Affiliation Agreement

24/7 MEDIA, INC. / NBC
AFFILIATION
AGREEMENT


AFFILIATION AGREEMENT, dated as of March 11, 1999 (the "Effective Date"), among 24/7 Media, Inc., a Delaware corporation with an address at 1250 Broadway, 27th floor, New York, NY 10001 ("24/7"), and NBC Multimedia, Inc., a Delaware corporation with an address at 30 Rockefeller Plaza, New York, NY 10112 ("NBC").


WHEREAS, National Broadcasting Company, Inc. (hereinafter the "NBC Network") and/or its affiliates are the operators and owners of the television stations (the "O/O TV Stations") and the Internet Web sites (the "O/O Web Sites") specified on Schedule A hereto;


WHEREAS, the NBC Network provides television programming and, through NBC Interactive Neighborhood ("NBC-IN"), Internet content, to affiliated television stations ("NBC Affiliates"), each of which operates and owns a television station and many of which operate an associated Internet Web site (the "Affiliate Web Sites", and collectively with the O/O Web Sites, the "Web Sites");


WHEREAS, 24/7 operates a network of Internet Web sites (the "24/7 Network") for which it solicits advertisers, advertising agencies, buying services or others ("Advertisers") regarding the placement of advertising banners and similar devices and sponsorships ("Advertising") for display on pages, screens, and other segments or spaces on web sites reasonably suitable for the display of such Advertising;


WHEREAS, NBC wishes to engage 24/7 to sell Advertising on the Web Sites individually and in packages that combine inventory from certain of the Web Sites, the O/O TV Stations, NBC Affiliates and, in certain limited circumstances set forth in Section 2.A, the 24/7 Network, and 24/7 wishes to accept such engagement; and


WHEREAS, NBC and 24/7 wish to encourage NBC Affiliates to become parties to an Affiliation Agreement (the "Affiliate Agreement") among the NBC Affiliates, 24/7 and NBC-IN;


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


1. Affiliation.


A. NBC hereby designates 24/7 as its exclusive third-party Internet advertising representation firm during the Term to sell (a) Co-op Advertising (as defined below) in packages that combine inventory from one or more of the Web Sites covered by an O/O TV Station or NBC Affiliate where 24/7 then has in place a dedicated full-time salesperson on site pursuant to Section 2.F (the "Manned Markets"), and on-air inventory from such O/O TV Stations and/or NBC Affiliates, and (b) Advertising on the Web Sites in the Manned Markets. In addition, NBC


Confidential treatment has been requested for certain portions of this Exhibit pursuant to Rule 406 under the Securities Act of 1933, as amended. The omitted portions have been filed separately with the Securities and Exchange Commission and are indicated by asterisk (*).


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hereby grants 24/7 the non-exclusive right to sell Co-op Advertising and Advertising in all markets covered by an O/O TV Station that are not Manned Markets. 24/7 shall have a right of first refusal to man such markets before NBC engages another third party. NBC also agrees to arrange for the O/O TV Stations, and to use commercially reasonable efforts to encourage NBC Affiliates, to become party to an Affiliate Agreement substantially in the form of Exhibit A (each, an "Affiliate Agreement") to be attached hereto within 30 days of the Effective Date in accordance with the timetable set forth on Schedule B hereto.


B. For purposes of this Agreement, "Co-op Advertising" is intended to mean a coordinated television and Internet advertising campaign in which multiple advertisers participate simultaneously on a cooperative basis, and which (x) incorporate a promotional television advertisement in which viewers are directed to the Web Site of the television station upon which such advertisement appears, and more specifically to a promotion appearing on such Web Site (the "Promotion"), (y) incorporate Advertising appearing on such Web Site which directs end users to the Promotion, and (z) results in at least 30% of the total ad buy being allocated to such Web Site Advertising. It is mutually understood and agreed that 24/7 may have the opportunity to sell Co-op Advertising that deviates from the terms set forth herein; provided, that (i) 24/7 may do so only with the consent of NBC and the applicable station manager, which consents may be withheld in NBC's or such station manager's discretion, as the case may be, and (ii) payments with respect to such modified Co-op Advertising shall be governed by the applicable Affiliate Agreement.


2. Obligations of 24/7.


In furtherance of the foregoing, 24/7 covenants and agrees to:


A. utilize its best efforts to sell Co-op Advertising and Advertising to Advertisers for placement on the Web Sites, the O/O TV Stations and the NBC Affiliate stations located in the Manned Markets, at such prices as NBC, the O/O TV Stations, such NBC Affiliate stations and 24/7 shall mutually agree, and in accordance with this Agreement and any Affiliation Agreements; provided, that if the inventory of a Web Site sought by a particular Advertiser (including any inventory controlled by NBC-IN thereon) is sold out or otherwise not sufficient to meet the needs of a particular advertiser for the time periods sought by such Advertiser, then 24/7 may offer such Advertiser inventory during such time periods on the 24/7 Network solely as a supplement to such Web Site's inventory;


B. utilize commercially reasonable efforts to sell Advertising for placement on the Web Sites in the non-Manned Markets, all in accordance with this Agreement and the applicable Affiliation Agreements, if any, with all such Advertising and the rates therefor subject to the approval of the applicable station management and NBC-IN.


