Exhibit 10.1


 





 


24/7 REAL
MEDIA INC.


and


LYCOS,
INC.


 


AMENDMENT
NO. 1


TO


SERVICES
AGREEMENT


AND
TECHNOLOGY SERVICES AGREEMENT


 


This Amendment No. 1 (the
“Amendment”) to the 24/7 REAL MEDIA INC. and LYCOS, INC. Services Agreement,
(the “Services Agreement”) and the 24/7 REAL MEDIA INC. and LYCOS, INC. Technology Services Agreement,
(the “Technology Agreement”)  is made as of December   7, 2004 
(the “Amendment Effective Date”) by
and between Lycos, Inc., a Virginia corporation (“Lycos”),
with an address at 100 Fifth Avenue, Waltham, MA  02451, and 24/7 Real Media, Inc., a Delaware
corporation (“24/7”), with an address
at 1250 Broadway, New York, NY  10001;
all capitalized Terms not defined when first used shall be construed in
accordance with the Definitions set forth in Section 1 of the Services
Agreement.  Unless expressly stated
otherwise, references to the Services Agreement shall include all Exhibits and
Schedules hereto.


 


WHEREAS, the Parties
entered into the Services Agreement as of February 11, 2004;


 


WHEREAS, the Parties
entered into the Technology Agreement as of February 11, 2004;


 


WHEREAS, in consideration
of the mutual covenants and agreements contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is agreed as follows:


 


SERVICES
AGREEMENT


 


The
definition of “Advertising” and “Advertisement” is hereby amended and restated
in its entirety as follows:  “Advertising” or “Advertisements” means the standard pixel advertisement sold for
display on the Web Sites and any other material displayed on the Web Sites that
promotes a brand or a product or a service through banners, buttons, jump pages
and any other format, including, without limitation, IAB recognized formats.


 


The definition of “Impression”
is hereby amended and restated in its entirety as follows: “Impression” means requests from a user
of a Web Site to 24/7 for Advertising, as determined in accordance with the IAB
standards.”


 


The definition of “Net
Advertising Sales Revenue” is hereby amended by deleting the term “gross
bookings” in each instance in such definition and inserting the term “gross
revenue” in their places.


 


Section 2A of the
Services Agreement is hereby amended and restated in its entirety as follows:


 


“A.  Grant of Rights.  Lycos hereby grants to 24/7 the exclusive
right to sell Advertising to be displayed on the Web Sites during the Term to
Web Site users originating anywhere in the world, provided, however,
that (i) effective July 1, 2005, Wired News shall not be a Web Site (for
purposes of clarity, Wired News means


 


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wired.com and subdomains
thereof) and (ii) effective January 1, 2006, Quote.com (and subdomains thereof)
shall not be a Web Site. For purposes of clarity, this means that, effective
July 1, 2005 for Wired.com and effective January 1, 2006 for Quote.com, Lycos’
shall have the exclusive right to have its own internal sales force assume sole
responsibility for the sale of Advertising on Wired.com and Quote.com, and for
the billing and collection for all Advertising run on Wired.com and
Quote.com.   Nothing contained herein
shall affect the exclusive right of 24/7 to sell all Advertising on Wired.com
prior to July 1, 2005, for campaigns scheduled to run both prior to and after
July 1, 2005. Nothing contained herein shall affect the exclusive right of 24/7
to sell all Advertising on Quote.com prior to January 1, 2006, for campaigns
scheduled to run both prior to and after January 1, 2006.


