STRATEGIC MARKETING AGREEMENT

THIS STRATEGIC MARKETING AGREEMENT is entered into by and between Best Buy Co., Inc., on behalf of itself and its designated subsidiaries and affiliates, including Best Buy Stores, L.P. and BestBuy.com, Inc., with offices at 7075 Flying Cloud Drive, Eden Prairie, Minnesota 55344, (“Best Buy”) and NetFlix.com Inc., a Delaware corporation, with offices at 970 University Avenue, Los Gatos, California 95032 (“NetFlix”).

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

1.1. “Agreement” refers to this Strategic Marketing Agreement, all exhibits, attachments, addenda, and schedules referred to herein, as it or they may be amended from time to time.

1.2. “Best Buy Site” means the sites operated and controlled by Best Buy, located on the world wide web portion of the internet and identified by the URLs www.bestbuy.com, www.samgoody.com, www.suncoast.com, www.mediaplay.com, www.oncue.com, and such other internet sites that are hosted on file servers operated by or on behalf of Best Buy or operated under Best Buy’s trademarks and trade name, whether or not “co-branded” with the trademarks or trade names of other entities, regardless of whether such sites are accessed directly through a personal computer or through a kiosk or terminal located in a Best Buy retail store, or via devices such as (but not limited to) mobile phones, web devices, portable digital devices, wireless devices, etc. The Best Buy Site shall exclude the Co-branded Site.

1.3. “Best Buy’s [*]” means[*], directly or indirectly, from or regarding (a) Best Buy’s [*]are not [*]and (b) Best Buy’s [*]are[*], but only for that [*]which is received from such customers because of [*]which are not related to this Agreement. Best Buy’s[*] also includes all[*] created or derived from the above, including but not limited to [*]; and any[*].

1.4. “Buy Button” means a prominently displayed text, button, icon, or other image that links a consumer to a corresponding movie search result page (or other mutually agreed upon page) within the Best Buy Site.

1.5.1. The consummation of the sale of all or substantially all of the assets of NetFlix;

1.5.2. The consummation of a reorganization, merger, or consolidation to which NetFlix is a party, if the stockholders of NetFlix immediately prior thereto (excluding any person participating in the Change of Control transaction) own less than a majority of NetFlix’ voting power immediately thereafter;

1.5.3. The acquisition by any person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under such Act) of more than a majority of the voting power of those classes of voting stock of NetFlix entitled to vote for the election of directors; or

1.5.4. Any other transaction, whether through change in directorships or otherwise, which has the purpose or effect of substantially changing the persons entitled to direct the affairs of NetFlix.

1.6. “Co-branded Site” means the web site which is customized for Subscribers, and is more particularly described in Exhibit A.

1.7. “Competitors” means[*]

1.8. “Confidential Information” means any information provided by the disclosing party to the receiving party or any third party acting on behalf of such receiving party and relating in any way to the subject matter of this Agreement, whether furnished before or after the Start Date and regardless of the manner in which furnished. Confidential Information includes but is not limited to: (a) all information related to sales of products, such as raw data, reports, and compilations of such data or information (including, but not limited to, information provided pursuant to Section 2.3); (b) information relating to the services performed under this Agreement; (c) work papers, analyses, compilations, projections, and statistical data; (d) product cost and or sale information or data; (e) identities of any current or pending or future vendors or planned products and services to be offered or withdrawn; (f) planned and future promotions and grand opening dates; (g) business plans and forecasts; (h) Best Buy’s [*]; (i) NetFlix’ [*]; and (j) any documents or other items marked “Confidential” or specifically communicated as “Confidential”. Confidential Information does not include any information which: (1) is already known to the receiving party; or (2) becomes available to the receiving party from other sources which the receiving party reasonably believes not to be bound by any obligation of confidentiality, directly or indirectly, to the disclosing party; or (3) is independently developed by the receiving party; or (4) is now or hereafter available to the public through no breach of this Agreement by the receiving party or its employees or agents; or (5) is disclosed by the receiving party in accordance with the terms of a prior written approval of the disclosing party; or (6) [*].

1.9. “[*]” means the [*]in a calendar week that [*]the Co-branded Site or[*] the Co-branded Site for[*], whether due to any [*]of the Co-branded Site or its related technology, including any proprietary or third-party[*].

1.10. “[*]” refers to Best Buy’s[*] which allows [*]to [*]for certain [*]and which [*]the necessary [*]information to such [*].

