**Exhibit 10.5**

 

**EMPLOYMENTAGREEMENT**

 

**EmploymentAgreement** made as of January 1, 2004, by andbetween **24/7Real Media, Inc.**, a Delaware corporation, with its principal placeof business at 1250 Broadway, New York, New York 10001 (the “Company”), andJonathan K. Hsu (“Executive”).

 

**WI T N E S S E T H:**

 

**WHEREAS**,the Company desires to employ Executive as its Executive Vice President andChief Financial Officer, and Executive is willing to serve in such capacity;and

 

**WHEREAS**,the Company and Executive desire to set forth the terms and conditions of suchemployment.

 

**NOW,THEREFORE**, in consideration of the premises and of themutual covenants and agreements herein contained and for other good andvaluable consideration, the receipt and adequacy of which are herebyacknowledged, the Company and Executive agree as follows:

 

**1.****             EMPLOYMENT**.

 

(a)           TheCompany hereby agrees to employ Executive, and Executive agrees to be employedby the Company, on the terms and conditions herein contained as its ExecutiveVice President and Chief Financial Officer, or in such other executivemanagerial position or positions with the Company or its subsidiaries oraffiliates as shall hereafter be designated by the Chief Executive Officer (the“CEO”) of the Company.  Executive shallreport directly to the CEO or such other person as the CEO may designate andshall have such duties, authority and responsibilities commensurate withExecutive’s position for similarly sized companies in the industry.

 

(b)           Executiveshall devote all of his business time, energy, skill and efforts to theperformance of his duties hereunder and shall faithfully and diligently servethe Company.  The foregoing shall notprevent Executive from participating in not-for-profit activities or frommanaging his passive personal investments or from providing incidentalassistance to family members on matters of family business or, subject to theapproval of the Company, from serving on the boards of directors of otherentities, provided that these activities do not materially interfere withExecutive’s obligations hereunder;

 

(c)           Uponthe request of the Board, Executive shall also serve as a director or officerof subsidiaries in positions commensurate with his position with the Companywithout additional compensation.  If anycompensation is paid Executive by such subsidiaries, they shall be a creditagainst amounts due hereunder.

 

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2.             **TERM OFEMPLOYMENT**.

 

(a)           Exceptfor earlier termination as provided in Section 7 hereof or as extended inthis Section 2, Executive’s employment under this Agreement (the“Employment Term”) shall commence on January 1, 2004 (the “CommencementDate”) and continue until terminated by either party pursuant to Section 7hereof.

 

(b)           Notwithstandinganything else herein, the provisions of Sections 8  and 9 hereof shall survive and remain in effect notwithstandingthe termination of the Employment Term or a breach by the Company or Executiveof this Agreement or any of its terms.

 

3.             **COMPENSATION**.  As compensation for his services under thisAgreement, the Company shall pay Executive a base salary (the “Base Salary”) asset forth on Exhibit A hereto.  Paymentof the Base Salary shall be made in equal installments twice a month.

 

4.             **BENEFITS ANDFRINGES**.

 

(a)           Duringthe Employment Term, Executive shall be entitled to such benefits and fringes,if any, as are generally provided from time to time by the Company to itsexecutive officers, including pension, retirement, savings, welfare (includinglife and health insurance) and other employee benefit plans and arrangements.

 

(b)           Exceptas otherwise specifically provided herein, the Executive shall be responsiblefor the tax consequences of all benefits and fringes.

 

5.             **EXPENSES**.  The Company shall reimburse Executive inaccordance with its expense reimbursement policy as in effect from time to timefor all reasonable expenses incurred by Executive in connection with theperformance of his duties under this Agreement upon the presentation byExecutive of an itemized account of such expenses and appropriate receipts andotherwise in compliance with such rules relating thereto as the Company may,from time to time, adopt.

 

6.             **VACATION**.  During the Employment Term, Executive shallbe entitled to **four weeks** of paidvacation per calendar year.

 

7.             **TERMINATION**.

