SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
(Amendment No.1)
[X] Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended June 30, 2002
or
[_] Transition Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Commission File Number 1-10031
NOBEL LEARNING COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2465204
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1615 West Chester Pike
West Chester, PA 19382
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (484) 947-2000
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
None None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, par value
$.001 per share
(Title of each class)
Indicate by check mark whether the registrant: (1) has filed all reports
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 _____
----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
As of September 3, 2002, 6,544,953 shares of common stock were outstanding.
The aggregate market value of the shares of common stock owned by non-affiliates
of the Registrant as of September 3, 2002 was approximately $30,256,000 (based
upon the closing sale price of these shares on such date as reported by Nasdaq).
Calculation of the number of shares held by non-affiliates is based on the
assumption that the affiliates of the Company include the directors, executive
officers and stockholders who have filed a Schedule 13D or 13G with the Company
which reflects ownership of at least 10% of the outstanding common stock or have
the right to designate a member of the Board of Directors, and no other persons.
The information provided shall in no way be construed as an admission that any
person whose holdings are excluded from the figure is an affiliate or that any
person whose holdings are included is not an affiliate and any such admission is
hereby disclaimed. The information provided is included solely for record
keeping purposes of the Securities and Exchange Commission.
STATEMENT REGARDING AMENDMENT NO. 1
Nobel Learning Communities, Inc. (the "Company") is filing this
Amendment No. 1 to the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on September 24, 2002 solely to reflect (1)
the value realized by the Company's former President and Chief Operating Officer
upon the exercise of stock options in Fiscal 2002, and (2) the date on which the
Company's current Vice Chairman, President and Chief Operating Officer became an
employee of the Company. No other items in the Company's Annual Report on Form
10-K filed on September 24, 2002 are amended.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is listed below.
COMPENSATION TABLES
The following tables contain compensation data for the Chief Executive
Officer and certain other of the Company's four other most highly compensated
executive officers (based on total annual salary and bonus for Fiscal 2002) (the
"Named Executive Officers").
Summary Compensation Table
---------------------------------------------------------------------
Long Term
Compensation
Annual Compensation Awards
---------------------------------------------------------
Other
Annual Securities All Other
Name and Principal Fiscal Compens- Underlying Compens-
Position Year Salary Bonus ation(1) Options/SARs ation(2)
- --------------------------------------------------------------------------------------------------------------
A.J. Clegg 2002 $ 329,648 $ 80,644(3) -- -- $ 6,752
Chairman, President and 2001 316,154 144,639(4) -- -- 7,383
Chief Executive Officer 2000 314,007 141,477 -- 110,000 6,391
- --------------------------------------------------------------------------------------------------------------
John R. Frock 2002 $ 180,869 $ -- -- -- $ 2,164
Vice Chairman - 2001 145,846 -- $ 14,626 -- 2,073
Corporate Development 2000 141,846 66,636 -- -- 2,676
- --------------------------------------------------------------------------------------------------------------
Robert E. Zobel(5)
Vice Chairman - 2002 $ 35,385 $ -- $ 3,792 65,000 $ --
Corporate Affairs and 2001 -- -- -- -- --
Chief Financial Officer 2000 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
D. Scott Clegg(5)
Vice Chairman - 2002 $ 126,923(6) $ -- $ 3,000 65,000 $ --
Operations, President and 2001 -- -- -- -- --
Chief Operating Officer 2000 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
Dr. Lynn A. Fontana
Executive Vice
President - 2002 $ 126,040 $ -- $ 21,389 -- $ 1,561
Education and Chief 2001 113,960 -- 22,468 -- 368
Education Officer 2000 98,526 20,360 0 -- --
- --------------------------------------------------------------------------------------------------------------
Daryl A. Dixon (7) 2002 $ 174,540(8) $ -- $ 54,621 -- $ 1,159
Former President and 2001 265,000 -- 49,326 -- 312
Chief Operating Officer 2000 260,615 117,205 49,858 -- 302
- --------------------------------------------------------------------------------------------------------------
(1) The amounts reported for Mr. Frock consist of $7,800 for automobile
expenses in Fiscal 2001 and $6,826 for health insurance in Fiscal
2001. The amounts reported for Mr. Zobel in Fiscal 2002 consist of
$1,200 for automobile expense and $2,592 for health insurance. The
amounts reported for Mr. D. Scott Clegg in Fiscal 2002 consist of
$3,000 for automobile expense. The amounts reported for Dr. Fontana
consist of $9,362 and $9,362 for loan forgiveness for relocation or
moving expenses in Fiscal 2002 and 2001, respectively, $6,000 and
1
$6,000 for automobile expenses for Fiscal 2002 and 2001 ,
respectively and $6,026 and $7,106 for health insurance in Fiscal
2002 and 2001, respectively. The amounts reported for Mr. Dixon
consist of $36,750, $34,100 and $35,303 in respect of loan
forgiveness in Fiscal 2002, 2001 and 2000, respectively, $4,200,
$8,400 and $8,400 for automobile expenses in Fiscal 2002, 2001 and
2000, respectively, $6,027, $6,826 and $6,155 for health insurance
in Fiscal 2002, 2001 and 2000, respectively, and $7,644 in Fiscal
2002 for unused vacation. Perquisites and other personal benefits
for Messrs. A. J. Clegg for all years; Mr. Frock in Fiscal 2002 and
2000 and Dr. Fontana in fiscal 2000 did not exceed 10% of such
executive officer's salary and bonus and accordingly have been
omitted from the table as permitted by the rules of the SEC.
(2) Other compensation in Fiscal 2002 for Messrs. A. J. Clegg, Frock and
Dixon and Dr. Fontana consisted of payments of (i) $5,848, $2,164,
$216, and $260, respectively, in respect of life insurance, and
(ii) $905, $0, $943, and $1,301, respectively; in respect of Company
matching 401(k) plan contributions.
