NOBEL EDUCATION DYNAMICS INC, PRE 14A, 1995-08-04

NOBEL EDUCATION DYNAMICS INC
PRE 14A, 1995-08-04
CHILD DAY CARE SERVICES

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C O N F I D E N T I A L

PRELIMINARY PROXY
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by Registrant /x/

Filed by a Party other than the Registrant / /

Check the appropriate box:

/ / Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)
/ / Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

NOBEL EDUCATION DYNAMICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant As Specified in Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing the Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(i)(2), or
Item 22(a) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rules
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11

1) Title of each class of securities to which transaction applies:
N/A
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2) Aggregate number of securities to which transaction applies:
N/A
- --------------------------------------------------------------------------------

3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:/1/
N/A
- --------------------------------------------------------------------------------

4) Proposed maximum aggregate value of transaction:
N/A
- --------------------------------------------------------------------------------

/1/Set forth the amount on which the filing fee is calculated and state how it
was determined.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount previously paid:
N/A
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2) Form, Schedule, or Registration Statement No.:
N/A
- --------------------------------------------------------------------------------

3) Filing party:
N/A
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4) Date filed:
N/A
- --------------------------------------------------------------------------------

5) Total fee paid.

- --------------------------------------------------------------------------------
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PRELIMINARY COPY

NOBEL EDUCATION DYNAMICS, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 22, 1995

To the Stockholders:

The 1995 Annual Meeting of Stockholders of Nobel Education Dynamics, Inc.
will be held at 1:00 P.M. on September 22, 1995 at the Best Western Concordville
Hotel & Conference Center for the following purposes:

1. To elect eight directors to serve for a one-year term.

2. To ratify the selection of Coopers & Lybrand as the Company's independent
auditors for fiscal 1995.

3. To consider and vote on a proposal to approve a Plan of Recapitalization
and to amend the Company's Restated Certification of Incorporation to
effect a 1 for 4 reverse stock split.

4. To consider and vote to approve the 1995 Stock Incentive Plan.

5. To transact such other business as may properly come before the meeting or
any adjournment thereof.

Stockholders of record at the close of business on August 11, 1995 will be
entitled to notice of, and to vote at, the meeting and any adjournment or
adjournments thereof.

Information concerning the matters to be acted upon at the meeting is set
forth in the accompanying Proxy Statement.

All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, and return the enclosed proxy card as promptly as possible in the postage-
prepaid envelope enclosed for that purpose. Any shareholder attending the
meeting may vote in person even if he or she returned a proxy.

Sincerely,

Yvonne DeAngelo
Secretary

Media, PA
August 22, 1995
<PAGE>

PRELIMINARY COPY

NOBEL EDUCATION DYNAMICS, INC.

PROXY STATEMENT

SOLICITATION OF PROXY, REVOCABILITY, AND VOTING

GENERAL

The enclosed proxy is solicited on behalf of the Board of Directors of
Nobel Education Dynamics, Inc., a Delaware corporation (the "Company"), for use
at the 1995 Annual Meeting of Stockholders to be held on September 22, 1995.
Only stockholders of record on August 11, 1995 will be entitled to vote at that
meeting. Each share of Common Stock and each share of Preferred Stock
outstanding on the record date is entitled to one vote on each matter to be
considered. On August 11, 1995, the Company had 15,645,063 shares of Common
Stock, 2,484,000 shares of Series A Preferred Stock, and 2,500,000 shares of
Series C Preferred Stock issued and outstanding.

The Company's principal executive offices are located at 1400 North
Providence Road, Suite 3055, Media, Pennsylvania 19063. The approximate date on
which this Proxy Statement and the accompanying proxy are first being sent to
stockholders is August 22, 1995.

QUORUM AND VOTING

The presence at the meeting, in person or by proxy, of the holders of a
majority of the Common Stock and Preferred Stock entitled to vote is necessary
to constitute a quorum for the transaction of business. The holders of the
Preferred Stock and the Common Stock vote together, and not as a separate class,
in the election of directors, approval of the 1 for 5 reverse stock split,
approval of the 1995 Stock Incentive Plan, and on the proposal to ratify the
selection of auditors. The election of directors will be determined by a
plurality vote and the eight nominees receiving the most "FOR" votes will be
elected. Approval of the proposal to ratify the selection of auditors will
require the affirmative vote of the holders of a majority of the shares present
at the meeting in person or by proxy and entitled to vote. Approval of the
proposal to adopt the Plan of Recapitalization and to amend the Company's
Certification of Incorporation to effect the 1-for-5 reverse stock split
requires the affirmative vote of at least a majority of the outstanding shares
of the Company's Common Stock and Preferred Stock entitled to vote thereon at
the Meeting. The affirmative vote of the holders of a majority of the Common
Stock and Preferred Stock of the Company present, at the Meeting in person, or
by proxy, and entitled to vote is necessary for approval of the 1995 Stock
Option Plan. In the election of directors, an abstention or broker non-vote will
not be counted as a vote cast and will have no effect on the outcome of the
election. On the proposals to ratify the selection of auditors, approve the Plan
of Recapitalization to effect the reverse stock split and to approve the 1995
Stock Option Plan, abstentions will have the effect of a vote against the
proposal. Broker non-votes will have no

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effect on the outcome of the proposals to ratify the selection of auditors and
to approve the 1995 Stock Option Plan, but will have the effect of a vote
against the proposal to approve the Plan of Recapitalization effecting the
1-for-5 reverse stock split.

REVOCABILITY OF PROXIES

Any person giving a proxy in the form accompanying this proxy statement has
the power to revoke it at any time before its exercise. It may be revoked by
filing with the Secretary of the Company an instrument of revocation or by the
presentation at the meeting of a duly executed proxy bearing a later date. It
also may be revoked by attendance at the meeting and election to vote in person.
Unless so revoked, the shares represented by proxies will be voted at the
meeting.

SOLICITATION

The Company will bear the entire cost of preparing, assembling, printing,
and mailing this proxy statement, the accompanying proxy, and any additional
material which may be furnished to stockholders. Copies of solicitation material
will be furnished to brokerage houses, fiduciaries, and custodians to forward to
beneficial owners of stock held in their names. The solicitation of proxies will
be made by the use of the mails and through direct communication with certain
stockholders or their representatives by officers, directors, and employees of
the Company, who will receive no additional compensation therefor. The Company
has engaged Stocktrans, Inc. to solicit proxies and distribute materials to
brokerage houses, banks, custodians, and other nominee holders. The Company will
pay Stocktrans approximately $3,000 for these services.

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS

Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's 1996 annual meeting must be received by
the Company no later than January 1, 1996 and be otherwise in compliance with
applicable laws and regulations in order for such proposals to be included in
the Proxy Statement.

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SECURITY OWNERSHIP

The following table shows information concerning the beneficial ownership
of the Company's Common Stock as of July 7, 1995 by each director and nominee,
by each executive officer named in the Summary Compensation Table beginning on
page 29, by each director, nominee, and executive officer as a group, and by
each person who is known to the Company to be the beneficial owner of more than
5% of the Company's Common Stock. The number of shares beneficially owned by
each person is determined under the rules of the Securities and Exchange
Commission and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership includes
any shares as to which the person has the sole or share voting power or
investment power and also any shares which the person has the right to acquire
within 60 days of July 7, 1995 through the exercise of any stock option or
right.
<TABLE>
<CAPTION>
Amount and Nature Percent
Title Name of of Beneficial of
of Class Beneficial Owner Ownership of Shares Class/(1)/
- -------------- ------------------ -------------------- -----------
<S> <C> <C> <C>

Common Stock A.J. Clegg 2,136,766 (2) 12.29%
Direct

Common Stock Edward H. Chambers 88,920 (3) *
Direct

Common Stock John Frock 108,800 (4) *
Direct

Common Stock Peter H. Havens 48,436 (5) *
Direct

Common Stock Morgan R. Jones 23,711 (6) *
Direct

Common Stock Janet Katz 117,600 (7) *
Direct

Common Stock Kevin McGovern 12,936 (8) *
Direct

Common Stock F.E. Montgomery 155,880 (9) 1.0%
Direct

Common Stock William Moore 5,880 (10) *
Direct

Common Stock Yvonne DeAngelo 1,000

Common Stock Edison Venture Fund 2,096,774 (11) 11.85%
Direct

Common Stock All officers and
directors as a group 4,802,583 23.98%
(12 persons) Direct
</TABLE>
* Less than 1%.

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(1) The numbers set forth above reflect the percentage of outstanding Common
Stock currently owned by each entity and person listed and the percentage
of outstanding Common Stock which would be owned by each entity or person
listed upon conversion of the Preferred Stock owned by each assuming the
present conversion rate of 1.176 shares of Common Stock for each share of
Preferred Stock Series A and the conversion rate of one share of Common
for each share Preferred Series C.

(2) Of these shares, 403,226 shares are issuable upon conversion of Series C
Preferred Stock of the Company owned by Mr. Clegg. In addition, Mr. Clegg
is also the beneficial owner of an additional 1,711,540 shares owned of
record by, or issuable upon the exercise of securities of the Company
owned of record by JBS Investment Banking, Ltd., a privately held
corporation of which Mr. Clegg is a director, officer and controlling
stockholder as follows: 412,000 shares of Common Stock owned of record by
JBS; an additional 750,000 shares issuable upon the exercise of warrants
held by JBS; and an additional 561,540 shares of Common Stock issuable
upon the exercise of the Company's Series A Preferred Stock owned of
record by JBS. JBS may also be deemed to be the beneficial owner of these
1,711,540 shares. Mr. Clegg is also the beneficial owner of 10,000 shares
of Common Stock purchased by his spouse. This does not include 12,000
shares owned by Mr. Clegg's children, as to which he disclaims beneficial
ownership.

(3) Consists of 77,000 shares of Common Stock which Mr. Chambers has the right
to purchase upon the exercise of currently exercisable options, and an
additional 5,880 shares of Common Stock issuable upon the conversion of
the Company's Series A Preferred Stock and 6,040 shares of Common Stock
held by Mr. Chambers.

(4) Consists of 58,800 shares of Common Stock issuable upon the conversion of
the Company's Series A Preferred Stock and 50,000 shares of Common Stock
held by Mr. Frock.

(5) Consists of 27,000 shares of Common Stock which Mr. Havens has the right
to purchase upon the exercise of currently exercisable options, an
additional 12,936 shares of Common Stock issuable upon the conversion of
the Company's Series A Preferred Stock, and 8,500 shares of Common Stock
held by Mr. Havens.

(6) Consists of 23,711 shares of Common Stock held by Mr. Jones. Does not
include 7,000 shares owned by Mr. Jones' spouse and 9,000 shares owned by
Mr. Jones' adult children as to which he disclaims beneficial ownership of
shares.

(7) Consists of 117,600 shares of Common Stock issuable upon the conversion of
the Company's Series A Preferred Stock held by Ms. Katz.

(8) Consists of 12,936 shares of Common Stock issuable upon the conversion of
the Company's Series A Preferred Stock held by Mr. McGovern.

(9) Consists of 150,000 shares of Common Stock held by Mr. Montgomery through
the exercise of stock options and 5,880 shares of Common Stock issuable
upon the conversion of the Company's Series A Preferred Stock also held by
Mr. Montgomery.

(10) Consists of 5,880 shares of Common Stock issuable upon the conversion of
the Company's Series A Preferred Stock held by Mr. Moore.

(11) Consists of 2,096,774 shares of Common Stock issuable upon the conversion
of the Company's Series C Preferred Stock held by the Edison Venture Fund.

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The tabulation below sets forth the beneficial ownership of the Company's
Series A Preferred Stock by each director, by each executive officer named in
the Summary Compensation Table on page 29, and officers and directors of the
Company as a group, and of all persons known to the Company beneficially owning
more than 5% of the Series A Preferred Stock as of July 7, 1995.
<TABLE>
<CAPTION>

Amount and Nature Percent
Title Name of of Beneficial of
of Class Beneficial Owner Ownership of Shares Class
- -------- ---------------- -------------------- --------
<S> <C> <C> <C>

Preferred Stock A. J. Clegg 477,500 (1) 19.22%
Series A Direct

Preferred Stock Edward H. Chambers 5,000 *
Series A Direct

Preferred Stock John Frock 50,000 2.01%
Series A Direct

Preferred Stock Peter H. Havens 11,000 *
Series A Direct

Preferred Stock Janet Katz 100,000 4.03%
Series A Direct

Preferred Stock Kevin McGovern 11,000 *
Series A Direct

Preferred Stock William Moore 5,000 *
Series A Direct

Preferred Stock F.E. Montgomery 5,000 *
Series A Direct

Preferred Stock All officers and 669,500 26.95%
Series A directors Direct
as a group
(12 persons)
</TABLE>

(1) Mr. Clegg is the beneficial owner of these 477,500 shares of Series A
Preferred Stock owned of record by JBS Investment Banking, Ltd., as he is a
director, officer and controlling shareholder of JBS Investment Banking,
Ltd.

