Exhibit 10.3


 


EXECUTION COPY


 


SERVICES AGREEMENT


 


THIS SERVICES AGREEMENT (the “Agreement”)
is entered into as of October 2, 2007 (the “Effective Date”) by and
between HowStuffWorks, Inc., with its principal
office located at 3350 Peachtree Road, Suite 1500, Atlanta, Georgia 30326 (“HSW”),
and HSW International, Inc.,
with its principal office located at 3350 Peachtree Road, Suite 1150, Atlanta,
Georgia 30326 (“Client”). HSW and Client are collectively referred to
herein as the “Parties” and individually a “Party”.


 


WHEREAS, HSW is engaged in the
publication and distribution of certain reference information in digital form
via the website www.howstuffworks.com (the “Site”);


 


WHEREAS, HSW and Client have
entered into one or more Content Contribution Agreements pursuant to which HSW
licensed the Contributed Content  to
Client (collectively, the “Contribution Agreements”) for digital
distribution in the Territory; and


 


WHEREAS, Client desires to
engage HSW for the purposes of developing, supporting, translating, updating
and facilitating the digital transmission of the Contributed Content on a
transitional basis until Client is able to perform such services on its own
behalf.


 


NOW THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereto hereby agree as follows:


 


1.                                      DEFINITIONS


 


Capitalized terms used but not defined herein shall
have the meanings ascribed to such terms in the Contribution Agreements. For
purposes of this Agreement, the following terms shall have the meanings
ascribed to them below:


 


“Client Sites” means the applicable domain
names for the Territory as set forth in the Contribution Agreements on which
the Contributed Content is posted, as specified by Client in writing.


 


“Technology” means all computer code,
documentation and functions and any other computer software (including all
computer programming code and documentation) and other technology utilized by
HSW or its third party providers in providing the Services.


 


“Terms of Use” means the terms and conditions
governing access to and use of the Client Sites by the Parties and Users, which
shall be posted on the Client Sites.


 


“User” means anyone that accesses a Client
Site.


 


2.                                      SERVICES


 


2.1                                 Provision
of Services.   Upon Client’s written
request, HSW shall provide the following services to Client or Intac
International Management Consultancy (Beijing) Co., Ltd., as reasonably
designated by Client: (i) translating the Content into the language designated
in the Contribution Agreements; (ii) designing and developing the Client Sites;
(iii) providing the


 

















 


Technology for establishing, operation and use of the Client Sites;
(iv) providing support and consulting concerning the hosting, operation, and
display of the Client Sites; (v) securing the registration and maintaining the
domain names for the Client Sites; and (vi) providing other services reasonably
agreed to by the Parties as necessary to develop, operate and maintain the
Client Sites (collectively, the “Services”). HSW shall provide the Services in
accordance with the mutually agreed upon statements of work (“SOW”) agreed to
by the Parties in writing. Each SOW shall incorporate, without modification,
the terms and conditions set forth herein and shall set forth the details and
terms with respect to the Services, including timing, scope details and fee
estimates. In the event of a conflict between the terms and conditions set
forth in this Agreement and those set forth in any SOW, the terms and
conditions set forth in this Agreement shall control. The Parties shall use
commercially reasonable efforts to launch the first Client Site by June 1,
2006.


 


2.2                                 Correction
of Errors.   Notwithstanding Section
6.3, in the event that the Client Sites have technical errors or the Client
Sites or Services do not meet the specifications set forth in an applicable
SOW, HSW shall use commercially reasonable efforts to remedy such deficiencies
in a timely manner in accordance with a new SOW agreed to by the Parties.


 


3.                                                                                      CONSIDERATION


 


3.1                                 Fees.
  In
consideration of the Services provided by HSW hereunder, Client shall pay HSW a
fee equal to HSW’s fully allocated costs in providing the Services, which shall
include reasonable direct, indirect and overhead costs (the “Fee”). HSW
shall provide a reasonably detailed invoice on a monthly basis specifying each
type of Service rendered to Client. Client shall pay all such invoices, in U.S.
dollars to HSW within thirty (30) days of Client’s receipt of the invoice.


 


3.2                                 Right
to Audit.   For a period of six (6) months after Client
receives an invoice from HSW for the provision of Services, Client shall be
provided, upon advance written notice, reasonable access to and the right to
audit, at Client’s cost and expense, by a mutually acceptable nationally recognized
accounting firm (provided that such firm has not previously provided services
to either Party and provided further that such firm enter into a
confidentiality agreement) all of HSW’s books and records that pertain to the
provision of the Services under such invoice; provided, however,
neither Client nor any agent of Client shall have access to the Technology or
any other proprietary technology of HSW by virtue of this Section 3.2. Any overpayments or underpayments shall be
credited or charged, as applicable, to Client in the next invoice from HSW to
Client. If the audit identifies that the Client was overcharged by more
than ten percent (10%) in respect of the audited invoices, HSW shall bear the
costs and expense of such audit.


