EXHIBIT 10.2
NOBEL LEARNING COMMUNITIES, INC.
SENIOR EXECUTIVE SEVERANCE PAY
PLAN STATEMENT
AND
SUMMARY PLAN DESCRIPTION
As modified February 3, 2000
TABLE OF CONTENTS
PAGE
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PART 1. DEFINITIONS 1
(S)1.1 Board 1
(S)1.2 Change in Control 1
(S)1.3 Company 3
(S)1.4 Eligible Employee 3
(S)1.5 Employer 3
(S)1.6 Monthly Pay 3
(S)1.7 Plan 3
(S)1.8 Plan Administrator 3
(S)1.9 Plan Statement 3
(S)1.10 Plan Year 4
(S)1.11 Termination Event 4
(S)1.12 Years of Service 4
(S)1.13 Cause 4
PART 2. PARTICIPATION 4
(S)2.1 Commencement of Participation 4
(S)2.2 Eligibility for Severance Benefits 4
PART 3. SEVERANCE BENEFITS; FUNDING 5
(S)3.1 Severance Benefits 5
(S)3.2 Plan Not Funded 6
(S)3.3 Limitations Concerning Excess Parachute Payments 6
PART 4. FORM AND TIMING OF SEVERANCE PAYMENTS 7
(S)4.1 Severance Allowance 7
(S)4.2 Bonus 7
(S)4.3 Payments After Death 7
PART 5. OTHER PLAN FEATURES 7
(S)5.1 Assignment of Benefit Prohibited 7
(S)5.2 Claims and Controversies 7
(S)5.3 Amendment or Termination of Plan 9
PART 6. ADDITIONAL INFORMATION 9
(S)6.1 Type of Plan 9
(S)6.2 Plan Sponsor 9
(S)6.3 Plan Administrator 9
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(S)6.4 Service of Legal Process 9
(S)6.5 Governing Law 9
(S)6.6 Severability 10
(S)6.7 Entire Agreement 10
(S)6.8 Successor Employer 10
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NOBEL LEARNING COMMUNITIES, INC.
SENIOR EXECUTIVE SEVERANCE PAY
PLAN STATEMENT
AND
SUMMARY PLAN DESCRIPTION
Effective as of January 3, 2000, and as thereafter from time to time
amended, Nobel Learning Communities, Inc. (the "Company"), a Delaware
corporation, has established the "Nobel Learning Communities, Inc. Senior
Executive Severance Pay Plan" (hereinafter referred to as the "Plan") for the
benefit of Eligible Employees. The terms of the Plan are set forth in this
document and entirely supersede and replace all prior severance plans, rules and
policies regarding severance benefits. The Plan is not intended to alter any
contractual rights to severance which may exist under a written employment
agreement with the Company. This document is intended to give participants an
easily understood explanation of the major features of the Plan.
The Plan provides severance benefits on account of a Termination Event
with respect to an Eligible Employee. All payments will be made from the
general corporate assets of the Company or an affiliated employer.
PART 1. DEFINITIONS
When the following terms are used in this document with initial
capital letters, they shall have the following meanings:
(S)1.1 Board - the Board of Directors of the Company.
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(S)1.2 Change in Control - a "Change in Control" shall be deemed
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to have taken place if:
(a) any person, including a group, becomes the beneficial
owner of shares of the Company having 50 percent or more of the total number of
votes that may be cast for the election of directors of the Company;
(b) any person, including a group, becomes the beneficial
owner of shares of the Company having 35 percent or more of the total number of
votes that may be cast for the election of directors of the Company, unless such
person's acquisition of such percentage of stock has been approved by at least
two-thirds of the directors in office on the date immediately preceding the date
such percentage ownership is first attained (other than Excluded Members);
(c) there occurs any cash tender or exchange offer for shares
of the Company, merger or other business combination, or sale of assets, or any
combination of the foregoing transactions, and as a result of or in connection
with any such event persons who were directors of the Company before the event
shall cease to constitute a majority of the Board or of the board of directors
of any successor to the Company; or
(d) at any date ("Reference Date"), 50 percent or more of the
members of the Board consists of persons other than (i) persons who were members
of the Board two years prior to the Reference Date (other than Excluded Members)
and (ii) Approved Members.
