INTERACTIVE MKTG AGREEMENT

Exhibit 10.6



CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.



EXECUTION COPY



INTERACTIVE MARKETING AGREEMENT



This Interactive Marketing Agreement (the "Agreement"), dated as of January 1, 1998 (the "Effective Date"), is between America Online, Inc. ("AOL"), a Delaware corporation, with offices at 22000 AOL Way, Dulles, Virginia 20166, and 800-Flowers, Inc. ("1-800-Flowers"), a New York corporation, with its principal offices at 1600 Stewart Avenue, Westbury, New York 11590. AOL and 1-800-Flowers may be referred to individually as a "Party" and collectively as "Parties."





AOL and 1-800-Flowers are parties to the Interactive Marketing Agreement, dated May 1, 1997 (the "Existing Agreement"), whereby AOL promotes and distributes an interactive site referred to in the Existing Agreement as the Online Area. AOL and 1-800-Flowers each desires to enter into a separate interactive marketing relationship whereby AOL will promote and distribute an interactive site referred to (and further defined) herein as the Affiliated 1-800-Flowers Site. This relationship is further described below and is subject to the terms and conditions set forth in this Agreement. Defined terms used but not defined in the body of the Agreement will be as defined on Exhibit B attached hereto.







1. PROMOTION, DISTRIBUTION AND MARKETING.





1.1. AOL PROMOTION OF AFFILIATED 1-800-FLOWERS SITE. AOL will

provide 1-800-Flowers with the promotions on AOL.com for the

Affiliated 1-800-Flowers Site which are described on Exhibit A

(the "Promotions"). AOL reserves the right to redesign or

modify the organization, structure, "look and feel,"

navigation and other elements of the AOL Network at any time.

In the event such modifications materially and adversely

affect any specific Promotion, AOL will work with

1-800-Flowers to provide 1-800-Flowers, as its sole remedy, a

comparable promotional placement (i.e., placement which is no

less valuable than the Promotion being replaced).



1.2. IMPRESSIONS. With respect to any Impressions targets specified

on Exhibit A, AOL will not be obligated to provide in excess

of any of such target amounts in any year. Any shortfall in

Impressions at the end of a year will not be deemed a breach

of the Agreement by AOL; such shortfall will be added to the

Impressions target for the subsequent year. In the event there

is a shortfall in Impressions as of the end of the Term (a

"Final Shortfall"), AOL will provide 1-800-Flowers, as its

sole remedy, with advertising placements through "run of

service" advertising on the AOL Network which have a total

value, based on an advertising rate of [****] per thousand

Impressions, equal to the value of the Final Shortfall

(determined by multiplying the percentage of Impressions that

were not delivered by the total, guaranteed payment provided

for below).



1.3. CONTENT OF PROMOTIONS. The Promotions will link only to the

Affiliated 1-800-Flowers Site and will promote only those

Products 1-800-Flowers is allowed to sell pursuant to Section

2.1. The specific 1-800-Flowers Content to be contained within

the Promotions (including, without limitation, advertising

banners and contextual promotions) (the "Promo Content") will

be determined by 1-800-Flowers, subject to AOL's technical

limitations, the terms of this Agreement and AOL's

then-applicable policies relating to advertising and

promotions. 1-800-Flowers will consistently update the Promo

Content on no less than twice per week, and the Parties will

jointly consult regarding the Promo Content to ensure that it

is designed to maximize performance. Except to the extent

expressly described herein (e.g., the placements described in

Exhibit A), the specific form, placement,





**** Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 406 of the Securities Act of 1933, as amended.





duration and nature of the Promotions will be as determined by

AOL in its reasonable editorial discretion (consistent with

the editorial composition of the applicable screens).



2. AFFILIATED FLOWERS SITE.



2.1. CONTENT. In the event that 1-800-Flowers wishes to offer any

categories or types of Content or Products in addition to

those categories or types specifically allowed pursuant to the

Existing Agreement (the "Additional Content"), 1-800-Flowers

will notify AOL in writing. 1-800-Flowers' right to offer any

such Additional Content will be subject to AOL's prior written

approval, which shall not be unreasonably withheld.. In

addition, 1-800-Flowers acknowledges and agrees that (a) its

ability to sell or promote [****] products [****] may be

limited by AOL's arrangements with third-party [****]

product retailers and (b) in the event 1-800-Flowers

desires to create an area or sub-area related to [****]

within the Affiliated 1-800-Flowers Site that is promoted

hereunder by AOL, 1-800-Flowers will not be entitled to do

so until the Parties have mutually agreed in writing upon

the terms and conditions relating to such area. All sales

of Products through the Affiliated 1-800-Flowers Site will

be conducted through a direct sales format; 1-800-Flowers

will not promote, sell, offer or otherwise distribute any

products through any format other than a direct sales format

[****] without the prior written consent of AOL. 1-800-Flowers

will review, delete, edit, create, update and otherwise manage

all Content available on or through the Affiliated

1-800-Flowers Site in accordance with the terms of this

Agreement. 1-800-Flowers will ensure that the Affiliated

1-800-Flowers Site does not in any respect promote, advertise,

market or distribute the products, services or content of any

other Interactive Service.



