Exhibit 10.1


EXECUTION COPY


FIRST AMENDMENT TO CREDIT AGREEMENT


          THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “First Amendment”) is entered into as of May 25, 2006 (the “First Amendment Effective Date”) among THE PRINCETON REVIEW, INC., a Delaware corporation (“Borrower”), the other Loan Parties signatory hereto, the Lenders a party hereto and Golub Capital Incorporated, a New York corporation, as administrative agent for the Lenders (“Administrative Agent”). 


W I T N E S S E T H:


          WHEREAS, Borrower, the other Loan Parties, Lenders and Administrative Agent are parties to that certain Credit Agreement dated as of April 10, 2006 (the “Credit Agreement”), pursuant to which Lenders extended a revolving credit facility to Borrower in the amount of Six Million Dollars ($6,000,000);


          WHEREAS, Borrower desires that Lenders increase the Revolving Loan Commitment to an amount of Ten Million Dollars ($10,000,000) for the purposes of financing the Fletcher Repurchase (as hereafter defined) and to fund working capital; 


          WHEREAS, the parties to the Credit Agreement desire to amend the terms of the Credit Agreement to, among other things, increase the Revolving Loan Commitment upon the terms and subject to the conditions set forth herein.


          NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows:


          1.        Defined Terms.  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Credit Agreement. 


          2.        Amendments to Credit Agreement.  Upon satisfaction of the conditions set forth in Section 3 hereof, the Credit Agreement is hereby amended as follows:

	
  
 
  	
  
(i)  In Section 2.3(a) of the Credit Agreement,   the reference to $3,000,000 is hereby deleted and replaced with “$5,000,000.”
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)  Section 2.4 of the Credit Agreement is   hereby deleted in its entirety and the following is substituted therefor:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
“Borrower   shall utilize the proceeds of the Revolving Loan solely for the financing of   the Fletcher Repurchase and Borrower’s working capital.”
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iii)  Section 2.5(a) of the Credit Agreement is   hereby deleted in its entirety and the following is substituted therefor:
  










	
  
 
  	
  
 
  	
  
“Borrower   shall pay interest to Administrative Agent, for the ratable benefit of   Lenders in accordance with the Loans being made by each Lender, in arrears on   each applicable Interest Payment Date, with respect to the Revolving Credit   Advances, the Index Rate plus the Revolver Index Margin per annum or, at the   election of Borrower, the applicable LIBOR Rate plus the Revolver LIBOR   Margin per annum, based on the aggregate Revolving Credit Advances   outstanding from time to time.  The   Revolver Index Margin will be 1.95% per annum and the Revolver LIBOR Margin   will be 4.00% per annum; provided, that with respect to the Revolving   Loans outstanding prior to the First Amendment Effective Date, the Revolver   Index Margin will be 1.45% per annum, and the Revolver LIBOR Margin will be   3.50% per annum for the period beginning on the date such Revolving Loans   were issued and ending on the date immediately prior to the First Amendment
 Effective Date.”
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iv)  In Sections 2.3(a) and 6.10 of the Credit   Agreement, the references to “forty (40)” are hereby deleted and replaced   with “seventy (70).”
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(v)  Section 2.9 (a) of the Credit Agreement is   hereby deleted in its entirety and the following is substituted therefor:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
“(a)     Borrower   shall have paid to Administrative Agent on the Closing Date a closing fee in   an amount equal to 1.00% of the aggregate amount of the Commitments on such   date (i.e. $60,000) and shall pay to Administrative Agent on the First   Amendment Effective Date a closing fee in an amount equal to 1.00% of the   aggregate increase in the Commitments on such date (i.e. $40,000).”
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(vi)  Section 2.9 (b) of the Credit Agreement is   hereby deleted in its entirety and the following is substituted therefor:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
“(b)     Borrower   shall pay to Administrative Agent a termination fee in the amount of $100,000   in the event the Revolving Loan Commitment is reduced to an amount less than   $5,000,000 at any time prior to October 10, 2010.”
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(vii)  Section 5.1 (a) of the Credit Agreement is   hereby deleted in its entirety and the following is substituted therefor:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
“(a)     Monthly   Financials.  To Administrative   Agent and Lenders, within thirty (30) days after the end of each Fiscal   Month, financial information regarding Borrower and its Subsidiaries,   certified by the Chief Financial Officer of Borrower, consisting of the   financial information provided on Exhibit 5.1(a) hereto.  Such financial information shall be   accompanied by the certification of the Chief Financial Officer of Borrower   that (i) such financial information presents fairly in accordance with GAAP   (subject to normal year-end adjustments and the absence of footnotes) the   financial position and results of operations of Borrower and its   Subsidiaries, on a consolidated basis, in each case as at the end of such   month and for the period then ended and (ii) any other information   presented is true, correct and complete in all material respects and that   there was no Default or
Event of Default in existence as of such time or, if   a Default or Event of Default shall have occurred and be continuing,   describing the nature thereof and all efforts undertaken to cure such Default   or Event of Default;”
  



