Document:

Sixth Amendment to Amended and Restated Loan and Security Agreement

 Exhibit 10.9 
  
 SIXTH AMENDMENT TO AMENDED AND RESTATED 
 LOAN AND SECURITY AGREEMENT 
  
 THIS SIXTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”) is made effective as of the 30th day of September, 2003, by and among NOBEL LEARNING COMMUNITIES,
INC. (“Nobel”), NEDI, INC. (“NEDI”), MERRYHILL SCHOOLS NEVADA, INC. (“ Merryhill Nevada”), PALADIN ACADEMY, L.L.C., formerly known as Nobel Learning Solutions,
L.L.C. (“Paladin”), NOBEL EDUCATION DYNAMICS FLORIDA, INC. ( “Nobel Florida”), THE ACTIVITIES CLUB, INC. (“TAC”), HOUSTON LEARNING ACADEMY, INC. (“Houston”), NOBEL SCHOOL MANAGEMENT SERVICES, INC. (“Nobel
Management”), NOBEL LEARNING TECHNOLOGIES, INC. (“Nobel Technologies”) (jointly and severally, “Borrowers”), FLEET NATIONAL BANK, as successor by merger to Summit Bank, as Agent
(“Agent”) and Lenders named on the signature pages hereto (collectively, “Lenders”). 
  
 BACKGROUND 
  
 A. Nobel, NEDI, Merryhill Schools, Inc., Merryhill Nevada, Paladin, Nobel Florida, TAC and Agent are parties to that certain Amended and Restated Loan and
Security Agreement dated March 9, 1999, as amended by (i) that certain First Amendment to Amended and Restated Loan and Security Agreement dated December 17, 1999, (ii) that certain Second Amendment to Amended and Restated Loan and Security
Agreement dated May 24, 2000, (iii) that certain Third Amendment to Amended and Restated Loan and Security Agreement dated May 24, 2001, and (iv) that certain Fourth Amendment to Amended and Restated Loan and Security Agreement dated as of July 5,
2001 and that certain Fifth Amendment to Amended and Restated Loan and Security Agreement dated as of May 28, 2003 (such Amended and Restated Loan and Security Agreement, as amended and as the same may be further amended, supplemented or restated
from time to time, being the “Loan Agreement”). 
  
 B. Borrowers, Agent and Lenders desire to further amend the Loan Agreement in accordance with the terms and conditions hereof. 
  
 C. Capitalized terms used herein and not otherwise defined shall have the meanings provided for such terms in the Loan Agreement. 
  
 NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto agree as follows: 
  
 1. Waiver of Existing Covenant
Defaults. The Events of Default resulting from Borrowers’ failure to comply with the Fixed Charge Coverage Ratio, Leverage Ratio, Interest Coverage Ratio, Adjusted Leverage Ratio and the Senior Debt to EBITDA Ratio as of June 30, 2003
and the Capital Expenditure Covenant at September 30, 2003 due to the purchase of certain real estate located in Alpharetta, Georgia are hereby waived. Nothing contained herein constitutes a waiver of, or an agreement or commitment by Agent or any
Lender to waive or release Borrowers from compliance with any other terms, conditions or covenants of the Loan Agreement or any other Loan Documents. 
  

 2. Permanent Reduction to Acquisition Term Loan. 
  
 Borrowers shall, on or before September 30, 2003, make a permanent reduction
in the Acquisition Credit Facility Term Loan of not less than One Million Dollars ($1,000,000.00). 
  
 3. Permanent Reduction in the Working Capital Credit Facility. As of the date hereof, and subject to the limitations set forth in the
Loan Agreement and herein, the maximum amount available under the Working Capital Credit Facility shall be reduced to Five Million Dollars ($5,000,000.00). 
  
 4. Amended Definition. 
  
 The definition of “EBITDA” contained in Article 1 of the Loan Agreement is hereby amended to read, in its entirety, as follows:

  
 “1.18 “EBITDA” means, for any
period, combined aggregate earnings for Borrowers for such period (excluding extraordinary earnings), plus the aggregate amount deducted for such period in determining such earnings in respect of (a) Interest Expense, (b) income taxes, (c)
depreciation expense, (d) amortization expense, all determined in accordance with GAAP, (e) non-recurring transaction fees, write-down of goodwill, or other non-recurring expenses incurred in the disposition of schools included in Borrowers’
managed assets, and (f) for the fiscal quarter and year ended June 30, 2003 only, those one-time changes set forth on Exhibit 1 hereto.” 
  
 5. Letters of Credit. Section 3.8(a) of the Loan Agreement is amended to read, in its entirety, as follows: 
  
 “(a) Issuing Bank may issue for the account of Borrowers under
the Consolidated Working Capital Credit Facility, commercial, documentary, automatically renewable or standby letters of credit in form and content satisfactory to Issuing Bank, at its sole discretion, with a term not to exceed the earlier to occur
of (i) twenty-four (24) months, or (ii) the expiration date of the Consolidated Working Capital Contract Period. Notwithstanding the foregoing, at no time shall the (x) aggregate face amount of all outstanding letters of credit issued under the
Consolidated Working Capital Credit Facility exceed One Million Dollars ($1,000,000.00); and (y) outstanding principal balance of the Consolidated Working Capital Credit Facility, plus the aggregate face amount of all outstanding letters of
credit issued under Consolidated Working Capital Credit Facility exceed the amount of the loans and extensions of credit then available to Borrowers under the Consolidated Working Capital Credit Facility pursuant to Section 3.1
above.” 
  

