EMPLOYMENT AGREEMENT
 THE PRINCETON REVIEW, INC.


          This Employment Agreement (this “Agreement”) is between Andrew Bonanni (“Exec”) and The Princeton Review, Inc. (“TPR”), and is subject to the terms of the current form of the Executive Compensation Policy Statement, dated July 1, 2005, a copy of which is attached as Exhibit A (the “Policy Statement”). Terms may be defined in The Princeton Review Glossary, also dated July 1, 2005, the current form of which governs this Agreement and is attached as Exhibit B.  This Agreement supersedes any previous employment agreement.

	
  
1.
  	
  
Job Description: Exec   shall serve as the Chief Financial Officer of TPR, performing such duties as   are reasonable and customary for such position within a business of this   type, and shall report solely and directly to TPR’s Chairman and Chief   Executive Officer.
  
	
  
 
  	
  
 
  
	
  
2.
  	
  
Compensation & Benefits: TPR shall pay Exec $290,000 per year   (prorated by the number of months employed), increasing annually each   February 14th by at least 2%.  Exec   shall also receive those medical, dental, life insurance or other benefits   made available by TPR to the other senior executives of TPR as a class. He shall also receive a bonus of up   to 50% of base salary, based on the “Bonus Calculation” described below in   Appendix A and in accordance with the Policy Statement, as amended.  The amount of the bonus paid shall be   based on the Bonus Calculation described below in Appendix A, provided,   however, that Exec’s bonus for calendar year 2005 shall be determined as   follows: (i) Exec’s 2005 base bonus (the “2005 Base Bonus”) shall first be   calculated in accordance with Appendix A and (ii) Exec shall receive an   amount equal to the 2005 Base Bonus as prorated by the number of months
employed by TPR in 2005.
  
	
   
  	
  
 
  
	
  
3.
  	
  
Stock   Option Grant:  TPR   shall grant Exec an option to purchase 40,000 shares of TPR’s Common Stock,   as authorized by TPR’s Compensation Committee, at fair market value as   indicated by the closing market price of REVU on Exec’s first day of   employment.  These options shall be   subject to the terms and conditions of The Princeton Review, Inc. Stock   Option Grant attached hereto.
  
	
  
 
  	
  
 
  
	
  
4.
  	
  
Term:    Exec’s employment shall commence on September 12, 2005.  This Agreement shall expire on February 14th,   2008 but shall be automatically extended for additional two-year periods upon the completion of the initial term and any two-year extension   period thereafter until (i) Exec voluntarily terminates employment or   (ii) TPR gives contrary written notice to Exec at least 6 months prior to the   completion of the initial term or any   two-year extension period thereafter.  TPR will not be under any   obligation to make additional option grants to Exec, such as those described   in paragraph 3 above, for any extension terms of this Agreement unless agreed   by TPR and Exec.
  
	
  
 
  	
  
 
  
	
  
5.
  	
  
Severance   Payments and Benefits: If TPR terminates Exec’s employment   without Cause, then in addition to the payments provided under Section 5.1 of   the Policy Statement, but in lieu of the payments provided under Section 5.3   of the Policy Statement, TPR will pay Exec his base salary plus benefits for   an additional nine months.
  
	
  
 
  	
  
 
  
	
  
6.
  	
  
Right   to be connected: Exec   will be provided with or be reimbursed for the reasonable cost of cell phone   service, DSL or cable modem connection service at his primary residence.
  




Agreed to this 9/9/05.

	
  
/s/ John Katzman
  	
  
 
  	
  
/s/Andrew Bonanni
  
	
  


  	
  
 
  	
  


  
	
  
John Katzman
  	
  
 
  	
  
Andrew Bonanni
  
	
  
Chairman, TPR
  	
  
 
  	
  
 
  










Appendix A

Bonus Calculation

	
  50%
  	
  The Princeton Review achieves annual financial   objectives as set for by 2005 TPR budget, as attached hereto. Bonus will be   paid out according to standard TPR financial bonus matrix as determined annually   by TPR.
  
	
   
  	
   
  
	
  50%
  	
  Goals to be mutually agreed upon by October 15,   2005.  Should Exec and TPR be unable   to agree upon mutually agreeable goals, this portion of the bonus goals shall   be based upon TPR achieving the financial objectives described above.
  










