Exhibit 10.2

THIRD AMENDMENT TO SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT

THIS THIRD AMENDMENT TO SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT (this
“Amendment”) is entered into as of March 9, 2011, by and among The Princeton
Review, Inc., a Delaware corporation (“TPR”), Penn Foster, Inc., a Pennsylvania
corporation (“PF”, and together with TPR, collectively, the “Issuer”), the
guarantors party hereto (the “Guarantors”) and the Purchasers party hereto (the
“Purchasers”).

RECITALS

A. The Issuer, the Guarantors, and the Purchasers are parties to that certain
Senior Subordinated Note Purchase Agreement, dated as of December 7, 2009, as
amended by that certain First Amendment to Senior Subordinated Note Purchase
Agreement dated as of April 23, 2010, and that certain Second Amendment and
Joinder to Senior Subordinated Note Purchase Agreement dated as of August 6,
2010 (the “NPA”).

B. The Issuer has requested that the Purchasers amend the NPA in certain
respects and the Purchasers have agreed to amend the NPA, subject to the terms
and conditions hereof.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and intending to be legally bound, the parties hereto
agree as follows:

A. AMENDMENTS

1. Amendment to Section 1.1. Section 1.1 of the NPA is amended by replacing the
definitions of “Consolidated EBITDA” and “Consolidated Fixed Charge Coverage
Ratio” in their entirety with the following:

“Consolidated EBITDA” means, with respect to any Person for any period, (a) the
Consolidated Net Income of such Person for such period plus (b) the sum of, in
each case to the extent included in the calculation of such Consolidated Net
Income but without duplication, (i) any provision for United States federal
income taxes or other taxes measured by income, (ii) Consolidated Interest
Expense, amortization of debt discount and commissions and other fees and
charges associated with Indebtedness, (iii) any loss from extraordinary items,
(iv) any depreciation, depletion and amortization expense, (v) any aggregate net
loss on the Sale of property outside the ordinary course of business, (vi) any
other non-cash expenditure, charge or loss for such period (other than any
non-cash expenditure, charge or loss relating to write-offs, write-downs or
reserves with respect to accounts receivable and inventory), including the
amount of any compensation deduction as the result of any grant of Stock or
Stock Equivalents to employees, officers, directors or consultants,
(vii) restructuring amounts incurred (x) on or prior to December 31, 2010 in
connection with the New York, New York office consolidation and the reduction in
the supplemental education services business in an aggregate amount not to
exceed $5,100,000 and (y) as proposed by TPR in reasonable detail, approved by a
third party auditor and as reasonably agreed to by the Required Purchasers in an
aggregate amount not to exceed $6,000,000 from January 1, 2011 through
December 31, 2011, $4,500,000 from January 1, 2012 through December 31, 2012,
and $4,500,000 in any trailing twelve month period thereafter (in each case, or
such increased