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The tabulation set below sets forth the beneficial ownership of the
Company's Series C Preferred Stock by each director, by each executive officer
named in the Summary Compensation Table on page 29, and officers and directors
of the Company as a group, and for all persons known to the Company beneficially
owning more than 5% of the Company's Series C Preferred Stock at July 7, 1995.
<TABLE>
<CAPTION>

Amount and Nature Percent
Title Name of of Beneficial of
of Class Beneficial Owner Ownership of Shares Class
- -------- --------------------- -------------------- --------
<S> <C> <C> <C>

Preferred Stock A.J. Clegg 403,226 16%
Series C

Preferred Stock Edison Venture Fund 2,096,774 84%
Series C

Preferred Stock All officers and
Series C directors as a group
(12 persons) 2,500,000 100%
</TABLE>

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PROPOSAL ONE

ELECTION OF DIRECTORS
(Item 1 on Proxy Card)

NOMINEES

Eight directors are to be elected at the meeting to serve until the next
annual meeting or until their successors have been elected and qualified. The
Board of Directors has nominated the persons named below, all of whom are
currently serving as directors, for election as directors at the annual meeting.
If any of the persons named below are not available to serve at the time of the
meeting, the persons named in the proxies may vote the proxies for such other
persons as they may choose unless the Board of Directors reduces the number of
directors to be elected.

The names of the nominees, and certain information about them, are set
forth below:
<TABLE>
<CAPTION>

DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- --------------- --- -------------------- --------
<S> <C> <C> <C>

Edward Chambers 57 Executive Vice President-Finance and
Administration of Wawa, Inc. 1988

A. J. Clegg 56 Chairman of the Board of Directors
and Chief Executive Officer 1992

John R. Frock 52 Executive Vice President of
Corporate Development 1992

Peter R. Havens 39 Manager of Kewanee Enterprises 1991

Morgan R. Jones 55 Partner of Drinker Biddle & Reath 1991

John H. Martinson 46 Managing Partner of Edison Venture
Fund 1994

Janet L. Katz 47 Acting Principal of Bogert School 1994

Eugene E. Monaco 67 Judge, Delaware County District Court
</TABLE>

The following description contains certain information concerning the
nominees, including current positions and principal occupations during the past
five years.

A.J. Clegg, 56, was named Chairman of the Board and Chief Executive Officer
of the Company on May 29, 1992. Since 1989 Mr. Clegg has also served on the
Advisory Board of Drexel University. Since June 1990, Mr. Clegg has also served
as the Chairman and CEO of JBS Investment Banking, Ltd., which provides
investment management and consulting services to businesses. He is also a
director of Avant-Garde Enterprises, Inc. and RML Laboratories, Inc.

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In 1979 he formed Empery Corporation, an operator of businesses in the cable and
printing industries, and held the offices of Chairman, President and CEO during
his tenure (1979-1993). Additionally, Mr. Clegg served as Chairman and CEO of
TVC Inc. (1983-1993), a distributor of cable television components; and Design
Mark Industries (1988-1993), a manufacturer of electronic senswitches. Mr.
Clegg has also served on the Board of Ferguson International Holdings, PLC, a
United Kingdom company, from March 1990 to April 1991; and was Chairman and CEO
of Globe Ticket and Label Company from December 1984 to February 1991.

Edward H. Chambers, 57, has served as a director of the Company since March
1988. Mr. Chambers has served as Executive Vice President-Finance and
Administration of Wawa, Inc. since March 1988. During the period April 1984
through March 1988, he served as President and Chief Executive Officer, and as a
director of Northern Lites, Ltd., an owner and operator of quick-service
restaurants operating pursuant to a franchise from D'Lites of America, Inc.
From 1982 to July 1984, Mr. Chambers was President-Retail Operations of Kentucky
Fried Chicken Corp., a franchiser of quick-service restaurants. He is a
director of the MDF Division of Davco Restaurants, a franchisee of Wendy's
International, Inc., and is a director of Riddle Memorial Hospital.

John Frock, 52, was named Executive Vice President of Corporate Development
on August 1, 1994. Mr. Frock was elected to the Board of Directors of the
Company on May 29, 1992. He is also a director of Avant-Garde Enterprises, Inc.
and RML Laboratories, Inc. In March 1992, Mr. Frock became the President and
Chief Operating Officer of JBS Investment Banking, Ltd., located in Paoli, PA.
Additionally, he has served as the Chairman, President and CEO of SBF
Communication Graphics, a business forms printer located in Philadelphia, PA;
President of Globe Ticket and Label Company, and President of the Graphics Group
of Empery Corporation; and member of the Board of Directors of Empery
Corporation.

Peter H. Havens, 39, was elected to the Board of Directors of the Company
in March 1991. Mr. Havens has served as manager of Kewanee Enterprises, a
private investment firm located in Bryn Mawr, Pennsylvania since 1982. He is
also a director of the Presidio Oil Company, Bryn Mawr Bank Corporation, and
Ursinus College.

Morgan R. Jones, 55, was elected to the Board of Directors of the Company
in February 1991. Mr. Jones has been a partner in the law firm Drinker Biddle &
Reath, Philadelphia, Pennsylvania since 1970, and is presently Chairman and
Chief Executive Officer of the firm. Mr. Jones serves on the Board of Directors
of Mack Printing Companies, Inc.

Janet Lea Katz, 47, has both a Master's and a Doctorate in Education from
Columbia University and is currently the acting principal at Bogert School in
Upper Saddle River, New Jersey. Ms. Katz has held various positions throughout
her career in education including speech arts teacher, coordinator and therapist
for speech and language programs for elementary schools, research assistant for
the study of learning disabilities at Columbia University, and is presently the
curriculum coordinator/consultant for the Upper Saddle River Schools, Upper
Saddle River, New Jersey.

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John Martinson, 46, was elected to the Board of Directors of the Company in
August 1994. Mr. Martinson is Managing Partner of Edison Venture Fund, which he
founded in 1986. He serves on the Board of Directors of the National Venture
Capital Association, BTG, Inc., SubMicron Systems, Inc., and ten private
companies.

Mr. Eugene E. Monaco, 67, has both a J.D. from Temple Law School and M.S.
in Mechanical Engineering from the University of Delaware and is currently
serving as a Judge for the Delaware County District Court since . He also
served as an Instructor in Kinematics and Dynamics at Drexel University, a
Lecturer in child abuse at Penn State University and was the Chief Negotiator
for the Rose Tree Media School Board. He also served as Assistant District
Attorney in Media, Pennsylvania and Engineering Negotiator for Westinghouse
Electric for 32 years.

Mr. John Martinson is the designee of Edison Venture Fund, the majority
holder of the Series C Convertible Preferred Stock which was issued in August of
1994.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.

BOARD MEETINGS AND COMMITTEES

The Board of Directors of the Company held a total of seven meetings during
the fiscal year ended December 31, 1994. Additionally, the Board of Directors
adopted resolutions by unanimous consent four times during the 1994 fiscal year.
Each member of the Board of Directors attended at least 75% of the meetings of
the Board and Board Committees of which he was a member during 1994 except for
Kevin McGovern and Morgan Jones.

The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee of the Board of Directors consists of Mr. Chambers
(Chairman), Mr. Moore, and Mrs. Havens. It held two meetings during the last
fiscal year. The Audit Committee recommends the engagement of the Company's
independent accounts and is primarily responsible for approving the services
performed by the Company's independent accounts and for reviewing and evaluating
the Company's accounting principles and its system of internal accounting
controls.

The Compensation Committee of the Board of Directors consists of Mr.
Chambers and Mr. Havens. The Committee reviews and recommends compensation and
compensation changes for executives of the Company and the Board of Directors
and administers the Company's stock option and stock grant plans. The Committee
met two times during the 1994 fiscal year.

On March 9, 1994, a Nominating Committee was established. This committee,
whose members are Messrs. Clegg, Martinson (Chairman), and Jones was formed for
the purpose of recommending to the Board a slate of Director candidates for
possible election by the shareholders. The Nominating Committee met four times
in 1994. Stockholders who wish to suggest qualified candidates to the
Nominating Committee should write to the Secretary of the Company, Nobel
Education Dynamics, Inc., 1400 North Providence Road, Suite 3055, Media,

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Pennsylvania 19063, stating in detail the candidate's qualifications for
consideration by the Committee.

The Company has no other committees of the Board of Directors.

COMPENSATION OF DIRECTORS

In June 1992, the Company adopted a policy to pay the Directors, exclusive
of A. J. Clegg, a fee of $1,500 for each Board meeting. For the year ended
December 31, 1994, the Company paid $10,500 each to Messrs. Chambers, Havens,
Jones, and Shemin, $7,500 to Mr. McGovern, and $3,000 each to Mr. Frock and Mr.
Moore, totaling $55,500. Mr. Clegg received no Directors' fees.

Directors have from time to time been awarded options to purchase shares of
the Company's Common Stock. On September 10, 1992, the Company issued options
to purchase 27,000 shares of Common Stock under the Company's 1986 Stock Option
and Stock Grant Plan to each of Messrs. Chambers, Havens, and Shemin for their
services as a director. The exercise price of these options were equal to the
fair market value of the Company's Common Stock on September 10, 1992 or $0.9375
per share. The options have a term of ten years and became fully exercisable on
September 30, 1993.

The Compensation Committee of the Board of Directors from January 1994
through December 14, 1994 and all of 1993 consisted of Messrs. Clegg, Chambers,
and Frock. As of December 14, 1994 the Compensation Committee consisted of Mr.
Chambers and Mr. Havens. The Committee reviews and recommends compensation and
compensation changes for executives of the Company and the Board of Directors
and administers the Company's Stock Option and Stock Grant Plans. Mr. Clegg was
an officer of the Company during the period he served on this Committee. Mr.
Frock was an officer of the Company for five months (August through December
1994) until a new committee was elected. Messrs. Clegg and Frock are officers of
JBS Investment Banking, Ltd., which had an Administrative Services Agreement
with the Company under which the Company paid JBS an annual fee for management
services through 1994. In August of 1994 the Company ceased paying fixed fees
to JBS. The Committee met four times in 1994.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mr. A. J. Clegg, Chairman and Chief Executive Officer of the Company and
Mr. John Frock, a director of the Company, served on the Compensation Committee
until December 14, 1994. Mr. A. J. Clegg is also Chairman and Chief Executive
Officer of JBS Investment Banking, Ltd. ("JBS") and Mr. Frock is also President
and Chief Operating Officer of JBS. The Company and JBS were parties to an
Administrative Services Agreement whereby JBS provided management and advisory
services to the Company and received management fees from the Company of
$200,724 for 1994. This Agreement was terminated in August 1994 when both Mr.
Clegg and Mr. Frock joined the Company as full-time employees.

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<PAGE>

EMPLOYMENT AGREEMENTS

On January 16, 1995, the Company entered into an employment agreement with
Mr. Wally Orrel in the capacity of Executive Vice President. The agreement
provides that on or about March 1, 1996, after one year of training by the Chief
Executive Officer and growth in managerial capacity acceptable to the Chief
Executive Officer, Mr. Orrel will be considered for promotion to the position as
President and Chief Operating Officer. The employment agreement provides for
Mr. Orrel's employment for a period commencing on January 16, 1995 and ending
January 15, 2000. If the executive is not promoted to the position as President
and COO by March 1, 1996, the executive shall have the right to terminate the
Employment Agreement and may resign and receive a termination payment of six
times the Executive's base monthly salary plus one month's salary for each full
year of employment.

Additionally, the Company has agreed to pay the Executive effective January
16, 1995 until March 1, 1996 a gross salary at the rate of one hundred and five
thousand dollars ($105,000). On March 1, 1996, the gross salary shall increase
to $125,000 upon promotion to President and Chief Operating Officer.
Additionally, the executive shall be eligible for 1) bonuses according to a
bonus plan approved by the Board of Directors, 2) 125,000 additional stock
options at $1.00 per share vesting at 25,000 shares on each of the anniversary
dates of the execution of this Agreement, and 3) other benefits in accordance
to the employers policy (vacation, car and health insurance).

SEVERANCE AGREEMENT

The Company agreed to pay Mr. F.E. Montgomery, the Company's former
president, 1) his base pay for a period of eight months plus three weeks
vacation pay for 1995, 2) the payment of the 1994 performance bonus which is due
based on finalization of the Company's 1994 audited financials, 3) use of the
company vehicle for up to ninety days after the separation and 4) medical
insurance for ninety days.

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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of its Common Stock to file with the Securities and Exchange Commission
(the "SEC") initial reports of ownership and reports of changes in ownership of
the Company's Common Stock. Executive officers, directors and ten percent
stockholders are required by SEC regulations to furnish the Company with a copy
of all Section 16(a) forms ("Forms 3, 4, and 5") that they file. To the
Company's knowledge, based solely on a review of copies of the Forms 3, 4, and 5
furnished to the Company and written representations that no other reports were
required during the period from January 1, 1994 through December 31, 1994, all
applicable Section 16(a) filing requirements were complied with.

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<PAGE>

PROPOSAL TWO

RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(Item 2 on Proxy Card)

The Board of Directors has selected Coopers & Lybrand, independent
accounts, to audit the consolidated financial statements of the Company for its
1995 fiscal year and recommends that the stockholders vote for ratification of
such appointment. If the shareholders do not ratify this appointment, the Board
of Directors will reconsider its selection. A representative of Coopers &
Lybrand is expected to be present at the annual meeting and will have the
opportunity to make a statement if desired and is expected to be available to
respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF COOPERS & LYBRAND AS THE INDEPENDENT ACCOUNTANTS FOR THE 1995
FISCAL YEAR.

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<PAGE>

AUTHORIZATION OF REVERSE SPLIT OF COMMON STOCK

INTRODUCTION

The Board of Directors of the Company has unanimously adopted a resolution
that approves, and submits to the Stockholders for their approval, a Plan of
Recapitalization that would effect a one for four reverse split of the Company's
Common Stock ("Reverse Split") and an amendment to the Company's Certification
of Incorporation to effect the Reverse Split. The full text of the Plan of
Recapitalization is set forth on Exhibit "A" attached hereto and made a part
hereof.