EXHIBIT A


THE PRINCETON REVIEW, INC.
 2005 EXECUTIVE COMPENSATION POLICY STATEMENT


EFFECTIVE JULY 1, 2005


The Princeton Review, Inc (“TPR”) wants to fairly compensate its senior management in a consistent and clear way. This document will serve as an addendum to the employment agreements of executives selected by the Chief Executive Officer (“CEO”) or the Board of Directors (the “Board”). 


The issues covered are as follows: (1) Who is eligible; (2) Responsibilities and Non-compete; (3) Term & Compensation; (4) Termination for Cause, Disability or Death; (5) Severance Benefits and Payments; (6) Change of Control; and the always-popular (7) Legal Stuff.


Section 1.     Who is Eligible

	
  
 
  	
  
1.1.
  	
  
The CEO or   the Board shall decide who will be covered under the Executive Compensation   Policy.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
1.2.
  	
  
An executive   will not be covered under the Executive Compensation Policy unless he or she   has an effective employment agreement that provides for such participation.
  




Section 2.     Responsibilities and Non-compete

	
  
 
  	
  
2.1.
  	
  
So long as   this Agreement continues in effect, the Executive shall devote full business   time and energies to the business affairs, including management and financial   responsibilities, of TPR. Further, he or she will use his or her best   efforts, skill and abilities to promote their interests, in accordance with   guidelines, policies and objectives established by TPR and his or her   manager.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
2.2.
  	
  
Any   materials, writings, graphics, techniques, methods or products relating or   reasonably applicable to TPR business, or any natural extension thereof,   which may be developed by the Executive during his or her term of employment   with TPR shall inure solely and fully to the benefit of TPR, without any   additional compensation to the Executive.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
In addition,   TPR will be the exclusive owner of all intellectual property rights   (including copyrights, patents, trade secrets, trademarks and moral rights)   in all of the Executive’s works of authorship, inventions, and other   creations, ideas, suggestions and contributions, either standing alone or as   part of a collective work, that are within the scope of the Executive’s   employment at TPR.  At TPR’s request,   the Executive agrees to sign all documents necessary to confirm this   agreement and to secure and perfect TPR’s interest in such rights.  The Executive acknowledges that during his   or her 
  










	
  
 
  	
  
 
  	
  
employment   with TPR, he or she may have had otherwise prohibited access to trade secrets   and other oral or written information and materials that are confidential in   nature and proprietary to TPR.  The   Executive will not, at any time, whether during or after the term of   employment, directly or indirectly, by any means or devices whatsoever, copy,   retain, disclose, use, or permit the use of or access to any confidential   business information, except as may be required in the performance of the   Executive’s duties for TPR.  Upon   termination or expiration of employment with TPR, the Executive will   immediately turn over to TPR all copies of any confidential business   information in his or her possession or control.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
2.3.
  	
  
In the event   of a breach or threatened breach by the Executive of any provision of this   Agreement which would be difficult to measure in terms of monetary damages,   including, but not limited to, the disclosure of confidential business   information, or the unauthorized rendering of services to any person or firm   engaged in a business competitive with that of TPR or its franchises as   described in Section 2.4 below, TPR shall by agreement of the parties be   entitled to obtain a restraining order, injunction and all other appropriate   equitable remedies in addition to other applicable remedies provided by   applicable law. It is expressly agreed that the Executive’s obligation to   maintain the confidentiality of the business of TPR and its franchises, which   are not matters of general public knowledge, will survive the termination of   this Agreement.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
2.4.
  	
