Advertising Agreement - CDnow and GeoCities


                             ADVERTISING AGREEMENT
                                        

     This Advertising Agreement ("AGREEMENT"), dated as of January 5, 1998 is
made by and between CDnow, a Pennsylvania corporation, and GeoCities, a
California corporation ("GEOCITIES"). CDnow and GeoCities sometimes are referred
to collectively as the "PARTIES" and individually as a "PARTY."

     In consideration of the mutual promises contained in this Agreement and
intending to be legally bound, CDnow and GeoCities hereby agree as follows:

SECTION 1.  DEFINITIONS.

     The following terms (and all declensions thereof) are used in this
Agreement with the respective meanings set forth below:

     1.1  "ABOVE-THE-FOLD" means situated within the portion of a page that is
designed to be visible on a standard computer screen with a resolution of 640
pixels by 480 pixels without requiring the user to scroll horizontally or
vertically through the page.

     1.2  "Affiliate" means, with respect to either Party, any individual or
entity that, by virtue of a majority ownership interest, directly controls, is
controlled by or is under common control with that Party.

     1.3  "BEYOND THE BANNER" means, any type of promotion which involves
promotional techniques other than the placement of standard advertising banners
or standard advertising buttons.

     1.4  "CDNOW ICONS" is defined in Section 2.1 of this Agreement.

     1.5  "CDNOW SITE" means, collectively, all points of presence and/or
services maintained by CDnow or its Affiliates on the Internet or on any other
public data network.

     1.6  "COMMENCEMENT DATE" means the date GeoCities first provides CDnow with
all links, advertisements and other promotional placements required under Stage
I described in the attached Exhibit B to this Agreement.

     1.7  "COMPETITOR" means (a) any of the Entities listed on Exhibit C, (b)
any Entity that either derives more than [***] of its annual gross revenues from
the retail sale of Music or Video Products, or is primarily known as [***] or
(c) any Entity with more than U.S. [***] in annual revenues from the sale of
Music or Video Products, though such entities shall only be construed to be a
Competitor in the event that the advertising or promotion to be placed by such
entity on the GeoCities Site is related to the category of Music or Video
Products. For purposes of this Section 1.7, any commercial homepage
participating in GeoCities' GeoShops Program

[***] Confidential treatment requested for redacted portion.

 
and any Entity who exclusively manufactures or distributes, or any Entity that
manufactures or distributes exclusively on behalf of a manufacturer or
distributor of Music or Video Products and also engages in direct selling of
Music or Video Products shall not be construed to be a Competitor. Any Entity
that sells exclusively used media which contain Music or Video Products shall
not be considered a Competitor hereunder.

     1.8  "CONFIDENTIAL INFORMATION" is defined in Section 13.2 of this
Agreement.

     1.9  "COSMIC CREDIT PROGRAM" means a syndicated selling program of CDnow
that sells Music or Video Products.

     1.10 "ENTITY" means any individual, partnership, corporation, or division,
subsidiary or business unit thereof, retail site, World Wide Web site or other
entity

     1.11 "EXCLUSIVE AREAS" means the GeoCities neighborhood homepages and the
GeoCities neighborhood topic pages and any materially similar pages or any pages
that supersede or replace these pages.

     1.12 "GEOCITIES BASIC COMMERCE PLATFORM" means the collection of links,
advertisements and promotional placements (as specified in Exhibit A to this
Agreement) associated with the GeoCities' neighborhood home pages and
neighborhood topic pages.

     1.13 "GEOCITIES GEOSHOPS PROGRAM" means the marketing program operated by
GeoCities which offers its homesteaders the opportunity to create a commercially
oriented homepage within the GeoCities Site. Participants in the GeoCities
GeoShops Program must confirm that their annual revenues are Two Hundred Fifty
Thousand Dollars ($250,000.00) or less upon application to the program..

     1.14 "GEOCITIES SITE" means, collectively, and subject to the limitations
set forth in the following sentences of this Section 1.13, all points of
presence and/or services maintained by GeoCities on the Internet as
www.geocities.com or on any other public data network; provided, however, that
"GeoCities Site" does not include any Homesteader Page or GeoShop Page with
revenues annually of Two Hundred Fifty Thousand Dollars ($250,000) or less. To
the extent that GeoCities enters into agreements with third parties relating to
the joint development and/or hosting of co-branded or outsourced personal home
page communities, such co-branded and outsourced communities shall not
constitute part of the GeoCities Site, unless GeoCities determines, in its
reasonable business judgment, that the inclusion of any such co-branded or
outsourced communities does not in any way conflict with or violate any such
agreement with a third party, or any agreements or other arrangements that such
third party may have with any other party, and provided such co-branding or
outsourced communities do not reduce the prominence of the GeoCities Site. If
GeoCities makes such a determination, it shall notify CDnow of such
determination, and the co-branded or outsourced community in question shall
thereupon become part of the "GeoCities Site."

