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EXHIBIT 3
CONSULTING AND NON-COMPETE AGREEMENT
THIS CONSULTING AND NON-COMPETE AGREEMENT (this "Agreement") is entered
into this 21st day of July, 2000, by and between PLATO, INC., a Delaware
corporation ("Company"), and XXXXX X. XXXXX ("Consultant"), an individual
residing at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx 00000.
WHEREAS, concurrently with the execution of this Agreement and pursuant
to that certain Stock Purchase Agreement (as amended, restated, supplemented or
otherwise modified from time to time, the "Purchase Agreement") dated as of July
21, 2000 among PLATO Learning, Inc., a Delaware corporation and the parent of
the Company, and the Sellers named therein. Company has purchased all of the
issued and outstanding capital stock of CyberEd, Inc., a Nevada corporation
("CyberEd").
WHEREAS, the execution and delivery of this Agreement by Consultant and
Company is a condition precedent to the obligations of the parties to the
Purchase Agreement;
WHEREAS, Company is in the business of publishing interactive
multimedia CD ROM products for high school and college level science education
(the "Business"); and
WHEREAS, Company desires to hire Consultant to provide consulting
services to Company and its affiliates (together with CyberEd and its
affiliates, collectively, the "Affiliated Companies").
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party hereto hereby agrees as
follows:
1. Consulting. Company hereby retains Consultant to render consulting
services to it regarding the Business as requested by Company from time to time,
provided, however that Consultant shall not be available to consult from July
28, 2000 to August 3, 2000. The Consultant shall provide its consulting services
at the site of CyberEd in the State of California or by telephone if the Company
or CyberEd so requests such services to be rendered by telephone. Consultant
shall be available to Company's officers, managers, auditors and other personnel
for consultation and advice for not more than five (5) days per week for the
three months following the date hereof during the term of this Agreement. In the
event that Consultant is not called upon to render consulting services in any
particular year, Consultant's obligation to render consulting services for such
year shall lapse and said hours shall not be cumulative.
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2. Consultant Covenants.
(a) Non-Competition. In partial consideration for the Purchase Price
(as defined in the Purchase Agreement) payable pursuant to the terms of the
Purchase Agreement, Consultant, for a period of two (2) years from and after the
date hereof, shall not, directly or indirectly, or as the agent of another
person or through other persons as an agent participate or engage in, directly
or indirectly (as an owner, partner, employee, officer, director, independent
contractor, consultant, advisor or in any other capacity calling for the
rendition of services, advice, or acts of management, operation or control), any
business that is competitive with the Business within any city or county in
which CyberEd does business for so long as CyberEd or CyberEd's successors in
interest do business in such city or county; provided, however, that (a)
Consultant may own up to five percent (5%) of any class of securities of a
corporation engaged in such a competitive business if such securities are listed
on a national securities exchange or registered under the Securities Exchange
Act of 1934; (b) Consultant may continue to operate and own that business known
as Educatus; and (c) Consultant may continue to own jointly with Xxxxxxx X.
Xxxxx, Xx. an aggregate of 205,000 shares of common stock of American Education
Corporation. The necessity of protection against the competition of Consultant
against CyberEd and the nature and scope of such protection has been carefully
considered by the parties hereto. The parties hereto agree and acknowledge that
the duration, scope and geographic areas applicable to the covenant
not-to-compete described in this Section 2(a) are fair, reasonable and necessary
and that adequate compensation has been received by Consultant for such
obligations. If, however, for any reason any court determines that the
restrictions in this Section 2(a) are not reasonable or that consideration is
inadequate, such restrictions shall be interpreted, modified or rewritten to
include as much of the duration, scope and geographic area identified in this
Section 2(a) as will render such restrictions valid and enforceable. In the
event of a breach or threatened breach of this Section 2(a), the Company shall
be entitled to an injunction restraining such breach. Nothing herein contained
shall be construed as prohibiting any party from pursuing any other remedy
available to it for such breach or threatened breach.