SUMMARY

Under the terms of the Plan of Recapitalization, each four shares of the
Company's currently outstanding shares of Common Stock (the "Old Common Stock")
will be exchanged for one post-split share of the Company's Common Stock (the
"New Common Stock"). Any fractional share resulting from such exchange will be
converted into a right to receive cash in the amount described below. This
Reverse Split will become effective on the date that the amendment to the
Company's Restated Certificate of Incorporation, in the form set forth in the
first paragraph of the Plan of Recapitalization (the "Amendment"), is filed with
the Office of the Secretary of the State of Delaware (the "Effective Date").
That filing is expected to occur promptly following approval of the Plan of
Recapitalization by the Company's Stockholders.

The New Common Stock will not be different from the Old Common Stock, and
the holders of the New Common Stock will have the same relative rights following
the Effective Date as they had prior thereto. The Reverse Split will not affect
the proportionate equity interest of a stockholder, except as may result from
the elimination of fractional shares as described below. The Reverse Split may
leave certain stockholders with one or more "odd lots" of Common Stock, i.e.,
stock in amounts of less than 100 shares. The Plan of Recapitalization will not
change the number of authorized shares of Common Stock or Preferred Stock, or
the par value thereof.

REASONS FOR APPROVING THE REVERSE STOCK SPLIT

The Company requires additional sources of capital to fund its plans for
continuing its growth through acquisitions and new center development. In
meetings with investment bankers, the Company has been advised that an increase
in the per share value of the Company's Common Stock, effected through a
reduction in the number of the outstanding shares due to the Reverse Split,
would improve the Company's prospects for obtaining additional financing by
enhancing the marketability of the Company's securities. Consequently, the
Board believes that implementation of the proposed Plan of Recapitalization is
essential to the Company's prospects for raising additional capital.

The Board of Directors also believes that the implementation of the
proposed Plan of Recapitalization will improve the marketability and liquidity
of the Company's Common Stock. Many brokerage firms are reluctant to recommend
lower price stocks for their clients, and the policies and practices of a number
of brokerage houses tend to discourage individual brokers within those firms

14
<PAGE>

from dealing in lower price stocks. Also, the brokerage commission on the
purchase or sale of a stock with a relatively low price generally tends to
represent a higher percentage of the sales price than the brokerage commission
charged on a stock with a relatively higher price, to the detriment of the
Company's stockholders and the market for the Company's Common Stock. The Board
of Directors believes that these issues will be addressed by the increase in the
price per share of the Company's Common Stock that is expected to occur as a
result of the proposed Reverse Split and the consequent reduction in the number
of shares of Common Stock outstanding.

Of course, there can be no assurance that the price of the Company's Common
Stock will rise following implementation of the Plan of Recapitalization, or
that such price, if it does rise, will continue to escalate or be sustained for
a significant period. In addition, although the Board of Directors is
continuing to meet with investment bankers concerning financing alternatives,
there can be no assurance that additional financing will be obtained.
Nevertheless, for the reasons set forth above, the Board of Directors believes
that adoption of the Plan of Recapitalization is advisable at this time.

Management of the Company is not aware of any present efforts by any person
to accumulate Common Stock of to obtain control of the Company, and the Reverse
Split is not intended to be an anti-takeover device.

15
<PAGE>

GENERAL EFFECT OF PLAN OF RECAPITALIZATION

The effect of the Reverse Split on the aggregate number of shares of the
Company's Common Stock, and on the stockholders' equity section of the Company's
balance sheet at June 30, 1995, is as follows:
<TABLE>
<CAPTION>

Prior to After
Proposed Reverse Proposed Reverse
Number of shares/1/ Split Split
- ------------------- ----- -----
<S> <C> <C>
Common Stock
Authorized 50,000,000 50,000,000
Outstanding 15,645,063 3,911,266
Available for issuance 34,354,937 46,088,734
Par value per share $ .001 $ .001

Preferred Stock
Authorized 50,000,000 50,000,000
Outstanding Series A 2,484,000 2,484,000
Outstanding Series C 2,500,000 2,500,000

Financial data
- --------------
Stockholders' equity
Preferred Stock $ 4,984 $ 4,984
Common Stock $ 15,645 $ 3,911
Additional paid-in
capital $19,782,223 $19,793,957
Accumulated deficit $(8,336,337) $(8,336,337)
----------- -----------
Total stockholders'
equity $11,466,515 $11,466,515
=========== ===========

</TABLE>

EFFECT ON THE MARKET FOR THE COMPANY'S STOCK

The Company's Common Stock is traded in the over-the-counter market on the
National Market System ("NMS") of the Small-Cap of the National Association of
Securities Dealers, Inc. Automated Quotations System "NASDAQ") under the symbol
"NEDI."

- ------------
/1/ Figures for the number of shares prior to the Reverse Split are as of June
30, 1995. Figures after the Reverse Split do not reflect any immaterial
adjustments that may result from the repurchase of fractional shares.

16
<PAGE>

The table below sets forth the high and low sale prices for the Company's
Common Stock on the NASDAQ for each full quarter within the two most recent
fiscal years and subsequent interim periods.

Price
-----
Period High Low
------ ---- ---
<S> <C> <C>
1995
- ----
As of July 10, 1995 $2 1/32 $1 13/16
Quarter ended June 30, 1995 2 1 1/2
Quarter ended March 31, 1995 1 3/4 1

1994
- ----
Quarter ended December 31, 1994 1 5/32 15/16
Quarter ended September 30, 1994 1 7/32 1
Quarter ended June 30, 1994 1 3/8 1
Quarter ended March 31, 1994 1 7/16 3/4

1993
- ----
Quarter ended December 31, 1993 7/8 11/16
Quarter ended September 30, 1993 1 1/16 9/16
Quarter ended June 30, 1993 7/8 15/32
Quarter ended March 31, 1993 1 3/8

</TABLE>

Management anticipates that after the Effective Date, the market price of
the New Common Stock will rise as a result of the decrease in the number of
shares outstanding. However, it cannot be predicted whether any such increase
will be in proportion to the ratio used in the reclassification. Following
implementation of the Reverse Split, trading in the Company's New Common Stock
will continue on NASDAQ.

Holders of the shares of the Company's Common Stock are entitled to receive
such dividends as may be declared by the Company's Board of Directors. No
dividends on Common Stock have ever been paid by the Company, however, and the
Company presently intends to retain all future earnings for the expansion of its
business and consequently does not presently intend to pay cash dividends. The
Company's loan agreement with its principal commercial lender prohibits the
Company from paying dividends or making other cash distributions without the
lender's consent.

EFFECT ON OPTIONS

Under the terms of the Plan of Recapitalization, the number of shares that
may be issued under the Company's 1988 Stock Option and Stock Grant Plan (the
"1988 Plan") and 1986 Stock Option and Stock Grant Plan (the "1986 Plan"), and
the number of shares issuable upon the exercise of outstanding options or
covered by outstanding stock grants, will be decreased in proportion to the one
for four exchange ratio, and the exercise price per share under such outstanding
options will be proportionately

17
<PAGE>

increased. Outstanding options and unvested stock grants under the Plans will be
rounded to the nearest whole share and no cash payment will be made in respect
of any fractional shares.

The Company also has outstanding a number of warrants to purchase shares of
Common Stock. Under the terms of the Plan of Recapitalization and the anti-
dilution provisions of the warrants, the number of shares issuable upon the
exercise of the warrants will be decreased in proportion to the one for four
exchange ratio, and the exercise price per share under such outstanding warrants
will be proportionately increased.

Thus, for example, if an employee of the Company owns an option to purchase
10,000 shares of the Company's Common Stock at $3.00 per shares, then on and as
of the Effective Date the terms of the option will be adjusted so that the
option represents the right to purchase 2,500 shares of Common Stock at an
exercise price of $12.00 per share. No payment will be made in respect of the
rounding of the extra fractional share.

EFFECT ON PREFERRED STOCK

The Company also has outstanding Series A and Series B Preferred Stock (the
"Preferred Stock") which are convertible into Common Shares of the Company.
Under the terms of the Plan of Recapitalization and the anti-dilution provisions
of the Preferred Stock, the number of shares convertible into Common Shares will
be decreased in proportion to the one for four exchange ratio, and the
conversion price per share under of such Preferred Stock will be proportionately
increased.

EXCHANGE OF STOCK CERTIFICATES AND LIQUIDATION OF FRACTIONAL SHARES

As soon as practicable after the Effective Date, the Stockholders will be
notified and requested to surrender their certificates representing shares of
Common Stock to the Company's transfer agent so that certificates representing
the appropriate number of shares of New Common Stock, and a cash payment in lieu
of any fractional share, may be issued in exchange therefor.

No strip or fractional certificates will be issued in connection with the
proposed Reverse Split. Rather, the Company will pay cash in lieu of any
fraction of a share which any Stockholder would otherwise receive. The price
for such fractional shares will be based upon the average closing price per
share for the shares of the Company's Common Stock on the NASDAQ as reported in
the Wall Street Journal for the ten trading days immediately preceding the
effective date of the Reverse Split.

ABANDONMENT OF THE PLAN OF RECAPITALIZATION BY THE DIRECTORS

If the Plan of Recapitalization is approved, it will become effective, as
noted above, upon the filing of the Amendment with the Office of the Secretary
of State of Delaware. However, the directors of the Company will be authorized,
without a further vote of the Stockholders, to abandon the Plan of
Recapitalization and to determine not to file the Amendment if the directors
conclude that such action would be in the best interest of the Company and its
Stockholders. For example, the directors might abandon the Plan of
Recapitalization upon the advise of an investment banker, or in order to

18
<PAGE>

consummate an acquisition or other transaction. The Company presently has no
indication that any such event will occur.

FEDERAL INCOME TAX CONSEQUENCES

A summary of the federal income tax consequences of the proposed Reverse
Split is set forth below. The following discussion is based upon present federal
tax law and does not purport to be a complete discussion of such consequences.
Accordingly, STOCKHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS FOR MORE
DETAILED INFORMATION REGARDING THE EFFECTS OF THE PROPOSED REVERSE SPLIT ON
THEIR INDIVIDUAL TAX STATUS.

1. The proposed Reverse Split will not be a taxable transaction to the
Company.

2. A Stockholder will not recognize any gain or loss as a result of the
Reverse Split unless the Stockholder receives cash in lieu of a fractional
share. Although it is impossible to predict with certainty the tax consequences
to any Stockholder who receives cash in lieu of a fraction share, in all
likelihood such Stockholder will either (i) recognize gain or loss as a result
of the repurchase of a fractional share based upon the amount realized for the
fractional share less the holder's proportionate adjusted basis in such
fractional share, or (ii) recognize gain in an amount not in excess of the
amount of proceeds received from the sale of the fractional share.

3. The tax basis of the shares of New Common Stock received by a
Stockholder pursuant to the Reverse Split will equal the aggregate tax basis of
the Stockholder's Old Common Stock exchanged therefore (which basis, if the tax
treatment described in Clause (ii) of paragraph 2 above applies will be (i)
increased by an allocable portion of the basis of any shares of Old Common Stock
that were exchanged for cash in lieu of fraction shares.) The holding period of
the New Common Stock received by the Stockholder will include the holding period
of the Stockholder's Old Common Stock before the Reverse Split, provided the
shares of Old Common Stock were capital assets in the hands of such Stockholder.

19
<PAGE>

NO DISSENTERS' RIGHTS

Under Delaware law, Stockholders are not entitled to dissenters' rights
with respect to the proposed amendment to the Company's Restated Certificate of
Incorporation to effect the Reverse Split.

APPROVAL BY THE STOCKHOLDERS

THE BOARD OF DIRECTORS BELIEVES THAT THE PLAN OF RECAPITALIZATION IS IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A
VOTE FOR APPROVAL OF THE PLAN OF RECAPITALIZATION AND THE AMENDMENT TO THE
COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO EFFECT THE ONE FOR FIVE
REVERSE SPLIT.

20
<PAGE>

1995 STOCK INCENTIVE PLAN

On June 21, 1995, the Company's Board of Directors (the "Board") adopted,
subject to shareholder approval, the Nobel Education Dynamics, Inc. 1995 Stock
Incentive Plan (the "Plan") to assist the Company and any subsidiary of the
Company ("Subsidiary") in (i) attracting and retaining officers and other key
management level employees of outstanding ability ("Key Employees" as defined in
the Plan), (ii) attracting and retaining directors of the Company or a
Subsidiary who are not officers or employees thereof ("Outside Directors"), and
(iii) motivating Key Employees and Outside Directors to exercise their best
efforts on behalf of the Company and any Subsidiary.

The following description of the Plan is intended merely as a summary of
its principal features and is qualified in its entirety by reference to the
Plan.

Under the Plan, one million five hundred (1,500,000) Common Shares are
reserved (subject to adjustment to reflect stock dividends, stock splits, share
combinations, and similar changes in the capitalization of the Company) for the
granting of incentive stock options ("ISOs"), non-qualified stock options
("NQSOs"), stock appreciation rights ("SARs"), restricted stock ("Restricted
Stock") and unrestricted stock ("Unrestricted Stock") (collectively, the
"Awards").

