<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: SEPTEMBER 30, 1999
Commission File Number 1-1003
NOBEL LEARNING COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2465204
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1400 N. PROVIDENCE ROAD, SUITE 3055, MEDIA, PA 19063
(Address of principal executive offices) (Zip Code)
(610) 891-8200
(Registrant's telephone number, including area code)
Indicate by check whether the registrant (1) has filed all report(s) required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----------- -----------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,921,366 shares of Common
Stock outstanding at November 10, 1999.
<PAGE>
INDEX TO FORM 10-Q
Nobel Learning Communities, Inc.
<TABLE>
<CAPTION>
Page
PART I. FINANCIAL INFORMATION Number
------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets,
September 30, 1999 (unaudited) and June 30, 1999......................................... 2
Consolidated Statements of Income for the
three months ended September 30, 1999 (unaudited)
and June 30, 1999........................................................................ 3
Consolidated Statements of Cash Flows for the
three months ended September 30, 1999 (unaudited)
and 1998 (unaudited)..................................................................... 4
Notes to Consolidated Interim Financial Statements....................................... 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............................................ 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8K..................................................... 12
</TABLE>
<PAGE>
PART I
FINANCIAL INFORMATION
"SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company's fiscal 2000 outlook and all other statements in this report other
than historical facts are forward-looking statements that involve risks and
uncertainties and are subject to change at any time. The Company derives its
forward-looking statements from its operating budgets and forecasts, which are
based upon detailed assumptions about many important factors such as market
demand, market conditions and competitive activities. While the Company
believes that its assumptions are reasonable, it cautions that there are
inherent difficulties in predicting the impact of certain factors, especially
those affecting the acceptance of the Company's newly developed and converted
schools and performance of recently acquired businesses, which could cause
actual results to differ materially from predicted results.
<PAGE>
Nobel Learning Communities, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Current Assets September 30,1999 June 30,1999
- --------------------------------------- ----------------- ------------
<S> <C> <C>
Cash and cash equivalents $4,098 $1,640
Accounts receivable, less allowance for 1,535 1,689
doubtful accounts of $177 in June and September of 1999
Prepaid rents 0 859
Other prepaid expenses 533 844
------------- -----------
Total Current Assets 6,166 5,032
------------- -----------
Property, & equipment at cost 40,496 37,024
Accumulated depreciation (13,219) (12,324)
------------- -----------
Total Property & Equipment 27,277 24,700
Property and equipment held for sale 728 1,202
Goodwill 47,396 45,725
Deposits and other assets 3,045 3,347
Deferred tax asset 1,019 1,019
------------- -----------
Total Assets $85,631 $81,025
============ ===========
Liabilities and Stockholders' Equity
- ---------------------------------------
Current portion of long-term obligations $2,753 $2,209
Accounts payable and other current liabilities 7,998 8,236
Cash Overdraft Liability 0 1,792
Deferred revenue 9,074 4,882
------------- -----------
Total Current Liabilities 19,825 17,119
------------- -----------
Long-term obligations 17,754 15,316
Long-term subordinated debt 13,431 13,831
Capital lease obligations 49 73
Deferred gain on sale/leaseback 25 27
Minority interest in consolidated subsidiary 537 514
------------- -----------
Total Liabilities 51,621 46,880
Stockholders' Equity:
Preferred Stock, $.001 par value; 10,000,000 shares authorized, issued
and outstanding 4,593,542 at September 30, 1999, and June 30, 1999; $5,530
aggregate liquidation preference at September 30, 1999 and June 30, 1999 5 5
Common Stock, $.001 par value, 20,000,000 shares authorized, issued and
outstanding 5,921,365 at both September 30, 1999 and June 30, 1999. 6 6
Treasury Stock, cost; 236,810 shares (1,375) (1,375)
Additional paid in capital 39,239 39,239
Accumulated deficit (3,865) (3,730)
Total Stockholders' Equity 34,010 34,145
------------- -----------
Total Liabilities & Stockholders' Equity $85,631 $81,025
============ ===========
</TABLE>
The accompanying notes in the financial statements included in the Registrant's
Annual Report on Form 10-K are an integral part of these financial statements
2
<PAGE>
Nobel Learning Communities Inc. and Subsidiaries
Consolidated Statements Of Income
for the three months ended September 30, 1999 and 1998
------------------------------------------------------
(Dollars in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Revenues $ 27,345 $ 23,911
Operating expenses 24,424 21,592
---------- ----------
School operating profit 2,921 2,319
General and administrative expenses 2,121 1,747
New school development costs 194 233
---------- ----------
Operating income 606 339
Interest expense 804 683
Other income (20) (43)
Minority interest in earnings of consolidated subsidiary 21 20
---------- ----------
Loss before income taxes (199) (321)
Income tax expense (84) (135)
---------- ----------
Net loss $ (115) $ (186)
========== ==========
Preferred stock dividends $ 21 $ 21
---------- ----------
Net income available to common stockholders $ (136) $ (207)
========== ==========
Basic earnings per share $ (0.02) $ (0.03)
========== ==========
Dilutive earnings per share $ (0.02) $ (0.03)
========== ==========
</TABLE>
The accompanying notes and the notes in the financial statements included in the
Registrant's Annual Report on Form 10-K are an integral part of these financial
statements.
