SEVERANCE AGREEMENT

Exhibit 10.1

EXECUTION COPY

SEVERANCE AGREEMENT

SEVERANCE AGREEMENT , dated as of September 15, 2008 (the “ Agreement ”), between Nobel Learning Communities, Inc., a Delaware corporation, (“ Employer ”), and Susan W. Race, Senior Vice President - Education (“ Executive ”).

WHEREAS , Executive is a member of Employer’s senior leadership team and is expected to be actively involved in positioning the organization for continued growth and success;

WHEREAS , in an effort to acknowledge Executive’s important role in this process and to provide Executive with a degree of income and benefit protection in the event her employment is terminated as more fully described below; and

NOW, THEREFORE , in consideration of the premises and the mutual covenants and promises contained herein and for other good and valuable consideration, Employer and Executive hereby agree as follows:

This Agreement shall become effective as of the above written date and shall provide for the payment of compensation and benefits in the event Executive’s employment with Employer is terminated under the conditions described in Section 3(a).

(a) This Agreement shall become effective as of the above written date. No provision of this Agreement may be modified, waived, or discharged unless the modification, waiver, or discharge is approved by the Board of Directors of Employer (“ Board ”) and is agreed to in writing by Executive.

(b) Employer may terminate this Agreement and Executive’s employment at any time upon written notice for “ Cause ,” which, for purposes of this Agreement, shall mean:

provided, that, in the case of clauses (iii), (v), or (vi), there shall not be Cause unless Employer has first given Executive written notice specifying in reasonable detail the circumstances which Employer believes gives rise to Cause for termination and Executive has failed to remedy the same to the reasonable satisfaction of the Board within fifteen (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.

(c) If Employer terminates Executive’s employment for Cause, or if Executive voluntarily terminates her employment other than for Good Reason, Executive shall not be entitled to any compensation or benefits under this Agreement, but shall be entitled to receive her base salary accrued but not paid through the date of termination and no other monies or benefits except as provided by the terms of the underlying plan documents or as required by law.

(d) For purposes of this Agreement, “ Good Reason ” means, within twelve (12) months following a Change in Control, (i) a reduction of Executive’s authority or responsibility, (ii) a reduction in Executive’s rate of pay, or (iii) a change in Executive’s principal work location to a location that is more than fifty (50) highway miles from Executive’s principal work location immediately before the change and the change increases Executive’s commuting distance in highway mileage. The terms “highway miles” and “highway mileage” shall have the same meanings as these terms have when used to express the distances between locations by mapmakers such as the Hagstrom Map Company.

2

(e) A reduction in authority or responsibility means (i) the assignment to Executive of any duties materially inconsistent in any respect with Executive’s position (including status, offices, titles, and reporting requirements), and that detract from or reduce the authority, duties or responsibilities to which Executive was assigned immediately before change; or (ii) any other action by Employer that results in a diminution in such position, authority, duties, or responsibilities.

(f) However, a reduction in authority or responsibility shall not include:

(g) If Executive determines that Good Reason exists to terminate her employment with Employer, Executive must notify Employer in writing of the specific event, within sixty days of the occurrence of the event, and the notice shall also include the date on which Executive will terminate employment with Employer, which date shall be no earlier than fifteen days after the date of the notice. Within seven days of Employer’s receipt of the written notice, Employer shall notify Executive that it agrees or disagrees with Executive’s determination that the event specified in the notice constitutes Good Reason. If Employer notifies Executive that it agrees with Executive’s determination that the event specified in the notice constitutes Good Reason, Executive will terminate employment with Employer as specified in the notice or as otherwise agreed. If Employer notifies Executive that it disagrees with Executive’s determination that the event specified in the notice constitutes Good Reason, Executive may terminate her employment on the date specified in the notice (or such later date as Executive and Employer may mutually agree in writing) or may elect to continue her employment by so notifying Employer in writing.

If, while this Agreement is in effect, (i) Executive’s employment is involuntarily terminated by Employer without Cause or Executive terminates her employment for Good Reason and Executive satisfies her obligations set forth in Section 4 of this Agreement including, but not limited to, the execution and delivery of the Waiver and Release described in Section 4(e), she shall be entitled to the payments and benefits described in this Section 3.

Notwithstanding the foregoing, if Employer determines that Executive has breached any provision of this Agreement, Executive shall repay the Salary Continuation Payment and forfeit any future benefits provided under this Agreement, excluding the lesser of (i) twenty percent of her total Salary Continuation Payment or (ii) $5,000. The retained amount shall be deemed to be continuing consideration for signing and not revoking the applicable Waiver and Release. Termination of Executive’s employment by reason of death or disability shall not constitute involuntary termination by Employer under this Agreement and, in such event, no payments or benefits shall be provided under this Agreement.

