Document:

<PAGE>

                              AMENDED AND RESTATED
                            SENIOR SUBORDINATED NOTE

THE INDEBTEDNESS EVIDENCED BY THIS NOTE AND ANY RIGHTS OR REMEDIES HEREUNDER
SHALL BE SUBORDINATE AND JUNIOR TO SUMMIT BANK AND ITS SUCCESSORS AND ASSIGNS TO
THE EXTENT AND IN THE MANNER SET FORTH IN A SUBORDINATION AGREEMENT DATED AS OF
JUNE 30, 1998 (AND AS FROM TIME TO TIME AMENDED, RESTATED, SUPPLEMENTED OR
OTHERWISE MODIFIED).

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OF THE NOTE UNDER SUCH ACT AND
UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR UPON SATISFACTION BY THE ISSUER
HEREOF THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SUCH SALE OR OFFER.

THIS AMENDED AND RESTATED SENIOR SUBORDINATED NOTE (the "Amended and Restated
Note") is made as of this 24/th/ day of May, 2001 by and among: (i) Bad News
Bears, Inc.Nobel Learning Communities, Inc. (formerly known as Nobel Education
Dynamics, Inc.), a Delaware corporationa California limited liability company
("Nobel"); (ii) Merryhill Schools, Inc., a California corporation (individually
and as successor by merger to Lake Forest Park Montessori School, Inc., a
Washington corporation); Merryhill Schools Nevada, Inc., a Nevada corporation;
NEDI, Inc., a California corporation; Paladin Academy, L.L.C., a Delaware
limited liability company (formerly known as Nobel Learning Solutions, L.L.C.);
Houston Learning Academy, Inc., a Texas corporation; Nobel School Management
Services, Inc., a Delaware corporation; and Nobel Learning Technologies, Inc., a
Delaware corporation (collectively, the entities listed in this clause (ii)
shall be referred to as the "Subsidiaries") (Nobel and the Subsidiaries, on a
consolidated basis, being collectively referred to as the "Company" or
"Borrower"); and (iii) ALLIED CAPITAL CORPORATION and its successors and assigns
("Holder");

                                    RECITALS:

     A. The Company issued to the Holder a Senior Subordinated Note dated as of
June 28, 1998 in the original principal amount of Ten Million and 00/100 Dollars
($10,000,000) (the "Senior Subordinated Note") in connection with an investment
made by in the Company pursuant to the terms and conditions of the investment
agreement between the Company, the Holder and certain other parties, dated as of
June 30, 1998 (the "Original Investment Agreement").

     B. In connection with an amendment to the Original Investment Agreement (as
amended, the "Investment Agreement"), the Company, with the consent of the
Holder, desires to amend and restate the Senior Subordinated Note.
<PAGE>

     Now, therefore, in consideration of the premises and other good and
valuable consideration, the parties hereto agree that the Senior Subordinated
Note shall be amended, restated, and consolidated in its entirety by this
Amended and Restated Note.

                        NOBEL LEARNING COMMUNITIES, INC.

                            SENIOR SUBORDINATED NOTE

$10,000,000                                            Dated as of June 30, 1998

     FOR VALUE RECEIVED, the undersigned, (i) NOBEL LEARNING COMMUNITIES, INC.
(successor to NOBEL EDUCATION DYNAMICS, INC.), a Delaware corporation having an
address at Rosetree Corporate Center II, 1400 N. Providence Road, Suite 3055,
Media, PA 19063 ("Nobel"), and (ii) Merryhill Schools, Inc., a California
corporation (individually and as successor by merger to Lake Forest Park
Montessori School, Inc., a Washington corporation); Merryhill Schools Nevada,
Inc., a Nevada corporation; NEDI, Inc., a California corporation; Paladin
Academy, L.L.C., a Delaware limited liability company (formerly known as Nobel
Learning Solutions, L.L.C.); Houston Learning Academy, Inc., a Texas
corporation; Nobel School Management Services, Inc., a Delaware corporation; and
Nobel Learning Technologies, Inc., a Delaware corporation (collectively, the
entities listed in this clause (ii) shall be referred to as the "Subsidiaries")
(collectively, Nobel and the Subsidiaries shall be referred to as the "Company"
or the "Borrower"), hereby jointly, severally, and unconditionally promise to
pay to the order of ALLIED CAPITAL CORPORATION or its registered assigns (the
"Holder"), at its offices located at 1666 K Street, N.W., Suite 901, Washington,
D.C. 20006, or such other places the Holder shall from time to time have
designated to the Company in writing, the principal amount of TEN MILLION AND
00/100 DOLLARS ($10,000,000), together with interest thereon, at the times and
in the manner hereinafter provided.

     1. Investment Agreement. This Note is subject to the terms of the
Investment Agreement, dated as of June 30, 1998, by and among the Borrower and
the Holder referenced above, as amended (the "Investment Agreement"), a copy of
which may be examined during normal business hours at the Company's offices.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings given to them in the Investment Agreement.

     2. Interest.

          (a) Interest shall be calculated on the basis of a 360-day year and
     shall be computed for each monthly payment period on the basis of 30 days
     having elapsed.

                                      -2-
<PAGE>

          (b) From June 30, 1998 and thereafter through and including October
     31, 2001, interest shall accrue hereunder at the rate of ten percent (10%)
     per annum, compounded quarterly.

          (c) From November 1, 2001 and thereafter through and including June
     30, 2005, interest shall accrue hereunder at the rate of twelve percent
     (12%) per annum, compounded quarterly.

          (d) From July 1, 2005 and thereafter until repayment of this Note,
     interest shall accrue hereunder at the rate of thirteen percent (13%) per
     annum, compounded quarterly.

     3. Payments.

     3.1 Payment of Interest. Commencing on October 1, 1998 and continuing on
January 1, April 1, July 1, and October 1 thereafter until the Maturity Date (as
defined below), the Borrower shall pay to Holder an amount equal to all interest
accruing on the principal balance of this Note from time to time outstanding.

     3.2 Principal Payments and Payment at Maturity. The Borrower shall pay to
Holder on or before July 1, 2006 the sum of Five Million and 00/100 Dollars
($5,000,000) (i.e., an amount equal to 50% of the original principal amount). On
or before July 1, 2007 (the "Maturity Date") or upon the acceleration of this
Note, the Borrower will pay to Holder the entire principal amount of this Note
then outstanding together with all accrued and unpaid interest thereon.

     3.3 Other Payment Provisions. All payments of principal and interest
hereunder shall be payable to the Holder in lawful money of the United States of
America not later than 2 p.m. on the date when due, without any offset or
deduction whatsoever. Any payment coming due on a day which is not a business
day within the District of Columbia shall be made on the next succeeding such
business day, and any such extension of the time of payment shall be included in
the computation of interest hereunder.

     3.4 Penalty.

          (a) If any payment of principal or interest due under this Note shall
     be overdue from the date hereof or at any time thereafter through October
     31, 2001, such overdue amount shall bear interest from and after the date
     due, to and including the date when paid in full, at a rate equal to the
     lesser of (i) the maximum rate allowed by law and (ii) thirteen percent
     (13%) per annum.

          (b) If any payment of principal or interest due under this Note shall
     be overdue from November 1, 2001 or at any time thereafter through June 30,
     2005, such overdue amount shall bear interest from and after the date due,
     to and including the date when paid in full,

                                      -3-
<PAGE>

     at a rate equal to the lesser of (i) the maximum rate allowed by law and
     (ii) fifteen percent (15%) per annum.

          (c) If any payment of principal or interest due under this Note shall
     be overdue from July 1, 2005 or at any time thereafter until repayment of
     this Note, such overdue amount shall bear interest from and after the date
     due, to and including the date when paid in full, at a rate equal to the
     lesser of (i) the maximum rate allowed by law and (ii) sixteen percent
     (16%) per annum.