As of the date of this Proxy Statement, no Awards have been made under the
Plan. There are approximately 250 of Key Employees and six Outside Directors
eligible to participate in the Plan. Key Employees are eligible to receive any
type of Award while Outside Directors are only eligible to receive NQSOs. No Key
Employee shall receive ISOs and NQSOs (collectively, "Options") for more than
100,000 Common Shares over any one year period. As of March 31, 1996 and each
subsequent March 31st that the Plan is in effect, each individual serving as an
Outside Director shall be granted an NQSO to purchase 2,000 Common Shares (as
adjusted pursuant to Section 11 of the Plan), if the individual served as a
director for the entire previous fiscal year-end, and the Company's pre-tax
income for such fiscal year increased at least 20% from the prior fiscal year.

The Plan will be administered by the Compensation Committee, which is
presently comprised of Messrs. Chambers (Chairman) and Havens. The Committee has
full authority to interpret the Plan, to establish appropriate rules and
regulations, to select Key Employees who will receive Awards under the Plan, to
grant Awards on behalf of the Company, to set the dates and authorized terms of
such Awards, and generally to administer the Plan. With respect to the
eligibility of Outside Directors, the Plan is intended to be a "formula award"
plan as defined by Rule 16b-3 promulgated under the Securities Exchange Act of
1934 (the "Exchange Act") and as such, the Committee does not have any
discretionary authority with respect to such Awards.

Options granted under the Plan to Key Employees have an exercise price of
not less than fair market value of the Common Shares on the date of the grant
and may not extend for more than ten years, subject to more stringent
limitations in the case of ISOs granted to an optionee who is a 10% or greater
shareholder. Options granted under the Plan to Outside Directors have as an
exercise price equal to the fair market value of the shares of Common Stock on
the date the Option is granted. NQSOs granted to Outside Directors have a term
of ten (10) years from the date of the grant. Options

21
<PAGE>

granted to Key Employees are exercisable in such installments as the Committee
may determine, but not earlier than six (6) months from the later of the date of
the grant or the date the Plan is approved by the Company's shareholders except
under specified circumstances. Options granted to Outside Directors are
exercisable commencing six months after the later of the date of the grant or
the date the Plan is approved by the Company's shareholders. On June 30, 1995,
the last reported sales price of the Company's Common Stock on the NASDAQ
National Market was 1 3/16.

Any Option held by a Key Employee or Outside Director who dies while
employed (as defined in the Plan) by the Company or a Subsidiary, or whose
employment with the Company or a Subsidiary is terminated prior to the
expiration date of such Option will remain exercisable by the Key Employee or
Outside Director, or his or her personal representative, for a period of time
following the Key Employee's or Outside Director's termination of employment or
death as provided in the Plan and the applicable option agreement. Upon exercise
of an Option, a Key Employee shall pay the exercise price in cash, or if, the
Committee shall so determine in its discretion, either in whole or in part by
the delivery of Common Stock held by the Key Employee, subject to the
limitations set forth in the Plan. The exercise price of an NQSO granted to an
Outside Director shall be paid in cash or its equivalent.

ISOs are also subject to certain additional terms and conditions required
by the Code. To the extent that the fair market value (determined as of the date
of the option grant) with respect to which ISOs are exercisable for the first
time in any one year as to any optionee exceeds $100,000, such option shall be
treated as a NQSO for tax purposes.

In the Committee's discretion, a Key Employee granted an Option may also be
granted the right in lieu of exercising all or a portion of an Option, to elect
instead to receive an amount equal to the difference between the fair market
value of all or a specified number, of the Common Stock subject to such Option
on the date such right is exercised and the exercise price under such Option.
Such right is referred to as a Stock Appreciation Right ("SAR"). This amount
may be paid in cash or in Common Stock, or in a combination of cash and Common
Stock as the Committee shall determine. Any SAR is exercisable only at a time
when the Option to which it is related is exercisable (more stringent rules
apply if the Key Employee is a director or officer of the Company within the
meaning of Section 16 of the Exchange Act and cash is being paid upon exercise
of the SAR.) A SAR shall be granted in tandem with an Option and the Option-SAR
shall be considered exercised when either the underlying Option or the SAR is
exercised. A SAR expires no later than the termination of the Option to which
it relates and is transferable only if and when the underlying Option is
transferable, and may be exercised only when the fair market value of the Common
Stock subject to the Option exceeds the exercise price of the Option.

The Committee, in its discretion, may make Restricted Stock Awards under
the Plan to Key Employees as it determines are warranted. Restricted Stock
Awards may be subject to one or more vesting periods and any additional terms or
conditions as the Committee may deem advisable. If the Company issues
certificates representing the Common Stock subject to the Restricted Stock Award
in the name of the Key Employee, such Common Stock will bear a legend indicating
their restrictions and the Key Employee shall execute a stock power to be held
with the certificates by the Company. However, the Key Employee shall be
entitled to receive dividends paid on such Common Stock, shall

22
<PAGE>

have the right to vote such Common Stock, and shall have all other shareholders'
rights with respect to such Common Stock. The Committee shall specify in the
Restricted Stock Award agreement, the manner of determining the number of
unvested shares of Common Stock which shall become vested in the Key Employee if
his or her employment is terminated prior to the later of the expiration of the
vesting period or the satisfaction of any conditions. Different vesting
provisions may apply to a Key Employee's termination due to death or disability.
Any remaining unvested shares of Common Stock shall be forfeited upon
termination of employment unless the Committee determines otherwise.

The Committee may grant Restricted Stock Awards under which the Key
Employee shall not be required to make any payment or under which the Key
Employee shall pay all (or any lesser amount than all) of the fair market value
of the Common Stock determined as of the date of the grant.

The Committee may make Unrestricted Stock Awards to Key Employees and each
certificate for shares of unrestricted Common Stock shall be registered in the
name of the Key Employee and be delivered to him or to her.

Upon a change in control of the Company (as defined in Section 12 of the
Plan), the Committee (as it is constituted on the day preceding the date of the
change in control) may, in its discretion, accelerate the vesting and
exercisability of outstanding Options and SARs granted to Key Employees and
accelerate the vesting of Restricted Stock Awards granted to Key Employees. In
the event of certain corporate reorganizations, each outstanding Award will be
assumed by the surviving or successor corporation. However, the Committee may
terminate all or a portion of the outstanding Options granted to Key Employees
if it determines that such termination is in the best interests of the Company
in which case the Key Employee will be given not less than seven days' notice
prior to termination and the Options may be exercised up to and including the
date immediately preceding such termination.

The Plan became effective (subject to shareholder approval) on August ,
1995, and terminates on July 31, 2005. The Board of Directors of the Company may
amend, suspend or discontinue the Plan, except that without the approval of the
shareholders: (1) the class of persons eligible to receive Awards shall not be
changed nor shall any other requirement as to eligibility for participation in
the Plan be materially modified; (2) the maximum number of shares of Common
Stock with respect to which Awards may be granted under the Plan shall not be
increased (otherwise than in connection with certain changes in the
capitalization of the Company); (3) the benefits accruing to individuals
participating in the Plan shall not be materially increased; (4) the duration of
the Plan shall not be extended; and (5) no amendment which would require
shareholder approval pursuant to Prop. Treas Reg. (S) 1.162-27(e)(4)(vi), or any
successor thereto, may be made. However, no amendment to the Plan that would
affect (1) the amount and price of the Common Stock subject to NQSOs to be
granted to Outside Directors, (2) the timing of such grants to Outside
Directors, or (3) the formula, if any, that determines the amount, price and
timing if NQSO grants to Outside Directors, shall be made more than once every
six months with changes in the Code or the Employee Retirement Income Security
Act.

23
<PAGE>

TAX TREATMENT

If an option is treated as an ISO, the optionee will recognize no U.S.
Federal taxable income upon grant of an ISO. Upon the exercise of an ISO, the
optionee recognizes no taxable income provided the optionee was an employee of
the Company during the entire period from the date of the grant of the ISO until
three months before the date of exercise (or such later date as the option may
provide) or in the case of an optionee whose employment terminates due to
disability, until twelve months before the date of exercise. Notwithstanding the
preceding, the excess of the fair market value of the Common Stock over the
exercise price, both determined at the time of exercise, generally will be
included in the optionee's alternative minimum taxable, income in the year of
exercise.

Upon an optionee's sale of the Common Stock (assuming that the sale occurs
no sooner than two years after grant of the option and one year after exercise
of the option), any gain will be taxed to the optionee as long-term capital
gain. If the optionee disposes of the shares of Common Stock prior to the
expiration of the above holding period, the optionee will recognize ordinary
income in an amount generally measured as the difference between the exercise
price and the lower of the fair market value of the Common Stock at the exercise
date or the sale price of the Common Stock. Any gain or loss recognized on such
a disposition of the Common Stock in excess of the amount treated as ordinary
income will be characterized as capital gain or loss. The Company will be
allowed a business expense deduction to the extent the optionee recognizes
ordinary income.

An optionee will not recognize any U.S. Federal taxable income at the time
the optionee is granted an NQSO. However, upon exercise of the Option, the
optionee will recognize ordinary income for federal income tax purposes in an
amount generally measured as the excess of the then fair market value of the
Common Stock over the exercise price, and the Company will be entitled to a
deduction at the time of exercise. If the Company complies with the applicable
income tax withholding or information reporting requirements, it will be
entitled to a business expense deduction in the same amount and at the same time
as the optionee recognizes ordinary income. Upon an optionee's sale of such
shares, any difference between the sale price and fair market value of such
shares on the date of exercise will be treated as capital gain or loss and will
qualify for long-term capital gain or loss treatment if the shares of Common
Stock have been held for more than one year.

Upon the grant of a SAR, the optionee recognizes no taxable income. Upon
exercise of a SAR, the optionee recognizes ordinary income as of the date of
exercise in an amount equal to the excess of the fair market value of the Common
Stock on the date of exercise over the exercise price. An optionee exercising a
SAR is subject to Federal income tax withholding on the income recognized as a
result of the exercise of the SAR. The Company is entitled to a deduction (in
the same year in which the grantee recognizes income) to the extent of the
amount includible in the gross income of the optionee.

Upon the making of a Restricted Stock Award, the grantee will recognize no
taxable income. Upon payment of dividends, the grantee will recognize ordinary
income and the Company generally will be entitled to a deduction (in the same
year in which the grantee recognizes income) equal to the amount includible in
the gross income of the grantee. Upon vesting of Common Stock in a grantee, the
grantee will recognize ordinary income in an amount equal to the fair market
value of such Common

24
<PAGE>

Stock on the date of vesting minus any purchase price paid for the restricted
shares. The Company will generally be entitled to a deduction (in the same year
in which the grantee recognizes income) equal to the amount of ordinary income
includible in the gross income of the grantee.

Upon the making of an Unrestricted Stock Award, the grantee will recognize
ordinary income in an amount equal to the fair market value of such Common Stock
on the date of the grant and the grantee is subject to Federal income tax
withholding. The grantee's holding period for Common Stock begins on the day of
the grant. When the grantee disposes of such Common Stock, he/she will
recognize a long-term or short term capital gain (or loss) under Code rules
which govern stock dispositions, assuming that the Common Stock is held by the
grantee as capital assets. The Company will generally be entitled to a
deduction (in the same year in which the grantee recognizes income) equal to the
amount of ordinary income includible in the gross income of the grantee.

Different rules for measuring ordinary income may apply if the optionee is
subject to Section 16 of the Securities Exchange Act of 1934, as amended.

The foregoing does not purport to be a complete summary of the effect of
Federal income taxation upon holders of Options, SARs, or Restricted Stock upon
the Company. It also does not reflect provisions of the income tax laws of any
municipality, state or foreign country in which an optionee may reside.

APPROVAL OF SHAREHOLDERS

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE 1995
STOCK INCENTIVE PLAN. THE BOARD OF DIRECTORS BELIEVES THAT THE PLAN IS AN
IMPORTANT TOOL FOR THE COMPANY IN ITS EFFORTS TO ATTRACT AND RETAIN TALENTED
EMPLOYEES AND OUTSIDE DIRECTORS.

25
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth the cash and non cash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the company and by the executive officers who earned more than
$100,000 during 1994.

Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
Long Term Compensation Awards
-----------------------------
Annual Compensation Securities
Name & Principal Other Annual Restricted Underlying All Other
Position Year Salary Bonus Compensation Stock Awards Options/SARs(#) Compensation
- ------------------ ---- ------ ----- ------------ ------------ --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>

A.J. Clegg 1994 $57,851/(1)/ $39,978/(2)/ $ 5,074/(4)/
Chairman and 1993 /(1)/
Chief Executive 1992 /(1)/
Officer

F.E. Montgomery 1994 $158,357 55,650/(2)/ 13,600/(5)/
President and 1993 147,124 52,500/(3)/ 33,715/(5)/ $150,000
Chief Operating
Officer

W. Orrel 1994 $ 83,551 31,040/(2)/ 27,870/(6)/
Exec. Vice 1993 52,165 10,336/(3)/ 22,942/(6)/ 30,000
President

D. Scott Clegg 1994 73,238 13,320/(2)/ 11,963/(7)/
Vice President 1993 38,795 14,391/(3)/ 16,453/(7)/ 25,000
</TABLE>

(1) In August of 1994, Mr. A.J. Clegg was hired as an employee of the Company in
the position of Chairman and Chief Executive Officer. Prior to this time,
Mr. Clegg was the Chairman and Chief Executive Officer of JBS Investment
Banking (Ltd) ("JBS"). On May 29, 1992, pursuant to a private placement
offering, the Company entered into a three (3) year Administrative Services
Agreement with JBS whereby JBS would provide management and advisory
services to the Company and would receive certain management fees. The
fixed fee portion of this agreement was terminated in August of 1994 when
Mr. Clegg joined the Company as a full time employee. During 1994, 1993 and
1992, respectively, the Company paid fees to JBS approved by the Board
totaling $200,374, $400,000 and $218,469 for the services of JBS personnel
including A.J. Clegg, B. Clegg, T. Fitzgerald, J. Frock, W. Moore and C.
Wisor.