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amount as approved by the Required Purchasers in their sole discretion) for the
purpose of normalizing EBITDA, including adjustments for system integration and
upgrade costs, duplicate technology and related costs of improving technology
efficiencies, in each case determined on a consolidated basis in accordance with
GAAP, (viii) in connection with all Related Transactions, (A) (i) all financial
advisory fees, accounting fees, legal fees and other similar fees, transaction
expenses and related out of pocket costs (to the extent not capitalized)
incurred by all Group Members and (ii) non-recurring cash charges resulting from
severance, restructuring, and integration incurred within 12 months from the
Closing Date as a result of the Acquisition as reasonably agreed to by the
Required Purchasers and so long as such amounts in clauses (i) and (ii) do not
exceed $14,100,000 in the aggregate, and (B) an amount equal to the annualized
cost savings implemented within 12 months from the Closing Date for headcount
reductions and combined back office operations resulting from the Acquisition as
reasonably agreed to by the Required Purchasers and not to exceed $1,000,000 in
the aggregate as set forth on Schedule B hereto, (ix) in connection with all
Permitted Acquisitions (regardless of whether actually consummated) (or any
other acquisition not meeting the definition of “Permitted Acquisition” but as
to which the Required Purchasers had waived the relevant criteria set forth in
the definition of “Permitted Acquisition”), (A) all financial advisory fees,
accounting fees, legal fees and other similar fees, transaction expenses and
related out of pocket costs incurred by all Group Members, as reasonably agreed
to by the Required Purchasers, and (B) non-recurring cash charges resulting from
severance incurred within the first 12 months of the date of such Permitted
Acquisition in an amount not to exceed $500,000 in the aggregate and reasonably
agreed to by the Required Purchasers and resulting therefrom and (x) start-up
expenses as agreed to by the Required Purchasers incurred in connection with or
on behalf of other investments made in the Strategic Ventures in an aggregate
amount not to exceed $7,500,000 in any trailing twelve month period ending on or
prior to December 31, 2011 and minus (c) the sum of, in each case to the extent
included in the calculation of such Consolidated Net Income and without
duplication, (i) any credit for United States federal income taxes or other
taxes measured by net income, (ii) any interest income, (iii) any gain from
extraordinary items and any other non-recurring gain, (iv) any aggregate net
gain from the Sale of property (other than accounts (as defined in the
applicable UCC) and inventory) out of the ordinary course of business by such
Person, (v) any other non-cash gain, including any reversal of a charge referred
to in clause (b)(vi) above by reason of a decrease in the value of any Stock or
Stock Equivalent, (vi) any other cash payment in respect of expenditures,
charges and losses that have been added to Consolidated EBITDA of such Person
pursuant to clause (b)(vi) above in any prior period and (vii) any excess
positive contributions to Consolidated Net Income from the Strategic Ventures
which are not Loan Parties exceeding 10% of Consolidated EBITDA in the aggregate
or such higher amount as agreed to by the Required Purchasers.

“Consolidated Fixed Charge Coverage Ratio” means, with respect to any Person for
any period, the ratio of (a) Consolidated EBITDA of such Person for such period
minus Consolidated Capital Expenditures of such Person for such period (other
than (i) Capital Expenditures from Permitted Reinvestments, (ii) Excluded
Capital Expenditures used to purchase Growth Capital Expenditures,
(iii) Excluded Capital Expenditures used to make investments in or to purchase
Strategic Ventures, (iv) Capital Expenditures in any trailing twelve month
period

 

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ended on or prior to December 31, 2012 in an amount equal to the amount of cash
on the balance sheet, not to exceed $3,000,000 and (v) integration related
Capital Expenditures in Fiscal Year 2010 and 2011 in an amount not to exceed
$6,900,000 in the aggregate, minus the total liability for United States federal
income taxes and other taxes measured by net income actually payable by such
Person in respect of such period to (b) the Consolidated Fixed Charges of such
Person for such period.

2. Amendment to Section 1.1. Section 1.1 of the NPA is further amended by
inserting the following definitions in the appropriate alphabetical order:

“Borrowing Availability” has the meaning specified in the Senior Credit
Agreement as in effect on the date hereof.

“Cash Available” means, as of any date of determination the sum of (i) Cash on
Hand as of such date plus (ii) Borrowing Availability as of such date.

“Cash on Hand” has the meaning specified in the Senior Credit Agreement as in
effect on the date hereof.

“PF” means Penn Foster, Inc., a Pennsylvania corporation.

“Third Amendment” means that certain Third Amendment to the Agreement, dated as
of March 9, 2011.

“Third Amendment Effective Date” means March 9, 2011.

“TPR” means The Princeton Review, Inc., a Delaware corporation.