     1.15 "GEOSHOP PAGE" means any homepage created by a participant in
GeoCities GeoShops program.

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     1.16  "HOMESTEADER PAGE" means any personal homepage, or commercial
homepage participating in GeoCities' GeoShop program (other than a GeoCities
Affiliate) which resides in a "member neighborhood" on the GeoCities Site.

     1.17  "IMPRESSIONS" is defined in Section 8.5 of this Agreement.

     1.18  "INTELLECTUAL PROPERTY RIGHTS" is defined in Section 10.1 of this
Agreement.

     1.19  "KEY COMMERCE PARTNERS" means up to any four (4) primary commerce
partners of the GeoCities Site.

     1.20  "MAKE GOOD AMOUNT" is defined in Section 8.6 of this Agreement.

     1.21  "MARKS" means a Party's trademarks, tradenames, service marks,
symbols, logos, brand names and other proprietary indicia of a Party under
common law, state law, federal law and laws of foreign countries.

     1.22  "MUSIC OR VIDEO PRODUCTS" means all forms and formats of pre-recorded
consumer audio and video products available for retail sale directly to
consumers, excluding used media which contain Music or Video Products.

     1.23  "QUALIFYING REVENUES" means, with respect to any monthly period, the
aggregate gross revenues resulting from Sessions less: (a) any shipping and
handling charges associated with the sale, (b) any sales taxes associated with
the sale, (c) any rebates associated with the sale and (d) any Qualifying
Revenues which are attributable to returned products and which have previously
been included in Qualifying Revenues.

     1.24  "RETURN ICON" is defined in Section 2.2 of this Agreement.

     1.25  "SESSION" means each instance in which a user accesses the CDnow Site
via a hypertext link embedded in any link, advertisement or other promotional
placement provided by GeoCities under this Agreement, and then views one or more
consecutive CDnow Site pages. A Session terminates when the user exits the CDnow
Site by any means.

     1.26  "URL" means Uniform Resource Locator.

     1.27  "VIEWER" means any user of the GeoCities Site who executes a link and
is connected to the CDnow Site.

SECTION 2. LINKAGE

     2.1   (A)  The CDnow graphic or other visual cues depicted on the attached
Exhibit A and associated with one or more URLs, which may include CDnow's Marks
and/or other indicia of origin (the "CDnow Icons") shall be included among the
GeoCities Basic Commerce Platform hyperlink icons during the Term.  When clicked
upon by a Viewer, the 

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CDnow Icon will directly link the Viewer with the CDnow Site. GeoCities shall
implement the link between the CDnow Icon and the CDnow Site.


           (B)  CDnow shall furnish GeoCities with full color representations of
the CDnow Icons at least ten (10) business days prior to the Commencement Date
for GeoCities' use under this Agreement. If CDnow subsequently modifies one or
more of the CDnow Icons or the URLs associated with the CDnow Icons, it shall
furnish a representation of same to GeoCities which GeoCities shall substitute
for the prior version within twenty (20) business days after receipt.

           (C)  During the initial term of this Agreement, GeoCities agrees that
CDnow is one of the Key Commerce Partners for the GeoCities Basic Commerce
Platform that will occupy premier positions on such platform, and CDnow will be
displayed and promoted in a manner no less commensurate with the display and
promotion of the other Key Commerce Partners on the GeoCities Basic Commerce
Platform.

           (D)  GeoCities further agrees that it will display the CDnow Icons in
a manner no less commensurate with its display of other vendor hyperlink icons
within the GeoCities Basic Commerce Platform.

     2.2   The GeoCities graphic or other visual cue depicted on the attached
Exhibit A and associated with a single URL, which may include GeoCities' Marks
and/or other indicia of origin (the "Return Icon") shall be displayed by CDnow
on each page of the CDnow Site viewed by a Viewer during the Term (starting when
CDnow provides this capability) in the position within the page layout as shown
on Exhibit A. When clicked upon by a Viewer, the Return Icon will directly link
the Viewer with a specific URL in the GeoCities Basic Commerce Platform. CDnow
shall create the link on the CDnow Site between the Return Icon and the
GeoCities Basic Commerce Platform. GeoCities shall furnish CDnow with full color
representations of the Return Icon at least ten (10) business days prior to the
Commencement Date for CDnow's use under this Agreement. If GeoCities
subsequently modifies the Return Icon, it shall furnish a representation of same
to CDnow which CDnow shall substitute for the prior version within twenty (20)
business days after receipt. The Return Icon shall be visible at the CDnow Site
only to Viewers who link to the CDnow Site via the GeoCities Basic Commerce
Platform and to no other visitors at the CDnow Site.