(3) Payment date for $80,644 of bonus payable under Mr. A.J. Clegg's
Special Incentive Agreement was accelerated by NLCI's compensation
committee from November 20, 2001 to August 19, 2001 in connection
with his exercise of warrants to purchase shares of NLCI's Common
Stock. Mr. A. J. Clegg has voluntarily deferred payment to him of
the remaining $56,689 of his bonus.
(4) Includes $7,306 of interest accrued from November 20, 2000, the date
bonus payment was due, until June 22, 2001, the date bonus payment
was actually made.
(5) Mr. Zobel joined the Company in April 2002 and Mr. D. Scott Clegg
joined the Company in February 2002.
(6) Includes $50,000 Mr. D. Scott Clegg received during Fiscal 2002 as a
consultant immediately preceding his employment with the Company.
(7) Mr. Dixon resigned form the Company effective November 30, 2001 and
continued to serve as a consultant through February 18, 2002.
(8) Includes $71,598 Mr. Dixon received during Fiscal 2002 as a
consultant immediately following his resignation.
Options/Stock Appreciation Rights Granted in Fiscal 2002
------------------------------------------------------------------------------------------
Potential Realized Value
Individual Grants at Assumed Annual
------------------------------------------------------------- Rates of Stock Price
% of Total Appreciation
Number of Options/ for Option Term (10 yrs)(3)
Securities SARs Granted Exercise or ---------------------------
Underlying to all Base At At
Name of Option/SARs Employees in Price per Expiration 5% Annual 0% Annual
Executive Granted(1) Fiscal 2002(2) Share Date Growth Rate Growth Rate
- -------------------------------------------------------------------------------------------------------------
A.J. Clegg 0 0.00% n/a n/a $ 0 $ 0
John R. Frock 0 0.00% n/a n/a $ 0 $ 0
Robert E. Zobel 65,000 48.15% $ 5.85 02/21/2012 $ 239,137 $ 299,531
D. Scott Clegg 65,000 48.15% $ 5.85 02/21/2012 $ 239,137 $ 299,531
Dr. Lynn A. Fontana 0 0.00% n/a n/a $ 0 $ 0
(1) Options granted vest in increments of one-third of the total
number of options granted on the first, second and third
anniversary dates of the date of grant.
(2) During Fiscal 2002, the Company granted to employees options to
purchase an aggregate of 135,000 shares of Common Stock.
(3) The potential realizable values are based on an assumption that
the stock price of the shares of Common Stock of the Company
appreciate at the annual rate shown (compounded annually) from the
date of grant until the end of the option term. These values do
not take into account contractual provisions of the options which
provide for termination of an option following termination of
employment, nontransferability, or vesting. These amounts are
calculated based on the requirements promulgated by the SEC and do
not reflect the Company's estimate of future stock price growth of
the shares of the Company's Common Stock.
2
Aggregated Option/Stock Appreciation Rights Exercised in Fiscal 2002 and Value
of Options at June 30, 2002
Value of Unexercised
Exercised in Number of Unexercised In-the-Money Options at
Fiscal 2002 Options at June 30, 2002 June 30, 2002
-------------------------------------------------------------------------------
Shares
Acquired
Name of on Value Un- Un-
Executive Exercise Realized Exercisable exercisable Exercisable exercisable
- -------------------------------------------------------------------------------------------------------
A.J. Clegg 0 0 238,333 36,667 $ 120,030 $ 0
John R. Frock 0 0 92,682 0 $ 107,220 $ 0
Robert E. Zobel 0 0 6,561 65,000 $ 0 $ 62,595
D. Scott Clegg 0 0 65,000 $ 0 $ 62,595
Dr. Lynn A. Fontana 0 0 3,333 1,667 $ 3,126 $ 1,564
Daryl A. Dixon 150,000 $ 433,781 0 0 0 0
None of the above named executive officers held any stock appreciation
rights at June 30, 2002.
Compensation of Directors
The Company pays directors an annual retainer of $10,000 (except directors
who are also employees of the Company, who receive $6,000), which is paid
quarterly, and pays members of committees of the Board of Directors $750 per
meeting for each committee meeting attended. In addition, members of the
Company's special committee of the Board of Directors will be paid a retainer in
the amount of $15,000, and the Chair of the special committee of the Board of
Directors will be paid a retainer in the amount of $25,000 (plus, in each such
case, such other amounts as may be deemed to be appropriate by the Board of
Directors following the date on which such retainers are paid), such retainers
to be in lieu of the normal policy of the Company for the attendance of meetings
of the special committee. (Executive officers' compensation reported in the
Summary Compensation Table does not include these fees.)
The Company's 1995 Stock Incentive Plan, as amended, provides that as of
the date 90 days following the closing of each fiscal year that the Plan is in
effect, each individual serving as a director of the Company who is not an
officer or employee of the Company will be granted a nonqualified stock option
to purchase 5,000 shares of Common Stock if the Company's pre-tax income for
such fiscal year increased at least 20% from the prior fiscal year and if the
individual served as a director for the entire fiscal year then ended (or a
proportionate lesser number of shares if the individual served as a director for
less than the entire fiscal year). In Fiscal 2002, no shares were subject to
annual grant, and, pursuant to the Plan, no director received an option to
purchase any shares of Common Stock.