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(viii)  In clause (i) of the second sentence of   each of Section 5.1(b) and Section 5.1(d) of the Credit Agreement, the words   “and consolidating” are hereby deleted.
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ix)  A new Section 6.17 is hereby inserted into   the Credit Agreement:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
“Borrower   shall complete the Fletcher Repurchase and retire the Fletcher Redeemed Stock   in accordance with the terms and conditions of the Fletcher Preferred Stock   Financing, on or before June 2, 2006.”
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(x)  Section 7.14 of the Credit Agreement is   hereby amended by deleting “and” before subsection (e) and inserting the   following at the end of such section:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
“and (f) the   Fletcher Repurchase.”
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(xi)  Section 9.1(b) of the Credit Agreement is   hereby amended by inserting “6.17,”    after “6.12,”.
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(xii)  Schedule 1.1 (Definitions) of the Credit   Agreement is hereby amended by:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(a)     deleting   the definition of “Commitments” in its entirety and replacing it  as follows:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
“ ‘Commitments’   shall mean (a) as to any Lender, the aggregate of such Lender’s Revolving   Loan Commitment as set forth on the signature page to the First Amendment (as   adjusted to reflect any assignments as permitted hereunder) and (b) as to all   Lenders, the aggregate of all Lenders’ Revolving Loan Commitments which   aggregate commitment shall be ten million dollars ($10,000,000) on the First   Amendment Effective Date, as such amount may be adjusted, if at all, from   time to time in accordance with this Agreement.”
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(b)     inserting   the following definitions in appropriate alphabetical order:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
“ ‘First   Amendment’ shall mean that certain First Amendment to Credit Agreement,   by and among Borrower, the other Loan Parties thererto, Administrative Agent   and Lenders, dated as of May 25, 2006.’
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
‘First   Amendment Effective Date’ has the meaning give to such term by the First   Amendment.’
  



