Advertising Agreement With Amazon.com

EXHIBIT 10.5


CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION


ADVERTISING AGREEMENT

This Advertising Agreement (this "Agreement"), dated as of November 5, 1997, is made between Amazon.com, Inc., a Delaware corporation ("Amazon.com"), and GeoCities, a California corporation ("GeoCities"). Amazon.com 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, Amazon.com and GeoCities hereby agree as follows:


SECTION 1. DEFINITIONS


The following terms (and all conjugations and 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 directly or indirectly controls, is controlled by or is under common control with that Party. As used in this definition, "control" means either (a) the ownership of greater than 50% of an entity's voting securities, or (b) the ability, through contract or otherwise, to determine an entity's operating activities. For the purposes of clarification, the parties acknowledge that GeoCities Japan is not an Affiliate of GeoCities.


1.3. "AMAZON.COM SITE" means, collectively, all points of presence and/or services maintained by Amazon.com or its Affiliates on the Internet or on any other public data network.


1.4. "ASSOCIATE" means any World Wide Web site that registers and is accepted as a participant in Amazon.com's Associates Program.


1.5. "COMMENCEMENT DATE" means the date GeoCities first provides Amazon.com with all links, advertisements and other promotional placements contained in "Phase 1 ," as more particularly described in Exhibit B to this Agreement.


1.6. "COMPETITOR" means (a) any of the entities listed on Exhibit A, or (b) any individual, corporation, corporate division, World Wide Web site or other entity that either derives more than [***] of its annual gross revenues from the sale of books or magazines, or is primarily known as a seller of books or magazines.


1.7. "EXCLUSIVE AREAS" means the portions of the GeoCities Site that will subject to the exclusivity provisions of Section 7, as more particularly described in Exhibit C to this Agreement.


1.8. "GEOCITIES SITE" means, collectively, (a) the World Wide Web site currently located at the URL www.geocities.com (and all successors or replacements thereto, regardless of network or URL), and (b) all other points of presence and/or services maintained by or on behalf


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of GeoCities or its Affiliates on the Internet or on any other public data network; provided, however, that "GeoCities Site" does not include any Homesteader Page or GeoShop Page. Clauses (a) and (b) above will not include any personal home page community that is co-branded or jointly developed by GeoCities (or its Affiliates) and any third party to the extent that the characterization of such community as part of the GeoCities Site would conflict with or would violate either (i) any agreement between GeoCities and the relevant third party dated prior to or concurrent with the establishment of the community, or (ii) any agreement between the third party and any other person or entity dated prior to or concurrent with the establishment of the community. GeoCities will provide Amazon.com with reasonable documentary evidence supporting the exclusion of any personal home page community from the GeoCities Site pursuant to the preceding sentence.


1.9. "GEOSHOP PAGE" means any commercial home page established by an individual or entity (other than GeoCities or its Affiliates) pursuant to GeoCities GeoShop program that resides within a "member neighborhood" on the GeoCities Site.


1.10. "HOMESTEADER PAGE" means any personal home page established by an individual or entity (other than GeoCities or its Affiliates) pursuant to the GeoCities Homesteader program that resides within a "member neighborhood" on the GeoCities Site.


1.11. "INTERNATIONAL SERVICE" means any Internet or network-based service that (a) is operated by an individual or entity other than a GeoCities Affiliate, (b) is hosted on computer servers located outside of the United States, (c) is substantially similar to all or any services offered via the GeoCities Site, and (d) is operated either in conjunction with a GeoCities trade name, trademark, service mark or other proprietary mark, or with material assistance from GeoCities or its Affiliates.


1.12. "PAGE VIEW" means each instance in which (a) an individual user requests that a discrete Web page contained within the GeoCities Site be transmitted to the user's computer, and (b) a GeoCities Site server actually transmits the page to the user's computer.


1.13. "QUALIFYING REVENUES" means, with respect to any payment period, (a) the aggregate gross revenues (excluding taxes, gift-wrapping and shipping and handling charges) derived by Amazon.com from product sales that occur during Sessions, less (b) any revenues attributable to returned products, if such revenues previously were included in "Qualifying Revenues."


1.14. "SESSION" means each instance in which a user accesses the Amazon.com 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 Amazon.com Site pages. A Session terminates when the user exits the Amazon.com Site by any means.


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SECTION 2. PROMOTIONAL PLACEMENTS


GeoCities will provide the advertisements and promotions specified in Exhibit 8, in accordance with the provisions contained in that Exhibit.