 

(a)           Executive’semployment under this Agreement and the Employment Term shall terminate uponany of the following events:

 

(i)            Automaticallyon the date of Executive’s death;

 

(ii)           Uponwritten notice given by the Company to Executive if Executive is unable tosubstantially perform his material duties hereunder for one hundred eighty(180) continuous days during any period of three hundred sixty (360)consecutive days by reason of physical or mental incapacity;

 

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(iii)          Uponwritten notice by the Company to Executive for Cause.  Cause shall mean (a) Executive being convicted of (or pleadingnolo contendere to) a felony (other than a traffic violation) or a crimeinvolving fraud, misappropriation, or embezzlement; (b) refusal of theExecutive to attempt to properly perform his obligations under this Agreement,or follow any direction of the CEO consistent with this Agreement, which ineither case is not remedied within ten (10) business days after receipt byExecutive of written notice from the Company specifying the details thereof,provided the refusal to follow a direction shall not be Cause if Executive ingood faith reasonably believes that such direction is not legal, ethical ormoral and promptly notifies the CEO in writing of such belief; (c) Executive’sgross negligence with regard to his duties or willful misconduct with regard tothe business, assets or employees of the Company that is materially injuriousto the financial condition or business reputation of the Company; or (d) anyother breach by Executive of a material provision of this Agreement thatremains uncured for twenty (20) business days after written notice thereof isgiven to Executive or such longer period as may reasonably be required toremedy the default, provided that the Executive endeavors in good faith toremedy the default;

 

(iv)          Upon**30 days**written notice by theCompany without Cause; or

 

(v)           Uponnot less than **30 days**’ writtennotice by the Executive.

 

(b)           Upontermination of the Employment Term, Executive shall be paid any unpaid salaryand accrued vacation through his date of termination and reimbursement for anyexpenses incurred in connection with the official business of the Company priorto his date of termination which he would be otherwise entitled toreimbursement for in accordance with the Company’s policies on thereimbursement of business expenses and any benefits or amounts under anybenefit or equity plan in accordance with the terms of said plan and any fringebenefits due for the period prior to such termination.

 

(c)   IfExecutive’s termination is pursuant to subsection (a)(i) above,Executive’s Beneficiary (as defined in the next sentence) shall continue toreceive payments of Executive’s Base Salary, at the same time such amountswould have been paid if Executive was still an employee of the Company for aperiod of six (6)  months followingExecutive’s death.  For purposes of thisprovision, Executive’s Beneficiary shall be Executive’s spouse; if Executive isnot married on his date of death, Executive’s children, per stirpes; andotherwise, Executive’s estate.

 

(d)           IfExecutive’s termination is pursuant to subsection (a)(ii) above, Executiveshall be entitled to receive an amount equal to six months’ of Executive’s Basesalary, in one lump sum payment, less any amounts actually received by himpursuant to long-term disability coverage, if any, provided for by the Companyfor the matching pay period.  After suchsix months, Executive shall only be entitled to any amounts due him under thelong-term disability coverage, if any.

 

(e)           IfExecutive’s termination is pursuant to subsection (a)(iv) above, Executiveshall receive:

 

(i) for six months following the termination of Executive’semployment,  at the same time as itwould have been paid if he were an employee of the Company, his Base Salary;

 

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(ii) continued medical and dental coverage for a period of six monthsfollowing termination of Executive’s employment; and,

 

**(iii) a prorated portion of his Target EBITA and Revenue bonus for the year oftermination, reduced by amounts already paid, plus a lump-sum payment equal to50% the total target EBITA and Revenue bonus for the full-year in whichtermination occurs.**

 

(f)            Allamounts payable pursuant to this Section 7 shall be subject to requiredwithholding.  The Company shall have noother obligations to Executive as a result of his termination.

 

8.             **CONFIDENTIALINFORMATION AND NON-COMPETITION**. Executive has entered into a Non-Competition and Non-Disclosure andDevelopments agreement of even date herewith, which agreement is attachedhereto and made a part hereof as though fully set forth herein.