 


3.3                                 Taxes.
  The fees and expenses shall not include
any applicable foreign, federal, state or local sales, use, excise, value
added, customs fees or other taxes, duties, surcharges or assessments, and HSW
shall provide Client written notification of such taxes and Client shall be
responsible for the payment of all such taxes. Notwithstanding anything to the
contrary in this section, HSW shall be solely responsible for all taxes based
on its income.


 


3.4                                 Late
Payments.   Any amount not paid when
due hereunder shall be subject to an interest charge at the lesser of 1.5% per
month or the maximum rate permitted by law.


 


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4.                                      PROPRIETARY
RIGHTS


 


4.1                                 Content.   Ownership
of the Content and the Contributed Content and Client’s right to use the same
are governed by the terms and conditions set forth in the Contribution
Agreements.


 


4.2                                 Technology.   All
right, title and interest in and to the Technology and all Intellectual
Property Rights therein and all derivatives thereof, shall remain exclusively
vested in HSW. This Agreement does not convey, confer, grant, assign or
otherwise provide Client with any ownership interest in or to the Technology.


 


5.                                      TERM/TERMINATION


 


5.1                                 Term.
  This Agreement shall commence upon the
Effective Date and continue for a period of eighteen (18) months or until
earlier terminated in accordance with the terms set forth herein (the “Term”).


 


5.2                                 Termination.   This
Agreement shall terminate when the Parties mutually agree in writing that
Client is able to perform the Services on its own behalf. Client may terminate
any or all Services, either in whole or in part, or this Agreement upon thirty
(30) days’ written notice to HSW. HSW may suspend any Service in the event that
Client fails to pay the Fee for such Service when due and such failure
continues un-remedied for ninety (90) days after receipt of written notice
thereof from HSW.


 


5.3                                 Termination
of Contribution Agreements.   This
Agreement shall automatically and immediately terminate upon termination of all
the licenses granted in Section 2.2 of the Contribution Agreements.


 


5.4                                 Effect
of Termination.   Any termination of this Agreement shall not
(i) waive or otherwise adversely effect any other rights or remedies the
terminating Party may have at law or in equity, or (ii) affect any terms and
conditions which by their nature should survive termination, including (a)
Client’s obligations to pay all accrued but unpaid Fees, and (b) the rights and
obligations of the Parties under Sections 3.2, 3.3 and 3.4; and Articles
4, 6, 7, and 8.


 


6.                                      WARRANTIES
AND COVENANTS


 


6.1                                 By
HSW.   HSW represents, warrants and
covenants to Client that (i) it has the full power and authority to enter into
this Agreement; (ii) it shall provide and perform the Services with the level
of care and in a professional and workmanlike manner in accordance with
commercially reasonable industry standards; (iii) it shall observe and comply
with any and all applicable U.S. laws and regulations bearing on the
performance of the Services; and (iv) the Technology and Services do not and
will not infringe or misappropriate any third party Intellectual Property
rights.


 


6.2                                 By
Client.   Client represents and
warrants to HSW that (i) it has the full power and authority to enter into this
Agreement; (ii) the Client Sites are in compliance with all applicable laws,
rules, regulations, statutes and ordinances; (iii) the Client Sites do not and
will not infringe any third party Intellectual Property Rights; provided,
however, that this


 


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representation and warranty shall not apply in respect of Contributed
Content or Updates and instead, the applicable representation and warranty
shall be as set forth in the Contribution Agreements and Update Agreements;
(iv) it will not use the Technology or any portion thereof in any way that
infringes or misappropriates any Intellectual Property Rights; and (v) will
ensure that Terms of Use are at all times in compliance with all
applicable  laws, rules, statutes,
regulations and ordinances.


 


6.3                                 Disclaimer.
  Except for the express warranties and
representations set forth in this Agreement and the Contribution Agreements,
neither Party makes any warranties, whether express, implied or otherwise with
respect to the Services and the materials provided by HSW under this Agreement
and Licensee’s use of the Client Sites and Contributed Content. Each Party
expressly disclaims all other warranties and representations, whether express,
implied or statutory, including, without limitation, the implied warranties of
merchantability, fitness for a particular purpose, non-infringement and
accuracy. HSW does not warrant that the Client Sites or the Services will be
uninterrupted, secure, virus free, error free, or prevent unauthorized access
by third parties, that all errors will be corrected, or that the Services will
meet Client’s requirements.