3
<PAGE>
Nobel Learning Communities, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
for the three months ended September 30, 1999 and 1998
------------------------------------------------------
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
1999 1998
--------- ----------
<S> <C> <C>
Net Cash Provided By Operating Activities $5,037 $3,781
Cash Flows From Investing Activities:
Proceeds from sale of real estate 915 966
Capital expenditures (4,006) (2,397)
Payment for acquisitions (1,410) (3,389)
--------- ----------
Net Cash Provided By (Used In) Investing Activities: (4,501) (4,820)
--------- -----------
Cash Flows From Financing Activities:
Repayment of capital lease obligation (23) (24)
Payments of dividends on preferred stock (21) (21)
Proceeds from long term debt 7,900 5,460
Repayment of long term debt (5,546) (9,702)
Repayment of subordinated debt (388) (608)
Proceeds from subordinated debt 0 10,000
--------- -----------
Net Cash Provided by Financing Activities: 1,922 5,105
--------- -----------
Net increase (decrease) in cash and cash equivalents 2,458 4,066
Cash and cash equivalents at the beginning of the period 1,640 408
--------- -----------
Cash and cash eqivalents at the end of the period $4,098 $4,474
========= ===========
</TABLE>
<PAGE>
NOBEL LEARNING COMMUNITIES, INC. AND SUBSIDIARIES
Notes to Consolidated Interim Financial Statements
for the three months ended September 30, 1999 and 1998
(unaudited)
Note 1 - Basis of Presentation
- ------------------------------
The consolidated financial statements have been prepared by the Registrant
pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC") and, in the opinion of management, include all adjustments, consisting
of normal recurring adjustments, necessary to present fairly the financial
position and results of operations. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with the generally accepted accounting principals have been condensed or omitted
pursuant to such SEC rules and regulations. It is suggested that these
financial statements are read in conjunction with the consolidated financial
statements and notes thereto included in the Registrant's Annual Report on Form
10-K for the year ended June 30, 1999.
Due to the inherent seasonal nature of the education and child care businesses,
annualization of amounts in these interim financial statements may not be
indicative of the actual operating results for the full year.
The Company manages its business based on geographical regions within the United
States. Under SFAS 131, "Segment Reporting", the Company has aggregated these
regions based on management's belief that these regions have met the aggregation
criteria set forth in the standard.
Note 2 - Earnings Per Share
- ---------------------------
Earnings per share are based on the weighted average number of shares
outstanding and common stock equivalents during the period. In the calculation
of dilutive earnings per share, shares outstanding are adjusted to assume
conversion of the Company's non-interest bearing convertible preferred stock if
they are dilutive. In the calculation of basic earnings per share, weighted
average number of shares outstanding are used as the denominator. The Company
was in a loss position for the three months ended September 30, 1999 and 1998,
resulting in the calculation of dilutive earnings per share being antidilutive.
Earnings per share are computed as follows.
5
<PAGE>
<TABLE>
<CAPTION>
For the Three Months
-----------------------------------------------
September 30, 1999 September 30, 1998
<S> <C> <C>
Basic (loss) earnings per share
- ------------------------------------
Net income (loss) $ (115) $ (186)
Less preferred dividends $ 21 $ 21
Net income (loss) available for
common stock $ (136) $ (207)
Average common stock
outstanding 5,925 6,121
Basic earnings (loss) per share $ (0.02) $ (0.03)
</TABLE>
Note 3 - Dispositions
- ----------------------
On July 30, 1999, the Company sold the business operations of the nine schools
located in the vicinity of Indianapolis, Indiana to Children's Discovery Center
of America, Inc., which is controlled by Knowledge Universe for a total of
$550,000 in cash. Knowledge Universe, through KU Learning, LLC, controls a
significant percentage of the Company's stock. No gain or loss on the sale was
recorded for the sale of the operations as the Company had previously written
down the carrying value of the business at December 31, 1997.
Note 4 - Acquisitions
- ---------------------
On September 9, 1999, the Company acquired the capital stock of Houston Learning
Academy, Inc., which operates schools in Houston, Texas for a purchase price of
$1,350,000 in cash and $615,000 in a subordinated note. Additionally, the
Company entered into a non-compete agreement with the former owner for a total
of $25,000. Houston Leaning Academy is an alternative high school program,
consisting of five schools and several hospital contracts. Revenues total
approximately $1,600,000, and capacity equals approximately 370 students for the
schools for the last fiscal year. In connection with the acquisition, the
Company also purchased for $25,000 an option to buy the management agreement for
a charter school operating in Houston, Texas.
On August 2, 1999, the Company acquired the land, building and assets of
Atlantic City Prep School located in Northfield, New Jersey for approximately
$757,000. The school has a capacity of 200 children and annual revenues of
approximately $400,000.
Note 5 - Commitments and Contingencies
- --------------------------------------
The Company is engaged in legal actions arising in the ordinary course of its
business. The Company believes that the ultimate outcome of all such matters
will not have a material adverse effect on the Company's consolidated financial
position. The significance of these matters on the Company's
6
<PAGE>
future operating results and cash flows depends on the level of future results
of operations and cash flows as well as on the timing and amounts, if any, of
the ultimate outcome.
The Company carries fire and other casualty insurance on its schools and
liability insurance in amounts which management believes are adequate for its
operations. As is the case with other entities in the education and preschool
industry, the Company cannot effectively insure itself against certain risks
inherent in its operations. Some forms of child abuse have sublimits per claim
in the general liability coverage.
7
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
For the First Quarter Ended September 30, 1999 vs the First Quarter ended
September 30, 1998
Revenues for the first quarter ended September 30, 1999 increased $3,434,000 or
14.4% to $27,345,000 from $23,911,000 for the first quarter ended September 30,
1998. The increase in revenues is primarily attributable to the increase in
enrollment and to a lesser extent the increase in the number of schools.
Currently, the Company operates 138 schools. Since September 30, 1998, the
Company has opened or acquired 23 new schools: six elementary schools, six
preschools, four schools for learning challenged (the Paladin Academy schools),
one charter school and six specialty high schools (Houston Learning Academy).
The Company has also closed seven and sold ten underperforming schools, nine of
which were the Indianapolis schools disposed of in July 1999.
Same school revenue (schools that were opened in both periods) increased
$2,303,000 or 10.3% in the first quarter of 1999 compared to the prior year.
This increase is related to tuition and enrollment increases, which is partially
due to an improved summer program, and partially due to improved September
enrollments. The increase in revenues related to the 23 schools opened or
acquired totaled $1,929,000. These increases were offset by a decrease in
revenues of $797,000 related to the closing of seven and sale of ten
underperforming schools.
School operating profit for the first quarter ended September 30, 1999 increased
$602,000 or 26.0% to $2,921,000 from $2,319,000 for the first quarter ended
September of 1998. Total school operating profit margin increased from 9.7% to
10.7%. The improvement in operating margin was due to lower personnel costs
which improved 2.4% to 46.5% of revenues offset by higher insurance, taxes and
rent expense which increased 1.3% to 21.2% of revenues.