Executive Severance Plan
In March 1997, the Company adopted an Executive Severance Pay Plan (the
"Severance Pay Plan"). The Severance Pay Plan covered certain officers and key
executives of the Company and such other additional employees or positions as
determined by written resolution of the Board from time to time (collectively,
the "Eligible Executives"). Under the Severance Pay Plan, if the employment of
an Eligible Executive with the Company terminates following a Change in Control
(as defined in the Severance Pay Plan) of the Company, under specified
circumstances, the Eligible Executive will be entitled to receive the severance
benefit specified in the Severance Pay Plan. The amount payable to an Eligible
Executive would equal (a) the Eligible Executive's salary for a period of months
equal to six plus the number of years of service of the Eligible Executive as of
the date of termination (or two times the number of years of service, if he or
she has completed at least three years of service as of the termination date),
subject to a maximum of 18 months' pay, plus (b) the bonus which would have been
payable to the Eligible Executive for the year in which employment was
terminated pro rated based on the number of months of employment in the year of
termination. In December 2001, the Severance Pay Plan was amended to remove a
provision which would have given Eligible Executives the right to receive
benefits under the Severance Pay Plan by terminating their employment
voluntarily, for any reason, within one month following the date of a Change of
Control. 3
Senior Executive Severance Plan
In February 2000, the Company adopted an amended Senior Executive Severance
Pay Plan (the "Executive Severance Pay Plan"), which replaced the Executive
Severance Pay Plan adopted in March 1997, for five of the Company's executive
officers. Under the Senior Executive Severance Pay Plan, if the employment of an
Executive Officer covered by the Executive Severance Pay Plan (collectively, the
"Eligible Senior Executives") terminates following a Change in Control (as
defined therein) of the Company, under specified circumstances, the Eligible
Senior Executive will be entitled to receive the severance benefit specified in
the Executive Severance Pay Plan. The amount payable to an Eligible Senior
Executive would equal (a) the Eligible Executive's salary for a period of months
equal to (i) twelve plus the number of years of service of the Eligible
Executive as of the date of termination if he has completed less than three
years of services, (ii) twelve plus two times the number of years of service, if
he has completed three or four years of service as of the termination date, or
(iii) twelve plus 2.99 times the number of years of service, if he has completed
at least five years of service as of the termination date; but in no event more
35.99 months, plus (b) the bonus which would have been payable to the Eligible
Executive for the year in which employment was terminated pro rated based on the
number of months of employment in the year of termination. In December 2001, the
Executive Severance Pay Plan was amended to remove a provision that would have
given Eligible Senior Executives the right to receive benefits under the
Executive Severance Pay Plan by terminating their employment voluntarily, for
any reason, within one month following the date of a Change in Control.
Employment Agreements with Executive Officers
Daryl A. Dixon - President and Chief Operating Officer
The Company entered into a three-year employment agreement with Daryl Dixon
upon his commencement of employment in February 1999. Mr. Dixon's annual base
salary was $265,000 and beginning in the Fiscal 2000, Mr. Dixon became eligible
to receive an annual bonus of up to 50% of his base salary for achieving the
Company's business plan and up to an additional 50% of his base salary for
achieving above business plan targets. Pursuant to his employment agreement, on
his first day of employment, the Company granted Mr. Dixon options to purchase
150,000 shares of Common Stock, vesting over a three-year period. The Company
also agreed to provide Mr. Dixon with a $8,400 per year car allowance, term life
insurance in the amount of $260,000 for his benefit and other benefits provided
to the Company's senior executives. Further, upon commencement of his
employment, the Company loaned Mr. Dixon the sum of $90,000 (to repay a loan
with his prior employer) (the "Dixon Loan"), accruing interest at a rate of 8%
per annum. Each month during Mr. Dixon's employment, the Company forgave 1/36 of
the principal amount and associated interest of the Dixon Loan. Mr. Dixon agreed
not to compete against the Company during the term of his employment and for two
years thereafter.
The Company entered into a certain Separation Agreement and Mutual Release
with Mr. Dixon dated November 30, 2001. Pursuant to that agreement, Mr. Dixon's
employment with the Company terminated on that date, and he agreed to continue
to serve the Company as a consultant through February 18, 2002 (the "Transition
Period"). During the Transition Period, Mr. Dixon was compensated at a pro rated
amount equivalent to $265,000 per year. In addition, Mr. Dixon received a lump
sum payment equal to the number of days of vacation which had accrued but were
unused, multiplied by his prorated daily compensation. The Company also agreed
to permit Mr. Dixon, during the Transition Period, to continue to participate in
any health and insurance plans maintained by the Company for its employees
generally, and permitted the stock options granted to Mr. Dixon under his
employment agreement to continue to vest through the Transition Period. The
Company also agreed that, during the Transition Period, it would continue to
forgive 1/36 of the principal amount and associated interest of the Dixon Loan.
Finally, Mr. Dixon agreed that, until the ninetieth day following the end of the
Transition Period, he would not publicly sell more than 1,200 shares of NLCI
common stock in any one day, in a public sale (provided, that Mr. Dixon would be
permitted to sell any amount of shares as a private trade (i.e., any trade not
reflected on any securities exchange, quotation system or SRO) to any beneficial
owner of less than 5% of the Company's Common Stock).
Dr. Lynn Fontana - Executive Vice President - Education and Chief Education
Officer
The Company entered into a three-year employment agreement with Dr. Lynn
Fontana upon her commencement of employment in August 1999. Dr. Fontana's annual
base salary was $110,000 and she was eligible for an annual bonus according to a
bonus plan established by the Company annually. The Company also agreed to
provide Dr. Fontana with a $6,000 per year car allowance and loaned to Dr.
Fontana the sum of $25,000
4
for relocation expenses, accruing interest at a rate of 8% per annum. On
each anniversary date during Dr. Fontana's employment, the Company forgave 1/3
of the principal amount and associated interest of this loan. In connection with
her employment agreement, on her first day of employment, the Company granted
Dr. Fontana options to purchase 5,000 shares of Common Stock, vesting over a
three-year period.
On February 3, 2000, the Company and Dr. Fontana amended her employment
agreement to provide that the loan to Dr. Fontana for moving expenses would be
forgiven if her employment with the Company was terminated due to a Change in
Control (as defined in her employment agreement). Dr. Fontana is currently paid
$131,000 under the terms of her employment agreement.
