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AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

Shareholder Agreement

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT | Document Parties: HOWSTUFFWORKS, INC | HSW International Merger Corporation | HSW INTERNATIONAL, INC | HSW, INTAC International, Inc You are currently viewing:
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HOWSTUFFWORKS, INC | HSW International Merger Corporation | HSW INTERNATIONAL, INC | HSW, INTAC International, Inc

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Title: AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
Governing Law: New York     Date: 1/31/2007
Industry: Communications Services     Sector: Services

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, Parties: howstuffworks  inc , hsw international merger corporation , hsw international  inc , hsw  intac international  inc
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Exhibit 2.3

Execution Copy

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

among

HSW INTERNATIONAL, INC.

HOWSTUFFWORKS, INC.

and

WEI ZHOU

Dated January 29, 2007

 

 

Table of Contents

 

Page

ARTICLE 1

 

CERTAIN DEFINITIONS

 

 

 

SECTION 1.01 Certain Definitions

2

ARTICLE 2

 

RESTRICTIONS ON TRANSFERABILITY

 

 

 

SECTION 2.01 Restrictions on HSW

4

SECTION 2.02 Restrictions on WEI ZHOU

5

SECTION 2.03 Improper Sale or Encumbrance

5

SECTION 2.04 Restrictive Legends

5

ARTICLE 3

 

CORPORATE GOVERNANCE

 

 

 

SECTION 3.01 Composition of the Board, Committees and Management

6

SECTION 3.02 Agreement with Respect to Voting of Common Stock

7

ARTICLE 4

 

CONFIDENTIALITY

 

 

 

SECTION 4.01 Confidentiality

8

SECTION 4.02 Furnishing of Information

8

ARTICLE 5

 

OTHER MARKETS, ETC.

 

 

 

SECTION 5.01 Other Markets. (a)

9

SECTION 5.02 Additional Content

10

SECTION 5.03 Non-Competition

10

ARTICLE 6

 

MISCELLANEOUS

 

 

 

SECTION 6.01 Termination

10

SECTION 6.02 Notices

11

SECTION 6.03 Amendments and Waivers

12

SECTION 6.04 Binding Effect

12

SECTION 6.05 Expenses

12

SECTION 6.06 Governing Law; Jurisdiction

12

SECTION 6.07 Specific Performance

13

SECTION 6.08 Counterparts

13

SECTION 6.09 Entire Agreement

13

SECTION 6.10 Headings

13

SECTION 6.11 Severability

13

SECTION 6.12 Public Announcements

13

SECTION 6.13 Cumulative Remedies

14

SECTION 6.14 Interpretation

14

SECTION 6.15 No Third Party Beneficiaries

14

SECTION 6.16 Construction

14

 

ii

 

 

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

This Amended and Restated Stockholders Agreement (this " Agreement ") is entered into as of this 29th day of January, 2007 to be effective as of the Effective Time, by and among HSW INTERNATIONAL, INC., a Delaware corporation (the " Company "), HOWSTUFFWORKS, INC., a Delaware corporation (" HSW "), and WEI ZHOU, a citizen of Germany ("WEI ZHOU").

W I T N E S S E T H :

WHEREAS, the Company, HSW and WEI ZHOU entered into that certain Stockholders Agreement dated as of April 20, 2006, to be effective as of the Effective Date (the "Original Stockholders Agreement");

WHEREAS, the Company, HSW and WEI ZHOU now desire to amend and restate the provisions of the Original Stockholders Agreement as set forth herein.