 

9.             **INDEMNIFICATION**.  During the Employment Term and thereafter,the Company shall **defend****Executive to thefullest extent permitted by law against any claims, demands, suits or actions,and**indemnify Executive to the fullest extentpermitted by law against any judgments, fines, amounts paid in settlement andreasonable expenses (including attorneys’ fees), and advance amounts necessaryto pay the foregoing at the earliest time and to the fullest extent permittedby law, in connection with any claim, action or proceeding (whether civil orcriminal) against Executive (other than a claim brought by the Company) as aresult of Executive serving as an officer, director or employee of the Companyor in any capacity at the request of the Company , in or with regard to anyother entity, employee benefit plan or enterprise.  This **duty to defend and indemnify******shall be in addition to, and not in lieuof, any other defense and indemnification rights. Executive shall be entitledto pursuant to the Company’s Certificate of Incorporation or By-laws orotherwise.  Following Executive’stermination of employment, the Company shall continue to cover Executive underthe Company’s directors and officers insurance for the period during whichExecutive may be subject to potential liability for any claim, action orproceeding (whether civil or criminal) as a result of his service as an officeror director of the Company or in any capacity at the request of the Company, atthe highest level then maintained for any then current or former officer ordirector.

 

10.           **EXECUTIVEREPRESENTATION.**  Executiverepresents and warrants that he is not limited under any contractual or otherprovision from entering into this Agreement and performing his obligationshereunder.

 

11.           **ENTIREAGREEMENT; MODIFICATION**. This Agreement constitutes the full and complete understanding of theparties hereto and will supersede all prior agreements and understandings, oralor written, with respect to the subject matter hereof.  Each party to this Agreement acknowledgesthat no representations, inducements, promises or agreements, oral orotherwise, have been made by either party, or anyone acting on behalf of eitherparty, which are not embodied herein and that no other agreement, statement orpromise not contained in this Agreement shall be valid or binding.  This Agreement may not be modified oramended except by an instrument in writing signed by the party against whom orwhich enforcement may be sought.

 

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12.           **SEVERABILITY**.  Any term or provision of this Agreementwhich is invalid or unenforceable in any jurisdiction shall, as to suchjurisdiction, be ineffective to the extent of such invalidity orunenforceability without rendering invalid or unenforceable the remaining termsand provisions of this Agreement or affecting the validity or enforceability ofany of the terms or provisions of this Agreement in any other jurisdiction.

 

13.           **WAIVER OFBREACH**.  The waiver by anyparty of a breach of any provisions of this Agreement, which waiver must be inwriting to be effective, shall not operate as or be construed as a waiver ofany subsequent breach.

 

14.           **NOTICES**.  All notices hereunder shall be in writingand shall be deemed to have been duly given when delivered by hand, or one (1)day after sending by United States Postal Service express mail or other“overnight mail service,” or three (3) days after sending by certified orregistered mail, postage prepaid, return receipt requested.  Notice shall be sent as follows:  if to Executive, to his home address aslisted in the Company’s records; and if to the Company, at its office as setforth at the head of this Agreement. Either party may change the notice address by notice given as aforesaid.

 

15.           **ASSIGNABILITY;BINDING EFFECT**.  ThisAgreement shall be binding upon and inure to the benefit of Executive andExecutive’s legal representatives, heirs and distributees, and shall be bindingupon and inure to the benefit of the Company, its successors and assigns.  This Agreement may not be assigned byExecutive.  This Agreement may not beassigned by the Company except in connection with a merger or a sale by theCompany of all or substantially all of its assets, and then only provided thatthe assignee specifically assumes in writing all of the Company’s obligationshereunder.