For purposes of subsections (b) and (d) above, (i) an "Approved
Member" shall mean any director (other than an Excluded Member) whose election
by the Board or nomination for election by the stockholders of the Company was
approved by a vote of at least two-thirds of the directors in office on the date
of approval who either were directors (A) on the date two years prior to the
Reference Date or (B) who had previously become Approved Members; and (ii) an
"Excluded Member" is any director (A) designated or nominated by, or affiliated
with, a person who has entered into an agreement with the Company to effect a
transaction described in subsection (c) above, or (B) who initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 under the Securities Exchange Act of 1934 (the
"Exchange Act")) or other actual or threatened solicitation of proxies or
contests by or on behalf of a person other than the Board (a "Proxy Contest"),
including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest.
As used in this Section 1.2, the terms "person" and "beneficial owner"
have the same meanings as such terms under section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder.
If a Change in Control occurs (as defined in any subsection of this
Section 1.2), and prior to the date an Eligible Employee experiences a
Termination Event, a Change in Control (also as defined in any subsection of
this Section 1.2) again occurs, the determination of the entitlement of such
Eligible Employee to benefits hereunder shall be made by reference to the Change
in Control event that results in the largest benefit hereunder; provided,
however, that the Plan Administrator shall be determined by reference to the
first Change in Control event which occurs in the two-year period prior to the
date of the participant's Termination Event. A Change in Control shall be
deemed to occur upon satisfaction of any subsection of this Section 1.2
irrespective of prior events constituting a Change in Control (e.g., if a person
becomes the beneficial owner of shares of the Company having 35 percent or more
of the total number of votes that may be cast for the election of directors of
the Company without such acquisition being approved by the requisite members of
the Board and later the same person becomes the beneficial owner of shares of
the Company having 50 percent or more of the total number of votes that may be
cast for the election of directors of the Company, and later the same person
causes new individuals to be elected to the board so the threshold described in
subsection (d) of this Section 1.2 is satisfied, then there shall be deemed to
be a Change in Control on the date that each of such three events occurs).
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(S)1.3 Company - Nobel Learning Communities, Inc., a Delaware
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corporation.
(S)1.4 Eligible Employee - Any employee who is designated by the
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CEO and approved by the Compensation Committee of the Board of Directors of the
Company to be a participant in this Plan, and who executes the release and
waiver of claims in the form attached to this Plan.
(S)1.5 Employer - the Company and any corporation which is a
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member of a controlled group (as defined in section 414(c) of the Internal
Revenue Code of 1986, as amended (the "Code")) which includes the Company.
(S)1.6 Monthly Pay - one-twelfth of your highest base salary
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rate (excluding bonus payments, overtime, and any other extra payments or
benefits) from the Employer which is in effect in the calendar year in which a
Change in Control occurs (annualized on the basis of a 52-week year).
(S)1.7 Plan - the severance pay plan of the Company established
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for the benefit of Eligible Employees. (As used herein, "Plan" refers to the
program established by the Company and not the document pursuant to which the
Plan is maintained. That document is referred to herein as the "Plan
Statement.") The Plan shall be referred to as the "Nobel Learning Communities,
Inc. Senior Executive Severance Pay Plan."
(S)1.8 Plan Administrator - the Company's Compensation Committee
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as it is constituted on the date preceding the date of a Change in Control;
provided, however, that should a majority of the members of such Committee
refuse to so serve following a Change in Control, the Plan Administrator shall
be a person or committee appointed by the Board and approved by at least 51
percent of the Plan participants; and further provided, that should the Company
and 51 percent of the Plan participants fail to agree on such a successor Plan
Administrator, the Plan Administrator shall be appointed by the arbitrators
acting pursuant to Section 5.2(c). The Plan Administrator shall have the
responsibility, power, authority and discretion to supervise and control the
operation of the Plan in accordance with the terms of the Plan Statement. The
Plan Administrator shall be the "named fiduciary" of the Plan within the meaning
of section 402 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). If the Plan Administrator is a committee, a majority of the
members of such committee shall constitute a quorum for the transaction of
business related to the Plan. All resolutions or other actions taken by such
committee at any meeting shall be by vote of the majority of members of such
committee. Resolutions may be adopted or other action taken without a meeting
upon written consent signed by all members of such committee.
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(S)1.9 Plan Statement - this document entitled "Nobel Learning
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Communities, Inc. Executive Severance Pay Plan Statement and Summary Plan
Description" as adopted by the Company, effective as of January 3, 2000, as the
same may be amended from time to time thereafter.