  
The   Executive agrees that his or her services provided to TPR are of a special,   unique and intellectual character, and the Executive’s position with TPR   places him or her in a position of confidence and trust with the business,   customers and employees of TPR and its affiliates. Accordingly, the Executive   agrees during the term of this Agreement and for a period of eighteen (18)   months following the expiration or termination of this Agreement not to:
  






	
  
 
  	
  
2.4.1.
  	
  
engage in   any capacity, in the business of providing assistance with or professional   training for state standards and assessments, preparation for standardized   examinations, or the college, professional school, or graduate school   admissions process, without the advance written consent of TPR, or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
2.4.2.
  	
  
solicit the   services of any employee of TPR or any of its franchises (or any individual   employed by TPR or any of its franchises within the then most recent 12   months) or take any action that results, or might reasonably result, in any   employee ceasing to perform services for TPR or any of its franchises and   commencing to perform services for the Executive or any person or entity   associated with the Executive. If the Executive breaches this Section 2.4, he   or she will immediately forfeit as of the time of such breach the right to   receive any severance payments or benefits under this Agreement and forfeit   the gain from any stock options exercised following a termination of   employment.  In addition, TPR will be   entitled to require that the Executive repay to TPR the value of any such   payments or benefits previously paid to the Executive and to pursue any   additional remedies at law or equity, including, without limitation, those
contemplated by Section 2.3 above.
  



Page 2 of 5








	
  
 
  	
  
2.5.
  	
  
If any   provision of this Section 2 is found to be void or unenforceable, in whole or   in part, then the remainder of the provisions of this Section 2 will remain   in full force and effect and in no way be affected or impaired, and the   provision so found to be void or unenforceable will be deemed modified in   amount, duration, scope or otherwise to the minimum extent necessary such   that such provision shall not be void or unenforceable and, as so modified,   will remain in full force and effect.
  




Section 3.     Term & Compensation:

	
  
 
  	
  
3.1.
  	
  
The   Agreement has an initial one-year term, which will automatically be extended   for additional two-year periods upon the completion of the initial one-year   term or any two-year extension period thereafter until (i) the Executive   voluntarily terminates employment or (ii) TPR gives contrary written notice   to the Executive at least 60 days prior to the completion of the initial   one-year term or any two-year extension period thereafter.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
3.2.
  	
  
Base annual   salary is payable in 26 equal bi-weekly installments.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
3.3.
  	
  
The   Executive may be eligible for an annual bonus in accordance with The   Princeton Review Bonus Policy, attached hereto as Exhibit A.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
3.4.
  	
  
A health   insurance plan comparable to the best plan being provided on a current basis   to management executives of TPR or other TPR employees.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
3.5.
  	
  
Other   benefits such as 401(k), cafeteria plan, educational reimbursement and such   others as may be provided to other management personnel of TPR or other TPR   employees.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
3.6.
  	
  
Three weeks   of paid vacation.
  




Section 4.     Termination of Employment:

	
  
 
  	
  
4.1.
  	
  
TPR may   terminate the Executive’s employment for Cause.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
4.2.
  	
  
TPR may   terminate the Executive’s employment due to his or her “Disability.” For   purposes of this Agreement, the Disability of the Executive shall mean that   the Executive shall fail to perform the duties of employment because of   illness or incapacity to perform for 90 successive days, or for shorter periods   aggregating 90 days or more in any consecutive 12-month period (the “Periods   of Disability”).  In no event will the   Executive’s absence from work on an approved maternity or paternity leave be   counted as a Period of Disability.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
4.3.
  	
  
This Agreement   shall terminate immediately upon the Executive’s death.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
4.4
  	
  
If the   Executive voluntarily terminates without Adequate Notice, any stock options   granted to the Executive shall immediately terminate upon the Executive’s   termination of employment.
  




Page 3 of 5









Section 5.     Severance Payments and Benefits:

	
  
 
  	
  
5.1.
  	
  
If the   Executive’s employment terminates for any reason during the term of the   Agreement, the Executive will be entitled to receive his or her salary   through the date of termination (and a cash payment for vacation accrued to   that date).
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
5.2.
  	
  
If TPR   terminates the Executive’s employment due to his or her Disability, then, in   addition to the payments provided under Section 5.1 above (which will include   the salary accrued by the Executive during the Period(s) of Disability), the   Executive will also continue to receive base salary for a period of six   months following the date of termination, minus any other Disability benefits   provided by TPR to the Executive during this period. Payment under this   Section 5.2 will, however, immediately cease upon the Executive’s return to   employment with TPR or any other employer.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
5.3.
  	
