Exhibit
10.1
EXECUTIVE EMPLOYMENT
AGREEMENT
This EXECUTIVE EMPLOYMENT
AGREEMENT is entered into as of the 11th day of August, 2008
(the “Effective Date”), by and between The Princeton
Review, Inc. (the “Company”), a Delaware
corporation, and Anthony Bordon (the
“Executive”).
WHEREAS , the Executive is currently employed by the
Company as its President, Supplemental Educational Services
Division and during his employment he has gained valuable
experience and knowledge in all phases of the Company’s
business;
WHEREAS , the Company recognizes the Executive’s
extraordinary experience and relationships in the Company’s
business and industry, and the Company desires to retain the
services and employment of the Executive;
WHEREAS , the Company and the Executive desire to enter
into this Agreement in order to provide for the continued
employment of the Executive by the Company upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE
, in consideration of the foregoing
and the mutual promises contained herein, the parties agree as
follows:
1. Effective Date and Term .
This Agreement shall become effective, and Executive’s
employment under this Agreement will begin, on the Effective Date.
The Executive shall be employed hereunder for the period starting
on the Effective Date and continuing until the Termination Date, as
that term is defined in Section 7(a)(v) below (such period of
employment shall be referred to as the
“Term”).
2. Employment .
(a) The Executive will be employed
as the President, Supplemental Educational Services Division or in
such other position(s) as may be mutually agreed upon by the
parties. The Executive will perform the duties, undertake the
responsibilities and exercise the authority customarily performed,
undertaken and exercised by persons employed in a similar executive
capacity or as directed by the Company’s Chief Executive
Officer (the “CEO”) or designee. The Executive shall
report directly to the CEO or the CEO’s designee.
(b) The Executive will devote his
full working time, attention and skill to the performance of his
duties and responsibilities as an executive employee of the Company
in a trustworthy and professional manner, and will use his best
efforts to promote the interests of the Company. The Executive will
not, without prior written approval of the Company, engage in any
other activities that would interfere with the performance of his
duties as an employee of the Company, are in violation of written
policies of the Company, are in violation of applicable law, or
would create an actual or perceived conflict of interest with
respect to the Executive’s obligations as an employee of the
Company. The Executive may (1) with advance notice to and
consent of the Company, serve on corporate, civil or charitable
boards or committees; (2) deliver lectures and teach at
educational institutions; (3) serve as a personal
representative or trustee; and (4) invest personally in any
business where no conflict of interest exists between such
investment and the business of the Company, provided those
activities do not require a material time commitment by the
Executive or are otherwise contrary to any provision of this
Agreement.
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3. Compensation . For so long
as the Executive is employed by the Company under this Agreement,
the Executive shall be paid the following compensation:
(a) Base Salary . The
Executive’s initial base salary will be $250,000 per annum
(such base salary, as may be adjusted from time to time in
accordance with this Section, the “Base Salary”), from
which shall be deducted all required or authorized payroll
deductions, including state and federal withholdings. The Base
Salary shall be payable in accordance with the Company’s
customary payroll practices applicable to its executives generally.
The Base Salary will be reviewed, and may be adjusted, at least
annually in a manner designated by the Board of Directors of the
Company (the “Board”) or the Compensation Committee of
the Board (the “Compensation Committee”).
(b) Bonus .
The Executive will be eligible for an annual bonus for each
calendar year of his employment targeted at 50% of his Base Salary
(the “Target Bonus”) based on the attainment of
performance metrics established and revised annually by the Board
or the Compensation Committee. The Board or the Compensation
Committee, in its sole discretion, shall establish the eligibility
criteria for such annual bonus, which may include Company financial
projections and management goals specific to the Executive. Each
bonus earned by the Executive shall be paid to the Executive
in cash, less all required or authorized tax and other
withholdings, during the 2 1
/
2 month period following the end
of the calendar year in which the bonus was earned.
