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                                                                     Exhibit 4.1

                           CERTIFICATE OF DESIGNATION
                                       OF
                              24/7 REAL MEDIA, INC.

                      SERIES B CONVERTIBLE PREFERRED STOCK

         WHEREAS, the Amended and Restated Certificate of Incorporation of 24/7
Real Media, Inc., a Delaware corporation (the "CORPORATION"), as amended to the
date hereof (the "CERTIFICATE OF INCORPORATION") authorizes the Corporation to
issue a total of 10,000,000 shares of preferred stock, par value $0.01 per share
("PREFERRED STOCK"), which may be divided into one or more classes and/or series
as the Corporation's Board of Directors (the "BOARD") may determine;

         WHEREAS, the Certificate of Incorporation expressly vests in the Board
of Directors the authority to fix the powers, designations, preferences, rights
and qualifications, limitations or restrictions, of the Preferred Stock; and

         WHEREAS, the Board of Directors deems it advisable to designate a
series of the Preferred Stock consisting of One Hundred Twenty Five Thousand
(125,000) shares designated as Series B Convertible Preferred Stock;

         NOW, THEREFORE, IT IS HEREBY RESOLVED, that pursuant to Article Fourth
of the Certificate of Incorporation, there be and hereby is authorized and
created, pursuant to the terms of this designation statement (this "DESIGNATION
STATEMENT") a series of Preferred Stock, which series shall have the powers,
designations, preferences, voting rights, relative and other special rights, and
the qualifications, limitations and restrictions set forth below:

         SERIES B CONVERTIBLE PREFERRED STOCK. One Hundred Twenty Five Thousand
(125,000) of the authorized shares of Preferred Stock of the Corporation are
hereby designated "Series B Convertible Preferred Stock", $0.01 par value per
share (the "SERIES B PREFERRED STOCK"). The powers, designations, preferences,
relative and other special rights, and the qualifications, limitations and
restrictions and other matters relating to the Series B Preferred Stock are as
follows:

         1. DEFINITIONS. For purposes of this Designation Statement, the
following definitions apply:

                  1.1 "ACQUIRING STOCKHOLDER" shall mean, with respect to a
Combination Transaction, a stockholder or stockholders of the Corporation that
(i) merges or combines with the Corporation in such Combination Transaction or
(ii) owns or controls a majority of another corporation that merges or combines
with the Corporation in such Combination Transaction.

                  1.2 "CLOSING DISCOUNTED COMMON STOCK PRICE" shall mean a price
per share of $0.2066.
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                  1.3 "COMBINATION TRANSACTION" shall mean a reorganization,
consolidation, merger or similar transaction or series of related transactions.

                  1.4 "COMMON STOCK" shall mean the Common Stock, par value
$0.01 per share, of the Corporation.

                  1.5 "COMMON STOCK DIVIDEND" shall mean a stock dividend
declared and paid on the Common Stock that is payable in shares of Common Stock.

                  1.6 "COMMON STOCK EVENT" shall mean, at any time or from time
to time after the Original Issue Date, (i) the issue by the Corporation of
additional shares of Common Stock in connection with a Common Stock Dividend or
other distribution on outstanding Common Stock, (ii) a subdivision of the
outstanding shares of Common Stock into a greater number of shares of Common
Stock, or (iii) a combination of the outstanding shares of Common Stock into a
smaller number of shares of Common Stock.

                  1.7 "DISTRIBUTION" shall mean the transfer of cash or property
by the Corporation to one or more of its stockholders without consideration,
whether by dividend or otherwise (except a dividend in shares of Corporation's
stock). A Permitted Repurchase (defined below) is not a Distribution.

                  1.8 "DIVIDEND ACCRUAL DATE" shall mean the first day of each
calendar month.

                  1.9 "DIVIDEND RATE" shall mean a dollar amount per share equal
to six percent (6%) of the Original Issue Price for the Series B Preferred
Stock, per annum, for the Series B Preferred Stock (as adjusted for any stock
splits, stock dividends, recapitalizations or the like, with respect to the
Series B Preferred Stock).

                  1.10 "ORIGINAL ISSUE DATE" shall mean the date on which the
first share of Series B Preferred Stock is issued by the Corporation.

                  1.11 "ORIGINAL ISSUE PRICE" shall mean $10.00 per share for
the Series B Preferred Stock (as adjusted for any stock splits, stock dividends,
recapitalizations or the like, with respect to such series of Preferred Stock).

                  1.12 "PERMITTED REPURCHASES" shall mean the repurchase by the
Corporation of shares of Common Stock held by employees, officers, directors,
consultants, independent contractors, advisors, or other persons performing
services for the Corporation or a Subsidiary that are subject to restricted
stock purchase agreements, stock option exercise agreements or similar
agreements under which the Corporation has the option to repurchase such shares.

                  1.13 "SERIES A DESIGNATION" shall mean the resolutions adopted
by the Board authorizing the Series A Preferred Stock, as filed with the
Delaware Secretary of State.

                  1.14 "SERIES A PREFERRED STOCK" shall mean the Series A
Preferred Stock, par value $0.01, of the Corporation.

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                  1.15 "SUBSIDIARY" shall mean any corporation of which at least
fifty percent (50%) of the outstanding voting stock is at the time owned
directly or indirectly by the Corporation or by one or more of such subsidiary
corporations.

         2.       DIVIDEND RIGHTS.

                  2.1 CUMULATIVE DIVIDEND PREFERENCE. The holders of the then
outstanding Series B Preferred Stock shall be entitled to receive, when, as and
if declared by the Board, out of any funds and assets of the Corporation legally
available therefor, cumulative dividends at the annual Dividend Rate for the
Series B Preferred Stock, prior and in preference to the payment of any dividend
or other Distribution on the Common Stock (other than a Common Stock Dividend).
Such dividends shall begin accruing on each share of Series B Preferred Stock on
the first Dividend Accrual Date occurring after the date on which such share of
Series B Preferred Stock is issued by the Corporation, and shall accrue on each
subsequent Dividend Accrual Date thereafter until paid, whether or not earned or
declared. No accumulation of dividends on the Series B Preferred Stock shall
compound or bear any interest. Unless the full amount of any accrued and unpaid
dividends accrued on the Series B Preferred Stock shall have been paid or
declared in full and a sum sufficient for the payment thereof reserved and set
apart, no dividend (other than a Common Stock Dividend) shall be paid or
declared, and no Distribution shall be made, on any Common Stock; PROVIDED,
HOWEVER, that this restriction shall not apply to Permitted Repurchases.
Payments of any accrued dividends to the holders of the Series B Preferred Stock
and the Series A Preferred Stock shall be made pro rata, on an equal priority,
pari passu basis.

                  2.2 PARTICIPATION RIGHTS. In the event that the Corporation
shall declare a dividend or other Distribution on the Common Stock out of funds
legally available therefor (other than a Common Stock Dividend), then the
holders of the then outstanding Series B Preferred Stock shall be entitled to a
proportionate share of any such dividend or other Distribution as though each
holder of such Series B Preferred Stock was the holder of the greatest whole
number of shares of Common Stock issuable upon conversion pursuant to Section 5
of all such shares of Series B Preferred Stock held by such holder, as of the
record date fixed for the determination of holders of Common Stock entitled to
receive such dividend or other Distribution.

                  2.3 NON-CASH DIVIDENDS. Whenever a dividend provided for in
this Section 2 shall be payable in property other than cash, the value of such
dividend shall be deemed to be the fair market value of such property as
determined in good faith by the Board, provided that dividends payable in
securities (other than Common Stock Dividends, dividends declared and paid on
the Series B Preferred Stock that are payable in shares of Series B Preferred
Stock, and dividends declared and paid on the Series A Preferred Stock that are
payable in shares of Series A Preferred Stock) shall be valued in the manner set
forth in Sections 3.4(a) and (b) hereof.

                  2.4 PAYMENT ON CONVERSION. If the Corporation shall have
accrued but unpaid dividends with respect to any Series B Preferred Stock upon
its conversion as provided in

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Section 5, then, to the extent such dividends have not been declared, all such
accrued but unpaid dividends on such converted shares of Series B Preferred
Stock shall be cancelled.

         3. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the funds and
assets that may be legally distributed to the Corporation's stockholders (the
"AVAILABLE FUNDS AND ASSETS") shall be distributed to stockholders in the
following manner:

                  3.1 LIQUIDATION PREFERENCE. The holders of each share of
Series B Preferred Stock then outstanding shall be entitled to be paid, out of
the Available Funds and Assets, and prior and in preference to any payment or
distribution (or any setting apart of any payment or distribution) of any
Available Funds and Assets on any shares of Common Stock, an amount per share
equal to the Original Issue Price for the Series B Preferred Stock plus all
accrued but unpaid dividends on the Series B Preferred Stock. The Series A
Preferred Stock shall rank on parity with the Series B Preferred Stock with
respect to the liquidation, dissolution or winding up of the Corporation. If
upon any liquidation, dissolution or winding up of the Corporation, the
Available Funds and Assets shall be insufficient to permit the payment to
holders of the Series B Preferred Stock and the Series A Preferred Stock of
their full preferential amounts, then all of the Available Funds and Assets
shall be distributed among the holders of the then outstanding Series B
Preferred Stock and the Series A Preferred Stock pro rata, on an equal priority,
pari passu basis, according to their respective liquidation preferences.

                  3.2 PARTICIPATION RIGHTS. If there are any Available Funds and
Assets remaining after the payment or distribution (or the setting aside for
payment or distribution) to the holders of the Series B Preferred Stock and
Series A Preferred Stock of their full liquidation preference amounts payable
pursuant to Section 3.1 above for the Series B Preferred Stock, and pursuant to
Section 3.1 of the Series A Designation for the Series A Preferred Stock, in
connection with a liquidation, dissolution or winding up of the Corporation,
then all such remaining Available Funds and Assets shall be distributed among
the holders of the then outstanding Common Stock, Series B Preferred Stock and
Series A Preferred Stock pro rata according to the number of shares of Common
Stock held by such holders, where, for this purpose: (a) each holder of
outstanding Series A Preferred Stock will be deemed to hold (in lieu of their
Series A Preferred Stock), the greatest whole number of shares of Common Stock
issuable upon conversion of the Series A Preferred Stock held by such holder as
of the record date fixed for the determination of holders of Common Stock
entitled to receive such distribution, and (b) each holder of outstanding Series
B Preferred Stock will be deemed to hold (in lieu of their Series B Preferred
Stock), the greatest whole number of shares of Common Stock issuable upon
conversion of such holder's Series B Preferred Stock pursuant to Section 5, as
of the record date fixed for the determination of holders of Common Stock
entitled to receive such distribution; UNTIL SUCH TIME AS: (x) in the case of
the Series A Preferred Stock, each holder of then outstanding Series A Preferred
Stock shall have received, in distributions made in connection with such
liquidation, dissolution or winding up, an aggregate amount per share of Series
A Preferred Stock held equal to three (3) times the Original Issue Price for the
Series A Preferred Stock (such aggregate dollar amount to include all amounts
previously paid to such holder pursuant to the liquidation preference of the
Series A Preferred Stock including without

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limitation any dividends paid thereon), and (y) in the case of the Series B
Preferred Stock, each holder of then outstanding Series B Preferred Stock shall
have received, in distributions made in connection with such liquidation,
dissolution or winding up, an aggregate amount per share of Series B Preferred
Stock held equal to three (3) times the Original Issue Price for the Series B
Preferred Stock (such aggregate dollar amount to include all amounts previously
paid to such holder pursuant to the liquidation preference of the Series B
Preferred Stock including without limitation any dividends paid thereon); AFTER
WHICH TIME the holders of then outstanding Common Stock shall be entitled to
receive all the remaining Available Funds and Assets (if any) pro rata according
to the number of outstanding shares of Common Stock then held by each of them.