  
If TPR   terminates the Executive’s employment without Cause, or if the Executive   terminates employment after being Reassigned, then, in addition to the   payments provided under Section 5.1 above, TPR will pay the Executive his or   her annual base salary for an additional six months following termination. In   addition, the Executive will be entitled to reimbursement of COBRA payments   to maintain medical and dental insurance for a number of weeks equal to twice   the number of years he or she was employed full-time by TPR.
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
5.4.
  	
  
If TPR does   not renew the Agreement under Section 3.1 above, then, in addition to the   payments provided under Section 5.1 above, TPR will pay the Executive an   amount equal to his or her weekly salary multiplied by twice the number of   years he or she was employed full-time by TPR. This payment will not be due   if TPR is in the process of Terminating for Cause at the time of renewal.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
5.5.
  	
  
Any   severance payments or benefits provided under this Section 5 shall be in   consideration of, and subject to, the Executive’s performance of the   non-competition obligations of Section 2.4 above.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
5.6.
  	
  
To the   extent permitted by law, the total amount of any severance payments or   benefits provided under this Section 5 shall be paid ratably over time   pursuant to TPR’s regularly scheduled payroll system based on the number of   months of the Executive’s annual base salary to be paid, and shall be subject   to withholding taxes.
  



Section 6.     Change in Control:

	
  
 
  	
  
6.1.
  	
  
TPR shall   retain full and unlimited discretion to add to or to dispose of TPR. However,   if there is a Change in Control during the term of the Agreement, the   Executive will be entitled to immediate vesting and settlement of all   deferred stock and stock options then held by the Executive under the   relevant plans, and of all other stock-based awards granted to the Executive   under any stock-based incentive plan of TPR.
  




Page 4 of 5









Section 7.     Legal Stuff:

	
  
 
  	
  
7.1.
  	
  
Except for   the right of TPR to seek equitable relief under the circumstances provided by   Section 2 hereof, any controversy, dispute or claim arising under or relating   to the provisions of this Agreement, or the breach thereof, shall be   determined by arbitration in the City of New York in accordance with the   Commercial Arbitration Rules of the American Arbitration Association then in   effect. The decision and award in such arbitration proceeding shall be   binding and final on the parties, and judgment upon the award rendered by the   arbitrator(s) may be entered in any court having jurisdiction thereof.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
7.2.
  	
  
If any   provision of the Agreement shall be found to be invalid or unenforceable,   that provision only shall be deemed to be deleted, or revised to validly   express the intention of the parties, and the remainder of the Agreement, by   intention of the parties, shall remain valid and enforceable to the fullest extent   permitted by law.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
7.3.
  	
  
The   Agreement is personal to the Executive and may not be assigned by him or her.   TPR may assign the Agreement to any successor, or to any party or corporation   that may succeed to the business of TPR or of such successor by sale of   assets, merger, or consolidation or otherwise, provided the assignee assumes   the responsibilities and obligations of TPR under the Agreement.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
7.4.
  	
  
The   Agreement constitutes and contains the entire agreement and understanding of   the parties with respect to the subject matter hereof. A modification of this   Agreement will be binding only if agreed to in writing by the party sought to   be bound or obligated.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
7.5.
  	
  
The   Agreement shall be interpreted under the laws of the State of New York.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
7.6.
  	
  
The   Agreement may be executed in any number of identical counterparts, and each   counterpart shall be deemed a duplicate original hereof.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
7.7.
  	
  
The   Compensation Committee shall administer this Policy and shall have exclusive   authority and discretion to interpret and construe the terms hereof and   determine eligibility for payments and benefits hereunder with respect to the   CEO and each other Executive Officer.    Any such determination will be final and binding on the Executive   Officer unless arbitrary and capricious or made in bad faith.  The CEO, however, shall administer this   Policy and shall have exclusive authority and discretion to interpret and   construe the terms hereof and to determine eligibility for payments and   benefits hereunder with respect to any other executive of TPR that is covered   by this Policy. Any such determination will be final and binding on the   executive unless arbitrary and capricious or made in bad faith.
  
	
   
  	
   
  	
   
  
	
   
  	
  7.8.
  	
  Any payments   due to the Executive hereunder will be reduced by all required withholding   and other taxes.
  
	
   
  	
   
  	
   
  
	
   
  	
  7.9.
  	