 

16.           **ARBITRATION**.  Any dispute or controversy arising under orin connection with this Agreement, other than injunctive relief underSection 8 (provided that Executive may bring an arbitration to recoverlegal fees in connection with such injunctive activities under the lastsentence of this Section 16) shall be settled exclusively by arbitration,conducted before a panel of three arbitrators in New York, New York, in accordancewith the rules of the American Arbitration Association then in effect, andjudgment may be entered on the arbitrators’ award in any court havingjurisdiction.  The decision of thearbitrator shall be final and binding on the parties.  The parties shall equally divide all costs of the AmericanArbitration Association and the arbitrator, except that the arbitrator shalldirect the Company to reimburse Executive’s portion of the cost on the samebasis as set forth in the next sentence with regard to legal fees.  Each party shall bear its own legal fees inany dispute except that, in the event the Executive prevails on any materialissue, the arbitrator shall award the Executive his legal fees attributable toall matters other than frivolous positions taken by the Executive (asdetermined by the arbitrator).

 

17.           **GOVERNINGLAW**.  All issues pertainingto the validity, construction, execution and performance of this Agreementshall be construed and governed in accordance with the laws of the State of NewYork, without giving effect to the conflict or choice of law provisionsthereof.

 

18.           **HEADINGS**.  The headings in this Agreement are intendedsolely for convenience or reference and shall be given no effect in theconstruction or interpretation of this Agreement.

 

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19.           **COUNTERPARTS**.  This Agreement may be executed in severalcounterparts, each of which shall be deemed to be an original but all ofwhich together shall constitute one and the same instrument.

 

**INWITNESS WHEREOF**, the Company has caused this Agreementto be duly executed and Executive has hereunto set his hand as of the datefirst set forth above.

 
|   | **24/7 REAL MEDIA,  INC.** |
|--------|----------------------------|
|   |                       |
|   |                       |
|   | By:                        |   /s/ DAVID J. MOORE |   |
|   |                       | David J. Moore |
|   |                       | Chief Executive Officer |
|   |                       |
|   |                       |
|   | **EXECUTIVE**              |
|   |                       |
|   |                       |
|   |                       |   /s/  JONATHAN K. HSU |   |
|   |                       | Jonathan K. Hsu |

 

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**EXHIBIT A**

 

#### **BASESALARY**

**The Company shall pay Executive a base salary at a rate of $200,000.00per annum (the “Base Salary”). Annual increases in Base Salary shall be atleast 3.0%, effective the first day of each calendar year.**

 

**REVENUE BONUS**

**Executive has a target revenue bonus compensation of $50,000.00(“Target Revenue Bonus”) during FY2004. The quarterly revenue bonus (“Quarterly Revenue Bonus”) will bedetermined by the following formula:**

** **
| **Actual Company  Quarterly Revenue** |   |   |   |                     |   |   |   |                        |
|---------------------------------------|--------|--------|--------|--------------------------|--------|--------|--------|-----------------------------|
|                                  |   | **X**  |   | **Target Revenue Bonus** |   | **=**  |   | **Quarterly Revenue Bonus** |
| **Annual Company  Revenue Goal**      |   |   |   |                     |   |   |   |                        |

 

**For FY2004, the Annual Company Revenue Goal equals $62,966,234.  The Quarterly Revenue Bonus shall be paidquarterly, within 45 days after the end of each quarter.**

 

**EBITA BONUS**

**Executive has a target revenue bonus compensation of $50,000.00(“Target EBITA Bonus”) during FY2004. The annual EBITA bonus (“Annual EBITA Bonus”) will be determined by thefollowing formula:**

 

 
| **Actual Company  Annual EBITA** |   |   |   |                   |   |   |   |                   |
|----------------------------------|--------|--------|--------|------------------------|--------|--------|--------|------------------------|
|                             |   | **X**  |   | **Target EBITA Bonus** |   | **=**  |   | **Annual EBITA Bonus** |
| **Annual Company  EBITA Goal**   |   |   |   |                   |   |   |   |                   |

 

 

**For FY2004, the Annual Company EBITA Goal equals $1,297,501.  EBITA Percentage is defined as ActualCompany Annual EBITA divided by Annual Company EBITA Goal.  If the EBITA Percentage is above 120%,Executive will be paid Target EBITA Bonus multiplied by 120%.  No bonus will be paid if the EBITAPercentage is less than 80%.  The AnnualEBITA Bonus shall be paid annually, upon completion of the annual companyaudit.**

 

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