lease Term has then expired and Tenant has no further obligation to Landlord.

Any payment by Tenant for the Operating Cost Excess shall not be deemed to waive any rights of Tenant to claim that the amount thereof was not determined in accordance with the provisions of this Lease.

(D)Subject to the provisions of this paragraph, Tenant shall have the right, at Tenant’s cost and expense, to examine all documentation and calculations prepared in the determination of Operating Cost Excess:

1.Such documentation and calculation shall be made available to Tenant at the offices where Landlord keeps such records during normal business hours within a reasonable time after Landlord receives a written request from Tenant to make such examination.

2.Tenant shall have the right to make such examination no more than once in respect of any period for which Landlord has given Tenant a statement of the actual amount of Operating Expenses for the Building.

3.Any request for examination in respect of any calendar year may be made no more than one hundred eighty (180) days after Landlord advises Tenant of the actual amount of Operating Expenses for the Building in respect of such calendar year and provides to Tenant the year-end statement required under Paragraph C of this Section 7.5, provided, however, if such examination results in a determination that Tenant was overcharged with respect to a calendar year, then Tenant shall have the right to review Landlord’s books as to the erroneous items for the two calendar years immediately prior to the calendar year in question.

4.Such examination may be made only by an independent certified public accounting firm approved by Landlord, which approval shall not be unreasonably withheld. Without limiting Landlord’s approval rights, Landlord may withhold its approval of any examiner of Tenant who is being paid by Tenant on a contingent fee basis. Notwithstanding the foregoing, Landlord agrees that Tenant may retain a third party agent to review Landlord’s books and records which is not a CPA firm, so long as the third party agent retained by Tenant shall have expertise in and familiarity with general industry practice with respect to the

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operation of and accounting for a first class office building and whose compensation shall in no way be contingent upon or correspond to the financial impact on Tenant resulting from the review.

5.As a condition to performing any such examination, Tenant and its examiners shall be required to execute and deliver to Landlord an agreement, in form reasonably acceptable to Landlord, agreeing to keep confidential any information which it discovers about Landlord or the Building in connection with such examination, provided however, that Tenant shall be permitted to share such information with each of its permitted subtenants so long as such subtenants execute and deliver to Landlord similar confidentiality agreements. Without limiting the foregoing, if Tenant uses any examiner which is other than a nationally recognized accounting firm, Tenant’s examiner shall be required to agree that it will not represent any other tenant in the Building or in other buildings located in the Prudential Center which are owned by Landlord or an affiliate of Landlord in connection with reviewing operating expenses for such tenant.

6.If the results of such examination, as verified by Landlord’s accountant, show that Operating Expense Excess for the year in question was overstated by more than four percent (4%), then Landlord shall reimburse Tenant for the reasonable costs of performing such examination.

7.6NO DAMAGE.

(A)NO LIABILITY. Landlord shall give Tenant reasonable advance notice (except in an emergency and except for normal cleaning and maintenance operations) prior to exercising any right which Landlord has to enter the Premises and Landlord shall use reasonable efforts to avoid material interference with Tenant’s use and enjoyment of the Premises; however, Landlord shall not be liable to Tenant for any compensation or reduction of rent by reason of inconvenience or annoyance or for loss of business arising from the necessity of Landlord or its agents entering the Premises for any purposes in this Lease authorized, or for repairing the Premises or any portion of the Building or Prudential Center however the necessity may occur. In case Landlord is prevented or delayed from making any repairs, alterations or improvements, or furnishing any services or performing any other covenant or duty to be performed on Landlord’s part, by reason of any cause reasonably beyond Landlord’s control, including, without limitation, strike, lockout, breakdown, accident, order or regulation of or by any Governmental authority, or failure of supply, or inability by the exercise of reasonable diligence to obtain supplies, parts or employees necessary to furnish such services, or because of war or other emergency, or for any cause due to any act or negligence of Tenant or Tenant’s servants, agents, employees, licensees or any person claiming by, through or under Tenant,

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Landlord shall not be liable to Tenant therefor, nor, except as expressly otherwise provided in this Lease, shall Tenant be entitled to any abatement or reduction of rent by reason thereof, nor shall the same give rise to a claim in Tenant’s favor that such failure constitutes actual or constructive, total or partial, eviction from the Premises.

(B)STOPPAGE OF SERVICE. Landlord reserves the right to stop any service or utility system, when necessary by reason of accident or emergency, or until necessary repairs have been completed; provided, however, that in each instance of stoppage, Landlord shall exercise reasonable diligence to eliminate the cause thereof as soon as reasonably practicable. Except in case of emergency repairs, Landlord will give Tenant reasonable advance notice of any contemplated stoppage and will use reasonable efforts to avoid unnecessary inconvenience to Tenant by reason thereof.

(C)RENT ABATEMENT. Notwithstanding anything to the contrary in this Lease contained, if due to Landlord’s failure to make any repairs, alterations, or improvements required to be made by Landlord hereunder, or to provide any service required to be provided by Landlord hereunder, any portion of the Premises becomes untenantable so that for the Premises Untenantability Cure Period, as hereinafter defined, the continued operation in the ordinary course of Tenant’s business is materially adversely affected, then, provided that Tenant ceases to use the affected portion of the Premises during the entirety of the Premises Untenantability Cure Period by reason of such untenantability, and that such untenantability and Landlord’s inability to cure such condition is not caused by the fault or neglect of Tenant or Tenant’s agents, employees or contractors, Annual Fixed Rent, Tax Excess and Operating Cost Excess shall thereafter be abated in proportion to such untenantability and its impact on the continued operation in the ordinary course of Tenant’s business until the day such condition is completely corrected. For the purposes hereof, the “Premises Untenantability Cure Period” shall be defined as five (5) consecutive business days after Landlord’s receipt of written notice from Tenant of the condition causing untenantability in the Premises, provided however, that the Premises Untenantability Cure Period shall be ten (10) consecutive business days after Landlord’s receipt of written notice from Tenant of such condition causing untenantability in the Premises if either the condition was caused by causes beyond Landlord’s control or Landlord is unable to cure such condition as the result of causes beyond Landlord’s control. The provisions of this Section 7.6(C) shall not apply in the event of untenantability caused by fire or other casualty, or taking.

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ARTICLE VIII

TENANT’S REPAIRS

8.1TENANT’S REPAIRS AND MAINTENANCE. Tenant covenants and agrees that, from and after the date that possession of the Premises is delivered to Tenant and until the end of the Lease Term, Tenant will keep neat and clean and maintain in good order, condition and repair the Premises and every part thereof, excepting only for (i) those repairs for which Landlord is responsible under the terms of Article VII of this Lease, and (ii) damage by fire or casualty, and (iii) as a consequence of the exercise of the power of eminent domain, and (iv) reasonable wear and tear. Tenant shall not permit or commit any waste, and Tenant shall be responsible for the cost of repairs which may be made necessary by reason of damages to common areas in the Building or Prudential Center by Tenant, Tenant’s agents, employees, contractors, sublessees, licensees, concessionaires or invitees. Tenant shall maintain all its equipment, furniture and furnishings in good order and repair, reasonable wear and tear excepted.

If repairs are required to be made by Tenant pursuant to the terms hereof, Landlord may demand that Tenant make the same forthwith, and if Tenant refuses or neglects to commence such repairs and complete the same with reasonable dispatch after such demand, Landlord may (but shall not be required to do so) make or cause such repairs to be made and shall not be responsible to Tenant for any loss or damage that may accrue to Tenant’s stock or business by reason thereof, except (subject to the provisions of Section 13.4) to the extent caused by Landlord’s gross negligence or willful malfeasance. If Landlord makes or causes such repairs to be made, Tenant agrees that Tenant will forthwith on demand, pay to Landlord as Additional Rent the cost thereof together with interest thereon at the rate specified in Section 16.21, and if Tenant shall default in such payment, Landlord shall have the remedies provided for non-payment of rent or other charges payable hereunder.

ARTICLE IX

ALTERATIONS

9.1LANDLORD’S APPROVAL. Tenant covenants and agrees not to make alterations, additions or improvements to the Premises, whether before or during the Lease Term, except in accordance with plans and specifications therefor first approved by Landlord in writing, which approval shall not be unreasonably withheld or delayed. However, Landlord’s determination of matters relating to aesthetic issues relating to alterations, additions or improvements which are visible from common areas outside the Premises or from the exterior of the Building shall be in Landlord’s sole discretion. Without limiting such standard, Landlord shall not be deemed unreasonable:

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(a)for withholding approval of any alterations, additions or improvements which (i) in Landlord’s reasonable opinion might affect any structural or exterior element of the Building, any area or element outside of the Premises or any facility or base building mechanical system serving any area of the Building outside of the Premises, or (ii) involve or affect the exterior design, size, height or other exterior dimensions of the Building, or (iii) enlarge the Rentable Floor Area of the Premises, or (iv) are inconsistent, in Landlord’s judgment, with alterations satisfying Landlord’s standards for new alterations in the Building, or (v) will require unusual expense to readapt the Premises to normal office use on Lease termination or increase the cost of construction or of insurance or taxes on the Building or of the services called for by Section 7.3 unless Tenant first gives assurance acceptable to Landlord for payment of such increased cost and that such readaptation will be made prior to such termination without expense to Landlord.

(b)for making its approval conditional on Tenant’s agreement to restore the Premises to its condition prior to such alteration, addition, or improvement at the expiration or earlier termination of the Lease Term.

Landlord’s review and approval of any such plans and specifications or under Section 4.1 and consent to perform work described therein shall not be deemed an agreement by Landlord that such plans, specifications and work conform with applicable Legal Requirements and requirements of insurers of the Building and the other requirements of the Lease with respect to Tenant’s insurance obligations (herein called “Insurance Requirements”) nor deemed a waiver of Tenant’s obligations under this Lease with respect to applicable Legal Requirements and Insurance Requirements nor impose any liability or obligation upon Landlord with respect to the completeness, design sufficiency or compliance of such plans, specifications and work with applicable Legal Requirements and Insurance Requirements. Within 30 days after receipt of an invoice from Landlord, Tenant shall pay to Landlord, as a fee for Landlord’s review of any plans or work (excluding any review respecting initial improvements performed pursuant to Section 4.1 hereof for which a fee had previously been paid), as Additional Rent, an amount equal to the sum of : (i) $1,000.00, plus (ii) third party expenses incurred by Landlord to review Tenant’s plans and Tenant’s work.

9.1.1CERTAIN ALTERATIONS. Notwithstanding the terms of Section 9.1, Tenant shall have the right, without obtaining the prior consent of Landlord, but upon at least five (5) business days’ prior written notice to Landlord, to make alterations, additions or improvements to the Premises where:

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(i)the same are within the interior of the Premises within the Building, and do not affect the exterior of the Premises and the Building;

(ii)the same do not affect the roof, any structural element of the Building, or the mechanical, electrical, plumbing, heating, ventilating, air-conditioning and fire protection systems of the Building;

(iii)the cost of any individual alteration, addition or improvement shall not exceed $50,000.00 in each instance; and

(iv)Tenant shall comply with the provisions of this Lease and if such work increases the cost of insurance or taxes or of services, Tenant shall pay for any such increase in cost.

9.2CONFORMITY OF WORK. Tenant covenants and agrees that any alterations, additions, improvements or installations made by it to or upon the Premises shall be done in a good and workmanlike manner and in compliance with all applicable Legal Requirements and Insurance Requirements now or hereafter in force, that materials of first and otherwise good quality shall be employed therein, that the structure of the Building shall not be endangered or impaired thereby and that the Premises shall not be diminished in value thereby.

9.3PERFORMANCE OF WORK, GOVERNMENTAL PERMITS AND INSURANCE. All of Tenant’s alterations and additions and installation of furnishings shall be coordinated with any work being performed by or for Landlord and in such manner as to maintain harmonious labor relations and not to damage the Building or Prudential Center or interfere with Building construction or operation and, except for installation of furnishings, shall be performed by Landlord’s general contractor or by contractors or workers first approved by Landlord, such approval not to be unreasonably withheld or delayed. Except for work by Landlord’s general contractor, Tenant shall procure all necessary governmental permits before making any repairs, alterations, other improvements or installations. Tenant agrees to save harmless and indemnify Landlord from any and all injury, loss, claims or damage to any person or property occasioned by or arising out of the doing of any such work whether the same be performed prior to or during the Term of this Lease. At Landlord’s election, unless Landlord acts as Tenant’s general contractor or construction manager, Tenant shall cause its contractor to maintain a payment and performance bond in such amount and with such companies as Landlord shall reasonably approve. In addition, Tenant shall cause each contractor to carry workmen’s compensation insurance in statutory amounts covering the employees of all contractors and subcontractors, and commercial general liability insurance or comprehensive general liability

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insurance with a broad form comprehensive liability endorsement with such limits as Landlord may require reasonably from time to time during the Term of this Lease, but in no event less than the minimum amount of commercial general liability insurance or comprehensive general liability insurance Tenant is required to maintain as set forth in Section 1.2 hereof and as the same may be modified as provided in Section 13.2 hereof (all such insurance to be written in companies approved reasonably by Landlord and insuring Landlord, Landlord’s managing agent and Tenant as additional insureds as well as contractors) and to deliver to Landlord certificates of all such insurance. Tenant shall also prepare and submit to Landlord a set of as-built plans, in both print and electronic forms, showing such work performed by Tenant to the Premises promptly after any such alterations, improvements or installations are substantially complete and promptly after any wiring or cabling for Tenant’s computer, telephone and other communications systems is installed by Tenant or Tenant’s contractor. Without limiting any of Tenant’s obligations hereunder, Tenant shall be responsible, as Additional Rent, for the costs of any alterations, additions or improvements in or to the Building that are required in order to comply with Legal Requirements as a result of any work performed by Tenant. Landlord shall have the right to provide such rules and regulations relative to the performance of any alterations, additions, improvements and installations by Tenant hereunder and Tenant shall abide by all such reasonable rules and regulations and shall cause all of its contractors to so abide including, without limitation, payment for the costs of using Building services.

9.4LIENS. Tenant covenants and agrees to pay promptly when due the entire cost of any work done on the Premises by Tenant, its agents, employees or contractors, and not to cause or permit any liens for labor or materials performed or furnished in connection therewith to attach to the Premises or the Building or the Prudential Center and immediately to discharge any such liens which may so attach.

9.5NATURE OF ALTERATIONS. All work, construction, repairs, alterations, other improvements or installations made to or upon the Premises (including, but not limited to, the construction performed by Landlord under Article IV), shall become part of the Premises and shall become the property of Landlord and remain upon and be surrendered with the Premises as a part thereof upon the expiration or earlier termination of the Lease Term, except as follows:

(a)All trade fixtures whether by law deemed to be a part of the realty or not, installed at any time or times by Tenant or any person claiming under Tenant shall remain the property of Tenant or persons claiming under Tenant and may be removed by Tenant or any person claiming under Tenant at any time or times during the Lease Term or any occupancy by Tenant thereafter and shall be removed by Tenant at the expiration or earlier termination of the Lease Term if so requested by Landlord. Tenant

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shall repair any damage to the Premises occasioned by the removal by Tenant or any person claiming under Tenant of any such property from the Premises. Notwithstanding the foregoing, Tenant shall have the right to grant security interests and/or to lease its business equipment and personal property in the Premises, provided that such lessor or secured party agrees (or to such other commercially reasonable terms as may be mutually agreed upon by Landlord and such lessor or secured party):

1.That it will repair any damage to the Building or the Premises caused by the installation or removal of any such equipment or personal property;

2.That it will give Landlord not less than five (5) days’ advance written notice prior to making any entry into the Premises;

3.That it will not hold any auction or foreclosure sale on the Premises; and

4.That it will have the right to remove such equipment or property only during the term of this Lease, if the term of this Lease expires in the normal course, or within five (5) days after the earlier termination of the term of this Lease.

(b)At the expiration or earlier termination of the Lease Term, Tenant shall remove: (i) any wiring, cables or other installations appurtenant thereto for Tenant’s computer, telephone and other communication systems and equipment whether located in the Premises or in any other portion of the Building, including all risers (collectively, “Cable”), unless Landlord notifies Tenant in writing that such Cable shall remain in the Premises, and (ii) any alterations, additions and improvements made with Landlord’s consent during the Lease Term for which such removal was made a condition of such consent under Section 9.1(b). Upon such removal Tenant shall restore the Premises to their condition prior to such alterations, additions and improvements and repair any damage occasioned by such removal and restoration. Tenant shall have the right, upon written request to Landlord at any time on or after the date which is three (3) months prior to the expiration of the Lease Term, to ask Landlord if Tenant shall be required to remove such Cable at the termination of the Lease Term. Landlord shall respond to Tenant within fifteen (15) days of such request as to whether Tenant shall be required to remove such Cable at the expiration or earlier termination of the Lease Term and Landlord shall be bound by such response. If Landlord has not responded within such 15-day period, then Tenant may send Landlord a second notice, which shall state at the top, in all-capital bold-face print at least 10 points

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large, “WARNING: FAILURE TO RESPOND TO THIS NOTICE WITHIN FIVE (5) BUSINESS DAYS SHALL CONSTITUTE A WAIVER OF THE RIGHT TO REQUIRE TENANT TO REMOVE CABLE”. If Landlord does not respond to such second notice within five (5) business days, then Landlord shall be deemed to have waived its right to require Tenant to remove such Cable.

(c)If Tenant shall make any alterations, additions or improvements to the Premises for which Landlord’s approval is required under Section 9.1 without obtaining such approval, then at Landlord’s request at any time during the Lease Term, and at any event at the expiration or earlier termination of the Lease Term, Tenant shall remove such alterations, additions and improvements and restore the Premises to their condition prior to same and repair any damage occasioned by such removal and restoration. Nothing herein shall be deemed to be a consent to Tenant to make any such alterations, additions or improvements, the provisions of Section 9.1 being applicable to any such work.

9.6INCREASES IN TAXES. Tenant shall pay, as Additional Rent, one hundred percent (100%) of any increase in real estate taxes on the Building which shall, at any time after the Commencement Date, result from alterations, additions or improvements to the Premises made by Tenant if the taxing authority specifically determines such increase results from such alterations, additions or improvements made by Tenant.

ARTICLE X

PARKING

10.1PARKING PRIVILEGES. Landlord shall provide to Tenant monthly parking privileges in the Prudential Center Garage (the “Garage”) for eighteen (18) passenger automobiles for the parking of motor vehicles, sixteen (16) in unreserved stalls and two (2) in reserved stalls, in the Garage by Tenant’s employees commencing on the Commencement Date of the Term. Tenant’s reserved parking stalls shall initially be as shown on Exhibit F attached hereto. Landlord reserves the right to relocate such reserved stalls to another location, provided that (i) the stall numbered 1 on Exhibit F can only be relocated to a stall numbered 2 through 45 as shown on Exhibit F or another location which is approximately equally proximate to the entrance from the Garage to the Building, and (ii) the stall numbered 49 on Exhibit F can only be relocated to a space within the area reserved for reserved parking for tenants of the Building, as Landlord may designate such area from time to time. Tenant acknowledges that Landlord has advised Tenant that stall numbered 1 is not located within the reserved gate of the other reserved spaces in the Garage and, notwithstanding signs indicating that such stall is reserved, such space is often utilized by others. Therefore, Tenant

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acknowledges and agrees that Landlord shall have no obligation to police such stall and that Landlord’s only obligation with respect to such stall is to maintain reserved signage as is in place on the date of this Lease.

10.2PARKING CHARGES. Tenant shall pay for such parking privileges at the prevailing monthly rates from time to time charged by the operator or operators of the Garage, whether or not such operator is an affiliate of Landlord, for unreserved and, if applicable, reserved stalls. Such monthly parking charges for parking privileges shall be payable monthly as directed by Landlord upon billing therefor by Landlord or such operator. Tenant acknowledges that said monthly charges to be paid under this Section are for the use by the Tenant of the parking privileges referred to herein, and not for any other service. Tenant shall have the right to cease using any such parking privileges upon thirty (30) days’ notice to Landlord and such operator, whereupon Tenant shall no longer have any rights to use the relinquished privileges nor any obligation to pay any charges for such privileges accruing after the end of such 30-day period.

10.3GARAGE OPERATION. Unless otherwise determined by Landlord or the operator of such garage (the “Garage Operator”), the Garage is to be operated on a self-parking basis, and Tenant shall be obligated to park and remove its own automobiles, and Tenant’s parking shall be on an unreserved basis, Tenant having the right to park in any available stalls. Without limiting the foregoing, Landlord shall have the right to operate portions of the Garage, except for Tenant’s reserved stalls, on an attendant-managed basis, and Tenant shall cooperate with such attendants in parking and removing its automobiles, recognizing that Tenant may be required to leave keys for its vehicles with such attendants while such vehicles are in the Garage. Tenant’s access and use privileges with respect to the Garage shall be in accordance with regulations of uniform applicability to the users of the Garage from time to time established by the Landlord or the Garage Operator. Tenant shall receive one (1) identification sticker or pass and one (1) magnetic card so-called, or other suitable device providing access to the Garage, for each parking privilege paid for by Tenant. Tenant shall supply Landlord with an identification roster listing, for each identification sticker or pass, the name of the employee and the make, color and registration number of the vehicle to which it has been assigned, and shall provide a revised roster to Landlord monthly indicating changes thereto. Any automobile found parked in the Garage during normal business hours without appropriate identification will be subject to being towed at said automobile owner’s expense. The parking privileges granted herein are non-transferable (other than to a permitted assignee or subtenant pursuant to the applicable provisions of Article XII hereof). Landlord or the Garage Operator may institute a so-called valet parking program for the Garage, and in such event Tenant shall cooperate in all respects with such program. Landlord reserves for itself and any other PruOwner the right to alter the Garage as it sees fit and in such case to change the Garage including the reduction in area of the same, Tenant

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acknowledging that in connection with the potential expansion of buildings in the Prudential Center or the addition of other buildings thereto, it may be necessary to make significant changes to the Garage which may result in the reduction of the amount of parking available in the Garage and the change of location of such parking or may change the access to or egress from the Garage, all of which Landlord or any other PruOwner may perform in its sole and exclusive discretion, without limitation to its other rights in respect thereof.

10.4LIMITATIONS. Tenant agrees that it and all persons claiming by, through and under it, shall at all times abide by all reasonable rules and regulations promulgated by Landlord or the Garage Operator with respect to the use of the Garage. Except to the extent of gross negligence or willful acts, neither the Landlord nor the Garage Operator assumes any responsibility whatsoever for loss or damage due to fire or theft or otherwise to any automobile or to any personal property therein, however caused, and Tenant agrees, upon request from the Landlord, from time to time, to notify its officers, employees and agents then using any of the parking privileges provided for herein, of such limitation of liability. Tenant further acknowledges and agrees that a license only is hereby granted, and no bailment is intended or shall be created.

ARTICLE XI

CERTAIN TENANT COVENANTS

Tenant covenants during the Lease Term and for such further time as Tenant occupies any part of the Premises:

11.1To pay when due all Annual Fixed Rent and Additional Rent and all charges for utility services rendered to the Premises and service inspections therefor except as otherwise provided in Exhibit C and, as further Additional Rent, all charges for additional and special services rendered pursuant to Section 7.3.

11.2(A)To use and occupy the Premises for the Permitted Use only, and not to injure or deface the Premises or the Building or Prudential Center and not to permit in the Premises any auction sale, vending machine or flammable fluids or chemicals, or nuisance, or the emission from the Premises of any objectionable noise or odor and not to use or devote the Premises or any part thereof for any purpose other than the Permitted Use, nor any use thereof which is inconsistent with the maintenance of the Building as an office building of the first-class in the quality of its maintenance, use and occupancy, or which is improper, offensive, contrary to law or ordinance or liable to invalidate or increase the premiums for any insurance on the Building or its contents or liable to render necessary any alteration or addition to the Building.

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(B)Further, (i) Tenant shall not, nor shall Tenant permit its employees, invitees, agents, independent contractors, contractors, assignees or subtenants to, keep, maintain, store or dispose of (into the sewage or waste disposal system or otherwise) or engage in any activity which might produce or generate any substance which is or may hereafter be classified as a hazardous material, waste or substance (collectively “Hazardous Materials”), under federal, state or local laws, rules and regulations, including, without limitation, 42 U.S.C. Section 6901 et seq., 42 U.S.C. Section 9601 et seq., 42 U.S.C. Section 2601 et seq., 49 U.S.C. Section 1802 et seq. and Massachusetts General Laws, Chapter 21E and the rules and regulations promulgated under any of the foregoing, as such laws, rules and regulations may be amended from time to time (collectively “Hazardous Materials Laws”), (ii) Tenant shall immediately notify Landlord of any incident in, on or about the Premises, the Building or the Prudential Center that would require the filing of a notice under any Hazardous Materials Laws, (iii) Tenant shall comply and shall cause its employees, invitees, agents, independent contractors, contractors, assignees and subtenants to comply with each of the foregoing and (iv) Landlord shall have the right to make such inspections (including testing) as Landlord shall elect from time to time to determine that Tenant is complying with the foregoing.

(C)Landlord represents and warrants that, to its actual knowledge and as of the Date of this Lease, there are no Hazardous Materials in, on, under or emanating from the Prudential Center, including its interior, systems or structure, which are required to be assessed, reported, removed or remediated pursuant to applicable Hazardous Materials Laws, except as disclosed in the following reports have been provided to Tenant:

Phase I Environmental Site Assessment

Prudential Center

800 Boylston Street

Boston, MA

Dated July 11, 1997 prepared for Prudential Real Estate by

Levine-Fricke-Recon

and

Report of Phase I Environmental Site Assessment

Prudential Center

760 & 800 Huntington Avenue

Boston, Massachusetts

By Haley & Aldrich, Inc., Boston, Massachusetts

For Boston Properties Limited Partnership dated March, 1998

and

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Report on Phase I Environmental Site Assessment

Prudential Center

111 Huntington Avenue

Boston, Massachusetts

By Haley & Aldrich, Inc., Boston, Massachusetts

For Boston Properties dated July, 1999

Landlord shall indemnify Tenant and hold it harmless against any claims, damages, losses or liabilities (including reasonable attorneys’ and expert consultants’ fees) arising from any breach of the representations and warranties made by Landlord as set forth in this Paragraph (C) and from claims, damages, losses or liabilities arising in the event that Landlord, Landlord’s agents, employees or contractors release Hazardous Materials onto the Building or the Prudential Center; provided however, the foregoing indemnity shall not apply to: (i) any material or substance existing on the Prudential Center as of the Execution Date of this Lease which, as of the Date of this Lease, was not considered, as a matter of law, to be a Hazardous Material, but which is subsequently determined to be a Hazardous Material as a matter of law or (ii) any material or substance released or installed or placed on the Prudential Center after the Execution Date of this Lease which, as of the date of such release, installation or placement, was not considered, as a matter of law, to be a Hazardous Material but which is later determined, as a matter of law, to be a Hazardous Material. In addition, if Hazardous Materials are discovered in the Building or the Premises which are not caused by Tenant, its employees, invitees, agents, independent contractors, contractors, assignees or subtenants, then Landlord shall, if and as required by law, assess, remediate or remove the same, or cause the same to be assessed, remediated or removed.

11.3Not to obstruct in any manner any portion of the Building not hereby leased or any portion thereof or of the Prudential Center used by Tenant in common with others; not without prior consent of Landlord to permit the painting or placing of any signs, curtains, blinds, shades, awnings, aerials or flagpoles, or the like, visible from the common areas outside the Premises or from the exterior of the Building; and to comply with all reasonable rules and regulations now or hereafter made by Landlord, of which Tenant has been given notice, for the care and use of the Building and the Prudential Center and their facilities and approaches, but Landlord shall not be liable to Tenant for the failure of other occupants of the Building to conform to such rules and regulations.

11.4To keep the Premises equipped with all safety appliances required by law or ordinance or any other regulation of any public authority because of any use made by Tenant other than normal office use, and to procure all licenses and permits so required because of any use made by Tenant other than normal office use, and to procure all licenses and permits so required because of such use and, if requested

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by Landlord, to do any work so required because of such use, it being understood that the foregoing provisions shall not be construed to broaden in any way Tenant’s Permitted Use.

11.5Not to place a load upon any floor in the Premises exceeding an average rate of 70 pounds of live load (including partitions) per square foot of floor area; and not to move any safe, vault or other heavy equipment in, about or out of the Premises except in such manner and at such time as Landlord shall in each instance authorize. Tenant’s business machines and mechanical equipment shall be placed and maintained by Tenant at Tenant’s expense in settings sufficient to absorb and prevent vibration or noise that may be transmitted to the Building structure or to any other space in the Building.

11.6To pay promptly when due all taxes which may be imposed upon personal property (including, without limitation, fixtures and equipment) in the Premises to whomever assessed.

11.7To pay, as Additional Rent, all reasonable costs, counsel and other fees incurred by Landlord in connection with the successful enforcement by Landlord of any obligations of Tenant under this Lease or in connection with any bankruptcy case involving Tenant or any guarantor.

11.8Not to do or permit anything to be done in or upon the Premises, or bring in anything or keep anything therein, which shall increase the rate of insurance on the Premises or on the Building above the standard rate applicable to premises being occupied for the use to which Tenant has agreed to devote the Premises; and Tenant further agrees that, in the event that Tenant shall do any of the foregoing, Tenant will promptly pay to Landlord, on demand, any such increase resulting therefrom, which shall be due and payable as Additional Rent hereunder.

11.9To comply with all applicable Legal Requirements now or hereafter in force which shall impose a duty on Landlord or Tenant relating to or as a result of the Tenant’s use or occupancy of the Premises; provided that Tenant shall not be required to make any capital improvements to the Building or the Premises or any alterations or additions to the structure, roof, exterior and load bearing walls, foundation, structural floor slabs and other structural elements of the Building unless the same are required by such Legal Requirements as a result of or in connection with Tenant’s use or occupancy of the Premises other than for general business office purposes. Tenant shall promptly pay all fines, penalties and damages that may arise out of or be imposed because of its failure to comply with the provisions of this Section 11.9.

11.10The word “Prudential” alone or in any combination other than “Prudential Center” shall not be used by the Tenant for any purpose whatsoever. Tenant shall not use

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the words “Prudential Center” other than as part of the business address of Tenant and then only in such manner as will not appear to be part of Tenant’s name. Tenant shall not use the words “Prudential Center” in any manner which is undignified, confusing, detrimental or misleading in Landlord’s opinion and shall give no greater prominence to the words “Prudential Center” than to any other part of the business address of Tenant and shall give less prominence to the words “Prudential Center” than to Tenant’s name. The Tenant shall not utilize signage or advertising which contains (a) any description of the Prudential Center or the description of the location of the Premises other than “Prudential Center”, “at Prudential Center”, or an official street address such as “Boylston Street” or “Huntington Avenue” or a regional locator such as “Boston” or “Back Bay” and (b) any name of a building, space or area within the Prudential Center other than “Prudential Tower” if Tenant is located within the Prudential Tower in order to describe the location of the Premises.

In order to reduce peak-hour trip generation of employees at the Prudential Center, the Landlord encourages all employers at the Prudential Center to adopt flexible work schedules for its employees. The Landlord encourages all employers at the Prudential Center to participate in the Corporate Pass Program of the Massachusetts Bay Transit Authority which is designed to encourage the use of mass transit by persons working in Boston. As of June 1988, one hundred and twenty-five greater Boston companies provided subsidies for the purchase by their employees of monthly transit passes through this program with subsidies ranging from 10% to 100% of the cost of the transit pass. The provision of transit pass subsidies may also offer certain benefits to employers under tax law. The Landlord encourages all employers at the Prudential Center to participate in this program and to inform their employees of the benefits of using monthly transit passes.

11.11Any vendors engaged by Tenant to perform services in or to the Premises including, without limitation, janitorial contractors and moving contractors shall be coordinated with any work being performed by or for Landlord and in such manner as to maintain harmonious labor relations and not to damage the Building or Prudential Center or interfere with Building construction or operation and shall be performed by vendors first approved by Landlord.

ARTICLE XII

ASSIGNMENT AND SUBLETTING

12.1RESTRICTIONS ON TRANSFER. Except as otherwise expressly provided herein, Tenant covenants and agrees that it shall not assign, mortgage, pledge, hypothecate or otherwise transfer this Lease and/or Tenant’s interest in this Lease or sublet (which term, without limitation, shall include granting of concessions, licenses or the like) the whole or any part of the Premises. Any assignment,

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mortgage, pledge, hypothecation, transfer or subletting not expressly permitted in or consented to by Landlord under this Article XII shall be void, ab initio; shall be of no force and effect; and shall confer no rights on or in favor of third parties. In addition, Landlord shall be entitled to seek specific performance of, and other equitable relief with respect to, the provisions hereof.

12.2EXCEPTIONS FOR AFFILIATED ENTITIES. Notwithstanding the foregoing provisions of Section 12.1 above and the provisions of Section 12.4 below, BUT subject to the provisions of Sections 12.5 and 12.7 below, Tenant shall have the right to assign this Lease or to sublet the Premises (in whole or in part) to any controlling entity of Tenant or to any entity controlled by Tenant or to any entity under common control with Tenant (such parent or subsidiary entity or entity under common control with Tenant being hereinafter called a “Tenant Affiliate”) or to any corporation, limited liability partnership or limited liability company into which Tenant may be converted or with which it may merge, or to any entity purchasing all or substantially all of Tenant’s assets (each, a “Permitted Tenant Successor”), provided that (i) in the case of a Permitted Tenant Successor, the entity to which this Lease is so assigned or which so sublets the Premises has a net worth (e.g. assets on a pro forma basis using generally accepted accounting principles consistently applied and using the most recent financial statements) equal to the net worth of the Tenant immediately before such transaction, and (ii) in the case of an assignment to a Tenant Affiliate or a Permitted Tenant Successor, such Tenant Affiliate or a Permitted Tenant Successor shall execute an assumption agreement in form and substance reasonably acceptable to Landlord whereby such entity agrees to assume and be bound by all of Tenant’s obligations under this Lease. If any Tenant Affiliate to which this Lease is assigned or the Premises sublet (in whole or in part) shall cease to be such a Tenant Affiliate within one (1) year after such assignment or sublease, and if such cessation was contemplated at the time of the assignment or subletting, such cessation shall be considered an assignment or subletting requiring Landlord’s consent, except to the extent that such cessation leads to the assignee or sublessee becoming a Permitted Tenant Successor, or otherwise being a Permitted Tenant Successor, satisfying the requirements for waiver of Landlord’s consent set forth above.

12.3LANDLORD’S TERMINATION RIGHT. Notwithstanding the provisions of Section 12.1 above, but subject to the exceptions set forth in Section 12.2 above, in the event Tenant desires to assign this Lease or to sublet the whole or any part of the Premises, Tenant shall give Landlord a Recapture Offer, as hereinafter defined.

For the purposes hereof a “Recapture Offer” shall be defined as a notice in writing from Tenant to Landlord which:

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	(a)	States that Tenant desires to sublet the Premises, or a portion thereof, or to assign its interest in this Lease.
	(b)	Identifies the affected portion of the Premises (“Recapture Premises”).
	(c)	Identifies the period of time (“Recapture Period”) during which Tenant proposes to sublet the Recapture Premises or to assign its interest in the Lease.
	(d)	Identifies the rental rate of the proposed subletting or assignment.
	(e)	Offers to Landlord to terminate the Lease in respect of the Recapture Premises (in the case of a proposed assignment of Tenant’s interest in the Lease or a subletting for the remainder of the Term of the Lease) or to suspend the Term of the Lease PRO TANTO in respect of the Recapture Period (i.e. the Term of the Lease in respect of the Recapture Premises shall be terminated during the Recapture Period and Tenant’s rental obligations shall be reduced in proportion to the ratio of the Rentable Floor Area of the Recapture Premises to the Rentable Floor Area of the Premises then demised to Tenant and at the expiration of the Recapture Period the Recapture Premises will be returned to Tenant under the terms of the Lease).
	Landlord shall have thirty (30) days from Landlord’s receipt of the Recapture Offer to accept a Recapture Offer (the “Acceptance Period”). In the event that Landlord shall not timely exercise its termination rights as aforesaid, or shall fail to give any or timely notice pursuant to this Section, the provisions of Sections 12.4-12.7 shall be applicable. This Section 12.3 shall not be applicable to an assignment or sublease pursuant to Section 12.2.
12.4	CONSENT OF LANDLORD. Notwithstanding the provisions of Section 12.1 above, BUT subject to the provisions of this Section 12.4 and the provisions of Sections 12.5, 12.6 and 12.7 below, in the event that Landlord shall not have exercised the termination or suspension right as set forth in Section 12.3, or shall have failed to give any or timely notice under Section 12.3, then for a period of ninety (90) days (i) after the receipt of Landlord’s notice stating that Landlord does not elect the termination or suspension right, or (ii) after the expiration of the thirty (30) day period referred to in Section 12.3 in the event Landlord shall not give any or timely notice under Section 12.3, as the case may be, Tenant shall have the right to assign this Lease or sublet the whole or any part of the Premises in accordance with Tenant’s notice to Landlord given as provided in Section 12.5 provided that, in each instance, Tenant first obtains the express prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. Without limiting the foregoing standard, Landlord shall not be deemed

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to be unreasonably withholding its consent to such a proposed assignment or subleasing if:
(a)	the proposed assignee or subtenant is a Restricted Complex Occupant, as hereinafter defined, or is (or within the previous sixty (60) days has been) in active negotiation (evidenced by (i) a proposal from Landlord or a PruOwner to the Tenant, or vice versa, or (ii) a letter of intent executed by Landlord or a PruOwner and/or such proposed assignee or subtenant)with Landlord for premises in the Building or elsewhere in the Prudential Center or is not of a character consistent with the operation of a first class office building (by way of example Landlord shall not be deemed to be unreasonably withholding its consent to an assignment or subleasing to any governmental or quasi-governmental agency), or
(b)	in Landlord’s reasonable judgment, the proposed assignee or subtenant is not of good character and reputation, or
(c)	the proposed assignee or subtenant does not possess adequate financial capability to perform the Tenant obligations as and when due or required (recognizing that Tenant remains liable under this Lease), or
(d)	the assignee or subtenant proposes to use the Premises (or part thereof) for a purpose other than the purpose for which the Premises may be used as stated in Section 1.2 hereof, or
(e)	the character of the business to be conducted or the proposed use of the Premises by the proposed subtenant or assignee shall (i) be likely to materially increase Operating Expenses for the Building beyond that which Landlord now incurs for use by Tenant; (ii) be likely to materially increase the burden on elevators or other Building systems or equipment over the burden prior to such proposed subletting or assignment; or (iii) violate or be likely to violate any provisions or restrictions contained herein relating to the use or occupancy of the Premises, or
(f)	there shall be existing an Event of Default (defined in Section 15.1), or
(g)	intentionally omitted, or
(h)	any part of the rent payable under the proposed assignment or sublease shall be based in whole or in part on the income or profits derived from the Premises or if any proposed assignment or sublease shall potentially have any adverse effect on the real estate investment trust qualification requirements applicable to Landlord and its affiliates, or

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	(i)	the holder of any mortgage or ground lease on property which includes the Premises, which holder has approval rights over the proposed assignment or sublease, does not so approve the proposed assignment or sublease (Landlord agreeing to use good faith efforts to obtain such approval before Landlord refuses its consent based on this Section 12.4(i)); or
	(j)	due to the identity or business of a proposed subtenant, such approval would cause Landlord to be in violation of any covenant or restriction contained in another lease or other agreement affecting space in the Building or elsewhere in the Prudential Center.
	For the purposes hereof a “Restricted Complex Occupant” shall be defined as any tenant or subtenant of the Building or any other building in the Prudential Center Complex (which other building is then owned by Landlord or an affiliate of Landlord) other than one who satisfies all three of the following criteria: (i) such tenant or subtenant desires to sublease the Recapture Premises for expansion purposes only, and (ii) such tenant or subtenant will not, either directly or indirectly, cause a vacancy in the premises which it then occupies in the Building or elsewhere in the Prudential Center Complex, and (iii) such tenant or subtenant’s need, as to size of premises and length of term cannot then (i.e. at the time that Tenant requests Landlord’s consent to a sublease or assignment to such tenant or subtenant) be satisfied by Landlord or its affiliates in the Prudential Center Complex.
12.5	TENANT’S NOTICE. Tenant shall give Landlord prior notice of any proposed sublease or assignment, and said notice shall specify the provisions of the proposed assignment or subletting, including (a) the name and address of the proposed assignee or subtenant, (b) in the case of a proposed assignment or subletting pursuant to Section 12.4, such information as to the proposed assignee’s or proposed subtenant’s net worth and financial capability and standing as may reasonably be required for Landlord to make the determination referred to in Section 12.4 above (provided, however, that Landlord shall hold such information confidential having the right to release same to its officers, accountants, attorneys and mortgage lenders on a confidential basis), (c) all of the terms and provisions upon which the proposed assignment or subletting is to be made, (d) in the case of a proposed assignment or subletting pursuant to Section 12.4, all other information necessary to make the determination referred to in Section 12.4 above and (e) in the case of a proposed assignment or subletting pursuant to Section 12.2 above, such information as may be reasonably required by Landlord to determine that such proposed assignment or subletting complies with the requirements of said Section 12.2.
	If Landlord shall consent to the proposed assignment or subletting, as the case may be, then, in such event, Tenant may thereafter sublease or assign the whole or

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	any part of the Premises pursuant to Tenant’s notice, as given hereunder; provided, however, that if such assignment or sublease shall not be executed and delivered to Landlord within ninety (90) days after the date of Landlord’s consent, the consent shall be deemed null and void and the provisions of Section 12.3 shall be applicable.
12.6	PROFIT ON SUBLEASING OR ASSIGNMENT. In addition, in the case of any assignment or subleasing as to which Landlord may consent (other than an assignment or subletting permitted under Section 12.2 hereof or an assignment in conjunction with a bona fide transfer of either a significant portion of Tenant’s assets or a significant portion of the assets of Tenant’s business division located at the Premises) such consent shall be upon the express and further condition, covenant and agreement, and Tenant hereby covenants and agrees that, in addition to the Annual Fixed Rent, Additional Rent and other charges to be paid pursuant to this Lease, fifty percent (50%) of the “Assignment/Sublease Profits” (hereinafter defined), if any shall be paid to Landlord.
	The “Assignment/Sublease Profits” shall be the excess, if any, of (a) the “Assignment/Sublease Net Revenues” as hereinafter defined over (b) the Annual Fixed Rent, Additional Rent and other charges provided in this Lease (provided, however, that for the purpose of calculating the Assignment/Sublease Profits in the case of a sublease, appropriate proportions in the applicable Annual Fixed Rent, Additional Rent and other charges under this Lease shall be made based on the percentage of the Premises subleased and on the terms of the sublease). The “Assignment/Sublease Net Revenues” shall be the fixed rent, additional rent and all other charges and sums payable either initially or over the term of the sublease or assignment plus all other profits and increases to be derived by Tenant as a result of such subletting or assignment, less the reasonable costs of Tenant incurred in such subleasing or assignment (the definition of which shall be limited to rent concessions, brokerage commissions, marketing costs, legal fees, Landlord review fees, permitting costs and alteration allowances, in each case actually paid) as set forth in a statement certified by an appropriate officer of Tenant and delivered to Landlord within thirty (30) days of the full execution of the sublease or assignment document, amortized over the term of the sublease or assignment.
	All payments of the Assignment/Sublease Profits due Landlord shall be made within ten (10) days of receipt of same by Tenant.
12.7	ADDITIONAL CONDITIONS.
	(A) It shall be a condition of the validity of any assignment or subletting permitted under Section 12.2 above, or consented to under Section 12.4 above, that both Tenant and the assignee or sublessee agree directly with Landlord in a separate written instrument reasonably satisfactory to Landlord which contains

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terms and provisions reasonably required by Landlord, including, without limitation, the agreement of the assignee or sublessee to be bound by all the obligations of the Tenant hereunder, including, without limitation, the obligation to pay the Annual Fixed Rent, Additional Rent, and other amounts provided for under this Lease (but in the case of a partial subletting, such subtenant shall agree on a pro rata basis to be so bound) including the provisions of Sections 12.1 through 12.7 hereof, but such assignment or subletting shall not relieve the Tenant named herein of any of the obligations of the Tenant hereunder, Tenant shall remain fully and primarily liable therefor and the liability of Tenant and such assignee (or subtenant, as the case may be) shall be joint and several. Further, and notwithstanding the foregoing, the provisions hereof shall not constitute a recognition of the assignment or the assignee thereunder or the sublease or the subtenant thereunder, as the case may be, and at Landlord’s option, upon the termination or expiration of the Lease (whether such termination is based upon a cause beyond Tenant’s control, a default of Tenant, the agreement of Tenant and Landlord or any other reason), the assignment or sublease shall be terminated.

(B)           As Additional Rent, Tenant shall reimburse Landlord promptly for reasonable out of pocket legal and other expenses incurred by Landlord in connection with any request by Tenant for consent to assignment or subletting.

(C)           If this Lease be assigned, or if the Premises or any part thereof be sublet or occupied by anyone other than Tenant, Landlord may upon prior notice to Tenant, at any time and from time to time, collect Annual Fixed Rent, Additional Rent, and other charges from the assignee, sublessee or occupant and apply the net amount collected to the Annual Fixed Rent, Additional Rent and other charges herein reserved, but no such assignment, subletting, occupancy or collection shall be deemed a waiver of this covenant, or a waiver of the provisions of Sections 12.1 through 12.7 hereof, or the acceptance of the assignee, sublessee or occupant as a tenant or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained, the Tenant herein named to remain primarily liable under this Lease.

(D)          No assignment or subletting under any of the provisions of Sections 12.2 or 12.4 shall in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment or subletting in accordance with the provisions of this Article XII.

(E)           Without limiting Tenant’s obligations under Article IX, Tenant shall be responsible, at Tenant’s sole cost and expense, for performing all work necessary to comply with Legal Requirements and Insurance Requirements in connection with any assignment or subletting hereunder including, without limitation, any work in connection with such assignment or subletting.