Same school operating profit increased $774,000 or 33.7%. Same school operating
profit margin improved from 9.7% for the first quarter ended September 30, 1998
to 12.0% for the first quarter ended September 30, 1999. The increase in same
school operating profit is due to the revenue increases and lower operating
expenses(primarily personnel costs). The 23 new or acquired schools accounted
for an additional $214,000 in school operating profit. School closings
positively affected the increase in school operating profit by $39,000.
This increase in school operating profit was offset by the absence of certain
reductions in insurance and property tax expense that had positively affected
school operating profit in the quarter ended September 30, 1998. In the first
quarter of last year, the Company realized savings in insurance and property tax
expense that positively affected school operating profit. Insurance premium
costs for the most recently ended policy year ended in 1998 were less than
expected by $225,000. Property tax expense was reduced by $200,000 in the first
quarter of last year as a result of over-estimated property tax liability on
several properties.
General and administrative expenses increased $374,000 or 21.4% from $1,747,000
for the first quarter ended September 30, 1998 to $2,121,000 for the first
quarter ended September 30, 1999. As a
8
<PAGE>
percentage of revenue, general and administrative expense increased from 7.3% at
September 30, 1998 to 7.7% at September 30, 1999. This increase was related to
management additions necessary to support the continued growth of the Company.
New school development costs decreased $39,000 or 16.7% from $233,000 for the
quarter ended September 30, 1998 to $194,000 for the quarter ended September 30,
1999. The decrease is a result of timing of the opening of the schools.
Operating income increased $267,000 or 78.7% from $339,000 for the quarter ended
September 30, 1998 to $606,000 for the quarter ended September 30, 1999. The
increase is the result of an increase in school operating profit as described
above offset by the increase in general and administrative expenses.
Other income decreased $23,000 from $43,000 for the first quarter ended
September 30, 1998 to $20,000 for the first quarter ended September 30, 1999.
The decrease is due to the reduction in interest income from overnight deposits.
The Company implemented a new cash management system that uses cash to pay down
debt nightly rather than investing in overnight repurchase agreements. Also, in
connection with a sale leaseback transaction related to the development of new
schools in 1998, the Company received additional interest income.
Loss before taxes decreased 38% from a loss of $321,000 for the quarter ended
September 30, 1998 to a loss of $199,000 for the quarter ended September 30,
1999.
For the first quarter of fiscal 2000, EBITDA (defined as earnings before
interest, income taxes, depreciation and amortization) totaled $1,947,000. This
represents an increase of $331,000 over the comparable period. EBITDA is not a
measure of performance under generally accepted accounting principals, however
the Company and the investment community consider it an important calculation.
Interest expense increased $121,000 or 17.7% from $683,000 for the quarter ended
September 30, 1998 to $804,000 for the quarter ended September 30, 1999. The
increase is due to increased borrowings on the Company's credit facility offset
by a reduction in interest expense on seller subordinated debt.
Income tax benefit totaled $84,000 for the quarter ended September 30, 1999
which reflects a 42% effective tax rate.
Liquidity and Capital Resources
- -------------------------------
Management is pursuing a four-pronged growth strategy for the Company, which
includes (1) internal growth of existing schools through the expansion of
certain facilities, (2) new school development in both existing and new markets,
(3) strategic acquisitions, and (4) development of new education businesses.
The Company's principal sources of liquidity are (1) cash flow generated from
operations, (2) available borrowings under the Company's $35.0 million Amended
and Restated Loan and Security Agreement, (3) the use of site developers to
build schools and lease them to the Company, and (4) issuance of subordinated
indebtedness or shares of common stock to sellers in acquisition transactions.
The Company anticipates that its existing principal credit facilities, cash
generated from operations, and continued support of site developers to build and
lease schools will be sufficient to satisfy working
9
<PAGE>
capital needs, capital expenditures and renovations and the building of new
schools in the near term future.
The Company continues to look for quality acquisition candidates. The Company
identifies growth markets through both extensive demographic studies and an
analysis of the existing educational systems in the area. The Company seeks to
grow through a cluster approach whereby several preschools feed into an
elementary school. In order for the Company to continue its acquisition
strategy, the Company will continue to seek additional funds through debt or
equity financing.
In March 1999 the Company entered into an Amended and Restated Loan and Security
Agreement which increased the Company's available borrowing to $35,000,000.
Four separate facilities were established under the Amended and Restated Loan
and Security Agreement: (1) $7,000,000 Working Capital Credit Facility A, (2)
$3,000,000 Working Capital Credit Facility B (which is tied to the Company's
cash management arrangement), (3) $15,000,000 Acquisition Credit Facility and
(4) $10,000,000 Term Loan.
Working Capital Credit Facility A and B funds are available until March 2002.
Under the Acquisition Credit Facility, no principal payments are required until
March 2001. At that time the outstanding principal under the Acquisition Credit
Facility will be converted into a term loan which will require principal
payments in 16 quarterly installments.
Under the Term Loan Facility, no principal payments are required until April
2000. Quarterly installments of $250,000 are required the first four quarters
(through January 2001); thereafter quarterly installments of $562,500 are
required until January 2005.
At September 30, 1999, $3,141,000 was outstanding under Working Capital Credit
Facility A and Working Capital Credit Facility B, $4,095,000 was outstanding
under the Acquisition Credit Facility and $10,000,000 was outstanding under the
Term Loan.
Total cash and cash equivalents increased $2,458,000 from $1,640,000 at June 30,
1999 to $4,098,000 at September 30, 1999. The net increase was related to cash
provided from operations totaling $5,037,000, cash from financing activities
(senior bank debt) totaling $1,922,000 offset by net cash used in investing
activities of $4,501,000. Cash provided from operations totaled $5,037,000 at
September 30, 1999. The increase in cash is related to an increase of
$3,845,000 in deferred revenue, a decrease in accounts receivable of $501,000
and a decrease in prepaid expenses of $1,170,000.
The working capital deficit increased $2,089,000 from $12,087,000 at June 30,
1999 to $14,176,000 at September 30, 1999. The increase is primarily the result
of the increase in deferred revenue totaling $3,845,000. The increase in
deferred revenues is related to the beginning of the school year and parents
prepaying tuition.