     2.3   CDnow shall ensure that the version of the CDnow Site viewed by
Viewers who link to the CDnow Site through the GeoCities Basic Commerce Platform
shall be substantially similar to the CDnow Site viewed by non-Viewers except
for CDnow co-branded sites with third parties, the Return Icon and as elsewhere
provided for in this Agreement.

SECTION 3. PROMOTIONAL PLACEMENTS

     The promotional placements are specified in Exhibit B to this Agreement.

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SECTION 4. PARTICIPATION IN STRATEGIC PROGRAMS

     The terms of participation in strategic programs are specified in Exhibit B
to this Agreement.

SECTION 5. COMPENSATION

     5.1   As full consideration for GeoCities' performance under this Agreement
(including, without limitation, GeoCities' provision of all links,
advertisements and promotions specified in Sections 2, 3 and 4), CDnow will pay
GeoCities the fixed placement fees and variable incentive payments specified in
this Section 5.

     5.2   During the initial term of this Agreement (as specified in Section
11.1 below), CDnow will pay GeoCities a fixed placement fee of [***] Dollars
($[***]) on the Commencement Date and [***] of the Commencement Date.

     5.3   For each [***] that occurs subsequent to the Commencement Date during
the term of this Agreement (including any renewal term), CDnow will pay
GeoCities the applicable percentage(s) of Qualifying Revenues set forth opposite
from the range of Qualifying Revenues occurring in the first column of the table
below.


               CUMULATIVE REVENUES               REVENUE          SHARE
                     [***]                      PERCENTAGE
 
           $  [***]                               [***]%
 
 
     5.4   For each Homesteader Page that (a) participates in the Cosmic Credit
Program during the term of this Agreement and (b) within the [***] following the
Homesteader Page's entering the Cosmic Credit Program, is responsible for at
least $[***] in Qualifying Gross Revenue to CDnow as a result of its
participation in the Cosmic Credit Program, CDnow will pay GeoCities a one-time
bounty of $[***]. This provision will survive the expiration or termination of
this Agreement with respect to those Homesteader Pages that join the Cosmic
Credit Program within twelve (12) months prior to such expiration or
termination.

     5.5   With the exception of the fixed placement fee set forth in Section
5.2, CDnow will make payments under this Section 5 on a [***] basis, in arrears.
Specifically, within thirty (30) days following the end of each [***] occurring
subsequent to the Commencement Date, CDnow will pay GeoCities an amount equal to
the revenue share that accrued during such [***] pursuant to Section 5.3 and any
bounties payable pursuant to Section 5.4.

[***] Confidential treatment requested for redacted portion.

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     5.6   CDnow will deliver, together with each payment made pursuant to
Section 5.5, a written report signed by an authorized representative of CDnow
that describes (in reasonable detail) CDnow's calculation of the payment amount.

     5.7   (A)  GeoCities shall have the right, no more frequently than once
during the initial term and each renewal term, at its expense, upon thirty (30)
days advance written notice to CDnow and during CDnow's normal business hours,
to have an independent certified public accountant inspect and audit the books
and records of CDnow directly associated with CDnow's obligations to make
payments under this Agreement, for the purpose of verifying any payments due to
GeoCities under this Agreement. Any information obtained as a result of such
audit shall be the Confidential Information of CDnow, and GeoCities may use such
information only for the purpose of and only in such way as necessary for
collecting any amounts due it under this Agreement. In the event any shortfall
in payment to GeoCities is found which exceeds ten percent (10%) of the total
due GeoCities for the reporting period audited, then CDnow shall promptly pay
GeoCities the shortfall amount and reimburse GeoCities for all reasonable costs
of the audit.

           (B)  CDnow shall have the right, no more frequently than once during
the initial term and each renewal term, at its expense, upon thirty (30) days
advance written notice to GeoCities and during GeoCities' normal business hours,
to have an independent certified public accountant inspect and audit the books
and records of GeoCities directly associated with GeoCities' obligations under
this Agreement, for the purpose of verifying GeoCities' satisfaction of such
obligations. Any information obtained as a result of such audit shall be the
Confidential Information of GeoCities, and CDnow may use such information only
for the purpose of and only in such way as necessary for CDnow to enforce its
rights under this Agreement. In the event GeoCities' fails to meet any
obligations by more than ten percent (10%) of the total requirement of such
obligations as set forth in this Agreement, then Geo Cities shall promptly pay
CDnow all reasonable costs of the audit.

SECTION 6. IMPLEMENTATION

     6.1   GeoCities and CDnow acknowledge that time is of the essence in the
design, development and commencement of the links, advertisements and
promotional placements specified in this Agreement. Accordingly, the Parties
will devote all commercially reasonable efforts to launch each link,
advertisement and promotional placement as soon as reasonably possible, in
accordance with a written development plan to be negotiated by the Parties in
good faith.