D. Scott Clegg - Vice Chairman - Operations, President and Chief Operating
Officer
In February, 2002, we named D. Scott Clegg our Vice Chairman - Operations,
President and Chief Operating Officer. Mr. D. Scott Clegg executed a three-year
employment agreement that provides for, among other things, an annual base
salary of $200,000, and an annual bonus of up to 100% of his base salary for
achieving business plan targets. In connection with this employment agreement,
on his first day of employment, the Company granted Mr. D. Scott Clegg options
to purchase 65,000 shares of Common Stock, vesting over a three-year period. The
Company also agreed to provide Mr. D. Scott Clegg with a $7,200 per year car
allowance, term life insurance in the amount of $200,000 for his benefit and
other benefits provided to the Company's senior executives. Further, upon
commencement of his employment, the Company advanced to Mr. D. Scott Clegg the
sum of $35,000 for relocation expenses (the "D. Scott Clegg Relocation
Allowance"). Each month during Mr. D. Scott Clegg's employment, the Company will
forgive 1/36 of the principal amount and associated interest of the D. Scott
Clegg Relocation Allowance. Mr. D. Scott Clegg also agreed not to compete
against the Company during the term of his employment and for two years
thereafter.
Robert E. Zobel - Vice Chairman - Corporate Affairs and Chief Financial Officer
On April 29, 2002, we named Robert E. Zobel our Vice Chairman -
Corporate Affairs and Chief Financial Officer. It is expected that Mr. Zobel
will execute a three-year employment agreement that will provide for, among
other things, an annual base salary of $230,000, and an annual bonus of up to
100% of his base salary for achieving business plan targets. In connection with
this anticipated employment agreement, on his first day of employment, the
Company granted Mr. Zobel options to purchase 65,000 shares of Common Stock,
vesting over a three-year period. The Company also agreed to provide Mr. Zobel
with a $7,200 per year car allowance, term life insurance in the amount of
$230,000 for his benefit and other benefits provided to the Company's senior
executives. Further, upon commencement of his employment, the Company advanced
to Mr. Zobel the sum of $50,000 for relocation expenses (the "Zobel Relocation
Allowance"). Each month during Mr. Zobel's employment, the Company will forgive
1/36 of the principal amount and associated interest of the Zobel Relocation
Allowance. It is also anticipated that Mr. Zobel will agree not to compete
against the Company during the term of his employment and for two years
thereafter.
Other Agreements with Executive Officers
The Company and Mr. A. J. Clegg are parties to a Special Incentive
Agreement entered into November 20, 1999 which provides that on each of the
first, second and third anniversaries of the date of such agreement, if Mr. A.
J. Clegg is employed by the Company on such anniversary date, the Company will
pay him an incentive payment in the amount of $137,333. Such agreement also
provides that if there is a Change in Control (as defined in the agreement) of
the Company, within 30 days of the occurrence of such Change in Control, the
Company will pay to Mr. A. J. Clegg any such incentive payments which have not
yet been paid (in lieu of making payment on the applicable anniversary date).
The Company and Mr. Frock are parties to a Noncompete Agreement which
provides that the Company will make a payment to Mr. Frock of $255,000 following
his termination for any reason if, within 30 days of his termination date, Mr.
Frock delivers a letter to the Company agreeing not to engage in specified
activities in competition with the Company for four years. The Company and Mr.
Frock are also parties to a Contingent Severance Agreement which provides that
if Mr. Frock's employment is terminated because (i) the Company terminates Mr.
Frock's employment without Cause (as defined in the agreement), or (ii) Mr.
Frock resigns following a Change in Control (as defined in the agreement),
within 20 days following the date of termination, the Company must make a
severance payment to Mr. Frock in such amount. The Company will not under any
circumstance be
5
required to make a payment to Mr. Frock under both the Noncompete Agreement and
the Contingent Severance Agreement.
On August 29, 2001, the Company entered into Employment and Termination
Agreements with each of Mr. A. J. Clegg and Mr. Frock. These agreements provide,
as to each of these executives, that if the Company terminates the executive's
employment other than for cause or his death or disability, the Company will pay
to that executive, as severance, an amount equal to 2.99 times his average
earnings for the five full calendar years preceding such termination. In
addition, upon such termination, the Company will continue to provide, at its
cost, family health insurance coverage to the executive and his spouse for the
remainder of their lives or, in the event that the Company is unable under its
then-current group health insurance plan to provide such family health insurance
coverage, the Company will reimburse the executive and his spouse up to $24,000
per year for the cost of obtaining similar health insurance coverage. Upon such
termination, the Company will also provide the executive with two full, annual
scholarships per year for life to the Company school of his choice.
In the Employment and Termination Agreements, each executive also agrees
not to compete with the Company for a period of three years following
termination of his employment, in exchange for which the Company would, for each
such year, pay to Mr. A. J. Clegg the sum of $100,000 and to Mr. Frock the sum
of $50,000. In the event that the executive voluntarily terminates his
employment with the Company, the Company will provide the executive with a
five-year consulting contract, for which Mr. A. J. Clegg would be paid not less
than $200,000 per year and Mr. Frock not less than $100,000 per year and which
would provide each executive with the health insurance and scholarships
described above. Finally, the Company agrees to provide Mr. A. J. Clegg with a
life insurance policy with a benefit of $640,000 and Mr. Frock with a life
insurance policy with a benefit of $360,000.
The aggregate amount of payments and benefits provided under each
executive's Employment and Termination Agreement will be offset against the
aggregate amount of any payments or benefits owed to that executive under the
Company's Severance Pay Plan, but not, in the case of Mr. Frock, by any payments
or benefits under Mr. Frock's Noncompete Agreement or Contingent Severance
Agreement.