(S)1.10 Plan Year - the 12-consecutive month period beginning on
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any January 1 and ending on the following December 31.
(S)1.11 Termination Event - an event described in Section 2.2(b).
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(S)1.12 Years of Service - the number of 12-month periods
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beginning on your first day of work with the Employer and ending on the date a
Termination Event occurs; provided, however, if you incur a break in service of
longer than two months in any such 12-month period, such 12-month period shall
not count as a Year of Service. If you work at least 10 months in any such 12-
month period, you will receive credit for one Year of Service. Partial Years of
Service shall be disregarded.
(S)1.13 Cause - "Cause" for purposes of the Plan is defined as
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follows: deliberate acts of dishonesty; documented willful and deliberate
insubordination; conduct endangering the welfare of a Nobel student; or
conviction of a felony.
PART 2. PARTICIPATION
(S)2.1 Commencement of Participation - You become a participant
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in the Plan on the date you become an Eligible Employee.
(S)2.2 Eligibility for Severance Benefits -
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(a) In General. You are eligible to receive severance
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benefits under the Plan if you experience a Termination Event on or after the
date you become a participant in the Plan.
(b) Termination Event. A Termination Event occurs if you
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cease to be employed by the Employer for any of the reasons set forth in (1),
(2) or (3) below (provided that clause (3) shall not apply in the case of a
Change in Control only by virtue of Section 1.2(b)):
(1) the Employer terminates your employment involuntarily
for reasons other than Cause within eighteen (18)
months following a Change in Control; or
(2) you terminate employment with the Employer within
eighteen (18) months following a Change in Control as
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a result of any of the following events occurring
after such Change in Control:
(A) the duties of your position are materially and
adversely changed from such duties as they
existed immediately prior to the Change in
Control;
(B) your compensation plan is reduced as compared to
your compensation plan immediately prior to the
Change in Control (provided, however, that
severance pay shall not be considered
"compensation" for purposes of this
subparagraph); or
(C) the Employer requires you to be based at any
office which is more than 25 miles further from
your residence on the date such requirement is
imposed than the Employer's location on the day
before a Change in Control (other than travel
reasonably required in the performance of your
responsibilities); or
(3) prior to the date which is one month following the
date of a Change in Control, you terminate
voluntarily your employment with the Employer for any
reason (or give the Employer notice thereof).
Provided, however, that a Termination Event shall not be deemed to have occurred
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under this Section 2.2(b) if your employment with the Employer is involuntarily
terminated, but (A) prior to the date which is seven days after such
termination, you are offered employment by the buyer of the entire (or
substantially all of the) business of the Company following a sale or
divestiture by the Company of such business, on terms which if such employment
continued with the Employer, would not give you the right to severance benefits
under Section 2.2(b)(2), and you do not accept such employment, and (B) such
successor has assumed all Plan liabilities as required by Section 6.8.
PART 3. SEVERANCE BENEFITS; FUNDING
(S)3.1 Severance Benefits - If you experience a Termination
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Event, your severance benefits are as follows, subject to Section 3.3:
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(a) Severance Allowance. The Employer will pay you a
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severance allowance equal to your Monthly Pay multiplied by twelve plus:
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(1) if you have not completed three Years of Service as of
the date a Termination Event occurs, your Monthly Pay
multiplied by the number of Years of Service you have
completed as of the date a Termination Event occurs;
or
(2) if you have completed at least three Years of Service
and less than five Years of Service as of the date a
Termination Event occurs, your Monthly Pay multiplied
by two times the number of Years of Service you have
completed as of the date a Termination Event occurs;
(b) Bonus. The Employer will pay you the bonus, if any, that
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you would have received had you been employed by the Employer on the day on
which, absent this provision, you would have had to have been employed to
receive a bonus for the bonus period in which the Termination Event occurs,
prorated for the portion of the bonus period occurring prior to your Termination
Event.
(c) Vacation Days. The Employer will pay you the cash-value
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of the vacation days to which you are entitled, but which you have not used, on
the day before the Termination Event occurs.
(d) Medical and Group Term Life Insurance. The Employer will
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provide you the medical insurance and group term life insurance that you were
entitled to on the day before a Change in Control occurs, for a period beginning
with the date a Termination Event occurs and continuing over the number of
months of Monthly Pay determined under subsection (a) (i.e., a maximum of 35.99
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months).
