Document:

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                                                                   Exhibit 10.36

   CONFIDENTIAL MATERIALS OMITTED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
   TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                           ASTERISKS DENOTE OMISSIONS.

                                    AGREEMENT

AGREEMENT (this "Agreement"), made effective September 1, 1998, between The
Educational and Professional Publishing Group, a unit of The McGraw-Hill
Companies, Inc., ("McGraw-Hill"), a New York corporation, with an office located
at 936 Eastwind Drive, Westerville, OH 43081 ("EPG"), and the Princeton Review
Publishing L.L.C., a Delaware limited liability company with an office located
at 2315 Broadway, 2nd Floor, New York, NY 10024 ("TPR").

                                   WITNESSETH:

WHEREAS, EPG and TPR are each publishers of proprietary educational materials,
and

WHEREAS, EPG and TPR intend to establish a long-term relationship, in which TPR
provides consulting services and creative materials which help relate EPG's
textbooks to state and national exams through editing of those textbooks and
creation of workbooks, seminars, and possibly an online product under a separate
agreement.

NOW THEREFORE, EPG and TPR agree as follows:

I.    DEFINITIONS

Any capitalized term (or grammatical variant) that appears in this Agreement is
defined as follows:

      A.    "Deliverable" means any item that a Project Agreement specifies that
            TPR is required to deliver.

      B.    "Display," and "Work Made for Hire" have the same definitions that
            those terms have in the U. S. Copyright Act, 17 U. S. C.Section 101,
            as amended.

      C.    "Divisions" means the following divisions of EPG:
            Glencoe/McGraw-Hill, SRA/McGraw-Hill, CTB/McGraw-Hill, and the
            McGraw-Hill School Division.

      D.    "Educational Market" means educational institutions of all types,
            public and private, at all grade levels, including pre-school,
            elementary school, middle, junior and senior high school, and all
            customer types located therein, including students "taught at home,"
            and all K-12 marketing channels of distribution within which EPG
            directs its marketing and selling efforts.  The Educational Market
            excludes
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            the retail consumer market, the educational trade book market, the
            2- and 4-year college market, and the professional book market
            channels of distribution related to the foregoing markets.

      E.    "McGraw-Hill Materials" means all educational materials including
            text, computer programs, pictorial or graphic works, know-how,
            pedagogy, methods, and other works, which McGraw-Hill provides to
            TPR for inclusion in a Textbook or Workbook.

      F.    "Textbook" means textbooks, both student and teacher editions, that
            any EPG Division publishes for the Educational Market and which TPR
            supports, e.g. the Textbook contains TPR Textbook Contributions or
            any part of the Question Pool, has received TPR Editorial Review, or
            contains any TPR Mark or a reference to the association with TPR or
            it is sold using the association with TPR as part of the advertising
            or promotional program; or EPG distributes a related Workbook; or
            TPR provides a related Training Seminar or online product.

      G.    "TPR Materials" means all educational text, computer programs,
            pictorial or graphic works, questions, know-how, pedagogy, methods,
            and other creative works, which result from TPR's services under
            this Agreement or the Project Agreements.

      H.    Each of the following terms is defined in the Section set forth next
            to it:

                  Acceptance                    IV.E
                  Approval Period               IV.E
                  Brand Fee                     V.C
                  Change Order                  IV. C
                  Confidential Information      XVII.B
                  Derivative Questions          II.B.4
                  Design Document               III.A
                  Educational Publisher         XVI.A.
                  EPG Marks                     IX.A
                  EPG Programs                  V.D.1
                  Net Sales                     V.D.6
                  North America                 VIII.C
                  Online Product                III.B.6
                  Project                       IV.A
                  Project Agreement             IV.A
                  Project Manager               IV.B
                  Question Pool                 II.B.4
                  Specification                 IV.A
                  Third Party Materials         VIII.A
                  TPR Editorial Review          II.B.l
                  TPR Marks                     IX.A
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                  TPR Textbook Contributions    II.B.2
                  Trademark Materials           XI.B
                  Trademarks                    IX.A
                  Training Seminars             II.B.5
                  Workbooks                     II.B.3

II.   THE PARTIES' PERFORMANCE OBLIGATIONS

      A.    EPG's responsibilities include the following:

            1.    prepare Textbooks in accordance with EPG's business judgment,
                  and, unless otherwise agreed, publish them within eighteen
                  (18) months of Acceptance of TPR's Deliverable agreed under a
                  Project Agreement for that particular Textbook, in such style
                  and manner, under any imprint of any EPG Division and at a
                  price EPG deems in the best interest of such Textbook; and
                  keep the Textbooks in print for as long as EPG deems
                  appropriate. EPG's good faith determination of the schedule
                  for, and timing of, publication will be binding on TPR. If a
                  Textbook is being prepared in anticipation of an adoption, and
                  the adopting agency postpones or otherwise delays the
                  adoption, the eighteen- (18-) month period referenced above
                  will be extended for a corresponding period;

            2.    print, publish and sell Workbooks created by TPR, either alone
                  or bundled with each Workbook's corresponding Textbook;

            3.    contribute McGraw-Hill Materials for TPR's use in the creation
                  of TPR Textbook Contributions and Workbooks;

            4.    contribute to the Question Pool * questions from its CTB
                  Division in the same subject matters and in approximately the
                  same relative percentages for each subject matter as the
                  questions that TPR is creating under Paragraph II.B.4;

            5.    arrange and schedule Training Seminars through EPG's Regional
                  Sales Offices;

            6.    sell and market the Online Product, if the parties decide to
                  develop it.

      B.    TPR's responsibilities include the following:

            1.    review, within the limits of its available resources as TPR
                  will decide in its sole discretion, the first page proofs, in
                  whole or in part, of pupil and teacher editions of
                  EPG-prepared Textbooks and offer oral or written comments and
                  suggestions for ensuring that sample test questions and other
                  testing information contained in them is accurate and aligned
                  with

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                  state or national standards ("TPR Editorial Review"). TPR will
                  inform EPG if it declines to perform TPR Editorial Review in
                  whole or in part, but if it performs, it will report to EPG as
                  part of the Project Agreement the number of pages it will
                  review. TPR Editorial Review is intended to enhance, not
                  replace, EPG's normal editorial and fact-checking procedures
                  and will be completed in accordance with a schedule to be
                  agreed upon in writing by the parties;

            2.    prepare one-color pages and other contributions for Textbooks,
                  which may include TPR Materials and McGraw-Hill Materials
                  ("TPR Textbook Contributions");

            3.    prepare Workbooks in print format, each of which will refer to
                  a particular Textbook, or review and revise existing EPG
                  workbooks ("Workbooks");

            4.    create a pool of test questions that can be used by students
                  in grades 2-12 to practice for the major state and national
                  exams (the "Question Pool") and, subject to EPG's
                  determination in Section V.B.4, support the Question Pool so
                  as to keep it technically up-to-date and able to accommodate
                  minor changes to the exams. The initial Question Pool will
                  include * questions that EPG contributes from its CTB
                  Division, * questions from TPR's then-current and future
                  inventory, and * that TPR will create (at least * for each of
                  math and language arts and at least * for each of science and
                  history) on the schedule set out in the attached Exhibit A. If
                  TPR creates a question by electronically altering a question
                  from one test so that it conforms to the appropriate format of
                  a new test, TPR will count the new question as * of a question
                  for the purpose of meeting its quota of questions; if TPR
                  creates a question by manually altering a question from one
                  test so that it conforms to the appropriate format of a new
                  test, TPR will count the new question as * of a question for
                  the purpose of meeting its quota of questions. All such
                  altered questions shall be known as "Derivative Questions."
                  Each question in the Question Pool will be tagged so as to
                  identify whether it was created by TPR, contributed by TPR,
                  contributed by CTB Division, or, if a Derivative Question,
                  from what question it was derived. The major states are Texas,
                  California, Florida, Virginia, and North Carolina, and the
                  major exams are the SAT, ACT, CTBS, Terra Nova, SAT9, and
                  ITBS. If the parties agree, the Question Pool may be expanded
                  to include other states or tests;

            5.    prepare and conduct pre-service, in-service, and other
                  seminars for teachers and administrators about state or
                  national tests, at times and locations as the parties agree
                  ("Training Seminars"); EPG shall have the right, pursuant to a
                  Project Agreement, to review the format, content, and

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                  materials that TPR uses for the Training Seminars, and TPR
                  will conduct Training Seminars only with the request and prior
                  approval of the appropriate EPG Regional Sales Office;

            6.    sell and market the Online Product, if the parties decide to
                  develop it.

III.  DEVELOPMENT OF THE ONLINE PRODUCT

      A.    Design Document. EPG will pay * toward the creation of a design
            document which contains specifications, features, schedules, and
            cost estimates for an online product for students, their parents,
            and teachers that complements the Textbooks ("Online Product") to be
            delivered through the Internet ("Design Document").

      B.    Delivery and Approval. Not later than three days after execution of
            the Agreement, TPR will deliver the Design Document, which will
            include TPR's proposed price for the Online Product and a yearly
            base online fee. After TPR's delivery of the Design Document, EPG
            will have up to forty-five (45) days in which to decide whether to
            proceed with the Online Product at TPR's price. If EPG elects to go
            forward, the parties will enter into a separate agreement.

      C.    Option. If EPG elects not to proceed with the Online Product, TPR
            will be free to negotiate with a third party for publication of the
            Online Product based on the Design Document, except that if TPR
            negotiates such a deal within the six (6) months following EPG's
            rejection of TPR's offer for a price that is less than the price
            that EPG rejected, TPR must again offer publication to EPG at that
            price, and EPG will have ten (10) days in which to accept it.

      D.    If EPG elects not to go forward with the Online Product, TPR will
            own all rights including copyright in the Design Document. If TPR
            publishes the Online Product with another entity, TPR will repay EPG
            * from the first proceeds of that publishing venture; if TPR
            publishes the Online Product itself, TPR will repay EPG * which will
            be offset against the royalties due under Section V.D.1 in three
            equal amounts over the three years following TPR's publication.

IV.   PROJECT AGREEMENTS AND PROJECT MANAGERS

      A.    Project Agreements. TPR Editorial Review, TPR Textbook Contribution,
            Workbook, Training Seminar, Question Pool, and, if developed, Online
            Product (collectively or singly, "Project") must be the subject of a
            Project Agreement that conforms to the Sample Project Agreement
            attached to this Agreement as Exhibit B and incorporated in it
            ("Project Agreement"). No Project Agreement is effective unless
            signed by both parties. "Specifications" refers to all the
            information contained in a Project Agreement or a Change Order. No

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            Specification in a Project Agreement that conflicts with a provision
            of this Agreement is valid, unless the Project Agreement is signed
            by an officer of each of the parties.

      B.    Project Manager. Each party must designate a "Project Manager" for
            each Project Agreement. Each of the Divisions is entitled to
            negotiate and enter into Project Agreements with TPR. EPG's Project
            Manager will initiate Project Agreements. Project Managers will be
            responsible for managing each party's performance under a Project
            Agreement. Project Managers will coordinate and facilitate
            communication between the parties, direct activity for their
            respective parties, send and receive notices, schedule meetings,
            review and accept Deliverables and the performance of services, and
            authorize payments, among other management duties.

      C.    Change Orders. Material changes in the Specifications of a Project
            Agreement or for any material aspect or detail related to the
            performance of a Project, including changes in Deliverables,
            schedule dates, payment amounts, or other matters will be made by
            use of a Change Order that conforms to the Sample Change Order
            attached to this Agreement as Exhibit C ("Change Order"). A Change
            Order will become part of the Project Agreement that it modifies,
            and will become effective only when it is signed by each party's
            Project Manager for the Project Agreement that it modifies, but no
            Specification in a Change Order that conflicts with a provision of
            this Agreement is valid, unless the Change Order is signed by an
            officer of each of the parties.

      D.    Progress Reports. Project Managers will notify each other promptly
            of any factor, occurrence, or event that may affect the party's
            ability to meet the Specifications of a Project Agreement or that is
            likely to occasion any material delay or accelerate completion of
            the Project. As reasonably requested, TPR's Project Manager will
            provide EPG from time to time with oral or written reports on the
            progress of services performed and required under each Project
            Agreement. Unless EPG gives notice of dissatisfaction within five
            (5) business days of TPR's report, TPR will be entitled to assume
            that its progress is satisfactory to EPG, and EPG will not later
            claim lack of Acceptance based on circumstances of which it was
            notified but did not object.

      E.    Acceptance. TPR will deliver any Deliverable for any Project in
            accordance with the applicable Project Agreement, including
            timetables. The Deliverables for any Project including electronic
            files and/or camera-ready copy shall be prepared in accordance with
            professional standards in the trade. "Acceptance" means that EPG has
            determined in its reasonable judgment that a Deliverable or TPR's
            services meet the agreed Specifications in the applicable Project
            Agreement and this Agreement, or EPG's Project Manager has allowed
            the Approval Period to

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            pass without rejecting TPR's Deliverables or services. The "Approval
            Period" will be a reasonable period to keep the Project on schedule,
            generally not to exceed 14 days after TPR's delivery of a
            Deliverable.

      F.    Non-Acceptance. If EPG determines that a Deliverable or service is
            not Acceptable, EPG will so notify TPR within the Approval Period
            specifying to the extent practical, how and to what extent, the
            Deliverable or service is deficient and how it should be modified in
            order to make it Acceptable. TPR will make changes in the
            Deliverable or provide additional services at its own cost to make
            the Deliverable or services Acceptable and re-deliver the revised
            Deliverable to EPG. EPG will indicate its Acceptance of the revised
            Deliverable according to the procedure established for Acceptance of
            any Deliverable.

      G.    Deliverables and Services that are Not Acceptable. If TPR fails to
            modify or correct Deliverables or services or if, after
            modification, they are still not Acceptable to EPG, EPG will have
            the right, in its sole discretion:

            1.    to permit TPR to finish, correct or improve any unsatisfactory
                  Deliverable of a Project by a reasonable date specified by
                  EPG, or

            2.    either as an alternative or in addition to TPR's revision
                  under (1) above, to make arrangements with third persons or
                  entities, as EPG may select, to correct, revise and complete
                  the Deliverable so as to make it Acceptable to EPG. In that
                  event, EPG may charge the reasonable cost of such arrangements
                  to TPR from funds due to TPR under this Agreement giving TPR
                  credit for any savings EPG may have realized, but the costs of
                  those changes charged to TPR will not exceed the monies due
                  TPR for the applicable Project Agreement.

V.    PAYMENT FOR PROJECTS AND ROYALTIES

      A.    Payment Authorization. No royalty or other compensation will be due
            or payable to TPR in relation to any Project or the exercise of any
            rights, except as is expressly provided in this Agreement as duly
            amended or in a Project Agreement or Change Order.