(2) The bonus paid was for the period ended December 31, 1994.

(3) The bonus paid was for the period ended December 31, 1993.

(4) Other annual compensation for Mr. A.J. Clegg in 1994 includes $3,200 for
automobile expenses and $1,874 for health insurance. Mr. A.J. Clegg joined
the Company as a full time employee on August 1, 1994 (see 1 above).

(5) Other annual compensation for Mr. Montgomery included (1) $4,201 and $2,470
for automobile expenses in 1994 and 1993, respectively, (2) $9,399 and
$6,636 for health and life insurance in 1994 and 1993, respectively and
(3) $24,608 for relocation in 1993.

(6) Other annual compensation for Mr. Orrel included (1) $7,800 and $4,550 for
automobile expenses for 1994 and 1993, respectively, (2) $10,070 and $5,894
for health and life insurance in 1994 and 1993, respectively, and
(3) $10,000 and $12,498 for relocation

26
<PAGE>

expenses for 1994 and 1993, respectively. Mr. Orrel joined the Company in
April of 1993.

(7) Other annual compensation for Mr. D. Scott Clegg included (1) $6,600 and
$2,475 for automobile expenses in 1994 and 1993, respectively and (2) $5,653
and $2,413 for health and life insurance in 1994 and 1993, respectively and
(3) $11,565 for relocation expenses in 1993. Mr. Clegg joined the Company
in June of 1993.

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

Aggregated Option/SAR exercised in last fiscal year and fiscal year-end:

<TABLE>
<CAPTION>
Option/SAR Values
-----------------

Number of Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired on Value at End of 1994 at End of 1994
Name Exercise Realized(1) (Exercisable/Unexercisable) (Exercisable/Unexercisable(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A.J. Clegg - - - -
F.E. Montgomery - - 100,000 E/50,000 U $37,500 E/$18,750 U
W. Orrel - - 20,000 E/20,000 U $ 3,750 E/$ 3,750 U
D. Scott Clegg - - 15,000 E/10,000 U $ 2,813 E/$ 1,875 U

</TABLE>
(1) Value based on market value of the Company's Common Stock at date of
exercise or end of 1994 minus the exercise price.

None of the above named officers held any SARS at the end of 1994.

STOCK OPTIONS

On January 22, 1993, the Company issued 150,000 options under the 1986 Plan
to F.E. Montgomery, the President of the Company, in connection with his
compensation arrangements. These options were issued at fair market value on
January 22 and became exercisable in 3 installments as follows: 50,000 on July
14, 1993; 50,000 on January 14, 1994; and 50,000 on January 14, 1995. Mr.
Montgomery exercised these options on February 24, 1995.

27
<PAGE>

REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS

The Company's Compensation Committee is comprised of two outside Directors
of the Company, currently Messrs. Chambers (Chairman) and Havens. At least
annually, the Compensation Committee reviews the compensation levels of the
Company's executive officers and makes recommendations to the Board of Directors
regarding compensation of such executive officers. In general, the Compensation
Committee endeavors to base the compensation of the executive officers on
individual performance, performance against established financial goals based on
the Company's strategic plan, and comparative compensation paid to executives of
direct competitors and non-financial, service companies.

In 1994, the Committee was involved in fixing the compensation of the
Company's Chairman and Chief Executive Officer, President, Executive Vice
President of Operations, Executive Vice President of Corporate Development, Vice
President of Operations for the private school operations on the west coast, and
the Controller.

The Company's Chairman and CEO, Mr. Clegg, and Executive Vice President of
Corporate Development, Mr. Frock, joined the Company as full-time employees in
August 1994. From January through July of 1994, Mr. Clegg and Mr. Frock did not
receive remuneration directly from the Company for their services. Instead, the
Company paid fees for an Administrative Services Agreement to JBS Investment
Banking, Ltd., a management services company controlled by Mr. Clegg, for
various services detailed in the Agreement.

Executive officers' compensation generally consists of base salary which
comprises a significant portion of total compensation, bonuses that are based on
Company performance, fringe benefits, and stock options. All executive officers
are reviewed annually for performance, and salary changes are effective in
March. Bonuses are distributed after the results of the audit of the financial
statements have been verified by the Board.

The Chairman and Chief Executive Officer, Mr. A. J. Clegg, joined the
Company as a full-time employee in August 1994. In May 1994, the Compensation
Committee hired Towers Perrin to perform an executive compensation review.
Towers Perrin met with the Compensation Committee members and Nobel's executive
management to learn about Nobel's executive responsibilities and developed
competitive compensation levels using published and private data sources
covering the education/educational services industries. Towers Perrin then
developed a suggested salary structure for executive positions.

The Chairman and Chief Executive Officer's compensation included a annual
base salary of $150,000 based on the study performed by Towers Perrin, a bonus
plan tied to the performance of the Company, and normal fringe benefits. In
1994, the performance bonus plan was based on the Company's net income compared
to its annual business plan which is submitted to and approved by the

28
<PAGE>

Board of Directors prior to the beginning of the year. The bonus plan for the
Chairman and Chief Executive Officer entitled him to earn a bonus of $64,000 for
achieving 100% of the net income target. He was able to earn a minimum bonus of
80% of the $64,000 for achieving 90% of the net income to a maximum of 150% of
$64,000 for exceeding 125% of the net income target. As a result of the
Company's performance in 1994, the maximum bonus was earned by the Chairman and
CEO. Since he joined the Company as a full-time employee in August, this was
prorated for his period of employment.

The Compensation Committee established the other executive officers' base
salaries in 1994 by reviewing salary levels for similar positions of direct
competitors (including, but not limited to, those companies comparing the peer
group index that appears in the five-year performance graph) and other
educational companies. The Company also has an internal compensation committee
consisting of Messrs. Clegg and Frock. Except for the executives reviewed by
the Compensation Committee, all other salaries and performance are reviewed by
this committee. They review and report on individual performance to the
Compensation Committee, who then authorizes increases or changes based on
competitors' levels and performance. The Compensation Committee believes that
the salaries of the executive officers are in line with salary ranges in the
companies that they reviewed.

Executive officers of the Company can earn annual bonuses based upon the
performance of the Company as compared to its annual business plan, which is
submitted to and approved by the Board of Directors prior to the beginning of
the year. In 1994, the bonus plan in place entitled the Company's President and
Controller to earn a bonus based upon the Company's pre-tax profits in 1994 as
compared to a previously established pre-tax profit target for 1994. The plan
entitled each of them to a minimum bonus of 1% of base salary for achieving 96%
of the profit target and a maximum bonus of 35% of base salary for exceeding the
profit target by at least 20%. As a result of the Company's performance in
1994, the maximum bonus was earned by the President and Controller. The
Company's bonus plan for its Vice Presidents in charge of child care operations
and private school operations allowed each of them to earn a bonus ranging from
1% to 35% of his base salary based upon the 1994 operating profit of his unit
compared to the operating profit target for 1994, and additional bonuses of 2%
of base salary for each new center or school in his unit which becomes
cumulatively profitable within nine months of commencement of operations. The
Vice Presidents earned bonuses in 1994 equal to 35% and 16%, respectively, of
their base salaries. The Executive Vice President of Corporate Development, who
joined the Company in August 1994, could earn an annual bonus based on net
income compared to plan. The plan entitled him to earn a bonus of $22,000 for
achieving 100% of the net income target. He was able to earn a minimum of 80%
of the $22,000 for achieving 90% of the net income to a maximum of 150% of
$22,000 for exceeding 125% of the net income target. The Company's Executive
Vice President of Corporate Development earned a bonus at the maximum level
which was prorated for his length of employment since he joined the Company in
August.

COMPENSATION COMMITTEE

Mr. Edward Chambers, Chairman

Mr. Peter Havens

29
<PAGE>

The following line graph compares the cumulative total stockholder return
on the Company's Common Stock with the cumulative total return of the CRSP
(Center for Research in Security Prices) Index for NASDAQ Stock Market (US
Companies) and an index of peer group companies selected by the Company for the
period December 30, 1989 through December 31, 1995. The graph assumes that the
value of the investment in the Company's Common Stock and each index was $100 at
December 30, 1989, and that all dividends paid by those companies included in
the indices were reinvested.

COMPARISON OF FIVE YEAR CUMULATIVE
TOTAL RETURN AMONG NOBEL EDUCATION DYNAMICS, INC.,
THE CRSP INDEX FOR NASDAQ STOCK MARKET AND PEER GROUP

12/89 12/90 12/91 12/92 12/93 12/94
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>

Nobel Education Dynamics, Inc. $100 $29.7 $17.2 $34.4 $30.1 $38.7

NASDAQ Stock Market
(U.S. Companies) $100 $84.9 $136.3 $158.7 $182.2 $178.1

Self Determined Peer Group $100 $34.1 $27.8 $45.3 $61.7 $57.6
</TABLE>

Assumes $100 was invested on December 31, 1989 in the applicable stock or index,
and that all dividends were reinvested.

30
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Child Care Investors L.P., Limited (the "Partnership"), a Delaware limited
partnership, was formed in September 1986 for the purpose of purchasing and
leasing child care centers and other commercial properties. During 1986 and
1987, the Partnership purchased various child care centers and leased them to
the Company. To finance the acquisition of some of these centers, the
Partnership borrowed $3,500,000 from Fidelity Bank, N.A., the repayment of which
has been guaranteed by the Company. This loan was extended until April 1998, and
the balance was approximately $1.2 million.

During 1994 and 1993, legal services were rendered to the Company by
Drinker Biddle & Reath, of which Morgan R. Jones, a Director of Nobel, is a
partner, Chairman, and Chief Executive Officer. The Company expects this firm to
continue to provide such services during 1995. Fees paid to Drinker Biddle &
Reath in 1994 totaled $129,367.

Mr. A. J. Clegg, the Chairman and Chief Executive Officer, is also the
Chairman and Chief Executive Officer of JBS Investment Banking, Ltd. ("JBS"). On
May 29, 1992, the Company entered into a three-year Administrative Services
Agreement with JBS whereby JBS would provide management and advisory services to
the Company and will receive management fees from the Company of $250,000 per
year. The Board of Directors approved an additional payment of $150,000 to JBS
for services performed in 1993 beyond the scope of the contract, including
divestitures (including the Southeast divestiture), new center and school
development, acquisition feasibility, new product development, and other
services in 1993. The described fixed fee portions Administrative Services
Agreement was terminated in August of 1994 when Mr. Clegg and Mr. Frock
relinquished their duties at JBS and became full-time employees with the
Company. For the year ended December 31, 1994, the Company paid JBS fees
totaling $200,374.

In accordance with the private placement agreement of the Series C
Preferred Stock, Edison Venture Fund has the right to designate one director
until the sale or conversion of more than 1,250,000 shares of Series C Preferred
Stock. In August 1994, Edison Venture Fund appointed Mr. John Martinson as its
Board designee. Edison Venture Fund beneficially owns 2,096,774 shares of Series
C Preferred Stock. In November 1994, 403,206 shares of the Series C Preferred
Stock were purchased for $403,206 by A. J. Clegg from the Edison Venture Fund
II, PA due to a conflict with the fund. Edison Venture Fund continues to own the
majority of the Series C Preferred Stock.

31
<PAGE>

GENERAL INFORMATION

The Company's Annual Report for the fiscal year ended December 31, 1994 was
mailed to the stockholders previously on June 8, 1995. Stockholders who wish to
obtain, free of charge, a copy of the Company's Form 10-K for the year ended
December 31, 1994, as filed with the SEC, may do so by writing or calling Yvonne
DeAngelo, Secretary and Controller, Nobel Education Dynamics, Inc., 1400 North
Providence Road, Suite 3055, Media, Pennsylvania 19063, telephone (610)891-8200.

32
<PAGE>

EXHIBIT "A"

PLAN OF RECAPITALIZATION

On , 1995, the Board of Directors of Nobel Education Dynamics, Inc.
(the "Company") adopted a resolution declaring the advisability of, and
submitting to the Stockholders of the Company for their approval, the following
Plan of Recapitalization:

1. Amendment to Certificate of Incorporation. Subject to approval by the
Company's Stockholders, and subject to the terms of paragraph 6 of this Plan of
Recapitalization, the Company shall file a Certificate of Amendment
("Amendment") with the Office of the Secretary of State of Delaware which shall
amend the first paragraph of Article FOURTH of the Company's Restated
Certificate of Incorporation, as amended, to read in its entirety as follows:

"FOURTH: The amount of total authorized capital stock of the
Corporation is Sixty Million (60,000,000) shares, divided into Fifty
Million (50,000,000) shares of Common Stock, par value $.001 per
share, and Ten Million (10,000,000) shares of undesignated Preferred
Stock, par value $.001 per share. Each one (1) share of the
Corporation's Common Stock issued and outstanding on the date that
this Amendment is filed with the Office of the Secretary of State of
Delaware shall be and hereby is automatically changed without further
action into one-fifth (1/5) fully paid and nonassessable share of the
Corporation's Common Stock, provided that no fractional shares shall
be issued pursuant to such change. The Corporation shall pay to each
stockholder who would otherwise be entitled to a fractional share
based upon the average daily closing price per share of the
Corporation's Common Stock on the Small-Cap Market of the National
Association of Securities Dealers for the ten (10) trading days
preceding the effective date of this amendment."