(b) Confidentiality. During the term of this Agreement and following
the termination of this Agreement, whether terminated by Company or Consultant,
Consultant shall not, for his own benefit or for the benefit of any Person, make
use of any Confidential Information (as hereinafter defined), knowledge,
customer lists, or any other data of or pertaining to the Affiliated Companies,
their business, financial affairs, or services not generally known within the
Affiliated Companies' trade and which was acquired by Consultant in connection
with performing his duties under this Agreement. Consultant shall not
communicate or divulge any such Confidential Information, knowledge, customer
lists or other data to any Person. "Confidential Information" means proprietary
commercial information not generally known within the Affiliated Companies'
trade which is proprietary to the Affiliated Companies, including trade secret
information about the Affiliated Companies' business operations, products,
services, personnel, and organization, including, without limitation,
information relating to
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customers, research, development, accounting, marketing, applications, selling,
servicing, finance, business systems, computer systems, software, software
systems and techniques and also including all information disclosed to the
Consultant, or to which the Consultant had access in connection with performing
his duties under this Agreement which the Consultant or the Affiliated Companies
has a reasonable basis to believe to be Confidential Information or which is
treated by the Affiliated Companies as being Confidential Information, but shall
in any event exclude information (i) which becomes publicly known other than by
illegal means or in violation of this Agreement and (ii) which Consultant is
required by law or judicial order to disclose.
(c) Breach. Consultant and Company each recognize and acknowledge that
the Confidential Information which Consultant will obtain from the Affiliated
Companies in connection with performing his duties under this Agreement is
special and unique, and any violation of the covenants contained in this
Agreement is likely to cause irreparable damage to the Affiliated Companies;
therefore, the parties agree that, upon any breach of any covenant contained in
this Section 2 by Consultant, Company shall be entitled to an appropriate
injunction for a violation, threatened or actual, of these covenants, in
addition to all other available relief.
(d) Acknowledgment. Consultant acknowledges and agrees that the
restrictions set forth in this Section 2 are reasonable in scope and essential
to the preservation of Company's business and proprietary properties and that
enforcement of these restrictions will not cause Consultant any hardship, and
because of Consultant's background and experience, will not in any manner
preclude Consultant, in the event of a termination of this Agreement, from
becoming gainfully employed in such a manner and to such an extent as will
provide a standard of living for himself and the members of his family of at
least the sort and fashion to which he and they have become accustomed.
(e) Separate Agreement. The covenants of Consultant contained in this
Section 2 shall each be construed independently of any other provision in this
Agreement, and the existence of any claim or cause of action of Consultant
against Company whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Company of such covenants.
3. Term. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin on the date hereof and shall
remain in effect for a period of twenty-four (24) months thereafter.
4. Consulting Compensation. Subject to the provisions contained herein,
during the term of this Agreement, Company shall pay Consultant a daily
consulting fee of $500 per day (or such pro-rata portion for services rendered)
of consulting rendered by Consultant, provided, however, that if Consultant
renders services for less than four (4) hours in one day, then Consultant will
be paid $250 for such services, and further provided, that if Consultant renders
services for more than eight hours in one day, then Consultant shall receive
$500 plus such pro-rata portion for services rendered above eight hours in such
day. Such consulting fee shall be payable on the first day of each calendar
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month (or the next business day if such date is not a business day) beginning on
August 1, 2000.
5. Independent Contractor. Consultant shall, for purposes of this
Agreement, be an independent contractor of Company and not an employee thereof
and, notwithstanding any determination by the Internal Revenue Service that
Consultant is an employee, Consultant shall be responsible to pay all taxes as
if he were an independent contractor (or to reimburse Company if Company is
required to pay such amounts on behalf of Consultant).
6. Termination. The term of this Agreement shall terminate upon:
(a) Consultant's death;
(b) Consultant's inability to perform his duties hereunder by reason of
disability or incapacity, due to physical or mental illness, in excess of 90
days out of any consecutive 12-month period;
(c) termination by Company with "cause" (as hereafter defined); or
(d) written agreement of Company and Consultant.
7. Obligations Upon Termination. In the event of termination of this
Agreement:
(a) by Company for "cause", neither party shall have any further
obligation or liability under this Agreement except pursuant to Section 2(a),
which obligations and liabilities shall continue;
(b) pursuant to Section 6(a) or by Company without "cause," neither
party shall have any further obligation or liability under this Agreement except
pursuant to Sections 2(a), 2(b) and 4 hereof, which obligations and liabilities
shall continue in accordance therewith;
(c) pursuant to Section 6(b), neither party shall have any further
obligation or liability under this Agreement except pursuant to Sections 2(a),
(b), and 4, which obligations and liabilities shall continue in accordance
therewith; or
(d) pursuant to Section 6(d), Consultant shall be entitled to receive
such benefits and payments as may be specified in a written agreement, if any,
between Consultant and Company.