  Many   definitions and terms used here can be found in The Princeton Review   Glossary. Any of the terms herein may be superceded by the specific   employment agreement to the extent that the employment agreement specifically   provides that it is superceding a term herein.  The Executive’s specific employment agreement, together with   this addendum, are referred to herein as the “Agreement”.  However, the terms herein supercede those   of the Stock Option Grant or Stock Incentive Plan.
  



Page 5 of 5













EXHIBIT A
 THE PRINCETON REVIEW BONUS POLICY




CALENDAR YEAR 2005 




This document outlines the bonus policy and structure for The Princeton Review, Inc. (the “Company”) G-0 Employees, and it shall be incorporated into, and be deemed a part of, the employee’s Executive Compensation Policy Statement.  




The bonus calculations are a direct reflection of the Company/division’s results and the EVP’s contribution to our annual financial success.  This two-part structure is intended to accomplish the following: (1) the Company and division must meet or exceed its goals in order to trigger bonus payments, and (2) individuals must meet or exceed their goals in order to share in the bonus program.  




The Bonus Process


By the end of January, G-0 Employees will receive the bonus plan that will be in effect for that calendar year.  The plan will state the components that factor into the bonus. Specific financial or quality goals will be distributed only once the numbers for the previous year have been tabulated and released.  The maximum bonus amount G-0 employees can earn depends on their respective Employment Agreement. 



Each plan will be approved by the President and submitted to Human Resources.  Bonuses are distributed annually, after the Company’s financial statements have been finalized for the year.  Bonuses are based on The Princeton Review’s performance for the year and are not guaranteed.




Every employee will receive performance evaluations twice a year.  No bonuses will be approved or processed until the manager completes the review and files the appropriate paperwork with HR.  Managers will NOT be given their raises, bonuses, or options until they have completed the performance evaluations for their staff.  Unless approved by HR and the President in advance, those managers’ raises and option grants will not be backdated.  




Critical Factors behind the Bonus Plan




Divisional and Company Financial and Quality Performance

The plan is primarily based on factors that drive the business; payment of bonuses is based on the overall performance of The Princeton Review and the contribution of each employee to its success.  



The financial and quality bonus goals (often called matrices) for each department and/or division is set by the divisional EVP and approved by the President and for Executive Officers the Compensation Committee by the end of March each year.  The President will set the bonus matrix for the overall Company performance.  These targets reflect the goals of the organization that each person impacts in some way.  All employees have financial, customer satisfaction and personal components in their bonus.











The bonus components and weighting for G-0 employees are listed in the chart, below.   While these are expected percentages, the numbers may be changed at the discretion of The Compensation Committee:


	

  Job   Category,
  	

  

 
  	

  

Max. Bonus   as % of salary
  	

  

 
  	

  

Minimum Goal Parameters
  
	

  

 
  	

  

 
  	

  




  
	

  

 
  	

  

 
  	

  

Operating Division
  	

  

 
  	

  

Service Division
  
	

  




  	

  

 
  	

  




  	

  

 
  	

  




  	

  

 
  	

  




  
	

  G-0
  	

  

 
  	

  

Plug in % based on Exec Comp   Agreement


 	

  

 
  	

  

50%
  	

  

 
  	

  

Divisional/Departmental   Financial Performance 
  	

  

 
  	

  

30%
  	

  

 
  	

  

Divisional Financial   Performance (equally distributed) 
  
	

  

 
  	

  

 
  	

  

 
  	

  

10%
  	

  

 
  	

  

Company Financial   Performance
  	

  

 
  	

  

20%
  	

  

 
  	

  

Company Financial   Performance
  
	

   
  	

  

 
  	

  

 
  	

  

15%
  	

  

 
  	

  

Customer   Satisfaction/Quality Metrics
  	

  

 
  	

  

20%
  	

  

 
  	

  

Customer   Satisfaction/Quality Metrics
  
	

  

 
  	

  

 
  	

  

 
  	

  

 
  	

  

25%
  	

  

 
  	

  

Job Specific Objectives
  	

  

 
  	

  

30%
  	

  

 
  	

  

Job Specific Objectives
  







Personal Performance

We’ve allocated a minimum of 25% of the full-year review rating to personal performance (as indicated in the above chart).  Simply put, your performance will be the only factor in determining approx. a quarter of your bonus, regardless of how the Company fares overall. 