2. Reverse Split. Immediately upon filing the Amendment with the Office of
the Secretary of State of Delaware (the "Effective Date"), each five shares of
the Company's currently outstanding shares of Common Stock (the "Old Common
Stock") shall be converted into one post-split share of fully-paid and
nonassessable Common Stock (the "New Common Stock"), subject to the required
payment for fractional shares.

3. No Fractional Shares. The Company shall issue one share of New Common
Stock for each five shares of Old Common Stock outstanding, and shall pay cash
in lieu of any fraction of a share which any Stockholder would otherwise
receive. The price for such fractional share shall be based upon the average
daily closing price per share for the shares of the Company's Old Common Stock
on the National Market System of the National Association of Securities Dealers
as reported in the Wall Street Journal for the ten trading days immediately
preceding the Effective Date. From and after the Effective Date, certificates
representing shares of Old Common Stock shall be deemed to represent only the
right to receive shares of New Common Stock and cash in lieu of any fractional
share of New Common Stock to which an individual Stockholder would be entitled.

33
<PAGE>

4. Exchange of Stock Certificates. As soon as practicable after the
Effective Date, the Company shall notify its Stockholders and ask them to
surrender their certificates representing shares of Old Common Stock to the
Company's transfer agent so that the appropriate number of shares of New Common
Stock, and a cash payment in lieu of any fractional shares, may be exchanged
therefor. Until so surrendered, each outstanding share of Old Common Stock shall
be deemed for all corporate purposes to evidence the ownership of one-fifth
(1/5) share of New Common Stock.

5. Stock Option Plans. The number of shares that may be issued under the
Company's 1986 Stock Option and Stock Grant Plan and 1988 Stock Option and Stock
Grant Plan (together, the "Option Plans"), and the number of shares issuable
upon the exercise of outstanding options or covered by outstanding stock grants,
shall be decreased in proportion to the one for five exchange ratio established
above, provided, however, that outstanding options under the Option Plans shall
be rounded to the nearest whole share and no cash payment shall be made in
respect thereof, and the exercise price per share under such outstanding options
shall be increased in proportion to such exchange ratio.

6. Warrants. The number of shares that may be issued upon the exercise of
outstanding warrants to purchase the Company's Common Stock shall be decreased
in proportion to the one for five exchange ratio established above, and the
exercise price per share under such outstanding warrants shall be increased in
proportion to such exchange ratio, in accordance with the terms of each such
warrant.

7. Preferred Stock. The number of shares that may be issued upon the
conversion of Preferred Stock into the Company's Common Stock shall be decreased
in proportion to the one for five exchange ratio established above, and the
conversion price per share under such Preferred Stock shall be increased in
proportion to such exchange ratio, in accordance with the terms of the Preferred
Stock.

8. Directors May Abandon Plan. The directors are authorized to abandon this
Plan of Recapitalization at any time prior to the Effective Date.

<PAGE>

NOBEL EDUCATION DYNAMICS, INC.
1995 STOCK INCENTIVE PLAN

EFFECTIVE DATE: JUNE 21, 1995
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>

PAGE
----
<S> <C> <C>

SECTION 1 Purpose................................ 1

SECTION 2 Administration......................... 1

SECTION 3 Eligibility............................ 2

SECTION 4 Stock.................................. 3

SECTION 5 Granting of Options to Key Employees... 3

SECTION 6 Granting of NQSOs to Outside Directors. 4

SECTION 7 Annual Limit for ISOs.................. 4

SECTION 8 Options and SARs....................... 5

SECTION 9 Restricted Stock Awards................ 12

SECTION 10 Unrestricted Stock Awards.............. 14

SECTION 11 Capital Adjustments.................... 14

SECTION 12 Change in Control...................... 15

SECTION 13 Amendment or Discontinuance of the Plan 16

SECTION 14 Termination of Plan.................... 17

SECTION 15 Shareholder Approval................... 17

SECTION 16 Miscellaneous.......................... 17
</TABLE>
<PAGE>

NOBEL EDUCATION DYNAMICS, INC.
1995 STOCK INCENTIVE PLAN

SECTION 1
PURPOSE

This NOBEL EDUCATION DYNAMICS, INC. 1995 STOCK INCENTIVE PLAN ("Plan")
is intended to provide a means whereby NOBEL EDUCATION DYNAMICS, INC.
("Company") and any Subsidiary of the Company (as hereinafter defined) may,
through the grant of incentive stock options and non-qualified stock options
(collectively "Options"), stock appreciation rights ("SARs"), stock subject to
restrictions ("Restricted Stock") and stock not subject to restrictions
("Unrestricted Stock") to Key Employees and Outside Directors (both as defined
in Section 3), attract and retain such Key Employees and Outside Directors and
motivate such individuals to exercise their best efforts on behalf of the
Company and of any Subsidiary.

As used in the Plan, the term "incentive stock option" ("ISO") means
an Option which qualifies as an incentive stock option within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code"), at the time it is granted and which is either designated as an ISO
in the Option Agreement (as hereinafter defined) covering such Option or which
is designated as an ISO by the Committee (as defined in Section 2 hereof) at the
time of grant. The term "non-qualified stock option" ("NQSO") means any other
Option granted under the Plan. The term "Subsidiary" means any corporation
(whether or not in existence at the time the Plan is adopted) which, at the time
an Award is granted, is a subsidiary of the Company under the definition of
"subsidiary corporation" contained in section 424(f) of the Code, or any
successor thereto.

SECTION 2
ADMINISTRATION

The Plan shall be administered by the Company's Compensation Committee
(the "Committee"), which shall consist of at two or more Outside Directors who
shall be appointed by, and shall serve at the pleasure of, the Company's Board
of Directors (the "Board"). Each member of the Committee, while serving as
<PAGE>

such, shall be deemed to be acting in his capacity as a director of the Company.
Except as otherwise permitted under Section 6 and under section 16(b) of the
Securities Exchange Act of 1934 (the "Exchange Act"), and paragraph (c)(2)(i) of
Rule 16b-3 thereunder, no member of the Committee shall be granted, nor shall
have been granted, Awards (as defined below) pursuant to the Plan or equity
securities (within the meaning of 17 C.F.R. (S)240.16a-1(d)) pursuant to any
other plan of the Company or of any of its affiliates, as defined in or under
the Exchange Act, at any time during the period commencing with the date which
is one year prior to the date his service on the Committee began and ending on
the date which is one day after the date on which his service on the Committee
ceased. Each member of the Committee shall also be an "outside director" within
the meaning of Prop. Treas. Reg. (S) 1.162-27(e)(3), or any successor thereto.

The Committee shall have full and final authority in its absolute
discretion, subject to the terms of the Plan, to select the Key Employees to be
granted ISOs, NQSOs, SARs, Restricted Stock and Unrestricted Stock (collectively
"Awards") under the Plan, to grant Awards on behalf of the Company, and to set
the date of grant and the other terms of such Awards. With respect to the
eligibility of Outside Directors, the Plan is intended to comply with Rule 16b-3
and its successors promulgated under the Exchange Act as a "formula award" plan
described in Rule 16b-3(c)(2)(ii), and any provision of this Plan applicable to
Outside Directors that is to the contrary shall be deemed null and void.
Consequently, the award of Options to Outside Directors shall be as set forth in
Section 6, and the Committee shall not have any discretionary authority with
respect thereto.

The Committee may correct any defect, supply any omission and
reconcile any inconsistency in the Plan and in any Award granted hereunder in
the manner and to the extent it shall deem desirable. The Committee also shall
have the authority to establish such rules and regulations, not inconsistent
with the provisions of the Plan, for the proper administration of the Plan, and
to amend, modify or rescind any such rules and regulations, and to make such
determinations and interpretations under, or in connection with, the Plan, as it
deems necessary or advisable. All such rules, regulations, determinations and
interpretations shall be binding and conclusive upon the Company, its
shareholders and all officers and employees and former

2
<PAGE>

officers and employees, and upon their respective legal representatives,
beneficiaries, successors and assigns and upon all other persons claiming under
or through any of them.

No member of the Board or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Award
granted hereunder.

SECTION 3
ELIGIBILITY

(a) IN GENERAL. Key Employees and Outside Directors shall be eligible
to receive Awards under the Plan. Key Employees and Outside Directors who
have been granted an Award under the Plan shall be referred to as
"Grantees." More than one Award may be made to a Grantee under the Plan.

(b) KEY EMPLOYEES. Key Employees are (1) officers of the Company or a
Subsidiary, (2) school principals, center directors, and regional managers
of the Company or a Subsidiary, and (3) any other employees of the Company
or a Subsidiary so designated by the Committee. Key Employees shall be
eligible to receive any type of Award available under the Plan.

(c) OUTSIDE DIRECTORS. Outside Directors are directors of the Company
who are not officers or employees thereof. Outside Directors shall only be
eligible to receive NQSOs pursuant to Section 6.

SECTION 4
STOCK

The number of common shares of the Company, par value $.001 per
share ("Common Shares"), that may be subject to Awards under the Plan shall be
1,500,000 shares, subject to adjustment as hereinafter provided; provided,
however, that no Key Employee shall receive Options for more than 100,000 Common
Shares over any one-year period. Common Shares issuable under the Plan may be
authorized but unissued shares or reacquired shares, as the Company may
determine from time to time.

3
<PAGE>

Any Common Shares subject to an Option which expires or otherwise
terminates for any reason whatever (including, without limitation, the Key
Employee's surrender thereof) without having been exercised, and any shares of
Restricted Stock which are forfeited, shall continue to be available for the
granting of Awards under the Plan; provided, however, that (a) if an Option is
cancelled, the Common Shares covered by the cancelled Option shall be counted
against the maximum number of shares specified in this Section 4 for which
Options may be granted to a single Key Employee, and (b) if the exercise price
of an Option is reduced after the date of grant, the transaction shall be
treated as a cancellation of the original Option and the grant of a new Option
for purposes of counting the maximum number of shares for which Options may be
granted to a Key Employee. Common Shares subject to an Option cancelled upon
the exercise of a SAR shall not again be available for Awards under the Plan.

SECTION 5
GRANTING OF OPTIONS TO KEY EMPLOYEES

From time to time until the expiration or earlier suspension or
discontinuance of the Plan, the Committee may, on behalf of the Company, grant
to Key Employees under the Plan such Options as it determines are warranted,
subject to the limitations of the Plan; provided, however, that grants of ISOs
and NQSOs shall be separate and not in tandem. The granting of an Option under
the Plan shall not be deemed either to entitle the Key Employee to, or to
disqualify the Key Employee from, any other Awards under the Plan. In making
any determination as to whether a Key Employee shall be granted an Option, the
type of Option to be granted, and the number of Common Shares to be covered by
the Option, the Committee shall take into account the duties of the Key
Employee, his present and potential contributions to the success of the Company
or a Subsidiary, the tax implications to the Company and the Key Employee of any
Options granted, and such other factors as the Committee shall deem relevant in
accomplishing the purposes of the Plan. Moreover, the Committee may provide in
the Option Agreement that the Option may be exercised only if certain
conditions, as determined by the Committee, are fulfilled.

4
<PAGE>

SECTION 6
GRANTING OF NQSOs TO OUTSIDE DIRECTORS

As of March 31, 1996 and each March 31 thereafter until the expiration
or earlier suspension or discontinuance of the Plan, each individual serving as
an Outside Director on such date shall be granted a NQSO to purchase 2,000
Common Shares (as adjusted pursuant to section 11, if necessary), provided that
(a) the individual served as a director for the entire fiscal year immediately
preceding such March 31, and (b) the Company's pre-tax income for such fiscal
year exceeds by at least 20% the Company's pre-tax income for the previous
fiscal year, both as calculated in accordance with generally accepted accounting
principles ("GAAP").

SECTION 7
ANNUAL LIMIT FOR ISOs

(a) ANNUAL LIMIT. The aggregate Fair Market Value (determined as of
the date the ISO is granted) of the Common Shares with respect to which
ISOs become exercisable for the first time by a Key Employee during any
calendar year (under this Plan and any other ISO plan of the Company or any
parent corporation (within the meaning of section 424(e) of the Code
("Parent")) or Subsidiary) shall not exceed $100,000. The term "Fair
Market Value" shall mean the value of the Common Shares arrived at by a
good faith determination of the Committee and shall be:

(1) The mean between the highest and lowest quoted selling price,
if there is a market for the Common Shares on a registered securities
exchange or in an over the counter market, on the date specified;

(2) The weighted average of the means between the highest and
lowest sales on the nearest date before and the nearest date after the
specified date, if there are no such sales on the specified date but
there are such sales on dates within a reasonable period both before
and after the specified date;

5
<PAGE>

(3) The mean between the bid and asked prices, as reported by the
National Quotation Bureau on the specified date, if actual sales are
not available during a reasonable period beginning before and ending
after the specified date; or

(4) Such other method of determining Fair Market Value as shall
be authorized by the Code, or the rules or regulations thereunder, and
adopted by the Committee.

Where the Fair Market Value of Common Shares is determined under
(2) above, the average of the means between the highest and lowest
sales on the nearest date before and the nearest date after the
specified date shall be weighted inversely by the respective numbers
of trading days between the dates of reported sales and the specified
date (i.e., the valuation date), in accordance with Treas. Reg. (S)
20.2031-2(b)(1), or any successor thereto.

(b) OPTIONS OVER ANNUAL LIMIT. If an Option intended as an ISO is
granted to a Key Employee and such Option may not be treated in whole or in
part as an ISO pursuant to the limitation in (a) above, such Option shall
be treated as an ISO to the extent it may be so treated under such
limitation and as a NQSO as to the remainder. For purposes of determining
whether an ISO would cause such limitation to be exceeded, ISOs shall be
taken into account in the order granted.