     6.2   GeoCities, in cooperation with CDnow, will test the links,
advertisements and promotional placements required under this Agreement prior to
the time that they "go live" on the GeoCities Site (e.g., prior to the time that
they are implemented and enabled on a production version of the GeoCities Site)
and will continue to test such links, advertisements and promotional placements
as is reasonable and necessary during the term of this Agreement to ensure that
they function properly and as specified under this Agreement. The Parties will
mutually agree when the program of links, advertisements and promotional
placements will go live on the GeoCities Site.

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     6.3   GeoCities will not cause any link, advertisement or promotional
placement under this Agreement to go live on the GeoCities Site prior to the
applicable date agreed by the Parties. Further, at CDnow's discretion, traffic
from promotional links and advertising placements will be enabled in stages;
provided, however, that such staging will not delay the Commencement Date.

SECTION 7. TRAFFIC DATA

     7.1   On a monthly basis, GeoCities will provide CDnow with a report in a
form and via a distribution method mutually agreeable to the Parties concerning
search and browsing behavior on the GeoCities Site, to the extent such behavior
reasonably could relate to the online promotion or sale of Music or Video
Products, or other products that CDnow may sell from time to time. CDnow will
hold such data in confidence and will use it only in accordance with reasonable
guidelines to be mutually agreed upon by the Parties. Notwithstanding anything
to the contrary contained in this Section 7.1, GeoCities will not be required to
deliver to CDnow any user data in violation of its then-existing policies
regarding the protection of user information.

     7.2   CDnow will provide GeoCities with a report at least once per month of
orders for CDnow's products submitted by GeoCities' users in a form and via a
distribution method mutually agreeable to the Parties. Such report is to be used
by GeoCities to actively track performance of various promotional tools that it
has in service. GeoCities will hold such data in confidence and will use it only
in accordance with reasonable guidelines to be agreed by the Parties.
Notwithstanding anything to the contrary contained in this Section, CDnow will
not be required to deliver to GeoCities any data in violation of its then-
existing privacy policies or policies regarding the protection of actual sales
information.

     7.3   GeoCities will provide CDnow with a weekly report of Impressions
delivered to users of the GeoCities Site during the immediately preceding week
in a form and via a distribution method media mutually agreeable to the Parties.
Such report is to be used for CDnow to actively track whether GeoCities is
fulfilling its obligations under this Agreement.

SECTION 8. EXCLUSIVITY AND MEDIA GUARANTEE

     8.1   [***]

     8.2   GeoCities shall be allowed to sell limited quantities of Music or
Video Products through its GeoStore, though the GeoStore shall not offer more
than [***] separate Music or Video Products at any point in time and such Music
or Video Products shall not be sold through a Competitor. Participants in the
GeoCities GeoShops Program shall be allowed to sell products in the category of
Music or Video Products on the GeoCities Site.

     8.3   To preserve the benefits provided to CDnow under this Agreement in
the event that GeoCities enters into any merger, acquisition, transfer of
control, sale of substantial assets or similar transaction with any Competitor,
CDnow shall have the right to terminate this Agreement upon thirty (30) days'
written notice.


[***] Confidential treatment requested for redacted portion.

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     8.4   GeoCities represents and warrants that (a) it will continue to expend
at least the same amount of resources (e.g., budget, staff) as it is currently
committing as of the time of execution of this Agreement for both the pages in
which the Impressions appear, the GeoCities Site and the GeoCities Basic
Commerce Platform generally; and (b) it will not develop or promote any space on
and/or linked from the GeoCities Site which functions in a substantially similar
manner to or provides the user with a substantially similar experience as the
GeoCities Basic Commerce Platform and which provides a substantially similar
level of integration throughout the GeoCities Site as the GeoCities Basic
Commerce Platform and which would contain any Competitor's advertising or
promotions for the category of Music or Video Products. If Geo Cities fails or
determines not to meet the representations and warranties set forth in this
Section 8.4, then CDnow shall have the right to terminate this Agreement upon
thirty (30) days' written notice.

     8.5   As a result of the deployment of the CDnow Icons on the GeoCities
Site, GeoCities will deliver a guaranteed minimum number of Impressions of at
least [***]. For purposes of this Agreement, "IMPRESSIONS" means a user's
viewing of the CDnow ICON on a page on the GeoCities Site.

     8.6   If GeoCities fails to deliver the required minimum number of
Impressions in any given month during the initial term or the then current
renewal term, then GeoCities shall, within ten (10) days of the month following
the month in which GeoCities failed to deliver such minimum, make good the
shortfall from the prior month by using its best efforts to deliver additional
Impressions equal to the number of the prior month's shortfall (the "MAKE GOOD
AMOUNT") by providing CDnow with additional advertising and promotional
opportunities at [***] to CDnow, with such additional advertising and
promotional opportunities to be promptly, mutually agreed upon in good faith by
the Parties.