Notwithstanding any other provision in this Agreement to the contrary,
the obligations and liabilities of Consultant under Section 2(b) shall survive
the termination of this Agreement without regard to the manner of termination
hereof. For purposes of this Agreement, "cause" shall mean any act or omission
by Consultant of any of the following: (i) breach of his covenants or
obligations under this Agreement; (ii) the commission of a felony, fraud,
misappropriation or embezzlement involving Company or
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its property; or (iii) intentional wrongful acts or conviction of a crime
resulting in damage to the goodwill, business or property of Company.
8. Conflict. Consultant represents and warrants to Company that he has
not executed any written agreement with any other person or entity that would
prohibit Consultant from entering into this Agreement. Further, Consultant
represents and warrants to Company that the execution of this Agreement by
Consultant and his employment with Company pursuant to this Agreement will not
conflict with any obligations or duties which Consultant may have to prior
employers or pursuant to any other agreement.
9. Non-Disclosure of Agreement. Consultant agrees that, during the term
of this Agreement and after the termination of this Agreement, he shall not
disclose the terms and provisions of this Agreement or any other document
executed in connection herewith to any person, partnership, corporation or other
business entity, except (a) if required by law and (b) Consultant may disclose
this Agreement to such Consultant's accountant or attorney in order to engage in
discussions concerning this Agreement.
10. Notices. All notices or other communications required or permitted
by this Agreement shall be in writing and shall be deemed to have been duly
received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a business day and during
normal business hours of the recipient, and otherwise on the next business day
following transmission, (b) if given by certified or registered mail, return
receipt requested, postage prepaid, three business days after being deposited in
the U.S. mails and (c) if given by courier or other means, when received or
personally delivered, and, in any such case, addressed as follows:
(a) if to Company:
PLATO, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
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(b) if to Consultant:
Xxxxx X. Xxxxx
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
or to such other addresses as may be specified by any such Person to the other
Person pursuant to notice given by such Person in accordance with the provisions
of this Section 10.
11. Waiver of Breach. The waiver by Company of a breach of any
provision of this Agreement by Consultant shall not operate or be construed as a
waiver of any subsequent breach by Consultant.
12. Severability. In case any one or more of the provisions contained
herein for any reason shall be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions had never been
contained herein.
13. Assignment. No party may assign or transfer any or all of its
rights or obligations under this Agreement without the prior written approval of
all the other parties; provided, however, that Company may assign or transfer
all (but not less than all) of its rights and obligations under this Agreement
to any Person that is wholly-owned, directly or indirectly, by Company.
14. Opportunity to Employ Counsel. Consultant acknowledges receipt of a
copy of this Agreement well in advance of the date hereof and also acknowledges
that he has had ample time and opportunity to employ counsel of his choice to
provide advice concerning the terms and conditions of this Agreement.
15. Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof, and no
other representations, promises, agreements or understandings regarding the
subject matter hereof (including, without limitation, the Letter of Intent)
shall be of any force or effect unless in writing, executed by the party to be
bound thereby and dated on or after the date hereof.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO
THE "CONFLICTS OF LAW" THEREOF.
17. Arbitration. Company and Consultant agree that if a dispute to
which this Agreement is applicable (a "Dispute") has not been resolved by the
parties efforts at voluntary negotiation or mediation within 45 days, the
Dispute shall be resolved by final and binding arbitration pursuant to the
American Arbitration Association Rules and as provided for in Section 12.14 of
the Purchase Agreement.
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18. Modifications and Waivers. No change, modification or waiver of any
provision of this Agreement shall be valid or binding unless it is in writing,
dated subsequent to the date hereof and signed by Company and Consultant. No
waiver of any breach, term or condition of this Agreement by any party shall
constitute a subsequent waiver of the same or any other breach, term or
condition.
19. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
20. Definitions. Unless otherwise defined herein, each capitalized term
used herein shall have the meaning assigned thereto in the Purchase Agreement.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Consulting
and Non-Compete Agreement on the date first set forth above.
PLATO, INC.
By:
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Xxxx Xxxxxx
President
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Xxxxx X. Xxxxx, an individual