EXECUTIVE COMPENSATION
Report of the Compensation Committee. At the beginning of Fiscal 2002, the
Company's Compensation Committee was comprised of three outside directors of the
Company, Messrs. Chambers (Chairman), Walton and Zobel. In November 2001,
following Mr. Daniel Russell's election to the Board of Directors to succeed Mr.
Walton, Mr. Russell replaced Mr. Walton on the Company's Compensation Committee,
Ms. Lewis replaced Mr. Chambers, and Mr. Russell became the Chairman of the
Compensation Committee. In April 2002, when Mr. Zobel became the Company's Vice
Chairman - Corporate Affairs and Chief Financial Officer and following Ms.
Lewis' resignation as a director of the Company, Eugene Monaco was named to the
Company's Compensation Committee to replace Mr. Zobel, and Mr. Chambers replaced
Ms. Lewis.
At least annually, the Compensation Committee reviews the compensation
levels of the Company's executive officers and certain other key employees and
makes recommendations to the Board of Directors regarding compensation of such
persons. 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 of
non-financial service companies.
The Compensation Committee's review of compensation, other than that of the
Chairman and Chief Executive Officer, is based on the recommendations of the
Company's internal compensation committee, which consists of Mr. A. J. Clegg
(Chairman and Chief Executive Officer) and Mr. Frock (Vice Chairman -Corporate
Development). Executive officers' compensation generally consists of base salary
(which comprises a significant portion of total compensation), bonus (which is
based on the Company's performance and/or specific goals), fringe benefits and
stock options. All executive officers are reviewed annually for performance.
Salary changes are effective in October. Bonuses are distributed after the
results of the audit of the financial statements have been verified.
The Chairman and Chief Executive Officer's compensation for Fiscal 2002
included an annual base salary of $333,300, a bonus plan based on the Company's
net income as compared to the annual plan submitted to and approved by the Board
of Directors in June 2001 and the Compensation Committee's subjective evaluation
of the Company's and the Chief Executive Officer's performance, and customary
fringe benefits. Mr. A. J. Clegg's salary
6
reflected a 4.2% increase over the prior period. In November 1999, in
order to provide additional incentive to Mr. A. J. Clegg, the Compensation
Committee entered into a Special Incentive Agreement with Mr. A. J. Clegg which
provides that on each of the first, second and third anniversaries of the date
of such agreement, if employed by the Company on such anniversary date, Mr. A.
J. Clegg will receive an incentive payment (apart from any other compensation)
in the amount of $137,333.
In August 2001, in order to provide additional incentive to Messrs. A. J.
Clegg and Frock, the Compensation Committee approved Employment and Termination
Agreements with each of Mr. A. J. Clegg and Mr. Frock. These agreements
provide, as to each of these executives, that if the Company terminates the
executive's employment other than for cause or his death or disability, the
Company will pay to that executive, as severance, an amount equal to 2.99 times
his average earnings for the five full calendar years preceding such
termination. In addition, upon such termination, the Company will continue to
provide, at its cost, family health insurance coverage to the executive and his
spouse for the remainder of their lives or, in the event that the Company is
unable under its then-current group health insurance plan to provide such family
health insurance coverage, the Company will reimburse the executive and his
spouse up to $24,000 per year for the cost of obtaining similar health insurance
coverage. Upon such termination, the Company will also provide the executive
with two full, annual scholarships per year for life to the Company school of
his choice.
In Fiscal 2002 the bonus plan of each executive officer included a formula
component, providing a bonus of up to 100% of base salary based on the Company's
performance as compared to the Company's Business Plan. Based on such formula,
no executive officer received a bonus. Further, at the discretion of the
Company's internal executive committee and the Compensation Committee together,
bonuses could be awarded based on accomplishments of individual goals, which is
in addition to the bonus percentage awarded under the formula component, up to a
maximum total bonus (together with the formula-based component) of 100% of base
salary. No discretionary bonuses were approved.
COMPENSATION COMMITTEE
Mr. Edward H. Chambers
Mr. Daniel L. Russell
Mr. Eugene G. Monaco
REPORT OF THE AUDIT COMMITTEE
Membership and Role of the Audit Committee
At the beginning of Fiscal 2002, the Audit Committee of the Company's Board
of Directors (the "Audit Committee") was comprised of three outside directors,
Messrs. Chambers, Havens and Zobel, appointed by the Board of Directors. In
April 2002, when Mr. Zobel became the Company's Vice Chairman - Corporate
Affairs and Chief Financial Officer, Daniel Russell was named to the Audit
Committee to replace Mr. Zobel. Each member of the Audit Committee is
independent as defined under the National Association of Securities Dealers'
listing standards, and at least one member has past experience in accounting or
related financial management experience. The Audit Committee is governed by a
written charter adopted and approved by the Board of Directors.
Review of the Company's Audited Financial Statements for Fiscal 2002
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended June 30, 2002 with the
Company's management. The Audit Committee has discussed with
PricewaterhouseCoopers LLP, the Company's independent public accountants, the
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Audit Committee has also received the written disclosures and the
letter from PricewaterhouseCoopers LLP relating to their independence as
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and the Audit Committee has discussed with
PricewaterhouseCoopers LLP the independence of that firm.
7
The Audit Committee has also considered whether the provision of non-audit
services by PricewaterhouseCoopers LLP is compatible with maintaining
PricewaterhouseCoopers LLP's independence.
Based on the Audit Committee's reviews and discussions noted above, the
Audit Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 2002, for filing with the SEC.
AUDIT COMMITTEE
Mr. Edward H. Chambers
Mr. Peter H. Havens
Mr. Daniel L. Russell
AUDIT AND RELATED FEES
Fees to Accountants for Services Rendered During Fiscal 2002
Audit Fees
The aggregate fees billed to the Company by PricewaterhouseCoopers LLP for
professional services for the audit of the Company's annual financial statements
for Fiscal 2002 and the review of the Company's financial statements included in
the Company's quarterly reports on Form 10-Q for Fiscal 2002 totaled $130,000.