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 6. Waiver Fee. Section 6.9 of the Loan Agreement is amended by adding a new
subsection (c) thereto as follows: 
  
 “(c) Second
Waiver Fee. Borrowers shall unconditionally pay to Agent for the pro rata benefit of Lenders a waiver fee (the “Second Waiver Fee”), which shall become fully earned, non-refundable and payable as follows: 

 
 (1) Fifty Thousand Dollars ($50,000.00) upon the execution hereof; and

  
 (2) Seventy-Five Thousand Dollars ($75,000.00) on the earlier
to occur, if any, of (i) the acceleration of the Lender Indebtedness following the occurrence of an Event of Default; or (ii) January 1, 2004, provided that any amount remains due and owing under this Agreement on the Loan Documents at such time.
The Second Waiver Fee shall be paid in addition to the Waiver Fee set forth in Section 6.9(b), above.” 
  
 7. Capital Expenditures. Section 10.4 of the Loan Agreement is amended to read in its entirety as follows: 

 
 “10.4 Capital Expenditures. Borrowers shall not
cause, suffer or permit their aggregate Capital Expenditures to exceed, on a quarterly non-cumulative basis: (a) $2,000,000.00 for the quarter ended September 30, 2003; and (b) $3,300,000.00 for the quarter ended December 31, 2003.” 

 
 8. Events of Default. 
  
 Section 15.1 of the Loan Agreement is amended by adding the
following to the end of such section: 
  
 “(x) Borrowers
shall not have retained, on or before October 15, 2003, an investment bank, with both the investment bank and the terms of its retention acceptable to the Agent in its sole discretion; 
  
 (y) Borrowers shall not have received a valid commitment to refinance all Lender Indebtedness in full on or before October
31, 2003; or 
  
 (z) Borrowers have not repaid, on or before
December 31, 2003, all Lender Indebtedness in full.” 
  
 9.
Additional Documents. Borrowers covenant and agree to execute and deliver or cause to be executed and delivered to Agent any and all documents as Agent shall request in connection with the execution and delivery of this
Amendment or any other documents in connection herewith. 
  
 10.
Other References. All references in the Loan Agreement and the other Loan Documents to the term “Loan Documents” shall mean the Loan Documents as defined therein and this Amendment, including the Consolidated
Working Capital Credit Facility Notes, and any and all other documents executed and delivered by Borrowers pursuant to and in connection herewith. All references in the Loan Agreement and all the Loan Documents to the term “Lender
Indebtedness” shall include, but shall not be limited to, all obligations and liabilities of Borrowers to Lenders under the Consolidated Working Capital Credit Facility Notes, the other Notes and the Loan Agreement, as amended hereby. All
references in the Loan Agreement and all the Loan Documents to the term “Notes” shall include, but shall not be limited to, the Consolidated Working Capital Credit Facility Notes. All references in the Loan Agreement and 

 

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 all the Loan Documents to the term “Working Capital Credit Facility A” and the term “Working
Capital Credit Facility B” and the term “Working Capital Credit Facilities” shall be deemed references to the Consolidated Working Capital Credit Facility. 
  
 11. Further Agreements and Representations. Borrowers do hereby: 
  
 (a) ratify, confirm and acknowledge that the Loan Agreement,
as amended, and the other Loan Documents continue to be and are valid, binding and in full force and effect; 
  
 (b) covenant and agree to perform all obligations of Borrowers contained herein and under the Loan Agreement, as amended, and the other
Loan Documents; 
  
 (c) acknowledge and agree
that the principal amount of $-0- is presently outstanding under the Consolidated Working Capital Facility, the principal amount of $8,445,918.10 is presently outstanding under the Acquisition Credit Facility Term Loan, and the principal amount of
$10,178,571.39 is presently outstanding under the Term Loan, and that Borrowers have no defense, set-off, counterclaim or challenge against the payment of any sums owing under Loan Documents, the enforcement of any of the terms of the Loan
Agreement, as amended, or the other Loan Documents; 
  
 (d) represent and warrant that, except for the Events of Default waived herein, no Event of Default or event which with the giving of notice or passage of time or both would constitute such an Event of Default exists and all information
described in the foregoing Background is true, accurate and complete; 
  
 (e) acknowledge and agree that nothing contained herein and no action taken pursuant to the terms hereof are intended to constitute a novation of the Loan Agreement or any of the other Loan Documents, and (except to
the extent of events of default waived pursuant to Section 1 of this Amendment), do not constitute a release, termination or waiver of any of the rights or remedies granted to Agent therein, which rights and remedies are hereby ratified, confirmed,
extended and continued as security for the obligations of Borrowers to Agent and Lenders under the Loan Agreement and the other Loan Documents, including, without limitation, this Amendment; and 
  
 (f) acknowledge and agree that any Borrower’s failure
to comply with or perform any of its covenants, agreements or obligations contained in this Amendment shall constitute an Event of Default under the Loan Agreement and each of the Loan Documents. 
  
 12. Costs and Expenses. Upon execution of this
Amendment, Borrowers shall pay to Agent all out-of-pocket costs and expenses incurred by Agent (i) in connection with the review, preparation and negotiation of this Amendment and all documents in connection therewith (ii) all currently outstanding
out-of-pocket costs and expenses of Agent with respect to the fees of its consultant and legal counsel that have not been reimbursed as of the execution of this Amendment. 
  