     3.5 Prepayments. The unpaid principal amount of this Note and any accrued
and unpaid interest thereon may be prepaid, in whole or in part, at any time
upon 10 days prior written notice to Holder, without penalty or premium. Such
prepayments shall be credited against principal in inverse order of maturity.
Prepayments made without the required notice will not be credited against
principal until 10 days after receipt.

     3.6 Due on Sale. Notwithstanding anything herein or in the Investment
Agreement to the contrary, the entire indebtedness hereunder shall become due
and payable upon the earlier of the Maturity Date or a Transfer of the Company's
Business, as defined in Section 1.01 of the Investment Agreement.

     4. Subordination. The indebtedness represented by this Note is subordinate
to the Senior Debt of the Borrower in accordance with the terms of the
Investment Agreement, and the Subordination Agreement among the Borrower, the
Holder, and Summit Bank.

     5. No Assignment by Borrower. The Borrower shall not assign any of its
rights under this Note nor delegate any of its duties under this Note without
the prior written consent of Holder. Holder may freely assign its rights
hereunder.

     6. Covenants and Agreements. The Borrower covenants and agrees that, so
long as any indebtedness is outstanding hereunder, it will, unless the Holder
shall otherwise consent prior thereto in writing, comply with and perform each
of the covenants and agreements set forth in the Investment Agreement, which
provisions are incorporated herein by this reference as if set forth at length
herein.

     7. Default and Acceleration.

     7.1 Events of Default. Upon the occurrence of any Event of Default
described in Article VIII of the Investment Agreement, then a default may be
declared hereunder at the option of the Holder, without presentment, demand,
protest or further notice of any kind (all of which are hereby expressly
waived). In such event, the Holder shall be entitled to exercise any or all of
the rights and remedies described in Article IX of the Investment Agreement, at
its option, in addition to such other rights and remedies as may be provided for
in other Security Documents or as may be available at law or in equity. At any
time after a declaration of default

                                      -4-
<PAGE>

hereunder, but before a judgment or decree for the payment of money has been
obtained, the Holder may, by written notice, rescind the declared default if the
Borrower has paid a sum sufficient to pay all overdue interest and overdue
principal amounts, all interest on the overdue installments of interest and/or
principal at the penalty rate, and the Holder's reasonable costs of enforcing
its rights hereunder (including attorneys' fees and disbursements).

     7.2 No Waiver. No course of dealing between the Holder and any other party
hereto or any failure or delay on the part of the Holder in exercising any
rights or remedies hereunder shall operate as a waiver of any rights or remedies
of the Holder under this or any other applicable instrument. No single or
partial exercise of any rights or remedies hereunder shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder.

     8. Definitions. The term "indebtedness" as used herein shall mean the
indebtedness evidenced by this Note, including principal, interest and expenses
whether contingent, now due or hereafter to become due, and whether heretofore
or contemporaneously herewith or hereafter contracted.

     9. Confession of Judgment. If payment of the indebtedness evidenced by this
Note, or any part thereof, shall not be made when due and at maturity, by
acceleration or otherwise, the Borrower hereby authorizes and empowers any
attorney of any court of record in the United States to appear for all of the
undersigned in court, or before any clerk thereof, and confess judgment against
the undersigned in favor of the Holder of this Note for the amount due thereon
with interest and costs.

     10. Waiver of Trial by Jury. The Borrower agrees that any suit, action or
proceeding, whether claim or counterclaim, brought or instituted by the Holder
on or with respect to this Note or any event, transaction or occurrence arising
out of or in any way connected with the Investment Agreement or the dealing of
the parties with respect thereto, shall be tried only by a court and not by a
jury. THE BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
SUCH SUIT, ACTION OR PROCEEDING. The Borrower acknowledges and agrees that the
Holder would not extend credit under the Investment Agreement to the Borrower
and would not purchase this Note if this waiver of jury trial were not part of
the Investment Agreement and this Note.

     11. Venue; Service of Process. Venue for any adjudication hereof shall be
only in the courts of the State of Maryland or the Federal courts in the State
of Maryland, the jurisdiction of which courts all parties hereby consent to as
the agreement of the parties, as not inconvenient and as not subject to review
by any court other than such courts in Maryland. The Company intends that the
courts of the jurisdiction(s) in which the Company is incorporated and conducts
business should afford full faith and credit to any judgment rendered by a court
of the State of Maryland against the Company hereunder, and should hold that the
Maryland courts have jurisdiction to enter a valid, in personam judgment against
the Company hereunder. The Company agrees that service of any summons or
complaint, and other process which may be served in any action, may

                                      -5-
<PAGE>

be made by mailing via registered mail or delivering a copy of such process to
the Company, and the Company hereby agrees that this submission to jurisdiction
and consent to service of process are reasonable and made for the express
benefit of Holder.

     12. Controlling Law. This Note and all matters related hereto shall be
governed in accordance with the laws of the State of Maryland, without regard to
its principles of conflicts of law.

     13. No Novation. All of the terms, covenants and conditions of the Senior
Subordinated Note shall continue, except as specifically amended and restated
hereby. This Amended and Restated Note does not extinguish the outstanding
indebtedness and is not intended to be a substitution or novation of the
original indebtedness or instruments evidencing the same, all of which shall
continue in full force and effect except as specifically amended and restated
hereby or by instruments executed concurrently herewith.

                        {Signatures begin on next page.}

                                      -6-
<PAGE>

     IN WITNESS WHEREOF, the undersigned have duly caused this instrument to be
executed and delivered as of the date first above written.

WITNESS/ATTEST:                        "COMPANY":

                                       NOBEL LEARNING COMMUNITIES, INC.
                                       a Delaware corporation

By: /s/ Barry Swirsky                   By:/s/ John Frock                 (SEAL)
    ------------------------------         ------------------------------
    Assistant Secretary                    Vice Chairman

                                       MERRYHILL SCHOOLS NEVADA, Inc.
                                       a Nevada corporation

By: /s/ John Frock                     By:/s/ John Frock                 (SEAL)
    ------------------------------         ------------------------------
    Secretary                              Treasurer

                                       Merryhill Schools, Inc.
                                       a California corporation

By: /s/ Barry Swirsky                   By:/s/ William E. Bailey         (SEAL)
    ------------------------------         ------------------------------
    Assistant Secretary                    Executive Vice President

                                       NEDI, Inc.
                                       a California corporation

By: /s/ Randi L. Flecker               By: /s/ S. Good                    (SEAL)
    ------------------------------         ------------------------------
    School Secretary                       President

                      {Signatures continued on next page.}

                                      -7-
<PAGE>

                                       PALADIN ACADEMY, L.L.C.
                                       a Delaware limited liability company

By: /s/ Barry Swirsky                  By: /s/ William E. Bailey          (SEAL)
    ------------------------------         ------------------------------
    Assistant Secretary                    Executive Vice President

                                       HOUSTON LEARNING ACADEMY, INC.
                                       a Texas corporation

By: /s/ Barry Swirsky                  By: /s/ John R. Frock              (SEAL)
    ------------------------------         ------------------------------
    Assistant Secretary                    Vice President

                                       NOBEL SCHOOL MANAGEMENT SERVICES, INC.
                                       a Delaware corporation

By: /s/ Barry Swirsky                  By: /s/ William E. Bailey          (SEAL)
    ------------------------------         ------------------------------
    Assistant Secretary                    Treasurer

                                       NOBEL LEARNING TECHNOLOGIES, INC.
                                       a Delaware corporation

By: /s/ John Frock                     By: /s/ William E. Bailey          (SEAL)
    ------------------------------         ------------------------------
    Secretary                              Treasurer

                                      -8-<PAGE>

                     THIRD AMENDMENT TO AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT
                           ---------------------------

     THIS THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(the "Amendment") is made effective as of the 24th day of May, 2001, by and
among NOBEL LEARNING COMMUNITIES, INC. ("Nobel"), MERRYHILL SCHOOLS, INC.
("Merryhill"), 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, the
"Borrowers"), FLEET NATIONAL BANK, as successor by merger to Summit Bank, as
Agent ("Agent") and the Lenders named on the signature pages hereto
(collectively, the "Lenders").

