ADVERTISING AND PROMOTIONAL AGREEMENT - 08-21-97

2.4 Right of First Presentation. In the event that Yahoo intends to

--------------------------- create, acquire, develop or otherwise make available to a CDnow Competitor a promotional opportunity similar in scope and nature to that described in this Agreement, relating to the on-line sale of Recorded Music, on a [XXX] which are not the subject of this Agreement (provided that such navigational guide properties are solely owned, created, and branded by Yahoo), Yahoo will deliver to CDnow a written notice describing such property and Yahoo's reasonable business requirements for the opportunity. At CDnow's discretion, the parties will use good-faith efforts to negotiate and execute a written amendment to this Agreement to include such property under reasonable terms and conditions. If CDnow declines to commence negotiations regarding any Yahoo property within [XXX] days after receiving such written notice from Yahoo, or if the parties fail to reach agreement with [XXX] days following the commencement of good faith negotiations (or such later date as is agreed by the parties), Yahoo may offer the Yahoo property to any third party.



3. Compensation; Audit Rights.

--------------------------



3.1 Initial Term. In consideration of Yahoo's performance and obligations

------------ as set forth herein, CDnow will pay Yahoo a total marketing fee of three million nine hundred thousand dollars ($3,900,000) for the Initial Term. Such fee shall be divided into: (i) a non-refundable slotting fee of [XXX] (the "Slotting

-------- Fee"); and (ii) a referral fee of at least [XXX] (the "Referral Fee"), as - --- ------------ determined in Section 3.3. Such payments will be made in accordance with the terms of this Section 3.



3.2 Slotting Fee. During the Initial Term, CDnow shall pay to Yahoo [XXX]

------------ of the Slotting Fee, as a set-up, design, and consultation fee, on September 30, 1997. The balance of the Slotting Fee [XXX] shall be due and payable in accordance with the schedule set forth in Exhibit C. During the Subsequent

--------- Term, CDnow shall pay Yahoo a Slotting Fee based upon the following formula: number of actual Page Views during the last [XXX] months of the Initial Term multiplied by [XXX], divided by [XXX] then multiplied by [XXX]. In addition, the Slotting Fee for ...