1.11. “Event of Default” means any one of the following:

1.11.1. A party breaches any material provision or any warranty of this Agreement; or

1.11.2. A party becomes insolvent or is adjudged a bankrupt or makes an assignment for the benefit of creditors; or

1.11.3. A receiver of any property of a party is appointed in any action, suit, or proceeding by or against the party and is not removed within 90 days after such appointment.

1.12. “Expiration Date” means the latter of (i) date twenty-four (24) months from the Start Date or the next business day if such date falls on a weekend or a holiday; or (ii) the expiration of the Renewal Period.

1.13. “[*]” means the[*]

[*] – Confidential Treatment Requested

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1.14. “Impression” means an instance where a consumer in a retail venue or a unique user on the internet is exposed to a specified image.

1.15. “Insert” means Best Buy’s free standing newspaper advertising insert, currently distributed weekly.

1.16. “Link” means an embedded icon, object, graphic or text within a web page that consists of a hypertext pointer to the URL address of a web page.

1.17. “[*]” means the [*]due to[*]. shall normally be between the hours of [*] and [*]shall not exceed [*] minutes in a[*] and (b) [*]per[*].

1.18. “Movie Display Page” means a page on the NetFlix Site that features one specific movie title and which contains information about the movie including but not limited to the cast, credits, synopsis, and reviews.

1.19. “NetFlix’ [*]” means [*] received or extracted, directly or indirectly, from or regarding NetFlix [*]who are not [*]and all[*] created or derived from the above, including but not limited to [*]and[*], and any[*] of such data.

1.20. “NetFlix Site” means the site operated by NetFlix, located on the world wide web portion of the internet, the initial, top level display of which is identified by the following URL: <www.netflix.com>, or such other internet site operated under NetFlix’s trademarks and trade name. NetFlix Site shall not include the Co-branded Site.

1.21. “Promotional Code” means the numbers and/or letters that are used by NetFlix to determine which promotion a Subscriber is signing up under and also to track Subscriber activity.

1.22. “Renewal Period” shall have the meaning as defined in Section 7.5.

1.23. “Scheduled Time” means 10,080 minutes less [*]for the [*]week.

1.24. “Single Use Code” means a code that can only be used one time by one individual.

1.25. “Shares” means NetFlix’ Series F nonvoting, convertible, preferred stock.

1.26. “Start Date” shall mean the execution date of this Agreement.

1.27. “Sticker” means the promotional sticker that is (i) [*] (ii) agreed upon by the parties and shown within the attached, and incorporated herein, Attachment A1. All Stickers shall contain a Promotional Code.

1.28. “Studios” means the major Hollywood motion picture studios of[*].

1.29. “[*].

1.30. “Subscriber Information” means the[*] identity of Subscribers.

1.31. “Term” means the period of time between the Start Date and the earlier of the Expiration Date or Termination Date.

1.32. “Termination Date” means the effective date of any termination of this Agreement other than the Expiration Date.

1.33. [*]

1.34. [*]

[*] – Confidential Treatment Requested

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2. BEST BUY’S OBLIGATIONS

2.1. Best Buy shall [*]to promote and market the Co-branded Site as provided in Exhibit C attached hereto and incorporated herein by reference.

2.2. Best Buy shall [*]its in-store, corporate, and online customer care personnel in order to enable them to [*]customer inquiries about[*].

2.3. Each month during the term hereof, as such as may be extended, Best Buy shall [*]to furnish NetFlix with[*]), and [*]sold the prior [*]by [*]together with its [*]for each of the[*].

2.4. Using a file provided monthly by NetFlix, Best Buy will, within [*]days of its receipt of such file, identify for NetFlix those individuals who have signed up for[*] but who were either (a) never [*]or (b) are no longer [*](which in such case Best Buy shall also provide their[*]). Best Buy agrees that NetFlix may contact via email those individuals identified by Best Buy as[*]and inform them that [*]is being increased to [*]and further inform them that[*]. In this email NetFlix will identify a contact at Best Buy, to be provided by Best Buy, to whom any questions on [*]can be directed. Best Buy shall determine in its [*]what constitutes[*]and whether such [*]is considered [*]for purposes of this Agreement.

3. NETFLIX’ OBLIGATIONS

3.1. Upon execution of this Agreement, NetFlix shall issue to Best Buy [*]Shares. Upon Best Buy’s request, NetFlix agrees to discuss in good faith, from time to time, the purchase of additional shares by Best Buy.