SECTION 9. INDEMNIFICATION

     9.1   CDnow will defend and indemnify GeoCities and its Affiliates (and
their respective employees, directors and representatives) against any claim or
action brought by a third party, to the extent relating to (a) the operation of
the CDnow Site, or (b) the violation of third-party intellectual property rights
by any editorial content or other materials provided by CDnow for display on the
GeoCities Site. Subject to GeoCities' compliance with the procedures described
in Section 9.3, CDnow will pay any award against GeoCities or its Affiliates (or
their respective employees, directors or representatives) and any costs and
attorneys' fees reasonably incurred by GeoCities and its Affiliates resulting
from any such claim or action.

     9.2   GeoCities will defend and indemnify CDnow and its Affiliates (and
their respective employees, directors and representatives) against any claim or
action brought by a third party, to the extent relating to (a) the operation of
the GeoCities Site, or (b) the violation of any third-party intellectual
property rights by any editorial content or other materials provided by
GeoCities for display on the CDnow Site. Subject to CDnow's compliance with the
procedures described in Section 9.3, GeoCities will pay any award against CDnow
or its Affiliates (or their respective employees, directors or representatives)
and any costs and attorneys' fees reasonably incurred by CDnow and its
Affiliates resulting from any such claim or action.


[***] Confidential treatment requested for redacted portion.

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     9.3    In connection with any claim or action described in this Section,
the Party seeking indemnification (a) will give the indemnifying Party prompt
written notice of the claim, (b) will cooperate with the indemnifying Party (at
the indemnifying Party's expense) in connection with the defense and settlement
of the claim, and (c) will permit the indemnifying Party to control the defense
and settlement of the claim, provided that the indemnifying Party may not settle
the claim without the indemnified Party's prior written consent (which will not
be unreasonably withheld). Further, the indemnified Party (at its cost) may
participate in the defense and settlement of the claim.

SECTION 10. INTELLECTUAL PROPERTY RIGHTS

     10.1   Subject to the limited license granted to GeoCities under Section
10.2, CDnow reserves all of its ownership rights, title and interest in its
Intellectual Property Rights. Subject to the limited license granted to CDnow
under Section 10.3, GeoCities reserves all of its ownership rights, title and
interest in its Intellectual Property Rights. Neither Party grants any license
to any of the Party's Intellectual Property Rights to the other Party except as
specifically set forth in this Section 10. For purposes of this Agreement,
"Intellectual Property Rights" means all forms of intellectual property rights
and protections) including, without limitation, all right, title and interest in
and to all: (a) letters patent and all filed, pending or potential applications
for letters patent, including any reissue, reexamination, division, continuation
or continuation-in-part applications throughout the world now or hereafter filed
or issued; (b) trade secrets, and all trade secret rights and equivalent rights
arising under the common law, state law, federal law and laws of foreign
countries; (c) mask works, copyrights, other literary property or authors'
rights, whether or not protected by copyright or as a mask work, under common
law, state law, federal law and laws of foreign countries; and (d) Marks.

     10.2   CDnow hereby grants to GeoCities, during the term of this Agreement,
a non-exclusive, non-transferable license to use CDnow's Marks as reasonably
necessary to perform its obligations under this Agreement; provided, however,
that any promotional materials containing CDnow's Marks will be subject to
CDnow's prior written approval.

     10.3   GeoCities hereby grants to CDnow, during the term of this Agreement,
a non-exclusive, non-transferable license to use GeoCities' Marks as reasonably
necessary to perform its obligations under this Agreement; provided, however,
that any promotional materials containing GeoCities' Marks will be subject to
GeoCities' prior written approval.

     10.4   Neither GeoCities nor CDnow will use the other Party's Marks in a
manner that disparages the other Party, its Marks or its products or services,
or portrays the other Party, its Marks or its products or services in a false,
competitively adverse or poor light. Each of GeoCities and CDnow will comply
with the other Party's requests as to the use of the other Party's Marks and
will avoid any action that diminishes the value of such Marks. Either Party's
unauthorized use of the other's Marks is strictly prohibited. Each Party's use
of the other Party's Marks and any and all goodwill associated therewith or that
may accrue as a result of such use will inure solely to the benefit of the other
Party (the owning Party).

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SECTION 11. TERM AND TERMINATION

     11.1   The initial term of this Agreement will begin on the date of this
Agreement and will end [***] following the Commencement Date.

     11.2   (A)  CDnow will have the option to renew the term of this Agreement
for a single [***] renewal term beginning on the expiration of the initial term
by giving GeoCities written notice (indicating CDnow's exercise of its option to
renew the term of this Agreement) at least thirty (30) days prior to the
expiration of the initial term.

            (B)  During such renewal term, all terms and conditions of this
Agreement, except Section 11.2(a), will remain in full force and effect;
provided, however, that the fixed placement fees payable pursuant to Section 5.2
will be increased (or decreased as the case may be) in the renewal term [***].