Financial Information Systems Design and Implementation Fees
The Company did not engage PricewaterhouseCoopers LLP to provide, during
Fiscal 2002, any services for the Company regarding the design or implementation
of the Company's financial information systems, within the meaning of Rule
2-01(c)(4)(ii) of Regulation S-X.
All Other Fees
Fees billed to the Company by PricewaterhouseCoopers LLP during Fiscal 2002
for all other non-audit services rendered to the Company, including tax related
services, totaled $260,000.
8
STOCK PERFORMANCE
The following line graph compares the cumulative total stockholder return
on the Company's Common Stock with the total return of the Nasdaq Stock Market
(U.S. Companies) and an index of peer group companies for the period June 30,
1997 through June 30, 2002 as calculated by the Center for Research in Security
Prices. The graphs assume that the value of the investment in the Company's
Common Stock and each index was $100 at June 30, 1997 and that all dividends
paid by the companies included in the indexes were reinvested.
[GRAPHIC APPEARS HERE]
Comparison of Five Year Cumulative Total Return
CRSP Total Returns Index for: 6/97 6/98 6/99 6/00 6/01 6/02
------ ------ ------ ------ ------ ------
Nobel Learning Communities,
Inc. 100.0 105.9 58.8 92.6 89.1 68.1
Nasdaq Stock Market (U.S
Companies) 100.0 131.6 189.1 279.6 151.6 103.3
Self-Determined Peer Group 100.0 148.0 130.5 109.0 173.9 133.8
The self determined peer group includes: Bright Horizons Family Solutions,
Inc.; Childtime Learning Centers, Inc.; DeVry Inc.; ITT Educational Services,
Inc.; Sylvan Learning Systems, Inc. and Tesseract Group Inc.
Notes:
A. The lines represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization of
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100 at 6/30/97.
9
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as a part of this Report:
Page
-------
(1) Financial Statements.
Report of Independent Accountants .................... F-1
Consolidated Balance Sheets .......................... F-2
Consolidated Statements of Income .................... F-3
Consolidated Statements of Stockholders' Equity ...... F-4
Consolidated Statements of Cash Flows ................ F-5
Supplemental Schedules for Consolidated Statements
of Cash Flow ...................................... F-6
Notes to Consolidated Financial Statements ........... F-7
(2) Financial Statement Schedules.
Financial Statement Schedules have been omitted as
not applicable or not required under the instructions contained in
Regulation S-X or the information is included elsewhere in the
financial statements or notes thereto.
(b) Reports on Form 8-K.
None.
(c) Exhibits required to be filed by Item 601 of
Regulation S-K.
Exhibit Description of Exhibit
Number
2.1 Agreement and Plan of Merger by and between Socrates Acquisition
Corporation and Nobel Learning Communities, Inc., dated as of August
5, 2002. (Filed as Exhibit 2.1 to the Registrant's Current Report on
Form 8-K filed on August 8, 2002, and incorporated herein by
reference).
3.1 Registrant's Certificate of Incorporation, as amended and restated.
(Filed as Exhibit 3 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended December 31, 1998, and incorporated herein by
reference.)
3.2 Registrant's Certificate of Designation, Preferences and Rights of
Series A Convertible Preferred Stock. (Filed as Exhibit 7(c) to the
Registrant's Current Report on Form 8-K, filed on June 14, 1993 and
incorporated herein by reference.)
3.3 Registrant's Certificate of Designation, Preferences and Rights of
Series C Convertible Preferred Stock. (Filed as Exhibit 4(ae) to the
Registrant's Quarterly Report on Form 10-Q with respect to the quarter
ended June 30, 1994, and incorporated herein by reference.)
3.4 Registrant's Certificate of Designation, Preferences and Rights of
Series D Convertible Preferred Stock. (Filed as Exhibit 4E to the
Registrant's Current Report on Form 8-K, filed on September 11, 1995,
and incorporated herein by reference.)
3.4 Registrant's Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock. (Filed as Exhibit A to
Exhibit 1.1 to Registrant's Registration Statement on Form 8-A, dated
May 30, 2000, and incorporated herein by reference.)
3.5 Registrant's Amended and Restated By-laws as modified November 15,
2001. (Filed as Exhibit 3.4 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended December 31, 2001, and incorporated
herein by reference.)
4.1 Rights Agreement, dated as of May 16, 2000, between Registrant and
Stocktrans, Inc., as Rights Agent, which includes, as Exhibit B,
thereto the Form of Rights Certificate. (Filed as Exhibit 1.1 to
10
Registrant's Registration Statement on Form 8-A, dated May 30, 2000,
and incorporated herein by reference.)
4.2 Amendment No. 1 to the Rights Agreement of Nobel Learning Communities,
Inc., dated as of August 4, 2002, between Nobel Learning Communities,
Inc. and Stocktrans, Inc., as Rights Agent. (Filed as Exhibit 4.1 to
Registrant's Current Report on Form 8-K, filed on August 8, 2002, and
incorporated herein by reference.)
4.3 Amendment No. 2 to the Rights Agreement of Nobel Learning Communities,
Inc., dated as of August 5, 2002, between Nobel Learning Communities,
Inc. and Stocktrans, Inc., as Rights Agent. (Filed as Exhibit 4.2 to
Registrant's Current Report on Form 8-K, filed on August 8, 2002, and
incorporated herein by reference.)
10.1 Amended and Restated Loan and Security Agreement dated March 9, 1999
between the Registrant and its subsidiaries, as borrowers, and Summit
Bank, in its capacity as Agent and the financial institutions listed on
Schedule A attached thereto (as such schedule may be amended, modified
or replaced from time to time), in their capacity as Lenders. (Certain
schedules (and similar attachments) to Exhibit 10.1 have not been
filed. The Registrant will furnish supplementally a copy of any omitted
schedules or attachments to the SEC upon request.) (Filed as Exhibit
4.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999, and incorporated herein by reference.)