3. Amendment to Section 5.1. Section 5.1 of the NPA is amended by replacing such
Section 5.1 in its entirety with the following:

Section 5.1 Maximum Consolidated Total Leverage Ratio TPR shall not have, on the
last day of each Fiscal Quarter, a Consolidated Total Leverage Ratio greater
than the maximum ratio set forth opposite such Fiscal Quarter:

 

FISCAL QUARTER ENDING

  

MAXIMUM
CONSOLIDATED TOTAL
LEVERAGE RATIO

December 31, 2010

   4.60 to 1:00

March 31, 2011 through and including June 30, 2011

   5.18 to 1:00

September 30, 2011

   5.06 to 1:00

December 31, 2011

   4.89 to 1:00

March 31, 2012

   4.30:1.00

June 30, 2012

   4.00:1.00

September 30, 2012

   3.75:1.00

December 31, 2012

   3.50:1.00

March 31, 2013

   3.15:1.00

June 30, 2013

   2.90:1.00

September 30, 2013

   2.60:1.00

December 31, 2013 through and including September 30, 2014 and each Fiscal
Quarter thereafter

   2.30:1.00

 

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5. Amendment to Article 5. Article 5 of the NPA is amended by adding the
following new Section 5.7 to such Article:

5.7 Minimum Liquidity. Commencing with the first Fiscal Quarter most recently
ended after the Third Amendment Effective Date, TPR shall not permit Cash
Available as of the last day of any Fiscal Quarter to be less than $3,825,000.

6. Amendment to Section 6.1. Section 6.1 of the NPA is amended by replacing
Sections 6.1 (b) and 6.1(d) in their entirety with the following:

(b) Quarterly Reports. As soon as available, and in any event within 45 days
after (i) the end of each Fiscal Quarter for the first three Fiscal Quarters of
each Fiscal Year, the Consolidated unaudited balance sheet of TPR as of the
close of such Fiscal Quarter and related Consolidated statements of operations
and cash flow for such Fiscal Quarter and that portion of the Fiscal Year ending
as of the close of such Fiscal Quarter, setting forth in comparative form the
figures for the corresponding periods in the prior Fiscal Year and the figures
contained in the latest Projections, in each case, certified by a Responsible
Officer of the Issuer as fairly presenting in all material respects the
Consolidated financial position, results of operations and cash flow of TPR as
at the dates indicated and for the periods indicated in accordance with GAAP
(subject to the absence of footnote disclosure and normal year-end audit
adjustments), and (ii) the end of the last Fiscal Quarter of each Fiscal Year, a
draft management prepared Consolidated unaudited balance sheet of TPR as of the
close of such Fiscal Quarter and related Consolidated statements of operations
and cash flow for such Fiscal Quarter and that portion of the Fiscal Year ending
as of the close of such Fiscal Quarter, setting forth in comparative form the
figures for the corresponding periods in the prior Fiscal Year and the figures
contained in the latest Projections, in each case, fairly presenting in all
material respects the Consolidated financial position, results of operations and
cash flow of TPR as at the dates indicated and for the periods indicated in
accordance with GAAP (subject to the absence of footnote disclosure and normal
year-end audit adjustments).

(d) Compliance Certificate/Minimum Liquidity Certificate. Together with each
delivery of any Financial Statement pursuant to clause (b) or (c) above, a
Compliance Certificate duly executed by a Responsible Officer of the Issuer
that, among other things, (i) shows in reasonable detail the calculations used
in determining the financial covenants set forth in Article 5 and, if delivered
together with any Financial Statement pursuant to clause (c) above, the
calculations used in determining Excess Cash Flow, (ii) demonstrates compliance

 

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with each financial covenant contained in Article 5 that is tested at least on a
quarterly basis, (iii) states that no Default is continuing as of the date of
delivery of such Compliance Certificate or, if a Default is continuing, states
the nature thereof and the action that the Issuer proposes to take with respect
thereto, (iv) sets forth all Maintenance Capital Expenditures and Growth Capital
Expenditures made during such period, (v) sets forth in reasonable detail all
Strategic Ventures expenditures and terms on a cumulative basis entered into
during such period and (vi) sets forth the roll-forward balance of Excluded
Stock Issuances for such period and the expenditures and terms thereof on a
cumulative basis. Within five (5) Business Days after the end of any Fiscal
Quarter, Issuer shall deliver to the Purchasers a Certificate in the form of
Exhibit I to the Third Amendment (the “Minimum Liquidity Certificate”), signed
by a Responsible Officer of Issuer, certifying as to such minimum liquidity
amount together with electronic copies of any bank statements evidencing such
minimum liquidity amount, such evidence to be in form and substance reasonably
satisfactory to the Required Purchasers.