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‘Fletcher   Repurchase’ shall mean the redemption by Borrower of all Fletcher   Redeemed Stock pursuant to the terms and conditions of the Fletcher Preferred   Stock Financing.
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
‘Fletcher   Redeemed Stock’ shall mean 4,000 shares of Borrower’s Series B-1   Cumulative Convertible Preferred Stock held by Fletcher and to be redeemed   pursuant to those certain redemption notices dated May 1, 2006 and May 3,   2006, and otherwise in accordance with the terms and conditions of the Fletcher   Preferred Stock Financing.”
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
(c)     deleting   the definition of “Revolving Loan Commitment” in its entirety and replacing   it  as follows:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
“ ‘Revolving   Loan Commitment’ shall mean (a) as to any Lender, the aggregate   commitment of such Lender to make Revolving Credit Advances as set forth in   the signature page to the First Amendment (as adjusted to reflect any   assignments as permitted hereunder) and (b) as to all Lenders, the aggregate   commitment of all Lenders to make Revolving Credit Advances, which aggregate   commitment shall be ten million dollars ($10,000,000) on the First Amendment   Effective Date, as such amount may be adjusted, if at all, from time to time   in accordance with this Agreement.”
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
3.       Conditions.  The effectiveness of this First Amendment   is subject to the following conditions:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
a.     The   execution and delivery of this First Amendment by Borrower and the other Loan   Parties, Lenders and Administrative Agent;
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
b.     Administrative   Agent shall have received a certificate from each Loan Party, executed by   such Loan Party’s corporate secretary or an assistant secretary, dated as of   the date of the First Amendment Effective Date, (i) providing that that there   have been no amendments or other modifications to such Loan Party’s charter   and/or certificate of formation provided on the Closing Date and that such   charter and/or certificate of formation remain true, complete and in full   force and effect, (ii) providing that there have been no amendments or other   modifications to such Loan Party’s bylaws or operating agreement, as   applicable, provided on the Closing Date and that such bylaws or operating   agreement, as applicable, remains true, complete and in full force and   effect, (iii) attaching resolutions of such Loan Party’s Governing Body or   members, as applicable, approving and authorizing the execution,
delivery and   performance of the First Amendment and the transactions to be consummated in   connection therewith, (iv) providing that the signature and incumbency   certificates of the officers of such Loan Party provided on the Closing Date   are still true, complete, and in full force and effect, (v) attaching   bringdown certificates, covering the period beginning on the Closing Date and   ending on the First Amendment Effective Date, regarding the good standing of   such Loan Party (including verification of tax status) in its state of   incorporation/formation, (vi) attaching bringdown certificates, covering the   period beginning on the Closing Date and ending on the First Amendment   Effective Date, regarding the good standing (including verification of tax   status) and certificates of qualification to conduct business in each of New   York, Delaware, California and Pennsylvania.
  



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c.     Administrative   Agent shall have received a duly executed original legal opinion of Patterson   Belknap Webb & Tyler LLP, counsel for the Loan Parties, in form and   substance satisfactory to Administrative Agent and its counsel, dated the   First Amendment Effective Date.
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
d.     Borrower   shall have delivered to Administrative Agent such other certificates,   documents and agreements respecting any Loan Party as Administrative Agent   may reasonably request.
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
e.     Borrower   shall have paid the Fees in the respective amounts specified in Section   2.9 of the Credit Agreement, as amended by this First Amendment, and   shall have reimbursed Administrative Agent and Lenders for all other fees,   costs and expenses as of the First Amendment Effective Date.
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
          4.        Representations   and Warranties. Each Loan Party hereby represents and warrants to   Administrative Agent and each Lender as follows:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
a.     Except   as provided on Exhibit 4A hereto, the representations and warranties   made by such Loan Party contained in the Loan Documents are true and correct   in all material respects as of the date hereof (except to the extent such   representations and warranties expressly refer to an earlier date, in which   case they shall be true and correct as of such earlier date, and except to   the extent such representations and warranties are qualified by materiality,   contain dollar thresholds or have Material Adverse Effect qualifiers, in   which case, such representations and warranties shall be true and correct in   all respects);
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
b.     such   Loan Party is a corporation or limited liability company, duly organized,   validly existing and in good standing under the laws of the jurisdiction of   its incorporation or formation, as applicable;
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
c.     such   Loan Party  has the power and   authority to execute, deliver and perform its obligations under this First   Amendment and the Credit Agreement, as amended hereby;
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
d.     the   execution, delivery and performance by such Loan Party of this First   Amendment and the Credit Agreement, as amended hereby, have been duly   authorized by all necessary action;
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
e.     this   First Amendment and the Credit Agreement, as amended hereby, constitutes the   legal, valid and binding obligation of such Loan Party, enforceable against   such Person in accordance with their terms, except as enforceability may be   limited by applicable bankruptcy, insolvency, or similar laws affecting the   enforcement of creditor’s rights generally or by equitable principles   relating to enforceability; and
  




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f.     upon   the effectiveness of Section 2(iv) of this Amendment, no Default or Event of   Default exists (and the Loan Parties specifically acknowledge that any   misrepresentation of the provisions of this Section 4 shall constitute such   an Event of Default).
  



          5.        No Modification.  Except as amended hereby, the Credit Agreement and the other Loan Documents remain unmodified and in full force and effect.  All references in the Loan Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as amended hereby.