WHEREAS, the Company, HSW, INTAC International, Inc., a Nevada corporation (" INTAC "), and HSW International Merger Corporation, a Nevada corporation (" Merger Sub "), have entered into an Agreement and Plan of Merger dated as of April 20, 2006, as amended by that certain First Amendment to Agreement and Plan of Merger dated as of the date hereof (the " Merger Agreement "), pursuant to which (i) HSW will contribute certain assets, properties and rights to the Company in exchange for shares of the common stock, par value $0.001 per share, of the Company (the " Common Stock "), (ii) the Merger Sub will merge into and with INTAC with INTAC surviving the merger, and (iii) all shareholders of INTAC will receive shares of Common Stock upon the Closing;

WHEREAS, upon consummation of the transactions contemplated by the Merger Agreement, each of HSW and WEI ZHOU will become a significant stockholder of the Company, and will Beneficially Own shares of Common Stock (each of HSW and WEI ZHOU, a " Stockholder ");

WHEREAS, at the Closing, the Company and HSW will be entering into two Contribution Agreements (the " Contribution Agreements "), pursuant to which HSW will contribute to the Company, among other things, certain Contributed Content (as defined therein); and

WHEREAS, the Company, HSW and WEI ZHOU wish to enter into this Agreement to set forth their agreement as to the matters set forth herein with respect to, among other things, representation on the Company’s Board, the Sale of, or creation, incurrence or assumption of an Encumbrance on, the shares of Common Stock and acquisition by HSW and WEI ZHOU of additional shares of Common Stock.

NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, HSW and WEI ZHOU hereby agree as follows:

 

 

ARTICLE 1
CERTAIN DEFINITIONS

SECTION 1.01  Certain Definitions .  (a)  As used in this Agreement, the following terms shall have the following respective meanings:

" Affiliate " means, with respect to any specified Person, any Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person.

" Applicable Restricted Period " means (a) with respect to HSW, the period ending (i) twelve (12) months after the Closing with respect to the first one-third ( 1 / 3 ) of the shares of the HSW Stock, (ii) eighteen (18) months after the Closing with respect to the next one-third ( 1 / 3 ) of the shares of the HSW Stock, (iii) twenty-four (24) months after the Closing with respect to the remaining one-third ( 1 / 3 ) of the shares of the HSW Stock, and (b) with respect to WEI ZHOU, the period ending twelve (12) months after the Closing.

" Beneficially Own " has the meaning given such term in Rule 13d-3 under the Exchange Act; provided that Beneficial Ownership under Rule 13d-3(d)(1)(i) shall be determined based on whether a Person has a right to acquire Beneficial Ownership irrespective of whether such right is exercisable within 60 days of the time of determination.

" Board " means the board of directors of the Company.

" Closing " has the meaning given to such term in the Merger Agreement.

" Commission " means the Securities and Exchange Commission.

" Control " (including the terms " Controlled by " and " under common Control with ") means, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.

" Effective Time " has the meaning given to such term in the Merger Agreement.

" Encumbrance " means any security interest, pledge, mortgage, lien, charge, adverse claim of ownership or use, or other encumbrance of any kind.

" Exchange Act " means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

" Fully Diluted Basis " means, in respect of the Common Stock, the method of calculating the number of shares of Common Stock outstanding on an applicable measurement date, pursuant to which the following shares shall be deemed to be outstanding: (i) all shares of Common Stock outstanding on such measurement date, (ii) all shares of Common Stock issuable upon conversion of outstanding shares of any convertible or exchangeable securities of the

2

 

 

Company and (iii) all shares of Common Stock issuable pursuant to any outstanding stock options or warrants of the Company.

" Law " means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order issued or promulgated by any national, supranational, state, federal, provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdiction over the Company, HSW or WEI ZHOU, as the case may be.

" Permitted Transferee " means, with respect to a specified Person, any Affiliate of such Person, provided that such Person is not a competitor of the Company, as reasonably determined by the Board.

" Person " means, any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act.

The terms " register ," " registered " and " registration " refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement by the Commission.

" Representative " means, as to any person, such person’s Affiliates and its and their directors, officers, employees, agents, advisors (including, without limitation, financial advisors, counsel and accountants).

" Sale " means, in respect of any Common Stock, property or other asset, any sale, assignment, transfer, distribution or other disposition thereof or of a participation therein, or other conveyance of legal or beneficial interest therein.