2.2. PRODUCTION WORK. Except as agreed to in writing by the Parties

pursuant to the "Production Work" section of the Standard

Legal Terms & Conditions attached hereto as Exhibit F,

1-800-Flowers will be responsible for all production work

associated with the Affiliated 1-800-Flowers Site, including

all related costs and expenses.



2.3. HOSTING; COMMUNICATIONS. 1-800-Flowers will be responsible for

all communications, hosting and connectivity costs and

expenses associated with the Affiliated 1-800-Flowers Site. In

addition, 1-800-Flowers will provide all computer, telephone

and other equipment or resources necessary for 1-800-Flowers

to access the AOL Network. In the event that 1-800-Flowers

elects to create a mirrored version of the Affiliated

1-800-Flowers Site in order to comply with the terms of this

Agreement, 1-800-Flowers will bear responsibility for the

implementation, management and cost of such mirrored site.

1-800-Flowers will utilize a dedicated high speed connection

to maintain quick and reliable transport of information to and

from the 1-800-Flowers data center and AOL's designated data



2.4. TECHNOLOGY. 1-800-Flowers will take all reasonable steps

necessary to conform its promotion and sale of Products

through the Affiliated 1-800-Flowers Site to the then-existing

technologies identified by AOL which are optimized for the AOL

Service. AOL will be entitled to require reasonable changes to

the Content (including, without limitation, the features or

functionality) within any linked pages of the Affiliated

1-800-Flowers Site to the extent such Content will, in AOL's

good faith judgment, adversely affect any operational aspect

of the AOL Network. AOL reserves the right to review and test

the Affiliated 1-800-Flowers Site from time to time to

determine whether the site is compatible with AOL's

then-available client and host software and the AOL Network.



2.5. PRODUCT OFFERING. Subject to Section 2.1, 1-800-Flowers will

use all commercially reasonable efforts to ensure that the

Affiliated 1-800-Flowers Site includes substantially





**** Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 406 of the Securities Act of 1933, as amended.





all of the Products including any features, offers or contests

that are then made available by or on behalf of 1-800-Flowers

through any Additional 1-800-Flowers Channel; provided,

however, that (a) such inclusion will not be required where it

is commercially or technically impractical to either Party

(i.e., inclusion would cause either Party to incur substantial

incremental costs) or where it is prohibited as of the

Effective Date by a then-existing written agreement; (b) the

specific changes in scope, nature and/or offerings required by

such inclusion will be subject to AOL's review and approval

and the terms of this Agreement; and (c) in the event a third

party promotes, markets or distributes its products or Content

through a 1-800-Flowers Additional Channel, 1-800-Flowers will

offer AOL a substantially similar opportunity.



2.6. [****] AND TERMS; [****] 1-800-Flowers will ensure that the

[****] for Products in the Affiliated 1-800-Flowers Site do

[****] the [****] for the Products or substantially similar

Products offered by or on behalf of 1-800-Flowers through

any Additional 1-800-Flowers Channel. For purposes of

judging 1-800-Flowers' compliance with the foregoing, to

the extent 1-800-Flowers charges any shipping, handling or

similar charges or any processing, service or similar

charges (collectively, the "Service Charges"), the Service

Charges will not be considered as part of the prices for

the Products in the Affiliated 1-800-Flowers Site; provided,

however, that 1-800-Flowers must comply with Section 1.7

of the Existing Agreement.



2.7. SPECIAL OFFERS. 1-800-Flowers will, on a reasonably periodic

basis, promote through the Affiliated 1-800-Flowers Site

special offers exclusively available to AOL Members and/or AOL

Users (the "Special Offers"). 1-800-Flowers will provide AOL

with reasonable prior notice of Special Offers so that AOL can

market the availability of such Special Offers in the manner

AOL deems appropriate in its editorial discretion, subject to

the terms and conditions hereof. 1-800-Flowers will ensure

that the Special Offers are [****] made available by or on

behalf of 1-800-Flowers through any Additional

1-800-Flowers Channel during the same time the Special

Offers are made available; provided that the foregoing

shall not apply to a Special Offer to the extent that

1-800-Flowers cannot make such offer available in the event

such offer requires certain support technology from AOL

which AOL cannot, or elects not to, provide.