B. CONDITIONS TO EFFECTIVENESS

Notwithstanding any other provision of this Amendment and without affecting in
any manner the rights of the Purchasers hereunder, it is understood and agreed
that this Amendment shall not become effective, and the Issuer shall have no
rights under this Amendment, until the Purchasers shall have received each of
the following:

(a) duly executed signature pages to this Amendment from the Required
Purchasers, Issuer, and each other Loan Party;

(b) a fully executed copy of the First Amendment to the Senior Credit Agreement,
which shall be in full force and effect on the date hereof and shall be in form
and substance reasonably satisfactory to the Required Purchasers;

(c) a fully executed copy of the Third Amendment to the Securities Purchase
Agreement, which shall be in full force and effect on the date hereof and shall
be in form and substance reasonably satisfactory to the Required Purchasers;

(d) [reserved]; and

(d) payment in full in cash of all reasonable and documented out-of-pocket fees
and expenses of the Purchasers owing as of the date hereof, including all
reasonable fees and expenses of counsel to the Purchasers.

C. REPRESENTATIONS

Each Loan Party hereby represents and warrants to the Purchasers that:

1. The execution, delivery and performance by such Loan Party of this Amendment
(a) are within such Loan Party’s corporate or similar powers and, at the time of
execution hereof, have been duly authorized by all necessary corporate and
similar action (including, if applicable, consent of holders of its Securities);
(b) do not (i) contravene such Loan Party’s Constituent Documents, (ii) violate
any applicable material Requirement of Law, (iii) conflict with, contravene,
constitute a default or breach under, or result in or permit the termination or
acceleration of, any material Contractual Obligation of any Loan Party or any of
its Subsidiaries (including other Related Documents or Loan Documents) other
than

 

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those that would not, in the aggregate, have a Material Adverse Effect and are
not created or caused by, or constitute a conflict, breach, default or
termination or acceleration event under, any Loan Document or (iv) result in the
imposition of any Lien (other than a Permitted Lien) upon any property of any
Loan Party or any of its Subsidiaries; and (c) do not require any Permit of, or
filing with, any Governmental Authority or any consent of, or notice to, any
Person, other than (i) those listed on Schedule 1 hereto and that have been, or
will be prior to the Third Amendment Effective Date, obtained or made, copies of
which have been, or will be prior to the Third Amendment Effective Date,
delivered to the Purchasers, and each of which on the Third Amendment Effective
Date will be in full force and effect and (ii) those that, if not obtained,
would not, in the aggregate, have a Material Adverse Effect.

2. This Amendment has been duly executed and delivered for the benefit of or on
behalf of each Loan Party and constitutes a legal, valid and binding obligation
of each Loan Party, enforceable against such Loan Party in accordance with its
terms except as the enforceability hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws affecting creditors’
rights and remedies in general; and

3. Both before and after giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing as of the date hereof.

4. Neither any Loan Party, nor any Affiliate thereof, nor any director, officer
or employee of any of the foregoing, has entered into any side agreement or
understanding, either oral or written, including any agreement to pay any fee,
with the Senior Agent or any Senior Lender in connection with or in any way
related to the First Amendment to the Senior Credit Agreement other than as
explicitly set forth in the First Amendment to the Senior Credit Agreement or as
otherwise disclosed to the Board of Directors of TPR.