(c) Stock Based Compensation
.
(i) During the Term, the Executive
will be eligible to be considered by the Compensation Committee for
grants or awards of stock options or other stock-based compensation
under the Company’s 2000 Stock Incentive Plan, as amended and
restated on March 24, 2003 and as may hereafter be amended
(the “Plan”) or similar plans as in effect from time to
time. All grants or awards shall be governed by the relevant plan
documents and requirements and shall be evidenced by the
Company’s then-standard form of stock option, restricted
stock or other applicable agreement.
(ii) The Executive has previously
been granted a stock option or options to purchase an aggregate of
225,000 shares of the Company’s common stock.
4. Employee Benefits
.
(a) Employee Benefits
Generally . The Executive will be entitled to participate in
all employee benefit plans, practices and programs maintained by
the Company and made available to employees generally including,
without limitation, all pension, retirement, profit sharing,
savings, health, hospitalization, disability, dental, life or
travel accident insurance benefit plans, vacation and sick leave in
accordance with the terms of such plans, practices and programs as
in effect from time to time.
(b) Executive Benefits . The
Executive will also be entitled to participate in executive benefit
or incentive compensation plans now maintained or hereafter
established by the Company for the purpose of providing
compensation and/or benefits to executives of the Company
generally. Unless otherwise determined by the Compensation
Committee, the Executive’s participation in such plans will
be on the same basis and terms as other similarly situated
executives of the Company. No additional compensation provided
under any of such plans will be deemed to modify or otherwise
affect the terms of this Agreement or any of the Executive’s
entitlements hereunder.
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5. Reimbursements and Other
Benefits .
(a) Expenses generally . The
Company will pay all reasonable and properly documented expenses
incurred by the Executive in furtherance of the Company’s
business in accordance with applicable Company policies and
procedures (“Expenses”).
(b) Vacation . The Executive
may take 22 days of paid time off during each year (or such larger
number as provided by Company policy) at such times as shall be
consistent with the Company’s vacation policies and, in the
CEO’s judgment, consistent with the needs of the
Company.
6. Effect of Change in
Control .
(a) Definition . For purposes
of this Agreement, “Change in Control” means the
occurrence of any of the following events:
(i) the acquisition by an
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership of any capital stock
of the Company if, after such acquisition, such Person beneficially
owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in excess of 50% of either the then-outstanding
shares of common stock of the Company (the “Outstanding
Company Common Stock”) or the combined voting power of the
then-outstanding securities of the Company entitled to vote
generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for
purposes of this subsection (i), the following acquisitions shall
not constitute a Change in Control: (1) any acquisition of
more than 50% of the Outstanding Company Common Stock directly from
the Company (excluding an acquisition pursuant to the exercise,
conversion or exchange of any security exercisable for, convertible
into or exchangeable for common stock or voting securities of the
Company, unless the Person exercising, converting or exchanging
such security acquired such security directly from the Company or
an underwriter or agent of the Company); (2) any acquisition
of more than 50% of the Outstanding Company Common Stock by the
Company; (3) any acquisition of more than 50% of the
Outstanding Company Common Stock by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or (4) any acquisition
by any Person who, prior to such acquisition, already owned more
than 50% of the Outstanding Company Common Stock or Outstanding
Company Voting Securities; or
(ii) such time as the majority of
the members of the Board (or, if applicable, the board of
directors of a successor corporation to the Company) is replaced
during any 12-month period (commencing no earlier than the date of
this Agreement) by directors whose appointment or election is not
approved by a majority of the members of the Board prior to the
date of the appointment or election; or
(iii) the consummation of a merger,
consolidation, reorganization, recapitalization or statutory share
exchange involving the Company or a sale or other disposition of
all or substantially all of the assets of the Company in one or a
series of transactions (a “Business Combination”),
unless, immediately following such Business Combination, all or
substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding securities entitled
to vote generally in the election of directors, respectively, of
the resulting or acquiring corporation in such Business Combination
(which shall include, without limitation, a corporation which as a
result of such transaction owns the Company or substantially all of
the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, respectively; or
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(iv) the approval by the
stockholders of the Company of a complete liquidation or
dissolution of the Company, other than in a bankruptcy proceeding,
provided that the liquidation or dissolution otherwise meets the
requirements of one of the events described in Sections 6(a)(i),
(ii) or (iii) above.