 13. Release. Each Borrower hereby fully, finally and forever acquits, quitclaims, releases and
discharges each Lender and its respective officers, directors, employees, agents, successors and assigns, in their capacities as such, of and from any and all obligations, claims, 
  

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 liabilities, damages, demands, debts, liens, deficiencies or cause or causes of action to, of or for the benefit (whether
directly or indirectly) of any Borrower, at law or in equity, known or unknown, contingent or otherwise, whether asserted or unasserted, whether now known or hereafter discovered, whether statutory, in contract or in tort, as well as any other kind
or character of action now held, owned or possessed (whether directly or indirectly) by any Borrower on account of, arising out of, related to or concerning, whether directly or indirectly, proximately or remotely (i) the negotiation, review,
preparation or documentation of the Loan Agreement, this Amendment and the Loan Documents or any other documents or agreements executed in connection therewith, (ii) the administration of the Loan Documents, (iii) the enforcement, protection or
preservation of Lender’s rights under the Loan Documents, or any other documents or agreements executed in connection therewith, and/or (iv) any action or inaction by Lender in connection with any such documents, instruments and agreements.

  
 14. Inconsistencies. To the extent of any
inconsistency between the terms, conditions and provisions of this Amendment and the terms, conditions and provisions of the Loan Agreement or the other Loan Documents, the terms, conditions and provisions of this Amendment shall prevail. All terms,
conditions and provisions of the Loan Agreement and the other Loan Documents not inconsistent herewith shall remain in full force and effect and are hereby ratified and confirmed by Borrowers. 
  
 15. Construction. All references to the Loan Agreement
therein or in any other Loan Documents shall be deemed to be a reference to the Loan Agreement as amended hereby. 
  
 16. No Waiver. Except for the waiver expressly set forth above, nothing contained herein and no actions taken pursuant to the terms
hereof are intended to nor shall they constitute a waiver by Agent of any rights or remedies available to Agent at law or in equity or as provided in the Loan Agreement or the other Loan Documents. 
  
 17. Binding Effect. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns. 
  
 18. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. 
  
 19. Headings. The headings of the sections of this Amendment are inserted for convenience only and
shall not be deemed to constitute a part of this Amendment. 
  
 IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of the date first above written. 
  

	BORROWERS:
	
	 NOBEL LEARNING COMMUNITIES, INC.

		
	By:	 	/s/    William E. Bailey        
	 	

	 	 	William E. Bailey, Executive Vice President

  
 (SIGNATURES
CONTINUED ON FOLLOWING PAGE) 
  

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	NEDI, INC.
		
	By:	 	/s/    Barbara Moore.        
	 	

	 	 	Barbara Moore, Vice President

  
  

	MERRYHILL SCHOOLS NEVADA, INC.
		
	By:	 	/s/    Gary Lea        
	 	

	 	 	Gary Lea, President

  

	HOUSTON LEARNING ACADEMY, INC.
		
	By:	 	/s/    Yvonne DeAngelo        
	 	

	 	 	Yvonne DeAngelo, Treasurer

  

	PALADIN ACADEMY, L.L.C.
	By:	 	 NOBEL LEARNING COMMUNITIES,
 INC., its sole member

		
	By:	 	/s/    William E. Bailey        
	 	

	Name/Title:	 	William E. Bailey, Executive Vice President

  

	NOBEL LEARNING TECHNOLOGIES, INC.
		
	By:	 	/s/    William E. Bailey        
	 	

	 	 	William E. Bailey, Treasurer

  

	NOBEL EDUCATION DYNAMICS FLORIDA, INC.
		
	By:	 	/s/    William E. Bailey        
	 	

	 	 	William E. Bailey, Vice President

  
 (SIGNATURES
CONTINUED ON FOLLOWING PAGE) 
  

 -6- 

	THE ACTIVITIES CLUB, INC.
		
	By:	 	 NOBEL LEARNING COMMUNITIES,
 INC., its sole stockholder

		
	By:	 	/s/    William E. Bailey        
	 	

		
	Name/Title:	 	William E. Bailey, Executive Vice President

  

	AGENT:
	
	 FLEET NATIONAL BANK, as successor by
 merger to Summit Bank, as Agent

		
	By:	 	/s/    Richard F. Napierkowski        
	 	

	Name/Title:	 	Richard F. Napierkowski/Vice President

  

	LENDERS:
	
	 FLEET NATIONAL BANK, as successor by
 merger to Summit Bank

		
	By:	 	/s/    Richard F. Napierkowski        
	 	

	Name/Title:	 	Richard F. Napierkowski/Vice President

  

	 COMMERCE BANK, N.A.

		
	By:	 	/s/    Peter L. Davis        
	 	

	Name/Title:	 	Peter L. Davis, Senior Vice President

  

 -7- 

 Exhibit 1 (Revised) 
  
 Nobel Learning Communities, Inc. 
  

	 	D.	One-Time Balance Sheet Adjustments 

  

	 	  	 Amount
 (Thousands)

	 
	 EBITDA adjustments for Quarter ended June 30, 2003:
	  	 	 	 
		
	Book value of a school that we lease as an operating lease. School changed from an capital lease to an operating lease during 2001. The assets should have been written off that year.
Adjustment recorded in depreciation expense.	  	$	360	 
		
	Write-off of our 20% investment in Sagemont School acquired in 1997 as part of an acquisition of a number of Florida schools. Based on a review of their financial statements and
cumulative losses to date, we do not believe this this investment has value	  	 	111	 
		
	Write off of development fees related to the finding new school sites paid as part of the above acquisition in 1997. 50% of the development fees were prepaid. Since we haven’t
been interested in further development of this area in the past few years, we are writing the prepaid balance off.	  	 	200	 
		
	Vacation accrual for non California employees – In the past we did not have any vacation accrual for non-California employees. Proper accounting requires a vacation accrual
given our vacation policy. These amounts should have been accrued in prior years	  	 	525	 
		
	Increase in vacation accrual for California employees. Based on a detail analysis of our payroll records and confirmation with employees, the vacation accrual was understated in
prior years. This adjustment increases the accrual to the true liability.	  	 	130	 
		
