Exhibit
10.2
EXECUTIVE EMPLOYMENT
AGREEMENT
This EXECUTIVE
EMPLOYMENT AGREEMENT is entered into as of the 25
th
day of March, 2009
(the “Effective Date”), by and between The Princeton
Review, Inc. (the “Company”), a Delaware
corporation, and Susan Rao , (the
“Executive”).
WHEREAS , the Executive is currently employed by the
Company as its Executive Vice President, Finance and Chief
Financial Officer, Test Prep Division, and during his or her
employment he or she 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 Executive and the Company are parties to
an Offer Letter dated September 24, 2007 (the “Prior
Agreement”); and
WHEREAS , the Company and the Executive desire to enter
into this Agreement in order to replace and supersede the Prior
Agreement and 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 Executive Vice President, Finance or in such other
position(s) as the Company may determine. The Executive initially
shall report to the Chief Operating Officer (the “Managing
Officer”). 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 Managing Officer
or designee. Nothing in this Agreement shall limit the
Company’s right to change the Executive’s title,
position or reporting relationship.
(b) The Executive will devote his or
her full working time, attention and skill to the performance of
his or her duties and responsibilities as an executive employee of
the Company in a trustworthy and professional manner, and will use
his or her 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 or her 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
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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.
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 $300,000 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 Company.
(b) Bonus .
The Executive will be eligible for an annual bonus for each
calendar year of his or her employment targeted at 50% of his or
her Base Salary (the “Target Bonus”) based on the
attainment of performance metrics established and revised annually
by the Company. The Company, 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 options to purchase 175,000 shares of the
Company’s common stock, par value $0.01 per share, at a per
share exercise price equal to the fair market value of a share of
Company common stock on the effective date of the grant as
determined under the terms of the Plan.
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
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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.
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
Managing Officer’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
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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
(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.
7. Termination . The
Executive’s employment hereunder may be terminated as set
forth in this Section 7.
(a) Definitions .
(i) Cause . For purposes of
this Agreement, “Cause” means a good faith finding by
the Company that:
(A) the Executive failed to
substantially perform his or her duties and obligations to the
Company (other than a failure resulting from the Executive’s
incapacity because of a Disability, as defined in
Section 7(a)(ii)), including but not limited to one or more
acts of gross negligence or insubordination or a material breach of
the Company’s policies and procedures (other than such
policies set forth in Section 7(a)(i)(B) below); provided,
however, that if such failure is determined by the Company, in its
sole discretion, to be curable, the failure is not cured
within 10 days after a written demand for cure is received by the
Executive from the Company which specifically identifies the manner
in which the Company believes the Executive has failed to
substantially perform his or her duties and obligations to the
Company;
(B) the Executive has materially
breached the Company’s Code of Conduct or its
anti-discrimination and harassment policies;
(C) the Executive has committed a
crime involving fraud, dishonesty, theft, breach of trust or moral
turpitude;
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(D) the Executive willfully engaged
in conduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise;
(E) the Executive materially
breached this Agreement, including but not limited to the
Confidentiality, Non-Competition and Non-Solicitation provisions of
Section 8 below, or any other agreement regarding assignment
of intellectual property rights with the Company;
(F) the Executive violated state or
federal securities laws or regulations; or
(G) the Executive willfully failed
to cooperate with a bona fide internal investigation or an
investigation by regulatory or law enforcement authori