      B.    Project Fees.

            1.    For TPR's services in connection with the TPR Textbook
                  Contributions and Workbooks, EPG shall pay TPR * per one-color
                  page. The payment may vary upwards upon mutual agreement
                  reflected in a Project Agreement depending on factors such as
                  increased complexity, additional

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                  colors, and, in future years, inflation based on the Consumer
                  Price Index. The payment may also vary downwards upon mutual
                  agreement if the TPR Workbook or the TPR Textbook
                  Contributions require only minor revisions due to small
                  changes in a state test or in the related Textbook. Unless
                  otherwise provided in the Project Agreement, EPG shall pay TPR
                  half of the fee due under each Project Agreement upon
                  signature, and the remainder within 45 days of TPR's final
                  delivery of the Deliverable under any Project Agreement unless
                  the Deliverable is rejected within the Approval Period. EPG's
                  final payment will not by itself be deemed Acceptance of the
                  Deliverable if the Deliverable has been rejected during the
                  Approval Period, and EPG shall have a right to set off against
                  amounts due to TPR under this Agreement any final payment made
                  on a Deliverable that is not Accepted within the Approval
                  Period. TPR acknowledges receipt from EPG of a pre-payment of
                  * toward the services under this provision.

            2.    For TPR's services in connection with TPR Editorial Review
                  where there has been review only and no TPR Textbook
                  Contribution, EPG shall pay TPR * for each edited page that
                  EPG submits to TPR for review.

            3.    For conducting Training Seminars, EPG shall pay TPR monthly *
                  per full-day seminar and * per half-day seminar, plus
                  reimbursement of costs for travel, lodging, and meals, upon
                  submission of reasonable proof of expenditures over $50 in
                  accordance with EPG's reimbursement policies and practices,
                  and the TPR regional office will invoice EPG's local regional
                  sales office directly for such services and costs. EPG is
                  responsible for invoicing and collections from customers.

            4.    Question Pool. Under a Project Agreement under this Agreement
                  for TPR's preparation of * questions as provided in Paragraph
                  II.B.4, EPG will pay a total of * according to the following
                  schedule: for contract year * for contract year * and for
                  contract year * The payment for the 1998-99 contract year is
                  due upon execution of this Agreement, and subsequent payments
                  are due on the anniversary date of this Agreement. In
                  addition, EPG will pay TPR * annually at the beginning of each
                  contract year in order to support the Question Pool, except
                  that after the first year and on six (6) months' notice, EPG
                  may discontinue the * support fee if it reasonably concludes
                  that continued support of the Question Pool is unnecessary to
                  its continued usefulness. The first annual fee will be due
                  upon execution of the Agreement. If new questions are required
                  because of changed circumstances such as new tests, they will
                  be prepared under separate Project Agreements that include an
                  agreed fee.

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      C.    Brand Fee. Within 45 days of December 1, 1998, and within 45 days of
            December 1 of each subsequent year of the contract, EPG will pay TPR
            for use of the TPR Trademarks on materials in the EPG Programs as
            follows: *

      D.    Royalties.

            1.    During the term of the Agreement, EPG shall pay TPR the
                  following royalties based upon net sales of all components of
                  all EPG Programs except those listed on Exhibit D, which may
                  be amended by mutual consent, and upon net sales of any
                  Textbook or Workbook with a copyright date earlier than EPG
                  Programs, to which TPR has contributed or which it supports in
                  any way:

                  a.    For all language arts programs,  *

                  b.    For all non-language arts programs,  *

                  An "EPG Program" means each program for the math subject area
                  beginning with those bearing a 1999 copyright date and each
                  program for the social studies, science, reading/literature,
                  and language arts subject areas beginning with those bearing a
                  2000 copyright date, which are published by the
                  Glencoe/McGraw-Hill and McGraw-Hill School Divisions and the
                  Open Court Reading and Open Court Math programs of the
                  SRA/McGraw-Hill Division. Notwithstanding the foregoing, EPG
                  Programs do not include the 1999 Glencoe/McGraw-Hill "Math
                  Applications and Connections" math program outside of Texas
                  unless TPR later contributes or supports it in some way.

            2.    As soon as EPG establishes its divisional sales projections,
                  it will provide TPR with the sales goals (in dollars) for the
                  EPG Program that make up those projections, which shall
                  constitute Confidential Information under Section XVII.

            3.    If an EPG Program exceeds its sales goal, EPG will pay an
                  additional royalty as follows:

                  a.    for those net sales that are more than * and less than
                        or equal to * the above goal, an increase of * ,

                  b.    for those net sales that are more than * and less than
                        or equal to * the above goal, an increase of * and

                  c.    for those net sales that are more than * the above goal,
                        an increase

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                        of *

            4.    If an EPG Program fails to meet its sales goal, the royalty
                  rate otherwise payable to TPR on such EPG Program shall be
                  reduced as follows:

                  a.    if such net sales are less than * of that EPG Program's
                        goal but not less than * of goal, a reduction of * ,

                  b.    if such net sales are less than * of that EPG Program's
                        goal but not less than * of goal, a reduction of * ,

                  c.    if such net sales are less than * of that EPG Program's
                        goal, a reduction of *

            5.    After the termination or expiration of this Agreement, EPG
                  will continue to pay TPR royalties at the rates stated in
                  Sections V.D.1 and D.6 for any EPG Program to which TPR
                  contributed in any way during the term of the Agreement.

            6.    In any contract year, the royalty amounts due TPR will not
                  exceed  *

            7.    Notwithstanding the foregoing royalty obligations, on all
                  copies of any elements of the EPG Programs sold at a * forth
                  in Section V.D.1 above.

            8.    No royalties are payable for the following: copies of a
                  Textbook or any component of an EPG Program, distributed or
                  disposed of at or below cost, including copies provided in
                  connection with the sale of other copies; copies furnished for
                  review, publicity, promotion, sample or similar purposes, or
                  for charitable or other public purposes; or for copies
                  furnished gratis to TPR or to others at TPR's request. For
                  purposes of this provision, copies sold or distributed or
                  disposed of at a discount of * or more from the lowest state
                  adoption price of the Textbook, shall be deemed sold below
                  cost.

            9.    As used in this Section, V.D, "net sales" means, with respect
                  to EPG's sales, the net cash amount actually received by EPG
                  from each copy sold of any component or material in the EPG
                  Programs or, after the termination of the agreement, any
                  Textbook, not credited for return, after discounts, any
                  depository charges and exchange allowances.

            10.   Beginning after publication of the first Textbook, EPG will
                  render royalty statements in April and October for semi-annual
                  accounting periods

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                  ending December 31, and June 30 of each year in accordance
                  with its regular practices. Each statement will be accompanied
                  by payment of monies shown to be due after recoupment of
                  amounts payable as recoverable advances, if any.

            11.   EPG's failure to pay the Brand Fee, royalties, or Project Fees
                  when due, unless excused by TPR, is a material breach of the
                  Agreement, entitling TPR, in addition to all other remedies,
                  to terminate the Agreement.

VI.   AUDITING

      Each party shall keep and maintain accurate books and records with respect
      to financial transactions relating to this Agreement. Where financial
      figures have been agreed upon as an element of this Agreement or a Project
      Agreement, each party and its agents shall have audit rights and access to
      the other's books and records limited to those financial figures, upon
      reasonable notice, at reasonable intervals, to determine the accuracy of
      such financial figures and the royalties due under this Agreement or any
      Project Agreement. Such examination shall be at the examining party's
      expense unless it discovers accounting errors of more than four percent
      (4%) to its disadvantage for any single accounting period, in which case,
      the examined party will pay the reasonable costs of the audit.

VII.  COPYRIGHT AND LICENSES

      A.    Ownership. EPG and TPR agree as follows concerning ownership and the
            respective rights and licenses of each party:

            1.    McGraw-Hill Materials. As between McGraw-Hill and TPR,
                  McGraw-Hill owns or controls all rights, including copyright
                  in McGraw-Hill Materials, unless otherwise stated in writing
                  by EPG. EPG may provide TPR with McGraw-Hill Materials, at
                  EPG's sole cost, for use in or in connection with any Project,
                  together with the right to adapt the McGraw-Hill Materials for
                  the purposes of this Agreement as stated in a relevant Project
                  Agreement.

            2.    TPR Materials. As between TPR and EPG, TPR owns or controls
                  all rights, including copyright, in TPR Materials.

            3.    TPR Editorial Review. TPR Textbook Contributions and
                  Workbooks. Except for TPR Material that is contained in the
                  Question Pool, Online Product, if developed, and Training
                  Seminars and subject to Section XIII.B, all TPR Materials
                  created in performing the TPR Editorial Review, and contained
                  in the TPR Textbook Contributions and the Workbooks have been
                  specially commissioned by EPG as Works Made For Hire, and

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                  EPG shall be considered the author and the owner of the
                  copyright in them for all time everywhere in the world. If it
                  is determined that the TPR Materials that EPG has commissioned
                  as Works Made For Hire are not Works Made For Hire, then as of
                  the date of this agreement and subject to Section XIII.B, TPR
                  hereby assigns them to EPG outright and forever throughout the
                  world.

            4.    Question Pool. TPR and EPG jointly own all right, title and
                  interest in the TPR Question Pool, including copyright, except
                  that (a) the TPR questions contributed from TPR's inventory
                  and Derivative Questions based on them shall remain the
                  property of TPR, and (b) any questions supplied by CTB and
                  Derivative Questions based on them shall remain the property
                  of CTB.

            5.    TPR Training Seminars. TPR owns all right, title and interest,
                  including copyright, in the Training Seminars.

            6.    EPG is not authorized to revise any Textbook or any component
                  of an EPG Program using any TPR Materials or TPR Marks in
                  which TPR owns rights without entering into a new agreement
                  with TPR. Nothing shall prevent EPG from revising any Textbook
                  or component of an EPG Program without use of TPR Materials or
                  TPR Marks.

      B.    Copyright Notices. EPG and TPR will publish respectively EPG
            Programs and Textbooks (EPG) and Training Seminars and, if
            developed, the Online Product (TPR) with copyright notices in
            conformity with United States copyright law and the Universal
            Copyright Convention, including notice of the other's copyright in
            any TPR Materials or McGraw-Hill Materials. After publication, each
            party may, but is not obligated to, register copyright in its
            respective works in its own name (or, for EPG, the name of one of
            the Divisions). Each party is authorized to execute all documents
            necessary to register copyright or to extend the copyright in any
            manner provided by law anywhere in the world, but is not obligated
            to do so.

      C.    Further Documents. Each party agrees to execute any document the
            other party deems necessary to evidence, perfect, record, or
            otherwise confirm the rights transferred or licensed under this
            Agreement.

      D.    EPG Use of TPR Ideas, Concepts. Any other provision of this
            Agreement notwithstanding, in connection with its performance under
            this Agreement, EPG and TPR may each use any ideas, concepts,
            approaches, suggestions and other similar material suggested or
            communicated by the other without additional credit or additional
            compensation of any kind.

      E.    Other Publishing Ventures. Without limitation of any of the
            foregoing grants and

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            licenses of this Section VII and so long as EPG itself receives no
            revenues, EPG may, without any additional compensation to TPR,
            itself publish or license others:

                  1.    to publish any component of an EPG Program, including
                        any TPR Materials in whole or in part, in forms and
                        special formats for the handicapped, such as Braille and
                        recordings for the reading impaired, throughout North
                        America in the English or Spanish language, if
                        applicable rights have been cleared and special editions
                        of the Textbook, for use in special programs for the
                        learning disadvantaged;

                  2.    to use selected portions of an EPG Program, including
                        TPR Materials for publicity or promotional purposes for
                        the EPG Programs in print format and on radio and
                        television broadcasts; and

                  3.    to publish in any form, excerpts, summaries, and
                        serializations of any part of an EPG Program, including
                        Textbook and TPR Textbook Contributions in audiovisual,
                        computer, or other versions of the Textbooks, only for
                        use in connection with or to assist in use of a version
                        of the Textbooks or in advertising and promotion of a
                        version of the Textbooks, provided that TPR has reviewed
                        them and TPR will not unreasonably refuse a request to
                        do so.

                  4.    Display on Closed Circuit Cable Systems. EPG may license
                        others, free of charge, to Display and transmit any part
                        of an EPG Program, in whole or in part, including any
                        Textbook or Textbook Contribution, by means of closed
                        circuit cable systems intended primarily for educational
                        purposes.

VIII. LICENSED THIRD-PARTY MATERIALS

      A.    TPR will obtain written, non-exclusive licenses to include in
            Projects any third-party material included in the TPR Materials that
            is still in copyright as well as any other material for which
            permission is necessary in connection with TPR's warranties in
            Section XIV of this Agreement ("Third Party Materials"). Third Party
            Materials include text, computer programs, pictorial or graphic
            works, musical compositions, sound recordings, audiovisual works and
            other copyrightable material licensed from a third party. If TPR is
            unable to obtain licenses for the rights set forth in Section
            VIII.C. that are satisfactory to EPG, mutually agreeable material
            will be substituted.

      B.    EPG will obtain written licenses to include in Projects any
            third-party material in copyright that EPG directs TPR to include in
            Projects.

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      C.    Scope of Third-Party Licenses. To the extent possible, TPR will
            obtain rights to Third Party Materials in the English language for
            print media and, if appropriate, online publication in the
            Educational Market (1) in the United States of America, its
            territories and possessions, (2) in those jurisdictions outside the
            United States, which EPG will identify for TPR, that service the
            U.S. military (Dodds) and other U.S. agency-related personnel or at
            which American textbooks are used on a regular basis, such as
            "American" or "International" schools established principally to
            educate American or English speaking nationals, and (3) in the
            Dominion of Canada (all the foregoing, "North America"). If the
            parties agree in specific Project Agreements to designate the
            Spanish Language or any other language, electronic or other media
            publication rights, or other rights, including worldwide rights,
            then to the extent possible, TPR will obtain such rights in Third
            Party Materials.

      D.    Documentation of Licenses. TPR agrees to deliver to EPG copies of
            all licenses for Third Party Materials and, if not provided in those
            documents, the source of the Third Party Materials, the grantor's
            name and address, and, if for a computer program, the release and
            version numbers. Licenses for Third Party Materials are to be in a
            form EPG provides or, if not provided, in whatever form TPR chooses.
            TPR will provide this information and documentation as part of the
            on-going developmental process but not later than the final delivery
            of Deliverables for any Project Agreement.

      E.    Costs of Licenses. EPG will pay the costs of the licenses for Third
            Party Materials either directly to the third-party owner or by
            reimbursing TPR in those cases where TPR has paid the third-party
            owner.

IX.   TRADEMARK LICENSES

      A.    Marks. "Trademark" means the trademarks, service marks, and trade
            names listed in the attached Exhibit E, as amended from time to
            time, whether or not registered (collectively, the "Trademarks").
            Trademarks owned by TPR are identified as "TPR Marks." Trademarks
            owned by McGraw-Hill are identified as "EPG Marks."