	Write-off of accounts receivable due from FranklinTowne Charter School. This receivable covers legal fees paid on their behalf related to the termination of a principal in 2001. The
auditors believe these fees should be written off as the ability to collect these fees is questionable.	  	 	125	 
		
	Write off of site development fees in Nevada incurred in prior years. There has been no activity on this site in the past number of years and therefore has no value.	  	 	86	 
		
	Impairment write-down of the investment in Total Education Solutions originally recorded as a $2.5 million Note Receivable in 2000. The write-down was developed through a valuation
study using both an equity valuation method and a multiple of EBITDA.	  	 	1,000	 
		
	 	  	
	
	

	 Total EBIT adjustments
	  	$	2,537	 
	 Less depreciation adjustment
	  	 	(360	)
	 	  	
	
	

	 Total EBITDA adjustments June 30, 2003
	  	$	2,177	 
	 	  	
	
	

  

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 Continued – Next Page 
  
 (a) Exhibit 1 (Revised) – Continued 
  
 Nobel Learning Communities, Inc. 
  

	 	E.	One-Time Balance Sheet Adjustments 

  

	EBITDA adjustment for Quarter ended September 30, 2003:	  	 
		
	Setting up the liability to cover the future payments and health insurance coverage for Jack Clegg and John Frock related to their consulting agreement, which is being fully expensed
in the quarter ended September 30, 2003. The payments will be made monthly over the next five years. The liability excludes any payments made during the quarter ended September 30, 2003.	  	$	1,442

  

 -9-Separation Agreement and General Release

 Exhibit 10.52 
  
 SEPARATION AGREEMENT AND GENERAL RELEASE 
  
 THIS IS A SEPARATION AGREEMENT
AND GENERAL RELEASE (this “Agreement”) dated as of October 15, 2003, by and between D. SCOTT CLEGG
(“Employee”) and NOBEL LEARNING COMMUNITIES, INC., a Delaware corporation with an address at 1615 West Chester Pike, West Chester, PA 19382
(“NLCI”). 
  
 Background 
  
 WHEREAS, Employee is employed by NLCI in
the capacity of Vice Chairman/President/ Chief Operating Officer; and 
  
 WHEREAS, Employee has expressed his intent to resign as an employee of NLCI, and NLCI has agreed to accept Employee’s resignation, on the terms and conditions hereinafter provided; and 

 
 WHEREAS, the parties wish to conclude
amicably any and all issues relating to Employee’s employment and termination of employment with NLCI; 
  
 NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein,
IT IS HEREBY AGREED by and between Employee and NLCI as follows: 
  
 1. Resignation as Employee and Termination of Employment Agreement. 
  
 (a) Effective as of the close of business on October 31, 2003 (the “Separation Date”),
Employee shall resign as NLCI’s Vice Chairman/President/Chief Operating Officer. Such separation shall be irrevocable and final, and effective as of the Separation Date, neither Employee, NLCI nor any of its parent corporations, subsidiaries,
affiliates or other related companies (collectively with NLCI, the “NLCI Parties”), shall have any further obligation of any nature to the other, except as specifically set forth in this Agreement. Employee and NLCI agree that,
except as provided to the contrary in Section 1(b), all prior agreements between Employee and any NLCI Party including, without limitation, the March 1, 2002 Employment Agreement between Employee and NLCI (the “Employment
Agreement”), are hereby terminated effective as of the date of this Agreement, and, except as set forth in Section 1(b), no provisions of any such agreements shall hereafter survive, notwithstanding anything to the contrary set forth
therein. 
  
 (b) Notwithstanding anything to the
contrary set forth in Section 1(a), Employee and NLCI agree that the provisions of Sections 6, 9, 10.5, 10.6, 11 and 12 of the Employment Agreement shall hereafter continue in full force and effect in accordance with their terms. 

 
 2. Resignation as Director. Effective as of the date of this
Agreement, Employee hereby resigns his position(s), if any, as an officer or director of any of NLCI’s subsidiaries, affiliates or other related companies, and of any committee thereof; provided, however, that from the date of this
Agreement through the Salary Continuation Period (as that term is defined in 

 Section 5(a)(i)), Employee shall continue to serve, as one of NLCI’s designees, as an officer of Total
Education Solutions, Inc., unless requested otherwise by NLCI’s Chief Executive Officer. Provided that Employee has not resigned as a director of Total Education Solutions, Inc. on or before the end of the Salary Continuation Period, Employee
shall be deemed to have resigned, with no further action required, as a director of Total Education Solutions, Inc. and any committees thereof, effective as of the last day of the Salary Continuation Period 
  
 3. Scope of Duties During Transition Period. 
  
 (a) As used in this Agreement, the term “Transition
Period” shall mean that period of time commencing on the date of this Agreement, and continuing through the Separation Date. During the Transition Period, Employee’s sole duty and responsibility to NLCI shall be to serve as NLCI’s
principal operating employee, and in addition, to complete such tasks as shall be directed from time to time by NLCI’s Chief Executive Officer or his designee(s) (the “Designated Tasks”). Notwithstanding the foregoing, Employee
acknowledges that, effective as of the date of this Agreement, except as required in connection with his duties as NLCI’s principal operating employee or in order to complete the Designated Tasks, Employee no longer has the power or authority
to bind any NLCI Party or to assume or create any obligation or responsibility, express or implied, on the part of any NLCI Party, or in the name of any NLCI Party, and Employee shall not represent to any person or entity that Employee has such
power or authority. 
  