In all respects, the definition of
“Change in Control” shall be interpreted to comply with
Internal Revenue Code Section 409A, and any successor statute,
regulation and guidance thereto.
(b) Notwithstanding any provision of
the Company’s 2000 Stock Incentive Plan, any stock option
agreement or restricted stock or other stock award agreement or any
other stock option plan to the contrary, if the Executive is
employed by the Company upon the occurrence of a Change in Control,
immediately prior to such Change in Control the unvested portion of
the stock options held by the Executive on the date of the Change
in Control shall vest and become immediately exercisable, and all
restrictions shall lapse on any restricted stock or similar awards
held by the Executive at such time which were not otherwise vested
as of the date of the Change in Control.
(c) Gross-Up Payment.
(i) Anything in this Agreement to
the contrary notwithstanding, in the event it shall be determined
that any compensation, payment or distribution by the Company to or
for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise (the “Severance Payments”),
would be subject to the excise tax imposed by Internal Revenue Code
Section 4999, or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the
Executive shall be entitled to receive an additional payment or
payments (collectively, the “Gross-Up Payment”) such
that the net amount retained by the Executive, after deduction of
any Excise Tax on the Severance Payments, any Federal, state, and
local income tax, employment tax and Excise Tax upon the payment
provided by this Section, and any interest and/or penalties
assessed with respect to such Excise Tax, shall be equal to the
Severance Payments.
(ii) Subject to the provisions of
Section 6(c)(iii) below, all determinations required to be
made under this Section 6(c)(ii), including whether a Gross-Up
Payment is required and the amount of such Gross-Up Payment, shall
be made by a nationally recognized accounting firm selected and
paid for by the Company (the “Accounting Firm”), which
shall provide detailed supporting calculations both to the Company
and the Executive within 15 business days of the Termination Date,
if applicable, or at such earlier time as is reasonably requested
by the Company or the Executive. For purposes of determining the
amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal rate of federal
income taxation applicable to individuals for the calendar year in
which the Gross-Up Payment is to be made, and state and local
income taxes at the highest marginal rates of individual taxation
in the state and locality of the Executive’s residence on the
Termination Date, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and
local taxes. The Gross-Up Payment, if any, as determined pursuant
to this Section 6(c)(ii), shall be paid to the relevant tax
authorities as withholding taxes on behalf of the Executive at such
time or times when each Excise Tax payment is due. Any
determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the
application of Internal Revenue Code Section 4999 at the time
of the initial determination by the Accounting Firm hereunder, it
is possible that Gross-Up Payments which will not have been made by
the Company should have been made (an “Underpayment”).
In the event that the Company exhausts its remedies pursuant to
Section 6(c)(iii) below and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred,
consistent with the calculations required to be made hereunder, and
any such Underpayment, and any interest and penalties imposed
on
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the Underpayment and required to be paid by the
Executive in connection with the proceedings described in
Section 6(c)(iii) below, shall be promptly paid by the Company
to the relevant tax authorities as withholding taxes on behalf of
the Executive.
(iii) The Executive shall notify the
Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of
the Gross-up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive
knows of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is
due), unless failure to do so could reasonably be expected to
result in any criminal liability for the Executive. If the Company
notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, provided that the
Company has set aside adequate reserves to cover the Underpayment
and any interest and penalties thereon that may accrue, the
Executive shall:
(A) give the Company any information
reasonably requested by the Company relating to such
claim,
(B) take suc