      B.    Ownership of Textbook and Workbook Titles. EPG may obtain trademark
            or service mark protection for the name that it chooses to identify
            any EPG Program, Textbook, Workbook, or other component of it. EPG
            shall own all rights in such Trademarks. TPR agrees to cooperate to
            the extent reasonably requested by EPG in furnishing information and
            executing documents which may be required in connection with
            registration of any such EPG Marks or to confirm EPG's ownership or
            rights to use any such EPG Marks.

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<PAGE>   15
      C.    Ownership of Training Seminar and Online Product Titles. TPR may
            obtain trademark or service mark protection for the name that it
            chooses to identify any Training Seminars and the Online Product.
            TPR shall own all rights in such Trademarks. EPG agrees to cooperate
            to the extent reasonably requested by TPR in furnishing information
            and executing documents which may be required in connection with
            registration of any such TPR Marks or to confirm TPR's ownership of
            or rights to use any such TPR Marks.

      D.    EPG Use of TPR Marks. Subject to the terms and conditions of this
            Agreement, TPR hereby grants to EPG a non-exclusive, nontransferable
            license to use the TPR Marks solely in North America (1) on and in
            connection with any Textbook that has undergone TPR Editorial Review
            or contains TPR Textbook Contributions and on Workbooks, (2) with
            advertising and promotional materials for the Projects, and (3) to
            publicize EPG's relationship with TPR under this Agreement. EPG may
            not use or reproduce the TPR Marks in any manner whatsoever other
            than as expressly permitted by this Agreement.

      E.    TPR Use of EPG Marks. Subject to the terms and conditions of this
            Agreement, EPG hereby grants TPR a non-exclusive, nontransferable
            license to use the EPG Marks solely in North America (1) on and in
            connection with the Training Seminars and the Online Product, if
            developed, (2) to publicize the fact of TPR's relationship with EPG
            under this Agreement, and (3) to publicize TPR's contribution to and
            role in preparing the Projects. TPR may not use or reproduce the EPG
            Marks in any manner whatsoever other than as expressly permitted by
            this Agreement.

      F.    Ownership of Marks. Each party agrees and acknowledges that the
            other owns and retains all right, title and interest in and to its
            respective Trademarks. Except as expressly granted in this
            Agreement, no party shall have any rights in the other's Trademarks.
            The licenses each party has granted the other are personal to the
            other party, and neither shall assign, transfer or sub-license its
            rights in the other's Trademarks in any manner without the prior
            consent of the party owning the Trademarks, and any transfer in
            violation of this restriction will not be valid. Neither party will
            use or take any action with respect to the other party's Trademarks
            except in a manner that does not interfere, derogate or diminish the
            party's rights in its Trademarks, either during the term of this
            Agreement or afterwards. Each party agrees not to adopt, use or
            register any corporate name, trade name, trademark, service mark or
            certification mark, or other designation similar to, or containing
            in whole or in part, the Trademarks belonging to the other. Any and
            all goodwill arising from use of the EPG Marks and TPR's Marks shall
            inure solely to the party owning said Trademarks respectively. Upon
            termination of this Agreement, each party shall cease use of the
            other's

                                       15
<PAGE>   16
            Trademarks.

X.    TRADEMARK IDENTIFICATION; CREDIT

      A.    Trademark Notices on Textbooks. EPG shall cause to be imprinted
            irremovably and legibly marked on each copy of Trademark Materials,
            appropriate trademark notices with respect to the TPR Marks (and any
            component of them) as TPR specifies in each case, including the
            initials "TM" or the letter "R" encircled, or "*" (asterisk), and
            such legend(s) as TPR may require, including a legend indicating
            that the TPR Marks are owned by TPR, and are being used by EPG under
            license from TPR. The size, location and other details of placement
            of the TPR Marks on the Trademark Materials, shall be determined by
            EPG in consultation with TPR's Project Manager.

      B.    EPG will credit TPR for its contributions to the Projects.
            Attribution credit will generally be as follows, but must be
            approved by TPR:

            1.    TPR's Trademark will appear on the title page of a Textbook
                  (both student and teacher edition);

            2.    TPR will be listed as an author or contributor (as applicable)
                  on those pages where like authors of the Textbook are listed;

            3.    TPR will be listed as a content reviewer on the reviewer page
                  of the Textbook, if TPR performs TPR Editorial Review.

XI.   TRADEMARK QUALITY, INSPECTION AND APPROVAL

      A.    Quality of Textbooks. EPG agrees to maintain the quality of the
            Textbooks and Workbooks on which the TPR Marks are used at least
            equal to the quality of textbooks and other materials currently
            published by EPG, which employ EPG's own trade name and TPR Marks.
            The Textbooks will comply with applicable National Association of
            State Textbook Administrators standards. TPR will likewise maintain
            the current level of quality of the materials on which it uses EPG
            Marks.

      B.    Samples and Review of Marks. At each party's request, the other
            party shall supply the requesting party with suitable specimens of
            the Projects and advertising and promotional materials (singly or
            collectively, "Trademark Materials"), which demonstrate its use of
            the other's Trademarks in the manner specified in the Agreement.
            Each party shall cooperate fully with the other party to facilitate
            periodic review of its use of the other's Trademarks and its full
            compliance with the quality standards described in this Agreement.

                                       16
<PAGE>   17
      C.    Approval of Trademark Use. Each party will abide by the other's
            reasonable requirements with respect to Trademark usage. Each party
            reserves the right to approve the other's use of its Trademarks in
            promotional materials and in any press/public releases of
            information. Each party reserves the right to approve use of its
            Trademarks before the other party's use. Accordingly, each party
            agrees to submit to the other for approval, before use, distribution
            or disclosure all Trademark Materials. Each party shall act promptly
            in granting or denying approval. Once a usage of the marks has been
            approved, the same usage need not be resubmitted for approval and
            may be used again in the like manner unless approval is withdrawn by
            the owner. Any disapproval shall specifically state the reason(s)
            for which approval is being denied. Any approval or denial of
            approval shall be made within five (5) business days of submission
            for review. If either party fails to respond to a request for
            review, the submission shall be deemed approved and may be used by
            the submitting party without liability to the other. Approval for
            any such presumed usage may subsequently be withdrawn by the owner
            of the marks, and the other party shall take all reasonable actions
            to curtail and cease such disapproved usage but may use any existing
            materials, and any materials which are required to be produced
            immediately to meet immediate adoption delivery deadlines. If
            problems occur with the foregoing approval process, either party may
            request a reasonable change in the process to alleviate the problem.

      D.    No Assumption of Liability. Review and approval by either party of
            the use of the other's Trademarks shall be limited to trademark
            usage, but reasonable and responsible comment may also be
            volunteered as to content and context, and each party will consider
            the other's comments. Neither party assumes any liability for the
            content of the other's advertising, promotional statements or other
            materials, even if it has reviewed and approved usage of its
            Trademarks in such materials or communications.

      E.    For purposes of trademark application, registration, recordation,
            and registration in the U. S. or elsewhere in the world, each party
            agrees, at the other's reasonable request, to provide necessary
            information and samples of Trademark Materials, and to execute and
            return promptly to the other any necessary document, including
            documents which evidence a party's ownership, assignment or license
            of rights with respect to the Trademarks.

XII.  FAILURE TO PUBLISH; REVERSION OF RIGHTS

      A.    TPR Request for Publication. If EPG does not publish a Textbook
            within the period provided in Section II.A.1, TPR may at any time
            thereafter deliver to EPG a request under Section XVIII.H to publish
            the Textbook within twelve (12) months after EPG's receipt of TPR's

                                       17
<PAGE>   18
            request. If EPG fails to comply with TPR's request within such
            period, (1) this Agreement and the respective Project Agreement for
            the Textbook will terminate without further notice at the end of
            such period, and (2) all of TPR rights in the TPR Materials in the
            specific unpublished Textbook will revert to TPR without further
            obligation or liability on the part of either party to the other,
            except for any questions, which will become part of the Question
            Pool. The termination and reversion of rights provided in this
            Section XII.A shall be TPR's sole remedy if EPG fails for any reason
            to Publish a Textbook in which TPR Materials were intended to
            appear.

      B.    Reversion of Rights. Five years after the copyright date of any
            Textbook, all of TPR's rights in the TPR Materials for that Textbook
            and any related Project shall revert to TPR, except for any
            questions, which will become part of the Question Pool.
            Notwithstanding that reversion, EPG shall have the right, subject to
            the royalty payment provisions of this Agreement, to continue
            selling Textbooks and related Projects as part of the EPG Programs
            developed during the term of this Agreement, and any licenses
            previously granted will continue in effect to the end of their
            terms, and EPG will be entitled to its share of amounts received
            under any such licenses. EPG agrees to execute such documents as TPR
            reasonably requests to confirm any reversion of rights under this
            section.

      C.    Rights After Reversion of Rights. In the event of reversion of
            rights under Section XIII.B, EPG shall be entitled to prepare and
            publish new or different textbooks using the same or similar
            concepts, approaches and organization as were used in the Textbooks,
            but shall not publish anything that infringes TPR's rights in TPR
            Materials.

XIII  TERM AND TERMINATION

      A.    Term. Except for the payment of royalties due after termination and
            any provision that survives termination under Section XVIII.E, the
            Term of the Agreement in which the parties may commence new Project
            Agreements is four (4) years, and then the Agreement will renew
            automatically for one-year terms unless either party gives one (1)
            year's prior notice of termination.

      B.    EPG's Termination of the Agreement. EPG may terminate this Agreement
            under the following circumstances:

            1     TPR enters into any voluntary or involuntary declaration of
                  bankruptcy or there is a general assignment for the benefit of
                  TPR's creditors occurring before TPR's delivery to EPG of the
                  final Deliverables due under any completely executed Project
                  Agreement, or

                                       18
<PAGE>   19
            2     TPR materially breaches this Agreement and fails to cure the
                  breach within the time period specified in Section XIII.F, or

            3     upon notice to TPR, if TPR's failure to perform Project
                  Agreements is substantial, material, and repetitive, and TPR
                  has received notice of such failure(s) and has been accorded a
                  commercially reasonable opportunity to cure such failures, but
                  has not done so, with the result that the intent of this
                  Agreement is frustrated.

      C.    EPG's Termination of a Project Agreement for Cause. EPG may
            terminate a Project Agreement under any of the following
            circumstances:

            1     if a Deliverable, as corrected, revised, or completed pursuant
                  to Section IV.G is not acceptable to EPG, or

            2     TPR's performance or delivery is so untimely that EPG is
                  unable to publish Textbooks in accordance with the school
                  adoption schedules; or

            3     TPR materially breaches a Project Agreement and fails to cure
                  the breach within the time period specified in Section XIII.F.

      D.    TPR's Termination of the Agreement. TPR may terminate this
            Agreement, in whole or in part in accordance with this Section XIII
            if:

            1     during the period when a Textbook is being prepared, EPG or
                  McGraw-Hill enters into any voluntary or involuntary
                  bankruptcy or there is a general assignment for the benefit of
                  EPG's or McGraw-Hill's creditors, or

            2     EPG breaches a material provision of this Agreement and fails
                  to cure the breach within the time period specified in Section
                  XIII.F.

      E.    EPG's Termination or Delay of a Protect Without Cause.
            Notwithstanding any other provision of this Agreement and any
            Project Agreement, EPG shall have the right in its sole discretion,
            to terminate or to delay a Project Agreement based upon changed
            business circumstances, including cancellation of an adoption for
            which the work is being prepared. Upon EPG's notice to TPR of any
            such termination or delay, each party will cooperate to immediately
            cease performance of said Project Agreement so as to mitigate costs
            for each party. EPG will pay TPR for all services performed that EPG
            has approved in accordance with the Project Agreement, up to the
            date of termination. EPG will also pay TPR the amount of any bona
            fide "cancellation fees" payable to third parties arising from TPR's
            canceled commitments to others. In addition, EPG shall pay to TPR,
            ten

                                       19
<PAGE>   20
            percent (10%) of the amount remaining of the unpaid Project fees as
            stated in this Agreement and the relevant Project Agreement, as
            modified by any Change Order, as liquidated damages, and not as a
            penalty, for cancellation. Upon payment, neither party will have any
            further obligation or liability to the other under the terminated
            Project Agreement, except those that survive under Section XVIII.E.
            If EPG delays a Project, the parties will cooperate to make for a
            smooth, economical transaction under the circumstances by adding
            other Project(s) or by taking other appropriate measures.

      F.    Right to Cure. Except for termination under Section XIII.E above,
            neither party may terminate this Agreement or any Project Agreement
            unless and until the party seeking termination gives notice to the
            other party stating that it intends to terminate this Agreement or
            any Project Agreement and specifying the nature of the breach or
            default and unless the receiving party fails to cure such breach or
            default within thirty (30) days after receipt of the notice (or such
            longer period of time as may be specified in the notice).

      G.    Consequences of Termination

            1     Upon EPG's notice of termination of a Project Agreement under
                  Section XIII.C. l above, EPG may elect to: (a) retain any
                  Deliverable in its latest form of completion (including all
                  prior drafts, versions, builds or releases) and to own
                  whatever rights in it that have been granted in accordance
                  with this Agreement and the Project Agreement for that
                  Project, with no additional payments by EPG other than what
                  has been made as of termination; or (b) return the Deliverable
                  to TPR and grant back to TPR, without warranty of any kind,
                  all rights TPR granted to EPG under this Agreement and the
                  Project Agreement for that Project, and TPR will return
                  payments made under the Project Agreement but not expended
                  before notice of termination.

            2     Upon termination or expiration of this Agreement, TPR will own
                  all right, title, and interest, including copyrights and other
                  rights in the Online Product, if developed, and the parties
                  will divide the Question Pool evenly and randomly by subject
                  between the two parties, except that (a) the questions TPR
                  initially contributed from its inventory shall be allotted to
                  TPR, (b) the questions CTB initially contributed shall be
                  allotted to EPG; and (c) the Derivative Questions shall be
                  assigned to whichever party is allotted the question from
                  which the Derivative Question was derived. Each party hereby
                  assigns to the other party as of the date of termination its
                  joint right, title, and interest, including copyright, in the
                  remaining questions in the Question Pool allotted to the other
                  party. Each party agrees to execute such documents as the
                  other reasonably requests to

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                  confirm such assignment of rights under this section.

            3     All the assignments under this Section XIII.G are subject to
                  the exclusive license granted to TPR in Section XVI.A.2.

            4     If either party terminates this Agreement, the rights and
                  remedies of the parties are cumulative, and each party also
                  has all the rights and remedies provided by law or equity.

      H.    Effect of a Project's Termination on Other Projects. Termination of
            a portion of this Agreement or any Project Agreement relating to a
            Project shall not affect those provisions relating to the rights in
            copyrights or payment of royalties or other monies based upon the
            sale or licensing of Projects containing TPR Materials or bearing
            TPR Marks already published under this Agreement or EPG's recovery
            of any advance in royalties EPG paid to TPR.

