Sample Business Contracts


System Services Agreement - America Online Inc. and iBEAM Broadcasting Inc.

Services Forms


                           SYSTEM SERVICES AGREEMENT


     This System Services Agreement ("Agreement") is made as of January 27,
2000 (the "Effective Date") between America Online, Inc., a Delaware corporation
with its principal office at 22000 AOL Way, Dulles, VA 20166 ("AOL"), and iBEAM
Broadcasting, Inc., a Delaware corporation with its principal office at 645
Almanor Avenue, Suite 100, Sunnyvale, CA 94086 ("iBEAM").  Each of AOL and iBEAM
may be individually referred to herein as a "Party" and collectively, as the
"Parties."

                                    RECITALS

     A.  AOL desires to engage iBEAM to provide iBEAM's content distribution
services (the "Services") to AOL for installation within the areas of the AOL
Network infrastructure as set forth herein and for the purpose of improving
content distribution both within the AOL Network and between the AOL Network and
the Internet (collectively, the "Installation and Distribution Right").

     B.  iBEAM desires to provide the Services to AOL for the purpose of
obtaining access to AOL's Internet bandwidth for use by iBEAM on behalf of its
customers in accordance with the terms of this Agreement, and to provide support
to AOL Users accessing content from iBEAM servers.

     C.  The Parties intend to set forth in this Agreement the terms and
conditions governing iBEAM's provision of the Services and the compensation to
AOL for providing iBEAM with the Installation and Distribution Right.

     THEREFORE, the Parties hereby agree as follows:

     1.  iBEAM Services.  iBEAM will provide the Services using iBEAM servers,
         --------------
which shall be physically located within the AOL host complex (collectively, the
"iBEAM Servers").  iBEAM initially will install the iBEAM Servers within the AOL
host complex using no more than [*] standard equipment racks (each an "Equipment
Rack", and the [*] standard Equipment Racks collectively referred to herein as
the "Obligatory Equipment Rack Space") in each operational AOL data center
(currently in Reston, Virginia, Manassas, Virginia and Dulles, Virginia).  AOL
shall make space in such racks available to iBEAM no later than fifteen (15)
days after the Effective Date (the "Rack Space Availability Date"). The date on
which iBEAM completes the initial installation such that AOL's members have
access to the Media Content (as defined below) shall be known as the
"Installation Date."  iBEAM will retain all right, title and interest in and to
the iBEAM Servers and all iBEAM software and other IBEAM equipment installed on
or used in connection with the iBEAM Servers (other than the Equipment Racks).
The number of iBEAM Servers to be used by iBEAM in providing the Services will
be agreed upon by the Parties as part of the implementation of this Agreement.
If, following the Effective Date, IBEAM requests additional space in the AOL
host complex for further

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[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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Equipment Racks (i.e., in addition to the Obligatory Equipment Rack Space), AOL
and iBEAM will discuss terms on which AOL may provide such space to iBEAM. iBEAM
will provide to AOL rolling quarterly forecasts of anticipated space needs
within the AOL host complex, and AOL, in its sole discretion, shall decide
whether to accommodate any such iBEAM request for additional Equipment Rack
space. The Services will facilitate the distribution of (and iBEAM shall be
permitted to use the iBEAM Servers and utilize AOL's Internet bandwidth to send,
receive and deliver) text, software, communications, images, video, sound and
other media or information (collectively, "Media Content"), as follows:

          (a) Media Content will be delivered to members of the AOL Service and
the CompuServe Service (collectively, "AOL Users") through iBEAM Servers (the
"Internal Distribution");

          (b) Media Content will be delivered from the Internet to iBEAM Servers
using AOL's Internet bandwidth ("Inbound Distribution"); and

          (c) Media Content will be delivered from iBEAM Servers to Internet
recipients who are not AOL Users as expressly permitted by the terms of this
Agreement, using AOL's Internet bandwidth ("Outbound Distribution").