At reviews, Divisional EVPs will receive performance ratings using the following scale: Exceeds Expectations, Accomplished Goals, Requires Improvement, and Fails to Meet Expectations.  EVPs will be rated on the specific goals outlined for them in previous review sessions and will be given an overall rating based on their aggregate performance.  The following are the descriptions for each rating and guidelines for the percentage credit EVPs will receive for personal objectives achieved for each performance level.


	

  

Ratings for Job Specific Objectives:
  	

  

 
  	

  

Estimated Payout for Job Specific   Objectives:
  
	

  




  	

  

 
  	

  




  
	

  

EXCEEDS EXPECTATIONS
  	

  

 
  	

  

90%-100%
  
	

  

•
  	

  

 
  	

  

Produced exceptional work   on this objective 
  	

  

 
  	

  

 
  
	

  •
 	

   
  	

  

Quality of work exceeds   expectations and sets new standards of excellence 
  	

  

 
  	

  

 
  
	

  

•
  	

  

 
  	

  

Required little to no   direction or guidance for work on this objective. 
  	

  

 
  	

  

 
  
	

  

•
  	

  

 
  	

  

Objective completed ahead   of schedule and better than budget.
  	

  

 
  	

  

 
  
	

   
 	

  

 
  	

  

 
  	

  

 
  	

  

 
  
	

  

ACCOMPLISHED GOALS
  	

  

 
  	

  

50%-75%
  
	

  •
  	

  

 
  	

  

Expected results produced   and some expectations were exceeded 
  	

  

 
  	

  

 
  
	

  

•
  	

  

 
  	

  

Required minimal guidance   and direction 
  	

  

 
  	

  

 
  
	

  

•
  	

  

 
  	

  

Objective was completed   both on time and on budget.
  	

  

 
  	

  

 
  
	

   
 	

  

 
  	

  

 
  	

  

 
  	

  

 
  
	

  

 
  
	

  

REQUIRES IMPROVEMENTS TO MEET   EXPECTATIONS
  	

  

 
  	

  

0%-25%
  
	

  •
  	

  

 
  	

  

Quality of work on   objective did not meet expectations
  	

  

 
  	

  

 
  
	

  

•
  	

  

 
  	

  

Required above average   levels of guidance and direction
  	

  

 
  	

  

 
  
	

  

•
  	

  

 
  	

  

Objective was not   completed on time or was not on   budget.
  	

  

 
  	

  

 
  
	

   
 	

  

 
  	

  

 
  	

  

 
  	

  

 
  
	

  

FAILS TO   MEET EXPECTATIONS
  	

  

 
  	

  

0%
  
	

  •
  	

  

 
  	

  

Acceptable results we not   produced 
  	

  

 
  	

  

 
  
	

  

•
  	

  

 
  	

  

Unable to complete project   without exceptional levels of guidance and direction.
  	

  

 
  	

  

 
  





Page 2 of 3










Rules of the Game




Unless otherwise noted in your Employment Agreement and/or Executive Compensation Policy Statement, the following rules will apply:  


	

  

 
  	

  

•
  	

  

Employees must still be   with the company when bonuses are paid to receive the bonus.  An employee who is on an approved leave of   absence (medical, military service, etc.) during the bonus period, will   receive a pro-rated bonus that reflects the amount of time actively at work   during that bonus period.
  
	

   
  	

  

•
  	

  

Employees who are promoted   prior to August 1 to a higher job category will be eligible for the higher   bonus potential (if applicable).    Bonuses for employees promoted after August 1 will be considered at   the original category.
  
	

  

 
  	

  

•
  	

  

Bonuses for employees who   start prior to October 1st shall be pro-rated based on the time   they are with the company in the bonus year.
  
	

  

 
  	

  

•
  	

  

Divisional/Departmental   bonus plan goals will be established by the end of March of each year.
  
	

  

 
  	

  

•
  	

  

Raises will be processed   no earlier than March 10, retroactive to February 14.
  
	

  

 
  	

  

•
  	

  

We may not be able to   announce our annual financial performance until after our Q4 conference call   with the Wall Street financial analysts.    As such, announcement and/or payments of financial bonuses may be   delayed until after the release of our financial performance.
  