3

Executive shall be entitled to payment of her then current base salary through the date her employment is terminated (“ Termination Date ”). Any vacation amount accrued, but not paid, through the Termination Date shall also be paid to Executive in a single lump sum. Executive shall submit all vouchers for reasonable business expenses prior to her Termination Date or as soon thereafter as is practicable. Executive will no longer be authorized after her Termination Date to incur any expenses, obligations, or liabilities on behalf of Employer.

To the extent Executive is eligible for payments and benefits under this Agreement, Employer shall make a single lump sum payment (“ Salary Continuation Payment ”) to Executive equal to the then current base salary that Executive would have otherwise received during the period described below (the “ Salary Continuation Period ”). If Executive dies after becoming eligible for the Salary Continuation Payment and other benefits under this Agreement, but before the end of the Salary Continuation Period, the remaining benefits shall be paid to Executive’s lawful spouse, or estate if Executive has no surviving lawful spouse.

If Executive’s Termination Date is within twelve months after a Change in Control, the Salary Continuation Period shall be eighteen months. If Executive’s Termination Date is not within twelve months after a Change in Control, the Salary Continuation Period shall be nine months. For purposes of this Agreement, a “ Change in Control ” shall be deemed to have taken place if (i) any “person” becomes the “beneficial owner” (as such terms are defined in the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder) of shares of Employer having 50% or more of the total number of votes that may be cast for the election of Employer’s directors; or (ii) there occurs a cash or tender offer for Employer shares, 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 Employer before the event shall cease to constitute a majority of the Board or of the board of directors of any successor to Employer.

Executive shall be entitled to a pro rata portion of her incentive compensation (“ Award ”) for any “performance period” in progress under any annual bonus program of Employer in which Executive participates. The pro rata portion of Executive’s Award will be determined based on the assumption that Executive’s individual performance goals were 100% satisfied at the end of the performance period, provided that at the end of the performance period, there is a bonus payable to other eligible employees, and by then multiplying the amount that would otherwise have been paid to Executive had her employment not so terminated by a fraction. The numerator of the fraction is the number of months from the start of the

4

performance period through the end of the month in which Executive’s Termination Date occurs. The denominator of the fraction is the total number of months in the performance period. Unless Executive’s employment is terminated as a result of a Change of Control, in which event the Award will be paid to Executive in a single lump sum on the Termination Date, the prorated amount shall be paid in cash at the same time that awards would have been paid for that performance period to other participants in the respective bonus program who have not terminated employment.

Executive shall be entitled to participate in Employer’s medical, dental, vision, and any other group health benefit programs during the Salary Continuation Period on the same terms as she participated immediately prior to the Termination Date. The last day of the Salary Continuation Period will constitute the date of Executive’s “termination of employment” and her participation in those programs will terminate in accordance with their respective terms.

If during the Salary Continuation Period, Executive becomes re-employed with another employer and she and her dependents are eligible to receive any of the benefits referenced in the Section 3(f) under another employer’s plans, Employer’s obligations under this Section 3(f) shall be reduced to the extent comparable coverage or benefits are actually received by Executive following Executive’s termination by Employer, and Executive shall promptly report to Employer any such coverage or benefits actually received by Executive.

Executive shall be eligible to receive, at Employer’s expense, senior executive outplacement services from Employer or from an outplacement agency selected or approved by Employer until a date that is 12 months from the date of termination.

For purposes of Executive’s participation in any other employee or executive benefit or perquisite plan or program not specifically addressed in this Section 3, including, but not limited to, the Employer’s defined contribution, nonqualified deferred compensation and group life insurance plans, the Termination Date will constitute the date of Executive’s “termination of employment” for purposes of those plans and programs. Executive may make no contributions to, and shall accrue no further benefits under, those plans and programs after the Termination Date unless the plans and programs are required to permit the contributions or accruals under applicable law. Executive shall have no right to make contributions to Employer’s defined contribution plan from the Severance Payment under this Agreement. Executive shall vest in any defined contribution and deferred compensation plans in accordance with the terms set forth in such plan.

5

Executive shall not at any time, divulge, communicate, use to the detriment of Employer or for the benefit of any other person, firm, or entity, or misappropriate in any way, any confidential information or trade secrets relating to Employer or its business including, without limitation, business strategies, operating plans, acquisition strategies (including the identities of (and any other information concerning) possible acquisition candidates), pro forma financial information, market analyses, acquisition terms and conditions, personnel information, trade processes, manufacturing methods, know-how, customer lists and relationships, supplier lists, protected health information, or other non-public proprietary and confidential information relating to Employer.

During her employment with Employer and throughout the Salary Continuation Period, in addition to any other nonsolicitation agreements between Employer and Executive, Executive shall not, directly or indirectly, for herself or on behalf of any other person, firm, or entity, employ, engage, or retain any person who at any time during the 12-month period immediately preceding her Termination Date, was an employee of Employer or contact any supplier, customer, or employee of Employer for the purpose of soliciting or diverting any such supplier, customer, or employee from Employer, or otherwise interfering with the business relationship of Employer with any of the foregoing individuals or organizations.

During her employment with Employer and throughout the Salary Continuation Peri