 


7.                                      INDEMNITY


 


7.1                                 By
HSW.   HSW agrees to defend,
indemnify and hold harmless Client, its officers, directors, employees, agents
and contractors against any and all claims, demands, causes of action,
judgments, damages, penalties, losses, liabilities, costs and expenses
(including reasonable attorney fees’ and court costs) arising out of, resulting
from or related to (i) HSW’s breach of the covenants, representations and
warranties set forth in Article 6; or (ii) any breach of or default
under the Terms of Use by HSW or its subcontractors, except where such
liabilities, losses, damages, costs and expenses arise out of the gross
negligence, willful misconduct or bad faith of, or the violation of any
applicable law by, or willful breach by Client of any of Client’s obligations
under this Agreement. Client agrees to provide HSW with prompt written notice
of any third party claim subject to indemnification hereunder, allowing HSW to
have sole control of the defense of such claim and any resulting disposition or
settlement thereof; provided, however, that Client may participate in the
defense of a claim at its own expense. Notwithstanding the foregoing, any delay
by Client in providing notice as required hereunder shall not relieve HSW of
its indemnification obligations except and only to the extent that HSW was
prejudiced by such delay.


 


7.2                                 By
Client.   Client agrees to defend,
indemnify and hold harmless HSW, its officers, directors, employees, agents and
contractors against any and all claims, demands, causes of action, judgments,
damages, penalties, losses, liabilities, costs and expenses (including
reasonable attorney fees’ and court costs) arising out of, resulting from or
related to (i) Client’s breach of the covenants, representations and warranties
set forth in Article 6; or (ii) any breach of or default under the Terms
of Use by Client or its subcontractors or licensees, except where such
liabilities, losses, damages, costs and expenses arise out of the gross
negligence, willful misconduct or bad faith of, or the violation of any
applicable law by, or willful breach by HSW, its affiliates, its consultants or
its subcontractors of any of HSW’s obligations under this Agreement. HSW agrees
to provide Client with prompt written notice of any third party claim subject
to indemnification hereunder, allowing Client to have sole control of the
defense of such


 


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claim and any resulting disposition or settlement thereof; provided,
however, that HSW may participate in the defense of a claim at its own expense.
Notwithstanding the foregoing, any delay by HSW in providing notice as required
hereunder shall not relieve Client of its indemnification obligations except
and only to the extent that Client was prejudiced by such delay.


 


8.                                      LIMITATION
OF LIABILITY


 


8.1                                 Exclusion
of Damages.   Except for (i) the Parties’ respective
indemnification obligations set forth in this Agreement; and (ii) damages
arising out of either Party’s gross negligence or willful misconduct, neither
Party shall be liable to the other under any legal theory or cause of action
for any special, incidental, consequential or other indirect damages, including,
without limitation, damages for lost profits, even if the Party has been
advised of the possibility of such damages.


 


8.2                                 Limitation
of Damages.   Except with respect to
HSW’s (or its subcontractors’) gross negligence or willful or intentional misconduct,
HSW’s total aggregate liability arising from or related to the Services or this
Agreement shall be limited to the proven direct damages not to exceed the Fees
actually paid to HSW by Client hereunder for Services rendered during the first
twelve (12) months of the Term.


 


9.                                      MISCELLANEOUS


 


9.1                                 Assignment.
  Neither Party shall assign this
Agreement, in whole or in part, by operation or law or otherwise, without the
prior written consent of the other Party; provided, however, HSW may, without
Client’s consent, assign this Agreement or any of its rights or obligations
hereunder upon a change of control. Any purported assignment in violation
hereof shall be void.


 


9.2                                 Force
Majeure.   The obligations of either
Party shall be suspended during the period and to the extent that either Party,
is prevented or hindered from complying therewith by any of the following
causes beyond its reasonable control: 
(i) acts of God, (ii) weather, fire or explosion, (iii) war, invasion,
riot or other civil unrest, (iv) governmental laws, orders or restrictions, (v)
actions, embargoes or blockades in effect on or after the date of this
Agreement, (vi) action by any regulatory authority, (vii) national or regional
emergency, (viii) strikes, labor stoppages or slowdowns or other industrial
disturbances, (ix) power failures, fiber cuts, network disturbances, shortage
of adequate power or transportation facilities, or (x) any other event which is
beyond the reasonable control of such party. In such event, the Party whose
performance is affected thereby shall give notice of suspension as soon as
reasonably practicable to the other stating the date and extent of such
suspension and the cause thereof, and such Party shall resume the performance
of such obligations as soon as reasonably practicable after the removal of the
cause.


 


9.3                                 Subcontractors.
  HSW shall be entitled to perform any or
all of the Services through one or more subcontractors, provided that HSW
remains solely responsible to Client for the performance of the Services and
solely liable to Client for the acts and omissions of any subcontractor.


 


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9.4                                 Notices.
  All notices, consents and other
communications hereunder must be in writing and delivered to the other Party at
the address set below by personal delivery, certified mail (postage pre-paid),
overnight delivery service or by facsimile with verified receipt of
transmission, and shall be effective upon receipt (or when delivery is refused).
Each Party may change its address for receipt of notice by giving notice of the
new address to the other Party.