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ARTICLE XIII

INDEMNITY AND COMMERCIAL GENERAL LIABILITY INSURANCE

13.1	TENANT’S INDEMNITY. To the maximum extent this agreement may be made effective according to law, Tenant agrees to indemnify and save harmless Landlord from and against all claims of whatever nature arising from or claimed to have arisen from any breach of this Lease by Tenant or any act, omission or negligence of Tenant, or Tenant’s contractors, licensees, invitees, agents, servants, independent contractors or employees; any accident, injury or damage whatsoever caused to any person, or to the property of any person, occurring in or about the Premises after the date that possession of the Premises is first delivered to Tenant and until the end of the Lease Term and thereafter, provided that during any such period after the Lease Term Tenant or anyone acting by, through or under Tenant is in occupancy of the Premises or any portion thereof; or any accident, injury or damage occurring outside the Premises but within the Building, the Garage or on the Prudential Center, where such accident, injury or damage results, or is claimed to have resulted, from an act, omission or negligence on the part of Tenant or Tenant’s contractors, licensees, invitees, agents, servants, independent contractors or employees.
	This indemnity and hold harmless agreement shall include indemnity against all costs, expenses and liabilities incurred in or in connection with any such claim or proceeding brought thereon, and the defense thereof.
13.1A.	LANDLORD’S INDEMNITY OF TENANT .. Landlord, subject to the limitations on Landlord’s liability contained elsewhere in this Lease, agrees to hold Tenant harmless and to defend, exonerate and indemnify Tenant from and against any and all claims, liabilities, or penalties asserted by or on behalf of any third party for damage to property or injuries to persons sustained or occurring in the Building to the extent arising from the negligence or willful misconduct of Landlord or Landlord’s agents, employees or contractors.
	This indemnity and hold harmless agreement shall include indemnity against all costs, expenses and liabilities incurred in or in connection with any such claim or proceeding brought thereon, and the defense thereof.
13.2	COMMERCIAL GENERAL LIABILITY INSURANCE. Tenant agrees to maintain in full force from the date upon which Tenant first enters the Premises for any reason, throughout the Lease Term of this Lease, and thereafter, so long as Tenant is in occupancy of any part of the Premises, a policy of commercial general liability written on an occurrence basis with a broad form comprehensive liability endorsement under which Landlord and Landlord’s managing agent (and such other persons as are in privity of estate with Landlord and Landlord’s managing agent as may be set out in notice from time to time) and Tenant are

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	named as insureds, and under which the insurer agrees to indemnify and hold Landlord and Landlord’s managing agent, and those in privity of estate with Landlord and Landlord’s managing agent, harmless from and against all cost, expense and/or liability arising out of or based upon any and all claims, accidents, injuries and damages mentioned in Section 13.1 of this Article XIII, in the broadest form of such coverage from time to time available in the jurisdiction in which the Premises are located. Tenant shall use reasonable efforts to cause the issuer of each such policy to include a provision therein stating that the policy shall be non-cancelable and non-amendable with respect to Landlord and Landlord’s said designees without thirty (30) days’ prior notice to Landlord, and a duplicate original or certificate thereof shall be delivered to Landlord. As of the Commencement Date hereof, the minimum limits of liability of such insurance shall be as specified in Section 1.2 and from time to time during the Lease Term for such higher limits, if any, as are carried customarily in the Greater Boston Area with respect to similar properties identified in writing to Tenant. In addition, in the event Tenant hosts a function in the Premises, Tenant agrees to obtain and maintain, and cause any persons or parties providing services for such function to obtain, the appropriate insurance coverages as determined by Landlord (including liquor liability, if applicable) and provide Landlord with evidence of the same. All insurance required to be maintained by Tenant pursuant to this Lease shall be maintained with responsible companies qualified to do business, and in good standing, in the Commonwealth of Massachusetts and which have a rating of at least “A-” and are within a financial size category of not less than “Class VIII” in the most current Best’s Key Rating Guide or such similar rating as may be reasonably selected by Landlord if such Guide is no longer published.
13.3	TENANT’S PROPERTY INSURANCE. Tenant, at Tenant’s expense, shall maintain at all times during the Term of the Lease business interruption insurance and insurance against loss or damage covered by the so-called “all risk” type insurance coverage with respect to Tenant’s fixtures, equipment, goods, wares and merchandise, tenant improvements made by or paid for by Tenant, and other property of Tenant (collectively “Tenant’s Property”). Such insurance shall be in an amount at least equal to the full replacement cost of Tenant’s Property. In addition, during such time as Tenant is performing work in or to the Premises, Tenant, at Tenant’s expense, shall also maintain builder’s risk insurance for the full insurable value of such work.
13.4	NON-SUBROGATION. Any insurance carried by either party with respect to the Premises or property therein or occurrences thereon shall, if it can be so written without additional premium or with an additional premium which the other party agrees to pay, include a clause or endorsement denying to the insurer rights of subrogation against the other party to the extent rights have been waived by the insured prior to occurrence of injury or loss. Each party, notwithstanding any provisions of this Lease to the contrary, hereby waives any rights of recovery

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	against the other for injury or loss due to hazards covered by such insurance (or which would have been covered had such party carried the insurance required to be carried by it under the Lease) the to the extent of the indemnification received thereunder. This waiver of rights by Tenant shall apply to, and be for the benefit of, Landlord’s managing agent.
13.5	TENANT’S RISK. To the maximum extent that this agreement may be made effective according to law, Tenant agrees to use and occupy the Premises and to use such other portions of the Building, the Garage or the Prudential Center as Tenant is herein given the right to use at Tenant’s own risk; and Landlord shall have no responsibility or liability for any loss of or damage to fixtures or other personal property of Tenant.
13.6	LANDLORD’S INSURANCE. Landlord shall maintain so called All Risk property insurance on the Building at full replacement cost value and Commercial General Liability Insurance providing, on an occurrence basis, a minimum combined single limit of $5,000,000.00.

ARTICLE XIV

FIRE, CASUALTY AND TAKING

14.1

DAMAGE RESULTING FROM CASUALTY. In case during the Lease Term the Building is damaged by fire or casualty, and such fire or casualty damage cannot, in the ordinary course, reasonably be expected to be repaired within one hundred twenty (120) days from the time that repair work would commence as reasonably determined by Landlord, Landlord may, at its election, terminate this Lease by notice given to Tenant within sixty (60) days after the date of such fire or other casualty, specifying the effective date of termination. The effective date of termination specified by Landlord shall not be less than thirty (30) days nor more than forty-five (45) days after the date of notice of such termination. Unless terminated pursuant to the foregoing provisions, this Lease shall remain in full force and effect following any such damage subject, however, to the following provisions.

If during the last eighteen (18) months of the Lease Term (as it may have been extended), the Building shall be damaged by fire or casualty and such fire or casualty damage to the Premises cannot reasonably be expected to be repaired or restored within one hundred twenty (120) days from the time that repair or restoration work would commence as reasonably determined by Landlord, then Tenant shall have the right, by giving notice to Landlord not later than thirty (30) days after such damage, to terminate this Lease, whereupon this Lease shall terminate as of the date of such notice with the same force and effect as if such date were the date originally established as the expiration date hereof.

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	If the Building or any part thereof is damaged by fire or casualty and this Lease is not so terminated, or Landlord has no right to terminate this Lease, and in either such case the holder of any mortgage which includes the Building as a part of the mortgaged premises or any ground lessor of any ground lease which includes the Building as part of the demised premises allows the net insurance proceeds to be applied to the restoration of the Building, Landlord, promptly after such damage and the determination of the net amount of insurance proceeds available shall use due diligence to restore the Premises and the Building in the event of damage thereto (excluding Tenant’s Property ) into proper condition for use and occupation and a just proportion of the Annual Fixed Rent, the Operating Cost Excess and the Tax Excess according to the nature and extent of the injury to the Premises shall be abated from the date of casualty until the Premises shall have been put by Landlord substantially into such condition. Notwithstanding the foregoing, Landlord shall not be obligated to expend for such repairs and restoration any amount in excess of the net insurance proceeds.
	Where Landlord is obligated or otherwise elects to effect restoration of the Premises, unless such restoration is completed within ten (10) months from the date of the casualty, such period to be subject, however, to extension where the delay in completion of such work is due to Force Majeure, as defined hereinbelow (but in no event beyond eighteen (18) months from the date of the casualty or taking), Tenant, as its sole and exclusive remedy, shall have the right to terminate this Lease at any time after the expiration of such one-year (as extended) period until the restoration is substantially completed, such termination to take effect as of the thirtieth (30th) day after the date of receipt by Landlord of Tenant’s notice, with the same force and effect as if such date were the date originally established as the expiration date hereof unless, within such thirty (30) day period such restoration is substantially completed, in which case Tenant’s notice of termination shall be of no force and effect and this Lease and the Lease Term shall continue in full force and effect. The term “Force Majeure” shall mean any prevention, delay or stoppage due to governmental regulation, strikes, lockouts, acts of God, acts of war, terrorists acts, civil commotions, unusual scarcity of or inability to obtain labor or materials, labor difficulties, casualty or other causes reasonably beyond Landlord’s control or attributable to Tenant’s action or inaction.
14.2	UNINSURED CASUALTY. Notwithstanding anything to the contrary contained in this Lease, if the Building or the Premises shall be substantially damaged by fire or casualty as the result of a risk not covered by the forms of casualty insurance at the time maintained by Landlord and such fire or casualty damage cannot, in the ordinary course, reasonably be expected to be repaired within thirty (30) days from the time that repair work would commence, Landlord may, at its election, terminate the Term of this Lease by notice to Tenant given within thirty (30) days after such loss. If Landlord shall give such notice, then this Lease shall

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	terminate as of the date of such notice with the same force and effect as if such date were the date originally established as the expiration date hereof.
	If the Building is damaged by fire or other casualty, and if (x) the holder of any mortgage which includes the Building as a part of the mortgaged premises or any ground lessor of any ground lease which includes the Building as part of the demised premises refuses to allow the net insurance proceeds to be applied to the restoration of the Building or (y) Landlord reasonably determines that the net proceeds of insurance shall be insufficient to pay for the cost of restoring the Building, then unless Landlord elects to supply the necessary funds to restore the Premises (which Landlord shall have no obligation to do), Landlord shall notify Tenant of such refusal or insufficiency in writing, whereupon Tenant may, at its election, terminate this Lease by notice given to Landlord within 30 days receiving such notification from Landlord, which notice shall specify the effective date of termination.
14.3	RIGHTS OF TERMINATION FOR TAKING. If the Building, or such portion thereof as to render the balance (if reconstructed to the maximum extent practicable in the circumstances) unsuitable for Tenant’s purposes, shall be taken by condemnation or right of eminent domain, Landlord or Tenant shall have the right to terminate this Lease by notice to the other of its desire to do so, provided that such notice is given not later than thirty (30) days after Tenant has been deprived of possession. If either party shall give such notice, then this Lease shall terminate as of the date of such notice with the same force and effect as if such date were the date originally established as the expiration date hereof.
	Further, if so much of the Building or Prudential Center shall be so taken that continued operation of the Building would be uneconomic, Landlord shall have the right to terminate this Lease by giving notice to Tenant of Landlord’s desire to do so not later than thirty (30) days after Tenant has been deprived of possession of the Premises (or such portion thereof as may be taken). If Landlord shall give such notice, then this Lease shall terminate as of the date of such notice with the same force and effect as if such date were the date originally established as the expiration date hereof.
	Should any part of the Premises be so taken or condemned during the Lease Term hereof, and should this Lease not be terminated in accordance with the foregoing provisions, and the holder of any mortgage which includes the Premises as part of the mortgaged premises or any ground lessor of any ground lease which includes the Premises as part of the demised premises allows the net condemnation proceeds to be applied to the restoration of the Building, Landlord agrees that after the determination of the net amount of condemnation proceeds available to Landlord, Landlord shall use due diligence to put what may remain of the Premises into proper condition for use and occupation as nearly like the condition

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	of the Premises prior to such taking as shall be practicable (excluding Tenant’s Property). Notwithstanding the foregoing, Landlord shall not be obligated to expend for such repair and restoration any amount in excess of the net condemnation proceeds made available to it.
	If the Premises shall be affected by any exercise of the power of eminent domain and neither Landlord nor Tenant shall terminate this Lease as provided above, then the Annual Fixed Rent, the Operating Cost Excess and the Tax Excess shall be justly and equitably abated and reduced according to the nature and extent of the loss of use thereof suffered by Tenant; and in case of a taking which permanently reduces the Rentable Floor Area of the Premises, a just proportion of the Annual Fixed Rent, the Operating Cost Excess and the Tax Excess shall be abated for the remainder of the Lease Term.
14.4	AWARD. Except as otherwise provided in this Section 14.4, Landlord shall have and hereby reserves and excepts, and Tenant hereby grants and assigns to Landlord, all rights to recover for damages to the Building, the Prudential Center, and the Garage and the leasehold interest hereby created, and compensation accrued or hereafter to accrue by reason of such taking, damage or destruction, as aforesaid, and by way of confirming the foregoing, Tenant hereby grants and assigns, and covenants with Landlord to grant and assign to Landlord, all rights to such damages or compensation.
	However, nothing contained herein shall be construed to prevent Tenant from prosecuting in any such proceedings a claim for its trade fixtures so taken or relocation, moving and other dislocation expenses, provided that such action shall not affect the amount of compensation otherwise recoverable by Landlord from the taking authority.

ARTICLE XV

DEFAULT

15.1	TENANT’S DEFAULT. This Lease and the term of this Lease are subject to the limitation that Tenant shall be in default if, at any time during the Lease Term, any one or more of the following events (herein called an “Event of Default” a “default of Tenant” or similar reference) shall occur and not be cured prior to the expiration of the grace period (if any) herein provided, as follows:
	(a)	Tenant shall fail to pay any installment of the Annual Fixed Rent, or any Additional Rent or any other monetary amount due under this Lease on or before the date on which the same becomes due and payable, and such failure continues for ten (10) days after notice from Landlord thereof; or

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(b)Landlord having rightfully given the notice specified in (a) above to Tenant twice in any twelve (12) month period, Tenant shall fail thereafter to pay the Annual Fixed Rent, Additional Rent or any other monetary amount due under this Lease on or before the date on which the same becomes due and payable; or

(c)Tenant shall assign its interest in this Lease or sublet any portion of the Premises in violation of the requirements of Article XII of this Lease; or

(d)Tenant shall fail to perform or observe some term or condition of this Lease which, because of its character, would immediately jeopardize Landlord’s interest (such as, but without limitation, failure to maintain general liability insurance, or the employment of labor and contractors within the Premises which interfere with Landlord’s work, in violation of Sections 4.3, 9.3, 11.2 or 11.11) or a failure to observe the requirements of Section 11.2), and such failure continues for three (3) business days after notice from Landlord to Tenant thereof; or

(e)Tenant shall fail to perform or observe any other requirement, term, covenant or condition of this Lease (not hereinabove in this Section 15.1 specifically referred to) on the part of Tenant to be performed or observed and such failure shall continue for thirty (30) days after notice thereof from Landlord to Tenant, or if said default shall reasonably require longer than thirty (30) days to cure, if Tenant shall fail to commence to cure said default within thirty (30) days after notice thereof and/or fail to continuously prosecute the curing of the same to completion with due diligence; or

(f)The estate hereby created shall be taken on execution or by other process of law; or

(g)Tenant shall make an assignment or trust mortgage arrangement, so-called, for the benefit of its creditors; or

(h)Tenant shall judicially be declared bankrupt or insolvent according to law; or

(i)a receiver, guardian, conservator, trustee in involuntary bankruptcy or other similar officer is appointed to take charge of all or any substantial part of Tenant’s property by a court of competent jurisdiction; or

(j)any petition shall be filed against Tenant in any court, whether or not pursuant to any statute of the United States or of any State, in any bankruptcy, reorganization, composition, extension, arrangement or

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insolvency proceeding, and such proceedings shall not be fully and finally dismissed within sixty (60) days after the institution of the same; or

(k)Tenant shall file any petition in any court, whether or not pursuant to any statute of the United States or any State, in any bankruptcy, reorganization, composition, extension, arrangement or insolvency proceeding.

15.2TERMINATION; RE-ENTRY. Upon the happening of any one or more of the aforementioned Events of Default (notwithstanding any license of a former breach of covenant or waiver of the benefit hereof or consent in a former instance), Landlord or Landlord’s agents or servants may give to Tenant a notice (hereinafter called “notice of termination”) terminating this Lease on a date specified in such notice of termination (which shall be not less than five (5) days after the date of the mailing of such notice of termination), and this Lease and the Lease Term, as well as any and all of the right, title and interest of the Tenant hereunder, shall wholly cease and expire on the date set forth in such notice of termination (Tenant hereby waiving any rights of redemption) in the same manner and with the same force and effect as if such date were the date originally specified herein for the expiration of the Lease Term, and Tenant shall then quit and surrender the Premises to Landlord.

In addition or as an alternative to the giving of such notice of termination, Landlord or Landlord’s agents or servants may, by any suitable action or proceeding at law, immediately or at any time thereafter re-enter the Premises and remove therefrom Tenant, its agents, employees, servants, licensees, and any subtenants and other persons, and all or any of its or their property therefrom, and repossess and enjoy the Premises, together with all additions, alterations and improvements thereto; but, in any event under this Section 15.2, Tenant shall remain liable as hereinafter provided.

The words “re-enter” and “re-entry” as used throughout this Article XV are not restricted to their technical legal meanings.

15.3CONTINUED LIABILITY; RE-LETTING. If this Lease is terminated or if Landlord shall re-enter the Premises as aforesaid, or in the event of the termination of this Lease, or of re- entry, by or under any proceeding or action or any provision of law by reason of an Event of Default hereunder on the part of Tenant, Tenant covenants and agrees forthwith to pay and be liable for, on the days originally fixed herein for the payment thereof, amounts equal to the several installments of Annual Fixed Rent, all Additional Rent and other charges reserved as they would, under the terms of this Lease, become due if this Lease had not been terminated or if Landlord had not entered or re-entered, as aforesaid, and whether the Premises be relet or remain vacant, in whole or in part, or for a period less than the remainder of the Lease Term, or for the whole thereof, but, in the

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event the Premises be relet by Landlord, Tenant shall be entitled to a credit in the net amount of rent and other charges received by Landlord in reletting, after deduction of all reasonable expenses incurred in reletting the Premises (including, without limitation, remodeling costs, brokerage fees and the like), and in collecting the rent in connection therewith, in the following manner:

Amounts received by Landlord after reletting shall first be applied against such Landlord’s expenses, until the same are recovered, and until such recovery, Tenant shall pay, as of each day when a payment would fall due under this Lease, the amount which Tenant is obligated to pay under the terms of this Lease (Tenant’s liability prior to any such reletting and such recovery not in any way to be diminished as a result of the fact that such reletting might be for a rent higher than the rent provided for in this Lease); when and if such expenses have been completely recovered, the amounts received from reletting by Landlord as have not previously been applied shall be credited against Tenant’s obligations as of each day when a payment would fall due under this Lease, and only the net amount thereof shall be payable by Tenant. Further, Tenant shall not be entitled to any credit of any kind for any period after the date when the term of this Lease is scheduled to expire according to its terms.

Landlord agrees to use reasonable efforts to relet the Premises after Tenant vacates the Premises in the event that the Lease is terminated based upon a default by Tenant hereunder. Marketing of Tenant’s Premises in a manner similar to the manner in which Landlord markets other premises within Landlord’s control in the Prudential Center shall be deemed to have satisfied Landlord’s obligation to use “reasonable efforts.” In no event shall Landlord be required to (i) solicit or entertain negotiations with any other prospective tenants for the Premises until Landlord obtains full and complete possession of the Premises including, without limitation, the undisputed legal right to re-let the Premises free of any claim of Tenant, (ii) relet the Premises before leasing other vacant space in the Building, or (iii) lease the Premises for a rental less than the current fair market rental then prevailing for similar office space in the Building.

15.4LIQUIDATED DAMAGES. Landlord may elect, as an alternative, to have Tenant pay liquidated damages, which election may be made by notice given to Tenant at any time after the termination of this Lease under Section 15.2, above, and whether or not Landlord shall have colleced any damages as hereinbefore provided in this Article XV, and in lieu of all other such damages beyond the date of such notice. Upon such notice, Tenant shall promptly pay to Landlord, as liquidated damages, in addition to any damages collected or due from Tenant from any period prior to such notice and all expenses which Landlord may have incurred with respect to the collection of such damages, such a sum as at the time of such notice represents the amount of the excess, if any, of (a) the discounted present value, at a discount rate of 6%, of the Annual Fixed Rent, Additional Rent

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and other charges which would have been payable by Tenant under this Lease for the remainder of the Lease Term if the Lease terms had been fully complied with by Tenant, over and above (b) the discounted present value, at a discount rate of 6%, of the Annual Fixed Rent, Additional Rent and other charges that would be received by Landlord if the Premises were re- leased at the time of such notice for the remainder of the Lease Term at the fair market value (including provisions regarding periodic increases in Annual Fixed Rent if such are applicable) prevailing at the time of such notice as reasonably determined by Landlord.

For the purposes of this Article, if Landlord elects to require Tenant to pay liquidated damages in accordance with this Section 15.4, the total rent shall be computed by assuming the Tax Excess under Section 6.2 and the Operating Cost Excess under Section 7.5 to be the same as were payable for the twelve (12) calendar months (or if less than twelve (12) calendar months have been elapsed since the date hereof, the partial year) immediately preceding such termination of re-entry.

Nothing contained in this Lease shall limit or prejudice the right of Landlord to prove for and obtain in proceedings for bankruptcy or insolvency by reason of the termination of this Lease, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceeds in which, the damages are to be proved, whether or not the amount be greater, equal to, or less than the amount of the loss or damages referred to above.

15.5WAIVER OF REDEMPTION. Tenant, for itself and any and all persons claiming through or under Tenant, including its creditors, upon the termination of this Lease and of the term of this Lease in accordance with the terms hereof, or in the event of entry of judgment for the recovery of the possession of the Premises in any action or proceeding, or if Landlord shall enter the Premises by process of law or otherwise, hereby waives any right of redemption provided or permitted by any statute, law or decision now or hereafter in force, and does hereby waive, surrender and give up all rights or privileges which it or they may or might have under and by reason of any present or future law or decision, to redeem the Premises or for a continuation of this Lease for the term of this Lease hereby demised after having been dispossessed or ejected therefrom by process of law, or otherwise.

15.6LANDLORD’S DEFAULT. Landlord shall in no event be in default in the performance of any of Landlord’s obligations hereunder unless and until Landlord shall have failed to perform such obligations within thirty (30) days, or such additional time as is reasonably required to correct any such default, after notice by Tenant to Landlord properly specifying wherein Landlord has failed to perform any such obligation.

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The Tenant shall not assert any right to deduct the cost of repairs or any monetary claim against the Landlord from rent thereafter due and payable, but shall look solely to the Landlord for satisfaction of such claim.

ARTICLE XVI

MISCELLANEOUS PROVISIONS

16.1WAIVER. Failure on the part of Landlord or Tenant to complain of any action or non-action on the part of the other, no matter how long the same may continue, shall never be a waiver by Tenant or Landlord, respectively, of any of its rights hereunder.

Further, no waiver at any time of any of the provisions hereof by Landlord or Tenant shall be construed as a waiver of any of the other provisions hereof, and a waiver at any time of any of the provisions hereof shall not be construed as a waiver at any subsequent time of the same provisions. The consent or approval of Landlord or Tenant to or of any action by the other requiring such consent or approval shall not be construed to waive or render unnecessary Landlord’s or Tenant’s consent or approval to or of any subsequent similar act by the other.

No payment by Tenant, or acceptance by Landlord, of a lesser amount than shall be due from Tenant to Landlord shall be treated otherwise than as a payment on account. The acceptance by Landlord of a check for a lesser amount with an endorsement or statement thereon, or upon any letter accompanying such check, that such lesser amount is payment in full, shall be given no effect, and Landlord may accept such check without prejudice to any other rights or remedies which Landlord may have against Tenant. Further, the acceptance by Landlord of Annual Fixed Rent, Additional Rent or any other charges paid by Tenant under this Lease shall not be or be deemed to be a waiver by Landlord of any default by Tenant, whether or not Landlord knows of such default, except for such defaults as to which such payment relates.

16.2CUMULATIVE REMEDIES. Except as expressly provided in this Lease, the specific remedies to which Landlord and Tenant may resort under the terms of this Lease are cumulative and are not intended to be exclusive of any other remedies or means of redress which they may be lawfully entitled to seek in case of any breach or threatened breach of any provisions of this Lease. In addition to the other remedies provided in this Lease, Landlord shall be entitled to the restraint by injunction of the violation or attempted or threatened violation of any of the covenants, conditions or provisions of this Lease or to seek specific performance of any such covenants, conditions or provisions, provided, however, that the foregoing shall not be construed as a confession of judgment by Tenant.

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16.3QUIET ENJOYMENT. This Lease is subject and subordinate to all matters of record. Landlord agrees that, upon Tenant’s paying the Annual Fixed Rent, Additional Rent and other charges herein reserved, and performing and observing the covenants, conditions and agreements hereof upon the part of Tenant to be performed and observed, Tenant shall and may peaceably hold and enjoy the Premises during the term of this Lease (exclusive of any period during which Tenant is holding over after the expiration or termination of this Lease without the consent of Landlord), without interruption or disturbance from Landlord or persons claiming through or under Landlord, subject, however, to the terms of this Lease. This covenant shall be construed as running with the land to and against subsequent owners and successors in interest, and is not, nor shall it operate or be construed as, a personal covenant of Landlord, except to the extent of the Landlord’s interest in the Premises, and this covenant and any and all other covenants of Landlord contained in this Lease shall be binding upon Landlord and upon such subsequent owners or successors in interest of Landlord’s interest under this Lease, including ground or master lessees, to the extent of their respective interests, as and when they shall acquire same and then only for so long as they shall retain such interest.

16.4SURRENDER. (A) No act or thing done by Landlord during the Lease Term shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such surrender shall be valid, unless in writing signed by Landlord. No employee of Landlord or of Landlord’s agents shall have any power to accept the keys of the Premises as an acceptance of a surrender of the Premises prior to the termination of this Lease; provided, however, that the foregoing shall not apply to the delivery of keys to Landlord or its agents in its (or their) capacity as managing agent or for purpose of emergency access. In any event, however, the delivery of keys to any employee of Landlord or of Landlord’s agents shall not operate as a termination of the Lease or a surrender of the Premises.

(B)Upon the expiration or earlier termination of the Lease Term, Tenant shall surrender the Premises to Landlord in the condition as required by Sections 8.1 and 9.5, first removing all goods and effects of Tenant and completing such other removals as may be permitted or required pursuant to Section 9.5.

16.5BROKERAGE.

(A)Tenant warrants and represents that Tenant has not dealt with any broker in connection with the consummation of this Lease other than the broker, person or firm designated in Section 1.2 hereof; and in the event any claim is made against the Landlord relative to Tenant’s dealings with brokers other than the broker designated in Section 1.2 hereof, Tenant shall defend the claim against Landlord with counsel of Tenant’s selection, subject to Landlord’s reasonable approval, and save harmless and indemnify

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Landlord on account of loss, cost or damage which may arise by reason of such claim.

(B)Landlord warrants and represents that Landlord has not dealt with any broker in connection with the consummation of this Lease other than the broker, person or firm designated in Section 1.2 hereof; and in the event any claim is made against the Tenant relative to Landlord’s dealings with brokers other than the broker designated in Section 1.2 hereof, Landlord shall defend the claim against Tenant with counsel of Landlord’s selection, subject to Tenant’s reasonable approval, and save harmless and indemnify Tenant on account of loss, cost or damage which may arise by reason of such claim.

(C)Landlord agrees that it shall be solely responsible for the payment of brokerage commissions to the broker, person or firm designated in Section 1.2 hereof.

16.6INVALIDITY OF PARTICULAR PROVISIONS. If any term or provision of this Lease, or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law.

16.7PROVISIONS BINDING, ETC. The obligations of this Lease shall run with the land, and except as herein otherwise provided, the terms hereof shall be binding upon and shall inure to the benefit of the successors and assigns, respectively, of Landlord and Tenant and, if Tenant shall be an individual, upon and to his heirs, executors, administrators, successors and assigns. Each term and each provision of this Lease to be performed by Tenant shall be construed to be both a covenant and a condition. The reference contained to successors and assigns of Tenant is not intended to constitute a consent to assignment by Tenant, but has reference only to those instances in which Landlord may have later given consent to a particular assignment as required by the provisions of Article XII hereof.

16.8RECORDING. Each of Landlord and Tenant agree not to record the within Lease, but each party hereto agrees, on the request of the other, to execute a so-called Notice of Lease or short form lease in form recordable and complying with applicable law and reasonably satisfactory to Landlord’s and Tenant’s attorneys. In no event shall such document set forth the rent or other charges payable by Tenant under this Lease; and any such document shall expressly state that it is executed pursuant to the provisions contained in this Lease, and is not intended to vary the terms and conditions of this Lease.

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16.9NOTICES AND TIME FOR ACTION. Whenever, by the terms of this Lease, notice shall or may be given either to Landlord or to Tenant, such notices shall be in writing and shall be sent by hand, registered or certified mail, or overnight or other commercial courier, postage or delivery charges, as the case may be, prepaid as follows:

If intended for Landlord, addressed to Landlord at the address set forth on the first page of this Lease (or to such other address or addresses as may from time to time hereafter be designated by Landlord by like notice).

If intended for Tenant, addressed to Tenant at the address set forth on the first page of this Lease except that from and after the Commencement Date the address of Tenant shall be the Premises (or to such other address or addresses as may from time to time hereafter be designated by Tenant by like notice).

Except as otherwise provided herein, all such notices shall be effective when received; provided, that (i) if receipt is refused, notice shall be effective upon the first occasion that such receipt is refused or (ii) if the notice is unable to be delivered due to a change of address of which no notice was given, notice shall be effective upon the date such delivery was attempted.

Where provision is made for the attention of an individual or department, the notice shall be effective only if the wrapper in which such notice is sent is addressed to the attention of such individual or department.

Any notice given by an attorney on behalf of either party, or by Landlord’s managing agent on behalf of Landlord, shall be considered as given by Landlord or Tenant, as the case may be, and shall be fully effective.

Time is of the essence with respect to any and all notices and periods for giving of notice or taking any action thereto under this Lease.

16.10WHEN LEASE BECOMES BINDING. Employees or agents of Landlord have no authority to make or agree to make a lease or any other agreement or undertaking in connection herewith. The submission of this document for examination and negotiation does not constitute an offer to lease, or a reservation of, or option for, the Premises, and this document shall become effective and binding only upon the execution and delivery hereof by both Landlord and Tenant. All negotiations, considerations, representations and understandings between Landlord and Tenant are incorporated herein and may be modified or altered only by written agreement between Landlord and Tenant, and no act or omission of any

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employee or agent of Landlord shall alter, change or modify any of the provisions hereof.

16.11PARAGRAPH HEADINGS. The paragraph headings throughout this instrument are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify or aid in the interpretation, construction or meaning of the provisions of this Lease.

16.12RIGHTS OF MORTGAGEE.

(A)This Lease shall be subject and subordinate to any mortgage now or hereafter on the Building (or any part thereof), and to all renewals, modifications, consolidations, replacements and extensions thereof and all substitutions therefor, provided that in the case of a future mortgage the holder of such mortgage agrees to recognize the right of Tenant to use and occupy the Premises and Tenant’s other rights hereunder, subject to such holder’s commercially reasonable limitations thereon which are commonly imposed or agreed to by institutional mortgagees of commercial real estate, upon the payment of rent and other charges payable by Tenant under this Lease and the performance by Tenant of Tenant’s obligations hereunder. In confirmation of such subordination and recognition, Tenant shall execute and deliver promptly such instruments of subordination as such mortgagee may reasonably request, subject to receipt of such instruments of recognition from such mortgagee as Tenant may reasonably request. In the event that any mortgagee or its respective successor in title shall succeed to the interest of Landlord, then this Lease shall nevertheless continue in full force and effect and Tenant shall and does hereby agree to attorn to such mortgagee or successor and to recognize such mortgagee or successor as its landlord.

(B)If any holder of a mortgage which includes the Premises, executed and recorded prior to the Date of this Lease, shall so elect, this Lease, and the rights of Tenant hereunder, shall be superior in right to the rights of such holder, with the same force and effect as if this Lease had been executed, delivered and recorded, or a statutory Notice hereof recorded, prior to the execution, delivery and recording of any such mortgage. The election of any such holder shall become effective upon either notice from such holder to Tenant in the same fashion as notices from Landlord to Tenant are to be given hereunder or by the recording in the appropriate registry or recorder’s office of an instrument in which such holder subordinates its rights under such mortgage to this Lease.

(C)Notwithstanding the foregoing, Landlord will use reasonable efforts to obtain a non-disturbance, subordination and attornment agreement from the Mortgagee(s) listed on Exhibit I, on such Mortgagee’s current standard form of agreement, with such commercially reasonable changes as Tenant may request and otherwise reasonably satisfactory to Tenant. “Reasonable efforts” of Landlord

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shall not require Landlord to incur any cost, expense or liability to obtain such agreement, it being agreed that Tenant shall be responsible for any fee or review costs charged by the Mortgagee. Upon request of Landlord, Tenant will execute the Mortgagee’s form of non-disturbance, subordination and attornment agreement with such commercially reasonable changes as Tenant may request and return the same to Landlord for execution by the Mortgagee. Landlord’s failure to obtain a non-disturbance, subordination and attornment agreement for Tenant shall have no effect on the rights, obligations and liabilities of Landlord and Tenant or be considered to be a default by Landlord hereunder.

16.13RIGHTS OF GROUND LESSOR. If Landlord’s interest in property (whether land only or land and buildings) which includes the Premises is acquired by another party and simultaneously leased back to Landlord herein, the holder of the ground lessor’s interest in such lease shall enter into a recognition agreement with Tenant simultaneously with the sale and leaseback, wherein the ground lessor will agree to recognize the right of Tenant to use and occupy the Premises and Tenant’s other rights hereunder, subject to such ground lessor’s commercially reasonable limitations thereon, upon the payment of Annual Fixed Rent, Additional Rent and other charges payable by Tenant under this Lease and the performance by Tenant of Tenant’s obligations hereunder, and wherein Tenant shall agree to attorn to such ground lessor as its Landlord and to perform and observe all of the tenant obligations hereunder, in the event such ground lessor succeeds to the interest of Landlord hereunder under such ground lease.

16.14NOTICE TO MORTGAGEE AND GROUND LESSOR. After receiving notice from any person, firm or other entity that it holds a mortgage which includes the Premises as part of the mortgaged premises, or that it is the ground lessor under a lease with Landlord as ground lessee, which includes the Premises as a part of the leased premises, no notice from Tenant to Landlord shall be effective as against such holder or ground lessor unless and until a copy of the same is given to such holder or ground lessor at the address as specified in said notice (as it may from time to time be changed), and the curing of any of Landlord’s defaults by such holder or ground lessor within a reasonable time after such notice (including a reasonable time to obtain possession of the premises if the mortgagee or ground lessor elects to do so) shall be treated as performance by Landlord. For the purposes of this Section 16.14, the term “mortgage” includes a mortgage on a leasehold interest of Landlord (but not one on Tenant’s leasehold interest). If any mortgage is listed on Exhibit I then the same shall constitute notice from the holder of such mortgage for the purposes of this Section 16.14.

16.15ASSIGNMENT OF RENTS. With reference to any assignment by Landlord of Landlord’s interest in this Lease, or the rents payable hereunder, conditional in nature or otherwise, which assignment is made to the holder of a mortgage or ground lease on property which includes the Premises, Tenant agrees:

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(a)That the execution thereof by Landlord, and the acceptance thereof by the holder of such mortgage, or the ground lessor, shall never be treated as an assumption by such holder or ground lessor of any of the obligations of Landlord hereunder, unless such holder, or ground lessor, shall, by notice sent to Tenant, specifically otherwise elect or shall physically take possession of the Premises; and

(b)That, except as aforesaid, such holder or ground lessor shall be treated as having assumed Landlord’s obligations hereunder only upon foreclosure of such holder’s mortgage or the taking of possession of the Premises, or, in the case of a ground lessor, the assumption of Landlord’s position hereunder by such ground lessor. In no event shall the acquisition of title to the Building and the land on which the same is located by a purchaser which, simultaneously therewith, leases the entire Building or such land back to the seller thereof be treated as an assumption, by operation of law or otherwise, of Landlord’s obligations hereunder, but Tenant shall look solely to such seller-lessee, and its successors from time to time in title, for performance of Landlord’s obligations hereunder. In any such event, this Lease shall be subject and subordinate to the lease to such purchaser provided that such purchaser-lessor agrees to recognize the right of Tenant to use and occupy the Premises upon the payment of rent and all other charges payable by Tenant under this Lease and the performance by Tenant of Tenant’s obligations under this Lease. For all purposes, such seller-lessee, and its successors in title, shall be the landlord hereunder unless and until Landlord’s position shall have been assumed by such purchaser-lessor. Tenant acknowledges that it has been informed by Landlord that Landlord has entered into certain agreements with its lenders (“Lenders”) which require it to include in this Lease (and requires Tenant to include in any sublease which may be permitted hereunder) the following provisions: (i) no rent payable under this Lease or under any such sublease may be based in whole or in part on the income or profits derived from the Premises or any subleased premises except for percentage rent based on gross (not net) receipts or sales; (ii) if Lenders succeed to the Landlord’s interests under this Lease and are advised by Lenders’ counsel that all or any portion of the rent payable under this Lease is or may be deemed to be unrelated business income within the meaning of the Internal Revenue Code of the 1986, as amended, or the regulations issued thereunder, Lenders may elect to amend unilaterally the calculation of rents under this Lease so that none of the rents payable to Lenders under this Lease will constitute unrelated business income, provided that such amendment will not increase the Tenant’s payment obligations or other liability under this Lease or reduce the Landlord’s obligations under this Lease; and (iii) if Lenders request, Tenant will be obligated to execute any

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document Lenders may deem necessary to effect the amendment of this Lease in accordance with the foregoing subsection (ii). Further, no Annual Fixed Rent or Additional Rent may be paid by Tenant more than thirty (30) days in advance except with Lenders’ prior written consent, and any such payment without such consent shall not be binding on Lenders.

16.16STATUS REPORT AND FINANCIAL STATEMENTS. Recognizing that Landlord may find it necessary to establish to third parties, such as accountants, banks, potential or existing mortgagees, potential purchasers or the like, the then current status of performance hereunder, Tenant, within ten (10) days after the request of Landlord made from time to time, will furnish to Landlord, or any existing or potential holder of any mortgage encumbering the Premises, the Building or the Prudential Center, or any potential purchaser of the Premises, the Building, or the Prudential Center (each an “Interested Party”) a statement of the status of any matter pertaining to this Lease, including, without limitation, acknowledgments that (or the extent to which) each party is in compliance with its obligations under the terms of this Lease. In addition, Tenant shall deliver to Landlord, or any Interested Party designated by Landlord, financial statements of Tenant, and any guarantor of Tenant’s obligations under this Lease, as reasonably requested by Landlord including, but not limited to, financial statements for the past three (3) years. Any such status statement or financial statement delivered by Tenant pursuant to this Section 16.16 may be relied upon by any Interested Party.

16.17SELF-HELP. If Tenant shall at any time fail to make any payment or perform any act which Tenant is obligated to make or perform under this Lease and (except in the case of emergency) if the same continues unpaid or unperformed beyond applicable grace periods, then Landlord may, but shall not be obligated so to do, after ten (10) days’ additional notice to and demand upon Tenant, or without notice to or demand upon Tenant in the case of any emergency, and without waiving, or releasing Tenant from, any obligations of Tenant in this Lease contained, make such payment or perform such act which Tenant is obligated to perform under this Lease in such manner and to such extent as may be reasonably necessary, and, in exercising any such rights, pay any costs and expenses, employ counsel and incur and pay reasonable attorneys’ fees. All sums so paid by Landlord and all reasonable and necessary costs and expenses of Landlord incidental thereto, together with interest thereon at the annual rate equal to the sum of (a) the Base Rate from time to time announced by Fleet National Bank or its successor as its Base Rate and (b) two percent (2%) (but in no event greater than the maximum rate permitted by applicable law), from the date of the making of such expenditures by Landlord, shall be deemed to be Additional Rent and, except as otherwise in this Lease expressly provided, shall be payable to the Landlord on demand, and if not promptly paid shall be added to any rent then due or thereafter becoming due under this Lease, and Tenant covenants to pay any such sum or sums with interest as aforesaid, and Landlord shall have (in addition

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to any other right or remedy of Landlord) the same rights and remedies in the event of the non-payment thereof by Tenant as in the case of default by Tenant in the payment of Annual Fixed Rent.

16.18HOLDING OVER. Any holding over by Tenant after the expiration of the term of this Lease shall be treated as a tenancy at sufferance and shall be on the terms and conditions as set forth in this Lease, as far as applicable except that Tenant shall pay as a use and occupancy charge an amount equal to the greater of (x) the Holdover Percentage, as hereinafter defined, of the Annual Fixed Rent and Additional Rent calculated (on a daily basis) at the highest rate payable under the terms of this Lease or (y) the fair market rental value of the Premises, in each case for the period measured from the day on which Tenant’s hold-over commences and terminating on the day on which Tenant vacates the Premises. For the first sixty (60) days of such holding over, the Holdover Percentage shall be one hundred fifty percent (150%); from and after the sixty-first (61st) day of such holding over, the Holdover Percentage shall be two hundred percent (200%). In addition, Tenant shall save Landlord, its agents and employees harmless and will exonerate, defend and indemnify Landlord, its agents and employees from and against any and all damages which Landlord may suffer on account of Tenant’s hold-over in the Premises after the expiration or prior termination of the term of this Lease. Nothing in the foregoing nor any other term or provision of this Lease shall be deemed to permit Tenant to retain possession of the Premises or hold over in the Premises after the expiration or earlier termination of the Lease Term. All property which remains in the Building or the Premises after the expiration or termination of this Lease shall be conclusively deemed to be abandoned and may either be retained by Landlord as its property or sold or otherwise disposed of in such manner as Landlord may see fit. If any part thereof shall be sold, then Landlord may receive the proceeds of such sale and apply the same, at its option against the expenses of the sale, the cost of moving and storage, any arrears of rent or other charges payable hereunder by Tenant to Landlord and any damages to which Landlord may be entitled under this Lease and at law and in equity.

16.19ENTRY BY LANDLORD. Landlord, and its duly authorized representatives, shall, upon reasonable prior notice (except in the case of emergency), have the right to enter the Premises at all reasonable times (except at any time in the case of emergency) for the purposes of inspecting the condition of same and making such repairs, alterations, additions or improvements thereto as may be necessary if Tenant fails to do so as required hereunder (but the Landlord shall have no duty whatsoever to make any such inspections, repairs, alterations, additions or improvements except as otherwise provided in Sections 4.1, 4.3, 7.1 and 7.2), and to show the Premises to prospective tenants during the twelve (12) months preceding expiration of the term of this Lease as it may have been extended and at any reasonable time during the Lease Term to show the Premises to prospective

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purchasers and mortgagees. Any such entry will be made subject to the provisions of Section 2.2 hereof.

16.20TENANT’S PAYMENTS. Each and every payment and expenditure, other than Annual Fixed Rent, shall be deemed to be Additional Rent hereunder, whether or not the provisions requiring payment of such amounts specifically so state, and shall be payable, unless otherwise provided in this Lease, within ten (10) days after written demand by Landlord, and in the case of the non-payment of any such amount, Landlord shall have, in addition to all of its other rights and remedies, all the rights and remedies available to Landlord hereunder or by law in the case of non-payment of Annual Fixed Rent. Unless expressly otherwise provided in this Lease, the performance and observance by Tenant of all the terms, covenants and conditions of this Lease to be performed and observed by Tenant shall be at Tenant’s sole cost and expense. If Tenant has not objected to any statement of Additional Rent which is rendered by Landlord to Tenant within one hundred eighty (180) days after Landlord has rendered the same to Tenant, then the same shall be deemed to be a final account between Landlord and Tenant not subject to any further dispute. In the event that Tenant shall seek Landlord’s consent or approval under this Lease, then Tenant shall reimburse Landlord, upon demand, as Additional Rent, for all reasonable costs and expenses, including legal and architectural costs and expenses, incurred by Landlord in processing such request, whether or not such consent or approval shall be given.

16.21LATE PAYMENT. If Landlord shall not have received any payment or installment of Annual Fixed Rent or Additional Rent (the “Outstanding Amount”) on or before the date ten (10) days after the date on which the same first becomes payable under this Lease (the “Due Date”), the amount of such payment or installment shall incur a late charge equal to the sum of: (a) three percent (3%) of the Outstanding Amount for administration and bookkeeping costs associated with the late payment and (b) interest on the Outstanding Amount from the Due Date through and including the date such payment or installment is received by Landlord, at a rate equal to the lesser of (i) the rate announced by Fleet National Bank (or its successor) from time to time as its prime or base rate (or if such rate is no longer available, a comparable rate reasonably selected by Landlord), plus two percent (2%), or (ii) the maximum applicable legal rate, if any. Such interest shall be deemed Additional Rent and shall be paid by Tenant to Landlord upon demand.

16.22COUNTERPARTS. This Lease may be executed in several counterparts, each of which shall be deemed an original, and such counterparts shall constitute but one and the same instrument.

16.23ENTIRE AGREEMENT. This Lease constitutes the entire agreement between the parties hereto, Landlord’s managing agent and their respective affiliates with

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respect to the subject matter hereof and thereof and supersedes all prior dealings between them with respect to such subject matter, and there are no verbal or collateral understandings, agreements, representations or warranties not expressly set forth in this Lease. No subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord or Tenant, unless reduced to writing and signed by the party or parties to be charged therewith.

16.24LANDLORD LIABILITY. Tenant shall neither assert nor seek to enforce any claim for breach of this Lease against any of Landlord’s assets other than Landlord’s interest in the Building, and Tenant agrees to look solely to such interest for the satisfaction of any liability of Landlord under this Lease, it being specifically agreed that neither Landlord, nor any successor holder of Landlord’s interest hereunder, nor any beneficiary of any Trust of which any person from time to time holding Landlord’s interest is Trustee, nor any such Trustee, nor any member, manager, partner, director or stockholder nor Landlord’s managing agent shall ever be personally liable for any such liability. This paragraph shall not limit any right that Tenant might otherwise have to obtain injunctive relief against Landlord or Landlord’s successors-in-interest, or to take any other action which shall not involve the personal liability of Landlord, or of any successor holder of Landlord’s interest hereunder, or of any beneficiary of any trust of which any person from time to time holding Landlord’s interest is Trustee, or of any such Trustee, or of any manager, member, partner, director or stockholder of Landlord or of Landlord’s managing agent, to respond in monetary damages from Landlord’s assets other than Landlord’s interest in said Building, as aforesaid, but in no event shall Tenant have the right to terminate or cancel this Lease or to withhold rent or to set-off any claim or damages against rent as a result of any default by Landlord or breach by Landlord of its covenants or any warranties or promises hereunder, except in the case of a wrongful eviction of Tenant from the Premises (constructive or actual) by Landlord continuing after notice to Landlord thereof and a reasonable opportunity for Landlord to cure the same. In no event shall Landlord ever be liable for any indirect or consequential damages or loss of profits or the like. In the event that Landlord shall be determined to have wrongfully withheld any consent or approval under this Lease, the sole recourse and remedy of the Tenant in respect thereof shall be to specifically enforce Landlord’s obligation to grant such consent or approval, and in no event shall the Landlord be responsible for any damages of whatever nature in respect of its failure to give such consent or approval nor shall the same otherwise affect the obligations of the Tenant under this Lease or act as any termination of this Lease.