                                  BACKGROUND
                                  ----------

     A. Nobel, Merryhill, NEDI, 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, and
(ii) that certain Second Amendment to Amended and Restated Loan and Security
Agreement dated May 24, 2000 (as amended, the "Loan Agreement").

     B. Pursuant to that certain Stock Purchase Agreement dated as of September
9, 1999 by and among the Spyros and Marian G. Catechis Charitable Remainder
Unitrust and Spyros Catechis (being the sole shareholders of Houston), Stresa,
Inc. (d/b/a Educational Options), and Nobel, Nobel acquired the stock of
Houston.

     C. Pursuant to a Certificate of Dissolution of Imagine Educational
Products, Inc., filed with the State of Delaware on March 24, 2000, Imagine
Educational Products, Inc. was dissolved and no longer conducts business.

     D. Pursuant to (i) Articles of Merger of Lake Forest Park Montessori
School, Inc. into Merryhill School, Inc., filed with the State of Washington and
(ii) a Certificate of Ownership and Merger merging Lake Forest Park Montessori
School, Inc. (subsidiary corporation) into Merryhill Schools, Inc., filed with
the State of California, each of which was effective on December 29, 2000, Lake
Forest Park Montessori School, Inc. was merged with and into Merryhill, with
Merryhill being the surviving corporation.
<PAGE>

     E. On April 20, 2000, Nobel Management was formed as an additional
subsidiary of Nobel.

     F. On December 27, 1999, Nobel Technologies was formed as an additional
subsidiary of Nobel.

     G. Borrowers, Agent and Lenders desire to further amend the Loan Agreement
in accordance with the terms and conditions hereof.

     H. 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. Assignment to Lenders. Contemporaneously with the execution of this
Amendment, Agent, Fleet National Bank, as a Lender, and each of the other
Lenders have entered into certain Assignment and Acceptance Agreements pursuant
to which Fleet National Bank, as a Lender, has assigned to each other Lender,
and each such other Lender has accepted, a Pro Rata Share of each of the Loans,
all as more fully described in the respective Assignment and Acceptance
Agreements.

     2. Additional Borrowers. From and after the date hereof, Houston, Nobel
Management and Nobel Technologies shall each be a "Borrower" under the Loan
Agreement and shall be bound by all the representations, warranties, terms,
conditions, covenants, agreements and waivers thereof and thereunder with the
same force and effect as if each were originally a party thereto. All references
to Borrower or Borrowers in the Loan Agreement and the other Loan Documents
shall hereafter be deemed to include, without limitation, Houston, Nobel
Management and Nobel Technologies.

     3. Security. As security for the full and timely payment and performance of
all Lender Indebtedness, Houston, Nobel Management and Nobel Technologies each
hereby grants to Agent, for the pro rata benefit of Lenders, a security interest
in all of the following:

          a. All of such Borrower's present and future accounts, contract
     rights, chattel paper, instruments and documents and all other rights to
     the payment of money whether or not yet earned, for services rendered or
     goods sold, consigned, leased or furnished by such Borrower or otherwise,
     together with (i) all goods (including any returned, rejected, repossessed
     or consigned goods), the sale, consignment, lease or other furnishings of
     which shall be given or may give rise to any of the foregoing, (ii) all of
     such Borrower's rights as a consignor, consignee, unpaid vendor or other
     lien or in connection therewith, including stoppage in transit, set-off,
     detinue, replevin and reclamation, (iii) all general intangibles related
     thereto, (iv) all guaranties, mortgages, security interests, assignments,
     and other encumbrances on real or

                                      -2-
<PAGE>

     personal property, leases and other agreements or property securing or
     relating to any accounts, (v) choses-in-action, claims and judgments, (vi)
     any return or unearned premiums, which may be due upon cancellation of any
     insurance policies, and (vii) all products and proceeds of any of the
     foregoing.

          b. All of such Borrower's present and future inventory (including but
     not limited to goods held for sale or lease or furnished or to be furnished
     under contracts for service, raw materials, work-in-process, finished goods
     and goods used or consumed in such Borrower's business) whether owned,
     consigned or held on consignment, together with all merchandise, component
     materials, supplies, packing, packaging and shipping materials, and all
     returned, rejected or repossessed goods sold, consigned, leased or
     otherwise furnished by such Borrower and all products and proceeds of any
     of the foregoing.

          c. All of such Borrower's present and future general intangibles
     (including but not limited to tax refunds and rebates, manufacturing and
     processing rights, designs, patent rights and application therefor,
     trademarks and registration or applications therefor, tradenames, brand
     names, logos, inventions, copyrights and all applications and registrations
     therefor), licenses, permits, approvals, software and computer programs,
     license rights, royalties, trade secrets, methods, processes, know-how,
     formulas, drawings, specifications, descriptions, label designs, plans,
     blueprints, patterns and all memoranda, notes and records with respect to
     any research and development, and all products and proceeds of any of the
     foregoing.

          d. All of such Borrower's present and future machinery, equipment,
     furniture, fixtures, motor vehicles, tools, dies, jigs, molds and other
     articles of tangible personal property of every type together with all
     parts, substitutions, accretions, accessions, attachments, accessories,
     additions, components and replacements thereof, and all manuals of
     operation, maintenance, or repair, and all products and proceeds of any of
     the foregoing.

          e. All of such Borrower's present and future general ledger sheets,
     files, records, customer lists, books of account, invoices, bills,
     certificates or documents of ownership, bills of sale, business papers,
     correspondence, credit files, tapes, cards, computer runs and all other
     data and data storage systems whether in the possession of such Borrower or
     any service bureau.

          f. All letters of credit now existing or hereafter issued naming such
     Borrower as a beneficiary or assigned to such Borrower, including the right
     to receive payment thereunder, and all documents and records associated
     therewith.

          g. All deposits, funds, instruments, documents, policies and evidence
     and certificates of insurance, securities, chattel paper and other assets
     of such Borrower

                                      -3-
<PAGE>

     or in which such Borrower has an interest and all proceeds thereof, now, or
     at any time hereafter on deposit with or in the possession or control of
     any Lender or owing by any Lender to such Borrower or in transit by mail or
     carrier to any Lender or in the possession of any other Person acting on
     any Lender's behalf, without regard to whether such Lender received the
     same in pledge, for safekeeping, as agent for collection or otherwise or
     whether such Lender has conditionally released the same, and in all assets
     of such borrower in which any Lender now has or may at any time hereafter
     obtain a lien, mortgage, or security interest for any reason.

          h. All of such Borrower's right, title and interest in and to the
     ownership interest of any other Borrower owned by such Borrower, together
     with all cash, stock, dividends, distributions or other property paid in
     connection therewith; all securities received in addition to or in exchange
     for such ownership interest; all subscription rights with respect to such
     securities; any other distribution in respect of such securities in any
     form; and the proceeds thereof. All such securities shall be freely
     assignable and transferrable to Agent (subject to any applicable securities
     laws), and shall be accompanied by such pledge agreements and blank
     transfer powers with signatures guaranteed as Agent may require.

          i. All of such Borrower's investment property and financial assets and
     all proceeds thereof.

     4. Pledge of Interest. As further security for the full and timely payment
of all Lender Indebtedness, Nobel shall grant to Agent for the pro rata benefit
of Lenders a security interest in all stock of Houston, Nobel Management and
Nobel Technologies held by Nobel. In connection therewith, Nobel shall execute
and deliver to Agent all such documents as Agent may require including, without
limitation, the original of all certificates evidencing such stock. The term
"Collateral", as used in the Loan Agreement, shall hereafter be deemed to
include, without limitation, all of the additional security described in this
Amendment.