 


(i)  Transition Accounts.  On or prior to July 1, 2005, 24/7 shall
identify twenty Advertising accounts to which 24/7 has sold Advertising on
Wired.com (the “24/7 Accounts”),
in respect of which Lycos will pay 24/7 an amount equal to 35% of the Net
Advertising Sales Revenue (“Transition Commission 1”)
generated from the 24/7 Accounts on Wired.com for each of the months
individually of July 2005 and August 2005, and an amount equal to 17.5% of the
Net Advertising Sales Revenue (“Transition Commission 2”)
generated from those 24/7 Accounts on Wired.com for each of the months
individually of September, 2005 and October, 2005.  Payments associated with each of the months
within Transition Commission 1 will be paid by Lycos to 24/7 no later than
October 15, 2005.  Payments associated
with each of the months within Transition Commission 2 will be paid by Lycos to
24/7 no later than December 15, 2005.  
Each of Lycos’ Transition Commission 1 payment obligations to 24/7 shall
not exceed one-sixth (1/6) of the gross revenues generated from the 24/7
Accounts during the period January 1, 2005 to June 30, 2005 multiplied by 35%.
Each of Lycos’ Transition Commission 2 payment obligations to 24/7 shall not
exceed one-sixth (1/6) of the gross revenues generated from the 24/7 Accounts
during the period January 1, 2005 to June 30, 2005 multiplied by 17.5%.  On or prior to January 1, 2006, 24/7 shall
identify twenty Advertising accounts to which 24/7 has sold Advertising on
Quote.com (the “24/7 Quote Accounts”),
in respect of which Lycos will pay 24/7 an amount equal to 35% of the Net
Advertising Sales Revenue (“Transition Quote
Commission 1”) generated from the 24/7 Quote Accounts on
Quote.com for each of the months individually of January 2006 and February
2006, and an amount equal to 17.5% of the Net Advertising Sales Revenue (“Transition Quote Commission 2”)
generated from those 24/7 Quote Accounts on Quote.com for each of the months
individually of March 2006 and April 2006. 
Payments associated with each of the months within Transition Quote
Commission 1 will be paid by Lycos to 24/7 no later than April 15, 2006.  Payments associated with each of the months
within Transition Quote Commission 2 will be paid by Lycos to 24/7 no later
than June 15, 2006.   Each of Lycos’
Transition Quote Commission 1 payment obligations to 24/7 shall not exceed
one-sixth (1/6) of the gross revenues generated from the 24/7 Quote Accounts
during the period July 1, 2005 to December 31, 2005 multiplied by 35%. Each of
Lycos’ Transition Quote Commission 2 payment obligations to 24/7 shall not
exceed one-sixth (1/6) of the gross revenues generated from the 24/7 Accounts
during the period July 1, 2005 to December 31, 2005 multiplied by 17.5%.   24/7 shall have the right to audit all such
payments, pursuant to Section 19 of the Services Agreement. Other than
Transition Commission 1 and Transition Commission 2, 24/7 shall not be entitled
to any commissions with respect to Advertising on Wired.com past July 1, 2005,
and other than Transition Quote Commission 1 and Transition Quote Commission 2,
24/7 shall not be entitled to any commissions with respect to Advertising on
Quote.com past January 1, 2006.


 


(ii)  Content Targeted
Advertising.  Lycos shall have
the right for the duration of the Term to place Content Targeted Advertising on
the Web Sites subject to the following parameters: one Content Targeted
Advertisement per page consisting of up to four advertisers, such
Advertisements to be located at the bottom of the Web pages within the Web
Sites with the exception of up to 70% of the pages within the Tripod and
Angelfire member pages, where such advertisements may at Lycos’ discretion be
located at the top of such pages for the duration of the Term; and (ii) Lycos
shall have the right to retain up to ten percent (10%) of the


 


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Impressions in any calendar month, subject to a cap of 10% of the
Impressions in any calendar year, to run promotional or “house” Advertisements,
or Advertisements for Strategic Partners (the “Hold Back”).


 


(iv)  Strategic Partners.  In addition, nothing in this Agreement shall
prevent or limit Lycos’ entry into Strategic Partnerships after the Effective
Date, provided, however, that to the extent that Lycos enters
into transactions with Strategic Partners after the Effective Date which
include the sale of Impressions beyond the Hold Back, such Impressions will be
deemed to have been sold by 24/7 for purposes of this Agreement, and, with
respect to such Hold Back Advertising, Lycos shall pay to 24/7 an amount equal
to 100% of the Net Advertising Sales Revenue minus the applicable Lycos
Royalty within 45 days following the last day of each calendar quarter during
the Term, and such Impressions shall not count as Projected Impressions or
Actual Impressions, and provided, further, however that
Lycos shall consult with 24/7 before entering into such a transaction
concerning the sale of such Impressions beyond the Hold Back.