10.2 First Amendment, dated December 17, 1999, to Amended and Restated Loan
and Security Agreement by and among Registrant and its subsidiaries and
Summit Bank, as Agent and Lender. (Filed as Exhibit 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1999, and incorporated herein by reference.)
10.3 Second Amendment, dated May 24, 2000, to Amended and Restated Loan and
Security Agreement by and among Registrant and its subsidiaries and
Summit Bank, as Agent and Lender. (Filed as Exhibit 4.3 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended June
30, 2000, and incorporated herein by reference.)
10.4 Investment Agreement dated as of June 30, 1998 between Registrant and
its subsidiaries and Allied Capital Corporation. (Filed as Exhibit 4.11
to the Registrant's Annual Report on Form 10-K for the transitional
fiscal year ended June 30, 1998, and incorporated herein by reference.)
10.5 Amended and Restated Senior Subordinated Note dated as of May 24, 2001
in the principal amount of $10,000,000 payable to the order of Allied
Capital Corporation. (Filed as Exhibit 4.5 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended June 30, 2001, and
incorporated herein by reference).
The Registrant has omitted certain instruments defining the rights of
holders of long-term debt in cases where the indebtedness evidenced by
such instruments does not exceed 10% of the Registrant's total assets.
The Registrant agrees to furnish a copy of each of such instruments to
the SEC upon request.
10.6 Third Amendment, dated as of May 24, 2001, to Amended and Restated Loan
and Security Agreement by and among Registrant and its subsidiaries and
Fleet National Bank, as successor by merger to Summit Bank, as Agent
and Lender. (Filed as Exhibit 4.6 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 2001, and incorporated
herein by reference).
10.7 Fourth Amendment, dated as of July 5, 2001, to Amended and Restated
Loan and Security Agreement by and among Registrant and its
subsidiaries and Fleet National Bank, as successor by merger to Summit
Bank, as Agent and Lender. (Filed as Exhibit 4.7 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended June 30, 2001, and
incorporated herein by reference).
10.8 Amended and Restated Acquisition Credit Facility Note, dated as of May
24, 2001 in the principal amount of $11,250,000 payable to Fleet
National Bank, as successor by merger to Summit Bank. (Filed as Exhibit
4.8 to the Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 2001, and incorporated herein by reference).
10.9 Amended and Restated Term Note, dated as of May 24, 2001 in the
principal amount of $11,250,000 payable to Fleet National Bank, as
successor by merger to Summit Bank. (Filed as Exhibit 4.9 to the
11
Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 2001, and incorporated herein by reference).
10.11 1986 Stock Option and Stock Grant Plan of the Registrant, as
amended. (Filed as Exhibit 10(1) to the Registrant's
Registration Statement on Form S-1 (Registration Statement No.
33-1644) filed on August 12, 1987, and incorporated herein by
reference.)
10.12 1988 Stock Option and Stock Grant Plan of the Registrant.
(Filed as Exhibit 19 to the Registrant's Quarterly Report on
Form 10-Q dated March 31, 1988, and incorporated herein by
reference.)
10.13 1995 Stock Incentive Plan of the Registrant, as amended. (Filed
as Exhibit 10.3 to the Registrant's Annual Report on Form 10-K
for the transitional fiscal year ended June 30, 1998, and
incorporated herein by reference.)
10.14 Form of Non-Qualified Stock Option Agreement, for stock option
grants under 1995 Stock Incentive Plan. (Filed as Exhibit 10.4
to the Registrant's Annual Report on Form 10-K for the
transitional fiscal year ended June 30, 1998, and incorporated
herein by reference.)
10.15 Form of Incentive Stock Option Agreement, for stock option
grants under 1995 Stock Incentive Plan. (Filed as Exhibit 10.4
to the Registrant's Annual Report on Form 10-K for the
transitional fiscal year ended June 30, 1998, and incorporated
herein by reference.)
10.16 Stock and Warrant Purchase Agreement between the Registrant and
various investors, dated April 14, 1992. (Filed as Exhibit
10(r) to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1991, and incorporated herein by
reference.)
10.17 Registration Rights Agreement dated May 28, 1992 among the
Registrant, JBS Investment Banking, Ltd., and Pennsylvania
Merchant Group, Ltd. (Filed as Exhibit 4(a) to the Registrant's
Current Report on Form 8-K dated June 11, 1992, date of
earliest event reported May 28, 1992, and incorporated herein
by reference.)
10.18 Stock Purchase Agreement dated May 28, 1992 between Registrant
and a limited number of accredited investors at $0.50 per share
totaling 3,200,000 shares of common stock. (Filed as Exhibit
4(d) to the Registrant's Current Report on Form 8-K dated June
11, 1992, date of earliest event reported May 28, 1992, and
incorporated herein by reference.)
10.19 Series 1 Warrants for shares of Common Stock issued to Edison
Venture Fund II, L.P. and Edison Venture Fund II-PA, L.P.
(Filed as Exhibit 4(ad) to the Registrant's Quarterly Report on
Form 10-Q with respect to the quarter ended June 30, 1994, and
incorporated herein by reference.)
10.20 Registration Rights Agreement between Registrant and Edison
Venture Fund II, L.P. and Edison Venture Fund II-PA, L.P.
(Filed as Exhibit 4(af) to the Registrant's Quarterly Report on
Form 10-Q with respect to the quarter ended June 30, 1994, and
incorporated herein by reference.)
10.21 Amendment dated February 23, 1996 to Registration Rights
Agreement between Registrant and Edison Venture Fund II, L.P.
and Edison Venture Fund II-PA, L.P. (Filed as Exhibit 10.14 to
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995, and incorporated herein by reference.)