	

   
  	

  

•
  	

  

Financial performance of   the overall Company depends directly on our divisions and departments and   could make for difficult choices if one or more of them does not deliver its   promises.  Should a division or   department fall short of its budgeted bottom-line enough to significantly   affect the entire Company, bonuses may be lowered or eliminated for employees   in that division or department at the discretion of the CEO or President.
  
	

  

 
  	

  

•
  	

  

In times of poor financial   health or extremely poor financial performance, bonuses based on   non-financial components may be lowered.    This would only be done at the urging of the Board of Directors, and   would affect every employee in the Company by an equal percentage.
  
	

  

 
  	

  

•
  	

  

This bonus policy is not a   contract and may be modified at any time by the Company.  Employees will be notified of any changes   in the event that they are made.
  
	

  

 
  	

   
 	

  

This bonus agreement   supercedes any prior understandings or promises regarding bonuses.
  
	

  

 
  	

  

•
  	

  

For Executive Officers,   all bonus awards and the final determination of goals must be approved by the   Compensation Committee.
  





Stock Options


Please refer to Employee Bonus and Stock Option Document for details.


Page 3 of 3













EXHIBIT B


THE PRINCETON REVIEW GLOSSARY - 2005


EFFECTIVE JULY 1, 2005


In many documents and agreements used by The Princeton Review, Inc. we use certain terms.  In order that all of those documents refer to the same things in the same way, we have created this Glossary. 

	
  
1)
  	
  
“Adequate Notice” is 4 weeks prior written notice that an Executive   Officer must provide to the Company in the event that such Executive Officer   voluntarily terminates his or her employment with the Company.
  
	
  
 
  	
  
 
  
	
  
2)
  	
  
“Agreed Value” is the fair market value of the Company as determined   by the Company through the valuation committee set up in the Stockholder’s   Agreement.
  
	
  
 
  	
  
 
  
	
  3)
  	
  
“Board” shall mean the Board of Directors of the Company.
  
	
  
 
  	
  
 
  
	
  
4)
  	
  
“Cause” shall mean:
  
	
  
 
  	
  
 
  
	
  
 
  	
  
a)
  	
  
dishonesty or the willful engaging by an employee in illegal conduct,   if such acts materially injure the company;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
b)
  	
  
the willful failure of an employee to perform the material duties of   his or her employment (other than any such failure resulting from incapacity   due to physical or mental illness), after a written demand is delivered to   the employee which identifies the manner in which the employee has not   substantially performed his or her duties;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
c)
  	
  
the willful engaging by an employee in gross misconduct in connection   with the performance of his or her duties which is materially injurious to   his or her employer; or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
d)
  	
  
disloyalty towards the Company which results in material harm to the   Company, which specifically shall include, but not be limited to, actions   which are inconsistent with the fiduciary duty owed the Company arising by   law from employment as an officer and agent of the Company.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
5)
  	
  
A “Change in Control” shall mean:
  
	
  
 
  	
  
 
  
	
  
 
  	
  
a)
  	
  
an acquisition or acquisitions of 30% or more of the Company’s then   issued and outstanding voting stock, with preferred stock on an as-converted   basis, that results in a change in the CEO or Chairman of the Board, by an   outside entity or entities (as defined below);
  










	
  
 
  	
  
b)
  	
  
a merger or consolidation of the Company, unless (1) following the   transaction, former stockholders of the Company continue to hold at least 50%   of the voting stock of the surviving entity or (2) the transaction is   effected to implement a recapitalization in which no outside entity or   entities acquire control of 50% or more of the Company’s voting stock;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
c)
  	
  
during any period of two consecutive years, individuals who at the   beginning of such period were members of the Board cease for any reason to   constitute at least a majority thereof (unless the election, or the   nomination for election by the Company’s stockholders, of each new director   was approved by a vote of at least two-thirds of the directors then still in   office who were directors at the beginning of such period);
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
d)
  	
  
a liquidation or dissolution of the Company, or sale of substantially   all of its assets to an outside entity or entities; or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
e)
  	
  
the execution of a binding agreement which, if consummated, would result   in a Change in Control as defined above;
  





	
  
 
  	
  
i)
  	
  
provided, that, notwithstanding anything to the contrary in the   foregoing, neither the initial public offering of the common stock of the   Company, nor the temporary holding of Company securities by an underwriter   pursuant to an offering of such securities, shall be deemed to constitute, or   otherwise be treated as, a Change in Control.
  