          6.       Counterparts.  This First Amendment may be executed by one or more of the parties to this First Amendment and any number of separate counterparts, each of which when so executed, shall be deemed an original and all said counterparts when taken together shall be deemed to constitute but one and the same instrument.


          7.     Successors and Assigns.  This First Amendment shall be binding upon and inure to the benefit of Borrower and each Loan Party and their successors and assigns and Administrative Agent and Lenders and their successors and assigns.


          8.       Further Assurance.  Borrower hereby agrees from time to time, as and when requested by Administrative Agent or any Lender, to execute and deliver or cause to be executed and delivered, all such documents, instruments and agreements and to take or cause to be taken such further or other action as Administrative Agent or such Lender may reasonably deem necessary or desirable in order to carry out the intent and purposes of this First Amendment, the Credit Agreement and the Loan Documents.


          9.       GOVERNING LAW.  THIS FIRST AMENDMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.


          10.       Severability.  Wherever possible, each provision of this First Amendment shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this First Amendment shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this First Amendment.


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          11.       Reaffirmation. Each of the Loan Parties as debtor, grantor, pledgor, guarantor, assignor, or in any other similar capacity in which such Loan Party grants liens or security interests in its property or otherwise acts as accommodation party or guarantor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party (after giving effect hereto) and (ii) to the extent such Loan Party granted liens on or security interests in any of its property pursuant to any such Loan Document as security for or otherwise guaranteed Borrower’s Obligations under or with respect to the Loan Documents, ratifies and reaffirms such guarantee and grant of security interests and liens and confirms and agrees that such security interests and liens
hereafter secure all of the Obligations as amended hereby.  Each of the Loan Parties hereby consents to this First Amendment and acknowledges that each of the Loan Documents remains in full force and effect and is hereby ratified and reaffirmed.  The execution of this First Amendment shall not operate as a waiver of any right, power or remedy of Administrative Agent or Lenders, constitute a waiver of any provision of any of the Loan Documents or serve to effect a novation of the Obligations.


[Remainder of Page Intentionally Left Blank; Signature Page Follows]


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EXECUTION COPY


          IN WITNESS WHEREOF, each of the undersigned has executed this First Amendment as of the date set forth above.

	
   
  	
  
BORROWER:
  
	
  
 
  	
  
 
  
	
  
 
  	
  
THE   PRINCETON REVIEW, INC., 
   a Delaware corporation
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ Andrew   J. Bonnani
  
	
  
 
  	
  
 
  	
  


  
	
  
 
  	
  
Name: 
  	
  
Andrew J.   Bonanni
  
	
  
 
  	
  
Title: 
  	
  
Chief   Financial Officer and Treasurer
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
GUARANTORS:
  
	
  
 
  	
  
 
  
	
  
 
  	
  
PRINCETON   REVIEW OPERATIONS, L.L.C., 
   a Delaware limited liability company
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ Andrew   J. Bonnani
  
	
  
 
  	
  
 
  	
  


  
	
   
  	
  
Name: 
  	
  
Andrew J.   Bonanni
  
	
  
 
  	
  
Title: 
  	
  
Chief   Financial Officer and Treasurer
  










	
  
 
  	
  
ADMINISTRATIVE   AGENT:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
GOLUB   CAPITAL INCORPORATED
  
	
  
 
  	
  
 
  
	
   
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ Gregory   W. Cashman
  
	
  
 
  	
  
 
  	
  


  
	
  
 
  	
  
Name:  
  	
  
Gregory W.   Cashman
  
	
  
 
  	
  
Title: 
  	
  
Managing   Director
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
LENDERS:
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
GOLUB   CAPITAL CP FUNDING
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ Gregory   W. Cashman
  
	
  
 
  	
  
 
  	
  


  
	
  
 
  	
  
Name:  
  	
  
Gregory W.   Cashman
  
	
  
 
  	
  
Title: 
  	
  
Managing   Director
  
	
  
 
  	
  
 
  
	
   
  	
   
  
	
   
  	
  Revolving   Loan Commitment: $10,000,000.00