3.1.1. In the event, and each time, that NetFlix, prior to (1) the effective date of NetFlix’ registration statement filed under the Securities Act of 1933 in connection with an initial public offering of NetFlix shares; (2) a Change of Control; or (3) becoming subject to the reporting requirements of the Securities and Exchange Act of 1934, issues additional shares of stock during the Term as part of a financing in which a venture capital fund, investment bank, or mutual fund is the largest investor, then Section 3.1 and Section 3.3 shall automatically be amended so that the number of Shares issued and issuable to Best Buy under Section 3.1 and Section 3.3 immediately prior to such financing shall be increased by multiplying such Shares by a fraction, (x) the numerator of which shall be the number of fully diluted common stock equivalent shares outstanding immediately after such financing, and (y) the denominator of which shall be the number of fully diluted common stock equivalent shares outstanding immediately prior to such financing. This Section 3.1.1 and the obligations of NetFlix within it shall terminate immediately in the event that prior to such time this Agreement shall have been terminated by Best Buy or Best Buy shall have materially breached its obligations hereunder.

3.1.1.1. NetFlix shall deliver the additional Shares necessary to give effect to the retroactive amendment of Sections 3.1 and 3.3 pursuant to Section 3.1.1 within 15 days of the closing of the financing triggering an amendment pursuant to Section 3.1.1.

3.2.[*]:

3.2.1.[*];

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the disclosing party shall be entitled, without waiving any other rights or remedies, to such injunctive or equitable relief as may be deemed proper by a court of competent jurisdiction. Further, the parties acknowledge and agree that if there is a breach or threatened breach of the provisions of this Section 13, then the disclosing party will be irrevocably harmed and entitled to a temporary restraining order, injunction, and/or other equitable relief against the commencement or continuance of such breach without the requirement of posting a bond or proving injury as a condition of relief.

14. [*]

14.1. Except as expressly provided in this Agreement, neither party shall provide, sell, distribute, or otherwise grant access to the [*] during the Term without the prior express written permission of the other party. Notwithstanding the above, the parties may [*]to [*]for the purpose of [*] to [*] provided that the party disclosing the [*] to the [*]shall be responsible for the [*] and [*] of the[*].

14.2. Neither party shall intentionally and knowingly use [*] in any manner which would be reasonably likely to cause material harm [*]. The previous sentence does not in any way limit:

14.2.1. Either party’s right to [*], or [*] its products or services to the [*] via methods which do not [*];

14.2.2. Either party’s right to [*] its products and services to [*], without Best Buy’s, provided further that Best Buy grants NetFlix during the Term the right to [*]all such products and services as are [*]on the [*] as of the[*].

14.3. NetFlix will provide Best Buy with any and all [*]on a [*]basis.

14.4. All [*] shall be[*]. Except as limited by this Agreement, both parties shall have [*]in all[*].

14.5. After termination of this Agreement for any reason and for a period of [*]years, neither party shall [*]to to any [*]in any manner which would allow such to that the information[*], this Agreement and the parties relationship hereunder.

14.6. In the event that NetFlix begins selling [*]through the Co-branded Site which [*]believes in [*] to [*], NetFlix will [*]such [*]from the Co-branded Site within [*].

15. RELATIONSHIP OF PARTIES

15.1. NetFlix and Best Buy understand and acknowledge that (a) each shall perform its duties hereunder as the other’s independent contractor and (b) this Agreement does not create a joint venture, partnership, employment or agency relationship between NetFlix and Best Buy.

16. NOTIFICATIONS OF COMPLAINTS

16.1. Each party will [*] notify the other in writing, but in no event later than [*]of receipt, of any complaints or claims made by or through any third party or governmental or quasi-governmental agency/body regarding the obligations under this Agreement. Such reports shall contain information reasonably requested by the requesting party but shall contain at least the identity of the party making the complaint, a description of the grievance, the date of receipt by the receiving party of the complaint, the date of efforts to resolve the complaint, and the date and action taken to resolve the complaint.

[*] – Confidential Treatment Requested

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17. DELEGATION OF DUTIES

17.1. Either party may hire or contract with third party service providers or other subcontractors of their choice to assist that party in fulfilling its obligations pursuant to this Agreement, provided that the party hiring or contracting with any third party service provider or other subcontractor will remain liable for the third party service provider’s or subcontractor’s performance and for the acts or omissions of the third party service provider or subcontractor.