 


If to HSW:                                      HowStuffWorks,
Inc.

One Capital City Plaza

3350 Peachtree Road, Suite 1500

Atlanta, Georgia 30326
 Phone: 
404-760-4729

Fax:  404-760-3458

Attention:  Legal Department


 


If to Client:                                   HSW International, Inc.

3350 Peachtree Road, Suite 1150

Atlanta, Georgia 30326

Phone:

Fax:

Attention: Chief Executive Officer


 


9.5                                 Confidentiality.
  In connection with this Agreement, the
Parties may receive or have access to nonpublic information of the other Party
(“Confidential Information”). The Parties agree (i) to keep in
confidence and trust all of the other Party’s Confidential Information; (ii)
not to use the other Party’s Confidential Information other than as expressly permitted
under the terms of this Agreement or any other Agreement between the Parties;
(iii) to take all reasonable steps to prevent unauthorized disclosure or use of
the other Party’s Confidential Information, and to prevent it from falling into
the public domain or the possession of unauthorized persons; and (iv) to
disclose the other Party’s Confidential Information only to its employees or
agents who need access to such Confidential Information for purposes of meeting
and carrying out the  obligations hereunder
and who have executed a confidentiality agreement which protects the
confidentiality of the other Party’s Confidential Information. As used herein,
Confidential Information shall not include information that is: (i) available
to the public other than by a breach of this Agreement; (ii) rightfully
received from a third party not in breach of an obligation of confidentiality;
(iii) independently developed by the receiving Party without access to the
other Party’s Confidential Information; (iv) rightfully known to the receiving
Party prior to the time of disclosure; or (v) produced in compliance with
applicable law or a court order, provided the disclosing Party is given
reasonable notice of such law or order and an opportunity to attempt to
preclude or limit such production.


 


9.6                                 Waiver.
  Neither Party shall be deemed, by any
act or omission, to have waived any of its rights or remedies hereunder unless
such waiver is in writing and signed by the waiving Party, and then only to the
extent specifically set forth in such writing. A waiver with reference to one
event shall not be construed as continuing or as a bar to or waiver of any
right or remedy as to a subsequent event.


 


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9.7                                 Severability.   If, at
any time, any provision hereof is or becomes illegal, invalid or unenforceable
in any respect under the law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions hereof nor the legality,
validity or enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby. The invalid
provision shall be replaced by a valid one that achieves to the extent possible
the original purpose and commercial goal of the invalid provision.


 


9.8                                 Governing
Law; Jurisdiction.   This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, excluding its choice of laws provisions. The Parties agree that the
exclusive venue and jurisdiction for any actions or disputes arising from this
Agreement shall be a federal or state court in New York.


 


9.9                                 Relationship
of the Parties.   Nothing in this Agreement shall establish any
relationship of partnership, joint venture, employment, franchise, or agency
between the Parties. Nothing in this Agreement shall give either Party the
power to bind the other Party or incur obligations on the other Party’s behalf
without the other Party’s prior written consent. The Parties shall act as
independent contractors and not as an agent of the other in performing the
Services and in connection with this Agreement, maintaining control over its
employees, its subcontractors and their employees and complying with all
withholding of income at source requirements, whether federal, state, local or
foreign. No employee of either Party shall be considered an employee of the
other Party.


 


9.10                           Headings.   Headings
are used for purposes of reference only and shall not affect the interpretation
of this Agreement.


 


9.11                           Construction.
  This Agreement shall be construed and
interpreted fairly, in accordance with the plain meaning of its terms, and
there shall be no presumption or inference against the Party drafting this
Agreement in construing or interpreting the provisions hereof.


 


9.12                           Counterparts.
  This Agreement may be executed in
counterparts all of which taken together shall constitute one single agreement
between the Parties.


 


9.13                           Entire
Agreement.   This Agreement constitutes the entire
agreement between the Parties relating to the subject matter hereof and
supersede all prior communications, whether written or oral. This Agreement may
be amended only in a written document signed by both Parties.


 


[Signatures on following page]


 


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[Signature page to Services Agreement]


 


IN WITNESS WHEREOF, the Parties hereto have
executed this Agreement as of the Effective Date.


 


	
  HSW:

  	
  Client:

  
	
   

  
	
  HowStuffWorks, Inc.

  	
  HSW International, Inc.

  
	
   

  
	
  By:

  	
  /s/ Jeffrey Arnold

  	
   

  	
  By:

  	
  /s/ Bradley Zimmer

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Jeffrey Arnold

  	
   

  	
  Name:

  	
  Bradley Zimmer

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  	
  Title:

  	
  Secretary

  	
   

  
											



 


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