2.8. OPERATING STANDARDS. 1-800-Flowers will ensure that the

Affiliated 1-800-Flowers Site complies at all times with the

standards set forth in Sections 2.5, 2.6 and 2.7 of the

Existing Agreement and with Exhibit D hereto.



2.9. ADVERTISING SALES. Neither Party will sell promotions,

advertisements, links, pointers or similar services or rights

through the Affiliated 1-800-Flowers Site unless and until the

Parties have mutually agreed upon a written advertising

program whereby the Parties coordinate to establish

advertising inventory space and share mutually agreed revenues

generated from such advertising sales.



2.10. TRAFFIC FLOW. 1-800-Flowers will take reasonable efforts to

ensure that AOL traffic is either kept within the Affiliated

1-800-Flowers Site or channeled back into the AOL Network

(with the exception of advertising links sold and implemented

pursuant to the Agreement). The Parties will work together on

implementing mutually acceptable links from the Affiliated

1-800-Flowers Site back to the AOL Service.



3. AOL EXCLUSIVITY OBLIGATIONS. 1-800-Flowers will be the

exclusive provider of fresh-cut flowers and Gift Plants on

AOL.com (the "AOL.com Exclusive Products"), as follows:

AOL will not (i) promote, market or advertise within

AOL.com any entity (other than 1-800-Flowers) that provides

"AOL.com Exclusive Products," including but not limited to

any entity listed on Exhibit C (each entity so listed, a

"1-800-Flowers Competitor") and (ii) will not allow any

provider of the AOL.com Exclusive Products, including but

not limited to any 1-800-Flowers Competitor, to sell, or

offer to sell the AOL.com Exclusive Products within AOL.com;

[****].



**** Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 406 of the Securities Act of 1933, as amended.







4. PAYMENTS.



4.1. GUARANTEED PAYMENTS. During the Term of this Agreement,

1-800-Flowers will pay AOL a total guaranteed amount of

US$1,500,000, as follows: during the first eighteen (18)

months of the Term and during each of the two (2) twelve-month

periods thereafter (each of the foregoing three periods, a

"Payment Period"), 1-800-Flowers will pay AOL $500,000 as

follows: (i) 1-800-Flowers will pay AOL an amount equal to

[****] of all Transaction Revenues in each quarter of each

Payment Period (such amount, an "AOL.com Revenue Share"),

payable within thirty (30) days of the end of such quarter;

and (ii) as of the end of such Payment Period, if the

cumulative AOL.com Revenue Share during such Payment Period

pursuant to clause (i) does not equal or exceed $500,000,

1-800-Flowers will pay AOL the shortfall within thirty (30)

days of the end of such Payment Period.



4.2. ALTERNATIVE REVENUE STREAMS. In the event 1-800-Flowers or any

of its affiliates (a) receives or desires to receive, directly

or indirectly, any compensation in connection with the

Affiliated 1-800-Flowers Site other than Transaction Revenues

[****] (an "Alternative Revenue Stream"), 1-800-Flowers

will promptly inform AOL in writing, and the Parties will

negotiate in good faith regarding whether 1-800-Flowers

will be allowed to market Products producing such

Alternative Revenue Stream through the Affiliated

1-800-Flowers Site, and if so, the equitable portion of

revenues from such Alternative Revenue Stream (if

applicable) that will be shared with AOL. In the event the

Parties cannot in good faith reach agreement regarding such

Alternative Revenue Stream within ten (10) days of AOL's

request to negotiate, either Party will have the right to

have such matter submitted to dispute resolution pursuant

to Section 6.



4.3. LATE PAYMENTS. All amounts owed hereunder not paid when due

and payable will bear interest from the date such amounts are

due and payable at [****] in effect at such time.