17.2. Best Buy may assign this Agreement to a parent, subsidiary, or affiliated entity which is at least [*]owned by Best Buy [*]the approval of NetFlix.

17.3. Except as provided in Section 17.1 and 17.2, neither party shall delegate, or assign any of its rights or duties hereunder without the express written consent of the other party. If the requested party grants any such consent, the requesting party shall be solely responsible for the conduct of its agents, and the granting of such consent shall in no way modify or affect the obligations of the requesting party under this Agreement. Any assignment or delegation not complying with the terms of this Section shall be null and void. In the event of a proper assignment, this Agreement shall inure to the benefit of and be binding upon each of the parties and their respective successors, assigns, heirs, executors, administrators, trustees, and legal representatives.

18. PURCHASES

18.1. Neither party may purchase goods or equipment in the name of the other party. Neither party may make or incur any debts, liabilities, obligations, or contracts in the name or upon credit of the other party. NetFlix is not entitled to utilize any discount, bonus, or other marketing incentive earned by or made available to [*].

19. [*]

19.1.[*]

20. PUBLIC ANNOUNCEMENTS

20.1. NetFlix will not make any public disclosure or announcement of the existence of this Agreement or the relationship with Best Buy without the prior written consent of Best Buy. Best Buy reserves the right to approve of the contents of any such public disclosure or announcement.

21. NOTICES

21.1. All notices, requests, demands, approvals, consents, and other communications which are required or may be given hereunder shall be (1) in writing; (2) addressed to the parties as set forth below, unless a party notifies the others of a change of address (in which case the latest noticed address shall be used); and (3) deemed to have been duly given upon delivery thereof by one of the following means: (a) hand-delivered, (b) first-class mail, postage prepaid, (c) recognized overnight courier, or (d) facsimile or other electronic means provided receipt thereof is verified by the sender.

[*] – Confidential Treatment Requested

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Notices To NetFlix:		With a copy to:
NetFlix.com Inc.		NetFlix.com Inc.
Attn: VP Marketing		Attn: General Counsel
970 University Ave.		970 University Ave.
Los Gatos, CA 95032		Los Gatos, CA 95032
408-399-3737 (fax)		408-399-3737 (fax)
Notices To Best Buy:		With a copy to:
Best Buy Co., Inc.		Best Buy Co., Inc.
Attn: Scott Young		Attn: General Counsel
7075 Flying Cloud Drive		7075 Flying Cloud Drive
Eden Prairie, MN 55344		Eden Prairie, MN 55344
		(952) 995-7380 (fax)

22. AUDIT

22.1. Each party shall have the right to, upon [*] written notice and at [*]times during regular business hours, audit the other party to assure compliance with the terms and conditions of this Agreement. If the audit reveals that a party is not performing in [*]compliance with the terms of this Agreement, then, in addition to any other legal and equitable rights and remedies available, the party not in compliance shall [*]the other for[*]. Notwithstanding anything to the contrary herein, the parties agree that they shall not exercise their right of audit more often than, [*] nor on a date any later than [*]following the termination of this Agreement.

23. MISCELLANEOUS

23.1. Governing Law. This Agreement shall be governed, construed and interpreted in accordance with the laws of the State of New York. The parties to this Agreement consent to the jurisdiction of the state and federal courts located in Minneapolis, Minnesota.

23.2. Amendments. This Agreement may not be modified except by a writing referencing this Agreement and signed by both of the parties hereto.

23.3. Headings. The headings contained herein are for the convenience of reference only and are not of substantive effect.

23.4.[*] Except as otherwise provided herein, this Agreement shall not be [*]to [*]Best Buy and NetFlix. Best Buy shall be[*]to [*]to perform [*]covered hereby.

23.5. Severability. If any provision herein shall be deemed or declared unenforceable, invalid or void by a court of competent jurisdiction, the same shall not impair any of the other provisions contained herein which shall be enforced in accordance with their respective terms.

23.6. Entire Agreement. This writing is intended by the parties as the final and binding expression of their contract and agreement and is a complete and exclusive statement of the terms thereof and supersedes all prior negotiations, representations and agreements, including, but not limited to, the [*] and the [*]executed by NetFlix on [*]and by Best Buy on [*](both of which are hereby terminated).

23.7. Remedies; Waiver. No failure or delay by either party hereto to exercise any right,

[*] – Confidential Treatment Requested

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