" Securities Act " means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

" Subsidiary " or " Subsidiaries " of any Person means any corporation, partnership, limited liability company, joint venture, association or other legal entity of which such Person (either alone or together with any other Subsidiary), owns, directly or indirectly, more than 50% of the stock or other equity interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.

" Territories " means, collectively, each "Territory" as defined in the Contribution Agreements.

(b)                                  Each of the following terms is defined in the Section set forth opposite such term:

3

 

 

 

 

Term

 

Section

Agreement

  •  

  • Preamble

Company

  •  

  • Preamble

Common Stock

  •  

  • Recitals

Confidential Information

  •  

  • 4.01

Contribution Agreements

  •  

  • Recitals

HSW

  •  

  • Preamble

HSW Designees

  •  

  • 3.01

HSW Stock

  •  

  • 2.01

INTAC

  •  

  • Recitals

Merger Agreement

  •  

  • Recitals

Merger Sub

  •  

  • Recitals

Other Market Transaction

  •  

  • 5.01

Stockholder

  •  

  • Recitals

WEI ZHOU Designees

  •  

  • 3.01



ARTICLE 2
RESTRICTIONS ON TRANSFERABILITY

SECTION 2.01  Restrictions on HSW .  (a)                         HSW understands and agrees that the shares of Common Stock issued to HSW pursuant to the Merger Agreement (the "HSW Stock") will not have been registered for resale under the Securities Act.  During the Applicable Restricted Period, HSW may not make or solicit any Sale of, or create, incur or assume any Encumbrance with respect to, the HSW Stock; provided that, during the Applicable Restricted Period, HSW may make or solicit a Sale to a Permitted Transferee and may pledge an interest in the HSW Stock to High River Limited Partnership and/or StuffWorks, LLC pursuant to a Stock Pledge Agreement dated as of April 20, 2006 or to one or more other lenders pursuant to a Stock Pledge Agreement entered into by HSW in connection with any transaction in which the debt currently owed by HSW to High River Limited Partnership and/or StuffWorks, LLC is refinanced (pursuant to which the applicable pledgee shall succeed to all of the rights and obligations of HSW under this Agreement with respect to any shares of HSW Stock foreclosed upon thereunder); provided , further , that the restrictions contained in this Section 2.01 shall terminate and be of no further force and effect (i) with respect to one-third ( 1 / 3 ) of the shares of the HSW Stock, on the date that is twelve (12) months after the Closing , (ii) with respect to the next one-third ( 1 / 3 ) of the shares of the HSW Stock, on the date that is eighteen (18) months after the Closing, and (iii) with respect to the remaining one-third ( 1 / 3 ) of the shares of the HSW Stock, on the date that is twenty-four (24) months after the Closing.

(b)          No Sale of HSW Stock to a Permitted Transferee shall be effective if a purpose or effect of such transfer shall have been to circumvent the provisions of this Section 2.01.  HSW shall remain responsible for the performance of this Agreement by each Permitted Transferee of HSW to which HSW Stock is transferred.  If any Permitted Transferee to which HSW Stock is transferred pursuant to Section 2.01(a) ceases to be a Permitted Transferee of HSW, such Person shall reconvey such Stock to HSW immediately before such Person ceases

4

 

 

to be a Permitted Transferee of HSW so long as such Person knows of its upcoming change of status immediately prior thereto.  If such change of status is not known until after its occurrence, the former Permitted Transferee shall make such transfer to HSW as soon as is practicable after the former Permitted Transferee receives notice thereof.

(c)           HSW agrees that it will not make or solicit any Sale of, or create, incur or assume any Encumbrance with respect to, its interest in any Permitted Transferee to which it has transferred HSW Stock unless prior thereto HSW Stock held by such entity is transferred to HSW or to one or more Permitted Transferees.