 (b) NLCI acknowledges and
agrees that, commencing on the date of this Agreement, Employee will not be prohibited from seeking alternative employment, even where such pursuit involves a portion of Employee’s business and professional time; provided, that the
foregoing activities do not interfere with the performance of Employee’s duties during the Transition Period pursuant to Section 3(a); and provided further, that such activities do not violate any of the provisions set forth in
Sections 1(b) or 10. 
  
 4. Compensation During
Transition Period. During the Transition Period, as Employee’s sole compensation and consideration for Employee’s services and responsibilities as set forth in Section 3(a), NLCI will pay Employee, and Employee will accept, only
such compensation and benefits as are expressly itemized in this Section 4: 
  
 (a) Base Salary. NLCI shall continue to pay Employee through the Separation Date, based on Employee’s annual salary as of the
date of this Agreement. Such amount will be paid in accordance with NLCI’s normal bi-weekly payroll practices. 
  
 (b) Car Allowance. NLCI shall pay to Employee a car allowance to cover all car expenses, including gasoline, equivalent to the
annual rate of $7,200, but pro rated and payable only for the Transition Period (including any holidays observed by NLCI for its employees generally). Such amount will be paid at such intervals as NLCI pays any car allowances of its employees
generally. 
  
 (c) Other Benefits.
Employee shall be entitled to continue to participate in any group health, group life insurance, hospital and medical plans maintained by NLCI for its 

 employees generally during the Transition Period, on the same basis that Employee participated in the same as of the date
of this Agreement. Notwithstanding the foregoing, Employee acknowledges and agrees that, effective as of the date of this Agreement, Employee shall cease to be covered by any past, present or future severance or bonus plan of any NLCI Party
(including, without limitation, NLCI’s Senior Executive Severance Plan). 
  
 (d) Loan. During the Transition Period, NLCI will continue to forgive, on the 18th day of each month,  1/36 of the principal amount and associated interest of the relocation allowance previously advanced by NLCI to Employee in the principal amount of $35,000, as provided in the Employment Agreement.

  
 5. Separation Arrangements. 
  
 (a) Salary Continuation. 
  
 (i) Subject to the provisions of Sections 5(a)(ii),
and commencing on November 3, 2003, and ending on April 30, 2004, (the “Salary Continuation Period”), NLCI will make severance payments to Employee in the form of continued salary, based on Employee’s annual salary as of the
date of this Agreement (the “Salary Continuation”), but pro rated and payable only for such six-month period. The Salary Continuation shall be paid in accordance with NLCI’s normal bi-weekly payroll practices, beginning
with the first payroll period occurring on or after November 3, 2003. 
  
 (ii) Until such time, if at all, that Employee informs NLCI, pursuant to Section 5(b), that Employee no longer needs or desires Employee’s health insurance coverage to continue, Employee hereby authorizes
NLCI to deduct from the amount set forth in Section 5(a)(i) such amount (as determined by NLCI) that would have been deducted from Employee’s salary (had Employee still been employed by NLCI on such date) to continue Employee’s
coverage on the same basis had Employee’s employment continued beyond the Separation Date. This amount will be changed as necessary if the premium charged by the insurance company changes. 
  
 (b) Medical Coverage. NLCI will continue to cover
Employee under the policies included in NLCI’s group health insurance program from the Separation Date through April 30, 2004 on the same basis that it would have covered Employee had Employee’s employment continued beyond the Separation
Date (provided, however, that such obligation shall cease at such time, if at all, that Employee informs NLCI, in Employee’s discretion, that Employee no longer needs or desires such health insurance coverage to continue). Provided that
Employee has not previously informed NLCI that Employee no longer needs or desires such health insurance coverage to continue, effective on April 30, 2004, Employee will be afforded the opportunity, at Employee’s own expense, to convert such
group health insurance coverage per normal COBRA conversion privileges. 
  
 (c) Vesting of Options. NLCI previously granted to Employee, in connection with Employee’s employment with NLCI, options to purchase an aggregate of 65,000 shares of NLCI common stock. Such options were
subject to a three-year vesting schedule, with one-third 

 of the shares subject to such options becoming exercisable on each of March 1, 2003, 2004 and 2005, if
the conditions set forth in the related stock option agreement were then satisfied. NLCI and Employee each hereby confirm their understanding that, effective upon the expiration of the Salary Continuation Period, Employee’s options to purchase
up to 43,333 shares of NLCI common stock will be fully vested, at an exercise price of $5.85, and Employee will have until July 29, 2004 to exercise such options. 
  
 (d) Unused Vacation Time. On the Separation Date, NLCI will pay to Employee, as a lump sum, the
amount of $6,538.47, representing the number of days of vacation accrued but not used by Employee as of Separation Date (which is agreed to be 8.5 days), multiplied by Employee’s prorated daily salary. It is agreed that the Employee will
not take any vacation time during the Transition Period. 
  
 (e) Loan Forgiveness. During the Salary Continuation Period, NLCI will continue to forgive, on the 18th day of each month, 1/36 of the principal amount and associated interest of the relocation allowance
previously advanced by NLCI to Employee in the principal amount of $35,000, as provided in the Employment Agreement. 
  
 6. Withholding; Taxation. The amounts paid to Employee under Section 5 are taxable to Employee as wages, and NLCI will deduct appropriate
federal and state taxes and will reflect the amounts in the Form W-2 issued to Employee. Any and all federal, state and local income, employment or other taxes, assessments or reimbursements, owed in connection with the payment and receipt of the
amounts paid under this Agreement are the sole responsibility of Employee. 
  
 7. 401(k) Plan. Pursuant to the terms of NLCI’s 401(k) plan and applicable law, following the last day of the Salary Continuation Period, NLCI will distribute the funds accrued to Employee’s account
under such plan, if any, to Employee or as Employee directs. 
  