     5. Definitions.

          (a) The following Sections of Article 1 of the Loan Agreement are
     amended to read, in their entirety, as follows:

               (i) "Floating Rate Margin" shall mean one of the following
          margins determined based on the ratio of Borrowers' Total Funded
          Indebtedness to EBITDA from time to time:

                                      -4-
<PAGE>

                  Ratio of Total Funded Indebtedness             Floating Rate
                           to EBITDA                                 Margin
          -----------------------------------------------            ------
          greater than or equal to 3.5 to 1.0                   100 basis points

          less than 3.5 to 1.0, but greater than or equal
             to 3.0 to 1.0                                       75 basis points

          less than 3.0 to 1.0, but greater than or equal
             to 2.50 to 1.0                                      50 basis points

          less than 2.5 to 1.0, but greater than or equal
             to 2.0 to 1.0                                       25 basis points

          less than 2.0 to 1.0, but greater than or equal
             to 1.5 to 1.0                                        0 basis points

          less than 1.5 to 1.0                                  -25 basis points

               The Floating Rate Margin shall be determined on a quarterly basis
          upon the receipt, review and approval by Agent of Borrowers' financial
          statements for such quarter, which financial statements shall include,
          inter alia, a calculation of Borrowers' Total Funded Indebtedness to
          EBITDA as of the end of such quarter. Any change in the Floating Rate
          Margin shall be effective on the date of receipt of the foregoing
          financial statements. If Borrowers fail to deliver to Agent the
          foregoing financial statements, the Floating Rate Margin shall be
          highest margin set forth above.

               (ii) "Lender Indebtedness" shall mean all obligations and
          Indebtedness of each Borrower to Agent or any Lender, whether now or
          hereafter owing or existing, including, without limitation, all
          obligations under the Loan Documents, all obligations to reimburse
          Agent or any Lender for payments made by such party pursuant to any
          letter of credit issued for the account or benefit of any Borrower,
          all obligations of any Borrower to any Lender in connection with any
          hedge, rate swap or similar agreement, all other obligations or
          undertakings now or hereafter made by or for the benefit of any
          Borrower to or for the benefit of Agent or any Lender under any other
          agreement, promissory note or undertaking now existing or hereafter
          entered into by any Borrower with Agent or any Lender, including,
          without limitation, all obligations of any Borrower to Agent or any
          Lender under any guaranty or surety agreement and all obligations of
          any Borrower to immediately pay to Agent or any Lender the amount of
          any overdraft on any deposit account maintained with Agent or any
          Lender, together with all interest and other sums payable in
          connection with any of the foregoing.

               (iii) "LIBOR Rate" shall mean for any proposed or existing
          portion of the Loans, the sum of (a) that rate of interest for the
          applicable Rate Period which is determined by Agent to be the rate per
          annum obtained by dividing (the resulting quotient to be rounded
          upward to the nearest 1/100 of 1%) (i) the rate of interest estimated
          in good faith by Agent in accordance with its usual procedures (which
          determination shall be conclusive) to be the average of the rates per
          annum for deposits in United States dollars offered to major money
          center banks in the London interbank marked at approximately 11:00
          a.m., London time, two (2) Good Business Days prior to the first day
          of such Rate Period in amounts comparable to such portion (or, if
          there are no such

                                      -5-
<PAGE>

          comparable amounts actively traded, the smallest amounts actively
          traded) and have maturities comparable to such Rate Period, by (ii) a
          number equal to 1.00 minus the LIBOR Rate Reserve Percentage for such
          day, plus (b) the LIBOR Rate Margin.

               (iv) "LIBOR Rate Margin" shall mean one of the following margins
          determined based on the ratio of Borrowers' Total Funded Indebtedness
          to EBITDA from time to time:

                  Ratio of Total Funded Indebtedness               LIBOR Rate
                           to EBITDA                                 Margin
          -----------------------------------------------            ------
          greater than or equal to 3.5 to 1.0                   275 basis points

          less than 3.5 to 1.0, but greater than or equal
             to 3.0 to 1.0                                      250 basis points

          less than 3.0 to 1.0, but greater than or equal
             to 2.50 to 1.0                                     225 basis points

          less than 2.5 to 1.0, but greater than or equal
             to 2.0 to 1.0                                      200 basis points

          less than 2.0 to 1.0, but greater than or equal
             to 1.5 to 1.0                                      175 basis points

          less than 1.5 to 1.0                                  150 basis points

               The LIBOR Rate Margin shall be determined on a quarterly basis
          upon the receipt, review and approval by Agent of Borrowers' financial
          statements for such quarter, which financial statements shall include,
          inter alia, a calculation of Borrowers' Total Funded Indebtedness to
          EBITDA as of the end of such quarter. Any change in the LIBOR Rate
          Margin shall be effective on the date of receipt of the foregoing
          financial statements. If Borrowers fail to deliver to Agent the
          foregoing financial statements, the LIBOR Rate Margin shall be highest
          margin set forth above.

               (v) "Permitted Acquisitions" shall mean (i) an acquisition by any
          Borrower in which the purchase price or assets (personal or real)
          being acquired is less than Two Million Five Hundred Thousand Dollars
          ($2,500,000.00); provided that, the purchase price or assets (personal
          or real) will not exceed $5,000,000 in the aggregate during any fiscal
          year, and provided further that, Borrowers shall have given Agent
          prior written notice of such acquisition, containing such detail as
          Agent may reasonably require, including without limitation, evidence,
          in form and content acceptable to Agent, that the consummation of such
          acquisition will not result in an Event of Default, and (ii) such
          other acquisitions which have otherwise been consented to by the
          Required Lenders in writing. Notwithstanding the foregoing, no
          Borrower will be permitted to consummate a Permitted Acquisition after
          the occurrence and during the continuance of an Event of Default.

                                      -6-
<PAGE>

               (vi) "Rate Period" shall mean, for any portion of the Loans for
          which the Borrowers elect the LIBOR Rate, the period of time for which
          such rate shall apply to such principal portions.

               (vii) "Required Lenders" means, at any time, Lenders holding
          Pro Rata Percentages aggregating at least 66-2/3% of the total Pro
          Rata Percentages at such time, provided however, at such time as the
          Lenders are comprised of only two financial institutions the term
          "Required Lenders" shall mean the consent and agreement of both
          Lenders.

          (b) The following defined terms are added to Article 1 of the Loan
     Agreement in their proper alphabetical order:

          "Adjusted Leverage Ratio" means the ratio of (a) the sum of (i) Lender
          Indebtedness, plus (ii) Subordinated Indebtedness, plus (iii) the Rent
          Load, to (b) the sum of (i) EBITDA, plus (ii) the Annual Rent Expense.
          For purposes of calculating the Adjusted Leverage Ratio, (i) the
          defined term "Rent Load" shall equal, as of any date, the present
          value, discounted at an interest rate of 10%, of eight annual payments
          (commencing one year after such date), each equal to the Annual Rent
          Expense for the twelve month period ended on such date, and (ii) the
          defined term "Annual Rent Expense" shall mean, for any twelve month
          period, the aggregate rent expense of Borrowers for such period with
          respect to the real estate leased by Borrowers.

          "Applicable Percentage" shall mean one of the following margins
          determined based on the ratio of Borrowers' Total Funded Indebtedness
          to EBITDA from time to time:

                  Ratio of Total Funded Indebtedness               Applicable
                           to EBITDA                                 Margin
          -----------------------------------------------            ------
          greater than or equal to 3.5 to 1.0                    50 basis points

          less than 3.5 to 1.0, but greater than or equal
             to 3.0 to 1.0                                       50 basis points

          less than 3.0 to 1.0, but greater than or equal
             to 2.50 to 1.0                                    37.5 basis points

          less than 2.5 to 1.0, but greater than or equal
             to 2.0 to 1.0                                     37.5 basis points

          less than 2.0 to 1.0, but greater than or equal
             to 1.5 to 1.0                                       25 basis points

          less than 1.5 to 1.0                                   25 basis points

                                      -7-
<PAGE>

               The Applicable Percentage shall be determined on a quarterly
          basis upon the receipt, review and approval by Agent of Borrowers'
          financial statements for such quarter, which financial statements
          shall include, inter alia, a calculation of Borrowers' Total Funded
          Indebtedness to EBITDA as of the end of such quarter. Any change to
          the Applicable Percentage shall be effective on the date of receipt of
          the foregoing financial statements. If Borrowers fail to deliver to
          Agent the foregoing financial statements, the Applicable Percentage
          shall be the highest such level set forth above.