16.25NO PARTNERSHIP. The relationship of the parties hereto is that of landlord and tenant and no partnership, joint venture or participationis hereby created.

16.26SECURITY DEPOSIT. (A) Concurrently with the execution of this Lease, Tenant shall pay to Landlord a security deposit in the amount of Five Hundred

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Thousand and 00/100 ($500,000.00) Dollars and Landlord shall hold the same, throughout the Term of this Lease (including the Extended Term, if applicable), unless sooner returned to Tenant as provided in this Section 16.26, as security for the performance by Tenant of all obligations on the part of Tenant to be performed under this Lease. Such deposit shall be in the form of an irrevocable, unconditional, negotiable letter of credit (the “Letter of Credit”). The Letter of Credit shall (i) be issued by and drawn on a bank reasonably approved by Landlord and at a minimum having a corporate credit rating from Standard and Poor’s Professional Rating Service of BBB- or a comparable minimum rating from Moody’s Professional Rating Service, (ii) be in a form reasonably acceptable to Landlord, (iii) permit one or more draws thereunder to be made accompanied only by certification by Landlord that pursuant to the terms of this Lease, Landlord is entitled to draw upon such Letter of Credit, (iv) permit transfers at any time without charge and (v) permit presentment in Boston, Massachusetts. Any such Letter of Credit shall be for a term of two (2) years (or for one (1) year if the issuer thereof regularly and customarily only issues letters of credit for a maximum term of one (1) year) and shall in either case provide for automatic renewals through the date which is thirty (30) days subsequent to the scheduled expiration of this Lease (as the same may be extended) or if the issuer will not grant automatic renewals, the Letter of Credit shall be renewed by Tenant each year and each such renewal shall be delivered to and received by Landlord not later than thirty (30) days before the expiration of the then current Letter of Credit (herein called a “Renewal Presentation Date”). In the event of a failure to so deliver any such renewal Letter of Credit on or before the applicable Renewal Presentation Date, Landlord shall be entitled to present the then existing Letter of Credit for payment and to receive the proceeds thereof, which proceeds shall be held as Tenant’s security deposit, subject to the terms of this Section 16.26. Upon the occurrence of any Event of Default, Landlord shall have the right from time to time without prejudice to any other remedy Landlord may have on account thereof, to draw on all or any portion of such deposit held as a Letter of Credit and to apply the proceeds of such Letter of Credit or any cash held as such deposit, or any part thereof, to Landlord’s damages arising from such Event of Default on the part of Tenant under the terms of this Lease. If Landlord so applies all or any portion of such deposit, Tenant shall within seven (7) days after notice from Landlord deposit cash with Landlord in an amount sufficient to restore such deposit to the full amount stated in this Section 16.26. While Landlord holds any cash deposit Landlord shall have no obligation to pay interest on the same and shall have the right to commingle the same with Landlord’s other funds. Neither the holder of a mortgage nor the Landlord in a ground lease on property which includes the Premises shall ever be responsible to Tenant for the return or application of any such deposit, whether or not it succeeds to the position of Landlord hereunder, unless such deposit shall have been received in hand by such holder or ground Landlord.

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Tenant not then being in default and having performed all of its obligations under this Lease, including the payment of all Annual Fixed Rent, Landlord shall return the deposit, or so much thereof as shall not have theretofore been applied in accordance with the terms of this Section 16.26, to Tenant on the expiration or earlier termination of the term of this Lease (as the same may have been extended) and surrender possession of the Premises by Tenant to Landlord in the condition required in the Lease at such time.

(B)  Reduction in Letter of Credit Amount. Notwithstanding anything herein to the contrary, commencing on the first Effective Reduction Date (as defined below), and continuing on each Effective Reduction Date thereafter occurring during the initial Term, the security required under Section 26.6(A) shall be automatically reduced by $50,000.00 provided (i) there has been no monetary Event of Default by Tenant under this Lease and (ii) Tenant has delivered to Landlord, at least fifteen (15) days before the Effective Reduction Date in question, Tenant’s most recent annual audited financial statement which statement shall, (x) if Tenant is then a publicly traded company, be for Tenant’s fiscal year immediately preceding the fiscal year in which the Effective Reduction Date occurs, together with the most recent so called 10Q statements filed by Tenant, or (y) if Tenant is not then a publicly traded company, be for Tenant’s fiscal year in which the Effective Reduction Date occurs, all of which statements shall be prepared in accordance with generally accepted accounting principles (collectively, “GAAP Financial Statement”), that shows, as of the date of said GAAP Financial Statement, that (1) Tenant’s minimum net worth, as determined in accordance with generally accepted accounting principles (“GAAP”), is at least $40,000,000.00 and (2) Tenant’s minimum cash flow from operations, as determined in accordance with GAAP, is at least $15,000,000.00. If any of the aforesaid conditions are not satisfied as of the Effective Reduction Date in question, then the security shall not be reduced by $50,000.00; provided, however, if the reduction does not occur as a result of a failure to satisfy the condition set forth in clause (i), then there shall be no further reduction in the amount of the security; and provided, further, if the reduction does not occur solely as a result of a failure to satisfy the condition set forth in clause (ii), then such failure shall not affect the automatic reduction for any subsequent Effective Reduction Date if all of the conditions are satisfied as of said subsequent Effective Reduction Date. For the purposes of this Section 16.26, the “Effective Reduction Date” shall be each anniversary of the Rent Commencement Date, commencing on the third (3rd) anniversary of the Rent Commencement Date, except that if Tenant is not then a publicly traded company, the Effective Reduction Date shall be the later of the applicable anniversary of the Rent Commencement Date or the date that Landlord receives the GAAP Financial Statement for the fiscal year in which such Effective Reduction Date occurs. Such reduction shall be accomplished by having Tenant provide Landlord with a substitute letter of credit in the reduced amount, or an amendment, in form reasonably satisfactory to Landlord, to the letter of credit

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then being held by Landlord reducing the amount thereof to the reduced amount.

16.27GOVERNING LAW. This Lease shall be governed exclusively by the provisions hereof and by the law of The Commonwealth of Massachusetts, as the same may from time to time exist.

16.28WAIVER OF TRIAL BY JURY. To induce Landlord to enter into this Lease, the Tenant hereby waives any right to trial by jury in any action, proceeding or counterclaim brought by either Landlord or Tenant on any matters whatsoever arising out of or any way connected with this Lease, the relationship of the Landlord and the Tenant, the Tenant’s use or occupancy of the Premises and/or any claim of injury or damage, including but not limited to, any summary process eviction action.

16.29ROOFTOP ANTENNA.

Provided that Tenant notifies Landlord in writing of its desire to do  so on or before the first anniversary of the Commencement Date, Tenant shall have the right to use the Antenna Area, as hereinafter defined, to install one (1) satellite dish antenna (“Antenna”) for a period commencing as of the date that Tenant installs the Antenna, as hereinafter defined, in the Antenna Area (“Commencement Date in respect of the Antenna Area”) and terminating as of the last day of the Term, as such Term may be extended. The “Antenna Area” shall be an area on the roof of the Building designated by Landlord. Tenant, at Tenant’s cost, shall have the right to use, to the extent available, and install, if necessary, conduit between the Premises and the Antenna Area, provided that Tenant obtains Landlord’s prior written consent. Landlord agrees that it will not unreasonably withhold such consent. Tenant shall be permitted to use the Antenna Area solely for one (1) Antenna installed in accordance with specifications approved by Landlord in advance utilizing a frequency or frequencies and transmission power identified in such approved specifications which Tenant will be installing in the Antenna Area and no other frequencies or transmission power shall be used by Tenant without Landlord’s prior written consent. Such installation shall be designed in such manner as to be easily removable and so as not to damage the roof of the Building. The Antenna and any replacement shall be subject to Landlord’s approval. Tenant’s use of the Antenna Area shall be upon all of the conditions of the Lease, except as follows:

(A)The Annual Fixed Rent in respect of the Antenna Area shall be the Fair Market Rental Value of the Antenna Area, as determined by Landlord in its reasonable discretion taking into consideration the rent charged by Landlord to other tenants in the Prudential Center for similar rooftop facilities, as of the Commencement Date in respect of the Antenna Area.

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(B)Tenant shall have no obligation to pay Tax Excess or Operating Expense Excess in respect of the Antenna Area.

(C)Landlord shall have no obligation to provide any services to the Antenna Area.

(D)Tenant shall have no right to make any changes, alterations, signs, decoration, or other improvements (which changes, alterations, signs, decoration or other improvements, together with the Antenna, are hereby collectively referred to as “Rooftop Installations”) to the Antenna Area or to the Antenna without Landlord’s prior written consent, which consent Landlord may hold it its sole discretion.

(E)Tenant shall have no right of access to the roof of the Building unless Tenant has given Landlord reasonable advance notice and unless Tenant’s representatives are accompanied by a representative of Landlord. Landlord shall provide Tenant with 24-hour access to the Antenna Area, subject to Landlord’s reasonable security procedures and restrictions based on emergency conditions and to other causes beyond Landlord’s reasonable control. Tenant shall give Landlord reasonable advance written notice of the need for access to the Antenna Area (except that such notice may be oral in an emergency), and Landlord must be present during any entry by Tenant onto the Antenna Area. Each notice for access shall be in the form of a work order referencing the lease and describing, as applicable, the date access is needed, the name of the contractor or other personnel requiring access, the name of the supervisor authorizing the access/work, the areas to which access is required, the Building common elements to be impacted (risers, electrical rooms, etc.) and the description of new equipment or other Rooftop Installations to be installed and evidence of Landlord’s approval thereof. In the event of an emergency, such notice shall follow within five (5) days after access to the Antenna Area.

(F)At the expiration or prior termination of Tenant’s right to use the Antenna Area, Tenant shall remove all Installations (including, without limitation, the Antenna) from the Antenna Area.

(G)Tenant shall be responsible for the cost of repairing any damage to the roof of the Building caused by the installation or removal of any Rooftop Installations.

(H)Tenant shall have no right to sublet the Antenna Area.

(I)No other person, firm or entity (including, without limitation, other tenants, licensees or occupants of the Building) shall have the right to benefit from the services provided by the Antenna other than Tenant.

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(J)In the event that Landlord performs repairs to or replacement of the roof, Tenant shall, at Tenant’s cost, remove the Antenna until such time as Landlord has completed such repairs or replacements. Tenant recognizes that there may be an interference with Tenant’s use of the Antenna in connection with such work. Landlord shall use reasonable efforts to complete such work as promptly as possible and to perform such work in a manner which will minimize or, if reasonably possible, eliminate any interruption in Tenant’s use of the Antenna.

(K)Any services required by Tenant in connection with Tenant’s use of the Antenna Area or the Antenna shall be installed by Tenant, at Tenant’s expense, subject to Landlord’s prior approval.

(L)To the maximum extent permitted by law, all Rooftop Installations in the Antenna Area shall be at the sole risk of Tenant, and Landlord shall have no liability to Tenant in the event that any Rooftop Installations are damaged for any reason.

(M)Tenant shall take the Antenna Area “as-is” in the condition in which the Antenna Area is in as of the Commencement Date in respect of the Antenna Area.

(N)Tenant shall comply with all applicable laws, ordinances and regulations in Tenant’s use of the Antenna Area and the Antenna.

(O)Landlord shall have the right, upon thirty (30) days notice to Tenant, to require Tenant to relocate the Antenna Area to another area (“Relocated Rooftop Area”) on the roof of the Building suitable for the use of Rooftop Installations. In such event, Tenant shall, at Landlord’s cost and expense, on or before the thirtieth (30th) day after Landlord gives such notice, relocate all of its Rooftop Installations from the Antenna Area to the Relocation Rooftop Area.

(P)In addition to complying with the applicable construction provisions of the Lease, Tenant shall not install or operate Rooftop Installations in any portion of the Antenna Area until (x) Tenant shall have obtained Landlord’s prior written approval, which approval will not be unreasonably withheld or delayed, of Tenant’s plans and specifications for the placement and installation of the Rooftop Installations in the Premises, and (y) Tenant shall have obtained and delivered to Landlord copies of all required governmental and quasi-governmental permits, approvals, licenses and authorizations necessary for the lawful installation, operation and maintenance of the Rooftop Installations. The parties hereby acknowledge and agree, by way of illustration and not limitation, that Landlord shall have the right to withhold its approval of Tenant’s plans and specifications hereunder, and shall not be deemed to be unreasonable in doing so, if Tenant’s intended placement or method of installation or operation of the Rooftop Installations (i) may subject other licensees, tenants or occupants of the Building,

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or other surrounding or neighboring landowners or their occupants, to signal interference, Tenant hereby acknowledging that a shield may be required in order to prevent such interference, (ii) does not minimize to the fullest extent practicable the obstruction of the views from the windows of the Building that are adjacent to the Rooftop Installations, if any, (iii) does not complement (in Landlord’s bona fide business judgment, which shall not, however, require Tenant to incur unreasonable expense) the design and finish of the Building, (iv) may damage the structural integrity of the Building or the roof thereof, or (v) may constitute a violation of any consent, approval, permit or authorization necessary for the lawful installation of the Rooftop Installations.

(Q)In addition to the indemnification provisions set forth in the Lease which shall be applicable to the Antenna Area, Tenant shall, to the maximum extent permitted by law, indemnify, defend, and hold Landlord, its agents, contractors and employees harmless from any and all claims, losses, demands, actions or causes of actions suffered by any person, firm, corporation, or other entity arising from Tenant’s use of the Antenna Area.

(R)Landlord shall have the right to designate or identify the Rooftop Installations with or by a lease or license number (or other marking) and to place such number (or marking) on or near such Rooftop Installations.

(S)(i)Tenant recognizes that Landlord may wish to (and Landlord hereby reserves the right to) install a central Building system (the “Central Building System”) capable of, among other things, providing Tenant with the type of service (to be) provided by Tenant’s Rooftop Installations. If Landlord elects to install the Central Building System, and provided that the Central Building System provides Tenant with service equivalent to the service which had been provided by Tenant’s Rooftop Installations, then (i) Tenant shall, upon Landlord’s request and at Tenant’s expense, remove its Rooftop Installations and other Alterations (including any existing cabling) from the Building and repair any damage caused their installation or removal, (ii) Tenant may, at Tenant’s expense and subject to the provisions of this Agreement (including, without limitation, subparagraph P hereof), have access to and use (and tie into) the Central Building System for the uses permitted hereunder, and (ii) commencing upon Tenant’s use of the Central Building System and continuing thereafter throughout the term, the Yearly Rent payable hereunder shall be adjusted to include that which is reasonably designated by Landlord from time to time based upon Landlord’s determination of the fair market value of the access rights to the Central Building System granted herein, such amount to be (x) competitive with amounts then being charged by other landlords in the Boston area for similar services and (y) in no event greater than the rent that Tenant would have been paying pursuant to this Section 16.29 if Landlord had not exercised its rights under this Section 16.29(S).

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(ii)Landlord shall maintain, repair or replace the Central Building System, in accordance with the standards for the repair and maintenance of such systems generally prevailing in the industry from time to time, so as to eliminate any material interruption or other adverse effects caused by malfunction, damage or destruction of the Central Building System, the cost of which shall be borne by Tenant if the problem was caused by the act or omission of Tenant or its agents, contractors or employees. Notwithstanding the foregoing, Landlord’s obligation to maintain, repair or replace the Central Building System shall apply only to the extent necessary to reach premises in the Building that are then used by tenants after the malfunction, damage or destruction or that, if damaged or destroyed, will be again used by tenants upon the completion of restoration or repair thereof. In no event shall Tenant have any claim or right to make any claim against Landlord whatsoever for any damages, including,  without limitation, consequential or incidental damages, or lost  profits, in any such circumstance.

16.30SIGNAGE.

(A)Landlord shall provide building standard signage in the standard graphics for the Building listing Tenant and any permitted subtenant or assignee of Tenant (i) on the primary non-electronic directory(ies) for the Building, and (ii) at the entrance to the Premises. The initial listing of Tenant’s name shall be at Landlord’s expense. Any changes or additions to such directory(ies) or signage shall be at Tenant’s cost and expense.

(B)Landlord shall permit Tenant, any permitted subtenant or assignee of Tenant, and their key employees to be listed on any electronic directory installed by Landlord in the Building (Tenant acknowledging that Landlord has no obligation to install an electronic directory) at no charge to Tenant.

16.31STORAGE SPACE; GENERATOR SPACE.

(A)Tenant shall have the right, by written election given to Landlord not more than one hundred twenty (120) days after the Commencement Date, to license up to 1500 rentable square feet in the aggregate of dry storage space (“Storage Space”) at a location or locations designated by Landlord within the Prudential Center. The Storage Space need not be contiguous, but each portion of the Storage Space must be useable for storage purposes for items typically stored in connection with office uses. Tenant shall pay a fee for such Storage Space at the rate of $15.00 per rentable square foot per annum, increased by the increase in the Consumer Price Index every three (3) years. Tenant shall not be obligated to pay Operating Expense Excess or Tax Excess with respect to such Storage Space. Landlord shall not be obligated to provide any services to such Storage Space. Upon Tenant’s election to license such Storage Space, the parties shall enter into Landlord’s standard form of license agreement therefor.

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(B)Tenant shall have the right, by written election given to Landlord not more than one hundred twenty (120) days after the Commencement Date, to license up to 36 rentable square feet of space for an emergency generator (“Generator Space”) at a location designated by Landlord within the Prudential Center. Tenant shall pay a fee for such Generator Space at the rate of $20.00 per rentable square foot per annum, increased by the increase in the Consumer Price Index every three (3) years. Tenant shall not be obligated to pay Operating Expense Excess or Tax Excess with respect to such Generator Space. Landlord shall not be obligated to provide any services to such Generator Space. Any generator to be installed by Tenant in the Generator Space shall be subject to Landlord’s reasonable approval, and Tenant shall be responsible for the installation and maintenance thereof in accordance with all applicable laws, including without limitation obtaining and maintaining any required permits. Upon Tenant’s election to license such Generator Space, the parties shall enter into Landlord’s standard form of license agreement therefor.

16.32ARBITRATION Any disputes relating to (i) provisions or obligations in this Lease as to which a specific provision for a reference to arbitration is made herein (i.e., disputes under Articles IV ), or (ii) the withholding of consent or approval where a “reasonableness” standard is specifically required by this Lease, shall be submitted to arbitration in accordance with the provisions of applicable state law, as from time to time amended. Arbitration proceedings, including the selection of an arbitrator, shall be conducted pursuant to the rules, regulations and procedures from time to time in effect as promulgated by the American Arbitration Association. Prior written notice of application by either party for arbitration shall be given to the other at least ten (10) days before submission of the application to the said Association’s office in Boston, Massachusetts. The arbitrator shall hear the parties and their evidence. The decision of the arbitrator shall be binding and conclusive, and judgment upon the award or decision of the arbitrator may be entered in the Supreme Court of Suffolk County, Massachusetts; and the parties consent to the jurisdiction of such court and further agree that any process or notice of motion or other application to the court or a judge thereof may be served outside the Commonwealth of Massachusetts by certified mail or by personal service provided in accordance with the provisions of Section 16.9, provided a reasonable time for appearance is allowed. The costs and expenses of each arbitration hereunder and their apportionment between the parties shall be determined by the arbitrator in his award or decision. No arbitrable dispute shall be deemed to have arisen under this Lease prior to the expiration of the period of twenty (20) days after the date of the giving of written notice by the party asserting the existence of the dispute together with a description thereof sufficient for an understanding thereof.

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EXECUTED as a sealed instrument in two or more counterparts by persons or officers hereunto duly authorized on the Date set forth in Section 1.2 above.

WITNESS:		LANDLORD:
		BP PRUCENTER ACQUISITION LLC
		By:	Boston Properties Limited Partnership,
			a Delaware limited partnership
			Its: Member
			By:		Boston Properties, Inc.,
					a Delaware corporation
			Its:		General Partner
			Name:
			Its:
					Hereunto duly authorized
		TENANT:		THE FIRST MARBLEHEAD
				CORPORATION
ATTEST:
By		By
Name		Name
Title	SECRETARY (OR ASSISTANT SECRETARY)	Title		PRESIDENT (OR VICE PRESIDENT)
				HEREUNTO DULY AUTHORIZED
		By
		Name
		Title		TREASURER (OR ASSISTANT TREASURER)
				HEREUNTO DULY AUTHORIZED
				(CORPORATE SEAL)

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EXHIBIT A

LEGAL DESCRIPTION

PRUDENTIAL CENTER

PARCEL 1

That certain parcel of registered land located in the City of Boston, Suffolk County, Massachusetts, shown as Lot 12 on a Plan entitled “Subdivision Plan of Land in Boston, Massachusetts, Suffolk County, being a subdivision of L.C.C. 28611D Lot 8” (Nine (9) Sheets), dated March 6, 1998 on file with the Suffolk County Registry District of the Land Court as Land Court Plan No. 28611E.

PARCEL 2 AND PARCEL 3

Those two certain parcels of unregistered land located in the City of Boston, Suffolk County, Massachusetts, shown on a Plan entitled “Plan of Land in Boston, Massachusetts, Suffolk County,” dated June 25, 1998, prepared by Cullinan Engineering Co., Inc. and recorded with the Suffolk County Registry of Deeds in Book 22643, Page 112.

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EXHIBIT A-1

PLAN DEPICTING THE PRUDENTIAL CENTER

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EXHIBIT B

PRUDENTIAL CENTER

TENANT PLAN AND WORKING DRAWING REQUIREMENTS

1.Floor plan indicating location of partitions and doors (details required of partition and door types).

2.Location of standard electrical convenience outlets and telephone outlets.

3.Location and details of special electrical outlets; (e.g. Xerox), including voltage, amperage, phase and NEMA configuration of outlets.

4.Reflected ceiling plan showing layout of standard ceiling and lighting fixtures. Partitions to be shown lightly with switches located indicating fixtures to be controlled.

5.Locations and details of special ceiling conditions, lighting fixtures, speakers, etc.

6.Location and heat load in BTU/Hr. of all special air conditioning and ventilating requirements and all necessary HVAC mechanical drawings.

7.Location and details of special structural requirements, e.g., slab penetrations and areas with floor loadings exceeding a live load of 70 lbs./s.f.

8.Locations and details of all plumbing fixtures; sinks, drinking fountains, etc.

9.Location and specifications of floor coverings, e.g., vinyl tile, carpet, ceramic tile, etc.

10.Finish schedule plan indicating wall covering, paint or paneling with paint colors referenced to standard color system.

11.Details and specifications of special millwork, glass partitions, rolling doors and grilles, blackboards, shelves, etc.

12.Hardware schedule indicating door number keyed to plan, size, hardware required including butts, latchsets or locksets, closures, stops, and any special items such as thresholds, soundproofing, etc. Keying schedule is required.

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13.Verified dimensions of all built-in equipment (file cabinets, lockers, plan files, etc.).

14.Location of any special soundproofing requirements.

15.All drawings to be uniform size (30" X 42") and shall incorporate the standard project electrical and plumbing symbols and be at a scale of 1/8" = 1' or larger.

16.Drawing submittal shall include one sepia and one blue line print of each drawing.

17.Provide all other information necessary to obtain all permits and approvals for Landlord’s Work.

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EXHIBIT B-1

PRUDENTIAL CENTER

PLANS AND CONSTRUCTION SCHEDULE

Permit/GMP Plans (i.e., a set of plans sufficiently detailed to permit Landlord to apply for all permits and approvals necessary for the performance of Landlord’s Work and to permit Landlord to obtain guaranteed maximum price bid(s) for the cost of Landlord’s Work). These plans will also be used to generate the list of, and associated costs for, long lead time items.	Already submitted and approved, subject to the terms and conditions set forth in a letter from Landlord to Tenant dated August 22, 2003
Construction Drawings (i.e., full construction drawings for the performance of Landlord’s Work, based on the approved GMP Plans)	September 15, 2003
Long Lead Items Release Date	September 8, 2003
Authorization to Proceed Date	September 15, 2003

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EXHIBIT C

PRUDENTIAL TOWER, BOSTON, MA

LANDLORD SERVICES

I.CLEANING:

Cleaning and janitor services as provided below:

A.OFFICE AREAS:

DAILY:(Monday through Friday, inclusive, holidays excepted).

1.Empty all waste receptacles and ashtrays and remove waste material from the Premises; wash receptacles as necessary.

2.Sweep and dust mop all uncarpeted areas using a dust-treated mop.

3.Vacuum all rugs and carpeted areas.

4.Hand dust and wipe clean with treated cloths all horizontal surfaces, including furniture, office equipment, window sills, door ledges, chair rails, and convector tops, within normal reach.

5.Wash clean all water fountains and sanitize.

6.Move and dust under all desk equipment and telephones and replace same (but not computer terminals, specialized equipment or other materials).

7.Wipe clean all chrome and other bright work.

8.Hand dust grill work within normal reach.

9.Main doors to Premises shall be locked and lights shut off upon completion of cleaning.

WEEKLY:

1.Dust coat racks and the like.

2.Spot clean entrance doors, light switches and doorways.

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QUARTERLY:

1.Render high dusting not reached in daily cleaning to include:

a)dusting all pictures, frames, charts, graphs and similar wall hangings.

b)dusting of all vertical surfaces, such as walls, partitions, doors and door frames, etc.

c)dusting all pipes, ducts and moldings.

d)dusting of all vertical blinds.

e)dust all ventilating, air conditioning, louvers and grills.

2.Spray buff all resilient floors.

B.LAVATORIES:

DAILY:(Monday through Friday, inclusive, holidays excepted).

1.Sweep and damp mop.

2.Clean all mirrors, powder shelves, dispensers and receptacles, bright work, flushometers, piping and toilet seat hinges.

3.Wash both sides of all toilet seats.

4.Wash all basins, bowls and urinals.

5.Dust and clean all powder room fixtures.

6.Empty and clean paper towel and sanitary disposal receptacles.

7.Remove waste paper and refuse.

8.Refill tissue holders, soap dispensers, towel dispensers, sanitary dispensers; materials to be furnished by Landlord.

MONTHLY:

1.Machine scrub lavatory floors.

2.Wash all partitions and tile walls in lavatories.

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3.Dust all lighting fixtures and grills in lavatories.

C.MAIN LOBBIES, ELEVATORS, STAIRWELLS AND COMMON CORRIDORS:

DAILY:(Monday through Friday, inclusive, holidays excepted).

1.Sweep and damp mop all floors, empty and clean waste receptacles, dispose of waste.

2.Clean elevators, wash or vacuum floors, wipe down walls and doors.

3.Spot clean any metal work inside lobbies.

4.Spot clean any metal work surrounding building entrance doors.

5.Sweep all stairwells and dust handrails.

MONTHLY:

1.All resilient tile floors in public areas to be spray buffed.

D.WINDOW CLEANING:

All exterior windows shall be washed on the inside no less than two (2) times per year and on the outside no less than three (3) times per year.

II.HVAC:

A.Heating, ventilating and air conditioning equipment will be provided with sufficient capacity to accommodate a maximum population density of one (1) person per one hundred fifty (150) square feet of useable floor area served, and a combined lightning and standard electrical load of 3.0 watts per square foot of useable floor area. In the event Tenant introduces into the Premises personnel or equipment which overloads the system’s ability to adequately perform its proper functions, Landlord shall so notify Tenant in writing and supplementary system(s) may be required and installed by Landlord at Tenant’s expense, if within fifteen (15) days Tenant has not modified its use so as not to cause such overload.

Operating criteria of the basic system are in accordance with the Massachusetts Energy Code and shall not be less than the following:

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i)Cooling season indoor conditions of not in excess of 78 degrees Fahrenheit when outdoor conditions are 91 degrees Fahrenheit drybulb and 73 degrees Fahrenheit wetbulb.

ii)Heating season minimum room temperature of 72 degrees Fahrenheit when outdoor conditions are 6 degrees Fahrenheit drybulb.

B. Landlord shall provide heating, ventilating and air conditioning as normal seasonal charges may require during Normal Building Operating Hours (8:00 a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 1:00 p.m. on Saturdays, legal holidays in all cases excepted).

If Tenant shall require air conditioning (during the air conditioning season) or heating or ventilating during any season outside Normal Building Operating Hours, Landlord shall use landlord’s best efforts to furnish such services for the area or areas specified by written request of Tenant delivered to the Building Superintendent or the Landlord before 3:00 p.m. of the business day preceding the extra usage. For such services, Tenant shall pay Landlord, as additional rent, upon receipt of billing, a sum equal to the cost incurred by Landlord.

III.ELECTRICAL SERVICES:

A. Landlord shall provide electric power for a combined load of 6.0 watts per square foot of useable area for lighting and for office machines through standard receptacles for the typical office space.

B. Landlord, at its option, may require separate metering and direct billing to Tenant for the electric power required for any special equipment (such as computers and reproduction equipment) that requires either 3-phase electric power or any voltage other than 120, or for any other usage in excess of 6.0 watts per square foot.

C. Landlord will furnish and install, at Tenant’s expense, all replacement lighting tubes, lamps and ballasts required by Tenant. Landlord will clean lighting fixtures on a regularly scheduled basis at Tenant’s expense.

IV.ELEVATORS:

Provide  passenger elevator service.

V.WATER:

Provide hot water for lavatory purposes and cold water for drinking, lavatory and

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toilet purposes.

VI.CARD ACCESS SYSTEM:

Landlord will provide a card access system at one entry door of the building.

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EXHIBIT D

FLOOR PLAN

[schematic diagram of floor plan]

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EXHIBIT E

FORM OF COMMENCEMENT DATE AGREEMENT

Reference is made to that certain Lease by and between                                         , a(n)                                         , Landlord and                                                             , a(n)                                             , Tenant, and dated                                                     .

Landlord and Tenant hereby confirm and agree that the Commencement Date under the Lease is                                             and that the Lease Term is                                      .

This Commencement Date Agreement is executed as a sealed instrument as of                             , 20      .

LANDLORD: ,

a(n)
	By:
		By:
			By:
			Name:
			Title:
TENANT:				,
a(n)
By:
Name:
Title:
Name (print):

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EXHIBIT F

LOCATION OF RESERVED PARKING STALLS

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EXHIBIT G

INTENTIONALLY OMITTED

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EXHIBIT H

BROKER DETERMINATION OF PREVAILING MARKET RENT

Where in the Lease to which this Exhibit is attached provision is made for a Broker Determination of Prevailing Market Rent, the following procedures and requirements shall apply:

1.TENANT’S REQUEST. Tenant shall send a notice to Landlord in accordance with Section 3.2 of the Lease, requesting a Broker Determination of the Prevailing Market Rent, which notice to be effective must (i) make explicit reference to the Lease and to the specific section of the Lease pursuant to which said request is being made, (ii) include the name of a broker selected by Tenant to act for Tenant, which broker shall be affiliated with a major Boston commercial real estate brokerage firm selected by Tenant and which broker shall have at least ten (10) years experience dealing in properties of a nature and type generally similar to the Building located in the Downtown Boston and Back Bay Markets, and (iii) explicitly state that Landlord is required to notify Tenant within thirty (30) days of an additional broker selected by Landlord.

2.LANDLORD’S RESPONSE. Within thirty (30) days after Landlord’s receipt of Tenant’s notice requesting the Broker Determination and stating the name of the broker selected by Tenant, Landlord shall give written notice to Tenant of Landlord’s selection of a broker having at least the affiliation and experience referred to above.

3.SELECTION OF THIRD BROKER. Within ten (10) days thereafter the two (2) brokers so selected shall select a third such broker also having at least the affiliation and experience referred to above.

4.RENTAL VALUE DETERMINATION. Within thirty (30) days after the selection of the third broker, the three (3) brokers so selected, by majority opinion, shall make a determination of the annual fair market rental value of the Premises for the Extended Term. Such annual fair market rental value determination (x) may include provision for annual increases in rent during said Extended Term if so determined, (y) shall take into account the as-is condition of the Premises and (z) shall take account of, and be expressed in relation to, the payment in respect of taxes and operating costs and provisions for paying for so-called tenant electricity as contained in the Lease. The brokers shall advise Landlord and Tenant in writing by the expiration of said thirty (30) day period of the annual fair market rental value which as so determined shall be referred to as the “Prevailing Market Rent”.

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5.RESOLUTION OF BROKER DEADLOCK. If the Brokers are unable to agree at least by majority on a determination of annual fair market rental value, then the brokers shall send a notice to Landlord and Tenant by the end of the thirty (30) day period for making said determination setting forth their individual determinations of annual fair market rental value, and the highest such determination and the lowest such determination shall be disregarded and the remaining determination shall be deemed to be the determination of annual fair market rental value and shall be referred to as the Prevailing Market Rent.

6.COSTS. Each party shall pay the costs and expenses of the broker selected by it and each shall pay one half (1/2) of the costs and expenses of the third broker.

7.FAILURE TO SELECT BROKER OR FAILURE OF BROKER TO SERVE. If Tenant shall have requested a Broker Determination and Landlord shall not have designated a broker within the time period provided therefor above and such failure shall continue for more than ten (10) days after notice thereof, then Tenant’s broker shall alone make the determination of the Prevailing Market Rent in writing to Landlord and Tenant within thirty (30) days after the expiration of Landlord’s right to designate a broker hereunder. If Tenant and Landlord have both designated brokers but the two brokers so designated do not, within a period of fifteen (15) days after the appointment of the second broker, agree upon and designate the third broker willing so to act, the Tenant, the Landlord or either broker previously designated may request the Greater Boston Real Estate Board (or such organization as may succeed to the Greater Boston Real Estate Board) to designate the third broker willing so to act and a broker so appointed shall, for all purposes, have the same standing and powers as though he had been seasonably appointed by the brokers first appointed. In case of the inability or refusal to serve of any person designated as a broker, or in case any broker for any reason ceases to be such, a broker to fill such vacancy shall be appointed by the Tenant, the Landlord, the brokers first appointed or the Greater Boston Real Estate Board, as the case may be, whichever made the original appointment, or if the person who made the original appointment fails to fill such vacancy, upon application of any broker who continues to act or by the Landlord or Tenant such vacancy may be filled by the said Greater Boston Real Estate Board, and any broker so appointed to fill such vacancy shall have the same standing and powers as though originally appointed.

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EXHIBIT I

LIST OF MORTGAGES

Mortgage, dated 6/30/98, recorded in the Suffolk County Registry of Deeds at Book 22643, Page 183, made by Landlord to The Northwestern Mutual Life Insurance Company, having an address at 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, Attn: Real Estate Investment Department, with a copy to The Northwestern Mutual Life Insurance Company, Suite 700, 1133 20th Street, N.W., Washington, DC 20036, Attn: Mr. John Kraus; and Teachers Insurance and Annuity Association of America, having an address at 730 Third Avenue, New York, New York 10017, Attn: Ms. Joan Herman; and New York Life Insurance Company, having an address at 51 Madison Avenue, New York New York 10010, Attn: Real Estate Department: Mortgage Loan Administration Unit.

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The Prudential Tower
Prudential Center
Boston, Massachusetts 02199
(the “Building”)

FIRST AMENDMENT

Execution Date:  October 7, 2004

	LANDLORD:	BP Prucenter Acquisition LLC
	TENANT:	The First Marblehead Corporation, a Delaware corporation
	EXISTING PREMISES:	The entirety of the thirty-fourth (34th) floor of the Building, containing 26,296 rentable square feet, in accordance with the floor plan annexed to the Lease as Exhibit D
ORIGINAL LEASE DATA	DATE OF LEASE:	September 5, 2003
	COMMENCEMENT DATE OF EXISTING PREMISES:	December 1, 2003
	RENT COMMENCEMENT DATE OF EXISTING PREMISES:	April 1, 2004
	TERMINATION DATE:	March 31, 2014
	PREVIOUS LEASE AMENDMENTS:	None

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FIRST AMENDMENT PREMISES: The entirety of the twenty-ninth (29th) floor of the Building, containing 25,676 rentable square feet, substantially as shown on Exhibit A, First Amendment, Sheet 1, a copy of which is attached hereto and incorporated by reference herein

WHEREAS, Tenant desires to lease additional Premises from Landlord, to wit, the First Amendment Premises;

WHEREAS, Landlord is willing to lease the First Amendment Premises to Tenant on the terms and conditions hereinafter set forth;

NOW THEREFORE, the above-described lease (the “Lease”) is hereby amended as follows:

1.DEMISE OF THE FIRST AMENDMENT PREMISES

Landlord hereby demises and leases to Tenant and Tenant hereby hires and takes from Landlord, the First Amendment Premises for a Term commencing as of the CD, as hereinafter defined in Paragraph 1.A, and terminating as of March 31, 2014 (“Termination Date”).  Said demise of the First Amendment Premises shall be upon all of the terms and conditions of the Lease (including, without limitation, (i) Tenant’s obligation to pay Annual Fixed Rent, as hereinafter provided, (ii) Tenant’s obligation to pay Tax Excess, in accordance with Section 6.2 of the Lease, and (iii) Tenant’s obligation to pay Operating Cost Excess, in accordance with Section 7.5 of the Lease), except as follows:

A.The Commencement Date in respect of the First Amendment Premises (“CD”) shall be the first to occur of (a) the day on which the First Amendment Premises are deemed to be substantially completed, as defined in Section 4.1(C) of the Lease, based upon the performance of Landlord’s First Amendment Premises Work, as defined in Section 2 below, or (b) the date upon which Tenant commences use of the First Amendment Premises for business purposes (the parties hereby agreeing that the installation of Tenant’s furniture, fixtures and equipment shall not be considered to be business purposes).

B.The Rent Commencement Date in respect of the First Amendment Premises (“RCD”) shall be the date six (6) months after the CD (“Fixed Rent Abatement Period”) (i.e., Tenant shall have no obligation to pay Annual Fixed Rent during the first (1st) six (6) months of the Term of the Lease in respect of the First Amendment Premises (“Abated Fixed Rent “).  Notwithstanding anything to the contrary herein contained, if Tenant defaults at any time during the Term of the Lease and fails to cure such default

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within any applicable cure period under the Lease, all Abated Fixed Rent shall immediately become due and payable.  The payment by Tenant of the Abated Fixed Rent in the event of a default shall not limit or affect any of Landlord’s other rights, pursuant to this Lease or at law or in equity.  During the Fixed Rent Abatement Period, only Annual Fixed Rent payable in respect of the First Amendment Premises shall be abated, and Tax Excess, Operating Cost Excess and all other costs and charges specified in the Lease shall remain as due and payable pursuant to the provisions of the Lease.  In the event that Tenant pays to Landlord the Abated Fixed Rent in accordance with this Paragraph 1(B), then the monthly installments of Annual Fixed Rent thereafter (i.e., after Tenant makes such payment) payable by Tenant during the remainder of the initial Term of the Lease shall be reduced by the Monthly Abated Fixed Rent Reduction, as hereinafter defined.  The “Monthly Abated Fixed Rent Reduction” shall be defined as the amount of Abated Fixed Rent actually paid by Tenant to Landlord, amortized a straight-line basis in equal monthly installments over the remainder of the initial Term of the Lease.

C.No Annual Fixed Rent shall be payable in respect of the First Amendment Premises prior to the RCD.  The Annual Fixed Rent payable in respect of the First Amendment Premises for the period from and after the RCD shall be as follows:

Time Period	Rent PSF		Annual Fixed Rent		Monthly Payment
RCD through the date 55 months(1) after the CD:	$	39.50	$	1,014,202.00	$	84,516.84
The date 55 months after the CD through March 31, 2014:	$	43.50	$	1,116,906.00	$	93,075.50

D.Base Operating Expenses in respect of the First Amendment Premises means Operating Expenses for the Building for calendar year 2005 (that is the period beginning January 1, 2005 and ending December 31, 2005).

E.Base Taxes in respect of the First Amendment Premises means Landlord’s Tax Expenses for fiscal tax year 2005 (that is the period beginning July 1, 2004 and ending June 30, 2005).

F.In accordance with the provisions of Section 2.1 of the Lease, Landlord shall have no right to relocate the First Amendment Premises prior to the third (3rd) anniversary of the Rent Commencement Date in respect the Existing Premises.

(1) The fixed rent adjustment date shall occur in the 55th month after the CD on the same day of the month as the CD occurs.  For example, if the CD occurs on January 15, 2005, then the Annual Fixed Rent shall be increased from $1,014,202.00 to $1,116,906.00 effective as of July 15, 2009.

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G.Tenant’s Extension Options as set forth in Section 3.2 of the Lease, shall apply to the First Amendment Premises.  The parties hereby acknowledge that Tenant’s Extension Options may be exercised with respect to (i) both the Existing Premises and the First Amendment Premises, (ii) only the Existing Premises, or (iii) only the First Amendment Premises.  If Tenant exercises its option to extend the Term of the Lease for an Extended Term pursuant to Section 3.2 of the Lease, then the Term of the Lease shall be extended with respect to premises set forth in Tenant’s notice.  In the event Tenant exercises said option with respect to only one of the premises, then the Term of the Lease shall expire with respect to the other premises on the then Termination Date.

H. In the event that any of the provisions of the Lease are inconsistent with this Amendment or the state of facts contemplated hereby, the provisions of this Amendment shall control.

2. CONDITION OF FIRST AMENDMENT PREMISES

Landlord shall perform the work (“Landlord’s First Amendment Premises Work”) necessary to prepare the First Amendment Premises for Tenant’s occupancy (including renovation of the bathrooms on the twenty-ninth (29th) floor) in accordance with all of the terms and conditions set forth in Article IV of the Lease and Exhibit B to the Lease, except as follows:

A. Definitions.  With respect to Landlord’s First Amendment Premises Work, the terms set forth in this Paragraph 2.A shall be defined as follows:

· Authorization to Proceed Date:	September 28, 2004
· Estimated Commencement Date:	January 14, 2005
· Outside Completion Date:	January 14, 2006
· Tenant’s Construction Representative:	Robert Campbell
· Landlord’s Construction Representative:	Gretchen McGill

B. Exhibit B-1.  Exhibit B-1, First Amendment, a copy of which is attached hereto shall apply to Landlord’s First Amendment Premises Work in lieu of Exhibit B-1 attached to the Lease.

C. Tenant’s Termination Right in respect of First Amendment Premises.  Section 4.2 of the Lease shall have no applicability to the First Amendment Premises or Landlord’s First Amendment Premises Work, and in lieu thereof the following shall be substituted in its place:

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“If the Commencement Date in respect of the First Amendment Premises shall not have occurred on or before Outside Completion Date in respect of the First Amendment Premises (which Outside Completion Date shall be extended automatically for such periods of time as Landlord is prevented from proceeding with or completing the same by reason of Force Majeure as defined in Section 14.1 of the Lease, as well as for any Tenant Delay as defined in Section 4.1(B) of the Lease, without limiting Landlord’s other rights on account thereof), Tenant shall have the right to terminate the Lease in respect of the First Amendment Premises only (i.e. Tenant’s termination right pursuant to this paragraph shall not affect Tenant’s demise of the Existing Premises) by giving notice to Landlord of Tenant’s desire to do so at any time before such completion and within the time period from the Outside Completion Date in respect of the First Amendment Premises (as so extended) until the date which is thirty (30) days subsequent to the Outside Completion Date in respect of the First Amendment Premises (as so extended); and, upon the giving of such notice, the Term of the Lease in respect of the First Amendment Premises shall cease and come to an end, this First Amendment shall be void and without further force or effect, and without further liability or obligation on the part of either party under this First Amendment or with respect to the First Amendment Premises, unless, within thirty (30) days after receipt of such notice, the Commencement Date in respect of the First Amendment Premises occurs.  Each day of Tenant Delay shall be deemed conclusively to cause an equivalent day of delay by Landlord in substantially completing Landlord’s First Amendment Premises Work, and thereby automatically extend for each such equivalent day of delay the date of the Outside Completion Date in respect of the First Amendment Premises.  The remedies set forth in this paragraph are Tenant’s sole and exclusive rights and remedies based upon any delay in the performance of Landlord’s First Amendment Premises Work.”

E.Special Allowance in Respect of First Amendment Premises.  Landlord shall provide to Tenant a special allowance in respect of the First Amendment Premises equal to $1,668,940.00, being the product of (i) $65.00 and (ii) the Rentable Floor Area of the First Amendment Premises (“First Amendment Tenant Allowance”).  The First Amendment Tenant Allowance shall be paid upon all of the same terms and conditions set forth in Section 4.4 of the Lease.  Landlord hereby acknowledges that Tenant may apply up to twenty percent (20%) of the First Amendment Tenant Allowance towards the payment of various “soft” costs (including, without limitation, wiring and cabling costs, telecommunications costs, business wire services costs, architectural and engineering fees, general construction fees and management fees) incurred by Tenant in connection with the preparation of the First Amendment Premises for Tenant’s occupancy.

F.Bathroom Allowance in Respect of First Amendment Premises.  Landlord shall provide to Tenant an allowance to be used for the renovation of the bathrooms in the First Amendment Premises of up to $134,000.00 (“Bathroom Allowance”).  The Bathroom Allowance shall be paid upon all of the same terms and conditions set forth in Section 4.4 of the Lease, except that the only costs which may be reimbursed from the Bathroom Allowance shall be those costs related to the renovation of the bathrooms in the First Amendment Premises.

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G. Potential Verizon Strike.  Section 4.1(C)(6) of the Lease shall have no applicability to Landlord’s First Amendment Premises Work.