                  3.3 MERGER OR SALE OF ASSETS. Each of the following
transactions shall be deemed to be a liquidation, dissolution or winding up of
the Corporation as those terms are used in this Section 3 (and in the case of a
transaction described in Section 3.3(a) below, the Available Funds and Assets
shall be the consideration paid by the acquiror in such transaction): (a) a
Combination Transaction in which the Corporation is a constituent corporation
if, as a result of such Combination Transaction, the voting securities of the
Corporation that are outstanding immediately prior to the consummation of such
Combination Transaction (OTHER than any such securities that are held by an
Acquiring Stockholder) do not represent, or are not converted into, securities
of the surviving corporation of such Combination Transaction (or such surviving
corporation's parent corporation if the surviving corporation is owned by the
parent corporation) that, immediately after the consummation of such Combination
Transaction, together possess at least a majority of the total voting power of
all securities of such surviving corporation (or its parent corporation, if
applicable) that are outstanding immediately after the consummation of such
Combination Transaction, including securities of such surviving corporation (or
its parent corporation, if applicable) that are held by the Acquiring
Stockholder; or (b) a sale of all or substantially all of the assets of the
Corporation (each of the foregoing transactions, a "SALE TRANSACTION").

                  Notwithstanding the foregoing or the provisions of Section 5.7
below, if any of the above described transactions are approved by both: (a) the
vote of the holders of at least a majority of the shares of Preferred Stock then
outstanding, voting as a single class, and (b) a vote sufficient under the
Delaware General Corporation Law, the Certificate of Incorporation (including
this Designation Statement and the Series A Designation) and the Bylaws of the
Corporation to approve such transaction, THEN the rights of the holders of
Common Stock and Preferred Stock with respect to such transaction will be
governed by the documents to be entered into in connection with such
transaction.

                  The Corporation shall not enter into any Sale Transaction that
does not provide for the treatment of the holders of Series B Preferred Stock in
a manner consistent with the provisions of this Section 3 (including, without
limitation, the provisions in the second sentence of this Section 3.3). In the
event that the requirements of the immediately preceding sentence are not
complied with in connection with a Sale Transaction, the Corporation shall
forthwith either: (x) cause the closing of Sale Transaction to be postponed
until such time as such requirements have been complied with, or (y) cancel such
Sale Transaction, in which event the rights, preferences and privileges of the
holders of the Series B Preferred Stock shall revert to and be

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the same as such rights, preferrences and privileges existing immediately prior
to the latest date on which the notice referred to in Section 3.5 below with
respect to such Sale Transaction could be given in compliance with the
provisions of such Section 3.5.

                  3.4 NON-CASH CONSIDERATION. If any assets of the Corporation
distributed to stockholders in connection with any liquidation, dissolution, or
winding up of the Corporation are other than cash, then the value of such assets
shall be their fair market value as determined in good faith by the Board,
EXCEPT THAT any securities to be distributed to stockholders in a liquidation,
dissolution, or winding up of the Corporation shall be valued as follows:

                           (a)      The method of valuation of securities not
subject to investment letter or other similar restrictions on free marketability
shall be as follows:

                                    (i)     unless otherwise specified in a
definitive agreement for the acquisition of the Corporation, if the securities
are then traded on a national securities exchange, the Nasdaq National Market or
the Nasdaq SmallCap Market (or a similar national quotation system), then the
value shall be deemed to be the average of the closing prices of the securities
on such exchange or system over the twenty (20) trading day period ending three
(3) trading days prior to the distribution; and

                                    (ii)    if (i) above  does not apply but the
securities are actively traded over-the-counter, then, unless otherwise
specified in a definitive agreement for the acquisition of the Corporation, the
value shall be deemed to be the average of the closing bid prices over the
twenty (20) trading day period ending three (3) trading days prior to the
distribution; and

                                    (iii)   if there is no active public market
as described in clauses (i) or (ii) above, then the value shall be the fair
market value thereof, as determined in good faith by the Board.

                           (b)      The method of valuation of securities
subject to investment letter or other restrictions on free marketability (other
than restrictions arising solely by virtue of a stockholder's status as an
affiliate or former affiliate) shall be to make an appropriate discount from the
market value determined as above in subparagraphs (a)(i),(ii) or (iii) of this
subsection to reflect the approximate fair market value thereof, as determined
in good faith by the Board.

                           (c)      Any determination in good faith by the Board
pursuant to this Section 3.4 shall be conclusive and final and shall be binding
on the Corporation and all stockholders thereof.

                  3.5 NOTICE. Written notice of any liquidation, dissolution or
winding up of the Corporation within the meaning of this Section 3, stating the
nature of such liquidation, dissolution or winding up, and specifying the
anticipated effective date of such liquidation, dissolution or winding up, shall
be given in the manner specified in Section 5.12 hereof at least

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twenty (20) days prior to, and no more than sixty (60) days prior to, the
effective date of such liquidation, dissolution or winding up.

         4.       VOTING RIGHTS.

                  4.1 SERIES B PREFERRED STOCK. Each holder of shares of Series
B Preferred Stock shall be entitled to the number of votes equal to the number
of whole shares of Common Stock into which such shares of Preferred Stock could
be converted pursuant to the provisions of Section 5 below at the record date
for the determination of the stockholders entitled to vote on such matters or,
if no such record date is established, the date such vote is taken or any
written consent of stockholders is solicited.

                  4.2 GENERAL. Subject to the other provisions of this
Designation Statement, each holder of Series B Preferred Stock shall have full
voting rights and powers equal to the voting rights and powers of the holders of
Common Stock, and shall be entitled to notice of any stockholders' meeting in
accordance with the bylaws of the Corporation (as in effect at the time in
question) and applicable law, and shall be entitled to vote, together with the
holders of Common Stock, with respect to any question upon which holders of
Common Stock have the right to vote, except as may be otherwise provided by
applicable law. Except as otherwise expressly provided herein or as required by
law, the holders of Series B Preferred Stock, the holders of Series A Preferred
Stock and the holders of Common Stock shall vote together and not as separate
classes.

                  4.3      PROTECTIVE  PROVISIONS.  So long as the total number
of outstanding shares of Series B Preferred Stock is equal to or greater than
thirty one thousand two hundred fifty (31,250):

                           (a)      the Corporation shall not, without the prior
approval, by vote or written consent, of the holders of a majority of the Series
B Preferred Stock then outstanding, voting as a separate class:

                                    (i)     amend its Certificate of
Incorporation or Bylaws in any manner that would alter or change the rights,
preferences, privileges or restrictions of the Series B Preferred Stock so as to
adversely affect any of the rights, preferences, privileges or restrictions of
such series of Preferred Stock; or

                                    (ii)    increase or decrease (other than
pursuant to Section 6.1 below) the total number of authorized shares of Series B
Preferred Stock.

                           (b)      the Corporation shall not, without the prior
approval, by vote or written consent, of the holders of a majority of the Series
A Preferred Stock and the Series B Preferred Stock then outstanding, voting
together as a single class:

                                    (i)     reclassify any outstanding shares of
capital stock of the Corporation into shares having rights, preferences or
privileges senior to or on a parity with the
Series B Preferred Stock;

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                                    (ii)    take any action that authorizes,
creates or results in the issuance of any other equity security, including any
other security convertible into or exercisable for any equity security, having
any rights, preferences or privileges that are senior to or on a parity with the
Series B Preferred Stock; or

                                    (iii)   declare or pay any dividends (other
than dividends payable solely in shares of its own Common Stock) on or declare
or make any other distribution, purchase, redemption or acquisition (other than
Permitted Repurchases), directly or indirectly, on account of any shares of
Preferred Stock (other than the Series B Preferred Stock) or Common Stock now or
hereafter outstanding.

         5.       CONVERSION  RIGHTS.  The outstanding shares of Series B
Preferred Stock shall be convertible into Common Stock as follows:

                  5.1      OPTIONAL CONVERSION.

                           (a)      At the option of the holder thereof, each
share of Series B Preferred Stock shall be convertible, at any time or from time
to time, into fully paid and nonassessable shares of Common Stock as provided
herein.

                           (b)      Each  holder of Series B Preferred Stock who
elects to convert the same into shares of Common Stock shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or any transfer agent for the Series B Preferred Stock or Common
Stock, and shall give written notice to the Corporation at such office that such
holder elects to convert the same and shall state therein the number of shares
of Series B Preferred Stock being converted. Thereupon the Corporation shall
promptly issue and deliver at such office to such holder a certificate or
certificates for the number of shares of Common Stock to which such holder is
entitled upon such conversion. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
certificate or certificates representing the shares of Series B Preferred Stock
to be converted, and the person entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder of such shares of Common Stock on such date.

                  5.2      AUTOMATIC CONVERSION.

                           (a)      At any time after September 10, 2004, the
Corporation may cause each share of Series B Preferred Stock to be automatically
converted into fully paid and nonassessable shares of Common Stock, as provided
herein (such conversion, the "AUTOMATIC CONVERSION"), by delivery of a notice to
each registered holder of Series B Preferred Stock, which notice shall describe
the Automatic Conversion and include a certification by the Corporation's Chief
Executive Officer and Chief Financial Officer that each of the conditions to
Automatic Conversion listed in Sections 5.2(a)(i) to 5.2(a)(iv), inclusive, have
been satisfied (the "AUTOMATIC CONVERSION NOTICE"); PROVIDED, HOWEVER, that the
Corporation may not cause an Automatic Conversion unless each of the following
conditions is satisfied: (i) as of the "Automatic Conversion Date" (as defined
below), the Common Stock is then traded, and was

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traded during the sixty (60) trading day period ending on the Automatic
Conversion Date, on a national securities exchange, the Nasdaq National Market
or the Nasdaq SmallCap Market (or a similar national quotation system), (ii) the
average of the per share closing prices of the Common Stock on such exchange or
system over the sixty (60) trading day period ending on the Automatic Conversion
Date (such prices to be proportionately adjusted to reflect Common Stock Events)
is greater than three (3) times the Initial Conversion Price, (iii) a
registration statement with respect to the resale of the Common Stock issuable
in the Automatic Conversion to holders of the Series B Preferred Stock has been
filed with the Securities and Exchange Commission, such registration statement
is then in effect, and the Corporation has agreed with the holders of the Series
B Preferred Stock to maintain the effectiveness of such registration statement
for at least 180 consecutive days beginning with the date of the Automatic
Conversion, and (iv) the average daily trading volume of the Common Stock
calculated over such sixty (60) day period equaled or exceeded 200,000 shares
(such share amount to be proportionately adjusted to reflect Common Stock
Events). For purposes of this Section 5, the "AUTOMATIC CONVERSION DATE" shall
mean the date on which the Automatic Conversion Notice is, with respect to each
registered holder of Series B Preferred Stock, either: (Y) delivered to such
registered holder by personal delivery, or (Z) delivered to such registered
holder by facsimile transmission to the fascimile address of such holder
appearing on the books of the Corporation (with confirmation of receipt), and
deposited with a recognized express courier for express delivery, fees prepaid,
addressed to such registered holder at the address of such holder appearing on
the books of the Corporation.

                           (b)      Upon an Automatic Conversion in accordance
with the procedures specified in Section 5.2(a), and effective as of the close
of business on the Automatic Conversion Date, the outstanding shares of Series B
Preferred Stock shall be converted into Common Stock automatically without the
need for any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Corporation or its
transfer agent; PROVIDED, HOWEVER, that the Corporation shall not be obligated
to issue certificates evidencing the shares of Common Stock issuable upon such
conversion unless the certificates evidencing such shares of Series B Preferred
Stock are either delivered to the Corporation or its transfer agent as provided
below, or the holder notifies the Corporation or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation and/or its transfer agent to indemnify the
Corporation and/or its transfer agent from any loss incurred by it in connection
with such certificates. Upon the occurrence of such Automatic Conversion of the
Series B Preferred Stock, the holders of Series B Preferred Stock shall
surrender the certificates representing such shares at the office of any
transfer agent for the Series B Preferred Stock or Common Stock. Thereupon,
there shall be issued and delivered to such holder promptly at such office and
in its name as shown on such surrendered certificate or certificates, a
certificate or certificates for the number of shares of Common Stock into which
the shares of Series B Preferred Stock surrendered were convertible on the
Automatic Conversion Date.