 8. Property of the NLCI Parties. Employee covenants and agrees that on or before the Separation Date, Employee will return to NLCI’s Chief Executive Officer, or his designee, all tangible property of any NLCI Party then in
Employee’s possession, custody or control, including all company keys and credit cards, and all client contact information and any other documents, records, reports, writings and other similar materials containing confidential or proprietary
information (whether in written, electronic or other form), and will not retain any copies, extracts or notations of the same. Employee agrees that all outstanding expense reports shall be submitted to NLCI’s Chief Executive Officer, or his
designee, no later than the close of business on the Separation Date. NLCI will promptly pay to Employee all outstanding items properly owed, as reflected in such expense reports. 
  
 9. Cooperation. From the date hereof, and continuing on and after the Separation Date, Employee will cooperate with
the NLCI Parties in the defense or prosecution of all actual, pending or threatened disputes with third parties (each, a “Dispute”). In furtherance thereof, if requested by NLCI, upon reasonable notice, Employee will provide, at
such times as the parties shall mutually agree, written and oral evidence and testimony in connection with any Dispute, and will meet with NLCI’s attorneys or other representatives at reasonable times and places in 

 connection therewith. Employee will promptly notify NLCI’s General Counsel if Employee is contacted by any person
(including, without limitation, any current or former employee or director of any NLCI Party, or such person’s representative, or any person employed by, or representing, any governmental authority or agency) in connection with any Dispute, and
will give NLCI the opportunity to provide legal representation to Employee at NLCI’s expense should Employee be asked to provide written or oral evidence or testimony in connection with any such Dispute. No NLCI Party shall be required to pay
further consideration to Employee for any such cooperation and testimony; provided, however, that Employee will be reimbursed by NLCI for reasonable out-of-pocket expenses actually incurred by Employee in connection with such cooperation or
testimony (including wages actually lost), upon timely submission of appropriate documentation therefor. 
  
 10. Amendment of Sections 10.3 and 10.4 of Employment Agreement. Employee and NLCI agree that the provisions of Sections 10.3 and 10.4 of the
Employment Agreement are hereby amended and restated in their entirety as follows (and shall hereafter continue in full force and effect in accordance with such amended terms): 
  
 “10.3 Nonsolicitation. During the period that Executive is employed by Employer or provides
consulting services to the Company and for an additional period of 18 months thereafter, Executive will not employ, or enter into any consultancy arrangement with, any person (other than a member of Executive’s family) who was on the
Company’s payroll on the date of Executive’s termination of employment or consultancy or one (1) year prior to that date, take any action to solicit the employment of any such person, or direct or encourage any person to take any such
action. 
  
 10.4 Restrictive Covenant.
During the period that Executive is employed by Employer or provides consulting services to the Company and for an additional period of 18 months thereafter, Executive shall not (directly or indirectly), operate, manage, own, control, be employed
by, provide consulting services to, or in any way be connected with (i) any pre-school, private school, child care center, program or day camp providing educational services for any portion of the pre-elementary through 12th grade market; or (ii) any for-profit or nonprofit business which provides educational services of the nature provided by the
Company on the date of this Agreement, in each case, where services are provided within 25 miles of any place where the Company now offers or is now planning to provide such services; provided however, that nothing contained in this
Section 10.4 shall prohibit Executive from owning in the aggregate less than 2% of the publicly traded stock of any company. For purposes of this Section 10.4, the phrase “educational services of the nature provided by the Company
on the date of this Agreement” shall expressly include the provision of parent-paid clinical educational services for children with mild to moderate learning disabilities (including, without limitation, Attention Deficit Disorder (ADD/ADHD),
Dyslexia and Dysgraphia).” 
  

 11. Certain Covenants of Employee. In consideration of payment of the Separation Amount to
Employee, Employee hereby agrees to the following additional covenants: 
  
 (a) Intellectual Property. Employee acknowledges and agrees that all rights in and to any and all inventions, ideas, techniques, methods, developments, works, improvements and other forms of intellectual
property (“Intellectual Property”), whether or not patentable, which Employee (either alone or in conjunction with others) conceived, made, obtained or reduced to product or practice or commenced so to do during his employment with
NLCI or as a result of the performance of any consulting services for an NLCI Party, are and shall be the sole and absolute property of NLCI as “works made for hire”. The foregoing shall not apply to Intellectual Property unrelated to any
subject matter of actual or potential concern or interest to any NLCI Party which were not conceived, made, obtained or reduced to product or practice in the course of Employee’s employment or the performance of any consulting services for an
NLCI Party or with the use of the time, material or facilities of any NLCI Party. Employee will make full and prompt disclosure to NLCI of all Intellectual Property and will, at any time or times, at NLCI’s request and expense but without
additional compensation to Employee, execute and deliver such foreign and domestic patent, trademark or copyright applications, assignments and other papers and take such other action (including, without limitation, testifying in any legal
proceedings) as NLCI considers necessary to vest, perfect, defend or maintain NLCI’s rights in and to such Intellectual Property. 
  