(c) NQSOS, SARS, RESTRICTED STOCK AND UNRESTRICTED STOCK. The annual
limit set forth above for ISOs shall not apply to NQSOs, SARs, Restricted
Stock and Unrestricted Stock.

SECTION 8
OPTIONS AND SARS

(a) TERMS AND CONDITIONS OF OPTIONS. The Options granted pursuant to
the Plan shall include expressly or by reference the following terms and
conditions, as well as

6
<PAGE>

such other provisions not inconsistent with the provisions of this Plan as the
Committee shall deem desirable, and for ISOs granted under this Plan, the
provisions of section 422(b) of the Code:

(1) NUMBER OF COMMON SHARES. The Option Agreement shall state
the number of Common Shares to which the Option pertains.

(2) PRICE.

(A) KEY EMPLOYEES. With respect to Options granted to Key
Employees, the Option exercise price shall be determined and
fixed by the Committee in its discretion at the time of grant,
but shall not be less 100% (110% in the case of an ISO granted to
a more than 10% shareholder as provided in Subsection (10) below)
of the Fair Market Value of the optioned Common Shares on the
date the Option is granted.

(B) OUTSIDE DIRECTORS. With respect to Options granted to
Outside Directors, the Option exercise price shall be the Fair
Market Value of the optioned Common Shares on the date the Option
is granted.

(3) TERM.

(A) ISOS. Subject to earlier termination as provided in
Subsections (5), (6) and (7) below, the term of each ISO shall be
not more than 10 years (5 years in the case of a more than 10%
shareholder as provided in Subsection (10) below) from the date
of grant.

(B) NQSOS GRANTED TO KEY EMPLOYEES. Subject to earlier
termination as provided in Subsections (5), (6) and (7) below,
the term of each NQSO granted to a Key Employee shall be not more
than 10 years from the date of grant.

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<PAGE>

(C) NQSOS GRANTED TO OUTSIDE DIRECTORS. Subject to earlier
termination as provided in Subsection (8) below, the term of each
NQSO granted to an Outside Director shall be 10 years from the
date of grant.

(4) EXERCISE.

(A) OPTIONS GRANTED TO KEY EMPLOYEES. Options granted to
Key Employees shall be exercisable in such installments and on
such dates, commencing not earlier than 6 months from the later
of the date of grant or the date the Plan is approved by the
Company's shareholders, as the Committee may specify, provided
that:

(i) In the case of new Options granted to a Key
Employee in replacement for options (whether granted under
the Plan or otherwise) held by the Key Employee, the new
Options may be made exercisable, if so determined by the
Committee, in its discretion, at the earliest date the
replaced options were exercisable; and

(ii) The Committee may accelerate the exercise date
of any outstanding Options granted to Key Employees in its
discretion, if it deems such acceleration to be desirable.

(B) OPTIONS GRANTED TO OUTSIDE DIRECTORS. Options granted
to Outside Directors shall be exercisable commencing six months
after the later of the date of grant or the date the Plan is
approved by the Company's shareholders.

(C) GENERAL. Any Common Shares, the right to the purchase
of which has accrued, under an Option may be purchased at any
time up to the expiration or termination of the Option.
Exercisable Options may be exercised, in whole or in part, from
time to time by giving written

8
<PAGE>

notice of exercise to the Company at its principal office,
specifying the number of Common Shares to be purchased and
accompanied by payment in full of the aggregate Option exercise
price for such shares. Only full shares shall be issued under the
Plan, and any fractional share which might otherwise be issuable
upon the exercise of an Option granted hereunder shall be
forfeited.

(D) MANNER OF PAYMENT. The Option price of an Option
granted to an Outside Director shall be payable in cash or its
equivalent.

The Option price of an Option granted to a Key Employee
shall be payable:

(i) In cash or its equivalent;

(ii) In the case of an ISO, if the Committee, in its
discretion, causes the Option Agreement so to provide, and
in the case of a NQSO if the Committee, in its discretion,
so determines at or prior to the time of exercise, in Common
Shares previously acquired by the Grantee, provided that (1)
if such shares were acquired through the exercise of an ISO
and are used to pay the Option exercise price of an ISO,
such shares have been held by the Key Employee for a period
of not less than the holding period described in section
422(a)(1) of the Code on the date of exercise, or (2) if
such shares were acquired through the exercise of a NQSO and
are used to pay the Option exercise price of an ISO, or if
such shares were acquired through exercise of a NQSO or of
an option under a similar plan or through exercise of an ISO
and are used to pay the Option exercise price of a NQSO, or
if such shares were acquired under a SAR, or through the
grant of Restricted or Unrestricted Stock, such shares have
been held by the Key

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<PAGE>

Employee for a period of more than 12 months on the date of
exercise; or

(iii) In the discretion of the Committee, in any
combination of (i) and (ii) above.

In the event such Option exercise price is paid, in whole or
in part, with Common Shares, the portion of the Option exercise
price so paid shall equal the Fair Market Value on the date of
exercise of the Common Shares surrendered in payment of such
Option exercise price.

(5) EXERCISE UPON TERMINATION OF KEY EMPLOYEE. If a Key
Employee's employment by the Company (and Subsidiaries) is terminated
by either party prior to the expiration date fixed for his or her
Option for any reason other than death or disability, such Option may
be exercised, to the extent of the number of Common Shares with
respect to which the Key Employee could have exercised it on the date
of such termination, or to any greater extent permitted by the
Committee, by the Key Employee at any time prior to the earlier of:

(A) The expiration date specified in such Option; or

(B) Three months after the date of such termination of
employment.

(6) EXERCISE UPON DISABILITY OF KEY EMPLOYEE. If a Key Employee
shall become disabled (within the meaning of section 22(e)(3) of the
Code) during his or her employment and, prior to the expiration date
fixed for his or her Option, his or her employment is terminated as a
consequence of such disability, such Option may be exercised, to the
extent of the number of Common Shares with respect to which the Key
Employee could have exercised it on the date of such termination, or
to any greater extent permitted by the Committee, by the Key Employee
at any time prior to the earlier of:

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<PAGE>

(A) The expiration date specified in such Option; or

(B) One year after the date of such termination of
employment.

In the event of the Key Employee's legal disability, such Option
may be so exercised by the Key Employee's legal representative.

(7) EXERCISE UPON DEATH OF KEY EMPLOYEE. If a Key Employee shall
die during his or her employment and prior to the expiration date
fixed for his or her Option, or if a Key Employee whose employment is
terminated for any reason shall die following his or her termination
of employment but prior to the earliest of:

(A) The expiration date fixed for his or her Option;

(B) The expiration of the period determined under
Subsections (5) and (6) above; or

such Option may be exercised, to the extent of the number of Common
Shares with respect to which the Key Employee could have exercised it
on the date of his or her death, or to any greater extent permitted by
the Committee, by the Key Employee's estate, personal representative
or beneficiary who acquired the right to exercise such Option by
bequest or inheritance or by reason of the death of the Key Employee,
at any time prior to the earlier of:

(i) The expiration date specified in such Option; or

(ii) One year after the date of death.

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<PAGE>

(8) EXERCISE UPON TERMINATION OF OUTSIDE DIRECTOR'S SERVICE. If
an Outside Director's service on the Board is terminated prior to the
expiration date fixed for his or her Option, such Option may be
exercised by the Outside Director at any time prior to the earlier of:

(A) The expiration date specified in such Option; or

(B) One year after such termination of service.

Notwithstanding the above, if an Outside Director dies during
this period, such Option may be exercised, to the extent of the number
of Common Shares with respect to which the Outside Director could have
exercised it on the date of his or her death, by the Outside
Director's estate, personal representative or beneficiary who acquired
the right to exercise such Option by bequest or inheritance or by
reason of the death of the Outside Director, at any time prior to the
earlier of:

(i) The expiration date specified in such Option; or

(ii) One year after the date of the Outside Director's
death.

(9) RIGHTS AS A SHAREHOLDER. A Grantee shall have no rights as a
shareholder with respect to any Common Shares covered by his or her
Option until the issuance of a stock certificate to him or her for
such shares.

(10) TEN PERCENT SHAREHOLDER. If a Key Employee owns more than
10% of the total combined voting power of all shares of stock of the
Company or of a Subsidiary or Parent at the time an ISO is granted to
such Key Employee, the Option exercise price for the ISO shall be not
less than 110% of the Fair Market Value of the optioned Common Shares
on the date the ISO is granted, and such ISO, by its terms, shall not
be

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<PAGE>

exercisable after the expiration of five years from the date the
ISO is granted. The conditions set forth in this Subsection (10)
shall not apply to NQSOs.

(11) OPTION AGREEMENTS. Options granted under the Plan shall be
evidenced by written documents ("Option Agreements") in such form as
the Committee shall, from time to time, approve. Option Agreements
shall contain such provisions, not inconsistent with the provisions of
the Plan for NQSOs granted pursuant to the Plan, and such conditions,
not inconsistent with section 422(b) of the Code or the provisions of
the Plan, for ISOs granted pursuant to the Plan, as the Committee
shall deem advisable. An Option Agreement shall specify whether the
Option is an ISO or NQSO; provided, however, if the Option is not
designated in the Option Agreement as an ISO or NQSO, the Option shall
constitute an ISO if it complies with the terms of section 422 of the
Code, and otherwise, it shall constitute a NQSO. Each Grantee who
receives an Option shall enter into, and be bound by, the terms of an
Option Agreement.

(b) SARS. An Option Agreement may, in the discretion of the
Committee, include a provision under which a Key Employee shall have the
right, in lieu of exercising all or a portion of the Key Employee's Option,
to elect instead to receive an amount equal to the difference between the
Fair Market Value of all, or a specified number, of the Common Shares
subject to such Option on the date such right is exercised and the exercise
price under such Option, such amount to be paid in cash or in Common Shares
(based on their Fair Market Value on the date such right is exercised), or
in a combination of cash and Common Shares, as the Committee shall
determine. Such right is referred to in this Plan as a stock appreciation
right ("SAR"). Any SAR shall be exercisable only at a time when the Option
to which it is related is exercisable; provided, however, that if the Key
Employee is a director or officer of the Company within the meaning of
Section 16 of the Exchange Act, cash may be paid to the Key Employee upon
the exercise of a SAR only if the Key Employee exercises the SAR (by giving
the notice described in Section 8(a)(4)(C) hereof) during the period

13
<PAGE>

beginning on the third business day following the release for publication
of the Company's quarterly and annual summary statements of sales and
earnings, and ending on the twelfth business day following such date.

A SAR shall be granted in tandem with the related Option, and the
Option-SAR shall be considered exercised when, and to the extent that,
either the underlying Option or the SAR is exercised. Any SAR shall be
subject to the following additional conditions:

(1) The SAR will expire no later than the termination of the
Option to which it relates;

(2) The SAR will be transferable only if and when the underlying
Option is transferable, and under the same conditions; and

(3) The SAR may be exercised only when there is a positive
spread, i.e., when the Fair Market Value of the Common Shares subject
to the Option exceeds the exercise price of such Option.

SECTION 9
RESTRICTED STOCK AWARDS

From time to time until the expiration or earlier termination of the
Plan, the Committee may, on behalf of the Company, make such Restricted Stock
Awards under the Plan to Key Employees as it determines are warranted.
Restricted Stock Awards shall be subject to the following terms and conditions,
as well as such other terms and conditions as the Committee may prescribe:

(a) VESTING PERIOD; CONDITIONS. At the time of granting a Restricted
Stock Award, the Committee may establish one or more vesting periods
("Vesting Periods") with respect to the Common Shares covered by the Award.
The length of any such Vesting Period(s) applicable to a Restricted Stock
Award shall be within the discretion of the Committee. At the time of
grant, the Committee may also establish such additional conditions to the
payment of a

14
<PAGE>

Restricted Stock Award ("Conditions") as it may deem advisable in its sole
discretion, such as the achievement of corporate or individual goals.
Subject to the provisions of this Section 9 and any other Conditions
prescribed by the Committee, Common Shares subject to a Restricted Stock
Award shall vest in the Key Employee upon the expiration of the Vesting
Period with respect to such Common Shares. The Committee may accelerate the
vesting date of any unvested Common Shares subject to a Restricted Stock
Award in its discretion, if it deems such acceleration to be desirable.

(b) ISSUANCE AND DELIVERY OF CERTIFICATES. Upon the granting of a
Restricted Stock Award, the Company may, if so determined by the Committee
at the time of the grant, issue certificates representing the Common Shares
subject to the Restricted Stock Award in the name of the Key Employee. Any
such Common Shares shall bear a legend indicating that they are subject to
the terms of the Plan and the Restricted Stock Award Agreement (as
hereinafter defined) and that they may not be sold, exchanged, transferred,
pledged, hypothecated or otherwise disposed of except in accordance with
the terms of the Plan and the Restricted Stock Award Agreement. Upon
issuance of such certificates, the Key Employee shall immediately execute a
stock power or other instrument of transfer, appropriately endorsed in
blank, to be held with the certificates by the Company pursuant to the
terms of the Plan and the Restricted Stock Award Agreement. Only full
shares shall be issued, and any fractional shares which might otherwise be
issuable pursuant to a Restricted Stock Award shall be forfeited. After the
Key Employee becomes vested in Common Shares subject to the Restricted
Stock Award, the Company shall deliver the vested Common Shares to the Key
Employee or his or her beneficiary or estate, as applicable.