                  5.3 CONVERSION PRICE. Each share of Series B Preferred Stock
shall be convertible in accordance with Section 5.1 or Section 5.2 above into
the number of shares of Common Stock which results from dividing the Original
Issue Price for the Series B Preferred Stock by the conversion price for the
Series B Preferred Stock that is in effect at the time of

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conversion (the "CONVERSION PRICE"). The initial Conversion Price for the Series
B Preferred Stock shall be the Closing Discounted Common Stock Price (the
"INITIAL CONVERSION PRICE"). The Conversion Price of the Series B Preferred
Stock shall be subject to adjustment from time to time as provided below.
Following each adjustment of the Conversion Price, such adjusted Conversion
Price shall remain in effect until a further adjustment of such Conversion Price
hereunder.

                  5.4 ADJUSTMENT UPON COMMON STOCK EVENT. Upon the happening of
a Common Stock Event, the Conversion Price of the Series B Preferred Stock
shall, simultaneously with the happening of such Common Stock Event, be adjusted
by multiplying the Conversion Price of the Series B Preferred Stock in effect
immediately prior to such Common Stock Event by a fraction, (i) the numerator of
which shall be the number of shares of Common Stock issued and outstanding
immediately prior to such Common Stock Event, and (ii) the denominator of which
shall be the number of shares of Common Stock issued and outstanding immediately
after such Common Stock Event, and the product so obtained shall thereafter be
the Conversion Price for the Series B Preferred Stock. The Conversion Price for
the Series B Preferred Stock shall be readjusted in the same manner upon the
happening of each subsequent Common Stock Event.

                  5.5 ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. If at
any time or from time to time after the Original Issue Date for the Series B
Preferred Stock the Corporation pays a dividend or makes another distribution to
the holders of the Common Stock payable in securities of the Corporation, other
than an event constituting a Common Stock Event, then in each such event
provision shall be made so that the holders of the Series B Preferred Stock
shall receive upon conversion thereof, in addition to the number of shares of
Common Stock receivable upon conversion thereof, the amount of securities of the
Corporation which they would have received had their Series B Preferred Stock
been converted into Common Stock on the date of such event (or such record date,
as applicable) and had they thereafter, during the period from the date of such
event (or such record date, as applicable) to and including the conversion date,
retained such securities receivable by them as aforesaid during such period,
subject to all other adjustments called for during such period under this
Section 5 with respect to the rights of the holders of the Series B Preferred
Stock or with respect to such other securities by their terms.

                  5.6 ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND
SUBSTITUTION. If at any time or from time to time after the Original Issue Date
for the Series B Preferred Stock the Common Stock issuable upon the conversion
of the Series B Preferred Stock is changed into the same or a different number
of shares of any class or classes of stock, whether by recapitalization,
reclassification or otherwise (OTHER THAN by a Common Stock Event or a stock
dividend, reorganization, merger, or consolidation provided for elsewhere in
this Section 5), then in any such event each holder of Series B Preferred Stock
shall have the right thereafter to convert such stock into the kind and amount
of stock and other securities and property receivable upon such
recapitalization, reclassification or other change by holders of the number of
shares of Common Stock into which such shares of Series B Preferred Stock could
have been converted immediately prior to such recapitalization, reclassification
or change, all subject to further adjustment as provided herein or with respect
to such other securities or property by the terms thereof.

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                  5.7 REORGANIZATIONS, MERGERS AND CONSOLIDATIONS. If at any
time or from time to time after the Original Issue Date for the Series B
Preferred Stock there is a reorganization of the Corporation (other than a
recapitalization, subdivision, combination, reclassification or exchange of
shares provided for elsewhere in this Section 5) or a merger or consolidation of
the Corporation with or into another corporation (except an event which is
governed under Section 3.3), then, as a part of such reorganization, merger or
consolidation, provision shall be made so that the holders of the Series B
Preferred Stock thereafter shall be entitled to receive, upon conversion of the
Series B Preferred Stock, the number of shares of stock or other securities or
property of the Corporation, or of such successor corporation resulting from
such reorganization, merger or consolidation, to which a holder of Common Stock
deliverable upon conversion would have been entitled on such reorganization,
merger or consolidation. In any such case, appropriate adjustment shall be made
in the application of the provisions of this Section 5 with respect to the
rights of the holders of the Series B Preferred Stock after the reorganization,
merger or consolidation to the end that the provisions of this Section 5
(including adjustment of the Conversion Price then in effect and number of
shares issuable upon conversion of the Series B Preferred Stock) shall be
applicable after that event and be as nearly equivalent to the provisions hereof
as may be practicable. This Section 5.7 shall similarly apply to successive
reorganizations, mergers and consolidations.

                  5.8 SALE OF SHARES BELOW CONVERSION PRICE.

                           (a)      ADJUSTMENT FORMULA. If at any time or from
time to time after the Original Issue Date for the Series B Preferred Stock the
Corporation issues or sells, or is deemed by the provisions of this Section 5.8
to have issued or sold, Additional Shares of Common Stock (as hereinafter
defined), otherwise than in connection with a Common Stock Event as provided in
Section 5.4, a dividend or distribution as provided in Section 5.5 or a
recapitalization, reclassification or other change as provided in Section 5.6,
or a reorganization, merger or consolidation as provided in section 5.7, for an
Effective Price (as hereinafter defined) that is less than the Conversion Price
for the Series B Preferred Stock in effect immediately prior to such issue or
sale (or deemed issue or sale), then, and in each such case, the Conversion
Price for such series of Preferred Stock shall be reduced, as of the close of
business on the date of such issue or sale, to the price obtained by multiplying
such Conversion Price by a fraction:

                                    (i)     The numerator of which shall be the
sum of (A) the number of Common Stock Equivalents Outstanding (as hereinafter
defined) immediately prior to such issue or sale of Additional Shares of Common
Stock plus (B) the quotient obtained by dividing the Aggregate Consideration
Received (as hereinafter defined) by the Corporation for the total number of
Additional Shares of Common Stock so issued or sold (or deemed so issued and
sold) by the Conversion Price for such series of Preferred Stock in effect
immediately prior to such issue or sale; and

                                    (ii)    The denominator of which shall be
the sum of (A) the number of Common Stock Equivalents Outstanding immediately
prior to such issue or sale plus (B) the number of Additional Shares of Common
Stock so issued or sold (or deemed so issued and sold).

                                       11
<Page>

                           (b)      CERTAIN  DEFINITIONS.  For the purpose of
making any adjustment required under this Section 5.8:

                                    (i)     The term "ADDITIONAL SHARES OF
COMMON STOCK" shall mean all shares of Common Stock issued by the Corporation,
or deemed issued as provided in Section 5.8(c) below, whether or not
subsequently reacquired or retired by the Corporation, other than:

                                            (A)      shares of Common Stock
issued or issuable upon conversion of any outstanding shares of Preferred Stock;

                                            (B)      any shares of Common Stock
or Preferred Stock (or options, warrants or rights therefor) granted or issued
hereafter to employees, officers, directors, contractors, consultants or
advisers to, the Corporation or any Subsidiary pursuant to incentive agreements,
stock purchase or stock option plans, stock bonuses or awards, warrants,
contracts or other arrangements approved by the Board;

                                            (C)      any shares of the
Corporation's Common Stock or Preferred Stock (and/or options or warrants
therefor) issued to parties that are strategic partners investing in connection
with a commercial relationship with the Corporation under arrangements that are,
in each case, approved by the Board;

                                            (D)      shares of Common Stock or
Preferred Stock issued pursuant to: (i) acquisitions of other corporations or
entities by the Corporation by consolidation, merger, purchase of all or
substantially all of the assets, or other reorganization in which the
Corporation acquires, in a single transaction or series of related transactions,
all or substantially all of the assets of such other corporation or entity or
fifty percent (50%) or more of the voting power of such other corporation or
entity or fifty percent (50%) or more of the equity ownership of such other
entity; provided that each such transaction or series of transactions has been
approved by the Board, or (ii) purchases of less than a fifty percent (50%)
equity ownership of other corporations or entities in connection with joint
ventures or other strategic arrangements or other commercial relationships,
provided such arrangements are approved in each case by the Board;

                                            (E)      shares of Common Stock or
Preferred Stock issuable upon exercise of any options or warrants to purchase
any securities of the Corporation outstanding as of the date of this Designation
Statement and any securities issuable upon the conversion thereof;

                                            (F)      shares of Common Stock
issued pursuant to a transaction described in Section 5.4 hereof; and

                                            (G)      any shares of Common Stock
or Preferred Stock (or options, or warrants or rights to acquire the same),
issued or issuable hereafter that are: (i) approved by the Board, and (ii)
approved by the holders of a majority of the outstanding shares

                                       12
<Page>

of Preferred Stock, voting as a single class, as being excluded from the
definition of "Additional Shares of Common Stock" under this subsection
5.8(b)(i).

                                    (ii)    The term "AGGREGATE CONSIDERATION
RECEIVED" by the Corporation for any issue or sale (or deemed issue or sale) of
securities shall (A) to the extent it consists of cash, be computed at the gross
amount of cash received by the Corporation before deduction of any underwriting
or similar commissions, compensation or concessions paid or allowed by the
Corporation in connection with such issue or sale and without deduction of any
expenses payable by the Corporation; (B) to the extent it consists of property
other than cash, be computed at the fair value of that property as determined in
good faith by the Board of Directors; and (C) if Additional Shares of Common
Stock, Convertible Securities or Rights or Options to purchase either Additional
Shares of Common Stock or Convertible Securities are issued or sold together
with other stock or securities or other assets of the Corporation for a
consideration which covers both, be computed as the portion of the consideration
so received that may be reasonably determined in good faith by the Board to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
Rights or Options.

                                    (iii)   The term "COMMON STOCK
EQUIVALENTS OUTSTANDING" shall mean the number of shares of Common Stock that
is equal to the sum of (A) all shares of Common Stock of the Corporation that
are outstanding at the time in question, plus (B) all shares of Common Stock
of the Corporation issuable upon conversion of all shares of Preferred Stock
or other Convertible Securities that are outstanding at the time in question,
plus (C) all shares of Common Stock of the Corporation that are issuable upon
the exercise of Rights or Options that are outstanding at the time in
question assuming the full conversion or exchange into Common Stock of all
such Rights or Options that are Rights or Options to purchase or acquire
Convertible Securities into or for Common Stock.

                                    (iv)    The  term  "CONVERTIBLE  SECURITIES"
shall mean stock or other securities ultimately convertible into or exchangeable
for shares of Common Stock.

                                    (v)     The term "EFFECTIVE  PRICE" of
Additional Shares of Common Stock shall mean the quotient determined by dividing
the total number of Additional Shares of Common Stock issued or sold, or deemed
to have been issued or sold, by the Corporation under this Section 5.8, into the
Aggregate Consideration Received, or deemed to have been received, by the
Corporation under this Section 5.8, for the issue of such Additional Shares of
Common Stock; and

                                    (vi)    The term "RIGHTS OR OPTIONS" shall
mean warrants, options or other rights to purchase or acquire shares of Common
Stock or Convertible Securities.