XIV   REPRESENTATIONS AND WARRANTIES

      A.    McGraw-Hill warrants and represents as follows:

            1     McGraw-Hill has the full right, power, and authority to enter
                  into this Agreement, and McGraw-Hill has not and will not
                  assign, pledge or encumber its rights in the Question Pool to
                  any other person or entity.

            2     Except for TPR Materials, the EPG Programs, the Projects and
                  Textbooks contain nothing that is obscene, libelous,
                  defamatory, or, when taken as a whole is substantially
                  inaccurate, or injurious, and appropriate warnings and safety
                  instructions are included in Projects concerning any
                  particular hazards.

            3     Except for TPR Materials, the EPG Programs, the Projects,
                  Textbooks, and EPG Marks contain nothing that violates or
                  infringes a copyright, patent, trade secret, or other literary
                  property rights; or that violates the rights of any person,
                  including the right of privacy, publicity, or moral right; or
                  that violates any EPG contract, express or implied; or that
                  discloses any information that EPG has obtained in confidence
                  or with the understanding that it would not be disclosed or
                  published.

            4     EPG will use the TPR Marks on and in connection with any
                  Project solely as provided in this Agreement and any
                  applicable provision of any Project Agreement and will not use
                  the TPR Marks on or in connection with other goods, products
                  or services.

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            5     EPG makes no representation or warranty concerning the timing
                  of a Textbook's publication or the number of copies of a
                  Textbook that will be sold.

      B.    TPR hereby warrants and represents as follows:

            1     TPR has the full right, power, and authority to enter into
                  this Agreement and to grant, transfer, and assign the rights
                  granted and transferred in this Agreement and TPR has not and
                  will not assign, pledge or encumber such rights or its rights
                  in the Question Pool to any other person or entity.

            2     Except for Third-Party Materials and any public domain
                  material, TPR is the sole developer of TPR Materials, and TPR
                  Materials are original and previously unpublished, except as
                  may be disclosed in a Project Agreement.

            3     TPR Materials contained in any Projects contain nothing that
                  is obscene, libelous, defamatory, or, when taken as a whole,
                  are substantially inaccurate, or injurious, and appropriate
                  warnings and safety instructions are included in Projects
                  concerning any particular hazards.

            4     TPR Materials and TPR Marks contained in any Project,
                  including any programming code, contain nothing that violates
                  or infringes a copyright, patent, trade secret, or other
                  literary property rights; or that violates the rights of any
                  person, including the right of privacy, publicity, or moral
                  right; or that violates any TPR contract, express or implied;
                  or that discloses any information that TPR has obtained in
                  confidence or with the understanding that it would not be
                  disclosed or published.

            5     TPR will use the EPG Marks on and in connection with any
                  Project solely as provided in this Agreement and any
                  applicable provision of any Project Agreement and will not use
                  the EPG Marks on or in connection with other goods, products
                  or services.

            6     TPR makes no representation or warranties relating to the
                  content of any Project that is not TPR Materials.

      C.    Each party shall abide by all applicable laws in performing this
            Agreement.

XV    INDEMNIFICATION

      A.    Each party will defend and indemnify the other party, its successor
            and assigns,

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            and any seller or licensee of the EPG Programs against all damages
            (including settlement), costs, and expenses, including reasonable
            attorney's fees, based on any third-party claim that said party's
            contribution infringes that third party's copyright, trademark,
            patent, trade secret, other proprietary right, or that third party's
            personal property right, or any third-party claim, which, if proved,
            breaches any of the representations or warranties made by said
            indemnifying party in this Agreement, whether or not the claim
            results in a judgment. If such a claim has occurred, or in the
            opinion of the party is likely to occur, the other party agrees to
            permit the indemnifying party, at its option and expense, to settle
            any claim, action, change or proceeding on such terms as it deems
            advisable, or either to procure the right to continue selling,
            promoting or using the allegedly infringing contribution, or to
            replace its contribution or Trademark so that the allegedly
            infringing contribution or Trademark is non-infringing or
            non-offending. Modification of the infringing or offending
            contribution shall not negate the indemnifying party's obligation to
            indemnify the other party in accordance with the terms of this
            Agreement.

      B.    Each indemnifying party will have the right to defend with counsel
            of its own choosing. If the indemnified party desires to retain its
            own counsel, it will do so at its own cost. The indemnifying party
            shall pay any resulting costs, damages, liabilities and expenses,
            including reasonable attorney's fees, provided that the party
            seeking to be indemnified promptly notifies the indemnifying party
            of the claim and cooperates in the defense at the indemnifying
            party's expense, and that the indemnifying party has sole control of
            the defense and all related settlement negotiations.

XVI   NON-COMPETITION

      A.    TPR

            1     Competition During the Term of the Agreement. During the term
                  of the Agreement, TPR agrees it will not enter into a similar
                  agreement with a person or that part of a firm, corporation,
                  company, partnership or other entity engaged in the
                  development, publication, and distribution of proprietary
                  educational materials to the Educational Market ("Educational
                  Publisher"). Also during the term of the Agreement, each party
                  (including the Divisions) is entitled to use the questions
                  that it contributed to the Question Pool from inventory in
                  other ventures so long as such ventures do not compete with
                  this Agreement.

            2     Competition After the Term of the Agreement. For so long as a
                  Textbook is being sold as part of an EPG Program, TPR will
                  not, for itself or an Educational Publisher, without EPG's
                  prior consent, use or publish more

                                       23
<PAGE>   24
                  than forty percent (40%) of the TPR Materials in another
                  secondary school textbook or elementary school program, so
                  that such textbook or program might compete with or injure the
                  profitability of that Textbook or the EPG Program.

            3     TPR Trade Books. Both during and after the term of this
                  Agreement, regardless of which party terminates the Agreement,
                  TPR will have the exclusive right, without any compensation to
                  EPG, to use the Question Pool, except for the CTB questions
                  and derivatives for trade print publications and for products
                  which are noncompetitive with the EPG Programs, so long as not
                  more than forty percent (40%) of any such trade publication
                  includes questions from the Question Pool. If the parties do
                  not go forward with the Online Product under Section III, each
                  party will have the right to use 50% of the Question Pool
                  without accounting to the other party, except that neither
                  party will be able to use the questions that the other party
                  initially contributed to the Question Pool from inventory and
                  the Derivative Questions based on those contributed questions.

      B.    EPG. During the term of the Agreement, EPG will not retain another
            person or business entity to substitute for TPR in connection with
            the services that TPR performs under this Agreement.

      C.    Ability to Compete. Except as expressly stated in this Section XVI,
            each party acknowledges that the other may publish textbooks, test
            questions, or materials within the same or similar areas of general
            or specific interest as a Textbook published under this Agreement,
            and nothing in this Agreement shall inhibit a party from that
            practice. Each party understands that the other party is in the
            business of providing goods and services of many types, and it is
            not the intent of this Section XVI to unduly curtail the freedom of
            either party to conduct its business affairs, to enter into
            agreements with others, or to offer goods or services to its
            customers in accordance with its business judgment. This Section XVI
            is to be construed in a reasonable manner with the intent of
            protecting each party's right to carry on its own business while
            ensuring that each enjoys the benefits of its bargain under this
            Agreement.

XVII  CONFIDENTIAL INFORMATION

      A.    Nondisclosure. Confidential Information is and remains the property
            of the disclosing party. The parties will hold Confidential
            Information in confidence and treat it as each treats its own
            Confidential Information and will not disclose it to any third
            person without the express consent of the other party, except that
            the parties may disclose Confidential Information, including the
            terms of this

                                       24
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            Agreement, for the purpose of obtaining legal, financial or tax
            advice. A material failure to abide by these provisions shall
            constitute a material breach and cause for termination of this
            Agreement.

      B.    Definition of Confidential Information. "Confidential Information"
            means all information that either party discloses to the other and
            identifies as "confidential" or "proprietary," or which, under all
            of the circumstances, should reasonably be treated as confidential
            or proprietary, including the content of a Textbook, its publication
            date, the development fees, royalties rates and amounts paid, all
            information that relates to each party's past, present, and future
            research, development, plans, sales and business activities, as well
            as all information, conclusions, drafts, programming and associated
            materials and Textbook product resulting from TPR's performance
            under this Agreement. Upon termination or expiration of this
            Agreement, each receiving party will return all Confidential
            Information to the disclosing party, or destroy it and certify its
            destruction. The terms and conditions of this Agreement and
            information learned during an audit conducted under Section VI are
            Confidential Information, except that either party may disclose the
            terms of the Agreement for the purpose of seeking legal, financial,
            or auditing advice so long as such advisors agree to abide by the
            confidentiality restrictions of this Section XVII.

      C.    Information that is Not Confidential. Confidentiality obligations
            shall not apply to any Confidential Information (1) that at or after
            disclosure is available to the general public, other than through a
            breach by the receiving party; (2) that is already known to the
            receiving party before disclosure; (3) that is developed through the
            independent efforts of the receiving party; (4) that the receiving
            party rightfully receives from a third party without restriction as
            to confidentiality or use; or (5) whose disclosure is required by
            law or is requested by legal or administrative process, except that
            the party who is served with process will give immediate notice to
            the disclosing party of the process and make reasonable efforts not
            to disclose the Confidential Information until the disclosing party
            has had an opportunity to make a motion to quash the request.

      D.    Press Releases. The parties will coordinate and cooperate with each
            other in making any public announcement or press release concerning
            this Agreement, any Project Agreement, or the relationship between
            the parties under the Agreement. To that end, each party will give
            the other party reasonable prior opportunity to comment upon any
            such release or announcement and to approve the subject matter,
            details, and use of the other's Trademarks in it. Neither party will
            unreasonably withhold its approval.

                                       25
<PAGE>   26
XVIII       MISCELLANEOUS

      A.    Independent Contractors. Nothing in this Agreement shall be
            construed so as to constitute the parties as joint venturers,
            partners, or agents of each other, and neither party shall have the
            power to obligate or bind the other in any way whatsoever.

      B.    Entire Agreement. This Agreement, Exhibits A-D attached to it, and
            the related Project Agreements constitute the complete agreement
            between the parties and supersede all other agreements, promises,
            representations, and negotiations, whether written or oral, between
            the parties regarding the subject matter of the Agreement, including
            the parties' June 10, 1998 letter agreement.

      C.    Amendment: Waiver. No amendment or waiver of any provision of this
            Agreement will be valid unless in writing and signed by all parties
            affected by the amendment or waiver. No waiver shall be deemed a
            waiver of a subsequent breach.

      D.    Assignment. Neither party may assign this Agreement or assign or
            delegate its obligations under it without the other's prior consent,
            except that TPR can assign any monies payable to it, and any
            assignment in violation of this provision shall be null and void.
            Notwithstanding the foregoing, each party may assign this Agreement
            as a whole in connection with the transfer and sale of a Division,
            line of business, substantially all its assets or the sale or
            transfer of its voting shares, upon notice to the other. Should such
            transfer create a material conflict of interest for the
            non-assigning party, that party may terminate this Agreement upon
            reasonable grounds upon prior notice. Subject to the foregoing, this
            Agreement will be binding on the parties signing it and on all their
            successors and permitted assignees.

      E.    Survival. The rights and obligations of Sections VI, VII, XIV, XV,
            XVI.A.2, XVII, and XVIII, and those other provisions which by their
            nature survive will survive the expiration or termination of this
            Agreement and will bind the parties and their successors and assigns
            in accordance with their terms.

      F.    Severability. If any provision of this Agreement is held invalid or
            unenforceable, the remainder of the Agreement shall not be affected
            and shall remain in effect, unless doing so would deprive one of the
            parties of the benefit of the Agreement.

      G.    Applicable Law and Forum. This Agreement will be construed in
            accordance with and governed by the laws of the State of New York
            applicable to agreements made and to be performed there and without
            regard to it conflict of laws rules. Any disputes arising out of or
            related to this Agreement will be brought in the

                                       26
<PAGE>   27
            state or federal courts with jurisdiction in New York County, New
            York, and the parties expressly consent to the exclusive
            jurisdiction and venue of such courts.

      H.    Notices. Notices, approvals, disapprovals, excuses, requests, and
            consents concerning day-to-day administrative and performance
            matters must be in writing and sent to the respective party's
            Project Managers. Notices, approvals, disapprovals, requests, and
            consents of a substantive or legal nature required by this Agreement
            for either party are to be in writing and shall be forwarded as
            follows:

            TPR:                          EPG:
            ---                           ---

            John Katzman, President       Jack Witmer, President
            The Princeton Review          The Educational and Professional
            2315 Broadway, 2nd Floor      Publishing Group
            New York, N.Y. 10024          a unit of McGraw-Hill Companies, Inc.
            Telephone: (2l2) 874-8282     936 Eastwind Drive
            Facsimile: (212) 874-0775     Westerville, Ohio 43081
                                          Telephone: (614) 899-4300
                                          Facsimile: (614) 899-4304

            with a copy to:               with a copy to:
            --------------                --------------

            John P. Schmitt, Esq.            Vice President and General Counsel
            Patterson, Belknap, Webb &       Educational Publishing Group
                Tyler LLP                    1221 Avenue of the Americas
            1133 Avenue of the Americas      New York, New York 10020-1095
            New York, New York 10036         Telephone: (212) 512-4427
            Telephone: (212) 336-2849        Facsimile: (212) 512-4415
            Facsimile: (2l2) 336-2222

            Changes in address by either party shall be made by notice to the
            other party in accordance with this provision. Notices required by
            this Agreement shall be deemed received (1) upon delivery, when
            delivered in person or by commercially receipted courier, (2) upon
            the date sent by facsimile or other electronic media, if the sender
            confirms by sending a copy by courier delivery or U.S. Postal
            Service, or (3) five (5) days after deposit with the U.S. Postal
            Service by registered or certified mail.

      I.    Force Majeure: Neither party shall be liable to the other for any
            failure or delay caused by events beyond its reasonable control,
            including, acts of God, sabotage, accidents, failures or delays in
            transportation or communication, labor disputes, shortages of labor,
            fuel, raw materials or equipment, or other matters. Each party shall
            promptly inform the other of any such event. Should the event
            prevent performance of this Agreement for more than sixty (60) days,
            the other party may terminate this Agreement or the applicable
            Project Agreement; rights granted under this Agreement shall revert
            to the grantor; and each party shall retain its

                                       27
<PAGE>   28
            rights in the Question Pool specified in Section VIII.A.4, may
            exploit those rights to the extent permitted by law, and need not
            account to the other party with any proceeds from that exploitation.

      J.    Headings. Headings and captions throughout this Agreement are for
            convenience only and should not be considered part of the
            substantive terms of this Agreement.

      K.    Including. "Including" means "including but not limited to" and
            "including without limitation."

      L.    Counterparts. This Agreement may be executed in two or more
            counterparts, each of which shall be deemed an original, but all of
            which together shall constitute one and the same instrument.

            IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first set forth above.

EDUCATIONAL AND PROFESSIONAL              PRINCETON REVIEW
PUBLISHING GROUP, A UNIT OF               PUBLISHING L.L.C.
THE MCGRAW-HILL
COMPANIES, INC.

By: /s/ Jack Witmer                       By: /s/ John Katzman
   -----------------------------             -----------------------------
Title: President                          Title: President
      ----------------------------              ----------------------------
Date: 12/24/98                            Date: 12/28/98
     ----------------------------              ----------------------------
                                          Taxpayer ID No. 13-303-9184
                                                          ------------------

                                       28
<PAGE>   29
                        Exhibit A: Question Pool Schedule

This chart represents the numbers of questions that The Princeton Review will
create, not edit, broken down by grade grouping, major subject area, and the
school year during which the questions will be delivered.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
CONTRACT YEAR     Math      Reading      Social Studies    Science     TOTAL
1998-1999
<S>               <C>       <C>          <C>               <C>         <C>
K-2                *           *               *              *           *
--------------------------------------------------------------------------------
3-6                *           *               *              *           *
--------------------------------------------------------------------------------
7-8                *           *               *              *           *
--------------------------------------------------------------------------------
9-12               *           *               *              *           *
--------------------------------------------------------------------------------
TOTAL              *           *               *              *           *
--------------------------------------------------------------------------------
                                                                          *
--------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
CONTRACT YEAR     Math      Reading      Social Studies    Science     TOTAL
1999-2000
--------------------------------------------------------------------------------
<S>               <C>       <C>          <C>               <C>         <C>
K-2                *           *               *              *          *
--------------------------------------------------------------------------------
3-6                *           *               *              *          *
--------------------------------------------------------------------------------
7-8                *           *               *              *          *
--------------------------------------------------------------------------------
9-12               *           *               *              *          *
--------------------------------------------------------------------------------
TOTAL              *           *               *              *          *
--------------------------------------------------------------------------------
                                                                         *
--------------------------------------------------------------------------------
</TABLE>

                                       29
<PAGE>   30
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
CONTRACT YEAR     Math      Reading      Social Studies    Science     TOTAL
2000-2001
--------------------------------------------------------------------------------
<S>               <C>       <C>          <C>               <C>         <C>
K-2                *           *               *              *           *
--------------------------------------------------------------------------------
3-6                *           *               *              *           *
--------------------------------------------------------------------------------
7-8                *           *               *              *           *
--------------------------------------------------------------------------------
9-12               *           *               *              *           *
--------------------------------------------------------------------------------
TOTAL              *           *               *              *           *
--------------------------------------------------------------------------------
                                                                          *
--------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
SUMMARY           Math      Reading      Social Studies    Science     TOTAL
--------------------------------------------------------------------------------
<S>               <C>       <C>          <C>               <C>         <C>
K-2                *           *            *             *            *
--------------------------------------------------------------------------------
3-6                *           *            *             *            *
--------------------------------------------------------------------------------
7-8                *           *            *             *            *
--------------------------------------------------------------------------------
9-12               *           *            *             *            *
--------------------------------------------------------------------------------
TOTAL              *           *            *             *            *
--------------------------------------------------------------------------------
</TABLE>

                                       30
<PAGE>   31
                       Exhibit B: Sample Project Agreement

--------------------------------------------------------------------------------
Instructions: A Project Agreement is to be prepared by the EPG Contracts,
Copyright & Permissions Department as part of the Contract Request Form
procedures. EPG's Project Managers should initially complete this form and send
it to the Contract Department together with other required materials.
--------------------------------------------------------------------------------

This is a PROJECT AGREEMENT between the Educational and Professional Publishing
Group of The McGraw-Hill Companies, Inc. ("EPG") and Princeton Review Publishing
L.L.C. ("TPR") under a master Agreement dated _______________ 1998, between EPG
and TPR (the "Master Agreement"). The Master Agreement will govern preparation
and publication of the Textbook.
Please complete additional pages, if necessary.

Any capitalized term (or grammatical variant of it) in this Project Agreement
has the same definition as does that term in the Master Agreement.

NAME OF PROJECT:

PROJECT AGREEMENT DATE:

NAME OF EPG DIVISION:

TYPE OF PROJECT: Ownership rights, including copyright rights, to the various
Deliverables that comprise TPR Materials are determined under the Master
Agreement in accordance with Section VII and Section XIII. Therefore, it is
important to correctly classify the various components of TPR Materials, since
such classification will determine each party's ownership rights to these
components of the Textbook. Please circle one:

Editorial Review
Workbook
Question Pool
Online Product
Training Seminar

                                       31
<PAGE>   32
NAME OF PROJECT MANAGERS:

EPG:                                      TPR:

Name:  _____________________              Name:  ______________________

Telephone:  _________________             Telephone:  __________________

Fax:  _______________________             Fax:  ________________________

EPG:                                      TPR:

E-mail:  _______________________          E-mail:  _______________________

      (1)   NAME OF EPG TEXTBOOK: Insert the title of the Program/Textbook (if
            applicable) for which TPR is preparing a contribution ("Project").
            Identify the title by name, proposed copyright date, Edition Number
            (if applicable), Author's Name (if applicable), copyright, and other
            identifying details.

            ___________________________________________________________________
            ___________________________________________________________________
            ___________________________________________________________________
            ___________________________________________________________________

      (2)   DESCRIPTION OF SERVICES AND DELIVERABLES: Insert a description of
            the services TPR is to perform and the TPR Materials that TPR is to
            deliver ("Deliverable") hereunder. Attach additional pages, if
            needed.

            ___________________________________________________________________
            ___________________________________________________________________
            ___________________________________________________________________
            ___________________________________________________________________

                                       32
<PAGE>   33
      (3)   Will TPR use any McGraw-Hill Materials in the preparation if this
            TPR Work? yes / no If yes, please describe.

            ___________________________________________________________________
            ___________________________________________________________________
            ___________________________________________________________________
            ___________________________________________________________________

      (4)   MILESTONE EVENTS AND DELIVERY DATES:  List all delivery dates for
            services and Deliverables of the Project. Use additional page(s), if
            needed:

            ___________________________________________________________________
            ___________________________________________________________________
            ___________________________________________________________________
            ___________________________________________________________________

            Delivery/Performance                      Dates
            --------------------                      -----
            (Deliverables/Services to be performed)

      (5)   OWNERSHIP/LICENSE OF RIGHTS; RIGHTS OBTAINED FOR PERMISSIONS. Will
            EPG have the right to publish and distribute the Textbook in the
            following languages in addition to English (If Spanish or other
            rights are specified, TPR will be obligated to obtain such rights
            for all Third Party Materials, as stated in Section VIII.C of the
            Master Agreement):

            Spanish/Other (specify)/English only

      (6)   TOTAL PROJECT FEE: Insert the total Project Fee or Budget for the
            Project, including payment dates or events; attach additional pages,
            if needed. Unless otherwise noted, half payment will be made at the
            start of the project, and half on acceptance.

            Total Project Fee:

      (7)   LICENSED THIRD-PARTY MATERIALS: Describe the nature, sources, and
            cost of any Third Party Materials that TPR will be licensing under
            Section VIII of the Agreement:

                                       33
<PAGE>   34
            Under Section VIII.E, EPG will pay the cost of the Third Party
            Materials

            _____ directly to the Third Party (identify):

            _____ to TPR, which will pay the Third Party.

      (8)   SPECIAL PROVISIONS:  Describe any other special provisions, if
            necessary:

      EPG                                 TPR:

      Division:

      By:  ____________________________   By:  ____________________________

      Title:  __________________________  Title:  ___________________________

      Date:  __________________________   Date:  ___________________________

      Note: Please provide the EPG Contracts, Copyrights & Permissions
      Department with other relevant documentation such as correspondence
      exchanged between the parties, any "Request for a Proposal" issued by EPG,
      or any Proposal or Response to Proposal, or Bid issued by TPR when
      submitting a Contract Request Form for this Project Agreement.

                                       34
<PAGE>   35
                         Exhibit C: Sample Change Order

This is a CHANGE Order to a PROJECT AGREEMENT between the Educational and
Professional Publishing Group of The McGraw-Hill Companies, Inc. ("EPG") and
Princeton Review Publishing L.L.C. ("TPR") under a Master Agreement dated
_____________ 1998, between EPG and TPR (the "Master Agreement"). Any
capitalized term (or grammatical variant of it) in this Change Order has the
same definition as does that term in the Master Agreement.

This Change Order affects the following Project Agreement:

Date:  __________________________________
EPG Division:  ___________________________
Title of Program/Textbook:__________________

Insert a description of the material changes in TPR's services or TPR Materials,
for example, any change in the scope of services to be provided by TPR,
Deliverables, scheduled delivery dates, amount and dates of payment of Total
Project Fee, etc. Attach Additional Page(s), if necessary.

_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

i)    SCOPE OF CHANGE:  (TPR services or materials to be added or deleted)

_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

                                       35
<PAGE>   36
ii)   COMPENSATION OR PAYMENT SCHEDULE:

_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

iii)  OWNERSHIP RIGHTS:

_______________________________________________________________________________

iv)   OTHER SUBSTANTIAL CHANGES:

_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

EPG:                                TPR:

Division:

By:  ____________________________   By:  ____________________________

Title:  __________________________  Title:  ___________________________

Date:  __________________________   Date:  ___________________________

                                       36
<PAGE>   37
                          Exhibit D: Excluded Materials

Sales of the following materials are excluded from the calculation of royalties
under Section V.D. l of the Agreement:

                                 SCHOOL DIVISION

                                        *

                               GLENCOE/MCGRAW-HILL

                                 SOCIAL STUDIES

                                        *

                                  LANGUAGE ARTS

                                        *

                                     SCIENCE

                                        *

                                      MATH

                                        *

                                       37
<PAGE>   38
                     Exhibit E: List of Licensed Trademarks

A list of Trademarks, service marks and logos which are cross-licensed under the
Agreement between EPG and TPR.

"TPR MARKS" LICENSED TO EPG:

      THE PRINCETON REVIEW

"EPG MARKS" LICENSED TO TPR:

EPG Marks:

      Corporate:

            McGraw-Hill
            McGraw-Hill log.                    THE MCGRAW-HILL COMPANIES

      The McGraw-Hill Companies, Inc.
      The Educational and Professional Publishing Group of the McGraw-Hill
      Companies, Inc.

Glencoe Marks:

      Glencoe
      Glencoe/McGraw-Hill/
      Mindjogger

SRA Marks:

      SRA
      SRA/McGraw-Hill
      Science Research Associates
      SRA logo
      Open Court
      OC Design (Open Court)

                                       38
<PAGE>   39
School Division:

      School Division
      Math in My World

Marks may be added or deleted from this Exhibit during the term of the Agreement
with written notice.

                                       39
<PAGE>   40
                                AGREEMENT BETWEEN
               THE EDUCATIONAL AND PROFESSIONAL PUBLISHING GROUP,
                    A UNIT OF THE MCGRAW-HILL COMPANIES, AND
                              THE PRINCETON REVIEW

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                         <C>
I.    DEFINITIONS.......................................................       1

II.   THE PARTIES' PERFORMANCE OBLIGATIONS..............................       3

III.  DEVELOPMENT OF THE ONLINE PRODUCT.................................       5

IV.   PROJECT AGREEMENTS AND PROJECT MANAGERS...........................       5

V.    PAYMENT FOR PROJECTS AND ROYALTIES................................       7

VI.   AUDITING..........................................................      11

VII.  COPYRIGHT AND LICENSES............................................      11

VIII. LICENSED THIRD-PARTY MATERIALS....................................      13

IX.   TRADEMARK LICENSES................................................      14

X.    TRADEMARK IDENTIFICATION; CREDIT..................................      16

XI.   TRADEMARK QUALITY, INSPECTION AND APPROVAL........................      16

XII.  FAILURE TO PUBLISH; REVERSION OF RIGHTS...........................      17

XIII. TERM AND TERMINATION..............................................      18

XIV.  REPRESENTATIONS AND WARRANTIES....................................      21

XV.   INDEMNIFICATION...................................................      22

XVI.  NON-COMPETITION...................................................      23

XVII. CONFIDENTIAL INFORMATION..........................................      24

XVIII.MISCELLANEOUS.....................................................      26
</TABLE>
<PAGE>   41
<TABLE>
<S>                                                                         <C>
Exhibit A:  Question Pool Schedule......................................      29

Exhibit B:  Sample Project Agreement....................................      31

Exhibit C:  Sample Change Order.........................................      35

Exhibit D:  Excluded Materials..........................................      37

Exhibit E:  List of Licensed Trademarks.................................      39
</TABLE><PAGE>   1
                                                                  Exhibit 10.57

          STANDARD FORM OF AGREEMENT BETWEEN OWNER AND CONTRACTOR WHERE
            THE BASIS FOR PAYMENT IS THE COST OF THE WORK PLUS A FEE
                   WITH A NEGOTIATED GUARANTEED MAXIMUM PRICE

                            AIA DOCUMENT A111 - 1997
                        1997 EDITION - ELECTRONIC FORMAT

This document has important legal consequences. Consultation with an attorney is
encouraged with respect to its completion or modification. AUTHENTICATION OF
THIS ELECTRONICALLY DRAFTED AIA DOCUMENT MAY BE MADE BY USING AIA DOCUMENT D401.

This document is not intended for use in competitive bidding.

AIA Document A201-1997, General Conditions of the Contract for Construction, is
adopted in this document by reference.

This document has been approved and endorsed by The Associated General
Contractors of America.

Copyright 1920, 1925, 1951, 1958, 1961, 1963, 1967, 1974, 1978, 1987, (C) 1997
by The American Institute of Architects. Reproduction of the material herein or
substantial quotation of its provisions without written permission of the AIA
violates the copyright laws of the United States and will subject the violator
to legal prosecution.

AGREEMENT made as of the 1st day of August in the year 2000 (In words, indicate
day, month and year)

BETWEEN the Owner:
(Name, address and other information)

Princeton Review Publishing, LLC
2315 Broadway
New York, NY 10024
Attn: Bob Hoffman

and the Contractor:
(Name, address and other information)
IBEX Construction, LLC
1372 Broadway
New York, NY 10018

The Project is:
(Name and location)
Office fitout of 160 Varick Street, 12th Floor

The Architect is:
(Name, address and other information)
A/R Environetics Group, Inc.
116 East 27th Street
New York, NY 10016

The Owner and Contractor agree as follows.

AIA DOCUMENT A111 -OWNER - CONTRACTOR AGREEMENT - 1997 EDITION - AIA - COPYRIGHT
1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying violates U.S.
copyright laws and will subject the violator to legal prosecution. This document
was electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.