     6. Working Capital Contract Period. Section 3.1 of the Loan Agreement is
amended as follows:

          (a) By amending the term "Working Capital Contract Period" to mean the
     period through May 1, 2004.

          (b) By adding the following as Section 3.1(c):

               "3.1(c) Provided that no Event of Default (or an event which
          would, upon the giving of notice or passage of time or both,
          constitute an Event of Default) shall have occurred, Borrowers shall
          have the option, exercisable one time, to extend the Working Capital
          Contract Period through and including May 1, 2005 (the "Extension
          Option") if agreed to by Lenders at their sole discretion. If
          Borrowers desire to exercise the Extension Option, Borrowers must
          deliver written notice thereof to Agent and Lenders on or before May
          1, 2002, which notice, once delivered, shall be irrevocable."

     7. Acquisition Credit Facility. Section 3.3 of the Loan Agreement is
amended to read, in its entirety, as follows:

          "3.3 Acquisition Credit Facility.

               (a) Each Lender shall establish for Borrowers for and during the
          period from the date hereof and until May 1, 2003 ("Acquisition Credit
          Facility Advance Period"), subject to the terms and conditions hereof,
          a revolving acquisition credit facility, pursuant to which Lenders
          will from time to time in accordance with their respective Pro Rata
          Percentage, severally and not jointly, make advances to Borrowers in
          an aggregate amount not exceeding at any time Fifteen Million Dollars
          ($15,000,000.00) (the "Acquisition Credit Facility"). Within the
          limitations set forth in this Agreement, Borrowers may borrow, repay
          and reborrow under the Acquisition Credit Facility. The Acquisition
          Credit Facility shall be subject to all the terms and conditions set
          forth in the Loan Documents, which terms and conditions are
          incorporated herein. Borrowers' obligation to repay the loans and
          other

                                      -8-
<PAGE>

          extensions of credit under the Acquisition Credit Facility shall be
          evidenced by Borrowers' promissory notes delivered to each Lender,
          which shall be in the respective principal amounts of each Lenders'
          Pro Rata Share of the Acquisition Credit Facility and which shall be
          in the form attached hereto as Exhibit "D" (collectively, the
          "Acquisition Credit Facility Notes").

               (b) Subject to the terms and conditions of this Agreement, each
          Lender agrees to lend to Borrowers the amount equal to such Lender's
          respective Pro Rata Percentage of each advance requested by Borrowers
          under the Acquisition Credit Facility. The outstanding amount of
          advances by each Lender shall not exceed such Lenders' Pro Rata Share
          of the Acquisition Credit Facility (as such amount may change from
          time to time in accordance with the terms of this Agreement).

               (c) On or before May 1, 2002, Borrowers may, by written notice to
          Agent not less than thirty (30) days prior to such date, elect,
          exercisable one time, to convert any or all of the then outstanding
          principal balance under the Acquisition Credit Facility to an
          Acquisition Credit Facility Term Loan. If Borrowers elect an
          Acquisition Credit Facility Term Loan, the amount available to be
          borrowed under the Acquisition Credit Facility during the balance of
          the Acquisition Credit Facility Advance Period shall be permanently
          reduced by an amount equal to such Acquisition Credit Facility Term
          Loan. On or before May 1, 2003, all sums outstanding under the
          Acquisition Credit Facility which have not previously been converted
          to an Acquisition Credit Facility Term Loan shall, on such date, be
          converted to an Acquisition Credit Facility Term Loan and, thereafter,
          no further advances shall be permitted under the Acquisition Credit
          Facility."

     8. 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
     Working Capital Credit Facility A 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
     Working Capital Contract Period. Notwithstanding the foregoing, at no time
     shall the (x) aggregate face amount of all outstanding letters of credit
     issued under Working Capital Credit Facility A exceed the amount of Three
     Million Dollars ($3,000,000.00); and (y) principal balance of Working
     Capital Credit Facility A, plus the aggregate face amount of all
     outstanding letters of credit issued under Working Capital Credit Facility
     A exceed the amount of the loans and extensions of credit then available to
     Borrowers under Working Capital Credit Facility A pursuant to Section 3.1
     above."

                                      -9-
<PAGE>

     9. Term Loan.

          (a) The outstanding principal balance under the Term Loan as of the
     date hereof is Eight Million Four Hundred Thirty-Seven Thousand Five
     Hundred Dollars ($8,437,500.00) (the "Current Term Loan Balance"). The
     outstanding principal balance as of the date hereof under Working Capital
     Credit Facility A is Five Million Four Hundred Sixty-Two Thousand Seven
     Hundred Fifty-Six Dollars ($5,462,756.00) and under Working Capital Credit
     Facility B is Two Million Two Hundred Sixty-Five Thousand Seven Hundred
     Eighty and 12/100 Dollars ($2,265,780.12) (collectively, the "Working
     Capital Loan Balances"). Borrowers have requested that Lenders term-out a
     portion of the Working Capital Loan Balances in an aggregate amount equal
     to Six Million Five Hundred Sixty-Two Thousand Five Hundred Dollars
     ($6,562,500.00) (the "Additional Term-Out Loan"). The Additional Term-Out
     Loan shall constitute a term-out of a portion of the currently existing
     outstanding principal balance of Working Capital Credit Facility A and
     Working Capital Credit Facility B. After extension of the Additional
     Term-Out Loan, the existing outstanding principal balance of Working
     Capital Credit Facility A shall equal $337,244.00 and Working Capital
     Credit Facility B shall equal $1,166,036.12, respectively. From and after
     the date hereof, the term "Term Loan" as defined in the Loan Agreement
     shall mean a loan from Lenders to Borrowers inclusive of the Current Term
     Loan Balance and the Additional Term-Out Loan.

          (b) Upon full execution and delivery of this Agreement and each of the
     other documents required to be executed and delivered hereunder, each
     Lender shall, severally and not jointly, convert the applicable portions of
     the Working Capital Loan Balances to such Lender's Pro Rata Share of the
     Additional Term-Out Loan.

          (c) Contemporaneously with the execution hereof, Borrowers shall
     deliver to each Lender a Term Note (or an Amended and Restated Term Note)
     in the respective principal amount of each such Lender's Pro Rata Share of
     the Term Loan.

     10. Interest on Working Capital Credit Facility B. Section 5.2 of the Loan
Agreement is amended to read, in its entirety, as follows:

          "5.2 Working Capital Credit Facility B. Interest on the unpaid
     principal balance of Working Capital Credit Facility B will accrue at one
     of the two (2) interest rate options set forth below, subject to the
     restrictions and in accordance with the procedures set forth in this
     Agreement:

               (a) LIBOR Rate; or

               (b) Floating Rate."

     11. Interest on Acquisition Credit Facility. Section 5.3 of the Loan
Agreement is amended to read, in its entirety, as follows:

                                      -10-
<PAGE>

          "5.3 Acquisition Credit Facility. Interest on the unpaid principal
     balance of the Acquisition Credit Facility will accrue at one of the two
     (2) interest rate options set forth below, subject to the restrictions and
     in accordance with the procedures set forth in this Agreement:

               (a) LIBOR Rate; or

               (b) Floating Rate."

     12. Interest on Term Loan. Section 5.4 of the Loan Agreement is amended to
read, in its entirety, as follows:

          "5.4 Term Loan. Interest on the unpaid principal balance of the Term
     Loan will accrue at one of the two (2) interest rate options set forth
     below, subject to the restrictions and in accordance with the procedures
     set forth in this Agreement:

               (a) LIBOR Rate; or

               (b) Floating Rate."