 (b) Nondisclosure of Confidential Information. Employee shall not at any time, unless authorized to do so in writing by a duly
authorized officer of NLCI, directly or indirectly disclose or permit to be known to, or used for the benefit of, any person, corporation or other entity (outside of the employ of any NLCI Party), or himself, any “Confidential Information”
acquired by him during the course of or as an incident to his employment or association with NLCI, regardless of whether pursuant to the Employment Agreement or this Agreement. As used herein, the term “Confidential Information”
shall include, but not be limited to, all trade secrets, confidential or proprietary knowledge or information with respect to the conduct or details of any NLCI Party’s businesses including, but not limited to, financial information,
projections, business plans, lists of customers or suppliers, pricing strategies, budgets, business files and records, trade secrets, curricula, processes, costs, marketing methods, strategies or any other financial, educational, curricular or other
information about such businesses or curricula not in the public domain. Confidential Information shall not include any information which (i) is generally available to the public as of the date hereof, (ii) becomes generally available to the public
after the date hereof, provided that such public disclosure did not result, directly or indirectly, from any act, omission or fault of Employee, or any of Employee’s family members, or any of Employee’s employees, agents or
representatives; or (iii) becomes available to Employee after the Separation Date on a non-confidential basis from a source other than an NLCI Party, or any of its agents, provided that such source is not bound to any NLCI Party or its
representatives by agreement, fiduciary duty or otherwise not to disclose such information. 
  
 (c) Remedies. Employee acknowledges that if he breaches his promises set forth in this Section 11, NLCI will suffer
irreparable damages, the amount of which will be impossible to ascertain and which cannot be reasonably or adequately compensated in an action of law. Accordingly, in addition to all other remedies under this Agreement, NLCI shall be entitled as a
matter of right to injunctive relief, including specific performance, with respect to any such breach or violation, in any court of competent jurisdiction. The remedies granted to 

 NLCI in this Agreement are cumulative and are in addition to remedies otherwise available to NLCI at law
or in equity. Employee will not seek, and hereby waives any requirement for, the securing of posting of a bond or proving actual damages in connection with NLCI’s seeking or obtaining any injunctive or equitable relief in connection with
Employee’s covenants or other obligations under this Section 11. If, despite the foregoing waivers, a court would nonetheless require the posting of a bond, the parties agree that a bond in the amount of $5,000 would be a fair and
reasonable amount, particularly in light of the difficulty in quantifying what the actual loss caused by an injunction would be. Employee consents to in personam jurisdiction and venue in each of the United States District Court for the
Eastern District of Pennsylvania and the Court of Common Pleas of Chester County, Pennsylvania, and waives the right to contest in personam jurisdiction and venue in such courts. 
  
 12. Consulting Services From and After Separation Date. From and after the Separation Date and until the expiration
of the Salary Continuation Period, Employee agrees to provide such consulting services for NLCI as may from time to time reasonably be requested by NLCI’s Chief Executive Officer with appropriate advance notice (the “Subsequent
Consulting Services”), up to a maximum of twenty (20) days of such services for eight (8) hours per day. In connection therewith, Employee will be acting in the capacity of an independent contractor, and not as an employee of any NLCI
Party. Employee will be compensated for the Subsequent Consulting Services as follows: 
  
 (a) NLCI will reimburse Employee’s travel and other reasonable out-of-pocket business expenses actually incurred by Employee in
connection with Employee’s performance of the first through tenth days of Subsequent Consulting Services but will not otherwise compensate Employee for the first ten (10) days of the Subsequent Consulting Services; provided, that such
expenses are incurred in accordance with NLCI’s billing guidelines for consultants; 
  
 (b) NLCI will compensate Employee for the eleventh through twentieth days of the Subsequent Consulting Services at the rate of $500 for
each half-day and $1000 for each full day, and will reimburse Employee for any reasonable out-of-pocket business expenses which Employee actually incurs in connection with the performance of the Subsequent Consulting Services, upon timely submission
by Employee of vouchers or itemized statements thereof prepared in compliance with such rules relating thereto as NLCI may from time to time adopt (which rules may include the requirement that Employee receive advance approval of such expenses),
provided, that NLCI shall not be required to reimburse Employee for any such expenses unless an invoice therefor is delivered to NLCI within 45 days of the date such expense was incurred; 
  
 (c) NLCI agrees either to use Employee’s Subsequent
Consulting Services for no less than twenty (20) days or, if it elects not to use them for the full (20) days, will nevertheless pay Employee for any unused half or full days after the first ten (10) days, at the half-day and full day rates set
forth above; and 
  
 (d) All compensation for the
Subsequent Consulting Services will be made at the expiration of the Salary Continuation Period and will first be applied to offset any outstanding relocation allowance advanced to Employee pursuant to the Employment Agreement. If at that

 time the relocation allowance balance has been fully repaid by Employee, payment for Subsequent
Consulting Services will be made by check. If any relocation allowance balance remains at the conclusion of the Salary Continuation Period, Employee agrees to pay the balance to NLCI within sixty (60) days after the expiration of the Salary
Continuation Period. 
  
 13. General Release. 

 
 (a) General Release. In consideration of the
payments and benefits set forth in Section 5, Employee, on behalf of himself and his agents, assigns, heirs, executors and administrators, finally and unconditionally releases and discharges each NLCI Party, and all of their respective
officers, directors, agents, employees, partners, shareholders, predecessors, successors and assigns (collectively, the “NLCI Released Parties”) from any and all claims, demands, liabilities, damages, obligations, actions or causes
of action (collectively, “Claims”) of any kind, known or unknown, past or present, asserted or unasserted, suspected or unsuspected, matured or unmatured, which Employee now has, may have or could claim to have against any of the
NLCI Released Parties up to and including the date hereof, including, but not limited to, any and all claims arising out of, relating to, or in connection with, Employee’s employment or termination from such employment. The claims released by
Employee include, but are not limited to, claims for wrongful termination, constructive discharge, sexual harassment, breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, bad faith discharge, fraud,
defamation, libel, retaliation, invasion of privacy and intentional or negligent infliction of emotional distress, as well as any and all claims for counsel fees and costs. The claims released by Employee further include, but are not limited to,
claims under all federal, state and local laws, including, but not limited to, claims under any laws prohibiting employment discrimination, including, but not limited to, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of
1964, the Fair Labor Standards Act, the Americans with Disabilities Act, the Employee Retirement Income Security Act, the Family and Medical Leave Act, the Pennsylvania Human Relations Act and the Pennsylvania Equal Pay Law.  
  