                                                    Electronic Format A111-1997
User Document: PRINCETON -- 12/11/2000. AIA License Number 106905, which expires
                                                         on 12/31/2000 - Page #1

<PAGE>   2

ARTICLE 1         THE CONTRACT DOCUMENTS

         The Contract Documents consist of this Agreement, Conditions of the
         Contract (General, Supplementary and other Conditions), Drawings,
         Specifications, Addenda issued prior to execution of this Agreement,
         other documents listed in this Agreement and Modifications issued after
         execution of this Agreement; these form the Contract, and are as fully
         a part of the Contract as if attached to this Agreement or repeated
         herein. The Contract represents the entire and integrated agreement
         between the parties hereto and supersedes prior negotiations,
         representations or agreements, either written or oral. An enumeration
         of the Contract Documents, other than Modifications, appears in Article
         15. If anything in the other Contract Documents is inconsistent with
         this Agreement, this Agreement shall govern.

ARTICLE 2         THE WORK OF THIS CONTRACT

         The Contractor shall fully execute the Work described in the Contract
         Documents, except to the extent specifically indicated in the Contract
         Documents to be the responsibility of others.

ARTICLE 3         RELATIONSHIP OF THE PARTIES

         The Contractor accepts the relationship of trust and confidence
         established by this Agreement and covenants with the Owner to cooperate
         with the Architect and exercise the Contractor's skill and judgment in
         furthering the interests of the Owner; to furnish efficient business
         administration and supervision; to furnish at all times an adequate
         supply of workers and materials; and to perform the Work in an
         expeditious and economical manner consistent with the Owner's
         interests. The Owner agrees to furnish and approve, in a timely manner,
         information required by the Contractor and to make payments to the
         Contractor in accordance with the requirements of the Contract
         Documents.

ARTICLE 4         DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION

         4.1 The date of commencement of the Work shall be the date of this
         Agreement unless a different date is stated below or provision is made
         for the date to be fixed in a notice to proceed issued by the Owner.

         (Insert the date of commencement, if it differs from the date of this
         Agreement or, if applicable, state that the date will be fixed in a
         notice to proceed.)

         Upon receipt of a Notice To Proceed from Owner

         If, prior to commencement of the Work, the Owner requires time to file
         mortgages, mechanic's liens and other security interests, the Owner's
         time requirement shall be as follows:

         4.2 The Contract Time shall be measured from the date of commencement.

         4.3 The Contractor shall achieve Substantial Completion of the entire
         Work not later than days from the date of commencement, or as follows:
         (Insert number of calendar days. Alternatively, a calendar date may be
         used when coordinated with the date of commencement. Unless stated
         elsewhere in the Contract Documents, insert any requirements for
         earlier Substantial Completion of certain portions of the Work.) by
         December 4, 2000

         , subject to adjustments of this Contract Time as provided in the
         Contract Documents.

         (Insert provisions, if any, for liquidated damages relating to failure
         to complete on time, or for bonus payments for early completion of the
         Work.)

ARTICLE 5         BASIS FOR PAYMENT

         5.1 CONTRACT SUM

         5.1.1 The Owner shall pay the Contractor the Contract Sum in current
         funds for the Contractor's performance of the Contract. The Contract
         Sum is the Cost of the Work as defined in Article 7 plus the
         Contractor's Fee.

         5.1.2 The Contractor's Fee is:

         (State a lump sum, percentage of Cost of the Work or other provision
         for determining the Contractor's Fee, and describe the method of
         adjustment of the Contractor's Fee for changes in the Work.)
         Five Percent (5%) of the Final Cost of the Work

AIA DOCUMENT A111 -OWNER - CONTRACTOR AGREEMENT - 1997 EDITION - AIA - COPYRIGHT
1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying violates U.S.
copyright laws and will subject the violator to legal prosecution. This document
was electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.

                                                    Electronic Format A111-1997
User Document: PRINCETON -- 12/11/2000. AIA License Number 106905, which expires
                                                         on 12/31/2000 - Page #2

<PAGE>   3

         5.2 GUARANTEED MAXIMUM PRICE

         5.2.1 The sum of the Cost of the Work and the Contractor's Fee is
         guaranteed by the Contractor not to exceed Dollars ($ ), subject to
         additions and deductions by Change Order as provided in the Contract
         Documents. Such maximum sum is referred to in the Contract Documents as
         the Guaranteed Maximum Price. Costs which would cause the Guaranteed
         Maximum Price to be exceeded shall be paid by the Contractor without
         reimbursement by the Owner. (Insert specific provisions if the
         Contractor is to participate in any savings.) After Contractor has
         concluded the bidding and purchasing phases of the Project and the
         Construction Documents are 100% complete, the GMP will be mutually
         agreed to by Owner and Contractor.

         5.2.2 The Guaranteed Maximum Price is based on the following
         alternates, if any, which are described in the Contract Documents and
         are hereby accepted by the Owner: (State the numbers or other
         identification of accepted alternates. If decisions on other alternates
         are to be made by the Owner subsequent to the execution of this
         Agreement, attach a schedule of such other alternates showing the
         amount for each and the date when the amount expires.) N/A

         5.2.3 Unit prices, if any, are as follows:
         N/A

         5.2.4 Allowances, if any, are as follows:
         (Identify and state the amounts of any allowances, and state whether
         they include labor, materials, or both.)
         N/A

         5.2.5 Assumptions, if any, on which the Guaranteed Maximum Price is
         based are as follows:
         N/A

         5.2.6 To the extent that the Drawings and Specifications are
         anticipated to require further development by the Architect, the
         Contractor has provided in the Guaranteed Maximum Price for such
         further development consistent with the Contract Documents and
         reasonably inferable therefrom. Such further development does not
         include such things as changes in scope, systems, kinds and qualify of
         materials, finishes or equipment, all of which, if required, shall be
         incorporated by Change Order.

ARTICLE 6         CHANGES IN THE WORK

         6.1 Adjustments to the Guaranteed Maximum Price on account of changes
         in the Work may be determined by any of the methods listed in
         Subparagraph 7.3.3 of AIA Document A201-1997.

         6.2 In calculating adjustments to subcontracts (except those awarded
         with the Owner's prior consent on the basis of cost plus a fee), the
         terms "cost" and "fee" as used in Clause 7.3.3.3 of AIA Document
         A201-1997 and the terms "costs" and "a reasonable allowance for
         overhead and profit" as used in Subparagraph 7.3.6 of AIA Document
         A201-1997 shall have the meanings assigned to them in AIA Document
         A201-1997 and shall not be modified by Articles 5, 7 and 8 of this
         Agreement. Adjustments to subcontracts awarded with the Owner's prior
         consent on the basis of cost plus a fee shall be calculated in
         accordance with the terms of those subcontracts.

         6.3 In calculating adjustments to the Guaranteed Maximum Price, the
         terms "cost" and "costs" as used in the above-referenced provisions of
         AIA Document A201-1997 shall mean the Cost of the Work as defined in
         Article 7 of this Agreement and the terms "fee" and "a reasonable
         allowance for overhead and profit" shall mean the Contractor's Fee as
         defined in Subparagraph 5.1.2 of this Agreement.

         6.4 If no specific provision is made in Paragraph 5.1 for adjustment of
         the Contractor's Fee in the case of changes in the Work, or if the
         extent of such changes is such, in the aggregate, that application of
         the adjustment provisions of Paragraph 5.1 will cause substantial
         inequity to the Owner or Contractor, the Contractor's Fee shall be
         equitably adjusted on the basis of the Fee established for the original
         Work, and the Guaranteed Maximum Price shall be adjusted accordingly.

AIA DOCUMENT A111 -OWNER - CONTRACTOR AGREEMENT - 1997 EDITION - AIA - COPYRIGHT
1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying violates U.S.
copyright laws and will subject the violator to legal prosecution. This document
was electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.

                                                    Electronic Format A111-1997
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                                                         on 12/31/2000 - Page #3

<PAGE>   4

ARTICLE 7         COSTS TO BE REIMBURSED

         7.1 COST OF THE WORK
         The term Cost of the Work shall mean costs necessarily incurred by the
         Contractor in the proper performance of the Work. Such costs shall be
         at rates not higher than the standard paid at the place of the Project
         except with prior consent of the Owner. The Cost of the Work shall
         include only the items set forth in this Article 7.

Insert A:

         7.2 LABOR COSTS

         7.2.1 Wages of construction workers directly employed by the Contractor
         to perform the construction of the Work at the site or, with the
         Owner's approval, at off-site workshops.

Insert B: As per the rate sheets annexed hereto as Exhibit B

         7.2.2 Wages or salaries of the Contractor's supervisory and
         administrative personnel when stationed at the site or the home office
         with the Owner's approval. (If it is intended that the wages or
         salaries of certain personnel stationed at the Contractor's principal
         or other offices shall be included in the Cost of the Work, identify in
         Article 14 the personnel to be included and whether for all or only
         part of their time, and the rates at which their time will be charged
         to the Work.)

Insert C: Based upon a 35 hour week for office personnel and a 40 hour work week
for field personnel

         7.2.3 Wages and salaries of the Contractor's supervisory or
         administrative personnel engaged, at factories, workshops or on the
         road, in expediting the production or transportation of materials or
         equipment required for the Work, but only for that portion of their
         time required for the Work.

         7.2.4 Costs paid or incurred by the Contractor for taxes, insurance,
         contributions, assessments and benefits required by law or collective
         bargaining agreements and, for personnel not covered by such
         agreements, customary benefits such as sick leave, medical and health
         benefits, holidays, vacations and pensions, provided such costs are
         based on wages and salaries included in the Cost of the Work under
         Subparagraphs 7.2.1 through 7.2.3.

Insert D: Calculated at ,49 times salary

         7.3 SUBCONTRACT COSTS

         7.3.1 Payments made by the Contractor to Subcontractors in accordance
         with the requirements of the subcontracts.

         7.4 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
         CONSTRUCTION

         7.4.1 Costs, including transportation and storage, of materials and
         equipment incorporated or to be incorporated in the completed
         construction.

         7.4.2 Costs of materials described in the preceding Subparagraph 7.4.1
         in excess of those actually installed to allow for reasonable waste and
         spoilage. Unused excess materials, if any, shall become the Owner's
         property at the completion of the Work or, at the Owner's option, shall
         be sold by the Contractor. Any amounts realized from such sales shall
         be credited to the Owner as a deduction from the Cost of the Work.

         7.5 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND
         RELATED ITEMS

         7.5.1 Costs, including transportation and storage, installation,
         maintenance, dismantling and removal of materials, supplies, temporary
         facilities, machinery, equipment, and hand tools not customarily owned
         by construction workers, that are provided by the Contractor at the
         site and fully consumed in the performance of the Work; and cost (less
         salvage value) of

AIA DOCUMENT A111 -OWNER - CONTRACTOR AGREEMENT - 1997 EDITION - AIA - COPYRIGHT
1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying violates U.S.
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                                                         on 12/31/2000 - Page #4

<PAGE>   5

         such items if not fully consumed, whether sold to others or retained by
         the Contractor. Cost for items previously used by the Contractor shall
         mean fair market value.

         7.5.2 Rental charges for temporary facilities, machinery, equipment,
         and hand tools not customarily owned by construction workers that are
         provided by the Contractor at the site, whether rented from the
         Contractor or others, and costs of transportation, installation, minor
         repairs and replacements, dismantling and removal thereof. Rates and
         quantities of equipment rented shall be subject to the Owner's prior
         approval.

         7.5.3 Costs of removal of debris from the site.

         7.5.4 Costs of document reproductions, facsimile transmissions and
         long-distance telephone calls, postage and parcel delivery charges,
         telephone service at the site and reasonable petty cash expenses of the
         site office.

         7.5.5 That portion of the reasonable expenses of the Contractor's
         personnel incurred while traveling in discharge of duties connected
         with the Work.

         7.5.6 Costs of materials and equipment suitably stored off the site at
         a mutually acceptable location, if approved in advance by the Owner.

Insert E: Costs of providing. connecting and disconnecting temporary utilities.
Costs of Security watchmen employed at the Project.

         7.6 MISCELLANEOUS COSTS

         7.6.1 That portion of insurance and bond premiums that can be directly
         attributed to this Contract:

Insert F: Insurance Premiums billed at 1.5% of the final cost of the Project.

         7.6.2 Sales, use or similar taxes imposed by a governmental authority
         that are related to the Work.

         7.6.3 Fees and assessments for the building permit and for other
         permits, licenses and inspections for which the Contractor is required
         by the Contract Documents to pay.

         7.6.4 Fees of laboratories for tests required by the Contract
         Documents, except those related to defective or nonconforming Work for
         which reimbursement is excluded by Subparagraph 13.5.3 of AIA Document
         A201-1997 or other provisions of the Contract Documents, and which do
         not fall within the scope of Subparagraph 7.7.3.

         7.6.5 Royalties and license fees paid for the use of a particular
         design, process or product required by the Contract Documents; the cost
         of defending suits or claims for infringement of patent rights arising
         from such requirement of the Contract Documents; and payments made in
         accordance with legal judgments against the Contractor resulting from
         such suits or claims and payments of settlements made with the Owner's
         consent. However, such costs of legal defenses, judgments and
         settlements shall not be included in the calculation of the
         Contractor's Fee or subject to the Guaranteed Maximum Price. If such
         royalties, fees and costs are excluded by the last sentence of
         Subparagraph 3.17.1 of AIA Document A201-1997 or other provisions of
         the Contract Documents, then they shall not be included in the Cost of
         the Work.

         7.6.6 Data processing costs related to the Work.

         7.6.7 Deposits lost for causes other than the Contractor's negligence
         or failure to fulfill a specific responsibility to the Owner as set
         forth in the Contract Documents.

         7.6.8 Legal, mediation and arbitration costs, including attorneys'
         fees, other than those arising from disputes between the Owner and
         Contractor, reasonably incurred by the Contractor in the performance of
         the Work and with the Owner's prior written approval; which approval
         shall not be unreasonably withheld.

AIA DOCUMENT A111 -OWNER - CONTRACTOR AGREEMENT - 1997 EDITION - AIA - COPYRIGHT
1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying violates U.S.
copyright laws and will subject the violator to legal prosecution. This document
was electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.

                                                    Electronic Format A111-1997
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                                                         on 12/31/2000 - Page #5

<PAGE>   6

         7.6.9 Expenses incurred in accordance with the Contractor's standard
         personnel policy for relocation and temporary living allowances of
         personnel required for the Work, if approved by the Owner.

         7.7 OTHER COSTS AND EMERGENCIES

         7.7.1 Other costs incurred in the performance of the Work if and to the
         extent approved in advance in writing by the Owner.

         7.7.2 Costs due to emergencies incurred in taking action to prevent
         threatened damage, injury or loss in case of an emergency affecting the
         safety of persons and property, as provided in Paragraph 10.6 of AIA
         Document A201-1997.