     2.  Payments. iBEAM will make the following payments to AOL:
         --------

          (a) Guaranteed Payments. iBEAM shall pay AOL a non-refundable (except
              -------------------
as provided expressly to the contrary in this Section 2 (a) and Section 11 of
this Agreement ) guaranteed payment of Three million Dollars (US$3,000,000), as
follows: (i) One Million Five Hundred Thousand Dollars (US$1,500,000) upon
execution of this Agreement and (ii) One Million Five Hundred Thousand Dollars
(US$1,500,000) upon the earlier of (A) the Installation Date or (B) sixty (60)
days after the Effective Date. The parties acknowledge that if iBEAM terminates
this Agreement due to AOL's failure to provide iBeam with the Obligatory
Equipment Rack Space as required under Section 1, the above payments will be
refundable.

          (b)  Revenue Sharing Arrangement.
               ---------------------------

               (i) If at the end of any calendar quarter during the Term, the
          amounts owed to AOL under subparagraphs (iii) and (iv) below exceed
          the corresponding quarterly minimum dollar amounts set forth below
          (the "Revenue Sharing Threshold"), then iBEAM will pay to AOL the
          amounts owed to AOL under subparagraphs (iii) and (iv) below, less the
          corresponding Revenue Sharing Threshold for the applicable calendar
          quarter. The Revenue Sharing Threshold is as follows:

               Quarter    Revenue Sharing Threshold
               -------    -------------------------

               1st        $[*]

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[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.


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               2nd        $[*]

               3rd        $[*]

               4th        $[*]

               5th        $[*]

               6th        $[*]

               7th        $[*]

               8th        $[*]


     (ii)    There shall be no carryover of the Revenue Sharing Threshold from
any previous calendar quarter. The Revenue Sharing Threshold shall apply only to
amounts owed to AOL as a result of Gross Revenues generated in accordance with
subparagraphs (iii) and (iv) below.

     (iii)   Traffic Between AOL Network and the Internet.  Within [*] ([*])
             --------------------------------------------
days following the end of each month of the Term, AOL shall calculate iBEAM's
Monthly Bandwidth Usage, in accordance with Section 9.1 of this Agreement, and
shall notify iBEAM of such usage.  Within [*] ([*]) days following the end of
each month of the Term, iBEAM shall pay to AOL [*] percent ([*]%) of all Gross
Revenues generated from the traffic between the AOL Network and the Internet
during such month on the iBEAM Servers for all traffic up to and equal to the
Maximum Projected Inbound Distribution Bandwidth and Maximum Projected Outbound
Distribution Bandwidth (each as defined in Section 9.3 hereto) (collectively,
the "Minimum Internet Bandwidth Payment"); provided, however, that for each
                                           --------  -------
month in which iBEAM's Monthly Bandwidth Usage equals or exceeds either the
Maximum Projected Inbound Distribution Bandwidth or the Maximum Projected
Outbound Distribution Bandwidth, for such month, iBEAM shall pay to AOL, within
[*] ([*]) days following the end of such month (A) the Minimum Internet
Bandwidth Payment plus  (B) the greater of (1) [*] Dollars (US$[*]) per T-3-
                  ----
equivalent bandwidth for the amount by which the Inbound Distribution traffic
during such month exceeded the Maximum Projected Inbound Distribution Bandwidth
or (2) [*] Dollars (US$[*]) per T-3 equivalent bandwidth for the amount by which
the Outbound Distribution traffic for such month exceeded the Maximum Projected
Outbound Distribution Bandwidth for such month.  . By way of example, if the
Inbound Distribution usage exceeds the Maximum Projected Inbound Distribution
Bandwidth by [*] ([*]) Mbps and the Outbound Distribution exceeds the Maximum
Projected Outbound Distribution Bandwidth by [*] ([*]) Mbps in a particular
month, iBEAM would pay AOL [*] Dollars (US$[*]) per T3-equivalent multiplied by
[*] ([*]) Mbps (rather than $[*] per T3-equivalent multiplied by [*] ([*])
Mbps), in addition to the payment referred to in the preceding clause (A).  For
purposes of this Agreement, (x) "T-3-equivalent" bandwidth shall mean at least
[*] ([*]) Mbps and (y) "Gross Revenues" for a particular month shall mean the
payments billed by iBEAM to its customers during such month for Media Content

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the omitted portions.

<PAGE>

delivery services and excluding any sales, excise, export, use and similar
taxes.

     (iv) Traffic Within the AOL Network.  iBEAM shall pay AOL [*] percent
          ------------------------------
([*]%) of all Gross Revenues generated from traffic on the iBEAM Servers located
within or directly attached to the AOL Network (including, without limitation,
the AOL Service and the CompuServe Service) and delivered to AOL Users.