SECTION 2.02  Restrictions on WEI ZHOU .  WEI ZHOU understands and agrees that the shares of Common Stock issued to him pursuant to the Merger Agreement will not have been registered for resale under the Securities Act.  During the Applicable Restricted Period, WEI ZHOU may not make or solicit any Sale of, or create, incur or assume any Encumbrance with respect to, at least four million (4,000,000) shares of the Common Stock issued to WEI ZHOU pursuant to the Merger Agreement (the "Restricted Zhou Stock"); provided that the restrictions contained in this Section 2.02 shall terminate and be of no further force and effect on the date that is twelve (12) months after the Closing.

SECTION 2.03  Improper Sale or Encumbrance .  Any attempt not in compliance with this Agreement to make any Sale of, or create, incur or assume any Encumbrance with respect to, any shares of Common Stock shall be null and void and of no force and effect, the purported transferee shall have no rights or privileges in or with respect to the Company, and the Company shall not give any effect in the Company’s stock records to such attempted Sale or Encumbrance.  Furthermore, HSW or WEI ZHOU, as applicable, and the other parties engaging or attempting to engage in such Sale or Encumbrance shall indemnify and hold harmless the Company and the other Stockholder from all losses that the Company and the other Stockholder may incur (including, without limitation, incremental tax liability and lawyers’ fees and expenses) in enforcing the provisions of this Agreement.

SECTION 2.04  Restrictive Legends .  (a)  Each certificate representing the shares of HSW Stock, each certificate representing any shares of Common Stock acquired by HSW following its acquisition of Common Stock pursuant to the Merger Agreement and each certificate representing the Restricted Zhou Stock shall be stamped or otherwise imprinted with legends in substantially the following form (in addition to any legends required by agreement or by applicable state securities laws):

            • (i)                                      THE SHARES REPRESENTED BY THIS CERTIFICATE GENERALLY MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

              (ii)                                   THE SHARES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS UNDER THE TERMS OF AN AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED

5

 

 

            •                                                 JANUARY       , 2007, AS AMENDED FROM TIME TO TIME, BETWEEN THE ISSUER AND THE HOLDER HEREOF AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF THAT AGREEMENT.

(b)          Each Stockholder consents to the Company making a notation on its records and giving instructions to any transfer agent of its capital stock in order to implement the restrictions on transfer established in this Agreement.

(c)           If any HSW Stock or any Restricted Zhou Stock ceases to be subject to any and all restrictions on Sale or Encumbrance set forth in Section 2.01 or 2.02 of this Agreement, as applicable, or the other provisions set forth in this Agreement, the Company, upon the written request of the holder thereof, shall issue to such holder a new certificate evidencing such HSW Stock or such Restricted Zhou Stock, as applicable, without the first paragraph or without the second paragraph, as applicable, of the legends required by Section 2.04 endorsed thereon.

ARTICLE 3
CORPORATE GOVERNANCE

SECTION 3.01  Composition of the Board, Committees and Management .  (a)  From and after the Closing, the number of directors comprising the Board shall be seven (7), or such number of directors as may be determined by the Board in accordance with the Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws of the Company, effective as of the Closing.  At all times, a majority of the directors on the Board shall be independent directors and the independent directors (including those designated by any Stockholder) shall meet all requirements regarding the independence of directors as may be applicable to the Company pursuant to applicable Law or the rules of the stock exchange on which the shares of Common Stock are listed.

As of the Closing, HSW, WEI ZHOU and the Company, through the Board, shall take all such action as may be necessary (i) to cause the persons designated by each Stockholder as set forth in Exhibit 3.01(a) to be duly appointed to the Board, each to serve until the next annual election of directors of the Company (unless any such person originally designated by a Stockholder is unable to serve in such capacity, in which event such Stockholder shall designate a substitute individual), and (ii) to cause the Special Committee, the Compensation Committee and the Audit Committee of the Board to be duly established, each composed of the persons set forth in Exhibit 3.01(a) and to serve for such term during which such person remains a director of the Company.  HSW shall have the right to designate five (5) directors (three (3) of whom shall be independent directors) and such directors designated by HSW shall be referred to herein as the " HSW Designees ".  WEI ZHOU shall have the right to designate two (2)


 
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