         7.7.3 Costs of repairing or correcting damaged or nonconforming Work
         executed by the Contractor, Subcontractors or suppliers, provided that
         such damaged or nonconforming Work was not caused by negligence or
         failure to fulfill a specific responsibility of the Contractor and only
         to the extent that the cost of repair or correction is not recoverable
         by the Contractor from insurance, sureties, Subcontractors or
         suppliers.

Insert G: All Reimbursable costs set forth in this Article 7. with The exception
of the Subcontract Costs set forth in Article 7.3 and 7.2.1. shall be reimbursed
at the flat rate of Eight percent (8%) of the final Cost of the Work.

ARTICLE 8 COSTS NOT TO BE REIMBURSED

         8.1 The Cost of the Work shall not include:

         8.1.1 Salaries and other compensation of the Contractor's personnel
         stationed at the Contractor's principal office or offices other than
         the site office, except as specifically provided in Subparagraphs 7.2.2
         and 7.2.3 or as may be provided in Article 14.

         8.1.2 Expenses of the Contractor's principal office and offices other
         than the site office.

         8.1.3 Overhead and general expenses, except as may be expressly
         included in Article 7.

         8.1.4 The Contractor's capital expenses, including interest on the
         Contractor's capital employed for the Work.

         8.1.5 Rental costs of machinery and equipment, except as specifically
         provided in Subparagraph 7.5.2.

         8.1.6 Except as provided in Subparagraph 7.7.3 of this Agreement, costs
         due to the negligence or failure to fulfill a specific responsibility
         of the Contractor, Subcontractors and suppliers or anyone directly or
         indirectly employed by any of them or for whose acts any of them may be
         liable.

         8.1.7 Any cost not specifically and expressly described in Article 7.

         8.1.8 Costs, other than costs included in Change Orders approved by the
         Owner, that would cause the Guaranteed Maximum Price to be exceeded.

ARTICLE 9         DISCOUNTS, REBATES AND REFUNDS

         9.1 Cash discounts obtained on payments made by the Contractor shall
         accrue to the Owner if (1) before making the payment, the Contractor
         included them in an Application for Payment and received payment
         therefor from the Owner, or (2) the Owner has deposited funds with the
         Contractor with which to make payments; otherwise, cash discounts shall
         accrue to the Contractor. Trade discounts, rebates, refunds and amounts
         received from sales of surplus materials and equipment shall accrue to
         the Owner, and the Contractor shall make provisions so that they can be
         secured.

         9.2 Amounts that accrue to the Owner in accordance with the provisions
         of Paragraph 9.1 shall be credited to the Owner as a deduction from the
         Cost of the Work.

AIA DOCUMENT A111 -OWNER - CONTRACTOR AGREEMENT - 1997 EDITION - AIA - COPYRIGHT
1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying violates U.S.
copyright laws and will subject the violator to legal prosecution. This document
was electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.

                                                    Electronic Format A111-1997
User Document: PRINCETON -- 12/11/2000. AIA License Number 106905, which expires
                                                         on 12/31/2000 - Page #6

<PAGE>   7

Insert H: 9.3 Notwithstanding anything contained herein, Owner and Contractor
shall share equally (Shared Savings) in any cost savings if the final cost of
the Work is lower than the GMP.

ARTICLE 10        SUBCONTRACTS AND OTHER AGREEMENTS

         10.1 Those portions of the Work that the Contractor does not
         customarily perform with the Contractor's own personnel shall be
         performed under subcontracts or by other appropriate agreements with
         the Contractor. The Owner may designate specific persons or entities
         from whom the Contractor shall obtain bids. The Contractor shall obtain
         bids from Subcontractors and from suppliers of materials or equipment
         fabricated especially for the Work and shall deliver such bids to the
         Architect. The Owner shall then determine, with the advice of the
         Contractor and the Architect, which bids will be accepted. The
         Contractor shall not be required to contract with anyone to whom the
         Contractor has reasonable objection.

         10.2 If a specific bidder among those whose bids are delivered by the
         Contractor to the Architect (1) is recommended to the Owner by the
         Contractor; (2) is qualified to perform that portion of the Work; and
         (3) has submitted a bid that conforms to the requirements of the
         Contract Documents without reservations or exceptions, but the Owner
         requires that another bid be accepted, then the Contractor may require
         that a Change Order be issued to adjust the Guaranteed Maximum Price by
         the difference between the bid of the person or entity recommended to
         the Owner by the Contractor and the amount of the subcontract or other
         agreement actually signed with the person or entity designated by the
         Owner.

         10.3 Subcontracts or other agreements shall conform to the applicable
         payment provisions of this Agreement, and shall not be awarded on the
         basis of cost plus a fee without the prior consent of the Owner.

ARTICLE 11        ACCOUNTING RECORDS

         The Contractor shall keep full and detailed accounts and exercise such
         controls as may be necessary for proper financial management under this
         Contract, and the accounting and control systems shall be satisfactory
         to the Owner. The Owner and the Owner's accountants shall be afforded
         access to, and shall be permitted to audit and copy, the Contractor's
         records, books, correspondence, instructions, drawings, receipts,
         subcontracts, purchase orders, vouchers, memoranda and other data
         relating to this Contract, and the Contractor shall preserve these for
         a period of three years after final payment, or for such longer period
         as may be required by law.

ARTICLE 12        PAYMENTS

         12.1 PROGRESS PAYMENTS

         12.1.1 Based upon Applications for Payment submitted to the Architect
         by the Contractor and Certificates for Payment issued by the Architect,
         the Owner shall make progress payments on account of the Contract Sum
         to the Contractor as provided below and elsewhere in the Contract
         Documents.

         12.1.2 The period covered by each Application for Payment shall be one
         calendar month ending on the last day of the month, or as follows:

         12.1.3 Provided that an Application for Payment is received by the
         Architect not later than the First day of a month, the Owner shall make
         payment to the Contractor not later than the Twentieth day of the same
         month. If an Application for Payment is received by the Architect after
         the application date fixed above, payment shall be made by the Owner
         not later than Twenty days after the Architect receives the Application
         for Payment.

         12.1.4 With each Application for Payment, the Contractor shall submit
         payrolls, petty cash accounts, receipted invoices or invoices with
         check vouchers attached, and any other evidence required by the Owner
         or Architect to demonstrate that cash disbursements already made by the
         Contractor on account of the Cost of the Work equal or exceed (1)
         progress payments already received by the Contractor; less (2) that
         portion of those payments attributable to the Contractor's Fee; plus
         (3) payrolls for the period covered by the present Application for
         Payment.

         12.1.5 Each Application for Payment shall be based on the most recent
         schedule of values submitted by the Contractor in accordance with the
         Contract Documents. The schedule of values shall allocate the entire
         Guaranteed Maximum Price among the various portions of the Work, except
         that the Contractor's Fee shall be shown as a single separate

AIA DOCUMENT A111 -OWNER - CONTRACTOR AGREEMENT - 1997 EDITION - AIA - COPYRIGHT
1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying violates U.S.
copyright laws and will subject the violator to legal prosecution. This document
was electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.

                                                    Electronic Format A111-1997
User Document: PRINCETON -- 12/11/2000. AIA License Number 106905, which expires
                                                         on 12/31/2000 - Page #7

<PAGE>   8

         item. The schedule of values shall be prepared in such form and
         supported by such data to substantiate its accuracy as the Architect
         may require. This schedule, unless objected to by the Architect, shall
         be used as a basis for reviewing the Contractor's Applications for
         Payment.

         12.1.6 Applications for Payment shall show the percentage of completion
         of each portion of the Work as of the end of the period covered by the
         Application for Payment. The percentage of completion shall be the
         lesser of (1) the percentage of that portion of the Work which has
         actually been completed; or (2) the percentage obtained by dividing (a)
         the expense that has actually been incurred by the Contractor on
         account of that portion of the Work for which the Contractor has made
         or intends to make actual payment prior to the next Application for
         Payment by (b) the share of the Guaranteed Maximum Price allocated to
         that portion of the Work in the schedule of values.

         12.1.7 Subject to other provisions of the Contract Documents, the
         amount of each progress payment shall be computed as follows:

                  .1       take that portion of the Guaranteed Maximum Price
                           properly allocable to completed Work as determined by
                           multiplying the percentage of completion of each
                           portion of the Work by the share of the Guaranteed
                           Maximum Price allocated to that portion of the Work
                           in the schedule of values. Pending final
                           determination of cost to the Owner of changes in the
                           Work, amounts not in dispute shall be included as
                           provided in Subparagraph 7.3.8 of AIA Document
                           A201-1997;

                  .2       add that portion of the Guaranteed Maximum Price
                           properly allocable to materials and equipment
                           delivered and suitably stored at the site for
                           subsequent incorporation in the Work, or if approved
                           in advance by the Owner, suitably stored off the site
                           at a location agreed upon in writing;

                  .3       add the Contractor's Fee, less retainage of Zero
                           percent (0 %).The Contractor's Fee shall be computed
                           upon the Cost of the Work described in the two
                           preceding Clauses at the rate stated in Subparagraph
                           5.1.2 or, if the Contractor's Fee is stated as a
                           fixed sum in that Subparagraph, shall be an amount
                           that bears the same ratio to that fixed-sum fee as
                           the Cost of the Work in the two preceding Clauses
                           bears to a reasonable estimate of the probable Cost
                           of the Work upon its completion;

                  .4       subtract the aggregate of previous payments made by
                           the Owner;

                  .5       subtract the shortfall, if any, indicated by the
                           Contractor in the documentation required by Paragraph
                           12.1.4 to substantiate prior Applications for
                           Payment, or resulting from errors subsequently
                           discovered by the Owner's accountants in such
                           documentation; and

                  .6       subtract amounts, if any, for which the Architect has
                           withheld or nullified a Certificate for Payment as
                           provided in Paragraph 9.5 of AIA Document A201-1997.

Insert I: There shall be no retention held on Contractor's Fee and General
Conditions.

         12.1.8 Except with the Owner's prior approval, payments to
         Subcontractors shall be subject to retainage of not less than SEE BELOW
         percent ( %). The Owner and the Contractor shall agree upon a mutually
         acceptable procedure for review and approval of payments and retention
         for Subcontractors.

Insert J: Retention on Subcontract costs shall be 10% until the Project is 50%
complete and 5% thereafter.

         12.1.9 In taking action on the Contractor's Applications for Payment,
         the Architect shall be entitled to rely on the accuracy and
         completeness of the information furnished by the Contractor and shall
         not be deemed to represent that the Architect has made a detailed
         examination, audit or arithmetic verification of the documentation
         submitted in accordance with Subparagraph 12.1.4 or other supporting
         data; that the Architect has made exhaustive or continuous on-site
         inspections or that the Architect has made examinations to ascertain
         how or for what purposes the Contractor has used amounts previously
         paid on account of the Contract. Such examinations, audits and
         verifications, if required by the Owner, will be performed by the
         Owner's accountants acting in the sole interest of the Owner.

AIA DOCUMENT A111 -OWNER - CONTRACTOR AGREEMENT - 1997 EDITION - AIA - COPYRIGHT
1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying violates U.S.
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was electronically produced with permission of the AIA and can be reproduced
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                                                    Electronic Format A111-1997
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                                                         on 12/31/2000 - Page #8

<PAGE>   9

         12.2 FINAL PAYMENT

         12.2.1 Final payment, constituting the entire unpaid balance of the
         Contract Sum, shall be made by the Owner to the Contractor when:

                  .1       the Contractor has fully performed the Contract
                           except for the Contractor's responsibility to correct
                           Work as provided in Subparagraph 12.2.2 of AIA
                           Document A201-1997, and to satisfy other
                           requirements, if any, which extend beyond final
                           payment; and

                  .2       a final Certificate for Payment has been issued by
                           the Architect.

         12.2.2 The Owner's final payment to the Contractor shall be made no
         later than 30 days after the issuance of the Architect's final
         Certificate for Payment, or as follows:

         12.2.3 The Owner's accountants will review and report in writing on the
         Contractor's final accounting within 30 days after delivery of the
         final accounting to the Architect by the Contractor. Based upon such
         Cost of the Work as the Owner's accountants report to be substantiated
         by the Contractor's final accounting, and provided the other conditions
         of Subparagraph 12.2.1 have been met, the Architect will, within seven
         days after receipt of the written report of the Owner's accountants,
         either issue to the Owner a final Certificate for Payment with a copy
         to the Contractor, or notify the Contractor and Owner in writing of the
         Architect's reasons for withholding a certificate as provided in
         Subparagraph 9.5.1 of the AIA Document A201-1997. The time periods
         stated in this Subparagraph 12.2.3 supersede those stated in
         Subparagraph 9.4.1 of the AIA Document A201-1997.

         12.2.4 If the Owner's accountants report the Cost of the Work as
         substantiated by the Contractor's final accounting to be less than
         claimed by the Contractor, the Contractor shall be entitled to demand
         arbitration of the disputed amount without a further decision of the
         Architect. Such demand for arbitration shall be made by the Contractor
         within 30 days after the Contractor's receipt of a copy of the
         Architect's final Certificate for Payment; failure to demand
         arbitration within this 30-day period shall result in the substantiated
         amount reported by the Owner's accountants becoming binding on the
         Contractor. Pending a final resolution by arbitration, the Owner shall
         pay the Contractor the amount certified in the Architect's final
         Certificate for Payment.

         12.2.5 If, subsequent to final payment and at the Owner's request, the
         Contractor incurs costs described in Article 7 and not excluded by
         Article 8 to correct defective or nonconforming Work, the Owner shall
         reimburse the Contractor such costs and the Contractor's Fee applicable
         thereto on the same basis as if such costs had been incurred prior to
         final payment, but not in excess of the Guaranteed Maximum Price. If
         the Contractor has participated in savings as provided in Paragraph
         5.2, the amount of such savings shall be recalculated and appropriate
         credit given to the Owner in determining the net amount to be paid by
         the Owner to the Contractor.

ARTICLE 13        TERMINATION OR SUSPENSION

         13.1 The Contract may be terminated by the Contractor, or by the Owner
         for convenience, as provided in Article 14 of AIA Document A201-1997.
         However, the amount to be paid to the Contractor under Subparagraph
         14.1.3 of AIA Document A201-1997 shall not exceed the amount the
         Contractor would be entitled to receive under Paragraph 13.2 below,
         except that the Contractor's Fee shall be calculated as if the Work had
         been fully completed by the Contractor, including a reasonable estimate
         of the Cost of the Work for Work not actually completed.