     (v)  Other Stipulations. iBEAM agrees that it will not structure its
          ------------------
customer relationships so as to circumvent (or implement any billing mechanism
that would have the effect of circumventing) the revenue sharing provisions of
this Agreement.

     3.  Purchase of Services by AOL.  AOL may elect during the Term to purchase
         ---------------------------
Services from iBEAM for use in connection with the delivery of Media Content
from AOL's Internet websites (including but not limited to aol.com,
netcenter.com, spinner.com, netscape.com and moviefone.com), pursuant to iBEAM's
standard Service Terms and Conditions, which are attached hereto as Schedule A
to this Agreement. AOL may elect, at its sole discretion, to offset against or
waive iBEAM's payment obligations as set forth in this paragraph in exchange for
AOL purchasing Services in accordance with this Section 3.  AOL's purchase of
iBEAM's Services under this Section will be measured based on Mbps routed over
iBEAM's network, calculated at the "[*]" method, and priced in accordance with
the pricing schedule set forth in the Services Terms and Conditions attached as
Schedule A to this Agreement.

     4.  Warrants. Upon execution of this Agreement and subject to approval by
         --------
iBEAM's board of directors, iBEAM will issue to AOL warrants (in form and
substance satisfactory to AOL) to purchase Five Million Dollars (US$5,000,000)
of iBEAM common stock at a price per share to be mutually agreed upon by the
Parties pursuant to the terms of a warrant agreement to be entered into by the
Parties within thirty (30) days following the Effective Date hereof
(collectively, the "Warrants"). The Warrants shall fully vest upon the earlier
of (i) three (3) years, (ii) the occurrence of any Initial Public Offering, or
(iii) the expiration of this Agreement.  For purposes of this Agreement,
"Initial Public Offering" shall mean a public offering of iBEAM common stock
after the Effective Date that results in proceeds to iBEAM of not less than
twenty million dollars ($20,000,000). The Parties will agree on additional terms
and conditions with respect to the Warrants.

     5.  Media Content Restrictions.
         --------------------------

         (a)  Compliance with AOL Terms of Service. If AOL notifies iBEAM that
              ------------------------------------
     any Media Content delivered to AOL Users violates AOL's Terms of Service
     (which are the terms of service generally applied to AOL Users), iBEAM will
     promptly prevent such Media Content from being routed through the iBEAM
     Servers to the extent technically feasible; provided, however, that if
                                                 --------  -------
     iBEAM is unable to prevent such Media Content from being routed through the
     iBEAM Servers, then AOL may suspend the delivery of such Media Content to
     AOL Users, without penalty, immediately upon notice to iBEAM. AOL may
     modify its Terms of Service from time to time at its discretion; provided,
                                                                      --------
     however, that if AOL makes any material changes or revisions to its Terms
     -------
     of Service, notifications of such material changes or revisions shall be
     posted on the America

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with the Commission. Confidential treatment has been requested with respect to
the omitted portions.


<PAGE>

     Online service at least thirty (30) days prior to the effectiveness of such
     revisions. The current Terms of Service are available on the AOL Service at
     Keyword: TOS.

         (b)  User Information.  iBEAM shall ensure that iBEAM's collection,
              ----------------
use and disclosure of information obtained from AOL Users under this Agreement
("User Information") complies with (i) all applicable laws and regulations and
(ii) AOL's standard privacy policies, available on the AOL Service at the
keyword term "Privacy" (e.g., no member profiling or data mining). iBEAM will
not disclose User Information collected hereunder to any third party in a manner
that identifies AOL Users as end users of an AOL product or service or use User
Information collected under this Agreement to market another Interactive
Service. For purposes of this Agreement, "Interactive Service" shall mean any
entity offering one or more of the following: (i) [*] (e.g., [*]); (ii) [*]
(e.g., [*] and/or [*] (e.g., [*]); and (iii) [*].