 


The parties hereby agree
that the provisions of Section 5C shall be applicable to Wired News at July 1,
2005 and to Quote at January 1, 2006.”


 


The parties hereby agree
that Sections 2B(b) and 2B(d) of the Services Agreement apply only to Web
Sites.


 


All provisions in the
Services Agreement relating to the “Impression Guarantee” and “Annual Minimum
Payment” are hereby deleted.


 


Section 2D(i) of the
Services Agreement is hereby amended by deleting the phrase “provided, however,
that Lycos agrees that it will not materially alter the maintenance or
development of the Web Sites so as to negatively impact the aggregate value of
the Advertising.”


 


Section 4A, Transition
Payment. - 24/7 confirms it shall pay to Lycos $1.125 million on December 31,
2004, fulfilling all remaining obligations associated with the Transition
Payment.


 


Section 4B, Annual
Payments, is hereby amended by deleting it in its entirety and substituting the
following language:


 


(i) for the calendar year
2004, 24/7 shall pay Lycos the sum of $6,200,000; Lycos acknowledges that it
has received from 24/7 to date $2,879,912, and thus the entire remaining sum
owed by 24/7 to Lycos for calendar year 2004 is $3,320,088 (such amount, the “2004
Amount Due”);


 


(ii) for the period
January 1, 2005 through March 31, 2005, 24/7 shall pay to Lycos  65% of Net Advertising Sales Revenue generated
during the period;


 


(iii) for the period
April 1, 2005 through June 30, 2005, 24/7 shall pay to Lycos  65% of the greater of (i) Net Advertising
Sales Revenue generated during the period or (ii) the Minimum CPM Revenue for
such period (as defined on Schedule C hereto);


 


(iv) for the period July
1, 2005 through December 31, 2005, 24/7 shall pay to Lycos  62.5% of the greater of (i) Net Advertising
Sales Revenue generated during the period or (ii) the Minimum CPM Revenue for
such period (as defined on Schedule C hereto); and


 


(v) for the period
January 1, 2006 through the termination of the Services Agreement, 24/7 shall
pay to Lycos 62.5% of Net Advertising Sales Revenue generated during the
period.


 


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Amounts required to be
paid pursuant to the terms of Section 4B are called “Royalties”;
the applicable Royalty during any calendar quarter is the “Quarterly
Royalty”.


 


Section 4C is hereby
amended by deleting it in its entirety and substituting the following language:


 


Payment Schedule:  Quarterly Royalties shall be paid within 45
days after the last day of each calendar quarter during the Term commencing
with the first quarter of 2005, except that $2,820,088 of the 2004 Amount Due
shall be paid on the Amendment Effective Date, and $500,000 of the 2004 Amount
Due shall be paid by February 15, 2005.


 


Section 4D is hereby
amended by deleting it in its entirety and substituting the following language:


 


Advance Payment on
Royalties and Recoupment.  24/7 shall
prepay to Lycos: (i) Royalties in the amount of $1,000,000 on or prior to
December 17, 2004 and (ii) Royalties in the amount of $1,000,000 on February
15, 2005 (together, the “Upfront Advance”).  Commencing with Royalties to be paid pursuant
to Section 4B from January 2005, each quarter 24/7 shall retain 25% of
Royalties otherwise to be paid to Lycos until the date (the “Recoupment Date”) on which the
Upfront Advance has been recouped from such retained Royalties, provided,
however that, at any time prior to the Recoupment Date, Lycos may pay
24/7 in cash all or part of the unrecouped amount of the Upfront Advance and
upon such payment the amount so paid by Lycos shall be deemed earned.   If the Services Agreement is terminated
before the Recoupment Date by 24/7 pursuant to Section 5B or by Lycos pursuant
to Section 5B (other than pursuant to Section 5B(iii)) then Lycos shall pay the
unearned amount of the Upfront Advance to 24/7 in a lump sum payable within 30
days of the effective termination date. 
If the Services Agreement is terminated before the Recoupment Date by
Lycos pursuant to Section 5B(iii), Lycos shall pay the unearned amount of the
Upfront Advance to 24/7 in a lump sum payable within 30 days of the effective
termination date, together with the early termination fee specified in Section
5B(iii).