4.4. AUDITING RIGHTS. 1-800-Flowers shall maintain complete, clear

and accurate records of all expenses, revenues and fees in

connection with the performance of this Agreement. For the

sole purpose of ensuring compliance with this Agreement, AOL

shall have the right, at its expense, to direct an independent

certified public accounting firm to conduct a reasonable and

necessary inspection of portions of the books and records of

1-800-Flowers which are relevant to amounts payable to AOL

pursuant to this Agreement. Any such audit may be conducted

once per year after twenty (20) business days prior written

notice; provided that no such audit shall occur during the

months of July or August. Any audit shall be at AOL's sole

cost and expense unless a discrepancy of the greater of

[****] is found, in which case 1-800-Flowers will pay all

reasonable costs and expenses related to the audit, not to

exceed [****]. In the event 1-800-Flowers has good faith

grounds to question AOL's tracking and reporting of

Impressions, 1-800-Flowers will be





**** Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 406 of the Securities Act of 1933, as amended.





entitled to a report issued by a qualified independent auditor

describing AOL's methodologies regarding tracking and

reporting of Impressions and certifying AOL's compliance with

those methodologies and AOL's compliance with its obligations

hereunder. (These reports are currently being provided to AOL

for distribution to its partners by the Audit Bureau of

Circulations).



4.5. TAXES. 1-800-Flowers will collect and pay and indemnify and

hold AOL harmless from, any sales, use, excise, import or

export value added or similar tax or duty not based on AOL's

net income, including any penalties and interest, as well as

any costs associated with the collection or withholding

thereof, including attorneys' fees.



4.6. REPORTS. Each Party will each provide the other Party with

reports evidencing the reporting Party's compliance with its

obligations under the Agreement. All reports will be provided

in the form and manner that each Party is obligated to provide

pursuant to Section 4.8 of the Existing Agreement.



5. TERM; RENEWAL; TERMINATION.



5.1. TERM. Unless earlier terminated as set forth herein, the term

of this Agreement will commence on the Effective Date and

expire on June 30, 2001 (the "Term").



5.2. TERMINATION FOR BREACH. Except as expressly provided elsewhere

in this Agreement, either Party may terminate this Agreement

at any time in the event of a material breach of the Agreement

by the other Party which remains uncured after thirty (30)

days written notice thereof to the other Party (or such

shorter period as may be specified elsewhere in this

Agreement); provided that the cure period with respect to

either Party's failure to make any payment to the other Party

required hereunder shall be ten (10) days from the date

receipt of written notice regarding such payment provided for

herein. Notwithstanding the foregoing, in the event of a

material breach of a provision that expressly requires action

to be completed within an express period shorter than 30 days,

either Party may terminate this Agreement if the breach

remains uncured for the applicable time period after written

notice thereof to the other Party.



5.3. TERMINATION FOR BANKRUPTCY/INSOLVENCY. Either Party may

terminate this Agreement immediately following written notice

to the other Party if the other Party (i) ceases to do

business in the normal course, (ii) becomes or is declared

insolvent or bankrupt, (iii) is the subject of any proceeding

related to its liquidation or insolvency (whether voluntary or

involuntary) which is not dismissed within ninety (90)

calendar days or (iv) makes an assignment for the benefit of



5.4. TERMINATION ON CHANGE OF CONTROL. In the event of a Change of

Control of 1-800-Flowers resulting in control of 1-800-Flowers

by an Interactive Service, AOL may terminate this Agreement by

providing thirty (30) days prior written notice of such intent

to terminate.



6. MANAGEMENT COMMITTEE/ARBITRATION. If the Parties are unable to resolve

any dispute, controversy or claim arising under this Agreement

(excluding any disputes relating to intellectual property rights or

confidentiality) (each a "Dispute"), such Dispute shall be submitted to

the Management Committee for resolution. If the Management Committee is

unable to resolve the Dispute within ten (10) business days after

submission to them, the Dispute shall be solely and finally settled by

expedited arbitration in New York, New York, under the auspices of the

American Arbitration Association; provided that the Federal Rules of

Evidence shall apply IN TOTO to any such Dispute and, subject to the

arbitrators' discretion to limit the time for and scope of discovery,

the Federal Rules of Civil Procedure shall apply with respect to

discovery; and





provided further that, consistent with the parties' desire to avoid

waste of time and unnecessary expense, any Dispute arising from any

provision of the Agreement which expressly provides for the parties to

reach mutual agreement as to certain terms therein shall not be

submitted to arbitration but shall be resolved in good faith by the

Management Committee. The arbitrator may enter a default decision

against any Party who fails to participate in the arbitration

proceedings. For purposes herein, the "Management Committee" shall mean

a committee made up of a senior executive from each of the Parties for

the purpose of resolving Disputes under this Section and generally

overseeing the relationship between the Parties contemplated by this



7. STANDARD TERMS. The Standard Online Commerce Terms & Conditions set

forth on Exhibit E attached hereto and Standard Legal Terms &

Conditions set forth on Exhibit F attached hereto are each hereby made

a part of this Agreement.























IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date.





AMERICA ONLINE, INC. 800-FLOWERS, INC.



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