C. offer inventory on the 24/7 Network to the O/O TV Stations and the NBC Affiliates in those situations when such O/O TV Stations and/or NBC Affiliates have identified an advertiser who seeks more inventory than is available on such O/O TV Station's or NBC Affiliate's Web Site;


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D. not to sell packages which in any fashion combine Internet inventory and television inventory on behalf of any competitor of the NBC Network, the O/O TV Stations or the NBC Affiliates in any local market containing an O/O Station or an NBC Affiliate that executes the Affiliate Agreement within 90 days' after first being offered the opportunity to do so; provided, that 24/7 agrees to negotiate in good faith with each such O/O Station and NBC Affiliate and incorporate reasonable changes to the Affiliate Agreement in order to accommodate the needs of each such O/O Station or NBC Affiliate, as the case may be;


E. offer all services set forth in this Section 2 to O/O TV Stations and NBC Affiliates in accordance with the timetables set forth on Schedules A and B;


F. maintain suitable and qualified personnel in administrative, sales and technical positions necessary for 24/7 to perform effectively the terms of this Agreement; 24/7 shall hire and employ during the Term one salesperson resident in each of the fifteen (15) mutually agreed upon O/O TV Stations and NBC Affiliate stations (with the intention of manning at least 20 of the top 25 markets); which salespersons shall devote substantially all of their full-time efforts to the sale of Advertising in their assigned market pursuant to this Agreement (each, a "Manned Market Salesperson", and collectively the "Manned Market Salespeople"); provided, that if any such Manned Market Salesperson's employment is terminated, whether voluntarily or involuntarily, or if any such Manned Market Salesperson dies or becomes permanently disabled, then 24/7 shall promptly replace such Manned Market Salesperson; and provided, further, that the hiring of each such Manned Market Salesperson, and any replacements therefor, shall be subject to the reasonable approval of NBC and station management of the applicable O/O TV Station or NBC Affiliate, as the case may be;


G. serve or cause to be served Advertising to the Web Sites; it is understood that Advertising shall be served initially through a re-direction of Advertising from 24/7's ad serving system to DART, the ad serving system currently employed by NBC; provided, that NBC may elect at any time upon 60 days notice to 24/7 to transition fully to 24/7's ad serving system at 24/7's sole cost and expense, whereupon 24/7 shall use its best efforts to promptly effect a smooth transition to its system; and provided, further, that upon such election by NBC, the parties shall negotiate in good faith regarding a service level agreement covering Internet up-time, server up-time and response time, and other metrics relating to the performance of 24/7's ad serving system and the Internet connectivity thereof, which in no event shall be less favorable to NBC than that of any service level agreement provided to any other customer of 24/7;


H. provide NBC with prompt notice, via e-mail posting, of all new Co-op Advertising and Advertising that has been sold by 24/7 to be displayed on the Web Sites, and honor any decision by NBC or the station management of the applicable O/O TV Station or NBC Affiliate, as the case may be, to decline any Co-op Advertising or Advertising, in accordance with the Provisions in 3(B) below;


I. provide NBC with real-time access to records that will allow it to monitor the volume of paid Co-op Advertising and Advertising delivered to the Web Sites and the


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revenue produced (subject to billing corrections and adjustments) thereby; all such records, including data, statistical information or other traffic analysis, produced or provided by 24/7 (the "Data") shall be the joint property of 24/7 and NBC; provided, however, that 24/7 shall not, and shall ensure that any third party ad serving company engaged by 24/7 contractually agrees not to, sell or otherwise distribute the Data to any third parties without the prior written consent of NBC, which may be withheld by NBC in its sole discretion;


J. to assist NBC in the acquisition of syndicated content acquisitions for the Web Sites; provided, that NBC shall have no obligation to accept any such acquisition sourced by 24/7;


K. conduct quarterly sales seminars and reviews during the Term in rotating locations as mutually agreed by 24/7 and NBC-IN, with the content and format of such seminars to be developed by 24/7 in cooperation with the Steering Committee (as defined below) with the intent of communicating the sales experiences and successes of the Manned Market Salespeople to the sales staffs of the non-Manned Market stations; provided, that the quality of such seminars shall be at a level reasonably acceptable to NBC-IN; and provided, further, that 24/7 and NBC shall be jointly responsible for all costs and expenses associated therewith (such costs to be subject to mutual prior approval) other than travel, lodging and meals of the attendees of such seminars, which shall be at the sole expense of the applicable O/O TV Station or NBC Affiliate, as the case may be; and


L. provide sales and marketing products, including brochures, marketing materials and case studies, to the sales staffs of the non-Manned Markets, which are of a quality reasonably acceptable to NBC-IN; provided, that NBC shall reimburse 24/7 for the actual and reasonable out of pocket costs and expenses of such products and that all such costs and expenses shall be subject to NBC's prior approval.


3. Obligations of NBC.


NBC covenants and agrees to:


A. consult with 24/7 regarding the hiring and daily management of the Manned Market Salespeople, and provide such sales personnel suitable office space at the applicable O/O TV Station, and to make available to such sales personnel the reasonable use of all existing office facilities (general support staff, telephone system fax machines, photocopiers, rest rooms, kitchen facilities) on the same basis that such facilities are made available to employees of NBC or the TV Stations; no indirect or communal expense shall be allocated to 24/7 for the provisions in this paragraph, other than for expenses incurred directly by the 24/7 employee (i.e. long distance telephone, travel and entertainment, personal computer and personal office supplies);


B. provide 24/7 with NBC Network policies, as amended from time to time, regarding the acceptance of advertising and notify 24/7 within two business days from the time notice of any new Co-op Advertising or Advertising is given in accordance with Section 2.F of NBCs rejection of any new Co-op Advertising or Advertising. Failure to provide timely notice



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