(S)3.2 Plan Not Funded - The Employer will not make any
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contributions to fund this Plan. Any severance payments made pursuant to the
Plan will be paid out of the general funds of the Employer, and as a
participant, you will not have any secured or preferred interest by way of
trust, escrow, lien or otherwise in any specific assets. As a participant, your
rights shall be solely those of an unsecured general creditor of the Employer.
(S)3.3 Limitations Concerning Excess Parachute Payments. This
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Section shall be interpreted and applied to limit amounts otherwise payable to
an Eligible Employee under the Plan only to the extent required to avoid any
material risk of the imposition of excise taxes on the Eligible Employee under
section 4999 of the Code, or the disallowance of a deduction to the Employer
under section 280G(a) of the Code. Notwithstanding any other provision of the
Plan, severance benefits payable under Section 3.1 of the Plan,
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to the extent they are parachute payments (as defined in section 280G(b)(2) of
the Code), shall be modified to the extent necessary so that the aggregate
present value (as defined in section 280G(d)(4) of the Code) of such parachute
payments payable under the Plan and any other parachute payments (as defined in
section 280G(b)(2) of the Code) payable pursuant to any other plan or agreement
between the Eligible Employee and the Employer shall be at least one dollar less
than three times the Eligible Employee's base amount (as defined in section
280G(b)(3) of the Code).
PART 4. FORM AND TIMING OF SEVERANCE PAYMENTS
(S)4.1 Severance Allowance - Your severance allowance under
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Section 3.1(a) will normally be paid to you in a lump sum payment within 30 days
following a Termination Event. The Plan Administrator may, however, modify the
method of payment to installments coincident with normal payroll cycles, if the
Plan Administrator, in its sole discretion, determines that the Company's cash
resources are insufficient to make a lump sum payment. In no event, however,
shall the Plan Administrator delay payment or modify the method of payment
solely on account of your request to do so.
(S)4.2 Bonus - Your bonus, if any, under Section 3.1(b) will be
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paid to you in a lump sum payment on the date the bonus would have been paid to
you had you remained employed by the Employer.
(S)4.3 Payments After Death - If severance allowance (under
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Section 3.1(a)) and/or bonus (under Section 3.1(b)) remains unpaid at your
death, the remaining amount will be paid in a lump sum to the beneficiary you
most recently designated with respect to the Plan. In the event no such
beneficiary has been designated or survives you, your most recent beneficiary
designation with respect to the group term life insurance provided by the
Employer shall govern.
PART 5. OTHER PLAN FEATURES
(S)5.1 Assignment of Benefit Prohibited - No severance benefits
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under this Plan shall be subject in any manner to anticipation, alienation,
assignment (either at law or in equity), encumbrance, garnishment, levy,
execution or other legal or equitable process.
(S)5.2 Claims and Controversies - Benefits will be paid from the
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Plan to you, your personal representative or beneficiary only after a proper
written claim for the benefits has been filed with the Plan Administrator. If
you believe you may be entitled to benefits, or if you are in disagreement with
any determination that has been made, follow the following procedure:
(a) Making a Claim. Your claim must be written and must be
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delivered to the Plan Administrator. Within 30 days after you deliver your
claim, you will receive
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a decision. If your claim is wholly or partially denied, you will receive a
written notice specifying: (i) the reasons for denial; (ii) the Plan provisions
on which the denial is based; and (iii) any additional information needed from
you in connection with the claim and the reason such information is needed. You
also will receive a copy of paragraph (b) below concerning your right to request
a review.
(b) Requesting Review of a Denied Claim. You may request that
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a denied claim be reviewed. Your request for review must be written and must be
delivered to the Plan Administrator within 60 days after you receive the written
notice that your claim was denied. Your request for review may (but is not
required to) include issues and comments you want considered in the review. You
may examine pertinent Plan documents by asking the Plan Administrator. Within
30 days after you deliver your request for review, you will receive a decision.
The decision will be in writing and will specify the Plan provisions on which it
is based.
(c) Arbitration. In the event any controversy or claim
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arising out of or relating to the Plan or the breach, termination or validity
thereof is not resolved pursuant to subsection (a) or subsection (b), such
controversy or claim shall be settled by arbitration by one arbitrator in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association, and judgment upon the award rendered by
the arbitrators may be entered by any court having jurisdiction thereof.