H. Payment of Tenant Plan Excess Costs.  Tenant shall be obligated to pay all Tenant Plan Excess Costs in respect of the Landlord’s First Amendment Premises Work in accordance with Section 4.5 of the Lease, except as follows:

(i)Maximum Amount, as defined in Section 4.5 of the Lease, with respect to Landlord’s First Amendment Premises Work shall be $513,520.00 (being the product of (i) $20.00 and (ii) the Rentable Floor Area of the First Amendment Premises) rather than $525,920.00;

(ii)In the second (2nd) paragraph of Section 4.5 of the Lease, (i) the phrase “one hundred twenty-three (123) months” is deleted and the phrase “the number of full calendar months between the RCD and March 31, 2014” is substituted in its place, and (ii) the phrase “one hundred twenty-three (123) monthly payments” is deleted and the phrase “in equal monthly payments” is substituted in its place; and

(iii)The last sentence of the second (2nd) paragraph of Section 4.5 of the Lease is deleted in its entirety.

I. Initial Fit Allowance.  Section 4.4(D) of the Lease shall have no applicability to Landlord’s First Amendment Premises Work.  However, Landlord agrees to provide Tenant with an allowance (“First Amendment Premises Fit Allowance”) of up to $2,567.60, being the product of ((i) $0.10 and (ii) the Rentable Floor Area of the First Amendment Premises toward the cost of the initial fit plans for the First Amendment Premises.

3. RIGHT OF FIRST OFFER

A Subject to the provisions of this Paragraph 3 (including, without limitation, Subparagraph F of this Paragraph 3), provided that at the time that any portion of the RFO Space, as hereinafter defined, first becomes available for reletting (i) there exists no “Event of Default” (defined in Section 15.1 of the Lease), (ii) this Lease is still in full force and effect, and (iii) Tenant has neither assigned this Lease nor sublet more than twenty percent (20%) of the Rentable Floor Area of the Premises (except for an assignment or subletting permitted without Landlord’s consent under Section 12.2 of the Lease), Landlord agrees not to enter into a lease to relet such portion of the RFO Space without first giving to Tenant an opportunity to lease such space as hereinafter set forth.

B. The “RFO Space” shall be defined as the twenty-sixth (26th) and twenty-seventh (27th) floors of the Building.  The RFO Space is presently leased to another tenant, The Gillette Company (“Gillette”), pursuant to a lease with Landlord, the term of which expires as of December 31, 2009, with Gillette having the right to further extend

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the term of such lease.  Any portion of the RFO Space shall be deemed to be “available for reletting” when Landlord, in its sole judgment, determines that: (x) such portion of the RFO Space will be vacated by Gillette, and anyone claiming through Gillette, and (y) Landlord intends to offer such area for lease.  Tenant acknowledges that Gillette may surrender the entire RFO Space to Landlord at the same time, or Gillette may surrender portions of the RFO Space at different times.  All portions of the RFO Space which are surrendered to Landlord at the same time shall be deemed to be available for reletting by Tenant at such time (i.e. and Tenant shall have the option to lease the entirety, but not less than the entirety, of the portions of the RFO Space so surrendered by Gillette).

C.When Landlord determines that any portion of the RFO Space becomes so available for reletting, Landlord shall notify Tenant of the availability of such space, the date when Landlord estimates that the Commencement Date in respect of such portion of the RFO Space will occur, and Landlord’s designation of the Prevailing Market Rent applicable to such portion of the RFO Space (“Landlord’s Notice”).  If Tenant wishes to exercise Tenant’s right of first offer, Tenant shall do so, if at all, by giving Landlord notice (“Tenant’s RFO Exercise Notice”) of Tenant’s desire to lease the entire amount of such space on the terms set forth in this Paragraph 3 herein within fifteen (15) days after receipt of Landlord’s Notice to Tenant, time being of the essence.  If Tenant and Landlord do not agree upon the Prevailing Market Rent applicable to the RFO Space, then, provided that Tenant has timely given Tenant’s RFO Exercise Notice, Tenant shall have the right to submit such Prevailing Market Rent to Broker Determination in accordance with Exhibit H attached to the Lease.   If Tenant shall fail to timely give Tenant’s RFO Exercise Notice with respect to any portion of the RFO Space, time being of the essence in respect to such exercise, Tenant shall have no further right to lease such portion of the RFO Space.

D. The leasing to Tenant of any portion of the RFO Space shall be upon all of the same terms and conditions of the Lease applicable to the Premises initially demised to Tenant, except as follows:

(1) Commencement Date

The Commencement Date in respect of any portion of the RFO Space shall be the later of:  (x) the estimated Commencement Date in respect of such portion of the RFO Space as set forth in Landlord’s Notice, or (y) the date that Landlord delivers such portion of the RFO Space to Tenant.

(2) Rent Commencement Date

The Rent Commencement Date in respect of any portion of the RFO Space shall be the earlier of: (x) the date ninety (90) days after the Commencement Date in respect of such portion of the RFO Space, or (y) the date that Tenant commences to use such portion of the RFO Space (or

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any portion of such portion of the RFO Space) for business purposes.

(3) Termination Date

The Termination Date in respect of the RFO Space shall be the Termination Date of the Term of the Lease in respect of the Existing Premises.

(4) Annual Fixed Rent

The Annual Fixed Rent in respect of such portion of the RFO Space shall be based upon the Prevailing Market Rent, as defined in Exhibit H attached to the Lease, of such portion of the RFO Space as of the Commencement Date in respect of such portion of the RFO Space.  Tenant may only request a Broker Determination of the Prevailing Market Rent at the time that Tenant unconditionally gives Tenant’s RFO Exercise Notice with respect to such portion of the RFO Space.  Without limiting any other factors which may be taken into account in determining such Prevailing Market Rent, such Prevailing Market Rent shall take into account: (x) the fact that the Rent Commencement Date in respect of such portion of the RFO Space may be ninety (90) days after the Commencement Date in respect of such portion of the RFO Space, and (y) the fact that, unless otherwise agreed to by the parties in writing, Tenant will, in accordance with Paragraph 3D(5), be taking the RFO Space “as-is”, without any obligation on the part of Landlord to provide any allowance or contribution to Tenant towards the preparation of such portion of the RFO Space for Tenant’s occupancy.   If the Broker Determination with respect to a Prevailing Market Rent has not been resolved before the commencement of Tenant’s obligation to pay rent based upon such Prevailing Market Rent, then Tenant shall pay Annual Fixed Rent and other charges under the Lease in respect of the premises in question based upon the Prevailing Market Rent designated by Landlord until either the agreement of the parties as to the Prevailing Market Rent, or the decision of the Brokers, as the case may be, at which time Tenant shall pay any underpayment of rent and other charges to Landlord, or Landlord shall refund any overpayment of rent and other charges to Tenant.

(5) Condition of RFO Space

Tenant shall take each portion of the RFO Space “as-is” in its then (i.e. as of the date of premises delivery) state of construction, finish, and decoration, without any obligation on the part of Landlord to construct or prepare such portion of the RFO Space for Tenant’s occupancy, and without any obligation on the part of Landlord to provide any allowance or

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contribution towards the preparation of such portion of the RFO Space for Tenant’s occupancy.

(6) Parking

Landlord shall provide to Tenant one (1) unreserved parking space per 2,000 square feet of Rentable Floor Area of each portion of the RFO Space effective as of the Commencement Date in respect of such portion of the RFO Space.  Tenant shall not be entitled to any reserved parking spaces based upon its demise of the RFO Space.  Tenant’s use of such parking spaces shall be on all of the same terms and conditions as are applicable to the unreserved parking spaces provided to Tenant in connection with the Premises in initially demised to Tenant, as set forth in Article X of the Lease.

(7) Base Years

Base Taxes in respect of each portion of the RFO Space shall be defined as Landlord’s Tax Expenses for the fiscal tax year in which the Commencement Date in respect of such portion of the RFO Space occurs. Base Operating Expenses in respect of each portion of the RFO Space shall be defined as Operating Expenses for the Building for the calendar year in which the Commencement Date in respect of such portion of the RFO Space occurs, adjusted to 95% occupancy in accordance with the provisions of Section 7.4 of the Lease.

E.If Tenant shall exercise any such right of first offer and if, thereafter, the then occupant of any portion of the RFO Space wrongfully fails to deliver possession of such premises at the time when its tenancy is scheduled to expire, commencement of the term of Tenant’s occupancy and lease of such additional space shall, in the event of such holding over by such occupant, be deferred until possession of the additional space is delivered to Tenant.  The failure of the then occupant of such premises to so vacate shall not constitute or default or breach by Landlord and shall not give Tenant any right to terminate this Lease or to deduct from, offset against or withhold Annual Fixed Rent or additional rent (or any portions thereof). However, Landlord agrees to use good faith efforts (which shall be limited to the commencement and prosecution of eviction proceedings but shall not require the taking of any appeal) to cause the then occupant of the RFO Space to vacate such space when its tenancy expires.

F.Notwithstanding anything to the contrary herein contained, if the estimated Commencement Date with respect to an RFO Space is on or after the date which is three (3) years prior to the scheduled termination date of the Lease, then Tenant shall have no right to lease such RFO Space unless: (i) Tenant has the right, pursuant to Section 3.2 of the Lease, to extend the Term of the Lease in respect of both the Existing Premises and First Amendment Premises for at least one additional Extended Term which is not yet

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lapsed unexercised, and (ii) Tenant, at the time that Tenant gives Tenant’s Exercise Notice with respect to such RFO Space, gives Tenant’s Extension Exercise Notice pursuant to Section 3.2 of the Lease, extending the Term of the Lease for such Extended Term in respect of both the Existing Premises and First Amendment Premises.  If Tenant exercises its right to extend the Term for such Extended Term pursuant to this Paragraph 3F, then, notwithstanding anything to the contrary in Section 3.2 or elsewhere in the Lease contained:

·Landlord agrees that Tenant shall have the right to give Tenant’s Extension Exercise Notice with respect to such Extended Term prior to the date fifteen (15) months prior to the expiration of the Term of the Lease;

·Tenant shall have no right to request, and Landlord shall not be required to give, Landlord’s Rent Quotation with respect to such Extended Term prior to the time that Tenant is required to give such Tenant’s Exercise Notice; and

·Landlord may give Landlord’s Rent Quotation at any time after the date fifteen (15) months prior to the expiration of the Term of the Lease, but prior to the commencement of such Extended Term (Tenant hereby acknowledging that Tenant shall be deemed to unconditionally have exercised its right to extend the Term for such Extended Term in respect of both the Existing Premises and First Amendment Premises after it has given Tenant’s Extension Exercise Notice even though it has not received any Landlord’s Rent Quotation and the parties may not have entered into any negotiations as to the Annual Fixed Rent payable with respect to such Extended Term), and,  if Landlord has not already given Landlord’s Rent Quotation to Tenant, Landlord shall, within thirty (30) days after Landlord’s receipt of Tenant’s request therefore made after the date fifteen (15) months prior to the expiration of the Term of the Lease, give Landlord’s Rent Quotation to Tenant.

G.Execution of Lease Amendments

Notwithstanding the fact that Tenant’s exercise of the above-described option to lease any portion of the RFO Space shall be self-executing, as aforesaid, the parties hereby agree promptly to execute a lease amendment reflecting the addition of any portion of the RFO Space, except that the Annual Fixed Rent payable in respect of such portion of the RFO Space may not be as set forth in such Amendment.  At the time that such Annual Fixed Rent is determined, the parties shall execute a written agreement confirming the same.  The execution of such lease amendment shall not be deemed to waive any of the conditions to Tenant’s exercise of its right of first offer, unless otherwise specifically provided in such lease amendment.

4.EXPANSION OPTION

Provided that there is no Event of Default by Tenant, Tenant shall have the option to lease the entirety of the twenty-eighth (28th) floor of the Building (“Expansion Area”).  The Expansion Area contains approximately 25,676 rentable square feet, and is

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substantially as shown on Exhibit A, First Amendment, Sheet 2.  Landlord hereby represents to Tenant that the Expansion Area is presently occupied by Constellation New Energy, Inc. (“Existing Occupant”) and the Landlord expects that the Expansion Area will be available for occupancy by Tenant as of January 1, 2010 because the Existing Occupant’s lease expires as of December 31, 2009.

A. Exercise of Rights to Expansion Areas

Tenant may exercise its option to lease the Expansion Area by giving written notice (“Exercise Notice”) to Landlord on or before December 1, 2008.  If Tenant fails timely to give such notice, Tenant shall have no further right to lease such Expansion Area, time being of the essence of this Paragraph 4.  Upon the timely giving of such notice, Landlord shall lease and demise to Tenant, and Tenant shall hire and take from Landlord, such Expansion Area, without the need for further act or deed by either party, for the term and upon all of the same terms and conditions of this Lease, except as hereinafter set forth.

B. Lease Provisions Applying to Expansion Area

The leasing to Tenant of the Expansion Area shall be upon all the same terms and conditions of the Lease except as follows:

(1)Commencement Date

The Commencement Date in respect of the Expansion Area shall be the later of: (x) January 1, 2010, or (y) the date that the Existing Occupant, and anyone claiming under the Existing Occupant, vacates the Expansion Area and delivers the Expansion Area to Landlord.

(2)Rent Commencement Date

The Rent Commencement Date in respect of the Expansion Area shall be the earlier of: (x) the date ninety (90) days after the Commencement Date in respect of the Expansion Area, or (y) the date that Tenant commences to use the Expansion Area (or any portion of the Expansion Area) for business purposes.

(3)Annual Fixed Rent

Annual Fixed Rent in respect of the Expansion Area shall be based upon the Prevailing Market Rent, as defined in Exhibit H attached to the Lease, of the Expansion Area as of the Commencement Date in respect of the Expansion Area. Without limiting any other factors which may be taken into account in determining such Prevailing Market Rent, such Prevailing Market Rent shall take into account: (x) the fact that the Rent Commencement Date in respect of such portion of the Expansion Area may be ninety (90) days after the Commencement Date in respect of such portion of the

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Expansion Area, and (y) the fact that, unless otherwise agreed to by the parties in writing, Tenant will, in accordance with Paragraph 4B(6), be taking the Expansion Area “as-is”, without any obligation on the part of Landlord to provide any allowance or contribution to Tenant towards the preparation of such portion of the Expansion Area for Tenant’s occupancy.

(4)Base Operating Expenses in respect of the Expansion Area means Operating Expenses for the Building for calendar year 2010, adjusted to 95% occupancy in accordance with the provisions of Section 7.4 of the Lease.

(5)Base Taxes in respect of the Expansion Area means Landlord’s Tax Expenses for fiscal tax year 2010 (that is the period beginning July 1, 2009 and ending June 30, 2010).

(6)Condition of Expansion Area

The Expansion Area shall be delivered by Landlord and accepted by Tenant “as-is”, in its then (i.e. as of the Commencement Date in respect of the Expansion Area), state of construction, finish and decoration, without any obligation on the part of Landlord to prepare or construct the Expansion Area for Tenant’s occupancy. In implementation of the foregoing, Landlord shall have no obligation to provide any allowance in respect of such Expansion Area.

C. Notwithstanding the fact that Tenant’s exercise of the above-described expansion option shall be self-executing, as aforesaid, the parties hereby agree promptly to execute a lease amendment reflecting the addition of the Expansion Area, except that the Annual Fixed Rent payable in respect of such Expansion Area shall not be as set forth in such Amendment. Subsequently, after such Annual Fixed Rent is determined, the parties shall execute a written agreement confirming the same.  The execution of such lease amendment shall not be deemed to waive any of the conditions to Tenant’s exercise of the herein expansion options, unless otherwise specifically provided in such lease amendment.

5. ALLOCATION OF ELECTRICITY CHARGES IN RESPECT OF THE FIRST AMENDMENT PREMISES

The First Amendment Premises shall be separately metered for electricity, as part of Landlord’s First Amendment Premises Work, and Tenant shall pay for all electricity charges in respect of the First Amendment Premises directly to the supplier of the same.

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6.SECURITY DEPOSIT

The parties hereby acknowledge that Landlord is holding a Letter of Credit in the amount of Five Hundred Thousand and 00/100 ($500,000.00) Dollars, pursuant to Section 16.26 of the Lease and subject to reduction in accordance with Section 16.26 of the Lease.  The parties hereby further acknowledge that Landlord shall continue to hold said Letter of Credit throughout the Term of the Lease, pursuant to and in accordance with said Section 16.26 of the Lease.

7.PARKING PRIVILEGES IN RESPECT OF FIRST AMENDMENT PREMISES.

In addition to the Parking Privileges granted to Tenant pursuant to Article X of the Lease, Landlord shall provide to Tenant, in respect of the First Amendment Premises, monthly parking privileges (“Additional Parking Privileges”) in the Prudential Center Garage (the “Garage”) for seventeen (17) passenger automobiles for the parking of motor vehicles, fifteen (15) in unreserved stalls and two (2) in reserved stalls, in the Garage by Tenant’s employees commencing on the Commencement Date in respect of the First Amendment Premises.  Tenant’s reserved parking stalls shall be as shown on Exhibit B attached hereto.   Said Additional Parking Privilege shall be upon all of the same terms and conditions set forth in said Article X, except that the second (2nd), third (3rd) and fourth (4th) sentences of Section 10.1 of the Lease shall not apply to the Additional Parking Privileges.

8.SIGNAGE

Tenant shall have the right, subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld, to install a logo sign in the twenty-ninth (29th) floor elevator lobby.  The parties hereby acknowledge that Tenant’s current logo installed in the elevator lobby of the thirty-fourth (34th) floor is acceptable to Landlord.

9.STORAGE SPACE; GENERATOR SPACE

A.Sections 16.31A and B of the Lease are hereby deleted and the following is substituted in their place:

B.Tenant shall have the right, by written election given to Landlord not more than one hundred twenty (120) days after the CD, to license up to 3,000 rentable square feet in the aggregate of dry storage space (“Additional Storage Space”) at a location or locations designated by Landlord within the Prudential Center.  The Additional Storage Space need not be contiguous, but each portion of the Additional Storage Space must be useable for storage purposes for items typically stored in connection with office uses.  Tenant shall pay a fee for such Additional Storage Space at the rate of $15.00 per rentable square foot per annum, increased by the increase in the Consumer Price Index every three (3) years.  Tenant shall not be obligated to pay Operating Expenses Excess or Tax Excess

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with respect to such Additional Storage Space.  Landlord shall not be obligated to provide any services to such Additional Storage Space.  Upon Tenant’s election to license such Additional Storage Space, the parties shall enter into Landlord’s standard form of license agreement therefor.

C.Tenant shall have the right, by written election given to Landlord not more than one hundred twenty (120) days after the CD, to license up to 72 rentable square feet of space for an emergency generator (“Additional Generator Space”) at a location designated by Landlord within the Prudential Center.  Tenant shall pay a fee for such Additional Generator Space at the rate of $20.00 per rentable square foot per annum, increased by the increase in the Consumer Price Index every three (3) years.  Tenant shall not be obligated to pay Operating Expenses Excess or Tax Excess with respect to such Additional Generator Space.  Landlord shall not be obligated to provide any services to such Additional Generator Space.  Any generator to be installed by Tenant in the Additional Generator Space shall be subject to Landlord’s reasonable approval, and Tenant shall be responsible for the installation and maintenance thereof in accordance with all applicable laws, including without limitation obtaining and maintaining any required permits.  Upon Tenant’s election to license such Additional Generator Space, the parties shall enter into Landlord’s standard form of license agreement therefor.

10.BROKERAGE.

(A)Tenant warrants and represents that Tenant has not dealt with any broker in connection with the consummation of this First Amendment other than The Codman Company, (the “Broker”), and in the event any claim is made against the Landlord relative to Tenant’s dealings with brokers other than the Broker, Tenant shall defend the claim against Landlord with counsel of Tenant’s selection, subject to Landlord’s reasonable approval, and save harmless and indemnify Landlord on account of loss, cost or damage which may arise by reason of such claim.

(B)Landlord warrants and represents that Landlord has not dealt with any broker in connection with the consummation of this First Amendment other than the Broker, and in the event any claim is made against the Tenant relative to Landlord’s dealings with brokers other than the Broker, Landlord shall defend the claim against Tenant with counsel of Landlord’s selection, subject to Tenant’s reasonable approval, and save harmless and indemnify Tenant on account of loss, cost or damage which may arise by reason of such claim.

(C)Landlord agrees that it shall be solely responsible for the payment of brokerage commissions to the Broker.

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11.TENANT PLAN EXCESS COSTS AND MONTHLY IMPROVEMENT COST PAYMENTS IN RESPECT OF EXISTING PREMISES

The parties confirm and agree that the total amount of Tenant Plan Excess Costs in respect of Landlord’s Work in respect of the Existing Premises was $525,920.00 and that the amount of Monthly Improvement Costs Payments payable by Tenant to Landlord in respect of the Existing Premises during the initial Term of the Lease is $6,561.91.

12.INTERNAL STAIRWAY

If, at any time during the Term, Tenant is leasing space in the Building that is vertically contiguous, then Tenant shall have the right to construct, at Tenant’s expense or as part of a tenant improvement package from Landlord, an internal stairwell connecting the vertically contiguous spaces.  Such work shall be governed by the provisions of Article IX of the Lease.  Tenant’s use of such internal stairwell shall be conditioned upon the following:

(A)Tenant shall maintain its improvements in such internal stairwell in good condition, reasonable wear and tear, fire and other casualty excepted, throughout the Term of the Lease.

(B)Tenant shall, upon expiration or prior termination of the Term of the Lease, remove all improvements made by Tenant in such internal stairwell, and restore such internal stairwell to the condition in which it was in immediately prior to the making of such improvements.

(C)Tenant shall obtain all governmental approvals necessary for the use of such stairwell.

(D)Tenant’s use of the internal stairwell shall be solely for the purpose of pedestrian egress and ingress.

(E)Tenant shall indemnify, defend and hold Landlord harmless, from and against all loss, cost or damage arising from Tenant’s use of such stairwell.

(F)Tenant shall install such security measures are reasonably required by Landlord or which are required by law in connection with Tenant’s use of such stairwell.

13.CONDITION OF LANDLORD’S EXECUTION

The parties hereby acknowledge that Landlord is only willing and able to execute this First Amendment if Digitas agrees to terminate the term of its lease in respect of the First Amendment Premises.  Therefore, if, on or before the date forty-five (45) days after the Execution Date of this First Amendment, Landlord does not enter into in agreement, in form and substance acceptable to Landlord, in its sole discretion, with Digitas agreeing

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to terminate the term of its lease in respect of the First Amendment Premises, both parties shall have the right, exercisable upon written notice to the other party, to render this First Amendment void and without further force or effect.

14.As hereby amended, the Lease is ratified, confirmed and approved in all respects.

EXECUTED under seal as of the date first above-written.

LANDLORD:						TENANT:
BP PRUCENTER ACQUISITION LLC						THE FIRST MARBLEHEAD
By:	Boston Properties Limited Partnership,					CORPORATION
	a Delaware limited partnership
	Its:		Manager			By:	/s/ Donald R. Peck
						Name:		Donald R. Peck
	By:		Boston Properties, Inc., a			Title:		Executive Vice President and
			Delaware corporation					Chief Financial Officer
			Its:        General Partner
			By:	/s/ David C. Provost
			Name:		David C. Provost
			Its:		Senior Vice President
					Hereunto Duly Authorized
Date Signed:		10/7/04				Date Signed:			10/7/04

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EXHIBIT A, FIRST AMENDMENT, SHEET 1

FIRST AMENDMENT PREMISES PLAN

[schematic diagram of premises plan]

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EXHIBIT A, FIRST AMENDMENT, SHEET 2

EXPANSION AREA

[schematic diagram of expansion area]

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EXHIBIT B-1, FIRST AMENDMENT

PLANS AND CONSTRUCTION SCHEDULE

Permit/GMP Plans (i.e., a set of plans sufficiently detailed to permit Landlord to apply for all permits and approvals necessary for the performance of Landlord’s Work and to permit Landlord to obtain guaranteed maximum price bid(s) for the cost of Landlord’s Work). These plans will also be used to generate the list of, and associated costs for, long lead time items.	September 3, 2004
Construction Drawings (i.e., full construction drawings for the performance of Landlord’s Work, based on the approved GMP Plans)	September 17, 2004
Long Lead Items Release Date	September 17, 2004
Authorization to Proceed Date	September 28, 2004

19

The Prudential Tower
Prudential Center
Boston, Massachusetts 02199
(the “Building”)

SECOND AMENDMENT

Execution Date: September 14, 2004

	LANDLORD:	BP Prucenter Acquisition LLC
	TENANT:	The First Marblehead Corporation, a Delawarecorporation
	EXISTING
	PREMISES:
	Original Premises:
		The entirety of the thirty-fourth (34th) floor of the Building, containing 26,296 rentable square feet, in accordance with the floor plan annexed to the Lease as Exhibit D
	First Amendment Premises:
		The entirety of the twenty-ninth (29th) floor of the Building, containing 25,676 rentable square feet, substantially as shown on Exhibit A, First Amendment, Sheet 1 attached to the First Amendment
ORIGINAL	DATE OF
LEASE	LEASE:	September 5, 2003
DATA
	COMMENCEMENT
	DATE OF EXISTING
	PREMISES:	December 1, 2003
	RENT
	COMMENCEMENT
	DATE OF EXISTING
	PREMISES:	April 1, 2004
	TERMINATION
	DATE:	March 31, 2014

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PREVIOUS
LEASE
AMENDMENTS:	First Amendment dated September          , 2004 (the “First Amendment”)
TEMPORARY
PREMISES:	An area on the twenty-fourth (24th) floor of the Building, containing 5,549 rentable square feet, substantially as shown on Exhibit A, Second Amendment, a copy of which is attached hereto and incorporated by reference herein

WHEREAS, prior to the Commencement Date in respect of the First Amendment Premises, Tenant desires to lease other premises in the Building, to wit, the Temporary Premises, on a temporary basis;

NOW THEREFORE, the above-described lease, as previously amended (the “Lease”), is hereby further amended as follows:

1.DEMISE OF THE TEMPORARY PREMISES

Landlord hereby hires and leases to Tenant, and Tenant hires and takes from Landlord, the Temporary Premises. Said demise of the Temporary Premises shall be upon all of the same terms and conditions of the Lease, except:

A.The Commencement Date in respect of the Temporary Premises shall be September 20, 2004.

B.The Rent Commencement Date in respect of the Temporary Premises shall be September 20, 2004.

C.The termination date (“Temporary Premises Termination Date”) in respect of the Temporary Premises shall be the earlier of: (x) the day after the Commencement Date in respect of the First Amendment Premises, as defined in Paragraph 1 of the First Amendment Premises Lease, or (y) if the First Amendment is terminated pursuant to Paragraph 13 of the First Amendment, the date that the First Amendment is so terminated; provided however, that if the Temporary Premises Termination Date has not already occurred and if Tenant exercises its right to terminate the Term of the Lease in respect of the First Amendment Premises based upon the failure of the Commencement Date in respect of the First Amendment Premises to occur on or before January 14, 2006, as set forth in Section 2A of the First Amendment and in Section 4.2(A) of the Lease, then the Temporary Premises Termination Date shall be the effective termination date of the Term of the Lease in respect of the First Amendment Premises.

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D.The Annual Fixed Rent in respect of the Temporary Premises shall be Eighty-Eight Thousand Seven Hundred Eighty-Four and 04/100 ($88,784.04) Dollars (i.e., a monthly payment of 7,398.67).

E.Tenant shall have no obligation to pay Tax Excess, Operating Cost Excess or electricity in respect of the Temporary Premises.

F.Tenant shall not be entitled to any signage in respect of the Temporary Premises.

2.CONDITION OF TEMPORARY PREMISES

Tenant shall lease the Temporary Premises “as-is”, in the condition in which the Temporary Premises are in as of the Commencement Date in respect of the Temporary Premises, without any obligation on the part of Landlord to prepare or construct the Temporary Premises for Tenant’s occupancy, without any obligation on the part of Landlord to provide any allowance or contribution to Tenant on account of the Temporary Premises, and without any representation by Landlord as to the condition of the Temporary Premises or the Building.

3.INAPPLICABLE LEASE PROVISIONS

Sections 2.3, 3.2, 5.2, 7.4, 7.5, 16.29, 16.30, 16.31 of the Lease, Articles IV, VI, and X of the Lease, Exhibits B-1, F and H to the Lease and the entirety of the First Amendment shall have no applicability in respect of the Temporary Premises.

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4.As hereby amended, the Lease is ratified, confirmed and approved in allrespects.

EXECUTED under seal as of the date first above-written.

LANDLORD:					TENANT:
BP PRUCENTER ACQUISITION LLC					THE FIRST MARBLEHEAD
By:	Boston Properties Limited Partnership,				CORPORATION
	a Delaware limited partnership
	Its:		Manager		By:	/s/ Donald R. Peck
					Name:	Donald R. Peck
	By:		Boston Properties, Inc., a		Title:	EVP & CFO
			Delaware corporation
			Its:	General Partner
			By:	/s/ David C. Provost
			Name:	David C. Provost
			Its:	Senior Vice President
				Hereunto Duly Authorized
Date Signed:		9/14/04			Date Signed:		9/10/2004

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EXHIBIT A, SECOND AMENDMENT

TEMPORARY PREMISES

[schematic diagram of temporary premises]

5

The Prudential Tower
Prudential Center
Boston, Massachusetts 02199
(the “Building”)

THIRD AMENDMENT

Execution Date: December 1, 2005

	Landlord:	BP Prucenter Acquisition LLC
	Tenant:	The First Marblehead Corporation, a Delaware corporation
	Existing Premises:	Original Premises:
		The entirety of the thirty-fourth (34th) floor of the Building, containing 26,296 rentable square feet, in accordance with the floor plan annexed to the Lease as Exhibit D.
		First Amendment Premises:
		The entirety of the twenty-ninth (29th) floor of the Building, containing 25,676 rentable square feet, substantially as shown on Exhibit A, First Amendment, Sheet 1 attached to the First Amendment.
Original Lease Data:
	Date of Lease:	September 5, 2003
	Commencement Date of Existing Premises:	December 1, 2003
	Rent Commencement Date of Existing Premises:	April 1, 2004
	Termination Date:	March 31, 2014
	Previous Lease Amendments:	First Amendment dated October 4, 2004 (the “First Amendment”)
		Second Amendment dated September 14, 2004 (the “Second Amendment”)

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Third Amendment Premises: An area on the lower level of theBuilding, containing 4,986 rentable squarefeet, substantially as shown on ExhibitA attached hereto and incorporated herein.

WHEREAS, Tenant desires to lease other premises in the Building, to wit, the Third Amendment Premises, on the terms set forth herein;

NOW THEREFORE, the above-described lease, as previously amended (the “Lease”), is herby further amended as follows:

1.Demise of the Third Amendment Premises

Landlord hereby demises and leases to Tenant, and Tenant hires and takes from Landlord, the Third Amendment Premises. Said demise of the Third Amendment Premises shall be upon all of the same terms and conditions of the Lease, except:

A.The Commencement Date in respect of the Third Amendment Premises shall be the Execution Date of this Third Amendment (the “Third Amendment Premises Commencement Date”).

B.The Rent Commencement Date in respect of the Third Amendment Premises shall be the date which is ninety (90) days subsequent to the Third Amendment Premises Commencement Date (the “Third Amendment Premises Rent Commencement Date”).

C.The termination date in respect of the Third Amendment Premises shall be the same as for the Original Premises.

D.(i)The Annual Fixed Rent for the Third Amendment Premises for the period beginning on the Third Amendment Premises Rent Commencement Date and ending on the last day of the thirty-sixth (36th) calendar month following the Third Amendment Premises Rent Commencement Date shall be Seventy-Four Thousand Seven Hundred Ninety and 00/100 Dollars ($74,790.00) (i.e., a monthly payment of $6,232.50)

(ii)Annual Fixed Rent for the Third Amendment Premises for the periodbeginning on the first day of the month next following the thirty-seventh (37th) anniversary of the Third Amendment Premises Rent Commencement Date (“First Adjustment Date”) and ending on the last day of the seventy-second (72nd) calendar month following the Third Additional Premises Rent Commencement Date shall be the Annual Fixed Rent set forth in Section 1D(i) hereinabove (being Seventy-Four Thousand Seven Hundred Ninety and 00/100 Dollars ($74,790.00)) adjusted to reflect increases in the cost of living in the following manner:

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FIRST, there shall be computed any percentage increase which has occurred in the “Price Index” (as defined hereinbelow) between the Price Index in effect on the First Adjustment Date and the Price Index in effect on the Third Amendment Premises Rent Commencement Date,

SECOND, the amount obtained in FIRST above shall be multiplied by said Annual Fixed Rent payable pursuant to Section 1D(i) hereinabove, and

THIRD, the product determined pursuant to SECOND above shall beadded to said Annual Fixed Rent payable pursuant to Section 1D(i) hereinabove.

(iii)The Annual Fixed Rent for the Third Amendment Premises for the period beginning on the first day of the month next following the seventy-third (73rd) anniversary of the Third Amendment Premises Rent Commencement Date (“Second Adjustment Date”) through the remainder of the Term shall be the Annual Fixed Rent determined in Section 1D(ii) hereinabove above adjusted to reflect increases in the cost of living in the following manner:

FIRST, there shall be computed any percentage increase which has occurred in the “Price Index” between the Price Index in effect on theSecond Adjustment Date and the Price Index in effect on the First Adjustment Date, and

SECOND, the amount obtained in FIRST above shall be multiplied by said Annual Fixed Rent determined pursuant to Section 1D(ii) hereinabove, and

THIRD, the product determined pursuant to SECOND above shall beadded to said Annual Fixed Rent determined pursuant to Section 1D(ii) hereinabove.

(iv)The Annual Fixed Rent for the Third Amendment Premises for any extension period, if exercised, shall be as provided in Section 3.2.

(v)The term “Price Index” as used in this Third Amendment means the Consumer Price Index for Urban Wage Earners and Clerical Workers, (All Items) for the Boston Metropolitan Statistical Area on the basis of 1982-1984 = 100) published by the Bureau of Labor Statistics, U.S. Department of Labor. If the Bureau of Labor Statistics should cease to publish such an Index in its present form and calculated on the present basis, a comparable index or an index reflecting changes in the cost of living determined in a similar manner shall be reasonably chosen by Landlord.

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The Price Index as of any date relative to the application of this Section shall be that published by the Bureau of Labor Statistics as of such date, if computed for such date, or otherwise, for the most recent date immediately preceding the date as of which the application of this provision is to be made. Since a Price Index relevant to the application of this provision may not be available as of the date on which a determination of the applicability of this Section is to be made, the most current Price Index then available shall be used on a temporary basis for such determination and a final calculation shall be determined and necessary adjustments between Landlord and Tenant shall be made retroactively back to thedate of such temporary calculation within a reasonable time after required computations readily can be completed using the relevant Price Index.

E.Tenant shall have no obligation to pay Tax Excess or Operating Cost Excess in respect of the Third Amendment Premises.

F.Tenant agrees to pay to Landlord, as Additional Rent, electricity payments for the Third Additional Premises as provided in Exhibit C attached hereto and made a part hereof.

G.Tenant shall not be entitled to any signage in respect of the Third Amendment Premises.

H.Tenant’s Extension Options as set forth in Section 3.2 of the Lease, (as amended by Section 1 of the First Amendment) shall apply to the Third Amendment Premises. The parties hereby acknowledge that Tenant’s Extension Options may be exercised with respect to (i) all of the Existing Premises, the First Amendment Premises and the Third Amendment Premises, (ii) only the Existing Premises, (iii) only the First Amendment Premises, (iv) only the Third Amendment Premises or (v) any combination of (ii), (iii) and (iv) above. If Tenant exercises its option to extend the Term of the Lease for an Extended Term pursuant to Section 3.2 of the Lease, then the Term of the Lease shall be extended with respect to premises set forth in Tenant’s notice. In the event Tenant exercises said option with respect to only one or two of the premises, then the Term of the Lease shall expire with respect to the other premises on the then Termination Date.

I.(i)The Third Amendment Premises shall be delivered to Tenant in “as is” condition and Landlord shall have no obligation to perform any additions, alterations, improvements or demolitions to the Third Amendment Premises.

(ii)Landlord acknowledges that as of the date of this Third Amendment, there is heating, ventilating and air conditioning equipment located on the northwest corner of the roof of the Building which is dedicated to the Liebert units located within the Third Amendment Premises (such equipment along with any ducts, conduits and other items appurtenant thereto are hereinafter referred to as the “Third Amendment Premises HVAC Equipment”). In consideration for the terms set forth in this Third Amendment, Landlord agrees to allow Tenant to utilize

4

such Third Amendment Premises HVAC Equipment during the Lease Term respecting the Third Amendment Premises and Tenant agrees to maintain the same in good order and condition reasonable wear and tear excepted. Landlord makes no representation as to the fitness or suitability of such Third Amendment Premises HVAC Equipment for Tenant’s purposes. Tenant may not remove theThird Amendment Premises HVAC Equipment from the Third Amendment Premises or the roof of the Building without Landlord’s prior consent, however, Landlord shall be reasonable in providing its consent for Tenant, at its sole cost, to replace such equipment with similar equipment if necessary.. Tenant agrees, atits expense, to maintain and repair the Third Amendment Premises HVAC Equipment in good order and condition reasonable wear and tear and damage byfire or other casualty or by condemnation excepted. Landlord shall have no obligation for the maintenance, repair or replacement of any such Third Amendment Premises HVAC Equipment. Tenant shall have reasonable access to the roof in order to repair and maintain such Third Amendment Premises HVACEquipment upon notice to Landlord and in accordance with the roof access procedures for the Building as established by Landlord. Upon the expiration of earlier termination of the Lease Term respecting the Third Amendment Premises,Tenant shall yield up such Third Amendment Premises HVAC Equipment to Landlord in the same condition as delivered to Tenant on the Third Amendment Premises Commencement Date, reasonable wear and tear and damage by fire or other casualty or by condemnation excepted.

J.Use - the Permitted Use for the Third Amendment Premises shall be as a data center in conjunction with Tenant’s Existing Premises.

K.(i)Landlord shall have no obligation to provide any cleaning or other maintenance services to the Third Amendment Premises; provided, however, nothing contained in this Third Amendment shall be deemed to eliminate, reduce or otherwise alter Landlord’s obligations under the Lease to maintain the Building and the Building systems. Tenant shall be responsible, at its expense, to maintain the Third Amendment Premises along with the “Generator Room” and “Fuel Storage Room” as defined in Section 3A hereinbelow.

(ii)Further, the provisions of the Lease shall govern any additions, alterationsor demolitions in the Third Amendment Premises, Generator Room or Fuel Storage Room. Tenant shall submit to Landlord for its review and approval in accordance with the provisions of Article IX of the Lease, the plans andspecifications for any additions, alterations or demolitions Tenant desires to perform in the Third Amendment Premises and Landlord shall review and/or respond to such submittal as set forth in such Article IX.

L.In the event that any of the provisions of the Lease are inconsistent with this Third Amendment or the state of facts contemplated hereby, the provisions of this Third Amendment shall control.

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2.Brokerage

A.Tenant warrants and represents that Tenant has not dealt with any broker in connection with the consummation of this Third Amendment other than the Codman Company, (the “Broker”), and in the event any claim is made against the Landlord relative to Tenant’s dealings with brokers other than the Broker, Tenant shall defend the claim against Landlord with counsel of Tenant’s selection, subject to Landlord’s reasonable approval, and save harmless and indemnify Landlord on account of loss, cost or damage which may arise by reason of such claim.

B.Landlord warrants and represents that Landlord has not dealt with any broker in connection with the consummation of this Third Amendment other that the Broker, and in the event any claim is made against the Tenant relative to Landlord’s dealings with brokers other than the Broker or any claim made against Tenant by the Broker for Landlord’s failure to pay the brokerage commission due Broker in connection with this Third Amendment, Landlord shall defend the claim against Tenant with counsel of Landlord’s selection, subject to Tenant’s reasonable approval, and save harmless and indemnify Tenant on account of loss, cost or damage which may arise by reason of such claim.

C.Landlord agrees that it shall be solely responsible for the payment of brokerage commissions to the Broker.

3.Generator Equipment

A.Landlord hereby represents to Tenant that the equipment listed on Exhibit B attached hereto and incorporated herein (collectively the “Generator Equipment”) exclusively services the Third Amendment Premises. The two (2) generators listed on Exhibit B (“Generators”) are located in a room located on the loading dock servicing the Building (the “Generator Room”) and the fuel tanks for the generators are located in the fuel storage room located in the Yellow Level of the Garage (the “Fuel Storage Room”). Tenant shall have reasonable access to the Generator Room and the Fuel Storage Room twenty-four (24) hours a day, seven (7) days a week upon reasonable prior notice to Landlord. Tenant acknowledges that its access to and use of the Generator Room and Fuel Storage Room are not exclusive, however, the area within the Generator Room in which the Generators are located shall be exclusive to Tenant (the Generators shall be separated from other generators in the Generator Room by a chain link fence).

B.In consideration for the terms set forth herein, Landlord agrees to allow Tenant to utilize such Generator Equipment during the Lease Term respecting the Third Amendment Premises, however, Landlord makes no representation as to the fitness or suitability of the Generator Equipment for Tenant’s purposes and Tenant agrees that its use of the same shall be at Tenant’s sole risk. Tenant may not remove the Generator Equipment from the Third Amendment Premises, the

6

Generator Room or the Fuel Storage Room, however, Landlord shall notunreasonably withhold its consent for Tenant to replace, at its sole cost, the Generators with similar equipment in the event such replacement is necessary. Tenant shall, at its expense, maintain the Generator Equipment in good order and condition reasonable wear and tear and damage by fire or other casualty or by condemnation excepted (which maintenance shall include, at a minimum, two maintenance inspections a year, one of which shall be a major inspection with an oil change). Landlord shall have no obligation whatsoever for the maintenance, repair or replacement of such Generator Equipment. Further, for purposes of the Tenant’s indemnity provisions contained in Section 13.1 of the Lease and Tenant’s requirements to maintain insurance pursuant to Article XIII of the Lease, the Generator Room and the Fuel Storage Room shall be deemed to be part of the Premises. Upon the expiration of earlier termination of the Term, Tenant shall yield up such Generator Equipment to Landlord in the same condition as delivered to Tenant on the Third Amendment Premises Commencement Date, reasonable wear and tear and damage by fire or other casualty or by condemnation excepted.

C.(i)In consideration for the use of the Generator Equipment, Tenant shall payto Landlord, as Additional Rent, commencing on the Third Additional PremisesRent Commencement Date and continuing throughout the Term, Thirty-Six Thousand 00/100 Dollars ($36,000.00) per year (“Generator Fee”) payable in equal monthly installments at the time and in the manner specified in the Lease respecting payments for Annual Fixed Rent.

(ii)Notwithstanding the foregoing, in the event that (i) Tenant and Landlord execute a letter of intent for Tenant to lease two full floors of additional office space in the Building (“Additional Two Floors of Space”) prior to December 31, 2005, and (ii) Landlord and Tenant enter into a mutually acceptable lease for the Additional Two Floors of Space prior to February 28, 2006, Tenant’s payments for the Generator Fee shall be eliminated for the period commencing on the date that payments for Annual Fixed Rent commence for the Additional Two Floors of Space throughout the remainder of the Original Term.

(iii)Notwithstanding the foregoing, in the event that (i) Tenant and Landlord execute a letter of intent for Tenant to lease one full floor of additional office space in the Building (“Additional Floor of Space”) prior to December 31, 2005, and (ii) Landlord and Tenant enter into a mutually acceptable lease for the Additional Floor of Space prior to February 28, 2006, Tenant’s payments for the Generator Fee shall be reduced to Eighteen Thousand 00/100 Dollars ($18,000.00) per year commencing on the date that payments for Annual Fixed Rent commence for the Additional Floor of Space throughout the remainder of the Original Term.

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4.Inapplicable Lease Provisions

Sections 5.2, 7.4, 7.5, 16.5, 16.30, 16.31 of the Lease, Article IV, VI, and X of the Lease, Exhibits B-1, F and H to the Lease and the entirety of the First Amendment shall have no applicability in respect of this Third Amendment.

5.Invalid Lease Provisions

Section 9(B) and 9(C) of the First Amendment is hereby deleted and Tenant shall have no further rights thereunder.

7.As hereby amended, the Lease is ratified, confirmed and approved in all respects.

EXECUTED under seal as of the date first above-written.

LANDLORD:					TENANT:
BP PRUCENTER ACQUISITION LLC					THE FIRST MARBLEHEAD CORPORATION
By:	Boston Properties Limited Partnership,				By:	/s/ Jack L. Kopnisky
	a Delaware limited partnership,				Name:	Jack L. Kopnisky
	its manager				Title:	CEO & President
	By:	Boston Properties, Inc.,
		a Delaware corporation
		its general partner
		By:		/s/ David C. Provost
		Name:		David C. Provost
		Title:		Senior Vice President
				Boston Properties
Date Signed:			11/28/05		Date Signed:		11/21/05

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EXHIBIT A, THIRD AMENDMENT

THIRD AMENDMENT PREMISES

[schematic diagram of premises]

9

EXHIBIT B, THIRD AMENDMENT

GENERATOR EQUIPMENT

The following is a physical description of the two generators:

Make: Caterpillar

KVA: 375

KW: 300

HZ: 60

Volts: 480

Phase: 3

Year: 1997

Engine

·Model #: 3406

·Serial # - 4ZRO3365 & 4ZRO3366

Generator

·Model # - SR4B

·Serial # - 9CRO1143 & 9CRO1142

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EXHIBIT C

PRUDENTIAL CENTER
PROCEDURE FOR ADJUSTMENT OF COSTS OF ELECTRIC POWER USAGE BY
TENANTS

This memo outlines the procedure for adjusting charges for electric power to certain office tenants of the Building.

1.Main electric service will be provided by the local utility company to a central utility metering center. All charges by the utility will be read from these meters and billed to and paid by Landlord at rates established by or negotiated with the utility company.

2.Landlord represents to Tenant that there is a separate meter (known as a “check meter”) that measures only (i) the electricity consumed by Tenant within the Third Amendment Premises and (ii) the electricity consumed by the Third Amendment Premises HVAC Equipment.

3.Landlord will cause the check meter to be read monthly by its employees. For this purpose, the Landlord shall, as far as possible, read the check meter to determine usage for periods that include one or more entire periods used by the utility company for the reading of the meters located within the central utility metering center.

4.Tenant’s share of electricity shall be determined by Landlord on the following basis:

a.The cost of the total amount of electricity supplied for usage by tenants during the period being measured shall be determined by dividing the total cost of electricity through the central utility metering center as invoiced by the utility company for the same period by the total amount of kilowatt hour usage as measured by the meters located within the central utility metering center (herein called “Cost Per Kilowatt Hour”).

b.Tenant’s allocable share of electricity costs for the period (“Tenant Electricity”) shall be determined by multiplying the Cost Per Kilowatt Hour by the number of kilowatt hours utilized by Tenant for such period as indicated by the check meter for Third Amendment Premises.