         13.2 The Contract may be terminated by the Owner for cause as provided
         in Article 14 of AIA Document A201-1997. The amount, if any, to be paid
         to the Contractor under Subparagraph 14.2.4 of AIA Document A201-1997
         shall not cause the Guaranteed Maximum Price to be exceeded, nor shall
         it exceed an amount calculated as follows:

         13.2.1 Take the Cost of the Work incurred by the Contractor to the date
         of termination;

         13.2.2 Add the Contractor's Fee computed upon the Cost of the Work to
         the date of termination at the rate stated in Subparagraph 5.1.2 or, if
         the Contractor's Fee is stated as a fixed sum in that Subparagraph, an
         amount that bears the same

AIA DOCUMENT A111 -OWNER - CONTRACTOR AGREEMENT - 1997 EDITION - AIA - COPYRIGHT
1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying violates U.S.
copyright laws and will subject the violator to legal prosecution. This document
was electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.

                                                    Electronic Format A111-1997
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                                                         on 12/31/2000 - Page #9

<PAGE>   10

         ratio to that fixed-sum Fee as the Cost of the Work at the time of
         termination bears to a reasonable estimate of the probable Cost of the
         Work upon its completion; and ,

         13.2.3 Subtract the aggregate of previous payments made by the Owner.

         13.3 The Owner shall also pay the Contractor fair compensation, either
         by purchase or rental at the election of the Owner, for any equipment
         owned by the Contractor that the Owner elects to retain and that is not
         otherwise included in the Cost of the Work under Subparagraph 13.2.1.
         To the extent that the Owner elects to take legal assignment of
         subcontracts and purchase orders (including rental agreements), the
         Contractor shall, as a condition of receiving the payments referred to
         in this Article 13, execute and deliver all such papers and take all
         such steps, including the legal assignment of such subcontracts and
         other contractual rights of the Contractor, as the Owner may require
         for the purpose of fully vesting in the Owner the rights and benefits
         of the Contractor under such subcontracts or purchase orders.

         13.4 The Work may be suspended by the Owner as provided in Article 14
         of AIA Document A201-1997; in such case, the Guaranteed Maximum Price
         and Contract Time shall be increased as provided in Subparagraph 14.3.2
         of AIA Document A201-1997 except that the term "profit" shall be
         understood to mean the Contractor's Fee as described in Subparagraphs
         5.1.2 and Paragraph 6.4 of this Agreement.

ARTICLE 14        MISCELLANEOUS PROVISIONS

         14.1 Where reference is made in this Agreement to a provision AIA
         Document A201-1997 or another Contract Document, the reference refers
         to that provision as amended or supplemented by other provisions of the
         Contract Documents.

         14.2 Payments due and unpaid under the Contract shall bear interest
         from the date payment is due at the rate stated below, or in the
         absence thereof, at the legal rate prevailing from time to time at the
         place where the Project is located.
         (Insert rate of interest agreed upon, if any.)

         (Usury laws and requirements under the Federal Truth in Lending Act,
         similar state and local consumer credit laws and other regulations at
         the Owner's and Contractor's principal places of business, the location
         of the Project and elsewhere may affect the validity of this provision.
         Legal advice should be obtained with respect to deletions or
         modifications, and also regarding requirements such as written
         disclosures or waivers.)

         14.3 The Owner's representative is:

         (Name, address and other information.)

         Bob Hoffman

         14.4 The Contractor's representative is:

         (Name, address and other information.)

         Andy Frankl

         14.5 Neither the Owner's nor the Contractor's representative shall be
         changed without ten days' written notice to the other party.

         14.6 Other provisions:

ARTICLE 15        ENUMERATION OF CONTRACT DOCUMENTS

         15.1 The Contract Documents, except for Modifications issued after
         execution of this Agreement, are enumerated as follows:

         15.1.1 The Agreement is this executed 1997 edition of the Standard Form
         of Agreement Between Owner and Contractor, AIA Document A 111-1997.

         15.1.2 The General Conditions are the 1997 edition of the General
         Conditions of the Contract for Construction, AIA Document A201-1997.

AIA DOCUMENT A111 -OWNER - CONTRACTOR AGREEMENT - 1997 EDITION - AIA - COPYRIGHT
1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying violates U.S.
copyright laws and will subject the violator to legal prosecution. This document
was electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.

                                                    Electronic Format A111-1997
User Document: PRINCETON -- 12/11/2000. AIA License Number 106905, which expires
                                                        on 12/31/2000 - Page #10

<PAGE>   11

         15.1.3 The Supplementary and other Conditions of the Contract are those
         contained in the Project Manual dated and are as follows:

         Document                      Title                       Pages

         As set forth in the GMP Report, Exhibit A

         15.1.4 The Specifications are those contained in the Project Manual
         dated as in Subparagraph 15.1.3, and are as follows:

         (Either list the Specifications here or refer to an exhibit attached to
         this Agreement.)

         Section                        Title                       Pages

         As set forth in the GMP Report, Exhibit A

         15.1.5 The Drawings are as follows, and are dated unless a different
         date is shown below:

         (Either list the Drawings here or refer to an exhibit attached to this
         Agreement.)

         Number                          Title                       Pages

         As set forth in the GMP Report, Exhibit A

         15.1.6 The Addenda, if any, are as follows:

         Number                          Title                       Pages

         Portions of Addenda relating to bidding requirements are not part of
         the Contract Documents unless the bidding requirements are also
         enumerated in this Article 15.

         15.1.7 Other Documents, if any, forming part of the Contract Documents
         are as follows:

         (List here any additional documents, such as a list of alternates that
         are intended to form part of the Contract Documents. AIA Document
         A201-1997 provides that bidding requirements such as advertisement or
         invitation to bid, Instructions to Bidders, sample forms and the
         Contractor's bid are not part of the Contract Documents unless
         enumerated in this Agreement. They should be listed here only if
         intended to be part of the Contract Documents.)

         Exhibit A - GMP Report

ARTICLE 16        INSURANCE AND BONDS

         (List required limits of liability for insurance and bonds. AIA
         Document A201-1997 gives other specific requirements for insurance and
         bonds.)

         IBEX has submitted its standard certificate of coverage, which coverage
         and limits are acceptable to Owner.

         This Agreement is entered into as of the day and year first written
         above and is executed in at least three original copies, of which one
         is to be delivered to the Contractor, one to the Architect for use in
         the administration of the Contract, and the remainder to the Owner.

 /s/ Robert Hoffman                           /s/ Andy Frankl
--------------------------------------        ---------------------------------
 OWNER (Signature)                            CONTRACTOR (Signature)

 Insert K: Bob Hoffman, Vice President        Andy Frankl, President
 =====================================        ================================
 (Printed name and title)                     (Printed name and title)

Insert L:

AIA DOCUMENT A111 -OWNER - CONTRACTOR AGREEMENT - 1997 EDITION - AIA - COPYRIGHT
1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying violates U.S.
copyright laws and will subject the violator to legal prosecution. This document
was electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.

                                                    Electronic Format A111-1997
User Document: PRINCETON -- 12/11/2000. AIA License Number 106905, which expires
                                                        on 12/31/2000 - Page #11

<PAGE>   12

PRINCETON REVIEW HOMEROOM.COM                                           10/20/00
160 Varick Street, 12th Floor        GMP - EXHIBIT A          Revised - 10/25/00
New York, NY                                                   REVISED - 11/8/00
IBEX Project # 10057

<TABLE>
<CAPTION>
                             TRADE

                                                                    GMP

<S>                                                       <C>
            PHASE - 1
    1         - Demolition                                        35,000

            PHASE - 2
    2       Demolition - (Ceiling Inserts)                INCLUDED
    3       Drywall                                               69,885
    4       Ceiling                                       INCLUDED
    5       Metal & Glass Partition                               19,536
    6       Hollow Metal/Hardware/Wood doors                       4,319
    7       Plaster / Concrete Patch                               6,600
    8       Moveable Partition/Garage Door                         5,340
    9       Misc. Iron                                       ---
    10      Fireproofing                                     ---
    11      Millwork                                         N/C
    12      Painting                                              30,500
    13      Ceiling Slab Patch - Allowance                         9,000
    14      Carpet, VCT & Base                                    57,274
    15      Glass & Glazing                                        8,400
    16      Marker Boards                                              0
    17      Appliances                                       N/C
    18      Window Treatment                                       7,500
    19      Radiator Enclosures                                    7,100
    20      Plumbing                                               9,500
    21      Sprinkler                                             26,195
    22      HVAC                                                 129,740
    23      Light Fixtures                                INCLUDED
    24      Electrical                                           378,500
    25
    26                             TRADE SUB TOTAL:              804,389
    27      GENERAL CONDITIONS                                   111,777
    28      INSURANCE                                             13,679
    29      FEE                                                   46,281
    30                                    SUB-TOTAL              976,126
</TABLE>

NOTES & QUALIFICATIONS:
The following items are not included:

- Overtime, contingency, concealed conditions.

- Pantry millwork, sink, appliances.

- Relocating existing piping, conduit.

- Repairs of existing bathrooms (scope to be determined)

- Furniture system work, task lights.

- Unforeseeable changes and/or change directives.

Please note the following:

-        Pricing includes allowances for the following (as shown on submitted
         Letters of Recommendation):

         - "Rough" patching of exposed ceiling slab.

         - Glass door hardware (pending specification).

         - Electric raceway for workstations (pending detail).

- Electrical pricing includes tel/data stub-ups; existing panels (at column line
  5C) to remain in existing location;

- Pricing is based on drawings;

- Tec room A/C unit to include local wall thermostat.

- Revised plumbing price includes 25'-0 of horizontal piping pending
  verification of risers.

- Drawings- GN-1, GN-2, DM-12, CN-12, RC-12, FP-12, PF-12, ET-12, DT-12 dated
  10/11/00; ;H-1 H-2, H-4, H-5, H-6, E-1, E-2, E-6, P-1, SP-1, SP-2 dated
  10/10/00; H-1A, H-3, E-3, E-4, E-5, P-2 dated 10/13/00.

<PAGE>   13

                            [COMPANY SYMBOL OMITTED]
                                      IBEX
                                  CONSTRUCTION

December 11, 2000

Mr. Bob Hoffman
The Princeton Review
2315 Broadway
New York, NY 10024

Re:     160 Varick Street
        Ibex Job# 10057

Dear Mr. Hoffman

It is understood that Princeton Review has postponed the project completion date
from 12/4/00 to 1/5/01. This change was made to accommodate the schedule for
Client activities a>>d is in no way related to the performance of Ibex
Construction. Please indicate that this statement Is true and accurate by
signing in the space provided below.

Please indicate your approval by signing in the space provided below.

Sincerely,

IBEX CONSTRUCTION

/s/ Michael Abluso
--------------------------------
Michael Abluso
Project Director

Accepted by:   /s/ Robert Hoffman                     Date:  12/11/00
               ------------------------------                --------

<PAGE>   14

IBEX CONSTRUCTION
1372 BROADWAY

                                PRINCETON REVIEW
                                160 VARICK ST.
                                JOB #10057

                                EXHIBIT A
                                HOURLY RATES

<TABLE>
<CAPTION>
                                                 PER HOUR
<S>                          <C>                 <C>                        <C>
PROJECT MANAGER                                     89.55                   -
PROJECT SUPER                                       65.90                   -
ESTIMATOR                                          106.43                   -
PROJECT ACCOUNTANT                                  45.03                   -
CLERK                                               32.23                   -
UNION LABOR
           LABORER           (REG. TIME)            54.09                   -
           LABORER           (O.T)                  69.95
           CARP.             (REG. TIME)            78.58
           CARP.             (O.T)                 100.59                   -

                                                                            -
</TABLE>

<PAGE>   15

                                  SCHEDULE B-1

                           INSURANCE PROVIDED BY OWNER

         Builder's Risk

                  Owner at its cost will provide Builder's Risk Insurance upon
                  the entire Work. Losses under the deductible will be absorbed
                  by Owner. Insurance will be provided by companies licensed in
                  the State where the project is located. Coverage will be
                  arranged on the customary "All Risks"/Special Form. If Project
                  is located in a flood zone, flood insurance will be obtained
                  by Owner.

                  Contractor will be named as additional insured as their
                  interests may appear with waiver of subrogation in favor of
                  any insured. A binder shall be delivered to Contractor within
                  fifteen (15) days of effective date and a true copy of the
                  policy within sixty (60) days'.

         Business Interruption

                  It is suggested that Owner maintain Business Interruption
                  insurance to protect loss of use of Owner's property arising
                  from fire or other cause of loss or damage to Owner's property
                  or the property of others situated at the job site. Owner
                  waives all rights of action against Contractor for loss of use
                  of Owner's property including consequential losses.

         Equipment

                  If Owner owns, rents or borrows construction equipment, Owner
                  will be responsible for securing Direct Damage insurance on
                  the customary All Risks/Special Form covering the replacement
                  cost of the property. Losses under the deductible will be
                  absorbed by Owner. Such insurance shall have a waiver of
                  subrogation in favor of Owner and Contractor. If the Loss of
                  Use/Rental Value of such equipment is $5,000 or more, Loss of
                  use/Rental Value Liability insurance will also be arranged by
                  Owner protecting Owner and Contractor.

         Owner's Liability

                  Owner at its expense will maintain public liability insurance
                  protecting Owner against claims arising out of Owner's
                  activities at the Project.

Owner's Contracts

                  In the event Owner enters into contracts directly with
                  contractors and not through Contractor, Owner will require
                  such contractors to maintain the insurance set forth on
                  Schedule A-2, including an endorsement naming Contractor as an
                  additional insured.

<PAGE>   16

                                  SCHEDULE B-2

                        INSURANCE PROVIDED BY CONTRACTOR

         Contractor will arrange for the following insurance to be obtained for
         the Project with all costs to be paid for by Owner.

1.       Worker's Compensation and Employer's Liability Insurance:

         a.       Statutory Worker's Compensation including occupational disease
                  in accordance with the law.

         b.       Employer's Liability Legal Insurance with minimum limits of
                  $1,000,000 each accident/$1,000,000 policy limit by
                  disease/$1,000,000 bodily injury each employee.

2.       Comprehensive General Liability Insurance at a combined single limit of
         $1,000,000 each occurrence/$1,000,000 aggregate for Bodily Injury or
         Property Damage.

         Coverage also includes:

         a.       Personal Injury Groups A, B, C with employee exclusion
                  deleted.

         b.       Broad Form Property damage including completed operations and
                  all XCU hazards as applicable.

         c.       Independent Trade Contractors.

         d.       Blanket Contractual Liability.

         e.       Products Liability and Completed Operations.

         f.       "occurrence" Bodily Injury and Property Damage Form.

         The Commercial General Liability form is acceptable provided a. through
         f. are included.

3.       Business Automobile Liability, including all owned, non-owned and hired
         vehicles with a $1,000,000 combined single limit.

4.       Excess Liability Insurance with limits of $10,000,000 per
         occurrence/$25,000,000 aggregate.

5.       The following parties will be endorsed as additional insureds arising
         out of the acts of Contractor:

         Princeton Review Publishing, LLC

6.       Certificates of Insurance will be submitted or be available to Owner
         prior to commencement of the Work and shall provide for thirty (30)
         days' prior Notice of Cancellation.

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