 


For example, if Net
Advertising Sales Revenue is exactly $3,000,000 for each quarter of the
Services Agreement, then, assuming a 65% Royalty rate, 24/7 shall pay Lycos
$1,462,500 per quarter ($1,950,000 Royalty less $487,500  retained Royalties) until the total of Up
Front Advance of $2,000,000 is recouped from retained Royalties.


 


Section 4E is hereby
amended by adding the phrase at the end: “or December 31, 2006, if Lycos
terminates this Agreement pursuant to Section 5B(v).”


 


Section 5, Term and
Termination, is hereby amended by the addition of a Section 5B(v), which
provides as follows:  “Lycos may
terminate this Services Agreement for convenience by giving 180 days’ written
notice to 24/7 at any time after June 30, 2006, with such notice to take effect
not earlier than January 1, 2007; provided, however, that the
Parties acknowledge and agree that termination of the Services Agreement
pursuant to this Section 5B(v) shall not give either party the right to terminate
the Technology Services Agreement pursuant to Section 5(a)(iv) of the
Technology Services Agreement.”


 


Section 5B(iii) is hereby
amended and restated in its entirety to read as follows: “Lycos may terminate
this Agreement on 90 days’ written notice upon a Change of Control of Lycos;
provided, however, that in the event of termination pursuant to this Section
5B(iii), Lycos shall pay 24/7 an early termination fee equal to $2,200,000 for
each year remaining in the Term through December 31, 2006, prorated for partial
years.”


 


Section 5C is hereby
amended by adding a (vi) as follows: “(vi) 24/7 will use commercially
reasonable efforts to provide Lycos with information relating to all
Advertising contracts entered into between 24/7 and Advertisers prior to the
effective date of termination (in particular, but without limitation, 24/7
shall provide


 


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to Lycos a list of all
records (insertion orders, invoices, payment history, etc.) from July 1, 2004
forward relating to Advertisers on the Web Sites, access to information
relating to Advertising campaigns, including without limitation, customer
service reports and information relating to the delivery of such campaigns).”


 


Schedule C is hereby
amended by deleting it in its entirety and substituting the language attached
hereto as Schedule C.


 


TECHNOLOGY AGREEMENT


 


Section 5(a)(iv) of the
Technology Agreement is hereby amended by adding the following text at the end
of the current provision:  “provided,
however, that the Parties acknowledge and agree that termination of the
Services Agreement by Lycos for convenience, pursuant to Section B(v) of the
Services Agreement, shall not give either party the right to terminate the
Technology Agreement pursuant to this Section 5(a)(iv).”


 


Lycos acknowledges that
its obligations to make payments under the Technology Agreement for services
provided through the date hereof are not affected by this Amendment, and Lycos
shall pay 24/7, in accordance with the terms and provisions of the Technology
Agreement,  the sum of $422,580
(including a prorated minimum payment for December) for services delivered
pursuant to the Technology Agreement through the date hereof.


 


RELEASE


 


Each of the parties
acknowledges and agrees that this Amendment addresses and resolves all disputes
arising on or before the date hereof with respect to each parties’ performance
or non-performance under the Services Agreement, the Technology Agreement, and
the Transition Services Agreement (collectively, the Agreements), and, except
as specifically provided herein, each party hereby releases the other party and
its representatives, attorneys, agents, partners, officers, shareholders,
directors, employees, subsidiaries, affiliates, divisions, successors and
assigns, from all actions, claims, or causes of action of any kind, in law or
in equity, all suits, debts, liens, contracts, agreements, promises,
liabilities, demands, losses, damages, costs or expenses, including without
limitation court costs and attorneys’ fees, which it may have against the other
(known or unknown) on the date hereof that arise out of or relate directly to
the Agreements.  This release extends to
claims which the parties do not know or suspect to exist in their favor which
arise out of or relate directly to any events that have occurred prior to the
Amendment Effective Date.