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c.Tenant’s obligation to pay the cost of Tenant Electricity, shallcommence on the Third Amendment Premises Commencement Date.

5.a.Tenant shall pay to Landlord the cost of Tenant Electricity for the periodwithin thirty (30) days after billing therefor.

b.Tenant agrees that it will not make any material alteration or materialaddition to the electrical equipment and/or appliances in the Premises without the prior written consent of Landlord in each instance first obtained, which consent will not be unreasonably withheld, and will promptly advise Landlord of anyother alteration or addition to such electrical equipment and/or appliances.

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EX-10.28

Exhibit 10.28

TENANT: THE FIRST MARBLEHEAD CORPORATION

LEASE OF

WELLINGTON BUSINESS PARK

ONE CABOT ROAD, MEDFORD, MASSACHUSETTS

TABLE OF CONTENTS

	PAGE
ARTICLE I BASIC PROVISIONS	1
1.1   INTRODUCTION	1
1.2   BASIC DATA	1
1.3   ADDITIONAL DEFINITIONS	2
ARTICLE II PREMISES AND APPURTENANT RIGHTS	3
2.1   LEASE OF PREMISES	3
2.2   APPURTENANT RIGHTS AND RESERVATIONS	3
2.3   OPTION FOR ADDITIONAL PARKING	5
2.4   OPTION TO EXTEND	6
2.5   EXPANSION OPTION	7
2.6   RIGHT OF FIRST OFFER	8
2.7   STORAGE SPACE	8
ARTICLE III BASIC RENT	9
3.1   PAYMENT	9
ARTICLE IV COMMENCEMENT DATE AND CONDITION	10
4.1   COMMENCEMENT DATE	10
4.2   PREPARATION OF THE PREMISES	10
4.3   CONDITION; LANDLORD’S PERFORMANCE	12
4.4   TENANT’S DELAYS	12
ARTICLE V USE OF PREMISES	13
5.1   PERMITTED USE	13
5.2   INSTALLATIONS AND ALTERATIONS BY TENANT	14
5.3   HAZARDOUS MATERIALS	15
ARTICLE VI ASSIGNMENT AND SUBLETTING	16
6.1   PROHIBITION	16
6.2   EXCESS PAYMENTS	17
6.3   ACCEPTANCE OF RENT	18
6.4   ADDITIONAL REQUIREMENTS	18
ARTICLE VII RESPONSIBILITY FOR REPAIRS AND CONDITION OF PREMISES; SERVICES TO BE FURNISHED BY LANDLORD	18
7.1   LANDLORD REPAIRS	18
7.2   TENANT’S AGREEMENT	19
7.3   FLOOR LOAD—HEAVY MACHINERY	19
7.4   BUILDING SERVICES	20
7.5   ELECTRICITY	21
ARTICLE VIII REAL ESTATE TAXES	23
8.1   PAYMENTS ON ACCOUNT OF REAL ESTATE TAXES	23
8.2   ABATEMENT	24
8.3   ALTERNATE TAXES	24
ARTICLE IX OPERATING EXPENSES	25
9.1   DEFINITIONS	25
9.2   TENANT’S PAYMENTS	25
ARTICLE X INDEMNITY AND PUBLIC LIABILITY INSURANCE	26
10.1   TENANT’S INDEMNITY	26
10.2   LANDLORD’S INDEMNITY	27
10.3   GENERAL LIABILITY INSURANCE	27
10.4   TENANT’S RISK AND PROPERTY DAMAGE INSURANCE	27
10.5   INJURY CAUSED BY THIRD PARTIES	27
10.6   CERTIFICATES OF INSURANCE	27
ARTICLE XI LANDLORD’S ACCESS TO PREMISES	28
11.1   LANDLORD’S RIGHTS	28

ARTICLE XII FIRE, EMINENT DOMAIN, ETC.	28
12.1   ABATEMENT OF RENT	28
12.2   LANDLORD’S RIGHT OF TERMINATION	28
12.3   RESTORATION	29
12.4   AWARD	29
ARTICLE XIII DEFAULT	29
13.1   TENANT’S DEFAULT	29
13.2   LANDLORD’S DEFAULT	33
ARTICLE XIV MISCELLANEOUS PROVISIONS	33
14.1   EXTRA HAZARDOUS USE	33
14.2   WAIVER	34
14.3   COVENANT OF QUIET ENJOYMENT	34
14.4   LANDLORD’S LIABILITY	34
14.5   NOTICE TO MORTGAGEE OR GROUND LESSOR	35
14.6   ASSIGNMENT OF RENTS AND TRANSFER OF TITLE	35
14.7   RULES AND REGULATIONS	36
14.8   ADDITIONAL CHARGES	36
14.9   INVALIDITY OF PARTICULAR PROVISIONS	36
14.10   PROVISIONS BINDING, ETC.	36
14.11   RECORDING	36
14.12   NOTICES	36
14.13   WHEN LEASE BECOMES BINDING	36
14.14   PARAGRAPH HEADINGS AND INTERPRETATION OF SECTIONS	37
14.15   RIGHTS OF MORTGAGEE OR GROUND LESSOR	37
14.16   ESTOPPEL CERTIFICATE	37
14.17   INTENTIONALLY OMITTED	38
14.18   REMEDYING DEFAULTS	38
14.19   HOLDING OVER	38
14.20   WAIVER OF SUBROGATION	38
14.21   SURRENDER OF PREMISES	38
14.22   INTENTIONALLY OMITTED	39
14.23   BROKERAGE	39
14.24   GOVERNING LAW	39
14.25   BLINDS AND DRAPES	39

LEASE

THIS INSTRUMENT IS A LEASE, dated as of August 13, 2004, in which the Landlord and the Tenant are the parties hereinafter named, and which relates to space in the building (the “Building”) located at One Cabot Road, Medford, Massachusetts. The parties to this instrument hereby agree with each other as follows:

ARTICLE I

BASIC PROVISIONS

1.1  INTRODUCTION.  The following set forth basic data and, where appropriate, constitute definitions of the terms hereinafter listed.

1.2  BASIC DATA.

Landlord: Cabot Road Partners, LLC, a Delaware limited liability company.

Landlord’s Original Address: c/o Berkeley Investments, Inc.,
121 High Street,
Boston, Massachusetts 02110

Tenant: The First Marblehead Corporation

Tenant’s Original Address: The Prudential Tower
800 Boylston Street, 34th Floor
Boston, MA 02199-8157

Guarantor: None

Basic Rent: The Basic Rent is as follows:

Rental Period	Annual Basic Rent		Monthly Payment
Months 1-9	$	0.00	$	0.00
Months 10-24	$	2,593,424.00	$	216,118.66
Months 25-36	$	2,661,672.00	$	221,806.00
Months 37-84	$	2,934,664.00	$	244,555.33

Premises: The entire second floor and a portion of the third floor of the Building as shown on Exhibit FP annexed hereto, subject to the provisions of Section 2.1 regarding the Third Floor Space (as defined in Section 2.4).

Premises Rentable Area: Agreed to be 136,496 rentable square feet.

Permitted Uses: General office use, call center use, data center use, and other uses incidental to the foregoing uses (including, without limitation, ancillary office kitchen/pantry use), but specifically excluding medical or dental offices, utility company offices, employment agencies (other than executive or professional search firms) and governmental or quasi-governmental offices.

Escalation Factor: .442, as computed in accordance with the Escalation Factor Computation.

Initial Term: Seven (7) years commencing on the Commencement Date and expiring at the close of the day immediately preceding the seventh anniversary of the Commencement Date, except that if the Commencement Date shall be other than the first day of a calendar month, the expiration of the Initial Term shall be at the close of the day on the last day of the calendar month in which such anniversary shall fall.

Base Operating Expenses: Operating Expenses for the calendar year ending December 31, 2005.

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Base Taxes: Taxes for the calendar year ending December 31, 2005, as the same may be reduced by the proportional amount of any abatement net of expenses applicable to any tax fiscal year included within the aforesaid calendar year. Landlord represents that, as of the date of this Lease, the Property constitutes a single tax lot.

Security Deposit: None

Broker: The Codman Company & GVA Thompson Doyle Hennessey & Everest

1.3  ADDITIONAL DEFINITIONS.

Agent: Berkeley Management, Inc. or such other person or entity from time to time designated by Landlord.

Bankruptcy Code: As defined in Section 13.1.

Building Rentable Area: 308,496 rentable square feet.

Business Days: All days except Saturday, Sunday, New Year’s Day, Martin Luther King’s Birthday, Presidents’ Day, Patriot’s Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans’ Day, Thanksgiving Day, Christmas Day (and the following day when any such day occurs on Sunday or prior day if Saturday) and such other days that tenants occupying at least 50% of Building Rentable Area recognize as holidays for their general office staff.

Commencement Date: As defined in Section 4.1.

Default of Tenant: As defined in Section 13.1.

Environmental Condition: Any disposal, release or threat of release of Hazardous Materials on, from or about the Building or the Property or storage of Hazardous Materials on, from or about the Building or the Property.

Environmental Laws: Any federal, state and/or local statute, ordinance, bylaw, code, rule and/or regulation now or hereafter enacted, pertaining to any aspect of the environment or human health, including, without limitation, Chapter 21C, Chapter 21D, and Chapter 21E of the General Laws of Massachusetts and the regulations promulgated by the Massachusetts Department of Environmental Protection, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Toxic Substances Control Act, 15 U.S.C. §2061 et seq., the Federal Clean Water Act, 33 U.S.C. §1251, and the Federal Clean Air Act, 42 U.S.C. §7401 et seq.

Escalation Charges: The amounts prescribed in Sections 8.1 and 9.2.

Escalation Factor Computation: Premises Rentable Area divided by Building Rentable Area.

Event of Bankruptcy: As defined in Section 13.1.

Hazardous Materials: Shall mean each and every element, compound, chemical mixture, contaminant, pollutant, material, waste or other substance which is defined, determined or identified as hazardous or toxic under any Environmental Law, including, without limitation, any “oil,” “hazardous material,” “hazardous waste,” “hazardous substance” or “chemical substance or mixture”, as the foregoing terms (in quotations) are defined in any Environmental Laws.

Initial Public Liability Insurance: $5,000,000 per occurrence (combined single limit) for property damage, bodily injury or death.

Land: The parcel of land upon which the Building and the related sidewalks and parking facilities are constructed, as shown on the site plan attached hereto and made a part hereof as Exhibit PP. If Landlord shall elect to construct another building on the Land, then the definition of Land hereunder

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shall exclude the property on which such building and the improvements related to such building are located.

Operating Expenses: As determined in accordance with Section 9.1.

Operating Year: As defined in Section 9.1.

Premises Usable Area: The carpetable area contained within the Premises.

Property: The Building and the Land.

Rent Commencement Date: The date that is nine months after the Commencement Date.

Scheduled Commencement Date: December 1, 2004.

Tax Year: As defined in Section 8.1.

Taxes: As determined in accordance with Section 8.1.

Tenant’s Plans: As defined in Section 4.2.

Tenant’s Removable Property: As defined in Section 5.2.

Term of this Lease: The Initial Term and any extension thereof in accordance with the provisions hereof.

ARTICLE II

PREMISES AND APPURTENANT RIGHTS

2.1  LEASE OF PREMISES.  Landlord hereby demises and leases to Tenant for the Term of this Lease and upon the terms and conditions hereinafter set forth, and Tenant hereby leases from Landlord, the Premises. Notwithstanding the foregoing, Tenant acknowledges that the portion of the Premises on the third floor (the “Third Floor Space”) is currently leased to a third party pursuant to a separate lease. It shall be a condition precedent to the occurrence of the Commencement Date of this Lease and to the parties’ respective obligations under this Lease that (a) Landlord and such tenant of the Third Floor Space enter into an agreement satisfactory to Landlord to terminate such lease, and (b) such tenant has surrendered and vacated the Third Floor Space, except for certain items of movable personal property that will not affect or delay Landlord’s Work in the Premises. If such condition precedent has not occurred on or before the date that is twenty (20) days after the date of this Lease, either Landlord or Tenant shall have the right to terminate this Lease by written notice to the other given within five (5) Business Days after the expiration of such twenty (20) day period.

2.2  APPURTENANT RIGHTS AND RESERVATIONS.

(a)Tenant shall have, as appurtenant to the Premises, the non-exclusive right to use, and permit its invitees to use, in common with others (i) public or common lobbies, hallways, stairways and elevators and common walkways necessary for access to the Building, and if the portion of the Premises on any floor includes less than the entire floor, the common toilets, corridors and elevator lobby on such floor, and (ii) the access roads, driveways, parking areas, loading areas, pedestrian sidewalks, landscaped areas, trash enclosures, recreation areas and other areas or facilities, if any, which are located in or on the Land and designated by Landlord from time to time for the non-exclusive use of tenants and other occupants of the Building (the areas described in clauses (i) and (ii) are hereinafter collectively referred to as the “Common Areas”); but such rights shall always be subject to reasonable rules and regulations from time to time established by Landlord pursuant to Section 14.7 and to the right of Landlord to designate and change from time to time areas and facilities so to be used, provided that such changes shall not unreasonably, adversely affect Tenant’s access to or use and occupancy of the Premises and shall not result in a permanent reduction in the number of elevators serving the Premises.

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(b)Excepted and excluded from the Premises are the ceiling, floor, perimeter walls and exterior windows (except the inner surfaces of each thereof), and any space in the Premises used for shafts, stacks, pipes, conduits, fan rooms, ducts, electric or other utilities, sinks or other Building facilities, but the entry doors to the Premises are a part thereof. Landlord shall have the right to place in the Premises (but in such manner as to reduce to a minimum interference with Tenant’s use of the Premises and so as to require only a de minimus reduction in the Premises Usable Area) interior storm windows, sun control devices, and utility lines, equipment, stacks, pipes, conduits, ducts and the like. Tenant shall have the right, subject to the other terms and conditions of this Lease, including, without limitation, the provisions of Section 5.2, to place pipes, wires and other typical office infrastructure serving the Premises above the ceiling. In the event that Tenant shall install any hung ceilings or walls in the Premises, Tenant shall install and maintain, as Landlord may require, proper access panels therein to afford access to any facilities above the ceiling or within or behind the walls.

(c)As of the Execution Date of this Lease, there are approximately 3.0 parking spaces in the parking areas designated for use by the tenants of the Building for every 1,000 square feet of Building Rentable Area. Tenant’s Share of such parking spaces shall equal 409 spaces, of which, 81 spaces shall be available in the garage on a non-exclusive, unreserved basis. Nothing contained in the Lease shall prohibit or otherwise restrict Landlord from changing from time to time, without notice to Tenant, the location, layout or type of such parking areas, provided that Landlord shall not reduce the total number of parking spaces available for Tenants’ use. Subject to reasonable rules from time to time made by Landlord of which Tenant is given notice, Tenant shall have the right, in common with all other tenants of the Building, to use such parking areas, without charge, on a first-come, first-served basis. Notwithstanding the foregoing, if, after the date of this Lease, Landlord shall reserve any parking spaces for any other tenant of the Building, including pursuant to an amendment to the existing lease for a tenant in possession as of the date of this Lease, then Landlord shall reserve for Tenant the number of parking spaces that is equal to, on a proportionate basis, to the number of parking spaces reserved for such other tenant, and such reserved spaces shall constitute part of Tenant’s 409 spaces; for illustration purposes, if Landlord gives to a tenant 4 reserved parking spaces, and such reserved parking spaces constitute ten percent (10%) of the parking spaces allocable to the tenant under its lease, then Landlord shall give to Tenant 41 reserved parking spaces. In addition, Landlord shall maintain a sticker system, or other similar program selected by Landlord in its sole discretion, in order to restrict the use of the parking areas of the Property by authorized vehicles only. As part of any such system, Landlord shall use reasonable efforts to make sure unauthorized vehicles are not using the parking areas.

(d)So long as the Building is at least seventy-five percent (75%) occupied, Landlord agrees to operate a fitness center in the Building (the “Fitness Center”) in accordance with the provisions of this Section 2.2(d). Tenant and Tenant’s employees and invitees shall have the right to use the Fitness Center, subject to Landlord’s right to change from time to time the type and location of the Fitness Center and, if at any time the Building is less than seventy-five percent (75%) occupied, to cease operation of the Fitness Center. The use of the Fitness Center by Tenant and its employees and invitees shall be at the sole risk of Tenant and/or such employees and invitees, and Landlord shall have no risk or obligation therefor. As an ongoing condition to Tenant’s right to use the Fitness Center, Tenant covenants with Landlord to maintain at all times a list of persons who are using, or who have requested permission to use, the Fitness Center, and to keep on file for Landlord’s inspection a duly executed and witnessed release and indemnification agreement from each such person, in such form as Landlord may from time to time approve or require. Access to the Fitness Center shall be controlled by key card security.

(e)So long as the Building is at least seventy-five percent (75%) occupied, Landlord agrees to operate a cafeteria in the Building (the “Cafeteria”) in accordance with the provisions of this Section 2.2(e). Tenant and Tenant’s employees and invitees shall have the right to use the Cafeteria,

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subject to Landlord’s right to change from time to time the type and location of the Cafeteria and, if at any time the Building is less than seventy-five percent (75%) occupied, to cease operation of the Cafeteria. Landlord agrees to cause the Cafeteria and to cause the operator to operate, manage and maintain the Cafeteria in a condition in keeping with other cafeterias in similar first-class buildings in the Medford/Charlestown area.

2.3  OPTION FOR ADDITIONAL PARKING.  Notwithstanding anything to the contrary contained in the Lease, provided that (a) this Lease is then in full force and effect, (b) no Default of Tenant shall have occurred that remains uncured, and (c) the originally-named Tenant, The First Marblehead Corporation, or any successor entity for which Landlord’s consent is not required under Section 6.1(b) below, is then occupying at least eighty-five percent (85%) of the Premises for the Permitted Use, upon written notice from Tenant to Landlord, Landlord hereby consents to Tenant undertaking to construct or cause to be constructed additional parking spaces on the Property in the location set forth in Exhibit AP attached hereto (the “Additional Parking”), for use by Tenant’s employees, subject to the terms and conditions of this Section 2.3, and subject to the rights previously given to another tenant in the Building to build an additional 70 spaces in such location.

Tenant acknowledges that Landlord has made no representations or warranties regarding the feasibility of, or requirements for, the use of the Property for the Additional Parking, for all of which Tenant hereby assumes sole responsibility. Tenant shall, at Tenant’s sole cost and expense, obtain all required waivers, permits and approvals of applicable governmental entities and other third parties prior to commencing any such construction and shall provide copies thereof to Landlord. Tenant shall consult with Landlord and keep Landlord informed concerning the process of obtaining any required waivers, permits and approvals and Landlord shall have the right to participate with Tenant in such process. Tenant’s construction of the Additional Parking shall be subject to all of the applicable terms and conditions of this Lease regarding alterations, including, without limitation, the applicable provisions of Section 5.2 and Exhibits TW and IR. Without limiting the generality of the foregoing, Tenant shall submit all plans for construction to Landlord for its approval, and shall perform the construction using a contractor first approved by Landlord. Tenant shall perform such construction subject to and in accordance all applicable laws, codes, rules, regulations, permits and approvals, including, without limitation any Environmental Laws. Landlord’s approval of Tenant’s plans and Tenant’s general contractor shall not impose upon Landlord any responsibility or liability whatsoever to Tenant, including, without limitation, as a result of, or arising out of, the defaults or other acts or omissions of the general contractor.

After construction of the Additional Parking, Tenant shall be solely responsible, at Tenant’s sole cost and expense, to maintain and repair the Additional Parking, in good order condition and repair, including, without limitation, any necessary snow removal. If Landlord shall request by written notice to Tenant at the time that Landlord approves the plans for such Additional Parking, Tenant shall promptly, and in all cases prior to the expiration of such Term, remove the improvements constituting the Additional Parking and restore such portion of the Property to the condition existing immediately prior to the construction thereof, at Tenant’s sole cost and expense.

If at any time during the Term, Landlord intends to develop the portion of the Property on which Tenant has the right to construct the Additional Parking, Landlord may deliver a written notice to Tenant in which Landlord either (a) requires that Tenant remove the then existing improvements to the Property that constitute the Additional Parking, at Tenant’s sole cost and expense, within ninety (90) days after the date of such notice, or (b) informs Tenant that, if it has not yet constructed the Additional Parking, Tenant shall have no further right to construct the Additional Parking. If Tenant has previously constructed the Additional Parking, Tenant shall cause such improvements to be removed within such ninety day period.

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2.4  OPTION TO EXTEND.

(a)Provided that, at the time of each such exercise, (i) this Lease is in full force and effect, (ii) no Default of Tenant shall have occurred and be continuing (either at the time of exercise or at the commencement of an Extended Term), and (iii) Tenant shall not have assigned this Lease or vacated or sublet more than 20,000 rentable square feet in the Premises, other than in connection with a transfer for which Landlord’s consent is not required under Article VI (any of which conditions described in clauses (i), (ii), and (iii) may be waived by Landlord at any time in Landlord’s sole discretion), Tenant shall have the right and option to extend the Term of this Lease with respect to either the entire Premises, or only the portion of the Premises on the second floor, or only the portion of the Premises on the third floor, for two extended terms (each an “Extended Term”) of five (5) years each by giving written notice to Landlord not later than twelve (12) months prior to the expiration date of the then current Term. The effective giving of such notice of extension by Tenant shall automatically extend the Term of this Lease for the applicable Extended Term, and no instrument of renewal or extension need be executed. In the event that Tenant fails timely to give such notice to Landlord, or if Tenant shall elect to extend the Term solely with respect to the second floor space or the third floor space, then this Lease shall automatically terminate with respect to the remainder of the Premises at the end of the Initial Term, or the first Extended Term, as applicable, and Tenant shall have no further option to extend the Term of this Lease with respect to such portion of the Premises. Each Extended Term shall commence on the day immediately succeeding the expiration date of the Initial Term, or the expiration of the first Extended Term, as applicable, and shall end on the day immediately preceding the fifth (5th) anniversary of the first day of the Extended Term. The Extended Terms shall be on all the terms and conditions of this Lease, except: (i) during the second Extended Term, Tenant shall have no further option to extend the Term, (ii) the Basic Rent for each Extended Term shall be ninety-five percent (95%) of the Fair Market Rental Value of the Premises as of the commencement of the Extended Term, taking into account all relevant factors, determined pursuant to paragraph (b) below; and (iii) if Tenant shall elect in such notice of extension to extend the Term for only the second floor space or the third floor space, the Premises thereafter shall solely refer to such space.

(b)Promptly after receiving Tenant’s notice extending the Term of this Lease pursuant to paragraph (a) above, but in no event sooner than eleven months prior to the end of the then current Term, Landlord shall provide Tenant with Landlord’s good faith estimate of the Fair Market Rental Value of the Premises for the upcoming Extended Term based upon rents being paid by tenants entering into leases for first-class office similar in size, build-out, amenities and term in the Medford/Charlestown area. If Tenant is unwilling to accept Landlord’s estimate of the Fair Market Rental Value as set forth in Landlord’s notice referred to above, and the parties are unable to reach agreement thereon within thirty (30) days after the delivery of such notice by Landlord, then either party may submit the determination of the Fair Market Rental Value of the Premises to arbitration by giving notice to the other party naming the initiating party’s arbitrator within ten (10) days after the expiration of such thirty (30) day period. Within fifteen (15) days after receiving a notice of initiation of arbitration, the responding party shall appoint its own arbitrator by notifying the initiating party of the responding party’s arbitrator. If the second arbitrator shall not have been so appointed within such fifteen (15) day period, the Fair Market Rental Value of the Premises shall be determined by the initiating party’s arbitrator. If the second arbitrator shall have been so appointed, then the two arbitrators thus appointed shall make their own determination of Fair Market Rental Value and shall meet and confer in an effort to reconcile their respective determinations. If, within thirty (30) days after the appointment of the second arbitrator, the two arbitrators have not reached agreement, and if the difference between the two (2) determinations is less than ten percent (10%), then the average of the two determinations shall be the Fair Market Rental Value. If, however, the difference between the two (2) determinations is ten percent (10%) or more, then the two arbitrators shall, within ten (10) days after the expiration of such thirty (30) day period, appoint a third arbitrator; in the event the two initial arbitrators are unable timely to agree on the third arbitrator, then either may, on behalf of

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both, request such appointment by the American Arbitration Association, or its successor, or, on its failure, refusal or inability to act, by a court of competent jurisdiction. In such event, the third arbitrator shall conduct its own independent investigation of the applicable Fair Market Rental Value within fifteen (15) days of his/her appointment; neither Landlord’s arbitrator nor Tenant’s arbitrator shall notify the third arbitrator of its determination. After the third arbitrator has completed its determination, the third arbitrator shall notify Landlord and Tenant of the date on which said arbitrator will discloses its determination, which date shall be at least five (5) days after the giving of such notice. Such disclosure shall take place in Landlord’s office unless otherwise mutually agreed by the parties. In such case, the Fair Market Rental Value shall be the rent proposed by either Landlord’s arbitrator or Tenant’s arbitrator, whichever value is closer to the determination of the third arbitrator; if the two are equidistant from the third arbitrator, the Fair Market Rental Value shall be equal to the third arbitrator’s determination. All arbitrators shall be appraisers or other qualified real estate professionals who are independent from the parties who have had at least ten (10) years commercial real estate experience in the greater Boston area. Each party shall pay the fees of its own arbitrator, and the fees of the third arbitrator shall be shared equally by the parties.

2.5  EXPANSION OPTION.

(a)Subject to the terms and conditions of this Section 2.5 and subject to the pre-existing rights of Transystems, Inc., as shown on Exhibit FO, Tenant shall have the right to expand the Premises to include 16,640 rentable square feet of space on the first floor of the Building, in the location shown on Exhibit FP-1 (“Expansion Premises”), provided and on condition that (i) this Lease is in full force and effect, (ii) no Default of Tenant shall have occurred and be continuing (either at the time of exercise or at upon the Expansion Premises Commencement Date), (iii) Tenant shall not have assigned this Lease or vacated or sublet more than 20,000 rentable square feet in the Premises, other than in connection with a transfer for which Landlord’s consent is not required under Article VI (any of which conditions described in clauses (i), (ii), and (iii) may be waived by Landlord at any time in Landlord’s sole discretion). If Tenant shall give Landlord written notice no later than the date that is twelve months after the date of this Lease electing to so expand the Premises, then Landlord shall deliver possession of the Expansion Premises to Tenant on the Expansion Premises Commencement Date (as defined below). If Tenant shall fail to timely deliver such notice electing to so expand the Premises, Tenant shall be deemed to have waived such right, and Landlord shall thereafter be free to lease all or any portion of the Expansion Premises to such parties and on such terms as Landlord shall determine in its sole discretion, subject to the provisions of Section 2.6 below.

(b)Promptly after the date of Tenant’s notice, Landlord shall commence and use commercially reasonable efforts to perform certain improvements to the Expansion Premises in order to fit out the space in accordance with a Building standard level of finish consistent with the level of finish for Landlord’s Work in the remainder of the Premises, and a ratio of twenty percent (20%) office space to eighty percent (80%) open space. Such work shall be performed in accordance with and subject to the requirements for Plans, timing of Landlord’s Work, Tenant Delay, punchlist, warranty, and other requirements applicable to the initial Premises set forth in Article IV below. The date that Landlord has substantially completed such work and delivered the Expansion Premises to Tenant is hereinafter referred to as the “Expansion Premises Commencement Date”. Landlord shall use commercially reasonable efforts to deliver the Expansion Premises to Tenant on or before the date that is five (5) months after the date of Tenant’s notice. As of the Expansion Premises Commencement Date, the Premises under this Lease shall be expanded to include the Expansion Premises. Once incorporated into the Premises, Tenant’s rights and obligations with respect to the Expansion Premises shall be subject to and with the benefit of all of the terms and conditions of this Lease, except that: (i) the Basic Rent per square foot applicable to the Expansion Premises shall equal the Basic Rent per square foot for the remainder of the Premises; (ii) the Term of the Lease with respect to the Expansion Premises shall be coterminous with the remainder of the Premises; (iii) Tenant shall commence

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payment of such additional amount of Basic Rent with respect to the First Expansion Premises on the Expansion Premises Commencement Date; and (iv) the Escalation Factor shall be revised to reflect the addition of the Expansion Premises to the Premises in accordance with the Escalation Factor Computation. Promptly after the Expansion Premises Commencement Date, Landlord and Tenant agree to enter into an amendment to this Lease memorializing the addition of the Expansion Premises to this Lease and the amendment to the applicable defined terms hereunder, including, without limitation, Premises, Basic Rent, Term and Escalation Factor, but failure of the parties to execute such an amendment shall have no effect on the expansion of the Premises to include the Expansion Premises, and the economic terms associated therewith, as set forth above.

2.6  RIGHT OF FIRST OFFER.

(a)Subject to the terms and conditions of this Section 2.6 and subject to the pre-existing rights of the tenants or other occupants of the Building set forth in Exhibit FO, Tenant shall have a “Right of First Offer” to lease any office space that is available for lease to third parties in the Building during the Term of this Lease (the “First Offer Space”), including, without limitation, office space leased to a third party after Tenant has elected not to exercise, and/or has failed to exercise, whichever the case may be, such rights under this Section 2.6 with respect to said space, provided and on condition that (i) this Lease is in full force and effect, (ii) no Default of Tenant shall have occurred and be continuing (either at the time of exercise or upon the commencement date of the Term for the First Offer Space), (iii) Tenant shall not have assigned this Lease or vacated or sublet more than 20,000 rentable square feet in the Premises, other than in connection with a transfer for which Landlord’s consent is not required under Article VI (any of which conditions described in clauses (i), (ii), and (iii) may be waived by Landlord at any time in Landlord’s sole discretion).

(b)Landlord will notify Tenant of its plans to lease any portion of the First Offer Space to any unrelated third party. Landlord’s notice shall specify the square footage of the space and its location, the date of availability, the term of the lease for such space, the Basic Rent for such space, and all other material terms and conditions which will apply to such space. Notwithstanding the foregoing, if Landlord shall offer such space to Tenant during the first twelve months after the Commencement Date, such First Offer Space shall be upon the same terms and conditions as set forth for the Expansion Premises under Section 2.5 above. Tenant will notify Landlord within ten (10) Business Days of Landlord’s notice if Tenant wishes to lease such First Offer Space from Landlord on the terms and conditions so specified and otherwise on substantially the same terms and conditions as contained in this Lease. If Tenant notifies Landlord that it wishes to lease the First Offer Space, Landlord and Tenant shall execute a lease agreement or amendment to this Lease within ten (10) Business Days incorporating substantially such terms and conditions. If Tenant fails to notify Landlord within said seven day period that Tenant intends to lease such First Offer Space or fails to execute a lease agreement for such First Offer Space within ten (10) Business Days of Tenant’s notice of intent to Landlord, Landlord shall be entitled to lease such space to any third party on terms and conditions acceptable to Landlord in its sole discretion. Notwithstanding the foregoing, if Tenant shall not exercise its Right of First Offer and Landlord intends to lease the First Offer Space for a net effective rent (taking into consideration any difference in the improvements allowance or other economic concessions offered to such third party but not to Tenant) that is less than ninety percent (90%) of the net effective rent contained in Landlord’s notice to Tenant, prior to leasing such First Offer Space to any unrelated third party, Landlord shall again offer the First Offer Space to Tenant, at such revised terms and conditions offered to such third party, and Tenant shall again have a Right of First Offer pursuant to this Section 2.6.

2.7  STORAGE SPACE.

(a)Landlord shall lease to Tenant and Tenant shall accept from Landlord certain storage space consisting of approximately 1,000 rentable square feet on the garage level of the Building (the “Storage

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Area”), located as shown on Exhibit FP-2, attached hereto and made a part hereof. The Storage Area shall be used by Tenant solely for storage purposes as an ancillary use in connection with Tenant’s use of the Premises. The Storage Area shall be held by Tenant commencing on the Commencement Date and continuing thereafter throughout the Term of this Lease, subject to this Section 2.7. There shall be no additional charges due in respect of Tenant’s use of the Storage Space.

(b)During the term of this Lease, the Storage Area shall be occupied by Tenant in accordance with and subject to all of the terms and conditions of this Lease. Without limiting the generality of the foregoing (i) Tenant shall extend the coverage of the insurance provided for by Article X of this Lease to the Storage Area; (ii) Tenant shall maintain the Storage Area and repair any damage to the Storage Area caused by Tenant, its agents, contractors or employees; (iii) Landlord shall retain access to the Storage Area and shall be entitled to enter the Storage Area in accordance with the terms and conditions of Article XI; and (iv) upon expiration or earlier termination of this Lease, Tenant shall quit and surrender the same to Landlord, broom clean, and with any damage due to Tenant’s use thereof repaired. Landlord may require Tenant at its own expense to secure the Storage Area, but Tenant shall make no other changes to the Storage Area without Landlord’s prior written approval. Tenant agrees that it is accepting the Storage Area in “as is” condition without representation or warranty by Landlord.

ARTICLE III

BASIC RENT

3.1  PAYMENT.

(a)Tenant agrees to pay to Landlord, or as directed by Landlord, commencing on the Rent Commencement Date without offset, abatement (except as expressly provided in this Lease), deduction or demand, the Basic Rent. In addition, within ten (10) days after receipt of written notice from Landlord, which notice shall be given no earlier than the date that is three (3) months prior to the Rent Commencement Date, Tenant shall deposit with Landlord the sum of $216,118.66 as a deposit of the first month’s Basic Rent which shall be applied by Landlord on behalf of the Tenant to the payment of the first month’s Basic Rent when due and payable. Such Basic Rent shall be payable in equal monthly installments, in advance, on the first day of each and every calendar month (except as hereinabove provided) during the Term of this Lease, at the following address: Cabot Road Partners, L.L.C., P. O. Box 31367, Hartford, Connecticut 06150-1367, or at such other place as Landlord shall from time to time designate by notice, by check drawn on a bank which is a member of the Boston or New York Clearing House. Until notice of some other designation is given, Basic Rent and all other charges for which provision is herein made shall be paid by remittance payable to the Agent, and all remittances so received as aforesaid, or by any subsequently designated recipient, shall be treated as a payment to Landlord. Landlord and Tenant agree that all amounts due from Tenant under or in respect of this Lease, whether labeled Basic Rent, Escalation Charges, additional charges or otherwise, shall be considered as rental reserved under this Lease for all purposes, including without limitation regulations promulgated pursuant to the Bankruptcy Code, and including further without limitation Section 502(b) thereof.

(b)Basic Rent for any partial month shall be pro-rated on a daily basis, and if Basic Rent commences on a day other than the first day of a calendar month, the first payment which Tenant shall make to Landlord shall be payable on the date Basic Rent commences and shall be equal to a proportionate part of the monthly installment of Basic Rent for the partial month in which Basic Rent commences plus the installment of Basic Rent for the succeeding calendar month. Rental and any other sums due hereunder not paid within five (5) Business Days after the date due more than once in any twelve month period shall bear interest for each month or fraction thereof from the due date until paid computed at the annual rate of three percentage points over the so-called prime rate then currently from time to time charged to its most favored corporate customers by Bank of America or its successors, or at any applicable lesser maximum legally permissible rate for debts of this nature.

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ARTICLE IV

COMMENCEMENT DATE AND CONDITION

4.1  COMMENCEMENT DATE.  The “Commencement Date” shall be the last to occur of:

(a)the day following the Substantial Completion Date, as defined in Section 4.2, or

(b)the Scheduled Commencement Date set forth in Section 1.3 hereof.

Notwithstanding the foregoing, if Tenant’s personnel shall occupy all or any part of the Premises for the conduct of its business (as opposed to entry to prepare the same for occupancy) prior to the Commencement Date as determined pursuant to the preceding sentence, except any such entry for the purpose of setting up and operating a data center at the Premises, such date of occupancy shall, for all purposes of this Lease, be the Commencement Date. Promptly upon the occurrence of the Commencement Date, Landlord and Tenant shall execute and deliver a letter designating the Commencement Date, but the failure by either party to execute and deliver such a letter shall have no effect on the Commencement Date, as hereinabove determined. Landlord shall permit Tenant reasonable access to the Premises prior to the Commencement Date so that Tenant may install furniture, equipment, cabling and fixtures, and operate a data center (the “Data Center”) in the Premises, and perform such other actions as Tenant deems desirable to prepare for occupancy of the Premises on the Commencement Date. Any such access shall be subject to and upon all of the terms and conditions of this Lease other than the payment of Basic Rent and Escalation Charges.

4.2  PREPARATION OF THE PREMISES.

(a)

(i)Within ten (10) Business Days after Tenant has given to Landlord sufficient information concerning (A) telephone/data wiring and cabling to workstations, (B) program information for power/data, and (C) systems tie-in information from the Cavan Group, Landlord shall cause the construction drawings for the improvements to the portion of the Premises that will constitute the Data Center (the “Data Center Plans”) to be prepared in accordance with the space plan and work specifications attached hereto and made a part hereof as Exhibit SP-1 (the “Data Center Space Plan”), and in compliance with all applicable laws, regulations and ordinances, including without limitation the Americans With Disabilities Act of 1990. The Data Center Plans shall be submitted to Tenant within said ten (10) Business Day period for its approval, which shall not be unreasonably withheld. Tenant shall notify Landlord of its approval or disapproval of the Data Center Plans within five (5) Business Days after receipt thereof. Any disapproval shall be accompanied by a specific statement of the reasons therefor. Within ten (10) Business Days after receipt of Tenant’s disapproval, Landlord shall revise the Data Center Plans and resubmit them to Tenant, which shall have three (3) Business Days after receipt of the resubmission to review and respond thereto.

(ii)Within thirty (30) days after Tenant has given to Landlord sufficient information concerning (A) telephone/data wiring and cabling to workstations, (B) program information for power/data, and (C) systems tie-in information from the Cavan Group, Landlord shall cause the construction drawings for the interior finish and other tenant improvements to the Premises (the “Premises Plans”) to be prepared in accordance with Building standard tenant finish as described in Exhibit BS, the space and work specifications attached hereto and made a part hereof as Exhibit SP-2 (the “Premises Space Plan”), and in compliance with all applicable laws, regulations and ordinances, including without limitation the Americans With Disabilities Act of 1990. The Premises Plans shall be submitted to Tenant within said thirty (30) day period for its approval, which shall not be unreasonably withheld. Tenant shall notify Landlord of its approval or disapproval of the Premises Plans within five (5) Business Days after receipt thereof. Any disapproval shall be accompanied by a specific statement of the reasons therefor. Within ten (10) Business Days after

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receipt of Tenant’s disapproval, Landlord shall revise the Premises Plans and resubmit them to Tenant, which shall have three (3) Business Days after receipt of the resubmission to review and respond thereto.

(iii)The final approved Premises Plans and Data Center Plans hereunder shall be referred to collectively as the “Approved Plans.” Landlord shall be responsible for the architect’s fees in connection with the preparation of the Data Center Space Plan and the Premises Space Plan up to an amount equal to $13,649.60. In addition, Landlord shall be solely responsible for the architect’s fees in connection with the preparation of the Approved Plans.

(b)Promptly after approval of the Approved Plans, Landlord shall obtain all necessary permits and approvals and commence and exercise all reasonable efforts to complete the work described in the Approved Plans (“Landlord’s Work”). Landlord’s Work shall be performed at Landlord’s sole cost and expense, subject to the provisions of paragraph (c) below. Landlord agrees to complete Landlord’s Work in a good and workmanlike manner and in compliance with all applicable laws, regulations and ordinances, including without limitation the Americans With Disabilities Act of 1990. Landlord agrees to use reasonable efforts to substantially complete the portion of Landlord’s Work as set forth in the Data Center Plans on or before the date (the “Scheduled Data Center Completion Date”) that is forty-five (45) days after the Data Center Plans have been approved and Landlord has obtained all applicable permits and approvals required to perform such work, subject to Tenant Delay and Force Majeure. Landlord agrees to use reasonable efforts to substantially complete the remainder of Landlord’s Work by the Scheduled Commencement Date subject to Tenant Delay and Force Majeure. If Landlord has not substantially completed the portion of Landlord’s Work for the Data Center on or before the Scheduled Data Center Completion Date, except as a result of Force Majeure or Tenant Delay, Tenant shall be entitled to an abatement of one (1) day of Basic Rent (but not Additional Rent or other charges) applicable to the Data Center for every one (1) day delay in the occurrence of the substantial completion of such portion of Landlord’s Work after the Scheduled Data Center Completion Date. If Landlord has not substantially completed the remainder of Landlord’s Work on or before February 1, 2005, except as a result of Force Majeure or Tenant Delay, Tenant shall be entitled to an abatement of one (1) day of Basic Rent (but not Additional Rent or other charges) applicable to the entire Premises for every one (1) day delay in the occurrence of the substantial completion of the remainder of Landlord’s Work after February 1, 2005. If Landlord has not substantially completed Landlord’s Work as of April 1, 2005, subject to Force Majeure and Tenant Delay, Tenant shall have the right to terminate this Lease by written notice to Landlord given on or before April 10, 2005. The foregoing rights in the event of a delay in the substantial completion of Landlord’s Work shall be Tenant’s sole and exclusive remedies for such delay.

(c)The term “Change Order” as used in this Lease shall mean any change to the approved Plans requested by Tenant and Approved by Landlord, which shall not be unreasonably withheld, conditioned or delayed. Within five (5) Business Days after receipt by Landlord of a Change Order request, Landlord shall provide to Tenant a notice of the estimated adjustment, if any, in the cost of Landlord’s Work and the estimated delay, if any, in the substantial completion of Landlord’s Work beyond the scheduled Substantial Completion Date (as the same may have been previously modified by a prior Change Order) resulting from the Change Order. Within three (3) Business Days after receipt of Landlord’s notice, Tenant shall have the option to cancel the Change Order in writing to the Landlord within said three (3) Business Day period. The estimated adjustment in the cost of Landlord’s Work shall be determined by (i) adding the architectural and engineering fees (if any) associated with reviewing and revising the Plans in connection with the Change Order, the cost of the materials and labor attributable to the Change Order, the contractor’s overhead and profit attributable to the work described in the Change Order (which shall be calculated at the same rate used in the construction contract for Landlord’s Work), the increased costs (if any) of various trade contractors due to delay in completing Landlord’s Work, and the costs (if any) associated with the cancellation of materials already

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ordered, and (ii) subtracting from such costs the cost of materials and labor attributable to the work (if any) not being done, the contractor’s overhead and profit on the such materials and labor, the cost of the cancelled materials, and the cost of any other savings attributable to the Change Order. In the event there is a net increase in the cost of Landlord’s Work as a result of the Change Order, then Tenant shall pay to Landlord the amount of the net increase (less the amount of any retainage contained in Landlord’s construction contract) in two (2) equal installments, the first of which shall be paid within twenty (20) days after Tenant shall have approved the Change Order and the second of which shall be paid within thirty (30) days after the work described on the Change Order has been substantially completed; Tenant agrees to pay the retainage to Landlord simultaneously with the payment of the 2nd installment.

(d)The Premises shall be deemed ready for occupancy on the first day on which (i) Landlord’s Work has been completed, except for minor items of work (and, if applicable, adjustment of equipment and fixtures) which can be completed after occupancy has been taken without causing unreasonable interference with Tenant’s use and enjoyment of the Premises (i.e. so-called “punchlist” items), (ii) the Building systems serving the Premises are in good working order and otherwise in the condition required to be maintained by Landlord under this Lease, and (iii) Landlord has obtained a permanent certificate of occupancy for the Premises permitting Tenant to use the Premises for the Permitted Use. Such date is hereinafter called the “Substantial Completion Date.” Within five (5) Business Days after the occurrence of the Substantial Completion Date, Landlord and Tenant shall inspect the Premises and shall prepare a punchlist of remaining items to be completed. Landlord shall complete all punchlist items as soon as conditions permit, and in all events within sixty (60) days, and Tenant shall afford Landlord access to the Premises for such purposes.

4.3  CONDITION; LANDLORD’S PERFORMANCE.  In addition to the punchlist described in Section 4.2(d), Tenant shall have the right to give Landlord a notice, not later than twelve (12) calendar months after the Commencement Date, of (i) any respects in which Landlord has not performed Landlord’s Work fully, properly and in accordance with the terms of this Lease, or (ii) any respects in which Landlord’s Work is not in good working order and condition, or (iii) any defects in workmanship and materials in Landlord’s Work. Except as identified in any such notice from Tenant to Landlord, Tenant shall have no right to make any claim that Landlord has failed to perform any of Landlord’s Work fully, properly and in accordance with the terms of this Lease or to require Landlord to perform any further Landlord’s Work. Landlord shall complete, repair and/or replace such items as soon as conditions permit, and in all events within sixty (60) days after written notice from Tenant and Tenant shall afford Landlord access to the Premises for such purposes. Except for Landlord’s Work, the Premises are being leased in their present condition, and except as set forth in the immediately preceding sentence, are being leased AS IS, WITHOUT REPRESENTATION OR WARRANTY by Landlord.

4.4  TENANT’S DELAYS.  The delays referred to in paragraph (a) are herein referred to collectively and individually as “Tenant’s Delay”:

(a)If a delay shall occur in the Substantial Completion Date beyond the Scheduled Commencement Date as the result of:

(i)any delay by Tenant in approving the Data Center Plans and/or the Premises Plans beyond the periods set forth in Section 4.2 above; or

(ii)any request by Tenant that Landlord delay the commencement or completion of Landlord’s Work for any reason; or

(iii)any reasonably necessary displacement of any of Landlord’s Work from its place in Landlord’s construction schedule resulting from any of the causes for delay referred to in this paragraph (a) and the fitting of such Landlord’s Work back into such schedule; and

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if Landlord shall notify Tenant of such delay within two (2) days of the commencement of such delay (which notice shall include the estimated duration of such delay), then such delay shall constitute a Tenant Delay; provided, however, if Landlord fails to give Tenant notice of a delay within said two (2) day period, then such delay shall not constitute a Tenant Delay for the purposes of this Lease. The parties agree that the Substantial Completion Date shall be deemed accelerated by the actual number of days of delay attributable to Tenant Delays.

(b)In addition, if Landlord notifies Tenant in a Change Order of an estimated delay in the substantial completion of Landlord’s Work beyond the scheduled Substantial Completion Date due to the work described in said Change Order, and if a delay actually occurs, then such delay shall constitute a Tenant Delay and the Substantial Completion Date shall be deemed accelerated by the actual number of days of delay attributable to such Change Order.