     11.3   Either Party may terminate this Agreement if the other Party (a)
materially breaches this Agreement and does not cure the breach within thirty
(30) days following its receipt of written notice from the non-breaching Party,
or (b) ceases to carry on the portion of its business that relates to this
Agreement. In the event that CDnow terminates this Agreement pursuant to the
terms of this Section 11.3, CDnow's obligation to make any further payments not
yet accrued under this Agreement will be eliminated.

     11.4   Sections 1, 9, 10.1, 12 and 13 (together with all other provisions
that reasonably may be interpreted as surviving termination or expiration of
this Agreement) will survive the termination or expiration of this Agreement.

SECTION 12. DISCLAIMERS, LIMITATIONS AND RESERVATIONS

     12.1   EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, GEOCITIES DOES NOT
MAKE, AND HEREBY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES REGARDING THE
GEOCITIES SITE, GEOCITIES' SERVICES OR ANY PORTION THEREOF, INCLUDING (WITHOUT
LIMITATION) IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, GEOCITIES
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING (A) THE AMOUNT
OF SALES REVENUE THAT CDNOW MAY RECEIVE DURING THE TERM, AND (B) ANY ECONOMIC OR
OTHER BENEFIT THAT CDNOW MIGHT OBTAIN THROUGH ITS PARTICIPATION IN THIS
AGREEMENT.

[***] Confidential treatment requested for redacted portion.

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     12.2   EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, CDNOW DOES NOT MAKE,
AND HEREBY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES REGARDING THE CDNOW
SITE, CDNOW'S SERVICES OR ANY PORTION THEREOF, INCLUDING (WITHOUT LIMITATION)
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, CDNOW SPECIFICALLY DISCLAIMS
ANY REPRESENTATION OR WARRANTY REGARDING (A) THE AMOUNT OF SALES REVENUES THAT
MAY OCCUR DURING THE TERM, AND (B) ANY ECONOMIC OR OTHER BENEFIT THAT GEOCITIES
MIGHT OBTAIN THROUGH ITS PARTICIPATION IN THIS AGREEMENT.

     12.3   NEITHER CDNOW NOR GEOCITIES WILL BE LIABLE TO THE OTHER FOR
CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS OR LOST DATA)
ARISING OUT OF THIS AGREEMENT. EACH PARTY'S ENTIRE LIABILITY ARISING FROM THIS
AGREEMENT (EXCEPT FOR LIABILITIES ARISING UNDER SECTION 9 OR RESULTING FROM THE
PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT), WHETHER IN CONTRACT OR TORT,
WILL NOT EXCEED THE AMOUNTS TO BE PAID BY CDNOW UNDER SECTION 5.

     12.4   CDnow will remain solely responsible for the operation of the CDnow
Site, and GeoCities will remain solely responsible for the operation of the
GeoCities Site. Each Party: acknowledges that the CDnow Site and the GeoCities
Site may be subject to temporary shutdowns due to causes beyond the operating
Party's reasonable control; and (b) subject to the specific terms of this
Agreement, retains sole right and control over the programming, content and
conduct of transactions over its respective site.

SECTION 13. MISCELLANEOUS

     13.1   The Parties are entering this Agreement as independent contractors,
and this Agreement will not be construed to create a partnership, joint venture,
franchise or employment relationship between them. Neither Party will represent
itself to be an employee or agent of the other or enter into any agreement on
the other's behalf or in the other's name.

     13.2   Each Party agrees that the Confidential Information of the other
Party will be held in confidence to the same extent and the same manner as each
Party protects its own Confidential Information, but each Party agrees that in
no event will less than reasonable care be used. Each Party shall, however, be
permitted to disclose relevant aspects of such Confidential Information to its
officers, employees and consultants on a need-to-know basis for the purpose of
such Party's performance of its obligations under this Agreement, provided such
persons agree to protect the other party's Confidential Information to the same
extent as required under this Agreement. Each Party agrees to use all reasonable
steps to ensure that the other Party's Confidential Information received under
this Agreement is not disclosed in violation of this paragraph. For purposes of
this Agreement, "CONFIDENTIAL INFORMATION" means the terms of this Agreement,
except as otherwise specifically provided in this Agreement; each Party's trade
secrets, financial information, processes, formulas, specifications, programs,
instructions, source code, technical know-how, methods and procedures for
operation, benchmark test results, information about employees, customers,
marketing strategies, services, business or technical plans and proposals,

                                       11

 
in any form; and any other information relating to either Party that is not
generally known to the public at large.

     GeoCities agrees that it shall not be deemed a breach of this Agreement for
CDnow to disclose the terms and conditions of this Agreement in any regulatory
filing with the Securities & Exchange Commission, which CDnow in good faith
determines is required, provided CDnow seeks confidential treatment of the
material financial terms and conditions of this Agreement.