                           (c)      DEEMED  ISSUANCES.  For the purpose of
making any adjustment to the Conversion Price of Series B Preferred Stock
required under this Section 5.8, if the Corporation issues or sells any Rights
or Options or Convertible Securities and if the Effective Price of the shares of
Common Stock issuable upon exercise of such Rights or Options and/or the
conversion or exchange of Convertible Securities (computed without reference to
any additional

                                       13
<Page>

or similar protective or antidilution clauses) is less than the Conversion Price
then in effect for a series of Preferred Stock, then the Corporation shall be
deemed to have issued, at the time of the issuance of such Rights, Options or
Convertible Securities, that number of Additional Shares of Common Stock that is
equal to the maximum number of shares of Common Stock issuable upon exercise or
conversion of such Rights, Options or Convertible Securities upon their issuance
and to have received, as the Aggregate Consideration Received for the issuance
of such shares, an amount equal to the total amount of the consideration, if
any, received by the Corporation for the issuance of such Rights or Options or
Convertible Securities, plus, in the case of such Rights or Options, the minimum
amounts of consideration, if any, payable to the Corporation upon the exercise
in full of such Rights or Options, plus, in the case of Convertible Securities,
the minimum amounts of consideration, if any, payable to the Corporation (other
than by cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion or exchange thereof; PROVIDED THAT:

                                    (i)     if the minimum amounts of such
consideration cannot be ascertained, but are a function of antidilution or
similar protective clauses, then the Corporation shall be deemed to have
received the minimum amounts of consideration without reference to such clauses;

                                    (ii)    if the minimum amount of
consideration payable to the Corporation upon the exercise of Rights or Options
or the conversion or exchange of Convertible Securities is reduced over time or
upon the occurrence or non-occurrence of specified events other than by reason
of antidilution or similar protective adjustments, then the Effective Price
shall be recalculated using the figure to which such minimum amount of
consideration is reduced; and

                                    (iii)   if the minimum amount of
consideration payable to the Corporation upon the exercise of such Rights or
Options or the conversion or exchange of Convertible Securities is subsequently
increased, then the Effective Price shall again be recalculated using the
increased minimum amount of consideration payable to the Corporation upon the
exercise of such Rights or Options or the conversion or exchange of such
Convertible Securities.

No further adjustment of the Conversion Price, adjusted upon the issuance of
such Rights or Options or Convertible Securities, shall be made as a result of
the actual issuance of shares of Common Stock on the exercise of any such Rights
or Options or the conversion or exchange of any such Convertible Securities. If
any such Rights or Options or the conversion rights represented by any such
Convertible Securities shall expire without having been fully exercised, then
the Conversion Price as adjusted upon the issuance of such Rights or Options or
Convertible Securities shall be readjusted to the Conversion Price which would
have been in effect had an adjustment been made on the basis that the only
shares of Common Stock so issued were the shares of Common Stock, if any, that
were actually issued or sold on the exercise of such Rights or Options or rights
of conversion or exchange of such Convertible Securities, and such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Corporation upon such exercise, plus the consideration, if any,
actually received by the Corporation for the granting of all such Rights or
Options, whether or not exercised, plus the consideration received for issuing
or selling all such Convertible Securities actually converted or exchanged, plus
the consideration, if any, actually received by the

                                       14
<Page>

Corporation (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities) on the conversion or exchange of such
Convertible Securities, provided that such readjustment shall not apply to prior
conversions of Preferred Stock.

                  5.9 CERTIFICATE OF ADJUSTMENT. In each case of an adjustment
or readjustment of the Conversion Price for the Series B Preferred Stock, the
Corporation, at its expense, shall promptly cause its Chief Financial Officer to
compute such adjustment or readjustment in accordance with the provisions hereof
and prepare a certificate showing such adjustment or readjustment, and shall
cause such certificate to be delivered to each registered holder of the Series B
Preferred Stock in accordance with Section 5.12.

                  5.10 FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon any conversion of Series B Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be entitled, the
Corporation shall pay the holder cash equal to the product of such fraction
multiplied by the closing price of the Corporation's Common Stock (as reported
by a national securities exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market or a similar national quotation system on which the Common Stock
is then traded) on the date of conversion.

                  5.11 RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series B Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series B Preferred Stock; and if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of the
Series B Preferred Stock, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.

                  5.12 NOTICES. Except as provided in Section 5.2 with respect
to the Automatic Conversion Notice, any notice or certificate required by the
provisions of this Designation Statement to be given to the holders of shares of
the Series B Preferred Stock shall be deemed given upon the earliest of: (i)
actual receipt, (ii) one (1) business day after deposit with a recognized
express courier, fees prepaid, addressed to each holder of record at the address
of such holder appearing on the books of the Corporation, or (iii) on the date
of transmission by facsimile (with confirmation of receipt), sent to each holder
of record at the fascimile address of such holder appearing on the books of the
Corporation.

                  5.13 NO IMPAIRMENT. The Corporation shall not avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but shall at all times in good faith
assist in carrying out all such action as may be

                                       15
<Page>

reasonably necessary or appropriate in order to protect the conversion rights of
the holders of the Series B Preferred Stock against impairment.

         6.       MISCELLANEOUS.

                  6.1 NO REISSUANCE OF PREFERRED STOCK. No share or shares of
Series B Preferred Stock acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and all such shares shall
be cancelled, retired and eliminated from the shares which the Corporation shall
be authorized to issue.

                  6.2 PREEMPTIVE RIGHTS. No stockholder of the Corporation shall
have a right to purchase shares of capital stock of the Corporation sold or
issued by the Corporation except to the extent that such a right may from time
to time be set forth in a written agreement between the Corporation and a
stockholder.

                  6.3 PREFERRED STOCK WRITTEN CONSENT. Notwithstanding any other
provision of this Designation Statement, with respect to matters involving only
the Series B Preferred Stock and the rights, preferences, privileges and
restrictions granted to and imposed on the Series B Preferred Stock, the holders
of the Series B Preferred Stock may take action without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders of majority of the Series B
Preferred Stock then outstanding.

                  IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Designation of Series B Convertible Preferred Stock of 24/7 Real
Media, Inc. and acknowledges, under penalty of perjury, that this instrument is
the act and deed of the Corporation and that the facts stated herein are true
and correct of his own knowledge on this 18th day of September, 2002.

                                          /s/Mark E. Moran
                                          ------------------------------
                                          Mark E. Moran
                                          Executive Vice President, General
                                             Counsel and Secretary

                                       16<Page>
                                                                    Exhibit 10.1

                                                                  EXECUTION COPY

                              24/7 REAL MEDIA, INC.

                            SERIES B PREFERRED STOCK

                               PURCHASE AGREEMENT

         This SERIES B PREFERRED STOCK PURCHASE AGREEMENT (the "AGREEMENT") is
made as of September 19, 2002, by and among 24/7 Real Media, Inc., a Delaware
corporation (the "COMPANY") and the parties listed on the Schedule of Purchasers
attached to this Agreement as EXHIBIT A (each purchaser hereinafter individually
referred to as a "PURCHASER" and collectively as the "PURCHASERS").

                                    RECITALS

         WHEREAS, the Company desires to sell and the Purchasers desire to
purchase shares of the Company's Series B Preferred Stock, par value $0.01 per
share (the "SERIES B STOCK").

                                    AGREEMENT

         NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration the receipt and
adequacy of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:

         SECTION 1.     PURCHASE AND SALE OF STOCK

                  1.1 AUTHORIZATION. As of the Closing (as defined below), the
Company will have authorized the issuance and sale to the Purchasers, pursuant
to the terms of this Agreement, of 125,000 shares of the Series B Stock having
the powers, designations, preferences, voting rights, relative and other special
rights, and the qualifications, limitations and restrictions set forth in the
resolutions of the Company's Board of Directors (the "BOARD") attached hereto as
EXHIBIT B (the "SERIES B DESIGNATION").

                  1.2 AGREEMENT TO PURCHASE AND SELL STOCK. Subject to the terms
and conditions of this Agreement including, without limitation, the satisfaction
(or waiver) of the conditions set forth in Sections 4.1 and 5.1 below, each
Purchaser agrees to purchase from the Company at the Closing, and the Company
agrees to issue and sell to each Purchaser at the Closing, the number of shares
of Series B Stock set forth beside such Purchaser's name on EXHIBIT A hereto, at
a price per share equal to Ten Dollars ($10.00), for an aggregate purchase price
of $1,250,000 (the "PURCHASE PRICE"), based on an initial conversion price of
$0.2066 per share. The shares of Series B Stock issued and sold to the
Purchasers at the Closing are referred to herein as the "SERIES B SHARES." The
shares of the Company's common stock, par value $0.01 per share ("COMMON STOCK")
issuable upon conversion of the Series B Stock is referred to herein as the
"CONVERSION STOCK." The Series B Shares and Conversion Stock are sometimes
collectively referred to herein as the "SECURITIES."

<Page>

                  1.3 CLOSING. The closing of the purchase and sale of the
Series B Shares hereunder shall be held at the law offices of counsel to the
Company, Proskauer Rose LLP, 1585 Broadway, New York, New York, 10036, at 10:00
a.m. local time promptly following the satisfaction (or waiver) of the
conditions set forth in Sections 4.1 and 5.1 hereof (other than conditions which
will be satisfied at, but not before, the Closing) or at such other time and
place as the Company and Purchasers purchasing a majority of the Series B Shares
mutually agree (which time and place are designated as the "CLOSING").

                  1.4 DELIVERY. Subject to the terms of this Agreement, at the
Closing, the Company shall deliver to each Purchaser a certificate representing
the number of Series B Shares purchased by such Purchaser against payment to the
Company of the aggregate Purchase Price for the Series B Shares so purchased by
check or wire transfer of immediately available funds to such account as may be
designated by the Company no later than 12:00 p.m. New York Time on the business
day preceding the Closing.

         SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Purchasers, as of the date of this
Agreement and as of the Closing, and except as set forth with reasonable
specificity on the Disclosure Letter delivered to Purchasers concurrently with
this Agreement (the "DISCLOSURE LETTER"), as follows:

                  2.1 ORGANIZATION AND STANDING: CERTIFICATE OF INCORPORATION
AND BYLAWS. The Company is a corporation duly organized and validly existing
under the laws of the State of Delaware, is in good standing under such laws and
is authorized to exercise all of its corporate powers, rights and privileges.
The Company has the requisite corporate power and authority to own, lease and
operate its properties and assets and to conduct its business as presently
conducted, other than such corporate power and authority, the absence of which
would not reasonably be expected to cause a Material Adverse Effect. A MATERIAL
ADVERSE EFFECT means any material adverse effect on the business, properties,
assets, operations, results of operations or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole, or on the Company's
ability to consummate the transactions contemplated hereby or to enter into the
agreements and instruments to be entered into in connection herewith, or on the
authority or ability of the Company to perform its obligations under this
Agreement and the Investor's Rights Agreement substantially in the form of
EXHIBIT C hereto (the "INVESTORS' RIGHTS AGREEMENT" and, together with this
Agreement, the "FINANCING AGREEMENTS"). The Company is qualified to do business
as a foreign corporation in each jurisdiction where the failure to be so
qualified would reasonably be expected to cause a Material Adverse Effect. True,
correct and complete copies of the Company's Certificate of Incorporation and
Bylaws, each as will be in effect at the Closing, have been delivered to counsel
for the Purchasers.

                  2.2 CORPORATE POWER; AUTHORIZATION.

                           (a) The Company has the requisite corporate power to
execute and deliver the Financing Agreements, to issue and sell the Series B
Shares hereunder, to execute and file the Series B Designation (the "CERTIFICATE
OF DESIGNATION") and to carry out and perform its obligations under the terms of
the Financing Agreements and the Certificate of Designation.