Year 2000 Compliance
- --------------------
Management has implemented measures to ensure that the Company's information
systems and applications will recognize and process information pertaining to
the Year 2000. The measures being conducted utilize both internal and external
resources and are directed at risk assessments, remediation, acquisition of new
systems and applications, and testing of the systems and applications for Year
2000 compliance.
The Company believes that the only computer systems that are critical to its
operations are certain accounting and payroll software. The Company licenses
such software from two outside vendors. Both of these vendors have publicized
reports giving assurances that the software used by the Company is Year 2000
compliant. The Company is in the process of testing Year 2000 compliance
10
<PAGE>
for its accounting and payroll software. Tests will be competed by December
1999. The Company has completed an inventory of all hardware, primarily personal
computers and corporate network equipment. All non-compliant hardware has been
replaced.
Concurrent with the Company's Year 2000 compliance efforts, the Company upgraded
its management information system to link the schools to the corporate office as
well as to other schools. This process included purchasing new and replacing
old equipment and software to improve management efficiencies as well as assure
Year 2000 compliance. This process was completed in October 1999.
Although the Company could be affected by the systems of other companies with
which it does business, management does not believe that the Company's business
will be materially adversely effected by the failure of third parties to be Year
2000 compliant. Because of the geographical distribution of the Company's
schools, the Company is not dependent on any one or a small group of vendors for
goods and services and the needs of our customers for our services should not be
adversely affected by Year 2000 issues.
Management expects that the Company will be Year 2000 compliant by the end of
1999. A failure to meet this deadline should not disrupt the Company's delivery
of its services to customers. However, a failure of the Company's system could
indirectly significantly impact operations, as for example, by an inability to
pay employees and vendors in a timely manner.
11
<PAGE>
Part II
-------
Other Information
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Employment Agreement dated as of August 9, 1999 between Lynn Fontana and
the Registrant.
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOBEL LEARNING COMMUNITIES, INC.
Dated: November 15, 1999 By: /s/ William E. Bailey
-----------------------------------------
William E. Bailey
Vice President/Chief Financial Officer
(duly authorized officer and
principal financial officer)
12
<PAGE>
EXHIBITS
Exhibit
Number Description of Exhibit
10.1 Employment Agreement dated as of August 9, 1999 between Lynn Fontana
and the Registrant.
27 Financial Data Schedule
13
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is dated as of August 9, 1999 between Nobel
Learning Communities, Inc., a Delaware corporation ("EMPLOYER") and Lynn
Fontana, an individual residing as of the date hereof at 3318 Cranbrook Ct.,
Oakton, Virginia ("EXECUTIVE").
BACKGROUND
Executive wishes to be employed as Chief Education Officer and Vice
President - Education, and to be responsible for the functions and duties
assigned to this position, and Employer wishes to assure itself of the services
of Executive, and, upon the conditions hereinafter provided, Executive and
Employer are prepared to enter into this employment agreement.
TERMS
Now, Therefore, in consideration of the premises and mutual covenants and
obligations hereinafter set forth, intending to be legally bound hereby, the
parties hereto agree as follows:
1. EMPLOYMENT; SCOPE OF DUTIES.
1.1 Subject to and upon the terms and conditions set forth herein,
Employer hereby employs Executive in the capacity of Chief Education Officer and
Vice President - Education, and Executive hereby accepts such employment and
agrees to render her services exclusively to Employer, its subsidiaries and
affiliates, in such capacity or similar capacity, and faithfully, diligently and
to the best of her ability. Executive will perform those duties and
responsibilities as may from time to time reasonably be specified by Employer.
Such duties and responsibilities will initially include, without limitation,
those duties set forth in EXHIBIT A attached hereto. Executive will be
responsible for the efficient performance of such duties and responsibilities
and will at all times operate within the goals, guidelines, budgets, policies
and procedures now or hereafter established by Employer. Executive will report
to such executive of Employer as Employer designates, which shall initially be
Employer's President and Chief Operating Officer.
1.2 Executive will devote her full business and professional time, energy
and skill exclusively to the service of Employer, its subsidiaries and
affiliates and to the promotion of its interests in accordance with the duties
and responsibilities assigned to her by Employer hereunder and will not render
services of a business, professional or commercial nature to any other person or
firm, whether for compensation or otherwise; provided, however, that the
foregoing shall not be construed as preventing Executive from (a) serving as an
advisor/consultant to Thoughtful Technologies with respect to the development of
commercial products and services relating to the Multimedia and Thinking Skills
software (originally developed by Executive's company, Fountain Communications)
or (b) serving on the board of community and nonprofit organizations which do
not provide services which are in competition with those provided by Employer;
provided further that, in the case of both clauses (a) and (b), that such
activities require only minor commitments of Executive's time, to be performed
during non-business hours, and do not interfere with the diligent performance of
Executive's duties hereunder. Upon request of Employer, if Executive
<PAGE>
is duly elected or appointed, Executive shall serve, without additional
compensation, as an officer or a director of Employer and its subsidiaries or
affiliates. Further, as part of Executive's performance of her duties, she may
serve on the board of, or as an advisor to, nonprofit educational organizations
or governmental agencies that are deemed to be in the interest of Employer
(e.g.: National Independent and Private Schools Association (NIPSA), U.S.
Department of Education, National Science Foundation and the National Endowment
for the Humanities and National History Day. In each case, the length of
service, responsibilities and commitment to any organization or agency will be
approved in advance by the executive of Employer to whom Executive reports.
1.3 Executive will be based at Employer's main office. As a condition to
her employment hereunder, Executive has moved her residence to a reasonable
commuting distance of such office.
2. TERM. The term of Executive's employment will commence on August 9, 1999
and end on August 8, 2002, unless and until terminated earlier pursuant to the
provisions of this Agreement (said period during which Executive is employed
full time pursuant to this Agreement is hereinafter referred to as the
"EMPLOYMENT PERIOD"). Unless otherwise agreed by both parties in writing, any
continued employment of Executive by Employer after the Employment Period shall
be on an "at will" basis.
3. COMPENSATION. As compensation and consideration for Executive's services
and responsibilities under this Agreement, Employer will pay Executive, and
Executive will accept, the compensation and benefits set forth in this Section
3.