     6.  IBEAM's Responsibilities.  In providing the Services, iBEAM will
         ------------------------
distribute the Media Content to AOL Users exclusively from the iBEAM Servers
located within the AOL complex (subject to capacity restraints), and if AOL at
its sole discretion so requests, iBEAM will promptly provide AOL with
appropriate records to confirm compliance with this obligation.  Notwithstanding
the foregoing, AOL may request that iBEAM distribute Media Content to AOL Users
from other iBEAM servers located outside of the AOL complex (i.e., other than
the iBEAM Servers) in order to address emergency conditions, scheduled
maintenance or capacity constraints based on the number of iBEAM Servers located
within the AOL complex, in which case IBEAM shall do so, to the extent
commercially reasonable (collectively, the "Extraordinary Distribution
Arrangement"); provided, however, that the Media Content served pursuant to any
               --------  -------
such Extraordinary Distribution Arrangement shall not be subject to the revenue
share provisions described in paragraph 2 of this Agreement; provided, further,
                                                             --------  -------
that any resulting increase in Inbound Bandwidth usage is not counted when
measuring Inbound Distribution traffic as described in paragraph 2(b)(iii)(B).
iBEAM acknowledges and agrees that, except as expressly contemplated herein, it
does not require any access to AOL usage data, including but not limited to web
usage logs, to perform its obligations under this Agreement.  iBEAM will ensure
that its iBEAM Servers and Services support and interoperate with the leading
technology in the Internet industry (including, without limitation, [*] caching
servers, [*] and [*] browsers, [*] and [*] streaming software and any other
technology designated from time to time by AOL), and will be responsible for
providing the Services in a professional manner in conformance with industry
standards and the provisions of this Agreement; provided, however, that iBEAM
                                                --------  -------
does not represent or warrant that the Services will be uninterrupted or error
free, and iBEAM's liability in the event of interruptions, errors or failures in
its Services is limited as set forth in Section 10 below.  THE SERVICES ARE
PROVIDED "AS IS" AND IBEAM DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.

     7.  AOL's Responsibilities.  AOL shall be responsible for providing iBEAM
         ----------------------
with the Obligatory Equipment Rack Space to accommodate the iBEAM Servers and
for providing iBEAM with reasonable access to the iBEAM Servers as described in
Section

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Note: Information in this document marked with an "[*]" has been omitted and
filed separately with the Commission. Confidential treatment has been requested
with respect to the omitted portions.

[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.

<PAGE>

1 above in order for iBEAM to perform its obligations hereunder. AOL shall also
be responsible for supplying iBEAM with information about AOL's Internet
Protocol addressing scheme to the extent necessary for iBEAM to fulfill its
obligations under this Agreement. Notwithstanding the foregoing, AOL does not
represent or warrant that such services will be uninterrupted or error free, and
AOL's liability in the event of interruptions, errors or failures in the
services to be provided by AOL hereunder is limited as set forth in Section 10
below. In addition, the Parties hereby acknowledge and agree that this Agreement
is conditioned upon AOL's ability to permit iBEAM to utilize AOL's bandwidth in
the manner contemplated herein pursuant to AOL's existing arrangements with
third party peering partners. In the event that an AOL peering partner objects
to the use of its bandwidth (as provided to AOL) in accordance with the terms of
this Agreement, AOL shall have the right (without penalty to AOL) to suspend the
delivery of the Media Content through such peering partner's network, provided
that AOL meets its overall commitment to provide bandwidth as specified in this
Agreement. OTHER THAN AS SET FORTH HEREIN, THE SERVICES PROVIDED BY AOL ARE
PROVIDED `AS IS' AND AOL DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

     8.  Technical/Vendor Cooperation.  iBEAM will cooperate with AOL to the
         ----------------------------
extent commercially reasonable in adjusting the capacity of its Services under
this Agreement to adapt to AOL's changing needs, particularly in providing a
favorable browsing environment to AOL Users. In addition, AOL and iBEAM agree to
cooperate with each other to the extent commercially reasonable with a view to
discussing the provision of other value-added services to America Online content
providers and other IBEAM customers, and IBEAM agrees to make commercially
reasonable efforts to integrate the anticipated needs of AOL and its content
partners into IBEAM's future product plans.