     Confidential Information shall not include information that (a) is or
becomes generally known or available to the public at large through no negligent
act or omission of either Party; (b) can be demonstrated to have been available
lawfully to either Party prior to the disclosure or had thereafter been
furnished to either Party without restrictions to disclosure or use; or (c) can
be demonstrated to be independently developed by the recipient of Confidential
Information without use of such Confidential Information and such independent
development is proven on the basis of either Party's records related to such
development.

     13.3  Following the execution of this Agreement, CDnow and GeoCities will
prepare and distribute a joint press release (or coordinated press releases)
announcing the transaction.  The contents and timing of the release (or
releases) shall be as mutually agreed by the Parties. Neither Party will issue
any further press releases or make any other disclosures regarding this
Agreement or its terms without the other Party's prior written consent or except
as may be required by law in the opinion of the Party's counsel.

     13.4  In its performance of this Agreement, each Party will comply with all
applicable laws, regulations, orders and other requirements, now or hereafter in
effect, of governmental authorities having jurisdiction.  Without limiting the
generality of the foregoing, each Party will pay, collect and remit such taxes
as may be imposed upon it with respect to any compensation, royalties or
transactions under this Agreement.  Except as expressly provided herein, each
Party will be responsible for all costs and expenses incurred by it in
connection with the negotiation, execution and performance of this Agreement.

     13.5  Neither CDnow nor GeoCities will be liable for, or will be considered
to be in breach of or default under this Agreement on account of, any delay or
failure to perform as required by this Agreement as a result of any causes or
conditions that are beyond such Party's reasonable control and that such Party
is unable to overcome through the exercise of commercially reasonable diligence.
If any force majeure event occurs, the affected party will give prompt written
notice to the other Party and will use commercially reasonable efforts to
minimize the impact of the event.

     13.6  Notices deliverable under this Agreement shall be given in writing,
addressed to the Parties set forth below and shall be deemed to have been given
either one (1) day after being given to an express overnight carrier with a
reliable system for tracking delivery; or when sent by a confirmed facsimile
with another copy sent by any other means specified in this paragraph; or three
(3) business days after having been mailed postage prepaid by United States
registered or certified mail, return receipt requested:

                                       12

 
For notices to CDnow:                        For notices to GeoCities:
 
Name: Rod Parker                             James A. Rea

Title: Senior Vice President, Marketing      Vice President Business Development
 
Address:  Jenkins Court, Suite 310           1918 Main Street, 3rd Floor
          610 Old York Road
 
City:  Jenkintown PA 19046                   Santa Monica, CA 90405-1030
 
Facsimile: (215) 517-4499                    Facsimile: (310) 664-6520

with a copy to the CDnow General Counsel

     13.7  If any litigation is commenced to enforce any provision of this
Agreement or to seek a declaration of rights of the Parties hereunder or as a
result of any breach of any provision of this Agreement, the prevailing Party
will be entitled to recover from the non-prevailing Party all of its costs and
expenses incurred in connection with such litigation, including without
limitation reasonable attorneys' fees.

     13.8  Neither CDnow nor GeoCities may assign this Agreement, in whole or in
part, without the other Party's prior written consent (which will not be
withheld unreasonably), except to (a) any corporation resulting from any merger,
consolidation or other reorganization involving the assigning Party, (b) any of
its Affiliates, or (c) any individual or entity to which the assigning Party may
transfer substantially all of its assets; provided that the assignee agrees in
writing to be bound by all the terms and conditions of this Agreement.  Subject
to the foregoing, this Agreement will be binding on and enforceable by the
Parties and their respective successors and permitted assigns.

     13.9  If any provision of this Agreement is declared null, void or
otherwise unenforceable, such provision will be deemed to have been severed from
this Agreement to the minimal extent if necessary, which Agreement will
otherwise be and remain in full force and effect to its remaining provisions.

     13.10 This Agreement (a) represents the entire agreement between the
Parties with respect to the subject matter hereof and supersedes any previous or
contemporaneous oral or written agreements regarding such subject matter and (b)
may be amended or modified only by a written instrument signed by a duly
authorized agent of each Party. If any provision of this Agreement is held to be
invalid, such invalidity will not effect the remaining provisions.

     13.11 This Agreement may be executed in any number of counterparts, each of
which shall be an original and all of which shall constitute together one and
the same document.

                                       13

 
     IN WITNESS WHEREOF, the Parties have executed this Agreement on the date
first written above by their duly authorized representatives.