3.1 Base Salary. Employer shall pay to Executive a gross salary at the
-----------
annual rate of One Hundred Ten Thousand Dollars ($110,000) (hereinafter "BASE
SALARY"), payable at such intervals as Employer pays the salaries of its
executives generally (currently every two weeks), but not less frequently than
monthly. Executive's salary will be reviewed each year, but nothing contained
herein shall in any manner obligate Employer to make any increase in Executive's
Base Salary or provide any additional compensation.
3.2 Bonuses. Executive shall be eligible for an annual bonus according to
-------
a bonus plan to be established annually by Employer, in its sole discretion.
The bonus plan for the 1999/2000 fiscal year is attached hereto as EXHIBIT B.
Amounts specified under each bonus plan shall not payable to Executive, nor be
deemed to have accrued, unless she is employed by Employer on the date of
scheduled payment, as provided in the applicable bonus plan.
3.3 Stock Options. Executive will be eligible to participate in
-------------
Employer's Stock Incentive Plan. Grant of any options is subject to the sole
discretion of Employer's Board of Directors (or the Compensation Committee of
the Board of Directors) and to the terms of the Stock Incentive Plan and
Employer's form of stock option agreement.
2
<PAGE>
3.4 Car Allowance. Executive will be provided a $500 per month car
-------------
allowance to cover all car expenses, including gasoline (provided that, in the
case of trips to a destination which is 100 miles or more from Employer's
corporate headquarters, Executive will be reimbursed for the cost of gasoline
relating to the trip). Such car allowance shall be paid proportionately in each
pay period.
3.5 Vacation. Executive will be entitled to three (3) weeks vacation per
--------
year. All vacation periods requested must be approved by Executive's manager.
Vacation is on a "use or lose" basis, which means that carryover from year to
year will not be permitted. Vacation balances will be forfeited if not used by
the applicable anniversary date of the first day of the Employment Period.
3.6 Sick Leave. Executive will receive sick days in accordance with
----------
Employer's policies.
3.7 Moving Expenses. On or before September 13, 1999, Employer will loan
---------------
Executive the sum of $25,000, the proceeds of which Executive will use to cover
her expenses of relocating to the Media, Pennsylvania area. Such loan will
accrue interest at a rate of 8% per annum. On each anniversary date of the
commencement of the Employment Period, if Executive is employed by Employer on
such date, Employer will forgive one-third of the principal amount and
associated interest of such loan. If Executive's employment is terminated, the
loan will be payable in full 90 days following the date of termination of
employment. Executive will execute a promissory note to documents such loan.
3.8 Executive Severance Plan. Executive shall be covered by the "Nobel
------------------------
Education Dynamics, Inc. Executive Severance Pay Plan", upon execution and
delivery to Employer of an acknowledgment, in standard form, of her agreement to
submit any disputes thereunder to arbitration.
3.9 Other Benefits. Executive shall be entitled to participate in all
--------------
group health, group life insurance, disability, hospital, medical plans and
retirement plans according to Employer's policies for executive management
personnel (or as may be decided by Employer if said items are discretionary with
Employer). Such plans currently include:
(a) 100% payment by Employer of family medical insurance (which
currently is provided by Aetna US Healthcare or Keystone HMO, at Employer's
election) (with dental coverage available for an extra premium payable by
Executive);
(b) the Nobel Learning Communities 401(k) Savings Plan (in which
Executive will become eligible to participate upon the first open enrollment
period occurring after one year of service); provided that participation may be
limited by Federal laws relating to the participation level of lower wage
earners;
3
<PAGE>
(c) tuition reimbursement (the current features of which include the
requirement that courses be job-related and pre-approved, that reimbursement is
limited to a specified maximum amount and that a minimum grade be achieved as a
condition to reimbursement);
(d) term life insurance equal to one times Executive's Base Salary;
(e) a short-term disability insurance that extends coverage for a
period of 26 weeks at a rate of 65% of Executive's Base Salary with a maximum
weekly benefit of $325; and
(f) long-term disability insurance, as provided to other senior
executives of Employer.
4. REIMBURSEMENT OF EXPENSES. Executive shall be allowed reasonable business
expenses in connection with the performance of her duties hereunder upon
submission by Executive of vouchers or itemized statements thereof prepared in
compliance with such rules relating thereto as Employer may from time to time
adopt (which rules may include the requirement that the Executive receive
advance approval of such expenses) and as may be required in order to permit
such payments as proper deductions to Employer under the Internal Revenue Code
and the rules and regulations adopted pursuant thereto now or hereafter in
effect.
5. FACILITIES. Executive shall be entitled to an office appropriate to her
position and such secretarial services as are reasonably necessary to the
performance of her duties.
6. PHOTOGRAPHS. Employer shall have the right to photograph Executive during
the course of Executive's employment or at such other times when not at work, by
camera, film, television, tape radio or other media, or record Executive in
formal or informal conversation, interview, training sessions, etc., any of
which may be in the format of a pre-planned program or in a spontaneous
interview. The foregoing may be used by Employer or its affiliates or its
advertising agency for commercial purpose, on labels, training films or other
media at Employer's sole discretion. Executive's image, its replica, in whole
or portions thereof, may be used, and Executive's name may be attributed
thereto. Executive may be photographed individually or in a group. Executive's
compensation fully stated herein, includes full and complete payment for all of
the above and Executive hereby waives any further compensation, royalties, etc.
7. TERMINATION.
7.1 Early Termination of Employment Period. Notwithstanding Section 2,
--------------------------------------
the Employment Period shall sooner terminate upon the close of business on the
earliest to occur of the dates specified below:
(a) the date of death of Executive;
4
<PAGE>
(b) the date upon which Employer shall have given Executive written
notice of the termination of her employment hereunder for "disability" (as
defined in Section 7.2); and
(c) the date upon which Employer shall have given to Executive written
notice of the termination of her employment for "cause" (as defined in Section
7.3).
7.2 Definition of "Disability". For purposes of this Agreement, the term
--------------------------
"DISABILITY" shall mean that Executive cannot substantially perform her
"essential duties" (which shall include any travel requirements) with or without
reasonable accommodation and either (i) such situation persists for a period of
90 days in any 365 day period or (ii) in the opinion of a Pennsylvania licensed
physician, Executive is so disabled or incapacitated and she is unlikely to be
able substantially to perform her "essential duties" with or without reasonable
accommodation within 90 days. Determination of disability and the date thereof
shall be reasonably made by Employer, relying on certificates of physicians, and
Employer's decision shall be conclusive and binding, in the absence of fraud.