ARTICLE V

USE OF PREMISES

5.1  PERMITTED USE.

(a)Tenant agrees that the Premises shall be used and occupied by Tenant only for Permitted Uses and for no other purpose.

(b)Tenant agrees to conform to the following provisions during the Term of this Lease:

(i)Service and utility areas (whether or not a part of the premises) shall be used only for the particular purpose for which they were designed. Subject to the other terms and provisions of this Lease, Tenant may install at its own cost and expense so-called hot-cold water fountains, coffee makers, microwaves and so-called Dwyer refrigerator-sink-stove combinations for the preparation of beverages and foods, provided that no cooking, frying, etc., are carried on in the Premises which require special exhaust venting. Tenant hereby acknowledges that the Building is not engineered to provide any such special venting.

(ii)Tenant shall cause all freight to be delivered to or removed from the Building and the Premises in accordance with reasonable rules and regulations established by Landlord in accordance with Section 14.7;

(iii)Tenant will not place on the exterior of the Premises (including both interior and exterior surfaces of doors and interior surfaces of windows) or on any part of the Building outside the Premises, any signs, symbol, advertisement or the like, except as provided in this clause (iii). Landlord shall not unreasonably withhold or delay its consent with respect to the installation of signs or lettering on the entry doors to the Premises provided such signs conform to then Building standards adopted by Landlord in its sole discretion; Tenant shall submit to Landlord a plan or sketch of the sign (including size, color, material, location and method of affixation) to be placed on or at such entry doors in connection with Tenant’s request for Landlord’s consent. Landlord shall pay for the cost of any Building-standard suite entry signage selected by Tenant, and Tenant shall pay for any additional costs and expenses with respect to any above Building-standard signage selected by Tenant and approved by Landlord as aforesaid. Landlord agrees to maintain a tenant directory in the lobby of the Building in which will be placed Tenant’s name and the location of the Premises in the Building, and a directory on each floor with the names of up to five of Tenant’s departments.

In addition, subject to the approval of applicable governmental authorities, Landlord hereby consents to the installation of Tenant’s sign on the exterior of the east side of the Building, as conceptually depicted and in the location specified on Exhibit ES, which shall be purchased and installed at Tenant’s sole cost and expense. Upon the expiration or earlier termination of this Lease, Tenant shall remove the sign (but not the supports) from the exterior of the Building,

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remove the supports for such Building sign (unless other directed by Landlord), repair any damage to the Building’s exterior caused by such removal, and restore the exterior of the Building to the condition existing prior to the placement of such sign and support on the Building, reasonable wear and tear and damage by fire or other casualty excepted.

Landlord hereby agrees further to place Tenant’s name on the monument sign at the entrance to the Building, which signage shall be consistent with the Building standard graphics and lettering for the monument sign;

(iv)Notwithstanding any provision of this Lease, Tenant shall not use, or suffer or permit the use or occupancy of, or suffer or permit anything to be done in or anything to be brought into or kept in or about the Premises of the Building or any part thereof (including, without limitation, any materials appliances or equipment used in the construction or other preparation of the Premises and furniture and carpeting): (a) for any unlawful purposes or in any unlawful manner; (b) which, in the reasonable judgment of Landlord shall in any way materially impair, interfere with or otherwise diminish the quality of any of the Building services or the proper and economic heating, cleaning, ventilating, air conditioning or other servicing of the Building, or Premises, or with the use or occupancy of any of the other areas of the Building, which is consistent with the maintenance of the Building as an office building of the first class in the quality of its maintenance, use, or occupancy;

(v)Tenant shall not perform any act or carry on any practice which may injure the Premises, or any other part of the Building, or cause any offensive odors or loud noise or constitute a nuisance or a menace to, or otherwise interfere with the business of, any other tenant or tenants or other persons in the Building;

(vi)Tenant shall comply with the requirements of all applicable governmental laws, rules and regulations, including without limitation the Americans With Disabilities Act of 1990, to the extent such compliance is required as a result of the specific manner in which Tenant is using the Premises, Tenant’s layout of the Premises, or any alterations or improvements performed by Tenant subsequent to the completion of Landlord’s Work; and

(vii)If any governmental license or permit shall be required for the proper and lawful conduct of Tenant’s business, and if the failure to secure such licenses or permit would in any way affect Landlord, the Premises, the Building or Tenant’s ability to perform any of its obligations under this Lease, Tenant, at Tenant’s expense, shall duly procure and thereafter maintain such license and, upon request by Landlord, submit the same to inspection by Landlord. Tenant, at Tenant’s expense, shall at all times comply with the terms and conditions of each such license or permit. Tenant shall furnish all data and information to governmental authorities and Landlord as required in accordance with legal, regulatory, licensing or other similar requirements as they relate to Tenant’s use or occupancy of the Premises or the Building.

(c)Landlord shall comply with the requirements of all applicable governmental laws, rules and regulations, including without limitation the Americans With Disabilities Act of 1990, applicable to the Building and, to the extent Tenant is not obligated to comply therewith under clause (vi) of Section 5.1(b), to the Premises; provided, however, Landlord’s failure to comply with such laws, rules and regulations with respect to any portion of the Property outside the Premises shall not constitute a default under Section 13.2 unless (i) such failure unreasonably interferes with Tenant’s access to the Premises or with Tenant’s use and enjoyment of the Premises and/or the Common Areas or (ii) Tenant may be subject to a fine, penalty or enforcement action as a result of such failure.

5.2  INSTALLATIONS AND ALTERATIONS BY TENANT.

(a)Except as expressly provided herein, Tenant shall make no alterations, additions (including, for the purposes hereof, wall-to-wall carpeting), or improvements in or to the Premises (including any

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initial improvements necessary for Tenant’s occupancy) without Landlord’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed with respect to non-structural alterations that do not adversely affect any of the Building systems. Landlord’s consent shall not be required for (i) any purely cosmetic alteration that does not affect any Building system, and (ii) any non-structural alteration that does not affect any Building system and costs less than $50,000 in any one instance. Any alterations, additions or improvements for which Landlord’s consent is required shall (i) be in accordance with complete plans and specifications meeting the requirements set forth in Exhibit PR and approved by Landlord, (ii) be in accordance with the standards set forth in Exhibit BS attached hereto, (iii) be made only in accordance with the procedures set forth in Exhibit TW attached hereto by contractors or mechanics approved by Landlord, (iv) be made at Tenant’s sole expense and at such reasonable times and in such reasonable manner as Landlord may from time to time designate and (v) upon installation, become part of the Premises and the property of Landlord, provided that Landlord reserves the right, at the time that Landlord consents to such alterations, to require the removal of any non-standard office alterations upon the expiration or earlier termination of the Term of this Lease. Notwithstanding the foregoing, Tenant shall not be required to remove any items of Landlord’s Work installed as part of Tenant’s initial occupancy of the Premises, nor any wiring or cabling installed by Tenant from time to time during the Term.

(b)All articles of personal property and all business fixtures, machinery and equipment and furniture owned or installed by Tenant solely at its expense in the Premises (“Tenant’s Removable Property”) shall remain the Property of Tenant and may be removed by Tenant at any time prior to the expiration of this Lease, provided that Tenant, at its expense, shall repair any damage to the Building caused by such removal.

(c)Notice is hereby given that Landlord shall not be liable for any labor or materials furnished or to be furnished to Tenant upon credit, and that no mechanic’s or other lien for any such labor or materials shall attach to or affect the reversion or other estate or interest of Landlord in and to the Premises. To the maximum extent permitted by law, at such time as any contractor commences to perform work on behalf of Tenant, such contractor (and any subcontractors) shall furnish a written statement acknowledging the provisions set forth in the previous sentence. Whenever and as often as any mechanic’s lien shall have been filed against the Property based upon any act or interest of Tenant or of anyone claiming through Tenant, Tenant shall forthwith take such action by bonding, deposit or payment as will remove or satisfy the lien.

(d)In the course of any work being performed by Tenant, (other than “field installations” of Tenant’s Removable Property and the installation of any wiring and cabling), Landlord reserves the right to require Tenant to employ union labor compatible with that being employed by Landlord for work in or to the Building, and not to employ or permit the use of any labor or otherwise take any action which might result in a labor dispute involving personnel providing services or construction in the Building pursuant to arrangements made by Landlord.

5.3  HAZARDOUS MATERIALS.

(a)Tenant may use chemicals such as adhesives, lubricants, ink, solvents and cleaning fluids of the kind and in amounts and in the manner customarily found and used in business offices in order to conduct its business at the Premises and to maintain and operate the business machines located in the Premises. Tenant shall not use, store, handle, treat, transport, release or dispose of any other Hazardous Materials on or about the Premises or the Property without Landlord’s prior written consent, which Landlord may withhold or condition in Landlord’s sole discretion.

(b)Any handling, treatment, transportation, storage, disposal or use of Hazardous Materials by Tenant in or about the Premises or the Property and Tenant’s use of the Premises shall comply with all applicable Environmental Laws.

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(c)Tenant shall indemnify, defend upon demand with counsel reasonably acceptable to Landlord, and hold Landlord harmless from and against, any liabilities, losses claims, damages, interest, penalties, fines, attorneys’ fees, experts’ fees, court costs, remediation costs, and other expenses which result from the use, storage, handling, treatment, transportation, release, threat of release or disposal of Hazardous Materials in or about the Premises or the Property by Tenant or Tenant’s agents, employees, contractors or invitees.

(d)Tenant shall give written notice to Landlord as soon as reasonably practicable of (i) any communication received by Tenant from any governmental authority concerning Hazardous Materials which relates to the Premises or the Property, and (ii) any Environmental Condition, of which Tenant is aware, on the Premises, or elsewhere on the Property if caused by Tenant or anyone claiming by through or under Tenant.

(e)Landlord covenants that, as of the Commencement Date, the Premises shall be free of Hazardous Materials.

ARTICLE VI

ASSIGNMENT AND SUBLETTING

6.1  PROHIBITION.

(a)Except as otherwise provided in this Article VI, Tenant covenants and agrees that whether voluntarily, involuntarily, by operation of law or otherwise neither this Lease nor the term and estate hereby granted, nor any interest herein or therein, will be assigned, mortgaged, pledged, encumbered or otherwise transferred and that neither the Premises nor any part thereof will be encumbered in any manner by reason of any act or omission on the part of Tenant, or used or occupied or permitted to be used or occupied, by anyone other than Tenant, or for any use or purpose other than a Permitted Use, or be sublet (which term, without limitation, shall include granting of concessions, licenses and the like) in whole or in part, or be offered or advertised for assignment or subletting without, in each case, the prior written consent of Landlord. Without limiting the foregoing, any agreement pursuant to which: (x) Tenant is relieved from the obligation to pay, or a third party agrees to pay on Tenant’s behalf, all or any portion of Basic Rent, Escalation Charges or other charges due under this Lease; and/or (y) a third party undertakes or is granted the right to assign or attempt to assign this Lease or sublet or attempt to sublet all or any portion of the Premises, shall for all purposes hereof be deemed to be an assignment of this Lease and subject to the provisions of this Article VI. The provisions of this paragraph (a) shall apply to a transfer (by one or more transfers) of a majority of the stock or partnership interests or other evidences of ownership of Tenant as if such transfer were an assignment of this Lease, except any such transfer occurring on a recognized public stock exchange, or any such transfer complying with the provisions of paragraph (b) below.

(b)The provisions of paragraph (a) shall not apply to either: (x) transactions with an entity into or with which Tenant is merged or consolidated, or to which substantially all of Tenant’s assets are transferred; or (y) transactions with any entity which controls or is controlled by Tenant or is under common control with Tenant; provided that in either such event:

(i)the successor to Tenant’s interest under this Lease pursuant to clause (x) above has a net worth computed in accordance with generally accepted accounting principles consistently applied at least equal to the net worth of Tenant herein named on the date of this Lease, and proof reasonably satisfactory to Landlord of such net worth shall have been delivered to Landlord at least 10 days prior to the effective date of any such transaction (subject to any confidentiality requirements of applicable laws, in which case such disclosure may be made within ten (10) days subsequent to such transaction), and

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(ii)any assignee agrees directly with Landlord, by written instrument in form satisfactory to Landlord, to be bound by all the obligations of Tenant hereunder including, without limitation, the covenant against further assignment and subletting.

(c)Provided that Tenant is not in default of any of Tenant’s obligations under this Lease beyond applicable notice and cure periods, Landlord’s consent to a proposed assignment or sublease shall not be unreasonably withheld or delayed, and shall be given or withheld within twenty (20) days after receipt of all information required from Tenant hereunder, provided and upon condition that:

(i)In Landlord’s reasonable judgment the proposed assignee or subtenant is engaged in a business which is in keeping with the then standards of the Building and Property and the proposed use is limited to the Permitted Use;

(ii)The proposed assignee or subtenant is a reputable person or entity with sufficient financial worth considering the responsibility involved, based on evidence provided by Tenant (and others) to Landlord, as determined by Landlord in its reasonable discretion;

(iii)Neither (A) the proposed assignee or sublessee nor (B) any person or entity which, directly or indirectly, controls, is controlled by, or is under common control with, the proposed assignee or sublessee or any person or entity who controls the proposed assignee or sublessee, is then an occupant of any part of the Property, provided that Landlord then has comparable space to lease to such party;

(iv)The proposed assignee or sublessee is not a person or entity to or from whom Landlord has sent or received a letter of intent or other written expression of interest in the prior ninety (90) day period for the lease of space at the Property comparable in terms of size and finish as the Premises (or the applicable portion of the Premises to be sublet); and

(v)The proposed sublease or assignment shall be in form reasonably satisfactory to Landlord and shall comply with the applicable provisions of this Article 6.

(d)If Landlord shall refuse consent to a request to assign or sublease, Landlord’s notice shall set forth the reasons for denying such consent. If Landlord shall fail to respond to Tenant within such twenty (20) day period, and if such failure shall continue for an additional ten (10) days after an additional written notice from Tenant, which notice shall specifically reference this Section 6.1 and shall state, in bold, uppercase, prominent letters that failure to respond within such ten (10) day period shall be deemed approval by Landlord of such request, then Landlord shall be deemed to have approved the proposed assignment or sublease.

6.2  EXCESS PAYMENTS.  If Tenant assigns this Lease or sublets the Premises or any portion thereof, except pursuant to the provisions of Section 6.1(b) above, Tenant shall pay to Landlord as additional rent fifty percent (50%) of the amount, if any, by which (a) any and all compensation received by Tenant as a result of such assignment or subletting, net of reasonable expenses actually incurred by Tenant in connection with such assignment or subletting (including, without limitation, the cost of any leasehold improvements provided for such assignee or subtenant and the value of any reasonable and customary free rent, work allowance or other concessions provided to such party), exceeds (b) the allocable portion of the applicable Basic Rent and Escalation Charges attributable to the portion of the Premises so sublet or assigned. After Tenant has fully recovered its reasonable expenses, Tenant shall commence paying to Landlord its share of such excess payments to the extent Tenant actually receives such payment; such payments shall be made on the date the corresponding payments under this Lease are due. Notwithstanding the foregoing, the provisions of this Section 6.2 shall impose no obligation on Landlord to consent to an assignment of the Lease or a subletting of all or a portion of the Premises.

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6.3  ACCEPTANCE OF RENT.  If, in violation of this Article 6, this Lease be assigned, or if the Premises or any part thereof be sublet or occupied by anyone other than Tenant, Landlord may, at any time and from time to time, collect rent and other charges from the assignee, subtenant or occupant, and apply the net amount collected to the rent and other charges herein reserved, but no such assignment, subletting, occupancy, collection or modification of any provisions of this Lease shall be deemed a waiver of this covenant, or the acceptance of the assignee, subtenant or occupant as a tenant or a release of Tenant from the further performance of covenants on the part of Tenant to be performed hereunder. Any consent by Landlord to a particular subletting or occupancy shall not in any way diminish the prohibition stated in paragraph (a) of this Section 6.1 or the continuing liability of the original named Tenant. No assignment or subletting hereunder shall relieve Tenant from its obligations hereunder and Tenant shall remain fully and primarily liable therefor. No such assignment, subletting, or occupancy shall affect or be contrary to Permitted Uses. Any assignment, subletting or occupancy shall be void ab initio, if the same shall fail to require that such assignee, subtenant or occupant agree therein to be independently bound by and upon all of the covenants, agreements, terms, provisions and conditions set forth in this Lease on the part of Tenant to be kept and performed, except, in the case of a subtenant, limited to the portion of the Premises proposed to be sublet.

6.4  ADDITIONAL REQUIREMENTS.  Tenant shall reimburse Landlord on demand, as Additional Rent, for any reasonable out-of-pocket costs (including reasonable attorneys’ fees and expenses) incurred by Landlord in connection with any actual or proposed assignment or sublease or other act described in paragraph (a) of Section 6.1, whether or not consummated, including the costs of making investigations as to the acceptability of the proposed assignee or subtenant. Any sublease to which Landlord gives its consent shall not be valid unless and until Tenant and the sublessee execute a consent agreement in form and substance satisfactory to Landlord in its reasonable discretion and a fully executed counterpart of such sublease has been delivered to Landlord. Any sublease shall provide that: (i) the term of the sublease ends no later than one day before the last day of the Term of this Lease; (ii) such sublease is subject and subordinate to this Lease; (iii) Landlord may enforce the provisions of the sublease, including collection of rents; and (iv) in the event of termination of this Lease or reentry or repossession of the Premises by Landlord, Landlord may, at its sole discretion and option, take over all of the right, title and interest of Tenant, as sublessor, under such sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord.

ARTICLE VII

RESPONSIBILITY FOR REPAIRS AND CONDITION OF

PREMISES; SERVICES TO BE FURNISHED BY LANDLORD

7.1  LANDLORD REPAIRS.

(a)Except as otherwise provided in this Lease, Landlord agrees to keep in good order, condition and repair, consistent with similar first-class office buildings in the Medford/Charlestown area, (i) the Building, including, without limitation, roof, foundation, exterior walls, exterior windows, structure, elevators, and all base building systems (but specifically excluding any supplemental heating, ventilation or air conditioning equipment or systems installed at Tenant’s request or installed, whether or not by or on behalf of Tenant, as a result of requirements in excess of Building standard design criteria), (ii) all Common Areas (interior and exterior), and (iii) all signage (other than any signs installed by Tenant), except that Landlord shall in no event be responsible to Tenant for the repair of glass in the Premises (excluding exterior windows), the doors leading to the Premises, or any condition in the Premises or the Building caused by any act or neglect of Tenant, or its invitees or contractors other than as set forth in Article XII. Landlord shall also keep and maintain all Common Areas free of snow and ice and accumulation of dirt and rubbish, and shall keep and maintain all landscaped areas on the Property in a neat and orderly condition. Notwithstanding the foregoing, but subject to the provisions of Section 14.20, Landlord shall be responsible for the cost of repairs which may be made necessary by

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reason of damage to the Premises caused solely by any negligent or willful act of Landlord, or its contractors or invitees. Landlord shall not be responsible to make any improvements or repairs to the Building other than as expressly in this Section 7.1 provided, unless expressly provided otherwise in this Lease.

(b)Landlord shall never be liable for any failure to make repairs which, under the provisions of this Section 7.1 or elsewhere in this Lease, Landlord has undertaken to make unless Tenant has given notice to Landlord of the need to make such repairs, and Landlord has failed to commence to make such repairs within a reasonable time after receipt of such notice, or fails to proceed with reasonable diligence to complete such repairs.

7.2  TENANT’S AGREEMENT.

(a)Subject to Landlord’s obligations set forth in Section 7.1 above, Tenant will keep neat and clean and maintain in good order, condition and repair the Premises and every part thereof, excepting only those repairs for which Landlord is responsible under the terms of this Lease, reasonable wear and tear of the Premises, and damage by fire or other casualty or as a consequence of the exercise of the power of eminent domain; and shall surrender the Premises, at the end of the Term, in such condition. Without limitation, Tenant shall continually during the Term of this Lease maintain the Premises in accordance with standards recommended by the Boston Board of Fire Underwriters to the extent said compliance is required as a result of the specific manner in which Tenant is using the Premises, Tenant’s layout of the Premises, or any alterations or improvements performed by Tenant subsequent to the completion of Landlord’s Work. To the extent that the Premises constitute a “Place of Public Accommodation” within the meaning of the Americans with Disabilities Act of 1990, Tenant shall be responsible, subject to the requirements of Section 5.2, for making the repairs within the Premises that are necessary to comply with any provisions of such Act that are enacted, or become effective, or become applicable to the Premises after the Commencement Date. Notwithstanding the foregoing, to the maximum extent this provision may be enforceable according to law and is not otherwise contrary to public policy, Tenant shall be responsible for the cost of repairs which may be made necessary by reason of damage to the Building caused solely by any negligent or willful act of Tenant, or its contractors or invitees (including any damage by fire or other casualty arising therefrom), provided that the liability of Tenant under this sentence shall be limited as and to the extend provide in Section 14.20.

(b)If repairs are required to be made by Tenant pursuant to the terms hereof, Landlord may demand by written notice that Tenant make the same forthwith, and if Tenant refuses or neglects to commence such repairs and complete the same within the cure period provided in Section 13.1 (except in the case of emergency in which event Landlord may make such repairs immediately), Landlord may (but shall not be required to do so) make or cause such repairs to be made.

7.3  FLOOR LOAD—HEAVY MACHINERY.

(a)Tenant shall not place a load upon any floor in the Premises exceeding 100 lbs. per square foot of Premises Usable Area in the west wing and 125 lbs. per square foot of Premises Usable Area in the east wing or the maximum which such floor was designed to carry and which is allowed by law. Landlord reserves the right to employ Landlord’s structural engineer, at Tenant’s expense, to prescribe the weight and position of all business machines and mechanical equipment, including safes, which shall be placed so as to distribute the weight. Business machines and mechanical equipment shall be placed and maintained by Tenant at Tenant’s expense in settings sufficient, in Landlord’s judgment, to absorb and prevent vibration, noise and annoyance. Tenant shall not move any safe, heavy machinery, heavy equipment, freight, bulky matter or fixtures into or out of the Building without Landlord’s prior consent, which shall not be unreasonably withheld, conditioned or delayed, but which consent may include a requirement to provide reasonable insurance, naming Landlord as an insured, in such amounts as Landlord may deem reasonable.

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(b)If any such safe, machinery, equipment, freight, bulky matter or fixtures requires special handling, Tenant agrees to employ only persons holding a Master Rigger’s License to do such work, and that all work in connection therewith shall comply with applicable laws and regulations. Any such moving shall be at the sole risk and hazard of Tenant, and Tenant will exonerate, indemnify and save Landlord harmless against and from any liability, loss, injury, claim or suit resulting directly or indirectly from such moving.

7.4  BUILDING SERVICES.

(a)Landlord shall, on Business Days from 8:00 a.m. to 6:00 p.m., furnish heating and cooling as normal seasonal changes may require at least equal to 1cfm per square foot of Premises Usable Area with 20% outdoor air to maintain 69-74 degree Fahrenheit Temperature, under normal business operation at an occupancy of not more than one person per 100 square feet of Premises Usable Area and a combined lighting and standard electrical load not exceeding 3.0 watts per square foot of Premises Usable Area, with the use of venetian blinds on the windows. If Tenant shall require air conditioning, heating or ventilation outside the hours and days above specified, Tenant shall give Landlord at least 24 hours’ prior notice of such requirement. Landlord shall furnish such service and Tenant shall pay therefor such charges as may from time to time be in effect. Such charge is currently $50.00 per hour per floor. Notwithstanding the foregoing, Landlord shall provide heating and cooling from 8:00 a.m. to 1:00 p.m., on no more than twenty-six (26) Saturdays per calendar year, solely to the portion of the Premises on the second floor of the Building, provided and on condition that Tenant notifies Landlord in writing that it will require such heating or cooling not less than 24 hours prior to the applicable Saturday. In the event Tenant introduces into the Premises personnel or equipment which overloads the capacity of the Building system or in any other way interferes with the system’s ability to perform adequately its proper functions, supplementary systems may, if and as needed, at Landlord’s option, be provided by Landlord, at Tenant’s expense.

(b)Landlord shall also provide:

(i)Passenger elevator service in common with Landlord and other tenants in the Building.

(ii)Hot water for lavatory and kitchen purposes and cold water (at temperatures supplied by the City of Medford) for drinking, kitchen and lavatory and toilet purposes at a central service area on each floor. If Tenant uses water for any purpose other than for ordinary office kitchen, lavatory and drinking purposes, Landlord may assess a reasonable charge for the additional water so used or install a water meter and thereby measure Tenant’s water consumption for all purposes. In the latter event, Tenant shall pay the cost of the meter and the cost of installation thereof and shall keep such meter and installation equipment in good working order and repair. Tenant agrees to pay for water consumed, as shown on such meter, together with the sewer charge based on such meter charges, as and when bills are rendered, and in default in making such payment Landlord may pay such charges and collect the same from Tenant as an additional charge.

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(iii)Cleaning and janitorial services on Business Days to (x) the Premises, provided the same are kept in order by Tenant and no extra services are necessary by reason of any special installations made by Tenant, and (y) the Common Areas, substantially in accordance with the cleaning standards set forth in Exhibit CS attached hereto.

(iv)Free access to the Premises at all times, 24/7, subject to reasonable security restrictions from time to time in effect, and subject always to restrictions based on emergency conditions.

(v)Backup power for normal office use to the Premises through three 2,000 kva generators. Landlord shall perform scheduled preventative maintenance twice per year during the Term. Preventative maintenance will be performed to one generator at a time while the remaining two are on line and available. In addition, the generators will be exercised every two weeks during off hours by running each one for a half hour.

(vi)Illuminate the parking areas and the sidewalks after dusk, and illuminate the interior Common Areas.

(c)Landlord or Agent from time to time may provide one or more uniformed attendants in or about the lobby of the Building. Such attendant(s) serve functions such as assisting visitors and invitees of tenants and others in the Building, monitoring fire control and alarm equipment, and summoning emergency services to the Building as and when needed. Tenant expressly acknowledges and agrees that: (i) such attendants are not police officers, they are unarmed, and they are not trained in situations involving potentially physical confrontation; and (ii) such attendants have been provided as an amenity to tenants of the Building for the sole purposes set forth above, and not for the purpose of securing any individual tenant premises or guaranteeing the physical safety of Tenant’s Premises or of Tenant’s employees, agents, contractors or invitees. If and to the extent that Tenant desires to provide additional security for the Premises or for such persons or their property, Tenant shall be responsible for so doing, after having first consulted with Landlord and after obtaining Landlord’s consent, which shall not be unreasonably withheld. Landlord expressly disclaims any and all responsibility and/or liability for the physical safety of Tenant’s property, and for that of Tenant’s employees, agents, contractors and invitees, and, without in any way limiting the operation of Article X hereof, to the extent permissible by applicable law, Tenant, for itself and its agents, contractors, invitees and employees, hereby expressly waives any claim, action, cause of action or other right which may accrue or arise as a result of any damage or injury to the person or property of Tenant or any such agent, invitee, contractor or employee. Tenant acknowledges that the Building is located in an urban area, and that crimes against property and persons do occasionally occur. Tenant agrees that, as between Landlord and Tenant, it is Tenant’s responsibility to advise its employees, agents, contractors and invitees as to necessary and appropriate safety precautions.

7.5  ELECTRICITY.

(a)Landlord shall furnish electricity to the Premises for lights, outlets and supplemental HVAC service dedicated to Tenant’s Premises to meet a so-called “connected load” requirement not to exceed six (6.0) watts at 277/480 volts per square foot of Premises Usable Area. Tenant agrees in its use of the Premises not to exceed such requirement and that its total connected lighting load will not exceed the maximum from time to time permitted under applicable governmental regulations. Landlord shall purchase and install, at Tenant’s expense (without mark-up or service charge), all replacement lamps, tubes, bulbs, starters and ballasts; provided, however, Landlord agrees to purchase and install, at Landlord’s expense, any lamps, tubes, bulbs, starters and ballasts during the first three (3) months of the Term. In order to assure that the foregoing requirements are not exceeded and to avert possible adverse affect on the Building’s electrical system, Tenant shall not, without Landlord’s prior consent, connect any fixtures, appliances or equipment to the Building’s electrical distribution system other than typewriters, printers, fax machines, pencil sharpeners, desk top calculators, dictaphones, photocopiers,

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personal computers, word processors, radios and other similar small electrical equipment normally found in business offices.

(b)Tenant shall be responsible for the payment of all electricity used and consumed in the Premises, including, without limitation for lights, outlets and supplemental HVAC service dedicated to Tenant’s Premises, provided however, once Tenant has installed the equipment in the Data Center, and such equipment is in operation, Tenant shall pay for all electricity used in the Data Center, allocated by Landlord on a per square foot basis to the Data Center. Landlord shall install a separate check meter measuring the electricity used and consumed in the Premises, and from time to time, but not more than once per calendar month, Landlord shall invoice Tenant for electricity used and consumed in the Premises, at Landlord’s cost therefore, without markup. Tenant shall pay Landlord the invoiced amount as Additional Rent hereunder within thirty (30) days after receipt of each such invoice. The obligation to pay for electricity used and consumed in the Premises during the last month of the Term hereof shall survive expiration of the Term.

(c)Landlord shall have the right to discontinue furnishing electricity to the Premises at any time upon not less than thirty (30) days’ notice to Tenant provided that Landlord shall, at Landlord’s expense, separately meter the Premises directly to the applicable public utility company. If Landlord exercises such right, from and after the effective date of such discontinuance, Landlord shall not be obligated to furnish electricity to the Premises, and Landlord shall permit Landlord’s existing wires, risers, conduits and other electrical equipment of Landlord to be used to supply electricity to Tenant provided that the limits set forth in paragraph (a) shall not be exceeded, and Tenant shall be responsible for payment of all electricity charges directly to such utility.

(d)Notwithstanding anything to the contrary in this Article 7 or in this Lease contained, Landlord may institute, and Tenant shall comply with, such policies, programs and measures as may be reasonably necessary, required, or expedient for the conservation and/or preservation of energy or energy services, or as may be reasonably necessary or required to comply with applicable codes, rules, regulations or standards.

(e)When necessary by reason of accident or emergency, or for repair, alterations, replacements or improvements which in the reasonable judgment of Landlord are desirable or necessary to be made, or of difficulty or inability in securing supplies or labor, or of strikes, or of any other cause beyond the reasonable control of Landlord, whether such other cause be similar or dissimilar to those hereinabove specifically mentioned until said cause has been removed, Landlord reserves the right to interrupt, curtail, stop or suspend (i) the furnishing of heating, elevator, air conditioning, and cleaning services and (ii) the operation of plumbing and electric systems. Landlord shall exercise reasonable diligence to eliminate the cause of any such interruption, curtailment, stoppage or suspension, and perform any such repair or replacement in such a manner so as to minimize any unreasonably interference with Tenant’s use of the Premises, but there shall be no diminution or abatement of rent or other compensation due from Landlord to Tenant hereunder, nor shall this Lease be affected or any of the Tenant’s obligations hereunder reduced, and the Landlord shall have no responsibility or liability for any such interruption, curtailment, stoppage, or suspension of services or systems. Except as set forth in paragraph (f) below, no diminution or abatement of rent or other compensation, nor any direct, indirect or consequential damages shall or will be claimed by Tenant as a result of, nor shall this Lease or any of the obligations of Tenant be affected or reduced by reason of, any such interruption, curtailment, suspension or stoppage in the furnishing of the foregoing services or use, irrespective of the cause thereof. Except as set forth in Section 7.6 below, failure or omission on the part of Landlord to furnish any of the foregoing services or use as provided in this paragraph shall not be construed as an eviction of Tenant, actual or constructive, nor entitle Tenant to an abatement of rent, nor to render the Landlord liable in damages, nor release Tenant from prompt fulfillment of any of its covenants under this Lease.

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7.6  INTERRUPTION OF SERVICES.  Notwithstanding anything contained in this Lease to the contrary, if (i) an interruption or curtailment, suspension or stoppage of an Essential Service (as said term is hereinafter defined) shall occur because of a failure of the Building’s systems or a failure of Landlord to perform its obligations set forth herein, or as a result of the acts or negligence of Landlord or any third party under Landlord’s control, including without limitation, any tenant of the Building (any such interruption of an Essential Service being hereinafter referred to as a “Service Interruption”), and (ii) such Service Interruption continues for more than three (3) consecutive Business Days after Landlord shall have received notice thereof from Tenant, and (iii) as a result of such Service Interruption, the conduct of Tenant’s normal operations in the Premises are materially and adversely affected, then there shall be an abatement of one day’s Basic Rent and Escalation Charges for each day during which such Service Interruption continues after such three (3) Business Day period; provided, however, that if any part of the Premises is reasonably useable for Tenant’s normal business operations or if Tenant conducts all or any part of its operations in any portion of the Premises notwithstanding such Service Interruption, then the amount of each daily abatement of Basic Rent and Escalation Charges shall only be proportionate to the nature and extent of the interruption of Tenant’s normal operations or ability to use the Premises. Except if and to the extent any such failure of Landlord constitutes a default of Landlord pursuant to Section 13.2 below, the rights granted to Tenant under this Section 7.6 shall be Tenant’s sole and exclusive remedy resulting from a failure of Landlord to provide services. For purposes hereof, the term “Essential Services” shall mean the following services: access to the Premises, water and sewer/septic service, HVAC service and electricity, but only to the extent that Landlord has an obligation to provide same to Tenant under this Lease. Any abatement of Basic Rent under this paragraph shall apply only with respect to Basic Rent allocable to the period after each of the conditions set forth in subsections (i) through (iii) hereof shall have been satisfied and only during such times as each of such conditions shall exist.

ARTICLE VIII

REAL ESTATE TAXES

8.1  PAYMENTS ON ACCOUNT OF REAL ESTATE TAXES.

(a)For the purposes of this Article, the term “Tax Year” shall mean each calendar year during the Term of this Lease; and the term “Taxes” shall mean (i) all taxes, excises, assessments (special or otherwise), levies, fees and all payments or obligations to any governmental body or any other government levies, exactions and charges of every kind and nature, general and special, ordinary and extraordinary, foreseen and unforeseen, which are, at any time prior to or during the Term, imposed or levied upon or assessed against the Property or any portion thereof, and (ii) the reasonable out-of-pocket expenses actually incurred by Landlord in connection with any proceeding for abatement of any of the foregoing items included in Taxes, provided Landlord prevails in such abatement proceeding. Supplementing the foregoing sentence, Landlord agrees to pay any special taxes or special assessments over the longest period permitted and to include in the Taxes for any Tax Year only the installment amount of such special taxes or special assessments (plus any interest, other than penalty interest, payable thereon) required to be paid during the Tax Year in question. There shall be excluded from Taxes all income, estate, succession, inheritance and transfer taxes of Landlord. If and to the extent the Building at any time becomes part of a larger project or development, and Taxes are not separately allocated by the taxing authority among the various buildings in such project or development, Landlord shall, in accordance with commercially reasonable practices, allocate to the Building for each calendar year or portion thereof during the Term an equitable portion of such Taxes.

(b)Commencing January 1, 2006, in the event that for any reason, Taxes during any Tax Year shall exceed Base Taxes, Tenant shall pay to Landlord, as an Escalation Charge, an amount equal to (i) the excess of Taxes over Base Taxes for such Tax Year multiplied by (ii) the Escalation Factor, such

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amount to be apportioned for any fraction of a Tax Year in which the Commencement Date falls or the Term of this Lease ends.

(c)Estimated payments by Tenant on account of Taxes shall be made monthly on the first day of each and every calendar month during the Term of this Lease and otherwise in the manner herein provided for the payment of Basic Rent based on Landlord’s good faith estimate of such Taxes for such Tax Year. The monthly amount so to be paid to Landlord shall be sufficient to provide Landlord by the time real estate tax payments are due a sum equal to Tenant’s required payments, as estimated by Landlord from time to time, on account of Taxes for the then current Tax Year. Promptly after the end of each calendar year and receipt by Landlord of bills for such Taxes, Landlord shall advise Tenant of the amount thereof and the computation of Tenant’s payment on account thereof along with copies of such tax bills. If estimated payments theretofore made by Tenant for the Tax Year covered by such bills exceed the required payments on account thereof for such Year, Landlord shall credit the amount of overpayment against subsequent obligations of Tenant on account of Basic Rent or Escalation Charges (or refund such overpayment within thirty (30) days after the end of the Term if the Term of this Lease has ended and Tenant has no further obligation to Landlord); but if the required payments on account thereof for such Year are greater than estimated payments theretofore made on account thereof for such Year, Tenant shall make payment to Landlord within thirty (30) days after being so advised by Landlord.

8.2  ABATEMENT.  Upon the written request of Tenant, Landlord will consider in good faith whether to contest or seek abatement of any Taxes affecting the Premises. In the event Landlord receives a request from tenants (including Tenant) occupying at least 60% of the rentable area of the Building, Landlord shall contest or seek abatement of Taxes affecting the Premises. If Landlord shall receive any tax refund or reimbursement of Taxes or sum in lieu thereof with respect to any Tax Year, then out of any balance remaining thereof after deducting Landlord’s expenses reasonably incurred in obtaining the same, Landlord shall pay to Tenant, provided there does not then exist a Default of Tenant, an amount equal to such refund or reimbursement or sum in lieu thereof (exclusive of any interest) multiplied by the Escalation Factor; provided, that in no event shall Tenant be entitled to receive more than the amount of any payments actually made by Tenant on account of Taxes for such Tax Year pursuant to Section 8.1 or to receive any payment if Taxes for any Tax Year are less than Base Taxes.

8.3  ALTERNATE TAXES.

(a)If some method or type of taxation shall replace the current method of assessment of real estate taxes in whole or part, or the type thereof, or if additional types of taxes are imposed upon the Property or Landlord, Tenant agrees that such taxes shall be deemed to be and shall be Taxes hereunder and Tenant shall pay an equitable share of the same as an additional charge computed in a fashion consistent with the method of computation herein provided, to the end that Tenant’s share thereof shall be, to the maximum extent practicable, comparable to that which Tenant would bear under the foregoing provisions. In calculating the alternative tax, Landlord shall assume that the Building and the Property are the only real estate owned by Landlord.

(b)If a tax (other than a Federal or State net income tax) is assessed on account of the rents or other charges payable by Tenant to Landlord under this Lease, Tenant agrees to pay the same as an additional charge within ten (10) days after billing therefor, unless applicable law prohibits the payment of such tax by Tenant.

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ARTICLE IX

OPERATING EXPENSES

9.1  DEFINITIONS.  For the purposes of this Article, the following terms shall have the following respective meanings:

Operating Year: Each calendar year in which any part of the Term of this Lease shall fall.

Operating Expenses: The aggregate costs or expenses incurred by Landlord with respect to the operation, administration, cleaning, repair, maintenance and management of the Property including, without limitation, those items enumerated in Exhibit OC annexed hereto, provided that, if during any portion of the Operating Year for which Operating Expenses are being computed, the Building was not operated or less than 95% of Building Rentable Area was occupied by tenants or if Landlord is not supplying all tenants with the services and utilities being supplied hereunder, actual Operating Expenses incurred shall be reasonably projected by Landlord to the estimated Operating Expenses that would have been incurred if the Building were fully occupied for such Year and such services and utilities were being supplied to all tenants, and such projected amount shall, for the purposes hereof, be deemed to be the Operating Expenses for such Year. If and to the extent the Building becomes at any time part of a larger project or development, and if services (e.g. snow removal and landscaping) which are then Operating Expenses under this Lease are provided by Landlord to the exterior common areas which are shared in common among the buildings in such project or development, then Landlord shall, in accordance with commercially reasonable practices, allocate to each building within the project or development (including the Building) its equitable share of the cost of such services for each calendar year.

9.2  TENANT’S PAYMENTS.

(a)Commencing on January 1, 2006, in the event that Operating Expenses for any Operating Year shall exceed Base Operating Expenses, Tenant shall pay to Landlord, as an Escalation Charge, an amount equal to (i) the excess of Operating Expenses for such Operating Year over Base Operating Expenses, multiplied by (ii) the Escalation Factor, such amount to be apportioned for any Operating Year in which the Commencement Date falls or the Term of this Lease ends. Notwithstanding the foregoing, Tenant’s share of Controllable operating Expenses (defined below) as determined in accordance with this Section 9.2(a) shall not increase by more than five percent (5%) over Tenant’s share of Controllable Operating Expenses in the previous calendar year, including over Base Operating Expenses. The term “Controllable Operating Expenses” means the items of Operating Expenses for payroll, cleaning, and service contracts for the Property, including electrical, HVAC, elevator, janitorial, life/safety and landscaping contracts.

(b)Estimated payments by Tenant on account of Operating Expenses shall be made monthly on the first day of each and every calendar month during the Term of this Lease based on Landlord’s good faith estimate of Operating Expenses for such Operating Year (taking into consideration the Operating Expenses for the prior Operating Year and any reasonably anticipated increases), and otherwise in the manner herein provided for the payment of Basic Rent. The monthly amount so to be paid to Landlord shall be sufficient to provide Landlord by the end of each Operating Year with a sum equal to Tenant’s required payments, as estimated by Landlord from time to time during each Operating Year (but not more than twice in any one Operating Year), on account of Operating Expenses for such Operating Year. After the end of each Operating Year, Landlord shall submit to Tenant a reasonably detailed accounting of Operating Expenses for such Year. Landlord shall use reasonable efforts to deliver such accounting within one hundred twenty (120) days after the end of such Operating Year. If estimated payments theretofore made for such Year by Tenant exceed Tenant’s required payment on account thereof for such Year, according to such statement, Landlord shall credit the amount of overpayment against subsequent obligations of Tenant with respect to Basic Rent and Escalation Charges (or within thirty (30) days, refund such overpayment if the Term of this Lease has ended and Tenant has no

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further obligation to Landlord); but, if the required payments on account thereof for such Year are greater than the estimated payments (if any) theretofore made on account thereof for such Year, Tenant shall make payment to Landlord within 30 days after being so advised by Landlord.

(c)Tenant shall have the right to examine, copy and audit Landlord’s books and records establishing Operating Expenses for any Operating Year for a period of one (1) year following the date that Tenant receives the statement of Operating Expenses for such Operating Year from Landlord. Tenant shall give Landlord not less than ten (10) Business Days’ prior notice of its intention to examine and audit such books and records, and such examination and audit shall take place at such place within Massachusetts as Landlord routinely maintains such books and records. As a condition to performing any such examination, Tenant’s examiners shall be required to execute and deliver to Landlord an agreement, in form reasonably acceptable to Landlord, Tenant and such examiners, agreeing (i) to keep confidential (with customary exceptions) any information which it discovers about Landlord or the Building in connection therewith that is not otherwise “public” information and (ii) to refrain from soliciting other tenants in the Building. Such examination may be made only by Tenant, its employees and/or by an independent certified public accounting firm approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. Without limiting Landlord’s approval rights, Landlord may withhold its approval of any examiner that is being compensated on a contingent fee basis. All costs of the examination and audit shall be borne by Tenant. If, pursuant to the audit, the payments made for such Operating Year by Tenant exceed Tenant’s required payment on account thereof for such Operating Year, Landlord shall credit the amount of overpayment against subsequent obligations of Tenant with respect to Operating Expenses (or promptly refund such overpayment if the Term of this Lease has ended and Tenant has no further obligation to Landlord); but, if the payments made by Tenant for such Operating Year are less than Tenant’s required payment as established by the examination and audit, Tenant shall pay the deficiency to Landlord within thirty (30) days after conclusion of the examination and audit, and the obligation to make such payment for any period within the Term shall survive expiration of the Term. If Tenant’s audit demonstrates that Landlord’s annual statement of Operating Expenses overstated Operating Expenses for such Operating Year by more than five percent (5%), then Landlord shall pay Tenant’s out-of-pocket costs to perform such audit. If Tenant does not elect to exercise its right to examine and audit Landlord’s books and records for any Operating Year within the time period provided for by this paragraph, Tenant shall have no further right to challenge Landlord’s statement of Operating Expenses. If Landlord shall dispute Tenant’s accounting and such dispute has not been settled by agreement, either party may submit the dispute to arbitration in accordance with the commercial arbitration rules of the American Arbitration Association within 90 days after giving of such accounting. The decision of the arbitrators shall be final and binding on Landlord and Tenant and judgment thereon may be entered in any court of competent jurisdiction. Pending resolution by agreement or arbitration, Tenant shall make any payment due shown by such accounting to be without prejudice to Tenant’s position.

ARTICLE X

INDEMNITY AND PUBLIC LIABILITY INSURANCE

10.1  TENANT’S INDEMNITY.  Except to the extent arising from the negligence or willful misconduct of Landlord or its agents or employees, to the maximum extent this agreement may be made effective according to law, and subject to the provisions of Section 14.20, Tenant agrees to indemnify and save harmless Landlord from and against all claims, loss, cost, damage or expense of whatever nature arising: (i) from any accident, injury or damage whatsoever to any person, or to the property of any person, occurring in or about the Premises; (ii) from any accident, injury or damage occurring outside of the Premises but on the Property where such accident, damage or injury results or is claimed to have resulted from the negligence or willful misconduct of Tenant or Tenant’s agents or employees or independent contractors; or (iii) in connection with the use or management of the Premises or of any business therein, or any thing or work whatsoever done, or any condition created

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(other than by Landlord) in the Premises; and, in any case, occurring after the date of this Lease until the end of the Term of this Lease and thereafter so long as Tenant is in occupancy of any part of the Premises. This indemnity and hold harmless agreement shall include indemnity against all losses, costs, damages, expenses and liabilities incurred in or in connection with any such claim or proceeding brought thereon, and the defense thereof, including, without limitation, reasonable attorneys’ fees and costs at both the trial and appellate levels.

10.2  LANDLORD’S INDEMNITY.  Except to the extent Tenant is required to indemnify Landlord pursuant to Section 10.1 above, to the maximum extent this agreement may be made effective according to law, and subject to the provisions of Section 14.20, Landlord agrees to indemnify and save harmless Tenant from and against all claims, loss, cost, damage or expense of whatever nature arising from any accident, injury or damage occurring on the Property where such accident, damage or injury results or is claimed to have resulted from the negligence or willful misconduct of Landlord or Landlord’s agents or employees or independent contractors; and, in any case, occurring after the date of this Lease until the end of the Term of this Lease and thereafter so long as Tenant is in occupancy of any part of the Premises. This indemnity and hold harmless agreement shall include indemnity against all losses, costs, damages, expenses and liabilities incurred in or in connection with any such claim or proceeding brought thereon, and the defense thereof, including, without limitation, reasonable attorneys’ fees and costs at both the trial and appellate levels.