     9.  Connectivity Relationships; Bandwidth Usage Calculation.
         -------------------------------------------------------

         9.1.  Reliance on Third-Party Internet Service Providers.  iBEAM
               --------------------------------------------------
acknowledges that AOL's ability to allow iBEAM to use AOL's bandwidth in the
manner set forth herein may, in part, require the approval of one or more third-
party Internet service providers or content partners that have a direct
connection with AOL for such bandwidth. AOL agrees to use commercially
reasonable efforts to obtain such approval; provided, however, that if any such
                                            --------  -------
third party refuses to grant such approval, then AOL may suspend the delivery of
Media Content through such provider's network in AOL's sole discretion, without
penalty, upon reasonable notice to iBEAM provided that AOL meets its overall
commitment to provide bandwidth as specified in this Agreement. The Parties
agree to act in good faith regarding the placement and connectivity of the iBEAM
Servers in the AOL host complex.

         9.2  Measurement of Monthly Bandwidth Usage.  AOL shall separately
              --------------------------------------
measure the amount of Inbound Distribution bandwidth and Outbound Distribution
bandwidth used by iBEAM through the AOL Network infrastructure during each month
of the Term (collectively, the "Monthly Bandwidth Usage"). AOL shall measure
Monthly

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[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.

<PAGE>

Bandwidth Usage according to the "[*]" method, calculated as follows: (i) actual
Monthly Bandwidth Usage in megabit-per-second ("Mbps") will be sampled and
collected every [*] (each, an "Individual Data Point," and collectively, the
"Individual Data Points"), and such Individual Data Points shall be stored for
the remainder of the relevant month; (ii) at the end of each such month, all
Individual Data Points shall be ranked in descending order; (iii) the top [*]
percent ([*]%) of the ranked Individual Data Points shall then be discarded; and
(iv) the highest of the remaining, non-discarded Individual Data Points shall
constitute iBEAM's Monthly Bandwidth Usage.

         9.3  AOL Maximum Projected Monthly Total Bandwidth.  Within two (2)
              ---------------------------------------------
days following the Effective Date, AOL shall supply iBEAM with the maximum
surplus Inbound Distribution bandwidth projected to be available to iBEAM on a
monthly basis during the Term (the "Maximum Projected Inbound Distribution
Bandwidth") and Outbound Distribution bandwidth projected to be available to
iBEAM on a monthly basis during the Term (the "Maximum Projected Outbound
Distribution Bandwidth"), each in Mbps, and as determined by AOL in its sole
discretion (the Maximum Projected Inbound Distribution Bandwidth and the Maximum
Projected Outbound Distribution Bandwidth collectively referred to herein as the
"Maximum Projected Bandwidth", and each individually referred to herein as a
"Component"). AOL will have the right to change the Maximum Projected Bandwidth
(or any Component thereof) from time to time during the Term (as it applies to
subsequent months) upon thirty (30) days' prior notice to iBEAM. Notwithstanding
the foregoing, in no event shall (i) the Maximum Projected Inbound Distribution
Bandwidth be less than [*] ([*]) Mbps or (ii) the Maximum Projected Outbound
Distribution Bandwidth be less than [*] ([*]) Mbps. iBEAM may request from time
to time in writing during the Term an increase in the Maximum Projected
Bandwidth (or any Component thereof), and AOL agrees to respond to iBEAM within
fourteen (14) days following receipt by AOL of any such written request as to
whether or not such request is acceptable to AOL; provided, however, that AOL
                                                  --------  -------
shall not be obligated to provide or make available bandwidth beyond the Maximum
Projected Inbound Distribution Bandwidth (in the case of Inbound Distribution)
or the Maximum Projected Outbound Distribution Bandwidth (in the case of
Outbound Distribution).  The Parties hereby acknowledge and agree that any
bandwidth provided to AOL by iBEAM during the Term shall not constitute part of
either the Maximum Projected Bandwidth in any month of the Term.