SECTION 3. PROMOTION OF ASSOCIATES PROGRAM


GeoCities will implement a program through which GeoCities will encourage its members with Homesteader Pages to become active members of Amazon.com's Associates Program. The Parties will cooperate in the development of such promotional program, with the goal of launching the program during first quarter, 1998.


SECTION 4. COMPENSATION


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


4.2. During the initial term of this Agreement, Amazon.com will pay GeoCities (a) a fixed development fee of $[***], and (b) fixed placement fees of $[***]for each [***] that occurs subsequent to the Commencement Date.


4.3. During the term of this Agreement (including any renewal term), for each [***] that occurs subsequent to the Commencement Date, Amazon.com will pay GeoCities the applicable percentage(s) of Qualifying Revenues set forth below:


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CUMULATIVE QUALIFIED REVENUES REVENUE SHARE
(from Commencement Date) PERCENTAGE - -------------------------------------------------------------------------------
[***] [***] - -------------------------------------------------------------------------------
[***] [***] - -------------------------------------------------------------------------------
[***] [***] - -------------------------------------------------------------------------------
[***] [***] - -------------------------------------------------------------------------------


4.4. For each Homesteader Page that becomes an Associate during the term of this Agreement and, during the [***] following the Homesteader Page's becoming an Associate is responsible for at least $[***] in referred product sales (as calculated pursuant to the rules of the Associates Program), Amazon.com will pay GeoCities a bounty of $[***]. Notwithstanding the foregoing, Amazon.com will not be obligated to pay any bounties with respect to Homesteader Pages that joined the Associates Program prior to the Commencement Date. This provision will


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survive the expiration or termination of this Agreement with respect to those Homesteader Pages that became Associates within twelve (12) months prior to such expiration or termination.


4.5. Amazon.com will pay the fixed development fee promptly following the execution of this Agreement. Amazon.com will make all other payments under this Section 4 on a [***] basis, in arrears. Specifically, within 30 days following the end of each [***] occurring subsequent to the Commencement Date, Amazon.com will pay GeoCities an amount equal to the fixed placement fee payable under Section 4.2, plus the revenue share that accrued during the period under Section 4.3, plus any new Associate bounties that accrued during the period under Section 4.4. At GeoCities' option, GeoCities may submit invoices for the fees specified in Section 4.2(b) at the beginning of each three-month payment period.


4.6. Amazon.com will deliver, together with each payment made pursuant to Section 4.5, a written report signed by an authorized representative of Amazon.com that describes (in reasonable detail) Amazon.com's calculation of the payment amount.


4.7. GeoCities acknowledges that Amazon.com must implement certain improvements to its accounting software to accurately track Qualified Revenues. Amazon.com will use commercially reasonable efforts to implement such improvements, with the goal of completing the implementation within ninety (90) days following the date of this Agreement. Until such implementation is complete, Amazon.com will estimate Qualifying Revenues in good faith, in accordance with a written methodology to be provided to GeoCities.


SECTION 5. IMPLEMENTATION


5.1. GeoCities and Amazon.com 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.


5.2. GeoCities, in cooperation with Amazon.com, will test the links, advertisements and promotional placements required under the Agreement prior to 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).


5.3. GeoCities will not cause any link, advertisement or promotional placement under the Agreement to go live on the GeoCities Site prior to the applicable date agreed by the Parties. Further, at Amazon.com'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.


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SECTION 6. TRAFFIC DATA


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


SECTION 7. EXCLUSIVITY AND OTHER RIGHTS


7.1. GeoCities will not place [***], or permit any Competitor to place [***], any Competitor's advertising banners, promotional buttons, promotional links or other promotional materials or content on the GeoCities Site. In addition, GeoCities will not sell or promote [***], or permit any Competitor or non-Competitor to sell or promote [***], any books or magazines on the GeoCities Site.


7.2. Nothing in Section 7.1 will prevent GeoCities from directly selling a limited number of books through its own store on the GeoCities Site, provided that GeoCities does not offer to sell more than [***] book titles at any time. Further, nothing in Section 7.1 will prevent the owner or operator of any GeoShop Page from selling or promoting books or magazines on its GeoShop Page, provided that (a) GeoCities first makes a commercially reasonable attempt to persuade the owner or operator to become an Amazon.com Associate, and (b) the owner's or operator's gross revenues attributable to the sale or distribution of books and magazines during the twelve-month period prior to the launch of its GeoShop Page did not exceed $250,000. At Amazon.com's request, GeoCities will provide Amazon.com with reasonable documentation demonstrating its continuing compliance with the preceding sentence.


7.3. If Amazon.com enter ...