<Page>

                           (b) All corporate action on the part of the Company,
its stockholders, officers and directors necessary for the authorization,
execution, delivery and performance of the Financing Agreements and the
Certificate of Designation and for the authorization, sale, issuance (or
reservation for issuance) and delivery of the Securities, and the performance of
the Company's obligations hereunder and thereunder, has been taken. This
Agreement has been duly executed and delivered by the Company and constitutes,
and the Investors' Rights Agreement when executed and delivered will constitute,
legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws of general application affecting the enforcement of creditors' rights. The
Certificate of Designation has been filed prior to the Closing with the
Secretary of State of the State of Delaware and will be in full force and
effect, enforceable against the Company in accordance with their terms and shall
not have been amended unless in compliance with their terms.

                  2.3 SUBSIDIARIES. Each of the subsidiaries of the Company
listed on Schedule 2.3 of the Disclosure Letter (the "SUBSIDIARIES") is validly
existing, and the Company is the sole record and beneficial owner of the all of
the capital stock of each of the Subsidiaries. There is no obligation or
commitment of the Company or any Subsidiary to issue shares, options, warrants
or other rights with respect to any Subsidiary to any person. The Company has no
affiliated companies other than the Subsidiaries and does not otherwise own or
control, directly or indirectly, any material equity interest in any other
corporation, partnership, association or other business entity except as
disclosed in the Financial Statements (as defined below). The Company is not a
party to any material partnership or joint venture.

                  2.4 CAPITALIZATION.

                           (a) The authorized capital stock of the Company
consists of (A) 140,000,000 shares of Common Stock, of which 52,005,617 are
issued and outstanding as of the date hereof and (B) 10,000,000 shares of
Preferred Stock, $0.01 par value per share (the "PREFERRED STOCK"), of which
160,000 shares are issued and outstanding, and of which 800,000 shares are
designated as Series A Stock and 340,000 shares are designated as Series A-1
Stock. All such issued and outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable, and were issued
in compliance with all applicable federal and state securities laws. Except as
set forth in the Financing Agreements or in Schedule 2.4 of the Disclosure
Letter, and except for 11,386,547 shares of Common Stock reserved for issuance
under the Company's 1998 Stock Incentive Plan, of which 8,301,509 shares are
subject to outstanding options issued under such plan and 1,023,162 shares have
been issued and are included in the issued and outstanding Common Stock number
listed in the preceding sentence; 2,500,000 shares of Common Stock reserved for
issuance under the Company's 2001 Stock Incentive Plan for Non-Officers, of
which 2,176,184 shares are subject to outstanding options issued under such plan
and 5,188 shares have been issued and are included in the issued and outstanding
Common Stock number listed in the preceding sentence; 1,250,000 shares of Common
Stock reserved for issuance under the Company's 2001 Equity Compensation Plan,
of which 1,250,000 shares have been issued and are included in the issued and
outstanding Common Stock number listed in the preceding sentence; 3,000,000
shares of Common Stock reserved for issuance under the Company's 2002 Equity
Compensation Plan, of which 248,397

<Page>

shares have been issued and are included in the issued and outstanding Common
Stock number listed in the preceding sentence; and 4,020,412 shares of Common
Stock issuable upon the exercise of the warrants listed in Schedule 2.4 of the
Disclosure Letter, (i) no shares of the Company's capital stock are subject to
preemptive rights or any other similar rights; (ii) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional shares of capital stock of the Company or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company; (iii) there are no outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing indebtedness of the Company or by which the Company is or
may become bound; (iv) there are no amounts outstanding under, and there will be
no amounts due upon termination of, any credit agreement or credit facility; (v)
there are no financing statements securing obligations in any amounts greater
than Five Hundred Thousand Dollars ($500,000) in the aggregate, filed in
connection with the Company; (vi) there are no agreements or arrangements under
which the Company is obligated to register the sale of any of its securities
under the Securities Act; (vii) there are no outstanding securities or
instruments of the Company or which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company is or may become bound to redeem a security of
the Company; (viii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement; and (ix) the Company does not
have any stock appreciation rights or "phantom" stock plans or agreements or any
similar plan or agreement.

                           (b) ISSUANCE OF SECURITIES. As of the Closing, the
Series B Shares will have been duly authorized and, upon issuance in accordance
with the terms hereof, shall be (i) validly issued, fully paid and
non-assessable, (ii) free from all taxes, liens and charges with respect to the
issuance thereof and (iii) entitled to the rights and preferences set forth in
the Certificate of Designation. As of the Closing, at least 6,050,339 shares of
Common Stock will have been duly authorized and reserved for issuance upon
conversion of the Series B Shares. Upon conversion of the Series B Shares in
accordance with the Series B Designation, the shares of Conversion Stock shall
be (i) validly issued, fully paid and non-assessable, (ii) free from all taxes,
liens and charges with respect to the issuance thereof and (iii) subject to the
terms and provisions of the Financing Agreements, entitled to the rights
accorded to a holder of Common Stock. Subject to the accuracy of the
representations and warranties of each of the Purchasers in this Agreement, the
issuance by the Company of the Securities is exempt from registration under the
Securities Act and applicable state securities laws, and the Securities will be
issued in compliance with all applicable state and federal securities laws.
Except as provided in the Investors' Rights Agreement, the issuance of the
Securities is not (and will not be) subject to any preemptive rights or rights
of first refusal. Upon the Closing, each share of Series B Stock shall be
convertible pursuant to the terms of the Series B Designation into 48.40271
shares of Common Stock.

<Page>

                  2.5 SEC FILINGS; FINANCIAL STATEMENTS.

                           (a) The Company has filed all forms, reports and
documents required to be filed by the Company with the Securities and Exchange
Commission (the "SEC") since the filing of the Company's annual report on Form
10-K for the year ended December 31, 2000. All such forms, reports and
documents, including the Company's annual report on Form 10-K for the year ended
December 31, 2001, are referred to herein as the "COMPANY SEC REPORTS." As of
their respective dates, each of the Company SEC Reports, as of the date filed
and as they may have been subsequently amended, (i) were prepared in accordance
with all requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), or the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Reports, and (ii) did not contain any untrue
statement of a material fact or did not omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. All
material agreements to which the Company or any of its Subsidiaries is a party
or to which the property or assets of the Company or any of its Subsidiaries are
subject are included as part of or specifically identified in the Company SEC
Reports or have been specifically identified as material agreements on SCHEDULE
2.5(a) of the Disclosure Letter, and made available, to counsel to the
Purchasers.

                           (b) Each of the financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports
(collectively, the "FINANCIAL STATEMENTS") (i) complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, (ii) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated and with each other, and (iii) fairly presented the financial position
of the Company at the respective dates thereof and for the periods indicated
therein, except in the case of unaudited quarterly financial statements for the
omission of certain footnotes and subject to normal and recurring year-end
adjustments. The unaudited financial statements of the Company for the period
ending June 30, 2002, in the form provided to the Purchasers (the "UNAUDITED
6/30/02 FINANCIAL STATEMENTS"), (i) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated and with each other, and (ii) represented in
all material respects the financial position of the Company at the respective
dates thereof and for the periods indicated, except for the omission of
footnotes and statement of cash flows and subject to normal and recurring
year-end adjustments. Except as set forth in the Unaudited 6/30/02 Financial
Statements or specifically identified in the Company SEC Reports, the Company
has no liabilities, contingent or otherwise, other than obligations and
commitments incurred in the ordinary course of business that are not required
under generally accepted accounting principles to be reflected in the Unaudited
6/30/02 Financial Statements, in each case which, individually or in the
aggregate, are not material to the financial condition or operating results of
the Company. The Company is not aware of any material liability of any nature,
direct or indirect, contingent or otherwise, or any amount not adequately
reflected or reserved against in the Unaudited 6/30/02 Financial Statements and
notes thereto.

                           (c) The Company satisfies the requirements for use of
Form S-3 for registration of the resale of Registrable Securities (as defined in

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the Investors' Rights Agreement). The Company is not required to file and, if it
were to file a registration statement on Form S-3 on the date hereof, would not
be required to file any agreement, note, lease, mortgage, deed or other
instrument entered into prior to the date hereof and to which the Company is a
party or by which the Company is bound which has not been previously filed as an
exhibit to its reports filed with the SEC. To the knowledge of the Company,
except for the issuance of the Series B Shares contemplated by this Agreement,
no event, liability, development or circumstance has occurred or exists, or is
currently contemplated to occur, with respect to the Company or its business,
properties, operations, prospects or financial condition, that would be required
to be disclosed by the Company under applicable securities laws or the rules and
policies of Nasdaq and the Company's listing agreement with Nasdaq, and which
has not been publicly disclosed.

                  2.6 TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. The Company
and its Subsidiaries have good and marketable title to, or in the case of leased
properties and assets, valid and enforceable leaseholds or licensed interests
in, all of their respective material properties and assets. Such properties and
assets are not subject to any material mortgage, pledge, lien, security
interest, conditional sales agreement, encumbrance or charge, except liens for
current taxes not yet due and payable and mechanics liens incurred in the
ordinary course of business. The material properties and assets of the Company
and its Subsidiaries are in good condition and repair in all material respects.
Except as disclosed in Schedule 2.6 of the Disclosure Letter, such material
properties and assets constitute all of the material properties and assets,
tangible and intangible, of any nature whatsoever, necessary to operate the
Company's business as it is currently being operated.

                  2.7 INTELLECTUAL PROPERTY RIGHTS. The Company and its
Subsidiaries (a) own or have sufficient right to use, free and clear of all
liens, claims and restrictions, all material patents, trade secrets, inventions,
know-how, designs, processes, technical data, trademarks, service marks, trade
names, copyrights and other intangible or intellectual property rights
("INTELLECTUAL PROPERTY RIGHTS") (and licenses with respect to the foregoing)
needed for or used in the conduct of its business as now conducted and as
proposed to be conducted (as set forth in the SEC Reports) without infringing
upon or otherwise acting adversely to the right or claimed right of any person
or entity under or with respect to any of the foregoing, and (b) are not
obligated or under any liability whatsoever to make any material payments by way
of royalties, fees or otherwise to any owner of, licensor of, or other claimant
to, any Intellectual Property Right, with respect to the use thereof or in
connection with the conduct of their businesses. Neither the Company nor any of
its Subsidiaries are infringing upon or otherwise acting adversely to the right
or, to the Company's knowledge, claimed right of any person under or with
respect to any Intellectual Property Right. The Company has not received any
written or, to the actual knowledge of any directors or executive officers of
the Company, other communications alleging that the Company or any of its
Subsidiaries have violated any Intellectual Property or other proprietary right
of any other person or entity, which, singly or in the aggregate, if the subject
of any unfavorable decision, ruling or finding, would reasonably be expected to
cause a Material Adverse Effect. The Company has no knowledge of any third party
that is infringing or improperly using any Intellectual Property Right held by
the Company or any of its Subsidiaries, and except as disclosed in the Company
SEC Reports neither the Company nor any of its Subsidiaries have instituted any
action, suit or proceeding in which an act constituting an

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infringement of any such Intellectual Property Right was alleged to have been
committed by a third party. There is no claim, action or proceeding being made
by the Company or any of its Subsidiaries regarding any of the foregoing
Intellectual Property Rights of the Company or any of its Subsidiaries or
brought or, to the Company's knowledge, threatened against the Company or any of
its Subsidiaries regarding any of the foregoing Intellectual Property Rights of
the Company or any of its Subsidiaries, or the use of any Intellectual Property
Rights of any third party by the Company or any of its Subsidiaries that, if the
subject of an unfavorable decision, ruling or finding would reasonably be
expected to cause a Material Adverse Effect.