     13. Request for LIBOR Rate. Section 5.5 of the Loan Agreement is amended to
read, in its entirety, as follows:

          "5.5 Request for LIBOR Rate. If the Borrowers desire that all or part
     of the outstanding principal balance under the Loans accrue interest at the
     LIBOR Rate, Borrowers shall give Agent a LIBOR Rate Notification. Upon
     delivery by Borrowers to Agent of a LIBOR Rate Notification, that portion
     of the principal balance outstanding under the Loans identified in such
     LIBOR Rate Notification shall accrue interest at the LIBOR Rate as follows:
     (a) with respect to the principal amount of any new advance under the
     Loans, from the date of such advance until the end of the Rate Period
     specified in such LIBOR Rate Notification; and/or (b) with respect to all
     or any portion outstanding and accruing interest at another LIBOR Rate at
     the time of the LIBOR Rate Notification related to such principal amount,
     from the expiration of the then current Rate Period related to such
     principal amount until the end of the Rate Period specified in such LIBOR
     Rate Notification; and/or (c) with respect to all or any portion of the
     principal amount outstanding and accruing interest at the Floating Rate at
     the time of the LIBOR Rate Notification related to such principal amount,
     from the date set forth in such LIBOR Rate Notification until the end of
     the Rate Period specified in such LIBOR Rate Notification."

                                      -11-
<PAGE>

     14. Certain Provisions Regarding LIBOR. Section 5.6 of the Loan Agreement
is amended to read, in its entirety, as follows:

          "5.6 Certain Provisions Regarding LIBOR Rates. Borrowers understand
     and agree that: (a) subject to the provisions of this Agreement, the LIBOR
     Rate may apply simultaneously to different portions of the outstanding
     principal of the Loans; (b) the LIBOR Rate may apply simultaneously to
     various portions of the outstanding principal of the Loans for various Rate
     Periods; (c) the Rate Periods for the LIBOR Rate shall be either one (1),
     two (2) or three (3) months; (d) the LIBOR Rate applicable to any portion
     of the outstanding principal of the Loans may be different from the LIBOR
     Rate applicable to any other portion of the outstanding principal of the
     Loans; and (e) individual portions of the Loans accruing interest at the
     LIBOR Rate must be in amounts of at least Two Hundred Fifty Thousand
     Dollars ($250,000.00) each."

     15. Fall Back Rate. Section 5.7 of the Loan Agreement is amended to read,
in its entirety, as follows:

          "5.7 Floating Rate Fall Back. After expiration of any Rate Period, any
     principal portion of the Loans corresponding to such Rate Period which has
     not been converted or renewed in accordance with the terms of this
     Agreement shall accrue interest automatically at the Floating Rate from the
     date of expiration of such Rate Period until paid in full, unless and until
     Borrowers request another interest rate in accordance with the terms of
     this Agreement."

     16. LIBOR Rate Unavailable. Section 5.14 of the Loan Agreement is amended
to read, in its entirety, as follows:

          "5.14 LIBOR Rate Unascertainable or Unavailable. If, at any time,
     Agent shall determine (which determination shall be conclusive) that the
     LIBOR Rate is unavailable or adequate means for ascertaining the LIBOR Rate
     do not exist, Agent shall promptly notify Borrowers and Lenders of such
     determination. Upon such determination, the right of Borrowers to select,
     maintain and/or convert to the LIBOR Rate shall be suspended until notice
     from Agent to Borrowers and Lenders that the LIBOR Rate is again available
     or ascertainable and, until such time, the outstanding balance under the
     Loans shall accrue interest at the Floating Rate."

     17. Payments on Acquisition Credit Facility. Section 6.3 of the Loan
Agreement is amended to read, in its entirety, as follows:

                                      -12-
<PAGE>

          "6.3 Principal and Interest Payments on the Acquisition Credit
     Facility.

               (a) During the Acquisition Credit Facility Advance Period,
          Borrowers will pay interest on that portion of the principal advanced
          under the Acquisition Credit Facility which has not previously been
          converted to an Acquisition Credit Facility Term Loan monthly, on the
          first day of each calendar month, commencing on the first day of the
          first calendar month following the initial advance thereunder and on
          the last day of each Rate Period, as applicable.

               (b) Borrowers shall repay the outstanding principal balance of
          any Acquisition Credit Facility Term Loan selected by Borrowers on or
          before May 1, 2002 in accordance with Section 3.3(c) above, in
          quarterly installments, each in an amount equal to the amount of such
          Acquisition Credit Facility Term Loan divided by twenty (20), plus
          accrued and unpaid interest on such Acquisition Credit Facility Term
          Loan to the date of such payment at the applicable rate set forth in
          Section 5.3(b) above. Such quarterly installments shall commence on
          the first day of the first calendar quarter following Borrowers'
          election of such Acquisition Credit Facility Term Loan.

               (c) Upon the expiration of the Acquisition Credit Facility
          Advance Period, Borrowers shall repay the remaining portion of the
          outstanding principal balance of the Acquisition Credit Facility which
          has not previously been converted to an Acquisition Credit Facility
          Term Loan in accordance with Section 3.3(c) above, in quarterly
          installments each in an amount equal to such remaining portion,
          divided by sixteen (16), plus accrued and unpaid interest on such
          Acquisition Credit Facility Term Loan to the date of such payment at
          the rate set forth in Section 5.3(b) above. Such quarterly
          installments shall commence on the first day of the first calendar
          quarter following the expiration of the Acquisition Credit Facility
          Advance Period.

               (d) On April 1, 2007, Borrowers shall pay in full the outstanding
          principal balance of the Acquisition Credit Facility (including,
          without limitation, any Acquisition Credit Facility Term Loan),
          together with all accrued and unpaid interest thereon and all other
          sums due in connection therewith."

     18. Payments on the Term Loan. Section 6.4 of the Loan Agreement is amended
to read, in its entirety, as follows:

          "6.4 Principal and Interest Payment on the Term Loan.

               (a) Borrowers shall pay interest on the outstanding principal
          balance of the Term Loan on the first day of each calendar quarter,
          commencing on April 1, 1999.

                                      -13-
<PAGE>

               (b) Borrowers shall pay the outstanding principal balance under
          the Term Loan in quarterly installments on the first day of each
          calendar quarter, each in the following amounts:

                                    Dates                          Payments
                                    -----                          --------

                  7/1/2001; 10/1/2001; 1/1/2002 and 4/1/2002     $535,714.29
                  7/1/2002; 10/1/2002; 1/1/2003 and 4/1/2003     $535,714.29
                  7/1/2003; 10/1/2003; 1/1/2004 and 4/1/2004     $535,714.29
                  7/1/2004; 10/1/2004; 1/1/2005 and 4/1/2005     $535,714.29
                  7/1/2005; 10/1/2005; and 1/1/2006              $535,714.29

               (c) On April 1, 2006, Borrowers shall pay in full the outstanding
          principal balance of the Term Loan, together with all accrued and
          unpaid interest thereon and all other sums due in connection
          therewith."

     19. Excess Cash Flow Payments. Section 6.5 of the Loan Agreement is amended
to read, in its entirety, as follows:

          "6.5 Excess Cash Flow Payments. In addition to all other payments
     required under the Loans, Borrowers shall pay to Agent for the pro rata
     benefit of Lenders an amount equal to fifty percent (50%) of the Excess
     Cash Flow for each fiscal year of Borrowers if the Leverage Ratio as of the
     close of such fiscal year is equal to or greater than 3.0 to 1.0, which
     amount shall be paid within sixty (60) days after the end of each such
     fiscal year, commencing with Borrowers' fiscal year ending June 30, 1999.
     Excess Cash Flow payments shall be applied first to payments due under the
     Term Loan, then to payments due under any Acquisition Credit Facility Term
     Loan, all in the inverse order of their maturity, with the balance, if any,
     applied to such other Lender Indebtedness as determined by Agent. Together
     with each such Excess Cash Flow payment, Borrowers shall deliver to Agent a
     calculation of such payment in such detail as Agent shall reasonably
     require or, in lieu thereof, Borrowers shall deliver to Agent, within sixty
     (60) days of the end of such fiscal year, Borrowers' determination as to
     why no such payment is due, all of which shall be certified as to accuracy
     by the chief financial officer of Borrowers."