10.3  GENERAL LIABILITY INSURANCE.  Tenant agrees to maintain in full force from the date upon which Tenant first enters the Premises for any reason, throughout the Term of this Lease, and thereafter so long as Tenant is in occupancy of any part of the Premises, a policy of commercial general liability and property damage insurance (including broad form contractual liability, independent contractor’s hazard and completed operations coverage) under which Tenant is named as an insured and Landlord, Agent, and any Mortgagee whose identity may be set out in a notice from time to time, are named as additional insureds, and under which the insurer agrees to indemnify and hold Landlord, Agent and those in privity of estate with Landlord, harmless from and against all cost, expense and/or liability arising out of or based upon any and all claims, accidents, injuries and damages set forth in Section 10.1. Each such policy shall be written on an “occurrence” basis, and shall be in at least the amounts of the Initial Public Liability Insurance specified in Section 1.3 or such greater amounts as are customary for prudent property owners in the area in which the Property is located, as Landlord shall from time to time request, but not more than once in any five year period (other than pursuant to the reasonable request of any institutional mortgagee of the Property), with deductibles not to exceed $10,000.00 for any one occurrence, and a certificate thereof shall be delivered to Landlord.

10.4  TENANT’S RISK AND PROPERTY DAMAGE INSURANCE.  To the maximum extent this agreement may be made effective according to law, neither Landlord nor Landlord’s insurers shall have any responsibility or liability for any loss of or damage to Tenant’s Removable Property. Tenant shall carry “Special Form” property insurance on a “replacement cost” basis, with deductibles not to exceed $10,000.00 for any one occurrence insuring Tenant’s Removable Property. The provisions of this Section 10.4 shall be applicable from and after the execution of this Lease and until the end of the Term of this Lease, and during such further period as Tenant may use or be in occupancy of any part of the Premises or of the Building.

10.5  INJURY CAUSED BY THIRD PARTIES.  To the maximum extent this agreement may be made effective according to law, Tenant agrees that Landlord shall not be responsible or liable to Tenant, or to those claiming by, through or under Tenant, for any loss or damage that may be occasioned by or through the acts or omissions of persons occupying adjoining premises or any part of the premises adjacent to or connecting with the Premises or any part of the Property or otherwise.

10.6  CERTIFICATES OF INSURANCE.  Such insurance shall be effected with insurers with a Best Rating of at least A-:VIII, authorized to do business in the state wherein the Building is situated.

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Such insurance shall provide that the insurer will endeavor to notify the holder of cancellation, but not modification, of the policies listed on the certificate at least thirty (30) days in advance by written notice to the named insured therein; provided however, the failure to so notify shall not impose any liability on the insurer. Notwithstanding the foregoing, Tenant agrees to notify Landlord of any such cancellation or modification at least twenty (20) days before the occurrence thereof. On or before the time Tenant and/or its contractors enter the premises in accordance with this Lease and thereafter not less than fifteen (15) days prior to the expiration date of each expiring policy, certificates of the policies provided for in this Article X issued by the respective insurers, together with evidence satisfactory to Landlord of the payment of all premiums for such policies, shall be delivered by Tenant to Landlord and upon request of Landlord, be delivered by Tenant to the holder of any mortgage affecting the Premises.

10.7  LANDLORD’S INSURANCE.  At all times throughout the term, Landlord shall carry and maintain (a) commercial general liability insurance applicable to the Building and the Property and its appurtenances in at least the amounts required to be maintained by Tenant from time to time, which insurance shall also insure Landlord’s indemnification obligations under this Lease, and (b) “Special Form” property insurance on a “replacement cost” basis insuring the Building above foundation walls (including work, installations, improvements and betterments in the Premises), the other improvements constructed on the Property, and all of Landlord’s personal property on the Property and in the Building. Such insurance shall be effected with insurers with a Best Rating of at least A-:VIII, authorized to do business in the state wherein the Building is situated.

ARTICLE XI

LANDLORD’S ACCESS TO PREMISES

11.1  LANDLORD’S RIGHTS.  Landlord and/or Agent shall have the right to enter the Premises at all reasonable hours upon reasonable prior notice (except in case of emergency) and at any time for an emergency for the purpose of inspecting or making repairs to the same, and Landlord and/or Agent shall also have the right to make access available at all reasonable hours to prospective or existing mortgagees, purchasers or, in the last twelve months of the Term, to tenants of all or any part of the Property.

ARTICLE XII

FIRE, EMINENT DOMAIN, ETC.

12.1  ABATEMENT OF RENT.  If the Premises or the Building shall be damaged by fire or casualty, Basic Rent and Escalation Charges payable by Tenant shall abate proportionately for the period in which, by reason of such damage, all or a portion of the Premises is rendered untenantable having regard to the extent to which Tenant may be required to discontinue Tenant’s use of all or a portion of the Premises, but such abatement or reduction shall end if and when Landlord shall have substantially restored the Premises (including any alterations, additions or improvements made by Tenant pursuant to Section 5.2, to the extent that the same have become the property of Landlord) to the condition in which they were prior to such damage. If the Premises shall be affected by any exercise of the power of eminent domain, Basic Rent and Escalation Charges payable by Tenant shall be justly and equitably abated and reduced according to the nature and extent of the loss of use thereof suffered by Tenant. In no event shall Landlord have any liability for damages to Tenant for inconvenience, annoyance or interruption of business arising from such fire, casualty or eminent domain.

12.2  LANDLORD’S RIGHT OF TERMINATION.  If the Premises or the Building are substantially damaged by fire or casualty (the term “substantially damaged” meaning damage of such a character that Landlord’s architect estimates that repair of such damage cannot be completed within 180 days from the date such restoration work would commence), or if any part of the Building is taken by any exercise of the right of eminent domain which would leave the remainder of the Building

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unsuitable or uneconomic for use as an office building comparable to its use on the Commencement Date, then Landlord shall have the right to terminate this Lease (even if Landlord’s entire interest in the Premises may have been divested) by giving notice of Landlord’s election so to do within sixty (60) days after the occurrence of such casualty or the effective date of such taking, whereupon this Lease shall terminate 30 days after the date of such notice with the same force and effect as if such date were the date originally established as the expiration date hereof.

12.3  TENANT’S RIGHT OF TERMINATION; RESTORATION.  In the event of (a) any fire or other casualty affecting the Premises, or any portion of the Building that unreasonably adversely affects Tenant’s use and occupancy of the Premises, and Landlord’s architect estimates that repair of such damage cannot be completed within 180 days from the date such restoration work would commence, or (b) a taking of any portion of the Premises, the Building, and/or the Property that adversely affects Tenant’s access to, and/or Tenant’s use and occupancy of, the Premises, Tenant may elect to terminate this Lease by written notice to Landlord, delivered within thirty (30) days after the date of such fire or other casualty, or within thirty (30) days after notice of such taking. If this Lease shall not be so terminated by Tenant, or by Landlord pursuant to Section 12.2, Landlord shall thereafter use due diligence to restore the Premises, the Building and/or the Property (including any alterations, additions or improvements made by Tenant pursuant to Section 5.2, to the extent that the same have become the property of Landlord) to the condition in which they were prior to such damage or taking, provided that Landlord’s obligation shall be limited to the amount of insurance proceeds (and any deductible amount) available therefor (provided that Landlord maintains the insurance required to be maintained by Landlord under this Lease), or any award available for such taking in the event of a taking. If, for any reason, such restoration shall not be substantially completed within two hundred seventy (270) days after the date of such damage or taking (which 270-day period may be extended for such periods of time as Landlord is prevented from proceeding with or completing such restoration for any cause beyond Landlord’s reasonable control, but in no event for more than an additional ninety (90) days), then Tenant shall have the right to terminate this Lease by giving notice to Landlord thereof within thirty (30) days after the expiration of such period (as so extended). Upon the giving of such notice, this Lease shall cease and come to an end thirty (30) days after the giving of such notice, without further liability or obligation on the part of either party, unless, within such 30-day period, Landlord substantially completes such restoration. Such right of termination shall be Tenant’s sole and exclusive remedy at law or in equity for Landlord’s failure so to complete such restoration.

12.4  AWARD.  Landlord shall have and hereby reserves and excepts, and Tenant hereby grants and assigns to Landlord, all rights to recover for damages to the Property and the leasehold interest hereby created, and to compensation accrued or hereafter to accrue by reason of such taking, damage or destruction, and by way of confirming the foregoing, Tenant hereby grants and assigns, and covenants with Landlord to grant and assign to Landlord, all rights to such damages or compensation. Nothing contained herein shall be construed to prevent Tenant from prosecuting in any condemnation proceedings a claim for the value of any of Tenant’s Removable Property installed in the Premises by Tenant at Tenant’s expense and for relocation expenses, provided that such action shall not affect the amount of compensation otherwise recoverable by Landlord from the taking authority.

ARTICLE XIII

DEFAULT

13.1  TENANT’S DEFAULT.

(a)If at any time subsequent to the date of this Lease any one or more of the following events (herein referred to as a “Default of Tenant”) shall happen:

(i)Tenant shall fail to pay the Basic Rent, Escalation Charges, additional charges or other charges hereunder when due and such failure shall continue for five (5) full Business Days after

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written notice from Landlord, provided, however, if, in any twelve-month period, Landlord has given to Tenant two (2) notices of a monetary default under this clause (i), then, with respect to any subsequent failure to pay that occurs during such twelve (12) month period after the giving of the second (2nd) notice, Landlord shall not be obligated to give, and Tenant shall not be entitled to receive, a notice, and a Default of Tenant shall be deemed to have occurred immediately upon such subsequent failure; or

(ii)Tenant shall neglect or fail to perform or observe any other covenant herein contained on Tenant’s part to be performed or observed and Tenant shall fail to remedy the same as soon as practicable and in any event within thirty (30) days after notice to Tenant specifying such neglect or failure, or if such failure is of such a nature that Tenant cannot reasonably remedy the same within such thirty (30) day period, Tenant shall fail to commence promptly (and in any event within such thirty (30) day period) to remedy the same and to prosecute such remedy to completion with diligence and continuity; or

(iii)Tenant’s leasehold interest in the Premises shall be taken on execution or by other process of law directed against Tenant; or

(iv)Tenant shall make an assignment for the benefit of creditors or shall be adjudicated insolvent, or shall file any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future Federal, State or other statute, law or regulation for the relief of debtors (other than the Bankruptcy Code, as hereinafter defined), or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of Tenant or of all or any substantial part of its properties, or shall admit in writing its inability to pay its debts generally as they become due; or

(v)An Event of Bankruptcy (as hereinafter defined) shall occur with respect to Tenant; or

(vi)A petition shall be filed against Tenant under any law (other than the Bankruptcy Code) seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future Federal, State or other statute, law or regulation and shall remain undismissed or unstayed for an aggregate of sixty (60) days (whether or not consecutive), or if any trustee, conservator, receiver or liquidator of Tenant or of all or any substantial part of its properties shall be appointed without the consent or acquiescence of Tenant and such appointment shall remain unvacated or unstayed for an aggregate of sixty (60) days (whether or not consecutive);

then in any such case Landlord may terminate this Lease by notice to Tenant, specifying a date not less than five (5) days after the giving of such notice on which this Lease shall terminate, Landlord being under no obligation to accept any cure of such Default of Tenant offered by Tenant during such period prior to the effective date of such termination, such period being provided solely to accommodate Tenant’s vacating of the Premises. This Lease shall come to an end on the date of such notice as fully and completely as if such date were the date herein originally fixed for the expiration of the Term of this Lease, and Tenant will then quit and surrender the Premises to Landlord, but Tenant shall remain liable as hereinafter provided.

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(b)For purposes of clause (a)(v) above, an “Event of Bankruptcy” means the filing of a voluntary petition by Tenant, or the entry of an order for relief against Tenant, under Chapter 7, 11, or 13 of the Bankruptcy Code, and the term “Bankruptcy Code” means 11 U.S.C §101, et seq. If an Event of Bankruptcy occurs, then the trustee of Tenant’s bankruptcy estate or Tenant as debtor-in-possession may (subject to final approval of the court) assume this Lease, and may subsequently assign it, only if it does the following within 60 days after the date of the filing of the voluntary petition, the entry of the order for relief (or such additional time as a court of competent jurisdiction may grant, for cause, upon a motion made within the original 60-day period):

(i)file a motion to assume the Lease with the appropriate court;

(ii)satisfy all of the following conditions, which Landlord and Tenant acknowledge to be commercially reasonable:

(A)cure all Defaults of Tenant under this Lease or provide Landlord with Adequate Assurance (as defined below) that it will (x) cure all monetary Defaults of Tenant hereunder within 10 Business Days from the date of the assumption; and (y) cure all nonmonetary Defaults of Tenant hereunder within the time periods set forth above in Section 13.1(a) from the date of the assumption;

(B)compensate Landlord and any other person or entity, or provide Landlord with Adequate Assurance that within a reasonable period of time after the date of the assumption, it will compensate Landlord and such other person or entity, for any actual pecuniary loss that Landlord and such other person or entity incurred as a result of any Default of Tenant, the trustee, or the debtor-in-possession; and

(C)provide Landlord with Adequate Assurance of Future Performance (as defined below) of all of Tenant’s obligations under this Lease.

(c)Intentionally Omitted.

(d)For purposes only of paragraph (b), and in addition to any other requirements under the Bankruptcy Code, any future federal bankruptcy law and applicable case law, “Adequate Assurance of Future Performance” means at least meeting the following conditions, which Landlord and Tenant acknowledge to be commercially reasonable:

(i)the trustee or debtor-in-possession depositing with Landlord, as security for the timely payment of rent and other monetary obligations, an amount equal to the sum of two (2) months’ Basic Rent plus an amount equal to two (2) months’ installments on account of Operating Expenses and Taxes, computed in accordance with Articles 8 and 9;

(ii)the trustee or debtor-in-possession providing adequate assurance of the source of the rent and other consideration due under this Lease;

(iii)Tenant’s bankruptcy estate and the trustee or debtor-in-possession providing Adequate Assurance that the bankruptcy estate (and any successor after the conclusion of the Tenant’s bankruptcy proceedings) will have sufficient funds to fulfill Tenant’s obligations hereunder; and

(e)If the trustee or the debtor-in-possession assumes the Lease under paragraph (b) above and applicable bankruptcy law, it may assign its interest in this Lease only if the proposed assignee first provides Landlord with Adequate Assurance of Future Performance of all of Tenant’s obligations under the Lease, and, with respect to an assignment to a person or entity that proposes to use the Premises for purposes other than the Permitted Uses, if Landlord determines, in the exercise of its reasonable business judgment, that the assignment of this Lease will not result in a breach by Landlord of its obligations under any other lease, or any mortgage, financing agreement, or other agreement relating to the Property by which Landlord or the Property is then bound (and Landlord shall not be required

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to obtain consents or waivers from any third party required under any lease, mortgage, financing agreement, or other such agreement by which Landlord is then bound).

(f)For purposes only of paragraph (e) above, and in addition to any other requirements under the Bankruptcy Code, any future federal bankruptcy law and applicable case law, “Adequate Assurance of Future Performance” means at least the satisfaction of the following conditions, which Landlord and Tenant acknowledge to be commercially reasonable:

(i)the proposed assignee submitting a current financial statement, that shows a net worth and working capital in amounts determined in the reasonable business judgment of Landlord to be sufficient to assure the future performance by the assignee of Tenant’s obligation under this Lease;

(g)If this Lease shall have been terminated as provided in this Article, or if any execution or attachment shall be issued against Tenant or any of Tenant’s property whereupon the Premises shall be taken or occupied by someone other than Tenant, then Landlord may re-enter the Premises, either by summary proceedings, ejectment or otherwise, and remove and dispossess Tenant and all other persons and any and all property from the same, as if this Lease had not been made.

(h)In the event of any termination, Tenant shall pay the Basic Rent, Escalation Charges and other sums payable hereunder up to the time of such termination, and thereafter Tenant, until the end of what would have been the Term of this Lease in the absence of such termination, and whether or not the Premises shall have been relet, shall be liable to Landlord for, and shall pay to Landlord, as liquidated current damages, the Basic Rent, Escalation Charges and other sums that would be payable hereunder if such termination had not occurred, less the net proceeds, if any, of any reletting of the Premises, after deducting all reasonable expenses in connection with such reletting, including, without limitation, all reasonable repossession costs, brokerage commissions, legal expenses, attorneys’ fees, advertising, alteration costs and expenses of preparation for such reletting. Tenant shall pay such damages to Landlord monthly on the days which the Basic Rent would have been payable hereunder if this Lease had not been terminated.

(i)At any time after such termination, whether or not Landlord shall have collected any such current damages, as liquidated final damages and in lieu of all such current damages beyond the date of such demand, at Landlord’s election Tenant shall pay to Landlord an amount equal to the excess, if any, of the Basic Rent, Escalation Charges and other sums as hereinbefore provided which would be payable hereunder from the date of such demand assuming that, for the purposes of this paragraph, annual payments by Tenant on account of Taxes and Operating Expenses would be the same as the payments required for the immediately preceding Operating or Tax Year for what would be the then unexpired Term of this Lease if the same remained in effect, over the then fair net rental value of the Premises for the same period, discounted to present value using a discount rate equal to the average yield to maturity of United States treasury instruments having a maturity comparable to time period between the date of such termination or reentry and the original expiration date of the Term of this Lease.

(j)In case of any Default by Tenant, re-entry, expiration and dispossession by summary proceedings or otherwise, Landlord may (i) re-let the Premises or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may at Landlord’s option be equal to or less than or exceed the period which would otherwise have constituted the balance of the Term of this Lease and may grant concessions or free rent to the extent that Landlord considers advisable and necessary to re-let the same and (ii) may make such reasonable alterations, repairs and decorations in the Premises as Landlord in its sole judgment considers advisable and necessary for the purpose of reletting the Premises; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Landlord shall in no event be liable in any way whatsoever for failure to re-let the Premises, or, in the event that the Premises are re-let, for failure to collect the rent under such re-letting. Tenant hereby expressly waives any and all

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rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed, or in the event of Landlord obtaining possession of the Premises, by reason of the violation by Tenant of any of the covenants and conditions of this Lease. The foregoing notwithstanding, in the event of termination of this Lease or repossession of the Premises after a Default of Tenant, and provided Tenant has not refused to reasonably work with Landlord in surrendering possession of the Premises as required herein after such termination or repossession, Landlord shall use commercially reasonable efforts to mitigate its damages hereunder, provided that Landlord (i) shall not be obligated to show preference for reletting the Premises over any other vacant space in the Building; (ii) may divide the Premises, or to consolidate portions of the Premises with other spaces, in order to facilitate such reletting, as Landlord deems appropriate, (iii)may relet the whole or any portion of the Premises for any period, to any tenant, and for any use and purpose, and upon such terms as it deems appropriate, and may grant any rental or other lease concessions as it reasonably deems advisable under prevailing market conditions, including free rent; and (iv) Landlord’s obligation to mitigate damages shall be deemed satisfied by its providing adequate information to a commercial broker as to the availability of such space (based on a customary brokerage fee being earned by such broker), having the Premises available for inspection by prospective tenants during reasonable business hours, and by acceptance of a commercially reasonable offer for the Premises (or reasonable portion thereof) from a creditworthy person or entity based on a form of lease agreement which is substantially the same as the form utilized for other space tenants in the Building, without material change therefrom (and Landlord shall be under no obligation to accept any offer other than a commercially reasonable offer from a creditworthy person or entity at then going rental rates for the Building).

(k)The specified remedies to which Landlord may resort hereunder are not intended to be exclusive of any remedies or means of redress to which Landlord may at any time be entitled lawfully, and Landlord may invoke any remedy (including the remedy of specific performance) allowed at law or in equity as if specific remedies were not herein provided for.

(l)All reasonable costs and expenses incurred by or on behalf of Landlord (including, without limitation, attorneys’ fees and expenses at both the trial and appellate levels) in enforcing its rights hereunder or occasioned by any Default of Tenant shall be paid by Tenant.

13.2  LANDLORD’S DEFAULT.  Landlord shall in no event be in default in the performance of any of Landlord’s obligations hereunder unless and until Landlord shall have failed to perform such obligations within thirty (30) days, or if such failure is of such a nature that Landlord cannot reasonably remedy the same within such thirty (30) day period, Landlord shall fail to commence promptly (and in any event within such thirty (30) day period) to remedy the same and to prosecute such remedy to completion with diligence and continuity. The foregoing shall not derogate from the rights and remedies provided to Tenant in Section 7.6. Without limiting any other rights that Tenant may have under this Lease, at law or in equity, Tenant expressly agrees that this Lease shall be construed as though Landlord’s covenants contained herein are independent and not dependent.

ARTICLE XIV

MISCELLANEOUS PROVISIONS

14.1  EXTRA HAZARDOUS USE.  Tenant covenants and agrees that Tenant will not do or permit anything to be done in or upon the Premises, or bring in anything or keep anything therein, which shall increase the rate of property or liability insurance on the Premises or the Property above the standard rate applicable to Premises being occupied for Permitted Uses; and Tenant further agrees that, in the event that Tenant shall do any of the foregoing, Tenant will promptly pay to Landlord, on demand, any such increase resulting therefrom, which shall be due and payable as an additional charge hereunder. Landlord represents that, as of the date of this Lease, Tenant’s use of the Premises for the

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Permitted Use, in accordance with the terms of this Lease, shall not require any increase in the insurance premiums for the Premises or the Property.

14.2  WAIVER.

(a)Failure on the part of Landlord or Tenant to complain of any action or non-action on the part of the other, no matter how long the same may continue, shall never be a waiver by Tenant or Landlord, respectively, of any of the other’s rights hereunder. Further, no waiver at any time of any of the provisions hereof by Landlord or Tenant shall be construed as a waiver of any of the other provisions hereof, and a waiver at any time of any of the provisions hereof shall not be construed as a waiver at any subsequent time of the same provisions. The consent or approval of Landlord or Tenant to or of any action by the other requiring such consent or approval shall not be construed to waive or render unnecessary Landlord’s or Tenant’s consent or approval to or of any subsequent similar act by the other.

(b)No payment by Tenant, or acceptance by Landlord, of a lesser amount than shall be due from Tenant to Landlord shall be treated otherwise than as a payment on account of the earliest installment of any payment due from Tenant under the provisions hereof. The acceptance by Landlord of a check for a lesser amount with an endorsement or statement thereon, or upon any letter accompanying such check, that such lesser amount is payment in full, shall be given no effect, and Landlord may accept such check without prejudice to any other rights or remedies which Landlord may have against Tenant.

14.3  COVENANT OF QUIET ENJOYMENT.  Tenant, subject to the terms and provisions of this Lease, on payment of the Basic Rent, Escalation Charges and additional charges and observing, keeping and performing all of the other terms and provisions of this Lease on Tenant’s part to be observed, kept and performed, shall lawfully, peaceably and quietly have, hold, occupy and enjoy the Premises during the term hereof, without hindrance or ejection by any persons lawfully claiming under Landlord to have title to the Premises superior to Tenant; the foregoing covenant of quiet enjoyment is in lieu of any other covenant, express or implied.

14.4  LANDLORD’S LIABILITY.

(a)Tenant specifically agrees to look solely to Landlord’s interest in the Property, and the insurance and sale proceeds, condemnation awards, rent and other income therefrom, for recovery of any judgment from Landlord; it being specifically agreed that neither Landlord (original or successor) nor any partner of Landlord (nor any principal of any such partner) shall ever be personally liable for any such judgment, or for the payment of any monetary obligation to Tenant. The provision contained in the foregoing sentence is not intended to, and shall not, limit any right that Tenant might otherwise have to obtain injunctive relief against Landlord or Landlord’s successors in interest, or to take any action not involving the personal liability of Landlord (original or successor).

(b)With respect to any services or utilities to be furnished by Landlord to Tenant, Landlord shall in no event be liable for failure to furnish the same when prevented from doing so by strike, lockout, breakdown, accident, order or regulation of or by any governmental authority, or failure of supply, or failure whenever and for so long as may be necessary by reason of the making of repairs or changes which Landlord is required or is permitted by this Lease or by law to make or in good faith deems necessary, or inability by the exercise of reasonable diligence to obtain supplies, parts or employees necessary to furnish such services, or because of war or other emergency, or for any other cause beyond Landlord’s reasonable control, or for any cause due to any act or neglect of Tenant or Tenant’s servants, agents, employees, licensees or any person claiming by, through or under Tenant. Notwithstanding the foregoing, (A) Landlord shall exercise reasonable diligence to eliminate the cause of any such interruption, curtailment, stoppage or suspension, (B) Landlord shall secure, to the extent commercially reasonable, other means of providing such services or utilities on a temporary basis, and (C) Landlord shall perform any such repair or replacement in such a manner so as to minimize any

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unreasonably interference with Tenant’s use of the Premises. Landlord hereby acknowledges and agrees that the foregoing provisions shall not derogate from Tenant’s remedies set forth in Section 7.6.

(c)In no event shall Landlord ever be liable to Tenant for any loss of business or any other indirect or consequential damages suffered by Tenant from whatever cause. Except to the extent arising as a result of any holdover of Tenant in the Premises, in no event shall Tenant ever be liable to Landlord for any loss of business or any other indirect or consequential damages suffered by Landlord from whatever cause.

(d)Whenever Tenant requests Landlord’s consent or approval (whether or not provided for herein), Tenant shall pay to Landlord, on demand, as an additional charge, any expenses incurred by Landlord (including without limitation legal fees and costs, if any) in connection therewith without limitation.

(e)With respect to any repairs or restoration which are required or permitted to be made by Landlord, the same may be made during normal business hours and Landlord shall have no liability for damages to Tenant for inconvenience, annoyance or interruption of business arising therefrom. Landlord shall use commercially reasonable efforts to perform any such work in a manner that will not unreasonably interfere with Tenant’s use and occupancy of the Premises, and shall diligently pursue such work to completion.

14.5  NOTICE TO MORTGAGEE OR GROUND LESSOR.  After receiving notice from any person, firm or other entity that it holds a mortgage or a ground lease which includes the Premises, Tenant shall give a copy of any notice of default of Landlord to such holder or ground lessor (provided Tenant shall have been furnished with the name and address of such holder or ground lessor), and the curing of any of Landlord’s defaults by such holder or ground lessor shall be treated as performance by Landlord.

14.6  ASSIGNMENT OF RENTS AND TRANSFER OF TITLE.

(a)With reference to any assignment by Landlord of Landlord’s interest in this Lease, or the rents payable hereunder, conditional in nature or otherwise, which assignment is made to the holder of a mortgage on property which includes the Premises, Tenant agrees that the execution thereof by Landlord, and the acceptance thereof by the holder of such mortgage shall never be treated as an assumption by such holder of any of the obligations of Landlord hereunder unless such holder shall, by notice sent to Tenant, specifically otherwise elect and that, except as aforesaid, such holder shall be treated as having assumed Landlord’s obligations hereunder only upon foreclosure of such holder’s mortgage and the taking of possession of the Premises.

(b)In no event shall the acquisition of Landlord’s interest in the Property by a purchaser which, simultaneously therewith, leases Landlord’s entire interest in the Property back to the seller thereof be treated as an assumption by operation of law or otherwise, of Landlord’s obligations hereunder, but Tenant shall look solely to such seller-lessee, and its successors from time to time in title, for performance of Landlord’s obligations hereunder. In any such event, this Lease shall be subject and subordinate to the lease to such seller-lessee provided such purchaser-lessor enters into a non-disturbance agreement with Tenant, as required by the provisions of Section 14.15. For all purposes, such seller-lessee, and its successors in title, shall be the Landlord hereunder unless and until Landlord’s position shall have been assumed by such purchaser-lessor.

(c)Except as provided in paragraph (b) of this Section, in the event of any transfer of title to the Property by Landlord, upon assumption by such transferee of Landlord’s obligations hereunder, Landlord shall thereafter be entirely freed and relieved from the performance and observance of all covenants and obligations hereunder.

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14.7  RULES AND REGULATIONS.  Tenant shall abide by rules and regulations from time to time established by Landlord, it being agreed that such rules and regulations will be established and applied by Landlord in a non-discriminatory fashion, such that all rules and regulations shall be applicable to other tenants of the Building. The current rules and regulations in effect for the Building are attached hereto and made a part hereof as Exhibit RR. Landlord agrees to use reasonable efforts to insure that any such rules and regulations are uniformly enforced, but Landlord shall not be liable to Tenant for violation of the same by any other tenant or occupant of the Building, or persons having business with them. In the event that there shall be a conflict between such rules and regulations and this Lease, the provisions of this Lease shall prevail.

14.8  ADDITIONAL CHARGES.  If Tenant shall fail to pay when due any sums under this Lease designated as an Escalation Charge or additional charge, Landlord shall have the same rights and remedies as Landlord has hereunder for failure to pay Basic Rent.

14.9  INVALIDITY OF PARTICULAR PROVISIONS.  If any term or provision of this Lease, or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law.

14.10  PROVISIONS BINDING, ETC.  Except as herein otherwise provided, the terms hereof shall be binding upon and shall inure to the benefit of the successors and assigns, respectively, of Landlord and Tenant (except in the case of Tenant, however, only such assigns as may be permitted hereunder) and, if Tenant shall be an individual, upon and to his heirs, executors, administrators, successors and permitted assigns. The reference contained to successors and assigns of Tenant is not intended to constitute a consent to assignment by Tenant.

14.11  RECORDING.  Tenant agrees not to record this Lease, but, if the Term of this Lease (including any extended term) is seven (7) years or longer, each party hereto agrees, on the request of the other, to execute a so-called notice of lease in recordable form, complying with applicable law and reasonably satisfactory to Landlord’s attorneys. In no event shall such document set forth the rent or other charges payable by Tenant under this Lease; and any such document shall expressly state that it is executed pursuant to the provisions contained in this Lease, and is not intended to vary the terms and conditions of this Lease.

14.12  NOTICES.  Whenever, by the terms of this Lease, notices shall or may be given either to Landlord or to Tenant, such notice shall be in writing and shall be sent by registered, certified or express mail, or by a recognized commercial courier or delivery service, postage or delivery charges prepaid, return receipt requested:

If intended for Landlord, addressed to Landlord c/o Berkeley Investments, Inc., 121 High Street, Boston, Massachusetts 02110 and marked “ATTN: Steve Brooks (or to such other address or addresses as may from time to time hereafter be designated by Landlord by like notice); or

If intended for Tenant, addressed to Tenant at Tenant’s Original Address until the Commencement Date and thereafter to the Premises, to the attention of the Chief Executive Officer (or to such other address or addresses as may from time to time hereafter be designated by Tenant by like notice).

All such notices shall be effective when within three (3) days after depositing in the United States Mail or upon delivery to such courier or the next day after deposit with such overnight delivery service within the Continental United States.

14.13  WHEN LEASE BECOMES BINDING.  The submission of this document for examination and negotiation does not constitute an offer to lease, or a reservation of, or option for, the Premises,

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and this document shall become effective and binding only upon the execution and delivery hereof by both Landlord and Tenant. All negotiations, considerations, representations and understandings between Landlord and Tenant are incorporated herein and this Lease expressly supersedes any proposals or other written documents relating hereto. This Lease may be modified or altered only by written agreement between Landlord and Tenant, and no act or omission of any employee or agent of Landlord shall alter, change or modify any of the provisions hereof.

14.14  PARAGRAPH HEADINGS AND INTERPRETATION OF SECTIONS.  The paragraph headings throughout this instrument are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify or aid in the interpretation, construction or meaning of the provisions of this Lease. The provisions of this Lease shall be construed as a whole, according to their common meaning (except where a precise legal interpretation is clearly evidenced), and the provisions hereof shall not be construed or interpreted for or against either party, regardless of any rules of construction or interpretation. Use in this Lease of the words “including,” “such as” or words of similar import, when followed by any general term, statement or matter, shall not be construed to limit such term, statement or matter to the specified item(s), whether or not language of non-limitation, such as “without limitation” or “including, but not limited to,” or words of similar import, are used with reference thereto, but rather shall be deemed to refer to all other terms or matters that could fall within a reasonably broad scope of such term, statement or matter. Tenant represents that (i) it has had the opportunity to review this Lease and the terms and conditions herein set forth with sophisticated legal counsel of Tenant’s choosing, and (ii) it has had the opportunity to discuss and negotiate such terms and conditions with Landlord or Landlord’s counsel, and (iii) this Lease as executed represents the results of such review, discussions and negotiations.

14.15  RIGHTS OF MORTGAGEE OR GROUND LESSOR.

(a)This Lease shall be subordinate to any mortgage or ground lease from time to time encumbering the Premises, whether executed and delivered prior to or subsequent to the date of this Lease, provided and on condition that the holder of such mortgage or ground lease shall execute a subordination, non-disturbance and attornment agreement (“SNDA”) in form and substance reasonably satisfactory to Tenant and such holder; said SNDA shall provide, in part, that Tenant’s right to possession of the Premises shall not be disturbed, and Tenant’s other rights hereunder shall not be adversely affected by, any the exercise of any rights under said mortgage or ground lease, whichever is applicable (including, without limitation a foreclosure of such mortgage or encumbrance or a termination of such ground lease) so long as there is no Default of Tenant under this Lease. If this Lease is subordinated to any mortgage or ground lease and the holder thereof (or successor) shall succeed to the interest of Landlord, Tenant shall attorn to such holder in accordance with the terms of said SNDA and this Lease shall continue in full force and effect between such holder (or successor) (such holder hereinafter referred to as the “Successor Landlord”) and Tenant.

(b)This Lease is contingent upon the execution and delivery of the SNDA by the holder(s) of the existing mortgage(s) within forty-five (45) days after the execution of this Lease. If such contingency is not satisfied within said forty-five (45) day period, then Tenant shall have the right to terminate this Lease by notice given to Landlord at any time after said forty-five (45) day period. Said termination notice shall be effective on the tenth (10th) day after the giving of such notice, unless this contingency is satisfied on or before said tenth (10th) day.

14.16  ESTOPPEL CERTIFICATE.  Recognizing that both parties may find it necessary to establish to third parties, such as accountants, banks, mortgagees, ground lessors, or the like, the then current status of performance hereunder, either party, on the request of the other made from time to time, will promptly furnish to Landlord, or the holder of any mortgage or ground lease encumbering the Premises, or to Tenant, as the case may be, a statement of the status of any matter pertaining to

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this Lease, including, without limitation, acknowledgments that (or the extent to which) each party is in compliance with its obligations under the terms of this Lease.

14.17  INTENTIONALLY OMITTED.

14.18  REMEDYING DEFAULTS.  Landlord shall have the right, but shall not be required, to pay such sums or do any act which requires the expenditure of monies which may be necessary or appropriate by reason of the failure or neglect of Tenant to perform any of the provisions of this Lease, and in the event of the exercise of such right by Landlord, Tenant agrees to pay to Landlord forthwith upon demand all such sums, together with interest thereon at a rate equal to 3% over the so-called base rate in effect from time to time at Bank of America, N.A. (but in no event more than 18% per annum), as an additional charge.

14.19  HOLDING OVER.

(a)Provided that no Default of Tenant has occurred and is continuing, either at the time of exercise or the time such extension commences, Tenant shall have the one-time option to extend the Term of this Lease for an additional six (6) months after the expiration of the Lease (the “Holdover Term”), upon all of the terms and conditions of this Lease, by providing written notice to Landlord not later than twelve (12) months prior to the expiration of the Term of this Lease. The giving of such notice of extension by Tenant shall automatically extend the Term of this Lease for the Holdover Term, and no instrument of renewal or extension need be executed. In the event that Tenant fails to give such notice to Landlord, this Lease shall automatically terminate at the end of the Term then in effect, and Tenant shall have no further option to extend the Term of this Lease.

(b)Any holding over by Tenant after the expiration of the Term of this Lease not effected by Tenant in accordance with Paragraph (a) shall be treated as a daily tenancy at sufferance at a rate equal to one and a half times the Basic Rent then in effect plus Escalation Charges and other additional charges herein provided (prorated on a daily basis) and shall otherwise be on the terms and conditions set forth in this Lease as far as applicable. Without limiting the foregoing, Tenant shall also be responsible for, and indemnify and hold Landlord harmless from and against, all lost, cost and damage suffered by Landlord (including without limitation loss of rental or loss of a tenant) as a result of any such holding over.

14.20  WAIVER OF SUBROGATION.  Notwithstanding anything to the contrary contained in the Lease, insofar as, and to the extent that, the following provision shall not make it impossible to secure insurance coverage obtainable from responsible insurance companies doing business in the locality in which the Property is located (even though extra premium may result therefrom) Landlord and Tenant: (i) mutually agree that, with respect to any damage to property, the loss from which is covered by insurance then being carried by them, respectively, or would have been covered by insurance if said party had maintained the insurance required under this Lease, the one carrying, or obligated to carry, such insurance and suffering such loss releases the other of and from, and forever waives, any and all claims with respect to such loss, but only to the extent of the limits of insurance carried or required with respect thereto, less the amount of any deductible; and (ii) mutually agree that any property damage insurance carried by either shall provide for the waiver by the insurance carrier of any right of subrogation against the other.

14.21  SURRENDER OF PREMISES.  Upon the expiration or earlier termination of the Term of this Lease, Tenant shall peaceably quit and surrender to Landlord the Premises in neat and clean condition and in good order, condition and repair, together with all alterations, additions and improvements which may have been made or installed in, on or to the Premises prior to or during the Term of this Lease, excepting only (i) ordinary wear and use and (ii) damage by fire or other casualty or as a result of any exercise of the right of eminent domain. Tenant shall remove all of Tenant’s Removable Property and shall repair any damages to the Premises or the Building caused by such

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removal. Any Tenant’s Removable Property which shall remain in the Building or on the Premises after the expiration or termination of the Term of this Lease shall be deemed conclusively to have been abandoned, and either may be retained by Landlord as its property or may be disposed of in such manner as Landlord may see fit, at Tenant’s sole cost and expense.

14.22  INTENTIONALLY OMITTED.

14.23  BROKERAGE.  Tenant warrants and represents that Tenant has dealt with no broker in connection with the consummation of this Lease other than the Brokers and, in the event of any brokerage claims against Landlord predicated upon prior dealings with Tenant, Tenant agrees to defend the same and indemnify Landlord against any such claim (except any claim by the Brokers).

14.24  GOVERNING LAW.  This Lease shall be governed exclusively by the provisions hereof and by the laws of the Commonwealth of Massachusetts, as the same may from time to time exist.

14.25  BLINDS AND DRAPES.  No blinds may be put on or in any window or elsewhere if visible from the exterior of the Building, nor may the building standard drapes or blinds be removed by Tenant. Tenant may hangs its own drapes, provided that they shall not in any way interfere with the building standard drapery or blinds or be visible from the exterior of the Building and that such drapes are so hung and installed that when drawn, the building standard drapery or blinds are automatically also drawn. Neither Landlord’s name, nor the name of the Building, or the name of any other structure erected therein shall be used without Landlord’s consent in any advertising material (except on business stationery or as an address in advertising matter), nor shall any such name, as aforesaid, be used in any undignified, confusing, detrimental or misleading manner.

IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly executed, under seal, by persons hereunto duly authorized, in multiple copies, each to be considered an original hereof, as of the date first set forth above.

		LANDLORD: CABOT ROAD PARTNERS, LLC
		By:	BERKELEY INVESTMENTS, INC., its general partner
Attest:	/s/ STEVE BROOKS	By:	/s/ DONALD CUFF
		TENANT:
		THE FIRST MARBLEHEAD CORPORATION
Attest:		By:	/s/ ANDREW J. HAWLEY
			(Vice) President
Attest:		By:
			(Assistant) Treasurer

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EXHIBIT FP

(Floor Plan of the Premises)

[schematic diagrams of second and third floors]

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EXHIBIT FP-1

(Floor Plan of the Expansion Premises)

[schematic diagram of first refusal space—approximately 16,640 RSF]

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EXHIBIT FP-2

(Floor Plan of the Storage Area)

[schematic diagram of storage space—approximately 1,000 SF]

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EXHIBIT PP

(Plan of the Property)

[schematic diagram of site, including bounding roadways]

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EXHIBIT OC

(Items Included in Operating Expenses)

Without limitation, Operating Expenses shall include:

1.All expenses (including any sales or use tax) incurred by Landlord or Landlord’s agents which shall be directly related to employment of personnel, including amounts incurred for wages, salaries and other compensation for services, payroll, social security, unemployment and similar taxes, workmen’s compensation insurance, disability benefits, pensions, hospitalization, retirement plans and group insurance, uniforms and working clothes and the cleaning thereof, and expenses imposed on Landlord or Landlord’s agents pursuant to any collective bargaining agreement for the services of employees of Landlord or Landlord’s agents in connection with the operation, administration, repair, maintenance, cleaning, management and protection of the Property, and its mechanical systems including, without limitation, day and night supervisors, property manager, accountants, bookkeepers, janitors, carpenters, engineers, mechanics, electricians and plumbers and personnel engaged in supervision of any of the persons mentioned above; provided that, if any such employee is also employed on other property of Landlord, such compensation shall be suitably prorated among the Property and such other properties;

2.The cost incurred by Landlord of services, materials and supplies furnished or used in the operation, administration, repair, maintenance, cleaning, management and protection of the Property, including, without limitation, fees, if any, imposed upon Landlord, or charged to the Property, by the state or municipality in which the Property is located on account of the need of the Property for increased or augmented public safety services;

3.The cost of replacements for tools and other similar equipment used in the repair, maintenance, cleaning and protection of the Property, provided that, in the case of any such equipment used jointly on other property of Landlord, such costs shall be suitably prorated among the Property and such other properties;

4.Where the Property is managed by Landlord or an affiliate of Landlord, a sum equal to the amounts customarily charged by management firms in the Boston area for similar properties, but in no event more than four percent (4%) of gross annual income, whether or not actually paid, or where managed by other than Landlord or an affiliate thereof, the amounts accrued for management (not exceeding four percent of gross annual income), together with, in either case, amounts accrued for legal and other professional fees relating to the Property, but excluding such fees and commissions paid in connection with services rendered for securing or renewing leases and for matters not related to the normal administration and operation of the Building;

5.Premiums for insurance against damage or loss to the Building from such hazards as shall from time to time be generally required by institutional mortgagees in the Boston area for similar properties, including, but not by way of limitation, insurance covering loss of rent attributable to any such hazards, and public liability insurance and premiums for fidelity bonds covering persons having custody or control over funds or other property of Landlord relating to the Property;

6.If, during the Term of this Lease, Landlord shall make a capital expenditure for the purpose of complying with any legal requirement enacted or promulgated after the date of this Lease or for the purpose of updating any Building system in order to reduce Operating Expenses, the total cost of which is not properly includable in Operating Expenses for the Operating Year in which it was made, there shall nevertheless be included in such Operating Expenses for the Operating Year in which it was made and in Operating Expenses for each succeeding

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Operating Year the annual charge-off of such capital expenditure; provided, however, with respect to those capital expenditures incurred to reduce Operating Expenses, the annual charge-off included in the Operating Expenses for any Operating Year shall not exceed the actual savings realized by Landlord. Annual charge-off shall be determined by dividing the original capital expenditure plus an interest factor, reasonably determined by Landlord as being the interest rate then being charged for long-term mortgages by institutional lenders on like properties within the locality in which the Building is located, by the number of years of useful life of the improvement made with the capital expenditure (except that with respect to a capital expenditure for the purpose of saving Operating Expenses, the number of years may be less than the useful life of the improvement to the extent of such savings); and the useful life shall be otherwise determined reasonably by Landlord in accordance with generally accepted accounting principles and practices in effect at the time of making such expenditure; and

7.Costs incurred by Landlord for electricity, fuel, water and sewer use charges, and all other utilities supplied to the Property, except for those paid for directly by tenants of the Property.

Operating Expenses shall not include, and therefore Landlord is not entitled to be reimbursed under this Lease for, the following items: (i) depreciation on the Building or any other improvement on the Property; (ii) costs of planning, designing, improving or altering any tenant’s space; (iii) costs of relocating any tenant; (iv) expenses of advertising, marketing and leasing space in the Building, including finders’ fees and real estate broker commissions, legal fees, fit-up costs, contributions, credits, and buy-out costs; (v) costs for which Landlord is otherwise reimbursed, but only to the extent of such other reimbursement, such as, for example, expenses reimbursed by another tenant under the provisions of such other tenant’s lease; (vi) costs of any work or service performed for any other tenant to the extent such work or service is in excess of any work or service which Landlord is obligated to furnish to Tenant; (vii) Landlord’s general overhead and administrative expenses (exclusive of the management fee referenced above); (viii) court costs and legal fees; (ix) wages of any employee above the property manager; (x) except as otherwise expressly permitted under clause 6 above, all expenditures that are considered to be capital expenditures under GAAP; (xi) costs of repairs covered by warranty or guaranty; (xii) costs of repairs and replacements incurred by reason of fire or other casualty or caused by the exercise of the right of eminent domain to the extent Landlord is reimbursed for such expenses from insurance proceeds or any condemnation award and, with respect to those repairs and replacements for which Landlord is not reimbursed, such costs shall be excluded to the extent they would otherwise be excluded under this Exhibit OC; (xiii) costs related to the financing or refinancing of the Building or Property, including points, commissions and legal fees; (xiv) costs of complying with any laws, including, without limitation, environmental laws in effect as of the Commencement Date of this Lease; (xvi) contributions for off site improvements; (xvii) contributions to reserves; (xviii) all interest and amortization payments, and all fines and penalties; (xix) any cost or charge billed to Landlord pursuant to a service contract, which cost or charge, if incurred directly by Landlord, would be excluded from the Operating Expenses; (xx) all rent paid under any other ground or superior lease of the Building or Property; (xxiii) Taxes and all costs to contest Taxes; (xxiv) any costs and expenses related to the cafeteria in the Building to the extent reimbursed directly by the operator of such cafeteria or otherwise offset by the income received by Landlord for such cafeteria; and (xxv) any capital expenditures, except to the extent expressly permitted under paragraph 6 above.

In the event any employee whose wages (including fringe benefits and employment taxes) are included in the Operating Expenses does not devote his/her entire time to the Building and/or Property, then said wages shall be included only in proportion to the amount of time spent working at the Building and/or Property. In addition, if any service is provided by an affiliate or subsidiary of Landlord or managing agent, the cost of such service shall not exceed the reasonable and customary cost charged by an independent, reputable third party performing the same services.

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EXHIBIT CS

(Cleaning Specifications)

A.General

1.All stone, ceramic, tile, marble, terrazzo and other unwaxed flooring to be swept nightly on Business Days, using approved dust-down preparation; wash flooring once a month.