                  2.8 PROPRIETARY INFORMATION AGREEMENTS. All current and former
employees and consultants of the Company and its Subsidiaries that have or are
reasonably expected to contribute to the development of the products or
technology of the Company and/or its Subsidiaries are parties to a written
confidentiality and invention and proprietary rights assignment agreement
substantially in the form previously delivered to counsel for the Purchasers,
except where the Company's failure to obtain such agreements, in any single case
or in the aggregate, should not be reasonably expected to adversely affect the
assets, properties, financial condition, operating results or business of the
Company. To the Company's knowledge, none of the current or former employees of
the Company or any of its Subsidiaries is, or is alleged to be, in material
violation of any employment agreement, non-competition agreement, invention or
proprietary information disclosure agreement, or other contract or agreement to
which any of them is a party which violation or alleged violation relates to
their relationship to the Company, its Subsidiaries, their businesses or
operations, or is in material violation of the Confidentiality and Inventions
Agreement with the Company or any of its Subsidiaries to which such employee is
a party. None of the employees of the Company or its Subsidiaries, to the
Company's knowledge, has taken, removed or made use of any material proprietary
documentation, manuals, products, materials, or any other tangible item from his
or her previous employer, and the Company and its Subsidiaries has not and will
not make use of any such material proprietary items in the business of the
Company. The Company and its Subsidiaries have taken all commercially reasonable
steps to safeguard and maintain the secrecy and confidentiality of, and its
proprietary rights in, any of the Intellectual Property Rights of the Company
and its Subsidiaries.

                  2.9 PRIVACY. The Company and its Subsidiaries have obtained
any and all necessary consents from customers with regard to their collection
and dissemination of personal customer information in accordance in all material
respects with any applicable privacy policy published or otherwise communicated
by Company and any applicable laws, rules or regulations. The practices of the
Company and its Subsidiaries regarding the collection and use of personal
customer information are and have been in all material respects in accordance
with such privacy policies and with all applicable laws, rules or regulations.
The use of the current products and services of the Company and its Subsidiaries
by customers for the intended purposes of such products and services, as
described in the Company SEC Reports and in the product documentation of the
Company and its Subsidiaries, does not violate any laws, rules or regulations
regarding the collection, use or disclosure of personal information in any
material respect.

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                  2.10 GOVERNMENTAL PERMITS. The Company and its Subsidiaries
have all governmental permits, operating authority, licenses, franchises,
certificates, consents, rights and privileges as are necessary to the operation
of their businesses as currently conducted, the absence of which would
reasonably be expected to cause a Material Adverse Effect (collectively,
"PERMITS"). Such Permits are in full force and effect, no material violations
have been or are expected to have been recorded in respect of any such Permits,
and no material proceeding is pending or threatened that could result in the
revocation or limitation of any of such Permits. The Company has not received
any written notice of proceedings relating to the revocation or modification of
any such Permits. The Company and its Subsidiaries have conducted their
businesses in material compliance with all Permits.

                  2.11 COMPLIANCE WITH OTHER INSTRUMENTS; NO CONFLICTS. The
Company and its Subsidiaries are not in violation, breach or default of any term
of their respective certificates of incorporation or bylaws, or, in any material
respect, of any term or provision of any material mortgage, indenture, contract,
agreement or instrument to which the Company or any of its Subsidiaries is a
party, or of any provision of any foreign or domestic state or federal judgment,
decree, order statute, rule or regulation applicable to or binding upon the
Company or any of its Subsidiaries other than such violation, breach or default
which has not caused and would not reasonably be expected to cause a Material
Adverse Effect. The execution, delivery and performance of the Financing
Agreements by the Company, and the consummation by the Company of the
transactions contemplated hereby and thereby, the performance by the Company of
its obligations under the Certificate of Designation, and the issuance of the
Securities have not and will not (with or without notice or lapse of time, or
both): (a) conflict with or violate, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any material agreement, mortgage, indenture or instrument (including, without
limitation, any stock option, employee stock purchase or similar plan or any
employment or similar agreement) to which the Company or any of its Subsidiaries
is a party (including, without limitation, triggering the application of any
change of control or similar provision (whether "single trigger" or "double
trigger")); (b) violate any provision of the certificates of incorporation or
bylaws of the Company or any of its Subsidiaries; (c) result in the creation of
any material mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company or any of its Subsidiaries, or result in the
suspension, revocation, impairment, forfeiture or non-renewal of any material
Permit applicable to the operations or assets of the Company or any of its
Subsidiaries; or (d) result in a violation by the Company or any of its
Subsidiaries of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations
of NASDAQ). The business of the Company and its Subsidiaries is not being
conducted in violation of any law, ordinance or regulation of any governmental
entity, which violation would reasonably be expected to cause a Material Adverse
Effect on the Company. The Company is not in violation of the listing
requirements of NASDAQ or its listing agreement with Nasdaq.

                  2.12 LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the Company's knowledge, overtly threatened in
writing or, to the actual knowledge of any directors or executive officers of
the Company, by other means against the Company or any of its Subsidiaries or
its or their properties before any court, governmental

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agency, public board or self-regulatory organization (other than ordinary course
litigation that, if determined adversely to the Company, would not be reasonably
be expected to cause a Material Adverse Effect).

                  2.13 EMPLOYEES. The Company SEC Reports accurately describe,
as of the date of this Agreement, the employee benefit plans and arrangements of
the Company and its Subsidiaries therein described. Except as disclosed in the
Company SEC Reports, neither the Company nor any of its Subsidiaries is bound by
or subject to (and none of its or their assets is bound by or subject to) any
arrangement with any labor union and neither the Company nor any of its
Subsidiaries has any collective bargaining agreements covering any of its
employees. There is no pending or, to the best of the Company's knowledge,
threatened union organizing effort or labor dispute involving the Company or any
of its Subsidiaries and any group of its or their employees. Subject to
applicable law and to the terms of employment agreements described in Schedule
2.13, copies of which have been provided to the Purchasers, the employment of
each officer and employee of the Company or any of its Subsidiaries is
terminable at the will of the Company. The Company and its Subsidiaries are in
compliance in all material respects with all federal, state, local and foreign
laws and regulations respecting employment and employment practices, terms and
conditions of employment, wages and hours, equal employment opportunity and with
other laws related to employment. No executive officer (as defined in Rule
501(f) of the Securities Act) has notified the Company that such officer intends
to leave the Company or otherwise terminate such officer's employment with the
Company.

                  2.14 INSURANCE. The Company has obtained and maintains in full
force and effect fire, casualty, directors' and officers' liability and other
and liability insurance policies with recognized insurers with such coverages as
are customary for companies in businesses similarly situated. The Company has
not been refused any insurance coverage sought or applied for and has no reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that is not
materially in excess of current levels.

                  2.15 MATERIAL CONTRACTS AND OBLIGATIONS.

                            (a) Except for the contracts and agreements filed as
exhibits to the Company SEC Reports, Schedule 2.15(a) of the Disclosure Letter
contains a complete list of all contracts to which the Company or any of its
Subsidiaries are a party, or to which any of their respective assets or
properties are subject, in each case which are, or would reasonably be expected
to become, significant or material to the business, assets, liabilities,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole.

                            (b) There are no existing, pending or, to the actual
knowledge of any directors or executive officers of the Company, threatened
claims for indemnification with respect to infringement or misappropriation (or
alleged or potential infringement or misappropriation) of intellectual property
rights under any material agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries

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is bound, except for claims arising after December 31, 2001 that have been
settled, satisfied or otherwise resolved in full prior to the date hereof.

                            (c) Neither the Company nor any of its Subsidiaries,
nor, to the Company's knowledge, is any other party in default under or material
violation of any contract listed on Schedule 2.15(a) of the Disclosure Letter or
referenced in Section 2.15(a) to which the Company or any of its Subsidiaries is
a party.

                  2.16 TAX RETURNS AND PAYMENTS. The Company and its
Subsidiaries have accurately prepared and timely filed all tax returns (foreign,
federal, state and local) required to be filed by them or obtained extensions
therefor. All taxes shown to be due and payable on said returns, any assessments
received, and all other taxes due and payable by the Company or any of its
Subsidiaries on or before the date hereof have been paid or will be paid prior
to the time they become delinquent. The federal income and state income
franchise tax, sales or use tax returns of the Company and its Subsidiaries have
not been audited by any governmental authority since January 1, 2001. No
material deficiency assessment or proposed adjustment of the Company's or any of
its Subsidiaries' foreign or federal income tax or state or local taxes is
pending and the Company has no knowledge of any proposed material liability for
any tax to be imposed upon its properties or assets for which the Company has
not adequately reserved. The provision for taxes of the Company and its
Subsidiaries as shown in the Financial Statements is materially adequate for
taxes due or accrued as of the date thereof. The Company has not elected
pursuant to the Internal Revenue Code of 1986, as amended (the "CODE"), to be
treated as a collapsible corporation pursuant to Section 1362(a) or Section
341(f) of the Code and has not made any other elections pursuant to the Code
(other than elections which relate solely to methods of accounting, depreciation
or amortization) which would reasonably be expected to cause a Material Adverse
Effect on the Company.

                  2.17 NO OTHER AGREEMENTS RELATING TO VOTING OR TRANSFER.
Except as contemplated by the Financing Agreements, the Certificate of
Designation and the Company's Certificate of Incorporation, there is no
agreement between the Company, any of its Subsidiaries, or any of officers or
directors of the Company or any of its Subsidiaries, that directly affects or
relates to the voting of or giving of consents or approvals with respect to any
voting security.

                  2.18 CERTAIN TRANSACTIONS. Except as disclosed in the Company
SEC Reports, (i) the Company and its Subsidiaries are not directly or indirectly
indebted to any officers or directors of the Company or any of its Subsidiaries,
or to any member of his or her immediate family, in any amount whatsoever, or to
any holder of more than five percent (5%) of the Company's outstanding Common
Stock, (ii) no holder of more than five percent (5%) of the Company's
outstanding Common Stock or any of the Company's Subsidiaries, or officer or
director of the Company or any of its Subsidiaries, or member of his or her
immediate family, has incurred any indebtedness for borrowed money, or incurred
any other liabilities, to the Company or any of its Subsidiaries, of greater
than $60,000, or, to the knowledge of the Company, has any direct or indirect
ownership interest in any firm or corporation with which the Company or any of
its Subsidiaries has a business relationship, or any firm or corporation that
currently directly competes with the Company or any of its Subsidiaries (except
with respect to any interest in less than one percent of the stock of any
corporation whose stock is publicly traded), (iii) none of the

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officers or directors of the Company and its Subsidiaries, or member of his or
her immediate family, is directly or indirectly interested in or party to any
contract or commercial or financial relationship with the Company or any of its
Subsidiaries with a value exceeding $100,000, and (iv) the Company and its
Subsidiaries are not guarantors or indemnitors of any material indebtedness of
any other person, firm or corporation.

                  2.19 CHANGES.  Since June 30, 2002 there has not been:

                           (a) any development, condition or circumstance which
has had or should reasonably be expected to have a Material Adverse Effect;

                           (b) any material damage, destruction or loss, whether
or not covered by insurance, materially and adversely affecting the assets,
properties, financial condition, operating results or business of the Company or
any of its Subsidiaries (as such business is presently conducted);

                           (c) any satisfaction or discharge of any lien, claim
or encumbrance or payment of any obligation by the Company or any of its
Subsidiaries, except in the ordinary course of business;

                           (d) any waiver by the Company or any of its
Subsidiaries of a material right or of a material debt owed to it;

                           (e) any change or amendment to a material contract or
material arrangement by which the Company, any of its Subsidiaries or any of its
assets or properties is bound or subject, except in the ordinary course of
business which have not been in the aggregate materially adverse;

                           (f) any material change in any compensation
arrangement or agreement with any officer, or any employee or group of employees
who receive, in the aggregate, a material amount of cash, options and other
remuneration under such arrangement(s) or agreement(s), of the Company or any of
its Subsidiaries;

                           (g) any sale, assignment, license or transfer of any
patents, trademarks, copyrights, trade secrets or other intangible assets of the
Company or any of its Subsidiaries other than non-exclusive licenses in the
ordinary course of business;

                           (h) any resignation or termination of employment of
any officer of the Company or any of its Subsidiaries; and the Company does not
know of the impending resignation or termination of employment of any such
officer;

                           (i) to the actual knowledge of any director or
executive officer of the Company, receipt of notice that there has been a loss
of, or order cancellation by, any major customer of the Company or any of its
Subsidiaries;

                           (j) any loans made by the Company or any of its
Subsidiaries to or for the benefit of its employees, officers or directors, or
any members of their immediate families in

<Page>

excess of $250,000 individually or in the aggregate, other than travel advances
and other advances made in the ordinary course of its business, or any
guarantees made by the Company or any of its subsidiaries to or for the benefit
of any of the foregoing persons other than in the ordinary course;

                           (k) any declaration, setting aside or payment or
other distribution in respect of any of the Company's capital stock, or any
direct redemption, purchase or other acquisition of any of such stock by the
Company or any of its Subsidiaries;

                           (l) any other event or condition of any character
that the Company believes would reasonably be expected to cause a Material
Adverse Effect; or

                           (m) any agreement or commitment by the Company or any
of its Subsidiaries to do any of the things described in this Section 2.19.

