EX-10.3



 






    Exhibit 10.3



 




    Michael
    J. Perik

    Stock Option Grant and Agreement



 




    The
    Princeton Review, Inc.



 



    Date of
    Issue:  7/22/2007

    Granted To:  Michael J. Perik (“Grantee”)



 


	 	 	 	 	 
	

    Option No.:
    [          ]
    


	
 
	
 
	
    Total Shares: 1,700,000
	
 

	

    Vesting Period: 4 Years
    


	
 
	
 
	
    Vesting Commencement Date: October 31, 2007
	
 

	

    Option price per share: $4.69
    


	
 
	
 
	
 
	
 









 




    Your
    Option



 



    The definition of any terms used herein may be found in The
    Princeton Review Glossary dated July 1st, 2005
    (“Glossary”), provided that any references in the
    Glossary to “Plan” or “Stock Incentive Plan”
    shall be deemed, for the purposes of this Agreement, to refer to
    this Agreement.



 



    Your option is intended to qualify as a Non-Qualified Stock
    Option.



 




    Vesting



 



    Except as provided below, your option shall vest as to 6.25% of
    the Total Shares on the last day of every third month commencing
    on the Vesting Commencement Date and ending four years
    thereafter. Notwithstanding the foregoing, this option shall in
    the event of a Change in Control become fully vested and
    exercisable immediately prior to the effective date of the
    Change in Control. If this option is neither assumed or
    substituted for by the surviving corporation in connection with
    a Change in Control nor exercised as of the effective date of a
    Change in Control then this option shall terminate and cease to
    be outstanding as of the effective date of the Change in Control.



 



    Notwithstanding anything in this Agreement to the contrary, the
    Compensation Committee of the Company (the “Compensation
    Committee”) reserves the right at any time to substitute
    for any unvested portion of this option an alternative equity
    instrument that has an equivalent or greater fair market value
    than the value of the unvested portion of this option being
    replaced. To the extent a portion of this option is replaced
    with an alternative equity instrument, such replaced option
    shall be cancelled immediately. Any such substitution for the
    unvested portion of this option shall not affect the vested
    portion of this option which shall remain exercisable subject to
    the terms and conditions contained herein.



 




    Method of
    Exercise and Payment Methods



 



    This option to the extent then vested, may be exercised in whole
    or in part at any time during the option period by giving
    written notice of exercise to the Company specifying the number
    of shares to be purchased, accompanied by payment of the
    purchase price.



 



    Payment of the option price shall be made in U.S. dollars
    or, in the discretion of the Compensation Committee, in the
    Common Stock of the Company valued at its Fair Market Value, a
    combination of such Common Stock and cash or any other method as
    permitted by law and approved by the Compensation Committee.
    However, payment may not be made with Common Stock unless the
    shares have been held for at least six months if required under
    applicable accounting rules in effect at the time. Payment shall
    be made to the Company at its corporate office, 2315 Broadway,
    New York, New York 10024.



 




    Conditions
    of Exercisability



 



    The exercise of your option is subject to the following terms
    and conditions:



 


		
	    (1)  	
    As a prerequisite to delivery of any stock certificates upon
    your exercise of this option, you shall give an undertaking and
    agree to the placing of such legends on your certificates as may
    be required by the Compensation Committee to assure compliance
    with any federal or state securities laws. The Common





    

    1








 





		
		
    Stock purchased pursuant to the exercise of this option cannot
    be sold unless it has been registered under the Securities Act
    of 1933, as amended, or is subject to an exemption from
    registration under such Act.




 


		
	    (2)  
	    Except as provided below, you must be an employee or director
    of, or a consultant to, the Company or one of its subsidiaries
    at the date of exercise and that employment, directorship or
    consultancy must have been continuous from the date hereof. For
    the purposes of this Agreement, persons on company-authorized
    leaves of absence are considered employees; however, long-term
    disability is not considered employment.

	 
	    (3)  
	    In the event of your death while an active employee, director or
    consultant, your rights to exercise this option which have
    vested to and including the date of death may be exercised
    within one year after death by your estate or by any person who
    acquires this option by inheritance or devise. Thereafter, such
    rights shall lapse.