10.22 Investment Agreement dated as of August 30, 1995 by and among
the Registrant, certain subsidiaries of the Registrant and
Allied Capital Corporation and its affiliated funds.
(Certain schedules (and similar attachments) to Exhibit 4.1
have not been filed. The Registrant will furnish supplementally
a copy of any omitted schedules or attachments to the SEC upon
request.) (Filed as Exhibit 4A to the Registrant's Current
Report on Form 8-K, filed on September 11, 1995, and
incorporated herein by reference.)
10.23 Common Stock Purchase Warrant dated August 30, 1995 entitling
Allied Capital Corporation to purchase up to 23,178.25 shares
(subject to adjustment) of the Common Stock of the Registrant.
(Filed as Exhibit 4C to the Registrant's Current Report on Form
8-K, filed on September 11, 1995, and incorporated herein by
reference.)
Exhibit 10.23 is one in a series of four Common Stock Purchase Warrants
issued pursuant to the Investment Agreement dated as of August 30, 1995 that
are identical except for the Warrant No., the original holder thereof and
the number of shares of Common Stock of the Registrant for which the Warrant
may be exercised, which are as follows:
12
Number of Shares
of Common Stock
Warrant No. Holder (subject to adjustment)
- -------------- ---------------------------------- ------------------------
2 Allied Capital Corporation II 142,932.25
3 Allied Investment Corporation 92,713.00
4 Allied Investment Corporation II 50,219.50
10.24 Common Stock Purchase Warrant dated as of June 30, 1998
entitling Allied Capital Corporation to purchase up to 531,255
shares (subject to adjustment) of the Common Stock of the
Registrant. (Filed as Exhibit 10.13 to the Registrant's Annual
Report on Form 10-K for the transitional fiscal year ended June
30, 1998, and incorporated herein by reference.)
10.25 First Amended and Restated Registration Rights Agreement dated
as of June 30, 1998 by and between the Registrant and Allied
Capital Corporation. (Filed as Exhibit 10.14 to the Registrant's
Annual Report on Form 10-K for the transitional fiscal year
ended June 30, 1998, and incorporated herein by reference.)
10.26 Nobel Learning Communities, Inc. Senior Executive Severance Pay
Plan Statement and Summary Plan Description as modified February
3, 2000 and December 21, 2001. (Filed as Exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
December 31, 2001, and incorporated herein by reference.)
10.27 Nobel Learning Communities, Inc. Executive Severance Pay Plan
Statement and Summary Plan Description as modified February 3,
2000 and December 21, 2001. (Filed as Exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
December 31, 2001, and incorporated herein by reference.)
10.28 Employment Agreement dated January 25, 1999 between the
Registrant and Daryl Dixon. (Filed as Exhibit 10 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999, and incorporated herein by reference.)
10.29 Employment Agreement dated August 9, 1999 between the Registrant
and Lynn Fontana. (Filed as Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended September
30, 1999, and incorporated herein by reference.)
10.30 First Amendment dated February 3, 2000 of Employment Agreement
dated as of August 9, 1999 between Registrant and Lynn Fontana.
(Filed as Exhibit 10.3 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1999, and
incorporated herein by reference.)
10.31 Noncompete Agreement dated as of March 11, 1997 between John R.
Frock and the Registrant. (Filed as Exhibit 10.22 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, and incorporated herein by reference.)
10.32 Contingent Severance Agreement dated as of March 11, 1997
between John R. Frock and the Registrant. (Filed as Exhibit
10.23 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996, and incorporated herein by
reference.)
10.33 Special Incentive Agreement dated as of November 20, 1999
between A. J. Clegg and the Registrant. (Filed as Exhibit 10.24
to the Registrant's Annual Report on Form 10-K for the year
ended June 30, 2000, and incorporated herein by reference.)
10.34 Employment and Termination Agreement dated as of August 2001
between A. J. Clegg and the Registrant. (Filed as Exhibit 10.25
to the Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 2001, and incorporated herein by reference).
10.35 Employment and Termination Agreement dated as of August 2001
between John R. Frock and the Registrant. (Filed as Exhibit
10.26 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended June 30, 2001, and incorporated herein by
reference).
10.36 Separation Agreement and Mutual Release, dated as of November
30, 2001, between Daryl Dixon and Registrant. (Filed as 10.1 to
the Registrant's Quarterly Report on Form 10-Q for the quarter
ended December 31, 2001, and incorporated herein by reference).
13
21 List of subsidiaries of the Registrant. *
23 Consent of PricewaterhouseCoopers L.L.P. *
---------------------------------------------------------------------
* Previously filed
(d) Financial Statement Schedules.
None.
14
QUALIFICATION BY REFERENCE
Information contained in this Annual Report on Form 10-K as to a
contract or other document referred to or evidencing a transaction referred to
is necessarily not complete, and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to this Annual Report or
incorporated herein by reference, all such information being qualified in its
entirety by such reference.
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 13, 2003 NOBEL LEARNING COMMUNITIES, INC.
By: /s/ A. J. Clegg
-----------------------------------
A. J. Clegg
Chairman of the Board
and Chief Executive Officer
16
CERTIFICATION
I, A.J. Clegg, certify that:
1. I have reviewed this annual report on Form 10-K/A of Nobel Learning
Communities, Inc. (the "registrant");
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
(c) Presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons fulfilling the
equivalent function):
(a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 13, 2003
/s/ A. J. Clegg
-----------------------------
A.J. Clegg
Chief Executive Officer
17
CERTIFICATION
I, Robert E. Zobel, certify that:
1. I have reviewed this annual report on Form 10-K/A of Nobel Learning
Communities, Inc. (the "registrant");
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
(c) Presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons fulfilling the equivalent
function):
(a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 13, 2003
/s/ Robert E. Zobel
-----------------------------
Robert E. Zobel
Chief Financial Officer
18