If Employer so requests Executive will submit to an examination by a
Pennsylvania licensed physician with expertise or knowledge of the type of
disabling condition from which Executive allegedly suffers for the purpose of
verifying whether the provisions of this Section 7.2 are applicable. If
Executive refuses to cooperate in submitting to an examination as requested by
Employer, Executive shall immediately be deemed "disabled" for the purposes of
this Agreement. (Executive acknowledges that this Section 7.2 sets forth only
the condition for which Executive may be terminated for disability, and that
Employer is not required to pay (although it may pay) Executive for periods not
worked in excess of vacation and sick days utilized, except as may be required
by applicable law or to the extent that Executive receives benefits under
Employer's short term disability or long term disability policies.)
7.3 Definition of "Cause". For purposes of this Agreement, the term
---------------------
"CAUSE" shall include, but not be limited to, any one of the following
conditions or any one of the following events:
(a) Executive's habitual intoxication or drug addiction;
(b) violation of Employer's policies with respect to harassment
(sexual or otherwise);
(c) refusal or failure by Executive to perform such reasonable duties
as may reasonably be delegated or assigned to her, consistent with her position,
by Employer;
(d) failure to devote her entire full week business to the duties of
the position as provided herein, except permitted vacation periods and/or
sickness leave;
(e) continuing inattention or neglect by Executive of her duties
hereunder, which inattention is not the result of illness or accident;
5
<PAGE>
(f) willful or wanton misconduct or negligence by Executive in
connection with the performance of her duties;
(g) the material breach by Executive of any provisions of this
Agreement (including, without limitation, Section 9);
(h) the commission by Executive of a felony, participation in any
fraud or commission of any misdemeanor involving moral turpitude;
(i) Executive's dishonesty detrimental to the best interest of
Employer or any of its affiliates; and
(j) involvement in any matter which, in Employer's opinion, is
reasonably likely to cause prejudice or embarrassment to Employer's business.
provided, that, in the case of clauses (c), (d), (e), (f) or (g) of this Section
7.3, there shall not be "cause" unless Employer has first given Executive
written notice specifying in reasonable detail the circumstances on which
Employer believes there is "cause" for termination and Executive has failed to
remedy the same with 15 days after the date of such notice or unless the
condition or event is not subject to cure or a substantially similar condition
or event has been the subject) of a prior notice by Employer within the twelve
months preceding such notice.
7.4 Effect of Early Termination on Compensation. If the Employment Period
-------------------------------------------
is terminated as provided in Section 7.1 (including by reason of Executive's
death), Executive shall be entitled to receive only the compensation set forth
in Section 3 accrued but unpaid as of the date of termination and all benefits
shall terminate as of such date (except to the extent otherwise provided by
law). Under no circumstances shall Executive be entitled to any compensation
except as set forth in this Section 7.4, including without limitation any
severance pay or termination indemnity. Employer shall pay any funds provided
for in this Section 7.4 to Executive, her estate or legal representative, as the
case may be.
8. EXPIRATION OF EMPLOYMENT PERIOD. On termination of the Employment Period,
neither party shall be under any obligation to renew Executive's employment with
Employer and, unless otherwise agreed by both parties in writing, any continued
employment of Executive by Employer after the Employment Period shall be on an
"at will" basis. Notwithstanding any of the foregoing to the contrary,
Executive's covenants under Section 10 shall continue so long as she is employed
by Employer and for any additional periods specified therein. Executive
recognizes that it would be disruptive to Employer if she resigned from her
employment without adequate notice to Employer, and she covenants to notify
Employer at least 90 days prior to the end of the Employment Period if she does
not intend to continue her employment after the Employment Period; further,
Executive acknowledges that under Employer's policies, an employee forfeits
accrued vacation benefits if at least two weeks' advance notice of termination
is not given to Employer.
6
<PAGE>
9. EXECUTIVE REPRESENTATIONS. Executive represents and warrants to Employer
that she is not a party to or bound by any agreement, arrangement or
understanding, written or otherwise, which prohibits or in any manner restricts
her ability to enter into and fulfill her obligations under this Agreement
and/or to be employed by and serve Employer in an executive capacity. Executive
will indemnify and hold harmless Employer from any claims, liabilities, damages,
costs or expenses (including legal fees) resulting from third-party claims of
any such conflict or breach.
10. CERTAIN COVENANTS OF EXECUTIVE.
10.1 Intellectual Property. All rights in and to any and all inventions,
---------------------
ideas, techniques, methods, developments, works, improvements and other forms of
intellectual property (including, without limitation, all matters relating to
curriculum and curriculum techniques) ("Intellectual Property"), whether or not
patentable, which Executive (either alone or in conjunction with others)
conceives, makes, obtains or reduces to product or commences so to do during her
employment with Employer are and shall be the property of Employer. The
foregoing shall not apply to Intellectual Property developed in connection with
her activities permitted under clause (a) of Section 1.2, and as described in
the "Multimedia and Thinking Skills Software -- Product Prospectus dated March
23, 1999" and the "Multimedia and Thinking Skills Technology -Enabling Training
Applications for the 21/st/ Century" description provided by Executive to
Employer, or otherwise unrelated to any subject matter of actual or potential
concern or interest to Employer or any of its affiliates which are not
conceived, made, obtained or reduced to product in the course of Executive's
employment or with the use of the time, material or facilities of Employer or
any of its affiliates. Executive will make full and prompt disclosure to
Employer of all Intellectual Property and, at Employer's request and expense but
without additional compensation to Executive during her employment hereunder and
with reasonable compensation thereafter, will at any time or times execute and
deliver such foreign and domestic patent, trademark or copyright applications,
assignments and other papers and take such other action (including without
limitation testifying in any legal proceedings) as Employer considers necessary
to vest, perfect, defend or maintain Employer's rights in and to such
Intellectual Property. The provisions of this Section 10.1 shall survive the
termination, for any reason, of this Agreement.