	 
	    (4)  
	    In the event of the termination of your employment, directorship
    or consultancy due to long-term disability, your rights to
    exercise this option which have vested to and including the date
    of long-term disability may be exercised within one year after
    the start of long-term disability by you or, should you die
    within said one year period, by your estate or any person who
    acquires this option by inheritance or devise. Thereafter, such
    rights shall lapse.

	 
	    (5)  
	    In the event of your Retirement from the Company, your rights to
    exercise this option which have vested to and including the date
    of your Retirement may be exercised within three years after
    Retirement by you or, should you die within said three year
    period, by your estate or any person who acquires this option by
    inheritance or devise. Thereafter, such rights shall lapse. For
    purposes of this Grant, the term “Retirement” shall
    mean the termination of employment after having reached age
    sixty-five (65).

	 
	    (6)  
	    In the event of the termination of your employment other than
    for Cause, death, disability, Retirement or, if you are an
    Executive Officer and have not provided Adequate Notice, your
    rights to exercise this option which have vested to date of
    termination may be exercised within three months after such
    termination (the “Post-Termination Exercise Period”)
    or, should you die within said three month period, by your
    estate or any person who acquires this option by inheritance or
    devise. Thereafter, such rights shall lapse. Notwithstanding the
    foregoing, if you are a Section 16 Insider (as such term is
    defined in The Princeton Review, Inc. Insider Trading and Public
    Information Policy) and you reasonably believe you may be in
    possession of Material Inside Information (as such term is
    defined in The Princeton Review, Inc. Insider Trading and Public
    Information Policy), and may therefore be prohibited from
    engaging in transactions involving the securities of the
    Company, you may provide written notice (the “Extension
    Request Notice”) to the Company of the facts which you
    believe give rise to the Material Inside Information and of your
    request that your Post-Termination Exercise Period be extended
    for an additional time period equal to the lesser of
    (i) the period commencing on the date the Company receives
    such notice and ending on the date you receive written notice
    from the Company indicating that it would not seek to restrict
    trading by Insiders (as such term is defined in The Princeton
    Review, Inc. Insider Trading and Public Information Policy) in
    the Company securities by reason of the actual facts that may
    relate to the information identified in your Extension Request
    Notice or (ii) 90 days provided that the Extension
    Request Notice is received by the Company at least 5 business
    days prior to the Post-Termination Exercise Period.

	 
	    (7)  
	    If your employment is terminated for Cause or if you are an
    Executive Officer and you terminate your employment without
    Adequate Notice, the option granted hereunder shall immediately
    terminate upon the giving of notice of your termination. The
    Compensation Committee shall determine in its sole discretion
    when notice of termination was given and whether termination was
    for Cause.

	 
	    (8)  
	    This option shall be transferable by you to your spouse,
    children, brother, sister, parents or a trust in which these
    persons have more than fifty percent of the beneficial interest,
    or by will or by the laws of descent and distribution. During
    your lifetime, this option shall be exercisable only by you or
    any transferee described in the previous sentence.

	 
	    (9)  
	    This option is not, in any event, exercisable after the
    expiration of ten years from this date.

	 
	    (10) 
	    In connection with the exercise of this option, the Company
    shall have the right to withhold from your salary or other
    amounts payable to you, or to require you to make arrangements
    to pay in a manner satisfactory to the





    

    2








 





		
		
    Company, the appropriate amount of any federal, state, local or
    other taxes of any kind required by law to be withheld. Without
    limiting the scope of the preceding sentence, you shall have the
    right to elect to pay your withholding taxes to the Company in
    cash or in such form and manner as the Compensation Committee
    shall prescribe, to have such number of shares of Common Stock
    otherwise issuable with respect to the exercise of this option
    reduced by the amount necessary to satisfy all or part, as you
    may so elect, of your withholding obligation, and to transfer to
    the Company unrestricted shares of Common Stock already held by
    you for at least six months, if required under applicable
    accounting rules in effect at the time, to satisfy all or any
    part, as you may so elect, of your withholding obligation,
    provided that no more than the minimum statutory withholding
    rate shall be withheld. The obligations of the Company under
    this Agreement shall be conditional on such payment or
    arrangements.