D. OTHER AGREEMENTS

1. Continuing Effectiveness of Loan Documents. As amended hereby, all terms of
the NPA and the other Loan Documents shall be and remain in full force and
effect and shall constitute the legal, valid, binding and enforceable
obligations of the Loan Parties party thereto. To the extent any terms and
conditions in any of the other Loan Documents shall contradict or be in conflict
with any terms or conditions of the NPA, after giving effect to this Amendment,
such terms and conditions are hereby deemed modified and amended accordingly to
reflect the terms and conditions of the NPA as modified and amended hereby. Upon
the effectiveness of this Amendment such terms and conditions are hereby deemed
modified and amended accordingly to reflect the terms and conditions of the NPA
as modified and amended hereby.

2. Reaffirmation of Guaranty. Each Guarantor consents to the execution and
delivery by Issuer of this Amendment and the consummation of the transactions
described herein, and ratifies and confirms the terms of the Guaranty to which
such Guarantor is a party with respect to the indebtedness now or hereafter
outstanding under the NPA as amended hereby and all promissory notes issued
thereunder. Each Guarantor acknowledges that, notwithstanding anything to the
contrary contained herein or in any other document evidencing any indebtedness
of Issuer to the Purchasers or any other obligation of Issuer, or any actions
now or hereafter taken by the Purchasers with respect to any obligation of
Issuer, the Guaranty to which such Guarantor is a party (i) is and shall
continue to be a primary obligation of such Guarantor, (ii) is and shall
continue to be an absolute, unconditional, continuing and irrevocable guaranty
of payment, and (iii) is and shall continue to be in full force and effect in
accordance with its terms. Nothing contained herein to the contrary shall
release, discharge, modify, change or affect the original liability of any
Guarantor under the Guaranty to which such Guarantor is a party.

 

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3. [Reserved].

4. Effect of Agreement. Except as set forth expressly herein, all terms of the
NPA, as amended hereby, and the other Loan Documents shall be and remain in full
force and effect and shall constitute the legal, valid, binding and enforceable
obligations of Issuer to the Purchasers. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of the Purchasers under the
NPA, nor constitute a waiver of any provision of the NPA. This Amendment shall
constitute a Loan Document for all purposes of the NPA.

5. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the internal laws of the State of New York and all applicable
federal laws of the United States of America.

6. No Novation. This Amendment is not intended by the parties to be, and shall
not be construed to be, a novation of the NPA and the other Loan Documents or an
accord and satisfaction in regard thereto.

7. Costs and Expenses. Issuer agrees to pay on demand all reasonable
out-of-pocket costs and expenses of the Purchasers in connection with the
preparation, execution and delivery of this Amendment, including, without
limitation, the reasonable and documented out-of-pocket costs and expenses of
outside counsel for the Purchasers with respect thereto.

8. Counterparts. This Amendment may be executed by one or more of the parties
hereto in any number of separate counterparts, each of which shall be deemed an
original and all of which, taken together, shall be deemed to constitute one and
the same instrument. Delivery of an executed counterpart of this Amendment by
facsimile transmission, Electronic Transmission or containing an E-Signature
shall be as effective as delivery of a manually executed counterpart hereof.

9. Binding Nature. This Amendment shall be binding upon and inure to the benefit
of the parties hereto, their respective successors, successors-in-titles, and
assigns

10. Entire Understanding. This Amendment sets forth the entire understanding of
the parties with respect to the matters set forth herein, and shall supersede
any prior negotiations or agreements, whether written or oral, with respect
thereto.