10.2 Nondisclosure of Confidential Information.
-----------------------------------------
(a) Executive shall not, during the period that Executive is employed
by Employer or provides consulting services to Employer or at any time
thereafter, unless authorized to do so in writing by Employer, directly or
indirectly disclose or permit to be known to, or used for the benefit of, any
person, corporation or other entity (outside of the employ of Employer), or
herself, any confidential information acquired by her during the course of or as
an incident to her employment or association with Employer, whether or not
pursuant to this Agreement. For the purposes of this Section 10.2, the term
confidential information shall include, but not be limited to, all trade
secrets,
7
<PAGE>
confidential or proprietary knowledge or information with respect to the conduct
or details of Employer's business including, but not limited to, lists of
customers or suppliers of Employer's business, pricing strategies, business
files and records, trade secrets, curriculum, processes, costs, designs,
marketing methods or any other financial, educational, curricular or other
information about Employer's business or curriculum not in the public domain.
The term "confidential information" shall not include any information which (i)
is generally available to the public as of the date hereof, (ii) becomes
generally available to the public after the date hereof, provided that such
public disclosure did not result, directly or indirectly, from any act, omission
or fault of Executive, or (iii) becomes available to Executive after the date of
termination of her employment with Employer on a non-confidential basis from a
source other than Employer or its agents, provided that such source is not bound
to Employer or its representatives by agreement, fiduciary duty or otherwise not
to disclose such information.
(b) All confidential information described in Section 10.1 shall be
the exclusive property of Employer, and Executive shall use her best efforts to
prevent any publication or disclosure thereof. Upon termination of Executive's
employment with Employer, Executive shall return to Employer all documents,
records, reports, writings and other similar documents containing confidential
information, including copies thereof, then in her possession or control.
(c) All correspondence, memoranda, notes, records, reports, plans and
other papers and items delivered to Executive by Employer shall be the property
of Employer, and Executive will deliver all copies thereof to Employer on
termination of this Agreement or on earlier request.
10.3 Nonsolicitation; Restrictive Covenant. The Noncompetition,
-------------------------------------
Nonsolicitation and Confidentiality Agreement dated July 30, 1999 (the
"Noncompete Agreement") between Employer and Executive is incorporated herein by
reference.
10.4 Survival. The provisions of this Section 10 shall survive the
--------
termination, for any reason, of the Employment Period and of this Agreement, and
shall continue, in the case of Sections 10.1 and 10.2, without termination, and,
in the case of Sections 10.3, for the period contemplated therein (including any
extended period as provided in Section 10.5).
10.5 Remedies. Executive acknowledges that if she breaches her promises
--------
set forth in this Section 10, Employer will suffer irreparable damages, the
amount of which will be impossible to ascertain and which cannot be reasonably
or adequately compensated in an action of law. Accordingly, notwithstanding
Section 11, in addition to all other remedies under this Agreement (including,
but not limited to, money damages), Employer shall be entitled as a matter of
right to injunctive relief, including specific performance, with respect to any
such breach or violation, in any court of competent jurisdiction; provided,
however, that nothing herein shall be deemed to constitute consent by Executive
to an ex parte proceeding. The remedies granted to Employer in this Agreement
are cumulative and are in addition to remedies otherwise available to Employer
at law or in equity. (The provisions of the Noncompete Agreement relating to
the subject matter of this Section 10.5 are incorporated herein by reference.)
Executive consents to in personam jurisdiction and venue in each of the United
States District Court for the Eastern
8
<PAGE>
District of Pennsylvania and the Court of Common Pleas of Delaware County,
Pennsylvania, and waives the right to contest in personam jurisdiction and venue
in such courts.
11. ARBITRATION OF CERTAIN DISPUTES. Any and all controversies or claims
arising out of or relating to this Agreement, or the breach thereof, or any
other claim by Executive against Employer arising from the employment of
Executive or the termination of Executive's employment, including without
limitation claims alleging violation of Title VII of the Civil Rights Act of
1964, 42 U.S.C. (S)(S)2000e, et. seq., the Age Discrimination in Employment Act,
29 U.S.C. (S)621, et. seq., the Americans with Disabilities Act, 42 U.S.C.
(S)12101 et. seq., the Family and Medical Leave Act, 29 U.S.C. (S)2601, et.
seq., any statutes of any state, and any contract or any principle of state or
federal common law, shall be settled by arbitration administered by the American
Arbitration Association under its Employment Dispute Resolution Rules. Judgment
on the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. The procedure established by this Section 11 shall be the
exclusive method for resolution of such disputes. Copies of the American
Arbitration Association Employment Discrimination Resolution Rules are available
through our Human Resources Department and may be obtained upon request. Any
request or demand for arbitration of any dispute covered by this Section 11
shall be filed with the American Arbitration Association no later than 300 days
after the event which gave rise to the claim. Notwithstanding the foregoing,
Employer or Executive may seek injunctive relief in any court of law in
connection with an alleged violation of any provision of Section 10, as provided
in Section 10.5.
12. MISCELLANEOUS
12.1 Binding Effect. This Agreement shall be binding upon Executive, her
--------------
personal representative or representatives and testate or intestate
distributees, and upon Employer and its successors and assigns; provided that
this Agreement shall be assignable by Employer to an affiliate or any person,
firm or corporation which may become a successor in interest to Employer in the
business presently operated by it or which may acquire all or substantially all
of Employer's assets or a majority of Employer's voting capital stock. The term
"AFFILIATE" used in this Agreement shall mean any entity that directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with Employer, or is a successor of Employer. This
Agreement is a personal services contract and may not be assigned by Executive.
12.2 Survival of Certain Provisions. It is expressly understood by the
------------------------------
parties to this Agreement that certain provisions, rights, and obligations
pursuant to this Agreement, are expressly meant to survive the termination of
the Employment Period and the termination of this Agreement and shall be given
full effect pursuant to their terms.
12.3 Notices. Any notice required or permitted to be given under this
-------
Agreement shall be in writing and shall be delivered by hand or be sent by
certified mail or overnight courier addressed to Executive at her address set
forth in the first paragraph of this Agreement and to Employer at Nobel Learning
Communities, Inc., Rose Tree Corporate Center II, 1400 North
9
<PAGE>
Providence Road, Media, PA 19063, Attn. President, with a copy to Nobel Learning
Communities, at the same address, Attn: General Counsel, or to such other
address as either of such parties may designate in a written notice served upon
the other party in the manner provided herein. Any such notice shall become
effective upon being mailed or, in the case of delivery by hand or overnight
courier, upon receipt.