(c) RIGHTS AS A SHAREHOLDER. If the Company issues certificates
representing the Common Shares subject to a Restricted Stock Award prior to
the expiration of the Vesting Period for the Common Shares subject to such
Award or prior to the satisfaction of the Conditions, if any, pertaining to
such Award, the Key Employee shall be entitled to receive dividends paid on
such Common Shares, shall have the right to vote such Common Shares, and
shall have all

15
<PAGE>

other shareholder's rights with respect to such Common Shares, except that
(1) the Key Employee will not be entitled to delivery of the stock
certificate, (2) the Company will retain custody of the Common Shares, and
(3) the Common Shares subject to the Restricted Stock Award will revert to
the Company to the extent all Vesting Periods and Conditions applicable to
such Award are not satisfied.

(d) TERMINATION OF EMPLOYMENT. At the time of granting a Restricted
Stock Award, the Committee shall specify in the Restricted Stock Award
Agreement, the manner of determining the number, if any, of the unvested
Common Shares subject to the Award which shall become vested in the Key
Employee, or in his or her beneficiary or estate, if the Key Employee's
employment by the Company (and Subsidiaries) is terminated prior to the
later of the expiration of the Vesting Period or the satisfaction of all of
the Conditions with respect to such Common Shares. Any Restricted Stock
Award Agreement may provide different vesting provisions upon a Key
Employee's termination due to death or disability. Any remaining unvested
Common Shares covered by the Key Employee's Restricted Stock Award shall
immediately be forfeited upon termination of employment, except that the
Committee, if it determines that the circumstances warrant, may direct that
all or a portion of such remaining unvested Common Shares also be vested in
the Key Employee, or in his or her beneficiary or estate, subject to such
further terms and conditions, if any, as the Committee may determine.

(e) PAYMENT FOR RESTRICTED STOCK. The Committee may, on behalf of the
Company, grant Restricted Stock Awards under which the Key Employee shall
not be required to make any payment for the Restricted Stock or, in the
alternative, under which the Key Employee, as a condition to the Restricted
Stock Award, shall pay all (or any lesser amount than all) of the Fair
Market Value of the Common Stock, determined as of the date the Restricted
Stock Award is granted. If the latter, such purchase price shall be paid as
provided in the Restricted Stock Award Agreement.

(f) RESTRICTED STOCK AWARD AGREEMENT. Restricted Stock Awards under
the Plan shall be evidenced by written documents ("Restricted Stock Award
Agreements") in such form

16
<PAGE>

as the Committee shall, from time to time, approve. Restricted Stock Award
Agreements shall contain such provisions, not inconsistent with the
provisions of the Plan, as the Committee shall deem advisable. Each Key
Employee granted a Restricted Stock Award shall enter into, and be bound by
the terms of, a Restricted Stock Award Agreement.

SECTION 10
UNRESTRICTED STOCK AWARDS

(a) AWARDS OF UNRESTRICTED STOCK. From time to time until the
expiration or earlier termination of the Plan, the Committee may, on behalf
of the Company, make such Unrestricted Stock Awards under the Plan to Key
Employees as it determines are warranted.

(b) REGISTRATION. Each certificate for unrestricted Common Shares
shall be registered in the name of the Key Employee and immediately be
delivered to him or her.

SECTION 11
CAPITAL ADJUSTMENTS

The number of Common Shares which may be issued under the Plan, the
maximum number of Common Shares with respect to which Options may be granted to
any Key Employee under the Plan, both as stated in Section 4 hereof, the number
of Common Shares per NQSO granted to an Outside Director as stated in Section 6,
the number of Common Shares issuable upon the exercise of outstanding Options
under the Plan (as well as the Option exercise price per share under such
outstanding Options), and the number of Common Shares to be delivered upon the
vesting of outstanding Restricted Stock Awards (as well as the purchase price,
if any, for such Common Shares) shall, subject to the provisions of section
424(a) of the Code, be adjusted to reflect any stock dividend, stock split,
share combination, or similar change in the capitalization of the Company.

In the event of a corporate transaction (as that term is described in
section 424(a) of the Code and the Treasury

17
<PAGE>

Regulations issued thereunder as, for example, a merger, consolidation,
acquisition of property or stock, separation, reorganization, or liquidation),
each outstanding Award shall be assumed by the surviving or successor
corporation; provided, however, that, in the event of a proposed corporate
transaction, the Committee may terminate all or a portion of the outstanding
Options granted to Key Employees if it determines that such termination is in
the best interests of the Company. If the Committee decides to terminate such
outstanding Options, the Committee shall give each Key Employee holding an
Option to be terminated not less than seven days' notice prior to any such
termination by reason of such a corporate transaction, and any such Option which
is to be so terminated may be exercised (if and only to the extent that it is
then exercisable) up to, and including the date immediately preceding such
termination. Further, as provided in Section 8(b)(4)(A)(ii) hereof, the
Committee, in its discretion, may accelerate, in whole or in part, the date on
which any or all Options granted to Key Employees become exercisable.

The Committee also may, in its discretion, change the terms of any
outstanding Awards granted to Key Employees to reflect any such corporate
transaction, provided that, in the case of ISOs, such change is excluded from
the definition of a "modification" under section 424(h) of the Code.

SECTION 12
CHANGE IN CONTROL

Upon a Change in Control, the Committee (as it is constituted on the
day preceding the date of the Change in Control) may, in its discretion,
accelerate the vesting and exercisability of outstanding Options and SARs
granted to Key Employees and accelerate the vesting of Restricted Stock Awards
granted to Key Employees. "Change in Control" shall mean the point in time when
any person (as such term is used in Section 13 of the Exchange Act and the rules
and regulations thereunder and including any Affiliate or Associate of such
person, as defined in Rule 12b-2 under the Exchange Act, and any person acting
in concert with such person) directly or indirectly acquires or otherwise
becomes entitled to vote more than 50 percent of the

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<PAGE>

voting power entitled to be cast at elections for directors of the Company.

SECTION 13
AMENDMENT OR DISCONTINUANCE OF THE PLAN

(a) IN GENERAL. The Board from time to time may suspend or
discontinue the Plan or amend it in any respect whatsoever, except that,
without the approval of the shareholders (given in the manner set forth in
Subsection (b) below): (1) the class of persons eligible to receive Awards
shall not be changed nor shall any other requirement as to eligibility for
participation in the Plan be materially modified; (2) the maximum number of
Common Shares with respect to which Awards may be granted under the Plan
shall not be increased except as permitted under Section 11; (3) the
benefits accruing to individuals participating in the Plan shall not be
materially increased; (4) the duration of the Plan under Section 14 shall
not be extended; and (5) no amendment which would require shareholder
approval pursuant to Prop. Treas. Reg. (S) 1.162-27(e)(4)(vi), or any
successor thereto, may be made.

(b) MANNER OF SHAREHOLDER APPROVAL.

(1) The approval of shareholders must be by a majority of the
outstanding Common Shares present, or represented, and entitled to
vote at a meeting duly held in accordance with the applicable laws of
the state of Delaware; and

(2) The approval of shareholders must occur --

(i) By a method and in a degree that would be treated as
adequate under applicable state law in the case of an action
requiring shareholder approval (i.e., an action on which
shareholders would be entitled to vote if the action were taken
at a duly held shareholders' meeting); or

(ii) By a majority of the votes cast at a duly held
shareholders' meeting at which a quorum

19
<PAGE>

representing a majority of all outstanding voting stock is,
either in person or by proxy, present and voting on the Plan.

(c) AMENDMENTS AFFECTING OUTSIDE DIRECTORS. Notwithstanding the
foregoing, no amendment to any provision of the Plan that would affect (1)
the amount and price of Common Shares subject to NQSOs to be awarded to
Outside Directors, (2) the timing of such grants to Outside Directors, or
(3) the formula, if any, that determines the amount, price, and timing of
NQSO grants to Outside Directors, shall be made more than once every six
months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act, or the rules promulgated thereunder.

Notwithstanding the foregoing, no such suspension, discontinuance or
amendment shall terminate or affect the continued existence of rights created
under Awards issued and outstanding or materially impair the rights of any
holder of an outstanding Award without the consent of such holder.

SECTION 14
TERMINATION OF PLAN

Unless earlier terminated as provided in the Plan, the Plan and all
authority granted hereunder shall terminate absolutely at 12:00 midnight on May
31, 2005, which date is within 10 years after the date the Plan was adopted by
the Board, and no Awards hereunder shall be granted thereafter. Nothing
contained in this Section 14, however, shall terminate or affect the continued
existence of rights created under Awards issued hereunder and outstanding on May
31, 2005 which by their terms extend beyond such date.

SECTION 15
SHAREHOLDER APPROVAL

This Plan shall become effective on June 21, 1995 (the date the Plan
was adopted by the Board); provided, however, that if the Plan is not approved
by the shareholders, in the manner

20
<PAGE>

described in Section 13(b), within 12 months after said date, the Plan and all
Awards granted hereunder shall be null and void and no additional Awards shall
be granted hereunder.

SECTION 16
MISCELLANEOUS

(a) GOVERNING LAW. The Plan, and the Option Agreements and Restricted
Stock Award Agreements (collectively the "Award Agreements") entered into,
and the Awards granted thereunder, shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the operation of,
and the rights of Grantees under, the Plan, the Award Agreements, and the
Awards shall be governed by applicable federal law and otherwise by the
laws of the state of Delaware.

(b) RIGHTS. Neither the adoption of the Plan nor any action of the
Board or the Committee shall be deemed to give any individual any right to
be granted an Award, or any other right hereunder, unless and until the
Committee shall have granted such individual an Award, and then his or her
rights shall be only such as are provided by the Plan and the Award
Agreement.

Any Option under the Plan shall not entitle the holder thereof to any
rights as a shareholder of the Company prior to the exercise of such Option
and the issuance of the Common Shares pursuant thereto. Further,
notwithstanding any provisions of the Plan or any Award Agreement with a
Key Employee, the Company shall have the right, in its discretion, to
retire a Key Employee at any time pursuant to its retirement rules or
otherwise to terminate his or her employment at any time for any reason
whatsoever.

(c) NO OBLIGATION TO EXERCISE OPTION. The granting of an Option shall
impose no obligation upon a Grantee to exercise such Option.

(d) NON-TRANSFERABILITY. Other than Unrestricted Stock Awards, no
Award shall be assignable or transferable by a Grantee otherwise than by
will or by the laws of descent and

21
<PAGE>

distribution, and during the lifetime of the Grantee, any Options or
related SARs shall be exercisable only by the Grantee or by his or her
guardian or legal representative. If a Grantee is married at the time of
exercise of an Option and if the Grantee so requests at the time of
exercise, the certificate or certificates issued shall be registered in the
name of the Grantee and the Grantee's spouse, jointly, with right of
survivorship.

(e) WITHHOLDING AND USE OF COMMON SHARES TO SATISFY TAX OBLIGATIONS.
The obligation of the Company to deliver Common Shares or pay cash to a Key
Employee pursuant to any Award under the Plan shall be subject to
applicable federal, state and local tax withholding requirements.

In connection with an Award in the form of Common Shares, subject to
the withholding requirements of applicable federal tax laws, the Committee,
in its discretion (and subject to such withholding rules ("Withholding
Rules") as shall be adopted by the Committee), may permit the Key Employee
to satisfy the minimum required federal withholding tax, in whole or in
part, by electing to have the Company withhold (or by returning to the
Company) Common Shares, which shares shall be valued, for this purpose, at
their Fair Market Value on the date of exercise of the Option or the date
of vesting in the case of Restricted Stock (or if later, the date on which
the Key Employee recognizes ordinary income with respect to such Option or
Restricted Stock) (the "Determination Date"); provided, however, that with
respect to Key Employees who are subject to section 16 of the Exchange Act,
any such amount of minimum federal taxes required to be withheld shall be
satisfied by withholding Common Shares. An election to use Common Shares to
satisfy federal tax withholding requirements must be made in compliance
with and subject to the Withholding Rules. The Company may not withhold
Common Shares in excess of the number necessary to satisfy the minimum
federal income tax withholding requirements. In the event Common Shares
acquired under the exercise of an ISO are used to satisfy such withholding
requirement, such Common Shares must have been held by the Key Employee for
a period of not less than the holding period described in section 422(a)(1)
of the Code on the
22
<PAGE>

Determination Date, or if such Common Shares were acquired through the
exercise of a NQSO or of an option under a similar plan, such option must
have been granted to the Key Employee at least six months prior to the
Determination Date.

(f) LISTING AND REGISTRATION OF COMMON SHARES. Each Award shall be
subject to the requirement that, if at any time the Committee shall
determine, in its discretion, that the listing, registration or
qualification of the Common Shares covered thereby upon any securities
exchange or under any state or federal law, or the consent or approval of
any governmental regulatory body, is necessary or desirable as a condition
of, or in connection with, the granting of such Award or the purchase or
vesting of Common Shares thereunder, or that action by the Company or by
the Grantee should be taken in order to obtain an exemption from any such
requirement, no such Option may be exercised, in whole or in part, and no
Common Shares shall be delivered pursuant to a Restricted or Unrestricted
Stock Award, unless and until such listing, registration, qualification,
consent, approval, or action shall have been effected, obtained, or taken
under conditions acceptable to the Committee. Without limiting the
generality of the foregoing, each Grantee or his or her legal
representative or beneficiary may also be required to give satisfactory
assurance that Common Shares purchased upon exercise of an Option or
received pursuant to a Restricted or Unrestricted Stock Award are being
purchased for investment and not with a view to distribution, and
certificates representing such Common Shares may be legended accordingly.