     20. Letter of Credit Fees. Section 6.8 of the Loan Agreement is amended to
read, in its entirety, as follows:

          "6.8 Letter of Credit Fees. In connection with each letter of credit
     issued under this Agreement, Borrowers shall pay to (a) Agent, for the pro
     rata benefit of Lenders, a per annum fee, payable quarterly in advance on
     the first Business Day of each calendar quarter, equal to the product
     obtained by multiplying (i) the face amount of all letters of credit
     outstanding on the first day of each calendar quarter

                                      -14-
<PAGE>

     and (ii) the LIBOR Rate Margin in effect as of such date; and (b) Agent, as
     Issuing Bank, a fronting fee in an amount equal to .25% per annum of the
     aggregate face amount of all letters of credit issued under this Agreement,
     payable quarterly in arrears on the first Business Day of each calendar
     quarter. Notwithstanding the foregoing, upon the occurrence of an Event of
     Default and the continuance thereof, such letter of credit fees will equal
     the product obtained by multiplying (i) the face amount of all letters of
     credit then outstanding and (ii) the highest applicable LIBOR Rate Margin.
     In addition, Borrowers shall pay such other fees and charges in connection
     with the negotiation or cancellation of each letter of credit as may be
     customarily charged by Issuing Bank. Such fees shall be computed on the
     basis of a year of three hundred sixty (360) days for the number of days
     actually elapsed."

     21. Usage Fee. Section 6.9 of the Loan Agreement is amended to read, in its
entirety, as follows:

          "6.9 Usage Fee. Borrowers shall unconditionally pay to Agent for the
     pro rata benefit of Lenders a fee equal to the Applicable Percentage of the
     average daily unused portion of the Working Capital Credit Facilities and
     the Acquisition Credit Facility (which shall be calculated based on the
     maximum amount available under such Loans, taking into account any
     reductions of the Acquisition Credit Facility permitted under this
     Agreement, minus the average daily outstanding principal balance of cash
     advances under the Working Capital Credit Facilities and the Acquisition
     Credit Facility for such period, minus the average outstanding undrawn face
     amount of all letters of credit issued and outstanding under Working
     Capital Credit Facility A during such period), which fee shall be computed
     on a quarterly basis in arrears and shall be due and payable on the first
     day of each calendar quarter. Such fee shall be computed on the basis of a
     year of 360 days for the number of days actually elapsed."

     22. FINANCIAL COVENANTS. Article 10 of the Loan Agreements is amended to
read, in its entirety, as follows:

          "10. FINANCIAL COVENANTS. Except with the prior written consent of the
     Required Lenders, Borrowers will comply with the following:

               10.1 Leverage Ratio. Borrowers shall maintain a Leverage Ratio of
          not greater than (a) 3.75 to 1.0 as of June 30, 2001 at all times
          thereafter through June 29, 2002, (b) 3.50 to 1.0 as of June 30, 2002
          and at all times thereafter through June 29, 2003, (c) 3.25 to 1.0 as
          of June 30, 2003 and at all times thereafter through June 29, 2004,
          and (d) 3.00 to 1.00 as of June 30, 2004 and at all times thereafter.

                                      -15-
<PAGE>

               10.2 Interest Coverage Ratio. Borrowers shall maintain an
          Interest Coverage Ratio as of the end of each fiscal quarter,
          determined on a rolling four quarter basis, of not less than (a) 3.5
          to 1.0 as of the end of each fiscal quarter through the fiscal quarter
          ending March 31, 2002; and (b) 4.0 to 1.0 as of the fiscal quarter
          ending June 30, 2002 and as of the end of each fiscal quarter
          thereafter.

               10.3 Fixed Charge Coverage Ratio. Borrowers shall maintain a
          Fixed Charge Coverage Ratio as of the end of each fiscal quarter,
          determined on a rolling four quarter basis, of not less than 1.1 to
          1.0 as of the fiscal quarter ending June 30, 2001 and as of the end of
          each fiscal quarter thereafter.

               10.4 Capital Expenditures. Borrowers shall not cause, suffer or
          permit their aggregate annual Capital Expenditures to exceed the
          following amounts for the applicable fiscal years of Borrower:

                   Fiscal Year Ending                          Amount
                   ------------------                          ------

                   June 30, 2001                            $16,000,000
                   June 30, 2002                            $18,000,000
                   June 30, 2003                            $20,000,000
                   June 30, 2004                            $22,000,000
                   June 30, 2005                            $24,000,000

          The foregoing covenant shall be on a non-cumulative basis as to any
          unused sums during any fiscal year.

               10.5 Adjusted Leverage Ratio. Borrower shall maintain an Adjusted
          Leverage Ratio as of the end of each fiscal quarter, determined on a
          rolling four quarter basis, of not greater than (a) 4.5 to 1.0 as of
          the fiscal quarter ending June 30, 2001 and as of each fiscal quarter
          thereafter through and including the fiscal quarter ending March 31,
          2002, (b) 4.25 to 1.0 as of the fiscal quarter ending June 30, 2002
          and as of each fiscal quarter thereafter through and including the
          fiscal quarter ending March 31, 2003, (c) 3.75 to 1.0 as of the fiscal
          quarter ending June 30, 2003 and as of each fiscal quarter thereafter
          through and including the fiscal quarter ending March 31, 2004, and
          (d) 3.5 to 1.0 as of the fiscal quarter ending June 30, 2004 and as of
          the end of each fiscal quarter thereafter.

               10.6 Acquisitions. In the event Lenders consent to an acquisition
          by Borrowers, or any of them, that constitutes a Permitted Acquisition
          under subsection (ii) of the defined term "Permitted Acquisition" and
          such acquisition would result in the failure by Borrowers to comply
          with any of the financial covenants in this Article 10, Lenders agree
          that as part of such consent, Lenders will

                                      -16-
<PAGE>

          amend such covenant or covenants so that Borrowers will be in
          compliance therewith after giving effect to such acquisition."

     23. Yield Protection. Borrowers shall hedge the floating interest expense
of the Acquisition Credit Facility and the Term Loan by maintaining one or more
interest rate swap transactions with the Agent or any Lender (or with another
financial institution approved by Agent in writing) in an aggregate amount equal
to (a) one hundred percent (100%) of the outstanding principal balance of the
Term Loan and (b) a minimum of fifty percent (50%) of the aggregate outstanding
principal balance of the Acquisition Credit Facility Term Loans, respectively,
with the Borrowers making fixed rate payments and receiving floating rate
payments to offset changes in the variable interest expense thereof, all upon
terms and conditions as shall be acceptable to Agent. Borrowers shall enter into
such hedge transactions (and if entered into with a Person other than Agent,
deliver evidence thereof to Agent) (i) with respect to the Term Loan, on or
before 90 days from the date hereof and (ii) with respect to the Acquisition
Credit Facility, on or before the 90th day following the establishment of the
applicable Acquisition Credit Facility Term Loan.

     24. Proceeds of Capital Raise. Nobel has informed Agent and the Lenders
that it may desire to raise additional capital by issuing preferred equity
securities (a "Capital Raising Event"). Nobel will give Lenders written notice
of any Capital Raise Event and copies of all subscription and other disclosure
materials in connection therewith. Nobel agrees that any additional capital
raised as a result of a Capital Raising Event will be applied as Nobel elects to
(i) repay the outstanding principal balance and accrued interest thereon of the
Acquisition Credit Facility, (ii) repay the outstanding principal balance and
accrued interest thereon of the Working Capital Credit Facilities, and (iii) for
general corporate purposes. Notwithstanding the foregoing, in the event that the
Capital Raising Event raises in excess of $15,000,000 of additional capital, the
utilization of any capital in excess of $15,000,000 will be mutually agreed to
by Nobel, Agent and Lenders.