 


		
	    (11) 	
    If at any time the Compensation Committee shall determine that
    (a) the listing, registration or qualification of the
    Common Stock upon any securities exchange or under any state or
    federal law, or (b) the consent or approval of any
    government regulatory body or (c) an agreement by you with
    respect to the disposition of the Common Stock is necessary or
    desirable (in connection with any requirement or interpretation
    of any federal or state securities law, rule or regulation) as a
    condition of, or in connection with, the issuance, purchase or
    delivery of Common Stock pursuant to this option, this option
    shall not be exercised, in whole or in part, unless such
    listing, registration, qualification, consent, approval or
    agreement shall have been effected or obtained free of any
    conditions not acceptable to the Compensation Committee.




 




    General



 



    In the event of any merger, reorganization, consolidation, sale
    of all or substantially all of the Company’s assets,
    recapitalization, stock dividend, stock split, spin-off,
    split-up,
    split-off, distribution of assets (including cash) or other
    change in corporate structure affecting the Common Stock, an
    equitable substitution or adjustment, as may be determined to be
    appropriate by the Compensation Committee in its sole
    discretion, shall be made to prevent dilution or enlargement of
    this option with respect to the identity of the stock or other
    securities to be issued under this Agreement, the Total Shares
    subject to this Agreement and the purchase price to be paid by
    the Grantee with respect to this option. Notwithstanding the
    foregoing, none of the changes in corporate structure affecting
    this option described above shall impair the rights of the
    Grantee without his or her consent.



 



    The Compensation Committee may provide that options may be
    surrendered for cash upon any terms and conditions set by the
    Compensation Committee.



 



    This Agreement is not an employment contract and neither this
    Agreement nor any action taken hereunder shall be construed as
    giving to the Grantee the right to be retained in the employ of
    the Company or a Related Company. The Company or, as applicable,
    the Related Company may terminate the Grantee’s employment
    as freely and with the same effect as if this Agreement were not
    in existence. Nothing set forth in this Agreement shall prevent
    the Company or a Related Company from adopting other or
    additional compensation arrangements.



 



    The Grantee shall have neither rights to dividends nor other
    rights of a stockholder with respect to shares subject to this
    option until the optionee has given written notice of exercise
    and has paid for such shares.



 



    All determinations made by the Compensation Committee pursuant
    to the provisions of this Agreement shall be final and binding
    on all persons, including the Company and Grantee. No member of
    the Board or the Compensation Committee, nor any officer or
    employee of the Company or a Related Company acting on behalf of
    the Board or the Compensation Committee, shall be personally
    liable for any action, determination or interpretation taken or
    made with respect to this Agreement, and all members of the
    Board and the Compensation Committee, and all officers or
    employees of the Company and Related Companies acting on their
    behalf, shall, to the extent permitted by law, be fully
    indemnified and protected by the Company in respect of any such
    action, determination or interpretation.



 



    Income recognized by an employee pursuant to this Agreement
    shall not be included in the determination of benefits under any
    other executive compensation or employee benefit or other
    compensatory plan of the Company or a Related Company, or any
    entity controlled by the Company or a Related Company, except as
    specifically provided in any such other plan or as otherwise
    provided by the Compensation Committee.




    

    3








 






    If any provision of this Agreement is held to be void, illegal,
    unenforceable or otherwise in conflict with the law governing
    this Agreement, such provision shall be deemed to be restated to
    reflect as nearly as possible the original intentions of the
    parties in accordance with applicable law, and the other
    provisions of this Agreement shall remain in full force and
    effect.



 



    The text of this Agreement shall control and the headings to the
    Sections are for reference purposes only and do not limit or
    extend the meaning of any of this Agreement’s provisions.
    Except as to matters of federal law, this Agreement and all
    rights thereunder shall be governed by, and construed in
    accordance with, the laws of the State of New York, without
    reference to the principles of conflicts of law thereof which
    would provide for the laws of any other jurisdiction to govern.



 



    The terms and provisions of this Agreement may be modified or
    amended by the Company in a manner which is not adverse to the
    Grantee.



 



    Please retain this copy for your files.



 


 



    THE PRINCETON REVIEW, INC.



 


			
	 	    By: 
	
    /s/  John
    Katzman









    Name: John Katzman




    Title: Chairman of the Board of Directors



 


			
	 	    By: 
	
    /s/  Michael
    J. Perik









    Name: Michael J. Perik




    

    4