12.4 Governing Law. This Agreement is made and delivered in the
-------------
Commonwealth of Pennsylvania and shall be construed and enforced in accordance
with the laws of the Commonwealth of Pennsylvania, without giving effect to
principles of conflicts of law.
12.5 Prevailing Party. Should any party default in performance of any of
----------------
the terms and conditions of this Agreement which results in a claim for damages,
specific performance or other remedy, the prevailing party in such claim shall
be entitled to its reasonable attorneys' fees and court or arbitration costs
from the nonprevailing party. For the purposes of this Section 12.5, in any
action with respect to the enforcement of a covenant set forth in Section 10,
Employer shall be deemed to have prevailed if any such covenant is enforced in
part, even if the applicable court exercises its discretion to limit or reduce
the duration or scope thereof or enforces only certain of such covenants.
12.6 Entire Agreement; Modifications. This instrument, together with the
-------------------------------
Noncompete Agreement, contains the entire agreement of the parties relating to
the subject matter hereof, and there are no agreements, representations or
warranties not herein set forth. THIS AGREEMENT, TOGETHER WITH THE NONCOMPETE
AGREEMENT, SUPERSEDES ANY PRIOR WRITTEN OR ORAL AGREEMENT OR UNDERSTANDING
RELATING TO THE SUBJECT MATTER HEREOF. No modification of this Agreement or the
Noncompete Agreement shall be valid unless in writing and signed by the parties
hereto. A waiver of the breach of any term or condition of this Agreement or the
Noncompete Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition.
12.7 Severability; Savings Clause. If any term or provision of this
----------------------------
Agreement or the application thereof to any person or circumstance shall, to any
extent, be held invalid or unenforceable by a court of competent jurisdiction,
the remainder of this Agreement or the application of any such term or provision
to persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law. If any of the provisions contained in this Agreement shall for any reason
be held to be excessively broad as to duration, scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be valid and
enforceable to the extent compatible with the applicable law or the
determination by a court of competent jurisdiction.
12.8 ATTORNEY REVIEW. EXECUTIVE ACKNOWLEDGES THAT THIS AGREEMENT WILL HAVE
---------------
IMPORTANT LEGAL CONSEQUENCES AND IMPOSES SIGNIFICANT REQUIREMENT ON EXECUTIVE,
INCLUDING THE OBLIGATION TO REFRAIN FROM CERTAIN ACTIVITIES AFTER THE
TERMINATION OF HER EMPLOYMENT OR CONSULTANCY WITH
10
<PAGE>
EMPLOYER. ACCORDINGLY, EXECUTIVE ACKNOWLEDGES THAT EMPLOYER HAS RECOMMENDED THAT
SHE RETAIN LEGAL COUNSEL TO REVIEW THIS AGREEMENT AND THAT SHE HAS BEEN PROVIDED
WITH ADEQUATE TIME TO OBTAIN SUCH REVIEW.
IN WITNESS WHEREOF, the undersigned have executed this Agreement the date
and year first written above.
NOBEL LEARNING COMMUNITIES, INC.
By:________________________________________
A. J. Clegg
Chairman
EXECUTIVE:
_____________________________
Lynn Fontana
11
<PAGE>
EXHIBIT A
Partial List of Duties and Responsibilities
-------------------------------------------
1) The quality of the education programs at Nobel.
2) Chair the Education Advisory Board and bring to the Board experienced
outside educators to collaborate with Nobel's internal educators.
3) Set the standards and policies for the education component of Nobel
and managing the adherence to these standards and policies.
4) Manage the curriculum conversions and principal/teacher re-training
for Nobel's conversions from childcare centers to preschools.
5) Oversee the implementation of Nobel's education programs and evaluate
of the programs via the achievement levels of our students.
6) Determine the appropriate methods and testing programs to determine
achievement levels of our students.
7) Be cognizant of the state-of-the-art in education; methods, tools and
technologies.
8) Be cognizant of the various education reform movements and methods
such as charter schools, vouchers, privatization, management
organizations, etc..
9) Maintain and expand our NIPSA accreditation. Investigate other
accreditation agencies. Represent Nobel at NIPSA meetings.
10) Promote of Nobel's reputation and programs via participation in
selected education and financial conferences, guest lecturing and
articles in appropriate journals.
11) Coordinate the internship and the Nobel training programs with
UOP/Wharton, and possible other universities.
12) Parent and teacher training seminars.
13) Collaborate with the appropriate experts of companies and support
establishing and implementing after-school, weekend and summer student
tutorial programs.
14) Participate as part of the overall Nobel executive team.
15) Prepare each year of an "Educational" department budget, which must be
approved by the CEO.
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-1998
<PERIOD-START> JUL-01-1999 JUL-01-1998
<PERIOD-END> SEP-30-1999 SEP-30-1998
<CASH> 4,098 1,640
<SECURITIES> 0 0
<RECEIVABLES> 1,535 1,689
<ALLOWANCES> (177) (177)
<INVENTORY> 0 0
<CURRENT-ASSETS> 6,166 5,032
<PP&E> 40,496 37,024
<DEPRECIATION> (13,219) (12,324)
<TOTAL-ASSETS> 85,631 81,025
<CURRENT-LIABILITIES> 19,825 17,119
<BONDS> 0 0
0 0
5 5
<COMMON> 6 6
<OTHER-SE> 33,999 34,134
<TOTAL-LIABILITY-AND-EQUITY> 85,631 81,025
<SALES> 27,345 23,911
<TOTAL-REVENUES> 27,345 23,911
<CGS> 24,424 21,592
<TOTAL-COSTS> 26,739 23,572
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 804 683
<INCOME-PRETAX> (199) (321)
<INCOME-TAX> (84) (135)
<INCOME-CONTINUING> (115) (186)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (115) (186)
<EPS-BASIC> (.02) (.03)
<EPS-DILUTED> (.02) (.03)
</TABLE>