                  2.20 EMPLOYEE BENEFIT PLANS. The Company and its Subsidiaries
have materially complied with all applicable material local, state and federal
regulations with respect to each employment contract, deferred compensation
agreement, bonus plan, incentive plan, profit sharing plan, retirement agreement
and employee benefit plan subject to the Employee Retirement Income Security Act
of 1974, as amended.

                  2.21 ENVIRONMENTAL AND SAFETY LAWS. The Company and its
Subsidiaries (a) are in material compliance with any and all Environmental Laws,
(b) have received all material permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct its business, (c) are in
material compliance with all terms and conditions of any such permit, license or
approval and (d) have no material expenditures that are or, to Company's
knowledge, will be required in order to comply with any such Environmental Laws.
The term "ENVIRONMENTAL LAWS" means all federal, state, local or foreign laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) as they currently exist, including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued,
entered, promulgated or approved thereunder.

                  2.22 NO GENERAL SOLICITATION. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
Securities.

                  2.23 NO INTEGRATED OFFERING. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of

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the Securities Act or any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated, nor will the Company take any action or steps that would cause the
offering of the Securities to be integrated with other offerings.

                  2.24 FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor
any of its Subsidiaries, nor any director, officer, agent, employee or other
person acting on behalf of the Company or any of its Subsidiaries has, in the
course of his actions for, or on behalf of, the Company or any of its
Subsidiaries used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the United States Foreign Corrupt Practices Act of 1977, as
amended; or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.

                  2.25 INTERNAL ACCOUNTING CONTROLS. The Company and its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
accordance with general accepted accounting principles and to maintain asset and
liability accountability and (iii) access to assets or incurrence of liability
is permitted only in accordance with management's general or specific
authorization.

                  2.26 APPLICATION OF TAKEOVER PROTECTIONS. The Company and its
Board have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company's Certificate of Incorporation or the laws of the state of its
incorporation which is or could become applicable to the Purchasers as a result
of the transactions contemplated by this Agreement, including, without
limitation, the Company's issuance of the Securities and the Purchasers'
ownership of the Securities, or as a result of the acquisition by the Purchasers
of additional shares of Common Stock (whether then-outstanding or newly issued).

         SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each
Purchaser hereby represents and warrants to the Company, as of the date of the
Agreement and as of the Closing, but only with respect to such Purchaser, as
follows:

                  3.1 AUTHORIZATION. All action on the part of such Purchaser
necessary for the authorization, execution, delivery and performance by such
Purchaser of the Financing Agreements has been taken, and the Financing
Agreements, when executed and delivered by the Purchasers, will constitute valid
and binding obligations of the Purchasers, enforceable in accordance with their
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general application
affecting the enforcement of creditor's rights.

<Page>

                  3.2 INVESTMENT. Such Purchaser is acquiring the Series B
Shares, for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the Securities Act. Such Purchaser understand
that the Securities to be purchased by it have not been and will not be (except
as contemplated by the Investors' Rights Agreement) registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein.

                  3.3 EXPERIENCE; ACCREDITED INVESTOR. Such Purchaser has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Securities and
protecting its own interests in connection with such investment. Such Purchaser
is an "accredited investor" within the meaning of Regulation D promulgated under
the Securities Act.

                  3.4 RULE 144. Such Purchaser acknowledges that the Securities
are restricted securities within the meaning of applicable securities laws, have
not been registered under the Securities Act, and must be held indefinitely
unless subsequently registered under the Securities Act and applicable state and
other securities laws or unless an exemption from such registration is
available. Such Purchaser is aware of the provisions of Rule 144 promulgated
under the Securities Act that permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions. The
Securities will bear a legend reflecting these conditions on transferability
thereof.

                  3.5 INFORMATION. Such Purchaser believes it has had an
opportunity to discuss the Company's business, management and financial affairs
with the Company's management and an opportunity to review the Company's
facilities. Such Purchaser represents and acknowledges that it believes it has
had an opportunity to ask questions and receive answers from the Company's
officers, employees and directors regarding the terms and conditions of the
offering of the Securities. Such Purchaser has sought such advice as it
considered necessary to make an informed investment decision with respect to
acquisition of the Securities. The foregoing, however, does not limit or modify
such Purchaser's rights under this Agreement including, without limitation, the
representations and warranties of the Company in this Agreement or the right of
such Purchaser to rely thereon.

                  3.6 FURTHER LIMITATIONS ON DISPOSITIONS. Without in any way
limiting the representations set forth above, such Purchaser further agrees
that, if at the time of any transfer of any Securities, such Securities shall
not be registered under the Securities Act, prior to any disposition of all or
any portion of the Securities, the Company may require, as a condition of
allowing such transfer, that the holder or transferee furnish to the Company (i)
such information as is appropriate to establish that such transfer may be made
without registration under the Securities Act; and (ii) at the expense of the
holder or transferee, an opinion by legal counsel designated by such holder or
transferee and reasonably satisfactory in form and substance to the Company, to
the effect that such transfer may be made without registration under the
Securities Act. No such opinion of the Counsel shall be necessary for any
transfer to any person or entity that is deemed to be an "affiliate" of such
Purchaser for purposes of the Securities Act, if the

<Page>

transferee agrees in writing to be subject to the terms hereof to the same
extent as if the transferee were an original Purchaser hereunder.

                  3.7 RESIDENCE. Such Purchaser is a resident of that
jurisdiction specified in its address listed on EXHIBIT A.

                  3.8 CONFIDENTIALITY. Such Purchaser shall not disclose or
provide to any other person or entity any non-public information or materials,
or copies thereof, whatsoever about the Company, disclosed or made available to
the Purchasers in connection with the transactions contemplated hereby, or in
the Purchasers' capacity as stockholders of the Company; PROVIDED, HOWEVER, that
such Purchaser may disclose such information to such Purchaser's legal and
financial advisors in connection with advice to be rendered by them to such
Purchaser, or to such Purchaser's investors or potential investors or
affiliates, or to any transferee or potential transferees of the Securities if
such transfer is made in compliance with all the terms and conditions of this
Agreement. Prior to such disclosure, such Purchaser shall: (i) advise such legal
and financial advisors or such Purchaser's investors or potential investors or
affiliates, or transferees or potential transferee, as the case may be, that
each of them shall not further disclose such information or materials to any
other person or entity or utilize such information or materials for the benefit
of any person or entity other than the Company or the Purchasers, or such
transferee, in the capacity of a stockholder of the Company, or in connection
with the transactions contemplated hereby; and (ii) ensure that each such person
or entity executes an nondisclosure agreement in favor of the Company, the form
of which is customary for general commercial transactions. The nondisclosure
obligations set forth above shall not apply to any information which the Company
determines in writing shall not be the subject of such nondisclosure
obligations, nor shall such obligations apply to any information which, by
applicable law, the Company may not prohibit the Purchasers from disclosing. The
Purchasers may disclose any information to any governmental authority having
jurisdiction over it, provided that the Company when reasonably possible shall
be given reasonable advance written notice of Purchaser's intent to disclose any
information covered under this Section 3.8 unless Purchaser is precluded from
doing so by applicable law.

                  3.9 GENERAL SOLICITATION. Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.

                  3.10 BROKER-DEALER. Neither Purchaser nor any Affiliate of
Purchaser is a registered broker-dealer under the rules and regulations of the
SEC and NASD.

         SECTION 4.       CONDITIONS TO PURCHASERS' OBLIGATIONS.

                  4.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. The
obligation of each Purchaser hereunder to purchase Series B Shares at the
Closing, is subject to the fulfillment on or prior to the Closing of each of the
following conditions, provided that these conditions are for such Purchaser's
sole benefit and may be waived by the Purchasers at any time in their sole
discretion by providing the Company with written notice thereof.

<Page>

                           (a) REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by the Company in Section 2 hereof shall be
true and correct in all material respects when made, and shall be true and
correct in all material respects on and as of the Closing with the same force
and effect as if they had been made on and as of the same date.

                           (b) COVENANTS. All covenants, agreements, and
conditions in this Agreement required to be performed or complied with by the
Company on or prior to the Closing shall have been performed or complied with in
all material respects by the Company.

                           (c) PROCEEDINGS AND DOCUMENTS. All corporate and
other proceedings in connection with the transactions contemplated hereby and
all documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser.

                           (d) PERMITS. All governmental and third party
Permits, filings and waivers necessary for consummation of the transactions to
be consummated at the Closing shall have been obtained.

                           (e) FILING OF DESIGNATION. The Series B Designation
shall have been filed with the Secretary of State of the State of Delaware.

                           (f) GOOD STANDING CERTIFICATES. The Company shall
have delivered a certificate of status dated as of a date no more than three (3)
business days prior to the Closing issued by the Secretary of State of the State
of Delaware to the effect that the Company is legally existing and in good
standing.

                           (g) SECRETARY'S CERTIFICATE. The Company shall have
delivered a certificate executed by the Secretary or Assistant Secretary of the
Company dated as of the Closing certifying to the following matters: (i) the
resolutions adopted by the Board relating to the transactions contemplated by
this Agreement, (ii) the Company's certificate of incorporation as of the
Closing , including the Series B Designation, as certified by the Delaware
Secretary of State, (iii) the Bylaws of the Company; and (iv) incumbency of the
officers of the Company authorized to execute the Financing Agreements.

                           (h) STOCK CERTIFICATES. The Company shall have
executed and delivered to each Purchaser a certificate for the Series B Shares
purchased by such Purchaser at the Closing.

                           (i) FINANCING AGREEMENTS. The Company shall have
executed each of the Financing Agreements and delivered the same to such
Purchaser.

                           (j) COMPLIANCE CERTIFICATE. The Chief Executive
Officer and Chief Financial Officer of the Company shall have executed and
delivered as of the Closing, a certificate certifying that the conditions
specified in Sections 4.1(a), (b), and (o) have been fulfilled.

<Page>

                           (k) OPINION OF COUNSEL. Such Purchaser shall have
0received an opinion of Proskauer Rose LLP, counsel to the Company, as of the
Closing, in substantially the form as attached hereto as EXHIBIT I.

                           (l) LISTING OF COMMON STOCK. The Common Stock shall
be designated for quotation on either the NASDAQ National Market or the NASDAQ
SmallCap Market, and shall not have been suspended by the SEC or NASDAQ from
trading on such market.

                           (m) RESERVATION OF COMMON STOCK. The Company shall
have reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Series B Shares, at least 6,050,339
shares of Common Stock.

                           (n) NO INJUNCTIONS. No temporary restraining order,
preliminary or permanent injunction or other order or decree, and no other legal
restraint or prohibition shall exist which prevents or arguably prevents the
consummation of the transactions contemplated by the Financing Agreements, nor
shall any proceeding have been commenced or threatened with respect to the
foregoing.