	  
	  
	  

	
  
 
  	
  
ii)
  	
  
For purposes of this definition, an “outside entity” includes   “person” or “group” within the meaning of Sections 13(d) and 14(d)(2) of the   Securities Exchange Act of 1934 as of April 1, 2000.  Notwithstanding anything to the contrary   in the foregoing, an “outside entity” shall not include SG Capital Partners,   L.L.C.
  





	
  
6)
  	
  
“Code” shall mean the Internal Revenue Code of 1986, as amended from   time to time.
  
	
  
 
  	
  
 
  
	
  
7)
  	
  
“Common Stock” shall mean the common stock of the Company.
  
	
  
 
  	
  
 
  
	
  
8)
  	
  
“Committee” shall mean the Compensation Committee of the Board or   such other committee appointed either by the Board or by such Compensation Committee   to administer the Plan.
  
	
  
 
  	
  
 
  
	
  
9)
  	
  
“Company” shall mean The Princeton Review, Inc.
  
	
   
  	
  
 
  
	
  
10)
  	
  
“Deferral Period” shall mean the period during which receipt of an   award of Deferred Stock shall be deferred.
  
	
  
 
  	
  
 
  
	
  
11)
  	
  
“Deferred Stock” shall mean an award of deferred stock granted to an   employee under the Stock Incentive Plan.
  




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12)
  	
  
“Exchange Act” shall mean the Securities Exchange Act of 1934, as   amended.
  
	
  
 
  	
  
 
  
	
  
13)
  	
  
“Executive Officer” shall mean an executive officer of the Company as   defined in Rule 3b-7 of the Exchange Act.
  
	
   
  	
  
 
  
	
  
14)
  	
  
“Incentive Stock Option” shall mean a Stock Option that is an   “incentive stock option” within the meaning of Section 422 of the Code.
  
	
  
 
  	
  
 
  
	
  
15)
  	
  
“Fair Market Value” shall mean the closing sale price of the Stock on   a given date as reported on the NASDAQ, or such other national securities   exchange as may be designated by the Company, or, in the event that the Stock   is not listed for trading on a national securities exchange but is quoted on   an automated system, on such automated system.
  
	
  
 
  	
  
 
  
	
  
16)
  	
  
“Non-Qualified Stock Option” shall mean a Stock Option which is not   an Incentive Stock Option.
  
	
  
 
  	
  
 
  
	
  
17)
  	
  
“Reassigned” shall mean:
  
	
   
  	
  
 
  
	
  
 
  	
  
a)
  	
  
a material detrimental change in an employee’s duties, titles or   reporting responsibilities from those in effect;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
b)
  	
  
the relocation of the employee by more than 50 miles from the office   at which he or she was based, or, if the employee consents to relocation, the   failure by the Company to pay the Executive’s reasonable moving expenses and   indemnify him or her against loss realized in the sale of his or her   principal residence in connection with the relocation;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
c)
  	
  
the Company’s failure to have any successor assume the Agreement; or
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
d)
  	
  
any other material breach by the Company of the Agreement.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
18)
  	
  
“Related Company” shall mean any affiliate of the Company designated   as such by the Committee.
  
	
  
 
  	
  
 
  
	
  
19)
  	
  
“Restricted Stock” shall mean an award of shares of Stock granted to   an employee pursuant to the Stock Incentive Plan.
  
	
  
 
  	
  
 
  
	
  
20)
  	
  
“Stock” shall mean the common stock of the Company.
  
	
  
 
  	
  
 
  
	
  
21)
  	
  
“Stock Incentive Plan” shall mean The Princeton Review, Inc. 2000   Stock Incentive Plan, or any successor plan thereto.
  
	
   
  	
   
  
	
  22)
  	
  “Stock Option” shall mean an award to purchase shares of Stock granted   to an employee pursuant to the Stock Incentive Plan, which may be either a   Non-Qualified Stock Option or an Incentive Stock Option.
  



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