 (b) Broad Scope of Release. The release contained
herein is intended to be complete and final and to cover not only claims which are known, but also claims which are unknown or which Employee does not suspect to exist in his favor which, if known at the time of executing this Agreement, might have
affected his actions. Employee acknowledges and agrees that the agreements set forth herein are not and shall not be construed to be an admission of any violation of any federal, state or local statute or regulation, or of any duty owed by any NLCI
Party, and that this Agreement is made voluntarily to provide an amicable conclusion of Employee’s employment with NLCI. 
  
 14. No Re-employment. Employee releases any right or claimed right to re-employment or reinstatement with any NLCI Party from and after the
Separation Date. Employee shall not at any time seek employment with any NLCI Party. If, notwithstanding such covenant, Employee applies for such employment, such NLCI Party shall be under no obligation to consider Employee’s application.

  
 15. Non-Disparagement. Employee agrees that he will not
disparage in any way the professional or personal reputation or character of any NLCI Party, or any present, future or 

 former officers, directors, employees, agents or representatives of any NLCI Party. NLCI agrees that neither it nor any
NLCI Party will disparage in any way the professional or personal reputation or character of Employee. 
  
 16. Miscellaneous. 
  
 (a) Binding Agreement. This Agreement and the covenants contained herein shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns, heirs, executors and administrators. 
  
 (b) Notices. Any notice or other communication given under this Agreement shall be in writing and shall be valid and sufficient if
delivered personally or transmitted by overnight courier service or first class certified mail postage prepaid, return receipt requested, addressed (in the case of NLCI), to the address set forth in the first paragraph of this Agreement, to the
attention of its Chief Executive Officer, with a copy, at the same address, to the attention of its General Counsel, and (in the case of Employee), to such address as indicated in the records of NLCI as of the date of this Agreement, or to such
other address as any of such parties may subsequently designate by like notice. 
  
 (c) Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth
of Pennsylvania. Each party hereto agrees that any and all actions or proceedings hereunder or relating in any way to this Agreement shall be brought only in the federal and state courts for the Commonwealth of Pennsylvania. 
  
 (d) Effect of Violation. If Employee violates any of
the provisions of this Agreement (including, without limitation, those provisions of the Employment Agreement incorporated herein by reference in Section 1(b)), NLCI’s obligations pursuant to Sections 5 and 12 (including,
without limitation, the payments provided by NLCI pursuant to Section 3(a)) shall cease, and, in addition to any other rights which NLCI may have, NLCI shall be entitled to recover from Employee all payments previously made pursuant hereto,
and all reasonable attorneys’ fees and court or arbitration costs incurred in enforcement of this Agreement. If NLCI violates the provisions of this Agreement, Employee shall be entitled to recover from NLCI all reasonable attorney’s fees
and court or arbitration costs incurred in enforcement of this Agreement. 
  
 (e) Entire Agreement; Amendment. This Agreement (including those provisions of the Employment Agreement incorporated herein by reference in Section 1(b)) constitutes the entire agreement between Employee
and NLCI relative to the subject matter of this Agreement, and there are no agreements, representations or warranties not set forth herein or therein. This Agreement supersedes any prior written or oral agreement or understanding relating to the
subject matter hereof. Employee affirms that (i) the only consideration for Employee’s execution of this Agreement are the payments and benefits set forth in Sections 5 and 12; (ii) Sections 4, 5 and 12
specify all payment obligations of NLCI and Employee is releasing any other entitlements which Employee may have, including, but not limited to, any claim for any bonus or any benefits under any past, present or future severance plan; and (iii) no
other promise or agreement of any kind has been made to or with Employee by any person or 

 entity whatsoever to cause Employee to execute this Agreement. Any amendments to this Agreement must be
in writing, signed by Employee and a duly authorized officer of NLCI, and must state that the parties intend to amend this Agreement. A waiver of the breach of any term or condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition. 
  
 (f) Partial Invalidity. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be held invalid or unenforceable by a court of competent
jurisdiction, the remainder of this Agreement or the application of any such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision
of this Agreement shall be valid and enforceable to the fullest extent permitted by law. If any of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, scope, activity or subject, it shall
be construed by limiting and reducing it, so as to be valid and enforceable to the extent compatible with the applicable law or the determination by a court of competent jurisdiction. 
  
 (g) Validity of Photocopies. Photocopies of executed originals of this Agreement shall have the same
force and effect and shall be as legally binding and enforceable as the original. 
  
 17. Attorney Review. Employee acknowledges that this Agreement will have important legal consequences and imposes significant requirement on Employee, including, without limitation, the obligation to
refrain from certain activities after the Separation Date, and Employee’s agreement to release and forever discharge NLCI and related parties completely from all liability to Employee. Accordingly, Employee acknowledges that NLCI has
recommended that he retain legal counsel to review this Agreement and consult with Employee, and that he has been provided with adequate time to obtain such review. 
  
 [signatures are on following page; remainder of this page intentionally left blank] 

 IN WITNESS WHEREOF, the parties hereto have executed
this Agreement. 
  

	 Date: October 15, 2003
	 	 	 	 /s/     D. Scott Clegg    

 D. Scott Clegg

			
	Date: October 15, 2003	 	 	 	NOBEL LEARNING COMMUNITIES, INC.
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	 /s/    George Bernstein        

	 	 	 	 	 	 	 	 	 George Bernstein
 Chief Executive
Officer

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