                                     CDnow                                     
                                     
                                     By: /s/ Jason Olim                        
                                         ---------------------------------------
                                          Jason Olim                          
                                     Its:  President and Chief Executive Officer
                                     
                                     Jenkins Court, Suite 310                  
                                     610 Old York Road                         
                                     Jenkintown, PA 19046                      
                                     Facsimile: (215) 517-4399                 
                                     Attention: Jason Olim                     
                                     
                                     
                                     GEOCITIES                                 
                                         
                                     By: /s/ James A. Rea                      
                                         ---------------------------------------
                                          James A. Rea                         
                                     
                                     Its:  Vice President Business Development 
                                     
                                     1918 Main Street, 3rd Floor               
                                     Santa Monica, California 90405            
                                     Facsimile: (310) 664-6520                 
                                     Attention:  James A. Rea                   

                                       14

 
EXHIBIT A

CDnow ICON

Home page image:

A Graphic depicting a CDnow logo plus tag line (World's Largest Music Store) to
be no less than [***]. CDnow's presence shall be no less than the presentation
of any other key commerce partner.

     Example of a CDnow Logo:



Neighborhood Home Page

A Graphic with CDnow Icon (promotional message Product shot or other CDnow
graphical element) with a text message above the graphic promoting CDnow and two
individually hyperlinked text messages below the graphic that can be linked to
unique CDnow pages. CDnow's presence shall be no less than the presentation of
any other key commerce partner.

Image  to be no less than [***] or [***]

For example:



  [Picture of Logos]




[***] Confidential treatment requested for redacted portion.

                                       15

 
Topic Pages:

CDnow branded text message plus CDnow logo with at least two hyperlinked text
messages that can be linked to unique CDnow pages. CDnow's presence shall be no
less than the presentation of any other key commerce partner.

For Example:



RETURN ICON SPECIFlCATIONS


Size

Total Carry-through Bar Size: [***] as of April 1, 1997 all Carry-through Bar
sizes must be [***] to comply with the Internet Advertising Bureau's (IAB)
banner standards.

Live area for Partner Logo:  [***]


 

Timing

CDnow requires a minimum of five business days from when we receive the Carry-
through bar to implement it on our site.



Carry-through Bar Samples



[***] Confidential treatment requested for redacted portion.

                                       16

 
Color

Bar is black at all times.
Only partner logos/icons can be as many colors as desired with a black
background
"Return to..." copy is mandatory and must be set up as white Helvetica Neue
Black 10pt type, centered and 5 pixels in from the left-hand side of the first
black bar

We recommend all copy to be white

To pick up a template go to http://cdnow.com/cobrand template

Format

Must be saved in a GIF file format

Placement

Carry-through bar is placed on the top and bottom of each CDnow page.  Only
those people who visit CDnow from your site will see the Carry-through bar

URL/Address

Partners have the option of 1 to 3 links on their Carry-through bar  The URLs
will be provided by the partner

If more than one link is desired, the bar must consist of multiple gif images
that reference previous Carry-through bar specifications.  When using multiple
gif images keep two pixels between each bar.  No image maps are permitted.
Please see the following page for more examples of possible banner solutions.



Source Code

CDnow will provide the partner with a from equals(from=) tag.  This tag allows
us to identify customers coming from the Partners site to CDnow.

                                       17

 
                                   EXHIBIT B
          Promotion Placements and Participation in Strategic Programs

Staged Deployment of CDNOW Promotion on GeoCities

STATE I

Target Start Date top bed Implemented as Soon as Possible After Signing
Agreement:

1)  Main GeoCities Home Page;

2)  Each GeoCities Neighborhood Homepage (currently 39 and growing);

3)  Each Neighborhood Topic Page (currently between 500 and 600);

4)  Experimentation with Popups and/or Interstitials;

5)  Announcement of Relationship in World Report (using a reasonable
announcement that is editorially appropriate);

6)  Experimentation with Inclusion in New Member Welcome Package (Welcome
Wagon); and

7)  Banners.

STAGE II

GeoCities will make best efforts to implement within two months of the
Commencement Date.

1)  Offer Cosmic Credit Program for Homesteaders;

2)  Incentive Program for Homesteaders to Host CDnow Sponsored Chat on their
Homepages;

3)  Experimentation with Targeted Product Offerings within GeoCities Chat
Sessions; and

4)  Senior Positioning in GeoCities Marketplace.

STAGE III

GeoCities to make best efforts to implement within three months of the
Commencement Date.  Experimentation with various concepts and deploying those
which appear to provide successful results including:

1)  Product Offers on Search Result Pages;

                                       18

 
2)  Product Offers on Interest Pages;

3)  Product offers within Instant Messaging; and

4)  Greeting Card/Gift Certificate Offers.

                                       19

 
                                   EXHIBIT C

                  Competitors in Music and/or Video Categories

Pursuant to Section 1.7(a) of the Agreement, Competitor includes (i) [***] and
any other online music retail sites sponsored or promoted by [***]; (ii) [***],
including, without limitation, [***]; (iii) any online music store sponsored or
promoted buy a record label; (iv) [***]; and (v) any online music store
sponsored or promoted by [***], [***] or [***].


[***] Confidential treatment requested for redacted portion.

                                       20