 


All terms and conditions
set forth in the Agreements not modified by this Amendment No. 1 shall remain
in full force and effect.


 


[Signature page follows.]


 


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IN WITNESS WHEREOF,
the parties hereto have duly executed this Agreement as of the date first
indicated above.


 


 


	
   

  	
  24/7 REAL MEDIA, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David J. Moore

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LYCOS, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


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SCHEDULE
C


 


MINIMUM
CPM REVENUE PROVISIONS


 


“Actual
Impression Level” means the number of actual Impressions in each
editorial category and unit type (i.e., pop under or not) set forth in the
Minimum CPM table.


 


Minimum CPM's Table


 


	
   

  	
   

  	
  CPM (ex Popunders)

  	
   

  	
  Popunder CPMs

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Category

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Business &
  Finance

  	
   

  	
  $

  	
  0.49

  	
   

  	
  $

  	
  2.08

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  eCommerce

  	
   

  	
  $

  	
  2.45

  	
   

  	
  $

  	
  1.42

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Email

  	
   

  	
  $

  	
  0.48

  	
   

  	
  $

  	
  1.85

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Entertainment
  & Culture

  	
   

  	
  $

  	
  0.29

  	
   

  	
  $

  	
  1.55

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Games

  	
   

  	
  $

  	
  0.41

  	
   

  	
  $

  	
  1.93

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Home

  	
   

  	
  $

  	
  0.54

  	
   

  	
  $

  	
  0.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  News &
  General Info

  	
   

  	
  $

  	
  4.43

  	
   

  	
  $

  	
  1.82

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Travel

  	
   

  	
  $

  	
  0.07

  	
   

  	
  $

  	
  0.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Web Publishing

  	
   

  	
  $

  	
  0.36

  	
   

  	
  $

  	
  1.51

  	
   

  



 


“Projected
Impression Level” means the number of Impressions that Lycos
projects it will make available to 24/7 in each editorial category and unit
type (i.e. pop-under or not) set forth in the Minimum CPM table. The Projected
Impression Level for the second and third calendar quarters of 2005 is due to
24/7 by January 31, 2005, and the Projected Impression Level for the fourth
calendar quarter of 2005 is due to 24/7 by July 31, 2005.


 


“Minimum
CPM Revenue” means, for each calendar quarter, the product of
the Projected Impression Level multiplied by the Minimum CPMs in each category
and unit type. The Minimum CPM Revenue is subject to adjustment in accordance
with either paragraph 1 or 2 below and, then subject to further adjustment in
accordance with paragraph 3 below.


 


1.             If the Actual Impression Level exceeds the Projected
Impression Level then the Minimum CPM Revenue shall be the product of (a) the
Projected Impression Level multiplied by (b) the Minimum CPMs in each category
and unit type multiplied by (c) the ratio of (i) the Actual Impression
Level divided by (ii) the Projected Impression Level, provided, however
that if such ratio exceeds 1.1 then such ratio shall de deemed to equal 1.1 for
purposes of the foregoing calculation.


 


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2.             If the Projected Impression Level exceeds the Actual
Impression Level by more than 10% then the Minimum CPM Revenue shall be the
product of (a) Actual Impression Level multiplied by (b) the Minimum
CPMs in each category and unit type multiplied by (c) ((the Actual Impression
Level divided by (the Projected Impression Level multiplied by .90) +1) divided
by 2).


 


3.             In addition to adjustments, if any,
made pursuant to paragraphs 1 and 2 above, if the actual ratio of non-US
Advertising Impressions to actual Advertising Impressions (“Actual Ratio”), for any calendar
quarter, is greater than or less than 45% by more than 10% then: (i) the
Minimum CPM Revenue shall be reduced by (Actual Ratio minus 49.5%) if
the Actual Ratio is greater than 49.5%, and (ii) Minimum CPM Revenue shall be
increased by (40.5% minus Actual Ratio) if the Actual Ratio is less than
40.5%.


 


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