(d) In General. This Section 5.2 shall be the sole method in
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which controversies or claims under this Plan shall be determined. All decisions
on claims and on review of denied claims under subsections (a) and (b) will be
made by the Plan Administrator. The Plan Administrator may, in its discretion,
hold one or more hearings. If you do not receive a decision within the specified
time, you should assume your claim was denied or re-denied on the date the
specified time expired. You may have an attorney or other representative act on
your behalf. The Plan Administrator shall have the sole discretion to carry out
its duties under the Plan, to construe and interpret the provisions of the Plan,
and to determine all questions concerning benefit entitlement, including the
power to construe and determine disputed or doubtful terms. To the maximum
extent permissible under law, the Plan Administrator's determinations on all
such matters shall be final and binding on all persons involved.
If your claim is denied under Section 5.2(a), and approved on appeal
under Section 5.2(b) or pursuant to arbitration under Section 5.2(c), the
Company (i) will pay your legal fees associated with the claim, appeal and
arbitration, (ii) will pay you interest on the severance benefits payable under
subsections (a), (b) and (c) of Section 3.1, at the prime rate stated in The
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Wall Street Journal on the date of your Termination Event, and over the period
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ending on the date payment is made and beginning (A) with respect to benefits
payable pursuant to Section 3.1(a) and (c), on the date of your Termination
Event, and (B) with respect to any bonus payable pursuant to Section 3.1(b), on
the date the bonus would have been paid to you had you continued to be employed
by the Employer, and (iii) will reimburse you or your beneficiary(ies) for, and
pay to your beneficiary(ies) any medical and group term life insurance benefits,
respectively, which would have been reimbursed
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or paid had your medical and group term life insurance benefits been provided in
accordance with Section 3.1(d) on and after the date of your Termination Event.
(S)5.3 Amendment or Termination of Plan -The Company, by written
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action of the Board, reserves the right to amend the Plan and the provisions of
the Plan Statement or to terminate the Plan at any time; provided, however, that
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for a period of eighteen months following a Change in Control, no such amendment
or termination shall impair your rights under the Plan.
PART 6. ADDITIONAL INFORMATION
(S)6.1 Type of Plan - The Plan is a severance pay welfare
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benefit plan which is intended to be a plan solely covering a select group of
management or highly compensated employees within the meaning of section 201(2)
of ERISA and the regulations issued thereunder. The Plan is not a pension
benefit plan. The Plan and its records are kept on a Plan Year basis, January 1
through December 31.
(S)6.2 Plan Sponsor - The name of the employer sponsoring the
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Plan and its federal employer identification number ("EIN") are:
Nobel Learning Communities, Inc.
Rose Tree Corporate Center II
1400 North Providence Road
Suite 3055
Media, PA 19063
Telephone: (610-691-8200)
EIN: 22-2465204
(S)6.3 Plan Administrator - The Plan is administered by the Plan
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Administrator. Communications addressed to the Plan Administrator should be sent
to the address listed in Section 6.2.
(S)6.4 Service of Legal Process - The General Counsel of the
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Company, or should there be no General Counsel, the President of the Company, is
designated as agent for service of legal process against the Plan.
(S)6.5 Governing Law - The law of the Commonwealth of
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Pennsylvania shall be the controlling state law in all matters relating to the
Plan and shall apply to the extent it is not preempted by the ERISA.
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(S)6.6 Severability - If any provision of the Plan Statement
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shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision, and the Plan Statement shall be construed
and enforced as if such provision had not been included.
(S)6.7 Entire Agreement - This Plan Statement contains the
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entire agreement by the Employer with respect to the subject matter hereof. No
modification or claim of waiver of any of the provisions hereof shall be valid
unless in writing and signed by the party against whom such modification or
waiver is sought to be enforced.
(S)6.8 Successor Employer - In the event of the dissolution,
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merger, consolidation, or reorganization of the Company, or the sale of the
entire (or substantially all of the) business of the Company, the Plan shall be
continued by the Company's successor. The successor shall assume all Plan
liabilities and shall have the powers, duties and responsibilities of the
Company under the Plan.
IN WITNESS WHEREOF, Nobel Learning Communities, Inc. has caused this
Plan Statement to be duly executed this ____ day of ________________________,
2000.
Attest: NOBEL LEARNING COMMUNITIES, INC.
_________________________ By:______________________________
Secretary Chairman
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