                           (o) NO MATERIAL ADVERSE EFFECT. Between the time of
the execution of this Agreement and the Closing, there shall have been no
development, condition or circumstance which has had or could reasonably be
expected to have a Material Adverse Effect.

                           (p) TRANSFER AGENT CERTIFICATE. The Company shall
have caused to be delivered a certificate executed by the transfer agent of the
Company certifying the total number of shares of Common Stock of the Company
outstanding as of a day within five (5) days prior to the Closing.

                           (q) ASSET PURCHASE AGREEMENT. The Company shall have
executed and delivered an Asset Purchase Agreement to acquire certain assets of
Elbit Vflash Inc., d/b/a Nowmaketing (the "Asset Purchase Agreement"), and
consummated the transactions contemplated thereby, including, without
limitation, the intellectual property associated with NowCode, in exchange for
4.1 million shares of the Company's Common Stock.

         SECTION 5.      CONDITIONS TO COMPANY'S OBLIGATIONS

                  5.1 CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligation to issue, sell and deliver the Series B Shares at the
Closing is subject to the fulfillment at or prior to the Closing of the
following conditions, any of which may be waived in whole or in part by the
Company at any time in its sole discretion by providing the Purchasers with
written notice thereof.

                           (a) REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by the Purchasers in Section 3 hereof shall
be true and correct in all material respects when made, and shall be true and
correct in all material respects at the Closing, with the same force and effect
as if they had been made on or as of the same date.

<Page>

                           (b) PAYMENT OF THE PURCHASE PRICE. The Purchasers
shall have delivered to the Company the aggregate Purchase Price for the Series
B Shares purchased at the Closing.

                           (c) FINANCING AGREEMENTS. The Purchasers shall have
executed each of the Financing Agreements and delivered the same to the Company.

                           (d) COVENANTS. All covenants, agreements, and
conditions in this Agreement required to be performed or complied with by the
Purchasers on or prior to the Closing shall have been performed or complied with
in all material respects by such Purchasers.

                           (e) NO INJUNCTIONS. No temporary restraining order,
preliminary or permanent injunction or other order or decree, and no other legal
restraint or prohibition shall exist which prevents or arguably prevents the
consummation of the transactions contemplated by the Financing Agreements, nor
shall any proceeding have been commenced or threatened with respect to the
foregoing.

                           (f) ASSET PURCHASE AGREEMENT. The Purchasers shall
have executed and delivered the Asset Purchase Agreement and the transactions
contemplated thereby shall have been consummated.

         SECTION 6.  COVENANTS.  The parties hereby covenant and agree as
follows:

                  6.1 FORM D AND BLUE SKY. The Company agrees to file timely a
Form D with the SEC with respect to the Securities as required under Regulation
D and to provide a copy thereof to each Purchaser promptly after such filing.
The Company shall, on or before the Closing, take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for, or
to qualify the applicable Securities for, sale to the Purchasers at the Closing
pursuant to this Agreement under applicable securities or "Blue Sky" laws of the
states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to the Purchasers on or
prior to the Closing. The Company shall make all timely filings and reports
relating to the offer and sale of the Securities required under applicable
securities or "Blue Sky" laws of the states of the United States following the
Closing.

                  6.2 REPORTING STATUS. With a view to making available to the
Purchaser the benefits of Rule 144 promulgated under the Securities Act or any
similar rule or regulation of the SEC that may at any time permit the Purchasers
to sell securities of the Company to the public without registration ("RULE
144"), the Company shall take all action reasonably available to: (1) make and
keep public information available, as those terms are understood and defined in
Rule 144; and (2) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act.
This Section 6.2 shall terminate with respect to a Purchaser when such Purchaser
is able to sell pursuant to Rule 144(k) all the shares of Common Stock issuable
to such Purchaser upon conversion of any Series B Shares acquired hereunder by
such Purchaser.

<Page>

                  6.3 TRANSFER AGENT MATTERS. The Company and the Purchasers
shall agree, prior to the Closing, on a form of letter of instruction to be
delivered to the Company's transfer agent regarding the issuance of the
Securities (which shall include, among other matters, irrevocable instructions
to issue certificates upon conversion of the Series B Shares). The Company
shall, prior to or as of the Closing, deliver to the transfer agent an executed
copy of such letter authorizing the transfer agent to issue, pursuant to the
instructions in the letter, the Securities.

                  6.4 PRESS RELEASE. The Company shall issue a press release or
other announcement of this Agreement and the transactions contemplated hereby in
such form as mutually agreed by the Company and the Purchasers, promptly
following the Closing. The Purchaser shall not issue any press release or make
any other public statement with respect to the Financing Agreements or the
transactions contemplated thereby, except as required by law.

         SECTION 7.   MISCELLANEOUS

                  7.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any
term hereof may be amended except by a written instrument signed by the Company
and Purchaser holding a majority of the Series B Shares purchased hereunder.
This Agreement may not be waived except by an instrument in writing executed by
the party entitled to the benefits thereby waived. No waiver of any term,
provision or condition of this Agreement, in any one or more instances, shall be
deemed to be, or construed to be, a further or continuing waiver of any such
term, provision or condition, or as a waiver of any other term, provision or
condition of this Agreement.

                  7.2 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of New York as such laws are applied to
agreements between New York residents entered into and to be performed entirely
within New York. Each party hereto irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the Southern District of
New York for the adjudication of any dispute hereunder.

                  7.3 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchasers
and the closing of the transactions contemplated hereby until the earlier of (i)
the first anniversary of the date hereof and (ii) the date on which the
Purchasers have sold or otherwise transferred (other than to their affiliates)
all the Securities issued to such Purchasers hereunder. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder as of the date of such certificate or instrument.

                  7.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto. Notwithstanding anything else herein to the contrary, each
Purchaser may freely assign its rights hereunder to any person or entity that is
deemed to be an "affiliate" of such Purchaser for purposes of the Securities
Act.

<Page>

                  7.5 ENTIRE AGREEMENT. This Agreement (i) constitutes the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and supercedes all prior understandings and agreements relating
to the subjects hereof, whether written or oral between the parties hereof and
(ii) terminates any and all rights the parties may have had that arose under or
in connection with all prior understanding and agreements, including in each
case all prior term sheets between the Company and any or all of the Purchasers.

                  7.6 SEVERABILITY OF THIS AGREEMENT. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

                  7.7 LEGENDS. Each certificate representing the Securities
shall be endorsed with a legend referencing such restrictions of such rules and
regulations of the SEC and such contractual restrictions as the Company deems
appropriate and a legend in substantially the following form:

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT
         BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
         EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH
         SECURITIES, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY
         TO THE COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

Each certificate representing the Securities shall also bear any legend required
by any applicable state or foreign securities laws. The Company need not
register a transfer of Securities unless the conditions specified in the
foregoing legends are satisfied. The Company may also instruct its transfer
agent not to register the transfer of any of the Securities unless the
conditions specified in the foregoing legend is satisfied.

                  7.8 REMOVAL OF LEGENDS AND TRANSFER RESTRICTIONS. The legend
relating to the Securities Act endorsed on a stock certificate pursuant to
Section 7.7 of this Agreement and the stop transfer instructions with respect to
the shares of the Securities represented by such certificate shall be removed
and the Company shall issue a certificate without such legend to the holder of
such shares, if such shares are sold under Rule 144 or, in the event subsection
(ii) below applies, are eligible to be sold and such holder provides to the
Company an opinion of counsel reasonably satisfactory to the Company to the
effect that (i) a public sale, transfer or assignment may be made without
registration or (ii) such shares may be sold pursuant to Rule 144(k) of the
Securities Act.

                  7.9 TITLES AND SUBTITLES The titles of the Sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.

<Page>

                  7.10 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

                  7.11 DELAYS OR OMISSIONS. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to the Purchasers, upon
any breach or default of the Company under this Agreement, shall impair any such
right, power or remedy, nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default therefore or
thereafter occurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character by the Purchasers of any breach or default
under this Agreement, or any waiver by the Purchasers of any provisions or
conditions of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in writing and that all remedies, either under
this Agreement, or by law or otherwise afforded to the Purchasers, shall be
cumulative and not alternative.

                  7.12    EXPENSES.

                           (a) Each party will bear its respective costs, fees
and expenses (including legal and auditors' fees) incurred in connection with
the Financing Agreements and the transactions contemplated hereby and thereby.

                           (b) In the event that any action, suit or other
proceeding is instituted concerning or arising out of the Financing Agreements
or the transactions contemplated hereby and thereby, the prevailing party shall
recover all of such party's reasonable costs, fees and expenses (including legal
fees) incurred in each such action, suit or other proceeding, including any and
all appeals or petitions therefrom.

                  7.13 NOTICES. Any notice, instruction, or communication
required or permitted to be given under this Agreement to any party shall be in
writing (which may include telex, telegram, telecopier, or other similar form of
reproduction followed by a mailed hard copy) and shall be deemed given when
actually received or, if earlier, five days after deposit in the United States
Mail by certified or express mail, return receipt requested, postage prepaid,
(or for foreign addresses by Federal Express, DHL or other comparable delivery
service) addressed to the principal office of such party or to such other
address as such party may request by written notice. Each party shall make an
ordinary, good faith effort to ensure that the person to be given notice
actually receives such notice. The address of the Purchasers shall be as set
forth on EXHIBIT A hereto or at such other address as the Purchaser shall have
furnished to the Company in writing. Notice of change of address shall be given
in accordance herewith. For ease of reference, a current business address for
the Company is as follows:

<Page>

                                    To Company:   24/7 Real Media, Inc.
                                                  1250 Broadway
                                                  New York, NY 10001
                                                  Attn:  General Counsel
                                                  Tel:  (212) 231-7100
                                                  Fax:  (212) 760-2811

         A copy of any notice to the Company (which shall not constitute notice)
shall be given to:

                                                  Proskauer Rose LLP
                                                  1585 Broadway
                                                  New York, New York 10036
                                                  Attn:  Ronald R. Papa, Esq.
                                                  Tel:  (212) 969-3325
                                                  Fax:  (212) 969-2900

               [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

<Page>

                  IN WITNESS WHEREOF, the parties have executed and delivered or
caused this Series B Preferred Stock Purchase Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the day and year
first written above.

"COMPANY"

24/7 REAL MEDIA, INC.

By:  /s/ Norman A. Blashka
     ----------------------------
     Name:  Norman A. Blashka
     Title: Executive Vice President and CFO

"PURCHASERS"

ELBIT LTD.

By:  /s/ Gil Ben Itzhak
     ----------------------------
     Name:  Gil Ben Itzhak
     Title:

By:  /s/ Paul Weinberg
     ----------------------------
     Name:  Paul Weinberg
     Title:

GILBRIDGE INC.

By:  /s/ Emmanuel Gill
     ----------------------------
     Name:  Emmanuel Gill
     Title: Chairman and CEO

B
         [SIGNATURE PAGE TO SERIES B PREFERRED STOCK PURCHASE AGREEMENT]

<Page>

                                    EXHIBIT A

                             SCHEDULE OF PURCHASERS

         PURCHASERS AND ADDRESS                          SERIES B SHARES
         ----------------------                          ---------------

ELBIT LTD.                                                    100,000
c/o Elron Electronic Industries Ltd.
3 Azrieli Center
The Triangle Building, 42nd Floor
Tel Aviv, Israel  67023
Attention: Paul Weinberg
Tel:  (972) 3-607-5555
Fax: (972) 3-607-5565

GILBRIDGE INC.                                                 25,000
152 West 57th Street, 54th Floor
New York, New York  10019
Attention:  Jeremy Levine
Tel:  (212) 245-8713
Fax:  (212) 245-8732

in each case, with a copy to:

Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, New York  10019
Attention:  Richard Gilden, Esq.
Tel:  (212) 237-2559
Fax:  (212) 586-7878

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