     10.  Limitation of Liability.
          -----------------------

          (a)  Liability.  NEITHER PARTY (NOR ITS CUSTOMERS OR MEMBERS) SHALL
               ---------
BE LIABLE TO THE OTHER PARTY (NOR ITS CUSTOMERS OR MEMBERS) FOR PUNITIVE,
SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES, INCLUDING WITHOUT
LIMITATION LOST PROFITS OR LOSS OR DAMAGE TO DATA ARISING OUT OF THIS AGREEMENT,
EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES
(COLLECTIVELY, "DISCLAIMED DAMAGES"); PROVIDED THAT EACH PARTY WILL REMAIN
                                      --------
LIABLE TO THE OTHER PARTY TO THE EXTENT ANY DISCLAIMED DAMAGES ARE CLAIMED BY A
THIRD PARTY AND ARE SUBJECT TO INDEMNIFICATION PURSUANT TO SECTION 10(c). EXCEPT
AS PROVIDED IN

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<PAGE>

SECTION 10(c), (I) LIABILITY ARISING UNDER THIS AGREEMENT WILL BE LIMITED TO
DIRECT, OBJECTIVELY MEASURABLE DAMAGES, AND (II) THE MAXIMUM LIABILITY OF ONE
PARTY TO THE OTHER PARTY FOR ANY CLAIMS ARISING IN CONNECTION WITH THIS
AGREEMENT WILL NOT EXCEED THE AGGREGATE AMOUNT OF FIXED GUARANTEED PAYMENT
OBLIGATIONS OWED BY EITHER PARTY TO THE OTHER PARTY HEREUNDER IN THE YEAR IN
WHICH THE EVENT GIVING RISE TO LIABILITY OCCURS; PROVIDED THAT EACH PARTY WILL
                                                 --------
REMAIN LIABLE FOR THE AGGREGATE AMOUNT OF ANY PAYMENT OBLIGATIONS OWED TO THE
OTHER PARTY PURSUANT TO THE AGREEMENT.

          (b)  No Additional Warranties.  EXCEPT AS EXPRESSLY SET FORTH IN THIS
               ------------------------
AGREEMENT, NEITHER PARTY MAKES ANY, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS
ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE SERVICES,
AOL NETWORK, THE AOL SERVICE, AOL.COM, THE COMPUSERVE SERVICE, THE EQUIPMENT
RACKS, THE MEDIA CONTENT OR THE iBEAM SERVERS, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES
ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, AOL SPECIFICALLY DISCLAIMS ANY WARRANTY REGARDING
THE PROFITABILITY OF THE iBEAM SERVERS OR THE MEDIA CONTENT.

          (c)  Indemnity. Either Party will defend, indemnify, save and hold
               ---------
harmless the other Party and the officers, directors, agents, affiliates,
distributors, franchisees and employees of the other Party from any and all
third party claims, demands, liabilities, costs or expenses, including
reasonable attorneys' fees ("Liabilities"), resulting from the indemnifying
Party's material breach of any duty, representation, or warranty of this
Agreement.

          (d)  Claims. If a Party entitled to indemnification hereunder (the
               ------
"Indemnified Party") becomes aware of any matter it believes is indemnifiable
hereunder involving any claim, action, suit, investigation, arbitration or other
proceeding against the Indemnified Party by any third party (each an "Action"),
the Indemnified Party will give the other Party (the "Indemnifying Party")
prompt written notice of such Action. Such notice will (i) provide the basis on
which indemnification is being asserted and (ii) be accompanied by copies of all
relevant pleadings, demands, and other papers related to the Action and in the
possession of the Indemnified Party. The Indemnifying Party will have a period
of ten (10) days after delivery of such notice to respond. If the Indemnifying
Party elects to defend the Action or does not respond within the requisite ten
(10) day period, the Indemnifying Party will be obligated to defend the Action,
at its own expense, and by counsel reasonably satisfactory to the Indemnified
Party. The Indemnified Party will cooperate, at the expense of the Indemnifying
Party, with the Indemnifying Party and its counsel in the defense and the
Indemnified Party will have the right to participate fully, at its own expense,
in the defense of such Action. If the Indemnifying Party responds within the
required ten (10) day period and elects not to defend such Action, the
Indemnified Party will be free, without prejudice to any of the Indemnified
Party's rights hereunder, to compromise or defend (and control the defense

                                       8
<PAGE>

of) such Action. In such case, the Indemnifying Party will cooperate, at its own
expense, with the Indemnified Party and its counsel in the defense against such
Action and the Indemnifying Party will have the right to participate fully, at
its own expense, in the defense of such Action. Any compromise or settlement of
an Action will require the prior written consent of both Parties hereunder, such
consent not to be unreasonably withheld or delayed.