11. Release. Each Loan Party hereby releases, acquits, and forever discharges
each of the Purchasers, and each and every past and present subsidiary,
affiliate, stockholder, officer, director, agent, servant, employee,
representative, and attorney of the Purchasers, from any and all claims, causes
of action, suits, debts, liens, obligations, liabilities, demands, losses, costs
and expenses (including reasonable attorneys’ fees) of any kind, character, or
nature whatsoever, known or unknown, fixed or contingent, which such Loan Party
may have or claim to have now or which may hereafter arise out of or connected
with any act of commission or omission of the Purchasers existing or occurring
prior to the date of this Amendment or any instrument executed prior to the date
of this Amendment including, without limitation, any claims, liabilities or
obligations arising with respect to the NPA or the other of the Loan Documents,
other than claims, liabilities or obligations caused by any Purchaser’s own
gross negligence or willful misconduct. The provisions of this paragraph shall
be binding upon each Loan Party and shall inure to the benefit of the Purchasers
and their respective heirs, executors, administrators, successors and assigns.

[remainder of page intentionally left blank; signature pages follow]

 

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first
written above.

 

THE PRINCETON REVIEW, INC., as ISSUER By:  

/s/ Christian G. Kasper

Name:   Christian G. Kasper Title:   EVP, CFO and Treasurer

PENN FOSTER, INC., as ISSUER By:  

/s/ Christian G. Kasper

Name:   Christian G. Kasper Title:   Vice President and Treasurer

SIGNATURE PAGE TO THE THIRD AMENDMENT TO THE PRINCETON REVIEW, INC. SENIOR
SUBORDINATED NOTE PURCHASE AGREEMENT

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PRINCETON REVIEW OPERATIONS, L.L.C., as a GUARANTOR

By:  

/s/ Christian G. Kasper

Name:   Christian G. Kasper Title:   Vice President and Treasurer TEST SERVICES,
INC., as a GUARANTOR

By:  

/s/ Christian G. Kasper

Name:   Christian G. Kasper Title:   Vice President and Treasurer THE PRINCETON
REVIEW OF ORANGE COUNTY, LLC, as a GUARANTOR

By:  

/s/ Christian G. Kasper

Name:   Christian G. Kasper Title:   Vice President and Treasurer PENN FOSTER
EDUCATION GROUP, INC., as a GUARANTOR

By:  

/s/ Christian G. Kasper

Name:   Christian G. Kasper Title:   Vice President and Treasurer

SIGNATURE PAGE TO THE THIRD AMENDMENT TO THE PRINCETON REVIEW, INC. SENIOR
SUBORDINATED NOTE PURCHASE AGREEMENT

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SANKATY CREDIT OPPORTUNITIES IV, L.P., as a PURCHASER

By:  

/s/ Michael Ewald

Name:   Michael Ewald Title:   Managing Director SANKATY CREDIT OPPORTUNITIES
II, L.P., as a PURCHASER

By:  

/s/ Michael Ewald

Name:   Michael Ewald Title:   Managing Director SANKATY CREDIT OPPORTUNITIES
III, L.P., as a PURCHASER

By:  

/s/ Michael Ewald

Name:   Michael Ewald Title:   Managing Director SANKATY CREDIT OPPORTUNITIES
(OFFSHORE MASTER) IV, L.P., as a PURCHASER

By:  

/s/ Michael Ewald

Name:   Michael Ewald Title:   Managing Director

SIGNATURE PAGE TO THE THIRD AMENDMENT TO THE PRINCETON REVIEW, INC. SENIOR
SUBORDINATED NOTE PURCHASE AGREEMENT

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FALCON STRATEGIC PARTNERS III, LP, as a PURCHASER By: Falcon Strategic
Investments III, LP, its general partner By: Falcon Strategic Investments GP
III, LLC, its general partner By:  

 /s/ John S. Schnabel

Name:   John S. Schnabel Title:   Director FALCON MEZZANINE PARTNERS II, LP, as
a PURCHASER By: Falcon Mezzanine Investments II, LLC, its general partner

By:  

 /s/ John S. Schnabel

Name:   John S. Schnabel Title:   Vice President FMP II CO-INVESTMENT, LLC, as a
PURCHASER

By:  

 /s/ John S. Schnabel

Name:   John S. Schnabel Title:   Vice President