     25. Sale of Real Estate. Nobel has represented and warranted to Agent and
the Lenders that it has undertaken and is diligently pursuing the sale of its
properties situate at 108 Woodward Road, Manalapan, New Jersey (the "Manalapan
Property") and 5821 W. Beverly Lane, Glendale, Arizona (the "Arizona Property").
Borrowers agree that the net proceeds received by Borrowers as a result of the
consummation of the sale of the Manalapan Property or the Arizona Property will
be delivered to Agent and will be applied to reduce the outstanding principal
balance of the Acquisition Credit Facility.

     Notwithstanding anything contained in the Loan Agreement, this Amendment or
the other Loan Documents to the contrary, Borrowers agree that Borrowers will
not request and Lenders will not be obligated to make after the date hereof (i)
any advance to Borrowers under the Acquisition Credit Facility, and (ii) any
advance to Borrowers under the Working Capital Credit Facilities which advance
will be applied by Borrowers to reduce the outstanding principal balance of the
Acquisition Credit Facility.

                                      -17-
<PAGE>

     Notwithstanding the foregoing, Agent and Lenders agree that in the event
that Borrowers reduce the outstanding principal balance of the Acquisition
Credit Facility by applying certain proceeds realized by Borrowers or other
income generated by Borrowers resulting from (i) the sale of the Manalapan
Property or the Arizona Property, (ii) additional capital raised by Borrowers as
a result of the issuance of preferred or common equity securities or
subordinated indebtedness, or (iii) Excess Cash Flow not otherwise paid to Agent
for the pro rata benefit of the Lenders in accordance with Section 6.5 of the
Loan Agreement; Borrowers may request an advance under the Acquisition Credit
Facility up to an aggregate amount of such reduction. In the event that
Borrowers reduce the outstanding principal balance of the Acquisition Credit
Facility by applying Excess Cash Flow, Borrowers agree that such payments will
only be permitted within ninety (90) days after the end of each fiscal year of
Borrowers commencing with the fiscal year ending June 30, 2001 and delivery to
Agent of a calculation of such payments in such detail as Agent shall require.
Agent and Lenders further agree that the limitations set forth in this Section
25 shall be null and void and of no further force or effect at such time as the
sale of the Manalapan Property and the Arizona Property are consummated and the
proceeds realized by Borrowers as a result of such sale are applied by Borrowers
to reduce the outstanding principal balance of the Acquisition Credit Facility.

     26. Title Insurance. Within thirty (30) days of the date hereof, Borrowers
covenant and agree to deliver to Agent, at no cost to Agent and in form and
content acceptable to Agent, endorsements to the existing loan title insurance
policies previously delivered to and in favor of Agent, which endorsements will
(i) evidence the "date-down" of such loan policies to the date hereof, and (ii)
add the Amendments, Confirmations and Ratifications of Mortgages and Deeds of
Trust referenced in Section 28(e) below to the insured estates under such loan
policies.

     27. Stock Pledge. Nobel and Merryhill covenant and agree to execute and
deliver to Agent, in form and content acceptable to Agent, stock pledge
agreements evidencing the pledge of and grant of a security interest in certain
stock of the other Borrowers held by Nobel and Merryhill, together with UCC-1
Financing Statements, blank stock powers and such other agreements the Agent may
require.

     28. Documents to be Delivered. As a condition of closing the transactions
contemplated under this Amendment, Borrowers shall deliver to Agent or Agent
shall have received all of the following which must be in form and content
acceptable to Agent in Agent's sole discretion:

          (a) This Amendment and all other documents collateral thereto, duly
     executed on behalf of Borrowers and all other parties thereto;

          (b) Amended and Restated Acquisition Credit Facility Notes and Amended
     and Restated Term Notes which shall be in the respective principal amounts
     of each Lenders' Pro Rata Share of the Acquisition Credit Facility and Term
     Loan, respectively;

          (c) An amended Schedule A to Loan Agreement evidencing the respective
     principal amounts of each Lenders' Pro Rata Share of the Loans;

                                      -18-
<PAGE>

          (d) An Amendment to Amended and Restated Securities Pledge Agreement
     executed by Nobel Learning Communities, Inc.;

          (e) Amendment, Confirmations and Ratifications of Mortgages and Deeds
     of Trust confirming that all obligations of Mortgagor (as defined therein)
     to Agent and Lenders under and in connection with the Loans;

          (f) Assignment and Acceptance Agreement fully executed by Commerce
     Bank, N.A.;

          (g) A certified copy of resolutions of Borrowers certified by their
     secretary as of the Closing Date, authorizing the transactions contemplated
     hereunder and the execution of documents on behalf of Borrowers by one or
     more their corporate officers; and

          (h) A current Good Standing Certificate for Nobel and Merryhill.

     29. Additional Documents. Nobel covenants and agrees to execute and deliver
or cause to be executed and delivered to Agent any and all documents,
agreements, corporate resolutions, certificates and opinions as Agent shall
request in connection with the execution and delivery of this Amendment or any
other documents in connection herewith.

     30. 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 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 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 actions
     taken pursuant to the terms hereof is intended to constitute a novation of
     the Loan Agreement or any of the other Loan Documents, and does 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,

                                      -19-
<PAGE>

     extended and continued as security for the obligations of Borrowers to
     Agent 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.

     31. Costs and Expenses. Upon execution of this Amendment, Borrowers shall
pay to Agent and each Lender, all costs and expenses incurred by Agent and such
Lender in connection with the review, preparation and negotiation of this
Amendment and all documents in connection therewith, including, without
limitation, all of Agent's and such Lender's attorneys' fees and out-of-pocket
expenses.

     32. Notices Notwithstanding anything to the contrary contained in Section
17.1 of the Loan Agreement, copies of all notices to Agent shall be forwarded to
the following address:

                 White and Williams LLP
                 1800 One Liberty Place
                 Philadelphia, PA 19103-7395
                 Attention: Maulin S. Vidwans, Esquire

     33. 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.

     34. 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.

     35. No Waiver. 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.

     36. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.

     37. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.

                                      -20-
<PAGE>

     38. 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.

                                      -21-
<PAGE>

     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

                                       MERRYHILL SCHOOLS, INC.

                                       By: /s/ William E. Bailey
                                           -------------------------------------
                                           William E. Bailey, Executive Vice
                                           President

                                       NEDI, INC.

                                       By: /s/ S. Good
                                           -------------------------------------
                                           S. Good, President

                                       MERRYHILL SCHOOLS NEVADA, INC.

                                       By: /s/ John R. Frock
                                           -------------------------------------
                                           John R. Frock, Treasurer

                                       HOUSTON LEARNING ACADEMY,  INC.

                                       By: /s/ John R. Frock
                                           -------------------------------------
                                           John R. Frock, Vice President

                                       PALADIN ACADEMY, L.L.C.

                                       By: /s/ John R. Frock
                                           -------------------------------------
                                           John R. Frock, Vice President

                    (SIGNATURES CONTINUED ON FOLLOWING PAGE)

                                      -22-
<PAGE>

                                       NOBEL SCHOOL MANAGEMENT SERVICES, INC.

                                       By: /s/ William E. Bailey
                                           -------------------------------------
                                           William E. Bailey, Treasurer

                                       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

                                       THE ACTIVITIES CLUB, INC.

                                       By: /s/ John R. Frock
                                           -------------------------------------
                                           John R. Frock, President

                                       AGENT:

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

                                       By: /s/ James V. Nixon
                                           -------------------------------------
                                           James V. Nixon, Senior Vice President

                    (SIGNATURES CONTINUED ON FOLLOWING PAGE)

                                      -23-
<PAGE>

                                       LENDERS:

                                       FLEET NATIONAL BANK, as successor by
                                       merger to Summit Bank

                                       By: /s/ James V. Nixon
                                           -------------------------------------
                                           James V. Nixon, Senior Vice President

                                       COMMERCE BANK, N.A.

                                       By: /s/ Peter Davis
                                           -------------------------------------
                                       Name/Title: Peter Davis, Senior Vice
                                                   President
                                                   -----------------------------

                                      -24-

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