2.All linoleum, rubber, asphalt tile and other similar types of flooring (that may be waxed) to be swept nightly on Business Days, using approved dust-down preparation. Waxing, if any, shall be done at Tenant’s expense.

3.All carpeting and rugs to be carpet swept or vacuum cleaned nightly on Business Days, as may be required.

4.Hand dust and wipe clean all furniture, files, fixtures and window sills nightly on Business Days;

5.Dust interior of all waste paper disposal cans and baskets nightly on Business Days; damp dust as necessary.

6.Wash clean all water coolers nightly on Business Days;

7.Dust all door and other ventilating louvers within reach, as necessary.

8.Dust all telephones as necessary.

9.Sweep all private stairway structures nightly on Business Days.

10.Wipe clean all bright work weekly.

11.Interior and exterior of metal elevator car and hatch doors, including saddles, to be properly cleaned and treated as necessary.

12.The parties agree and acknowledge that, despite reasonable precautions in selecting cleaning and maintenance contractors and personnel, any property or equipment in the premises of a delicate, fragile or vulnerable nature may nevertheless be damaged in the course of cleaning and maintenance services being performed. Accordingly, Tenant shall take reasonable protective precautions with such property and equipment (including, without limitation, computers, or other data processing components or equipment and optical or electronic equipment, etc.), e.g. housing the property and equipment in a separate, locked room, so as to render it inaccessible to the Building’s cleaning personnel.

B.Lavatories (Building)

1.Sweep and wash all lavatory floors nightly on Business Days, wash and polish all mirrors, powder shelves, bright work and enameled surfaces in lavatories, weekly.

2.Scour, wash and disinfect all basins, bowls and urinals throughout all lavatories nightly on Business Days.

3.Wash all toilet seats nightly on Business Days.

4.Hand dust and clean all partitions, tile wall dispensers and receptacles in all lavatories nightly on Business Days.

5.Empty paper towel receptacles and transport wastepaper from the demised premises nightly on Business Days.

6.Fill toilet tissue holders nightly on Business Days.

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7.Empty sanitary disposal receptacles nightly on Business Days.

8.Wash interior of waste cans and receptacles at least once a week.

9.Thoroughly wash all wall tile and stall surfaces as often as necessary but in no event less than once every two weeks.

10.Fill soap dispensers and paper towel dispensers.

C.High Dusting

Do all high dusting quarterly, which includes the following:

1.Dust clean all vertical surfaces, such as walls, partitions, doors and bucks and other surfaces not reached in nightly cleaning.

2.Dust clean all pipes, ventilating and air conditioning louvers, ducts, high moldings and other high areas not reached in nightly cleaning.

3.Dust all lighting fixtures, including glass or plastic enclosures (exterior only).

D.Window Cleaning

1.All windows to be cleaned inside and outside, two times a year.

2.Tenants’ entrance doors and lobby glass to be spot-cleaned daily on Business Days.

3.All other Tenant interior partition glass and glass doors are to be cleaned at Tenant’s request and cost.

E.Day Porters

1.Service, during Business Days all public and operating space throughout the Building.

2.Keep elevator cars clean and neat during the day on Business Days.

3.Insert toilet tissue in lavatories as necessary on Business Days.

4.Keep staircases policed as necessary on Business Days.

5.Fill soap dispensers and paper towel dispensers on Business Days.

6.Police all Buildings’ men’s and ladies’ toilets during the day on Business Days.

F.Exterminating Services

Provide exterminating services by a licensed operator once a month throughout public space and vacant tenant space in the Building.

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EXHIBIT TW

(Tenant’s Work Requirements)

A.General

1.All alterations, installations or improvements (“Alterations”) to be made by Tenant in, to or about the Premises shall be made in accordance with the requirements of this Exhibit and by contractors or mechanics approved by Landlord.

2.Tenant shall, prior to the commencement of any work, submit for Landlord’s written approval, complete plans for the Alterations, which plans meet the requirements set forth in Exhibit PR. Drawings are to be complete with full details and specifications for all of the Alterations.

3.Alterations must comply with the Building Codes in effect for the City of Medford and the requirements, rules and regulations and any other governmental agencies having jurisdiction.

4.No work shall be permitted to commence without the Landlord being furnished with a valid permit from the City of Medford Building Department and/or other agencies having jurisdiction.

5.All demolition, removals or other categories of work that in Landlord’s reasonable judgment may inconvenience other tenants or disturb Building operations, must be scheduled and performed before 8:00 a.m. or after 6:00 p.m. and Tenant shall provide the Building manager with at least 48 hours’ notice prior to proceeding with such work.

6.All inquiries, submissions, approvals and all other matters shall be processed through the Building manager, and shall be in writing.

B.Prior to Commencement of Work

1.Tenant shall submit to the Building manager a written request to perform the work. The request shall include the following enclosures:

(i)A list of Tenant’s contractors and/or subcontractors for Landlord’s approval, including afterhours emergency contractor numbers.

(ii)Four complete sets of plans and specifications properly stamped by a registered architect and/or professional engineer and meeting the requirements set forth in Exhibit PR.

(iii)A properly executed building permit application form.

(iv)Four executed copies of the Insurance Requirements agreement in the form attached to these Tenant’s Work Requirements from Tenant’s contractor and if requested by Landlord from the contractor’s subcontractors.

(v)Contractor’s and subcontractor’s insurance certificates including an indemnity in accordance with the Insurance Requirements agreement.

2.Within ten (10) business days, Landlord will return the following to Tenant:

(i)Two sets of plans approved or a disapproval with specific comments as to the reasons therefor (such approval or comments shall not constitute a waiver of Building Department approval or approval of other governmental agencies).

(ii)Two fully executed copies of the Insurance Requirements agreement.

3.Tenant shall obtain a building permit from the Building Department and necessary permits from other governmental agencies. Tenant shall be responsible for keeping current all permits. Tenant shall submit copies of all approved plans and permits to Landlord and shall post the

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original permit on the Premises prior to the commencement of any work. All work, if performed by a contractor or subcontractor, shall be subject to reasonable supervision and inspection by Landlord’s representative. Such supervision and inspection, to the extent that the work may affect the Building’s mechanical and electrical systems, shall be at Tenant’s sole expense and Tenant shall pay Landlord’s reasonable charges for such supervision and inspection.

C.Requirements and Procedures

1.All structural and floor loading requirements shall be subject to the prior approval of Landlord’s structural engineer, with cost of such review to be paid by Tenant.

2.All mechanical (HVAC, plumbing and sprinkler) and electrical requirements shall be subject to the approval of Landlord’s mechanical and electrical engineers and all mechanical and electrical work shall be performed by contractors approved by Landlord. When necessary, Landlord will require engineering and shop drawings, which drawings must be approved by Landlord before work is started. Drawings are to be prepared by Tenant and all approvals shall be obtained by Tenant.

3.Elevator service for construction work shall be charged to Tenant at standard Building rates which will include the cost of operators and supervisory staff. Prior arrangements for elevator use shall be made in writing at least 48 hours in advance with Building manager by Tenant. No material or equipment shall be carried under or on top of elevators. If an operating engineer or master mechanic is required by any union regulations, such engineer or master mechanic shall be paid for by Tenant.

4.If shutdown of risers and mains for electrical, HVAC, sprinkler and plumbing work is required, such work shall be supervised by Landlord’s representative at Tenant’s cost. No work will be performed in Building’s mechanical or electrical equipment rooms without Landlord’s approval and under Landlord’s supervision.

5.Tenant’s contractor shall:

(i)have a responsible superintendent or foreman on the Premises at all times;

(ii)police the job at all times, continually keeping the Premises orderly;

(iii)maintain cleanliness and protection of all areas, at all times, including elevators and lobbies, building Common Areas, and loading areas.

(iv)protect the front and top of all peripheral HVAC units and thoroughly clean them at the completion of work;

(v)block off supply and return grills, diffusers and ducts to keep dust from entering into the Building air conditioning system;

(vi)avoid the disturbance of other tenants; and

(vii)fully abide by all building rules, policies and regulations.

6.If Tenant’s contractor is negligent in any of its responsibilities and if, after notice to Tenant no corrective action is taken, Landlord may, but shall not be obligated to, engage other contractors to perform the Alterations. Tenant shall be charged for corrective work.

7.All equipment and installations must be equal to the standards set forth in Exhibit BS. Any deviation from such standards will be permitted only if indicated or specified on the plans and specifications and approved by Landlord.

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8.A properly executed air balancing report signed by an independent professional engineer shall be submitted to Landlord upon the completion of all HVAC work for approval.

9.Upon completion of the Alterations and prior to taking occupancy, Tenant shall submit to Landlord a permanent certificate of occupancy and final approval by the other governmental agencies having jurisdiction.

10.Tenant shall submit to Landlord a final “as-built” set of sepia drawings showing all items of the Alterations in full detail.

11.Additional and differing provisions in the Lease, if any, will be applicable and will take precedence.

12.Any plan or design approval rights reserved to or exercised by Landlord hereunder are for the sole and exclusive benefit of Landlord to ensure compatibility of such work with Building systems and Building standards, and such approval does not constitute any representation or warranty whatsoever as to the adequacy, correctness, efficiency or compliance with applicable law of such plan or design or the work shown thereon.

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EXHIBIT IR

(Contractor’s Insurance Requirements)

Building: One Cabot Road, Medford, Massachusetts

Tenant:

Premises:

The undersigned contractor or subcontractor (“Contractor”) has been hired by the tenant or occupant (hereinafter called “Tenant”) of the Building named above or by Tenant’s contractor to perform certain work (“Work”) for Tenant in the Premises identified above. Contractor and Tenant have requested the undersigned landlord (“Landlord”) to grant Contractor access to the Building and its facilities in connection with the performance of the Work and Landlord agrees to grant such access to Contractor upon and subject to the following terms and conditions:

1.Contractor agrees to indemnify and save harmless the Landlord (and, if Landlord is a general or limited partnership, each of the partners thereof), Agent, Berkeley Investment, Inc. and their respective officers, employees and agents and their affiliates, subsidiaries and partners, and each of them, from and with respect to any claims, demands, suits, liabilities, losses and expenses, including reasonable attorneys’ fees, arising out of or in connection with the Work (and/or imposed by law upon any or all of them) because of personal injuries, including death at any time resulting therefrom and loss of or damage to property, including consequential damages, whether such injuries to person or property are claimed to be due to negligence of the Contractor, Tenant, Landlord or any other party entitled to be indemnified as aforesaid except to the extent specifically prohibited by law (and any such prohibition shall not void this Agreement but shall be applied only to the minimum extent required by law).

2.Contractor shall provide and maintain at its own expense, until completion of the Work, the following insurance:

(a)Workmen’s Compensation and Employers, Liability Insurance covering each and every workman employed in, about or upon the Work, as provided for in each and every statute applicable to Workmen’s Compensation and Employers’ Liability Insurance.

(b)Comprehensive General Liability Insurance including coverages for Products/Completed Operations, Broad Form Property Damage and Contractual Liability (to specifically include coverage for the indemnification clause of this Agreement), all listing Landlord as an additional insured, for not less than the following limits:

Personal Injury:	$1,000,000 per person $2,000,000 per occurrence
Property Damage:	$1,000,000 per occurrence $2,000,000 aggregate

(c)Comprehensive Automobile Liability Insurance (covering all owned, non-owned and/or hired motor vehicles to be used in connection with the Work) for not less than the following limits:

Bodily Injury:	$1,000,000 per person $2,000,000 per occurrence
Property Damage:	$1,000,000 per occurrence $2,000,000 aggregate

Contractor shall furnish a certificate from its insurance carrier or carriers to the Building office before commencing the Work, showing that it has complied with the above requirements regarding

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insurance and providing that the insurer will give Landlord ten (10) days’ prior written notice of the cancellation of any of the foregoing policies.

3.Contractor shall require all of its subcontractors engaged in the Work to provide the following insurance:

(a)Comprehensive General Liability Insurance including Protective and Contractual Liability coverages with limits of liability at least equal to the limits stated in paragraph 2(b).

(b)Comprehensive Automobile Liability Insurance (covering all owned, non-owned and/or hired motor vehicles to be used in connection with the Work) with limits of liability at least equal to the limits stated in paragraph 2(c).

Upon the request of Landlord, Contractor shall require all of its subcontractors engaged in the Work to execute an Insurance Requirements agreement in the same form as this Agreement.

Agreed to and executed this     day of                                 ,               .

Contractor:

By:

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EXHIBIT BS

(Building Standards)

TURNKEY EXHIBIT

Building Standard Materials and Turnkey Scope

Landlord will provide a turnkey buildout of Tenant’s Premises at Landlord’s expense substantially in accordance with the following scope definition and floor plans dated August 5, 2004 and labeled Schematic Design prepared by Fuller Associates (“Preliminary Plan”) attached hereto and incorporated herein as part of this Exhibit BS. The tenant improvements will be constructed with the building standard materials described below. Quantities will be defined by the Delineation of Turn-key Scope and Tenant Responsibility Matrix and approved Tenant plans.

		Turn-key Scope	Tenant Cost
Preparation of Premises for Tenant Improvements
a.	Landlord to remove at Landlord’s expense existing tenant improvements, including all existing tele/data cabling, as required to provide the new tenant improvements described herein.	X
b.	Landlord to furnish and install at Landlord’s expense all partitions to demise the Premises, 21/2" metal studs at 16" on center with one (1) layer of 5/8" gypsum board on one side and one (1) layer of 5/8" gypsum board on the other. Demising partitions will extend from floor to underside of structure above, insulated transfer ducts to be provided subject to requirements of the building air conditioning system, and the partition will be filled with 3" compressed fiberglass sound insulation.	N/A	N/A
c.	Landlord to provide all material and labor at Landlord’s expense to segregate the fire protection, HVAC, fire alarm, and electrical systems as required due to the demising of the Premises.	N/A	N/A
d.	Landlord to demolish and dispose of existing systems furniture and other equipment and debris remaining in the Premises.	X
Finish Carpentry
a.	Provide new standard color plastic laminate exterior and interior finish upper and lower cabinets with adjustable interior shelves at Pantries, Cafes and Kitchen.	X
b.	A closet shelf and coat rod will be provided at each coat room and/or closet.	X
c.	Standard color plastic laminate exterior and interior finish upper and lower cabinets with adjustable interior shelves at Copy/Fax, areas and Mail Rooms.	X
d.	Tenant to supply systems furniture.		X
e.	Reception desk.		X
f.	Provide new standard color plastic laminate phone carrels and coat rack at Training area Phones/Coats.	X
g.	Demo and dispose of ceilings in the existing auditorium and boardroom on the second floor.	X
h.	Repair window sills where damaged or altered for walls that have been demolished.	X
Rough Carpentry
a.	One (1) 4'x 8' plywood backboard mounted partition in MIS rooms to be provided for Tenant’s tele/data and security system equipment.	X
b.	Blocking within partitions to be provided as required for Turnkey work.	X

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c.	Raised flooring at 3rd floor auditorium as required for elevated seating.	X
d.	Provide design and support of dense file system at File Room, 2W.	X
Doors & Frames & Hardware
The Tenant standard doors shall consist of the following:
a.	All doors within a single premises will be 3'0" × 8'0" solid core wood doors or equivalent with mahogany veneer (finish to match doors on 2nd Floor), 13/4" thick and shall receive a factory clear finish. Oak doors refinished to mahogany will not be accepted. Door frames will be hollow metal.	X
b.	Hardware will include four (4) butts, one (1) standard duty mortise latch set, and one (1) floor-mounted door stop. Standard duty mortise locksets to be provided at doors to the common corridor. All office doors to receive one (1) coat hook. Landlord will be responsible to match existing hardware and replace any missing hardware.	X
c.	Closers to be provided at doors to the common corridor, cafes, pantries, copy/fax areas and IT rooms.	X
d.	Landlord will provide entry doors as shown on plans.	X
e.	Where doors have had multiple hardware/locks removed, door shall be replaced with a new door and appropriate door hardware. Plating of core holes will not be acceptable.	X
Partitions
The following building standard materials will be provided by Landlord:
a.	Interior partitions (i.e. partitions within the a single Premises) will be 21/2" metals studs 24" on center with one (1) layer of 5/8" gypsum board on each side. Partitions will be built to 6" above the ceiling.	X
b.	Walls that are existing to remain shall be patched and repaired to receive new finishes.	X
Ceiling
a.	Building standard ceilings shall be 2'0" × 2'0" reveal edge textured acoustic lay-in tile, Celotex LeBaron, or equal. Ceiling grid shall match existing.	X
b.	ACT shall be consistent throughout. Patterned or embossed ACT shall be replaced to match existing tile in open areas.	X
Flooring
a.	Landlord will provide a $25/sy allowance for the total installed cost of the carpet, exclusive of any floor leveling or preparation that may be required.	X
b.	Standard VCT will be provided in pantries, kitchen and kitchen areas of cafes. It shall also be provided at storage and file rooms, as copy/fax rooms.	X
c.	Existing VCT that remains as shown on plans shall be stripped and re-sealed.	X
d.	Anti-static VCT to be provided in new MIS or IS rooms, as shown on plans.	X
e.	4" vinyl base will be provided on all partitions.	X
f.	Base building restrooms contained within the Premises are to receive new carpet (where carpet currently exists) complementary to Tenant finishes and existing restroom fixtures.	X
Painting and Wall Covering
a.	All wall surfaces and ceiling soffits shall receive two (2) coats of eggshell finish latex paint. Color selection will be made from a mutually agreed upon color palette with not more than one (1) color per office.	X

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b.	All existing interior hollow metal door frames will receive two (2) coats of semi-gloss enamel.	X
c.	Base building restrooms contained within the Premises are to receive new wall finishes complementary to Tenant finishes and existing restroom fixtures.	X
Specialties
a.	Fire extinguishers and cabinets to be provided as required per Code.	X
b.	Perimeter blinds to be in good working order with missing slats replaced.	X
c.	Damaged window sills repaired and sills washed down throughout.	X
d.	In-ceiling, electric projection screens shall be provided at all training and conference rooms seating 8 or more.	X
e.	LL to confirm as functional and/or repair as needed the automatic blackout shades in the third floor auditorium space. LL to provide any equipment required to operate said shades in a complete and functional manner.	X
Appliances
a.	Appliances to be provided as shown on plans.		X
Fire Protection
a.	All existing fire sprinkler heads to be reused and relocated to center of ceiling tiles as required by reflected ceiling plan. New heads with swing arms to be provided as required per Code.	X
b.	Existing Inergen system to be tested, adjusted and recharged as necessary for reuse at existing Data Center room.	X
c.	Deactivated Intergen system to be tested, adjusted and tanks provided and charged as necessary to reactive for reuse at existing room.	X
Plumbing
a.	Landlord will provide a stainless steel sink with hot and cold water at the pantries, kitchen, cafes and servery. A point of use hot water heater will be sized for the sink requirement and installed in an adjacent base cabinet. Tees for connection of water purification systems, refrigerators, and ice makers shall be provided at the sink.	X
b.	New restrooms are to be provided on Floors 2 and 3 as shown on plans, fixtures and level of finish to match base building standard.	X
HVAC
The Landlord will provide a fully functional HVAC system that will include the following:
a.	HVAC system consists of air handling units and interior VAV boxes. One (1) VAV box and one (1) DDC sensor will be provided per 1,500 square feet of interior usable space, mail room, and each conference room. One (1) DDC sensor to be provided for each 800 useable square feet of space abutting the exterior windows. VAV boxes to be located so to not be above private offices or conference rooms.	X
b.	Supply air on the interior shall be provided through low pressure duct work, ceiling- mounted diffusers, with concealed spline (or equal). Return air will be into a ceiling return air plenum through ceiling- mounted grills, (or equal).	X
c.	Provide supplemental cooling to Data Center, Engineering, Development Staging, IT and MIS Rooms, as shown on drawings.	X
d.	Provide supplemental cooling to Printing rooms (2W, west of Café)	X

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Electrical
The Landlord will provide a fully functional generator based electrical system based on the following:
a.	The lighting will be (2) 2x2 recessed direct/indirect fluorescent parabolic fixtures.	X
b.	One (1) switch or occupancy sensor will be provided in each individual room, as required by Code.	X
c.	Provide occupancy sensors/switching in open areas, as required by Code.	X
d.	Duplex outlets to be provided in open areas as required for cleaning. Two duplex outlets to be provided at each office and enclosed room. Furniture feeds to be provided as required on Fit Plan.	X
e.	Provide dedicated, grounded, surge protected power as required at Data Center, Engineering, Development Staging, IT and MIS Rooms and Printing Areas, as shown on drawings.	X
f.	One (1) flush poke-through receptacle providing both electrical and tele/data feeds to be provided in Conference Rooms.	X
g.	If required, transformers and panelboards located in electrical closet located within the base building electrical closets to supply the Premises.	X
h.	All exit signs, fire alarm devices, emergency egress lighting, and wiring required per Code will be provided. Existing fire alarm panel to be reused.	X
i.	Provide floor cores and conduit as required to supply conference room floor outlets and systems furniture connections where wiring is not contained within the Premises (e.g., Second floor space).	X
Telecom, Security, and Audio/Visual Systems
a.	One (1) plaster ring with pull string to above the finish ceiling to be provided at each private office, interview room, reception desk, copier and LAN room. Two (2) plaster rings with pull strings to above the finish ceiling to be provided at conference room.	X
b.	Tel/Data wiring		X
Security			X
a.	One (1) plaster ring with pull string to above the finish ceiling to be provided at each card reader, camera location or door contact as designated on plan.	X

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EXHIBIT PR

(Tenant Plan Requirements)

Whenever Tenant shall be required by the terms of the Lease to submit plans to Landlord in connection with any improvement or alteration to the Premises, such plans shall include at least the following:

1.Floor plan indicating location of partitions and doors (details required of partition and door types) and a furniture plan indicating the proposed use of the Premises.

2.Location of standard electrical convenience outlets and telephone outlets.

3.Location and details of special electrical outlets; e.g., photocopiers, etc.

4.Reflected ceiling plan showing layout of standard ceiling and lighting fixtures. Partitions to be shown lightly with switches located indicating fixtures to be controlled.

5.Locations and details of special ceiling conditions, lighting fixtures, speakers, etc.

6.Location and specifications of floor covering, paint or paneling with paint colors referenced to standard color system.

7.Finish schedule plan indicating wall covering, paint, or paneling with paint colors referenced to standard color system.

8.Details and specifications of special millwork, glass partitions, rolling doors and grilles, blackboards, shelves, etc.

9.Hardware schedule indicating door number keyed to plan, size, hardware required including butts, latchets or locksets, closures, stops, and any special items such as thresholds, soundproofing, etc. Keying schedule is required.

10.Verified dimensions of all built-in equipment (file cabinets, lockers, plan files, etc.)

11.Location and weights of storage files.

12.Location of any special soundproofing requirements.

13.Location and details of special floor areas exceeding 50 pounds of live load per square foot.

14.All structural, mechanical, plumbing and electrical drawings, to be prepared by the base building consulting engineers, necessary to complete the Premises in accordance with Tenant’s Plans.

15.All drawings to be uniform size (30" × 46") and shall incorporate the standard project electrical and plumbing symbols and be at a scale of 1/8" = 1' or larger.

16.All drawing shall be stamped by an architect (or, where applicable, an engineer) licensed in the Commonwealth of Massachusetts and without limiting the foregoing, shall be sufficient in all respects for submission to the City of Medford Inspectional Services Department in connection with a building permit application.

17.Landlord’s approval of the plans, drawings, specifications or other submissions in respect of any work, addition, alteration or improvement to be undertaken by or on behalf of Tenant shall create no liability or responsibility on the part of Landlord for their completeness, design sufficiency or compliance with requirements of any applicable laws, rules or regulations of any governmental or quasi-governmental agency, board or authority.

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EXHIBIT CL

(Commencement Letter)

CABOT ROAD PARTNERS LLC

121 High Street

Boston, MA 02110

[Name of Contact]

[Name of Tenant]

One Cabot Road

Medford, MA

RE:	[Name of Tenant]
	[Premises Rentable Area and Floor] One Cabot Road, Medford

Dear [Name of Contact]:

Reference is made to that certain Lease [and Leasehold Improvements Agreement], both dated as of                     , 19    , between Cabot Road Partners LLC as Landlord and                      as Tenant, with respect to approximately square feet of space on the             floor of One Cabot Road, Medford, Massachusetts.

In accordance with Section 4.1 of the Lease, this is to confirm that the Commencement Date of the term of such Lease occurred on                      , that the Rent Commencement Date shall occur on                            and that the Initial Term of such Lease shall expire on                               .. If the foregoing is in accordance with your understanding, would you kindly execute this letter in the space provided below, and return the same to us for execution by Landlord, whereupon it will become a binding agreement between us.

	Very truly yours,
	LANDLORD: CABOT ROAD PARTNERS, LLC
	By:
	By:
Attest:	By:
	TENANT:
Attest:	By:
		(Vice) President

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Attest:		By:
			(Assistant) Treasurer
Accepted and Agreed:
[Name of Tenant]
By:
	Name:
	Title:
	Date:

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EXHIBIT AP

LOCATION OF ADDITIONAL PARKING SITE

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EXHIBIT SP-1

DATA CENTER SPACE PLAN

[schematic diagram of third-floor data center]

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EXHIBIT SP-2

PREMISES SPACE PLAN

[schematic diagrams of second and third floor space plans]

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EXHIBIT ES

PLAN OF TENANT’S EXTERIOR SIGNAGE

[schematic diagram of exterior sign location]

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EXHIBIT RR

RULES AND REGULATIONS

1.The sidewalks, halls, passages, exits and entrances of the Building shall not be obstructed by Tenant or used by it for any purpose other than for ingress to and egress from the Premises. The halls, passages, exits, entrances, elevators and stairways are not for the use of the general public, and Landlord shall in all cases retain the right to control and prevent access thereto of all persons whose presence in the judgment of Landlord would be prejudicial to the safety, character, reputation and interests of the Building and its tenants, provided that nothing herein confined shall be construed to prevent such access to person with whom Tenant normally deals in the ordinary course of its business, unless such persons are engaged in illegal activities. Tenant shall not go upon the roof of the Building, except in areas that Landlord may designate as “Common Areas” from time to time.

2.The Premises shall not be used for lodging or sleeping and no cooking shall be done or permitted by Tenant on the Premises except that the preparation of coffee, tea, hot chocolate and similar items for Tenant and its employees shall be permitted.

3.Tenant shall not employ any person or persons other than the cleaning contractor of Landlord for the purpose of cleaning the Premises, unless otherwise agreed to by Landlord in writing, except with the written consent of Landlord. No person or persons other than those approved by Landlord shall be permitted to enter the Building for the purpose of cleaning same. Tenant shall not cause any unnecessary labor by reason of Tenant’s carelessness or indifference in the preservation of good order and cleanliness.

4.No additional locking devices shall be installed without the proper written consent of Landlord. Landlord may make reasonable charge for removal of any additional lock and bolt installed on any door of the Premises without the prior consent of Landlord. Tenant shall, upon the termination of its tenancy deliver to Landlord all keys to doors in the Building and the Premises that have been furnished to Tenant.

5.The freight elevator shall be available for use by Tenant, subject to such reasonable scheduling as Landlord shall deem appropriate. The persons employed by Tenant to move equipment or other items in or out of the Building must be acceptable to Landlord. Landlord shall have the right to prescribe the weight, size and position of all equipment, materials, supplies, furniture or other property brought into the Building. Landlord will not be responsible for loss of or damage to any such property from any cause, and all damage done to the Building by moving or maintaining Tenant’s property shall be repaired at the expense of Tenant.

6.Tenant shall not use or keep in the Premises or the Building any kerosene, gasoline or flammable or combustible fluid or use any method of heating or air conditioning other than that supplied by Landlord. Tenant shall not use, keep or permit or suffer the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building by reason of noise, odors and/or vibrations, or interfere in any way with other tenants or those having business in the Building.

7.In case of invasion, mob, riot, public excitement or other circumstances rendering such action advisable in Landlord’s opinion, Landlord reserves the right to prevent access to the Building during the continuance of same by such action as Landlord may deem appropriate, including closing entrances to the Building.

8.Tenant shall see that the doors of the Premises are closed and securely locked at such time as Tenant’s employees leave the Premises.

9.The toilet rooms, toilets, urinals, wash bowels and other apparatus shall not be used for any purpose other than that from which they were constructed, no foreign substance of any kind whatsoever

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shall be deposited therein, and any damage resulting to same from Tenant’s misuse shall be paid for by Tenant.

10.Tenant shall not install any radio or television antenna, loudspeaker or other device on the roof or exterior walls of the Building.

11.Tenant shall not use in any space, or in the Common Areas of the Building, any handtrucks except those equipped with rubber tires and side guards or such other material handling-equipment as Landlord may approve. No other vehicles of any kind shall be brought by Tenant into the Building or kept in or about the Premises.

12.Tenant shall store all its trash and garbage within the Premises until daily removal of same by Landlord to such location in the Building as may be designated from time to time by Landlord. No material shall be placed in the Building trash boxes or receptacles if such material is of such nature that may not be disposed of in the ordinary and customary manner of removing and disposing of trash and garbage in the municipality in which the Building is located without being in violation of any law or ordinance governing such disposal. All trash other than ordinary office trash will be removed only by special request and at the expense of the Tenant.

13.All loading and unloading of merchandise, supplies, materials, garbage and refuse and delivery of same to the Premises shall be made only through such entryways and elevators as Landlord shall designate.

14.Canvassing, soliciting, peddling or distribution of handbills or any other written material in the Building is prohibited, and Tenant shall cooperate to prevent same, reporting any such activity to the Landlord.

15.Tenant shall not permit the use or the operation of any coin-operated machines on the Premises including, without limitation, vending machines, video games, pinball machines, or pay telephones, without the prior written consent of Landlord.

16.Landlord may direct the use of all pest extermination and scavenger contractors at such intervals as Landlord may require.

17.Tenant shall ensure that all work by Tenant’s contractors and/or vendors affecting any area of the Building other than the Tenant’s Premises shall be coordinated with reasonable advanced notice with the Landlord. If requested by Landlord, all such contractors and/or vendors shall be required to provide to Landlord a certificate of insurance, naming Landlord as additionally insured.

18.Landlord reserves the right to select the name of the Building and to make such change or changes of name as it may deem appropriate from time to time, and Tenant shall not refer to the Building by any name other than (i) the names as selected by Landlord (as same may be changed from time to time), (ii) the post office address, approved by the United States Postal Service. Tenant shall not use the name of the Building in any respect other than as an address of its operation in the Building without the prior written consent of Landlord.

19.Except with the prior written consent of Landlord, Tenant shall not place any sign on the Building or any store front or in any window.

20.The requirements of Tenant will be attended to only upon application by telephone or in person at the office of the Building. Employees of Landlord shall not perform any work or do anything outside of their regular duties unless under special instructions from Landlord.

21.Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of these Rules and Regulations in favor of any other tenant or tenants, nor prevent Landlord from thereafter enforcing any such Rules and Regulations against any or all of the tenants of the Building.

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22.Whenever the word “Tenant” occurs in these Rules and Regulations, it is understood and agreed that it shall mean Tenant’s associates, agents, assigns, clerks, employees, visitors, vendors and contractors. Wherever the word “Landlord” occurs in these Rules and Regulations, it is understood and agreed that it shall mean Landlord’s assigns, agents, clerks, employees and visitors.

23.Landlord shall provide Tenant with space on the Building’s directory, located in the lobby, based upon the Tenant’s pro rata share. No subheadings shall be allowed for subtenants unless a sublease approved by Landlord has been executed by that individual.

24.These Rules and Regulations are in addition to, and shall not be construed in any way to modify, alter or amend, in whole or part, the terms, covenants, agreements and conditions of any lease of premises in the Building.

25.Landlord reserves the right to make such other and reasonable Rules and Regulations as in its judgment may from time tot time be needed for the safety, care, operating efficiency and cleanliness of the Building, and for the preservation of good order therein.

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EXHIBIT FO

(Superior Expansion Rights)

1.TranSystems—Right of First Refusal on 16,640 square feet on the first floor.

2.Cross Country—Right of First Offer on 29,757 square feet on the third floor.

3.Partners Healthcare—Right of First Offer on 77,380 square feet on the fourth floor.

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AMENDMENT OF LEASE

This AMENDMENT OF LEASE (this “Amendment”) dated as of the 31st day of August, 2007 by and between CABOT ROAD OWNER – VEF VI, LLC, a Delaware limited liability company having an address c/o Apollo Real Estate, 3340 Peachtree Road, N.E., Tower Place 100, Suite 1660, Atlanta, Georgia 30326, as Landlord (the “Landlord”), and THE FIRST MARBLEHEAD CORPORATION, a Delaware corporation, having an address at The Prudential Tower, 800 Boylston Street, 34th Floor, Boston, Massachusetts 02199-8157, as Tenant (“Tenant”).

BACKGROUND

Landlord and Tenant are holders of the landlord’s and tenant’s interests, respectively, under a Lease dated August 13, 2004 (the “Lease”) for the entire second floor and a portion of the third floor of the building (the “Building”) located at One Cabot Road in Medford, Massachusetts, consisting of approximately 136,496 rentable square feet of space (the “Original Premises”).  The parties desire to amend the Lease to reflect the addition of certain space on the first floor of the Building to the Original Premises under the Lease under the terms described herein, and to amend the Lease in certain other respects, all as hereinafter set forth.  Capitalized terms not defined herein shall have the same meaning ascribed to them in the Lease.

WITNESSETH:

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree to amend the Lease as follows:

1.Addition of First Floor Premises.  Landlord hereby demises and leases to Tenant, and Tenant hereby leases from Landlord, the space shown on Exhibit A hereto as the “First Floor Premises” (the “First Floor Premises”) on the terms and conditions contained in the Lease, as amended by this Amendment. Effective as of October 1, 2007 (the “First Floor Premises Commencement Date”), the First Floor Premises shall be added to the Original Premises under the Lease.  The parties agree that the First Floor Premises consists of approximately 16,640 rentable square feet of space.

2.As Is Delivery Condition of First Floor Premises.  The First Floor Premises shall be leased to Tenant as of the First Floor Premises Commencement Date in “as is” condition, without any obligation on the part of Landlord to perform any construction therein or to prepare the same for Tenant’s occupancy or otherwise (other than the installation of the electric meter pursuant to Paragraph 10 of this Amendment).

3.Amendments to Section 1.2 of Lease As of the Date Hereof.  Effective as of the date hereof, the terms “Landlord” and “Landlord’s Original Address” set forth in Section 1.2 of the Lease shall be amended to have the following meanings under the Lease:

Landlord:	Cabot Road Owner – VEF VI, LLC, a Delaware limited liability company
Landlord’s Original Address:	c/o Apollo Real Estate 3340 Peachtree Road, N.E. Tower Place 100, Suite 1660 Atlanta, Georgia  30326 Attention:  Howard C. Huang

4.Amendments to Section 1.2 of Lease as of First Floor Premises Commencement Date.  Effective as of the First Floor Premises Commencement Date, Section 1.2 of the Lease shall be amended as follows:

(a)The definition of “Basic Rent” shall be amended by providing the following at the end of the current definition therefore:

“Annual Basic Rent for First Floor Premises only

For the period commencing on the First Floor Premises Commencement Date and ending on March 31, 2012:  $399,360 per annum ($33,280 per month)

Notwithstanding the above, Tenant shall not be obligated to pay the portion of Annual Basic Rent for the First Floor Premises for the month of October, 2007.”

(b)The definition of “Premises” shall be deleted and shall be replaced with the following:

“Premises:  The entire second floor (the “Second Floor Premises”), a portion of the first floor (the “First Floor Premises”) and a portion of the third floor of the Building (the “Third Floor Premises”), all as shown on Exhibit FP annexed hereto.”

(c)The definition of “Premises Rentable Area” shall be deleted and shall be replaced with the following:

“Premises Rentable Area:  Agreed to be 153,136 rentable square feet.”

(d)The definition of “Escalation Factor” shall be amended by providing the following at the end of the current definition therefore:

“Escalation Factor For First Floor Premises Only:  .054”

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(e)The definition of “Initial Term” shall be amended by deleting the current definition thereof and by replacing it with the following:

“Initial Term For Third Floor Premises and Second Floor Premises:  The period commencing on March 5, 2005 and ending on March 31, 2012.

Initial Term For First Floor Premises:  That period commencing on October 1, 2007 and ending on March 31, 2012.”

(f)The definition of “Base Operating Expenses” with respect to the First Floor Premises only shall be:  “Operating Expenses for the calendar year ending December 31, 2007.”

(g)The definition of “Base Taxes” with respect to the First Floor Premises only shall be:  “Taxes for the tax fiscal year beginning on July 1, 2007 and ending on June 30, 2008, as the same may be reduced by the proportional amount of abatement net of expenses applicable to such tax fiscal year.”

5.Section 1.3 of Lease as of First Floor Premises Commencement Date.  Effective as of the First Floor Premises Commencement Date, Section 1.3 of the Lease shall be amended as follows:

(a)The definition of “Agent” is deleted in its entirety and the following is substituted therefor:  “Agent:  First Winthrop, LP, or such other person or entity from time to time designated by Landlord”.

(b)The definition of “Rent Commencement Date” with respect to the First Floor Premises only shall be:  “November 1, 2007”.

6.Deletion of Expansion Option.  Section 2.5 of the Lease entitled, “EXPANSION OPTION”, is hereby deleted and shall no longer have any force or effect.

7.Inapplicability of Certain Lease Provisions to First Floor Premises.  Sections 2.1, 4.1, 4.2, 4.3, 4.4 and Exhibit BS shall not applicable to Tenant’s leasing of the First Floor Premises.

8.Amendments to Section 3.1 and 14.12 of Lease.

(a)Section 3.1(a) of the Lease is hereby amended by deleting the rent payment address in the third sentence therefor and by substituting therefore the following address:  “Cabot Road – VEF Advisors LLC, P.O. Box 842731, Boston, MA 02284-2731”.

(b)Section 14.12 of the Lease, entitled “Notices”, is hereby amended by deleting the notice address for Landlord and by substituting therefore the following address:  “c/o Apollo Real Estate, Tower Place 100, Suite 1660, 3340 Peachtree Road,

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N.E., Atlanta, GA 30326, with a copy to One Cabot Road, c/o Winthrop Management LP, 7 Bulfinch Place, Suite 500, Boston, MA  02114-9507.”

9.Supplement to Exhibit FP to Lease.  Effective as of the First Floor Premises Commencement Date, Exhibit FP to the Lease shall be amended by adding thereto Exhibit FP Supplement that is attached to this Amendment.

10.Tenant’s Payments for Electricity For First Floor Premises.  Pursuant to Section 7.5(b) of the Lease, Tenant shall be responsible for the payment of all electricity used and consumed in the First Floor Premises, including, without limitation, for lights, outlets and supplemental HVAC service dedicated to the First Floor Premises.  Landlord shall install a separate check meter measuring the electricity used and consumed in the First Floor Premises, and, from time to time, but not more than once per calendar month, Landlord shall invoice Tenant for electricity used and consumed in the First Floor Premises, at Landlord’s cost therefore, without mark-up.  Tenant shall pay Landlord the invoiced amount as Additional Rent under the Lease within thirty (30) days after receipt of each such invoice.  The obligation to pay for electricity used and consumed in the First Floor Premises during the last month of the Term of the Lease shall survive expiration of the Term.

11.Amendment of Section 2.2 of the Lease Regarding Parking Spaces.  Effective as of the First Floor Premises Commencement Date, Section 2.2(c) to the Lease is hereby amended by deleting the second sentence thereof and by substituting the following therefor:

“Tenant’s share of such parking spaces shall equal 459 spaces, of which 91 spaces shall be available in the garage on a non-exclusive, unreserved basis.”

12.Amendment of Section 2.4 of the Lease Regarding the Option to Extend.  Effective as of the First Floor Premises Commencement Date, Section 2.4(a)(iii) to the Lease is hereby amended by deleting the term “20,000” and substituting the term “23,000” therefor.

13.Amendment of Section 2.6 of the Lease Regarding the Right of First Offer.  Effective as of the First Floor Premises Commencement Date, Section 2.6(a)(iii) to the Lease is hereby amended by deleting the term “20,000” and substituting the term “23,000” therefor.

14.Applicability of Lease Provisions to First Floor Premises:  Effective as of the First Floor Premises Commencement Date, except to the extent otherwise expressly provided in this Amendment or except to the extent inconsistent with the terms of this Amendment, all terms and provisions of the Lease shall be applicable to Tenant’s leasing of the First Floor Premises.

15.Leasehold Improvements; First Floor Premises Allowance to Tenant; Additional First Floor Allowance.

(a)Attached hereto as Schedule 1 is a detailed, schematic floor plan for the First Floor Premises.  By its execution of this Amendment, Landlord hereby approves the schematic floor plan, and Landlord hereby acknowledges and agrees that the leasehold improvements to the First Floor Premises shown on the approved schematic floor plan

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constitute standard office alterations, and Tenant is not required to remove the same upon the expiration or earlier termination of the Term of the Lease.  In connection with the construction of such leasehold improvements, Tenant agrees to comply with the provisions of Section 5.2 of the Lease and any other applicable provisions thereof.

(b)Landlord shall reimburse Tenant an amount not to exceed $499,200.00 (the “First Floor Premises Allowance”) for the cost of construction by Tenant of its initial leasehold improvements in the First Floor Premises performed on or before December 31, 2008.  Such reimbursement by Landlord shall be made from time to time within thirty (30) days of receipt by Landlord from Tenant of the AIA requisition form submitted by Tenant’s contractor with an architect’s certificate, attached to which shall be such documentation required from Tenant’s contractor, including, without limitation, lien waivers from the contractor and major subcontractors.  Landlord hereby acknowledges and agrees that the First Floor Premises Allowance can be used to pay any “soft” and/or “hard” costs incurred by Tenant in connection with such construction.

(c)In addition to the First Floor Premises Allowance, Landlord will make available to Tenant an Additional First Floor Premises Allowance not to exceed $166,400.00 (the “Additional First Floor Allowance”) for the construction of improvements in the First Floor Premises if requested by Tenant prior to November 1, 2007.  Disbursement of the Additional First Floor Allowance shall be subject to the provisions of the Paragraph 13(b).  Landlord hereby acknowledges and agrees that the Additional First Floor Allowance can be used to pay any “soft” and/or “hard” costs incurred by Tenant in connection with such construction.  If Tenant requests all or any portion of the Additional First Floor Allowance, then the Basic Rent shall be increased, effective as of November 1, 2007, by an amount equal to the monthly payment required to repay in full, on a direct reduction basis, a loan in an amount equal to the total amount of such Additional First Floor Allowance requested by Tenant by Landlord pursuant to this Paragraph 13(c), with interest at the rate of eight percent (8%) per annum, in equal monthly installments on the first day of each calendar month from November 1, 2007 through March 31, 2012.

16.Brokerage.  Tenant and Landlord each represents and warrants to the other that it dealt with no brokers in connection with this Amendment other than Grubb & Ellis Company and The Codman Company (collectively, “the Brokers”) and agrees to defend, with counsel approved by the other, indemnify and save the other harmless from and against any and all cost, expense or liability in the event such representation is false or alleged to be false.  Landlord agrees that it shall pay and be solely liable for the fees charged by the Brokers in connection with this transaction to the extent provided in separate agreements between Landlord and the Brokers.

17.Continued Effectiveness of Lease.  Except as expressly amended hereby, the Lease shall continue in full force and effect as heretofore.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

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WITNESS the execution hereof as an instrument as of the date first above written.

LANDLORD:
CABOT ROAD OWNER – VEF VI, LLC, a Delaware Limited Liability Company
	By: Value Enhancement Fund VI, L.P., its sole member
			By: VEF Group Management, LLC, its manager
				By:	/s/ Howard C. Huang
					Name: Howard C. Huang
					Title: Vice President
TENANT:
THE FIRST MARBLEHEAD CORPORATION
By:		/s/ Anne P. Bowen
		Name: Anne P. Bowen
		Title: Executive Vice President

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Exhibit A and Exhibit FP Supplement

Attach plan showing perimeter outline of First Floor Premises.

[schematic diagram of first floor premises]

EX-21.1

Exhibit 21.1

The following is a list of the direct and indirect subsidiaries of The First Marblehead Corporation:

Name of Subsidiary	Jurisdiction of Incorporation or Organization
First Marblehead Data Services, Inc.	Massachusetts
First Marblehead Education Resources, Inc.	Delaware
First Marblehead Securities Corporation II	Massachusetts
The National Collegiate Funding II, LLC	Delaware
Union Federal Savings Bank	United States
UFSB Private Loan SPV, LLC	Delaware
FM Loan Origination Services, LLC	Delaware

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

The First Marblehead Corporation:

We consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-153245, 333-129674 and 333-110523) of The First  Marblehead Corporation of our reports dated September 3, 2009, with respect to the consolidated balance sheets of The First Marblehead Corporation and subsidiaries as of June 30, 2009 and 2008, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended June 30, 2009, and the effectiveness of internal control over financial reporting as of June 30, 2009, which reports appear in the June 30, 2009 annual report on Form 10-K of The First Marblehead Corporation.

/s/ KPMG LLP

Boston, Massachusetts

September 3, 2009

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Daniel Meyers, certify that:

1.    I have reviewed this Annual Report on Form 10-K of The First Marblehead Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)      Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: September 3, 2009

/s/ Daniel Meyers

Daniel Meyers

Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Kenneth Klipper, certify that:

1.    I have reviewed this Annual Report on Form 10-K of The First Marblehead Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)      Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: September 3, 2009

/s/ Kenneth Klipper

Kenneth Klipper

Managing Director, Chief Financial

Officer, Treasurer and Chief

Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of The First Marblehead Corporation (the “Company”) for the period ended June 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel Meyers, Chief Executive Officer and President, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: September 3, 2009	/s/ Daniel Meyers
	Daniel Meyers
	Chief Executive Officer and President

A signed original of this written statement required by Section 906 has been provided to The First Marblehead Corporation and will be retained by The First Marblehead Corporation and furnished to the SEC or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of The First Marblehead Corporation (the “Company”) for the period ended June 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kenneth Klipper, Managing Director, Chief Financial Officer, Treasurer and Chief Accounting Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: September 3, 2009	/s/ Kenneth Klipper
	Kenneth Klipper
	Managing Director, Chief Financial
	Officer, Treasurer and Chief
	Accounting Officer

A signed original of this written statement required by Section 906 has been provided to The First Marblehead Corporation and will be retained by The First Marblehead Corporation and furnished to the SEC or its staff upon request.