     11. Terms and Termination.  The initial term of this Agreement (the
         ---------------------
"Initial Term") shall be two (2) years from the Installation Date (as defined in
Section 1 of this Agreement). The Parties may mutually agree to renew this
Agreement for up to two (2) additional one-year terms (each such additional
term, a "Renewal Term," and together with the Initial Term, collectively
referred to herein as the "Term"). Either Party may terminate this Agreement if
the other fails to cure a material breach of this Agreement within thirty (30)
days of receiving written notice of the breach from the terminating party.
Notwithstanding the foregoing, AOL may terminate the Agreement without penalty
in the event that iBEAM fails to reach Two Hundred Fifty Thousand Dollars
(US$250,000) in Gross Revenues owed to AOL (pursuant to Section 2(b) of this
Agreement) by the first anniversary of the Effective Date ("Insufficient Gross
Revenues Termination"); provided, however, that upon any such Insufficient Gross
                        --------  -------
Revenues Termination, AOL shall refund to iBEAM Two Million Dollars
(US$2,000,000).

     12. Public Relations and Confidentiality. Neither Party shall make or
         ------------------------------------
cause to be made any news release or other public announcement pertaining to
this Agreement or the relationship created hereby or disclose such information
to any third party without the express prior written consent and approval of the
other Party, which will not be unreasonably withheld, except to the extent
required by applicable law, in which case, the disclosing Party shall provide
the other Party with reasonable advance notice of its obligation to make such a
disclosure. The failure by one Party to obtain the prior written approval of the
other Party prior to issuing a Press Release (except as required by law) shall
be deemed a material breach of this Agreement.

     13. Audit Rights.  In making the payments required pursuant to this
         ------------
Agreement, the Party responsible for the same will accompany such payments with
a statement setting forth, in reasonable detail, the basis upon which the
payment has been calculated and the manner of such calculation. Each Party will
keep accurate and complete records supporting such calculation for a period of
at least three (3) years following the date the payment relating to such records
has been made. Each Party agrees to permit such records to be examined, upon
reasonable prior notice but no more than once per year during the Term, by an
independent certified public accountant designated by the Party seeking to audit
the same at such Party's cost in order to determine the accuracy of the reports
and payments made hereunder.  Prompt adjustment shall be made to correct any
errors or omissions in any reports or payments disclosed by any such audit
examination.  In the event that an audit uncovers inaccuracies in payments made
by either Party to the other Party in excess of five percent (5%), the audited
Party agrees to pay for the cost of the audit.  Similarly, AOL will keep
appropriate records supporting its calculation of iBEAM's bandwidth usage

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<PAGE>

under this Agreement and AOL's purchase of Services and will permit examination
of such records by an independent certified public accountant (on behalf of
iBEAM and at iBEAM's sole cost and expense), and an adjustment shall promptly be
made to correct any errors or omissions disclosed by any such examination.

     14. Confidentiality.  The Parties agree that all disclosures of
         ---------------
confidential and/or proprietary information before and during the Term shall
constitute confidential information (collectively, "Confidential Information")
of the disclosing Party.  Such Confidential Information shall include, but not
be limited to: AOL User and member information, product designs and plans,
architecture and configuration of the AOL Service, source code, the existence of
this Agreement and the relationship created hereby.  Each Party shall use
commercially reasonable efforts to ensure the confidentiality of such
information supplied by the disclosing party, or which may be acquired by either
party in connection with or as a result of the provision of the services under
this Agreement.  Each Party agrees that it shall not disclose, use, modify,
copy, reproduce or otherwise divulge such confidential information other than to
fulfill its obligations under this Agreement, except to the extent required by
applicable law, in which case, the disclosing party shall provide the other
Party with reasonable advance notice of its obligation to make such a
disclosure.  Each Party further agrees to hold  harmless and indemnify the other
Party in the event of any disclosure by such Party.  "Confidential Information"
shall not include information (a) already lawfully known to or independently
developed by the receiving Party, (b) disclosed in published materials, (c)
generally known to the public, or (d) lawfully obtained from any third party.

     15. Change of Control.  "Change of Control" is defined as (a) the
         -----------------
consummation of a reorganization, merger or consolidation or sale or other
disposition of substantially all of the assets of a party or (b) the acquisition
by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1933, as amended) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under such Act) of more
than 50% of the outstanding voting securities of the Company or of securities
representing the right to elect a majority of the Company's board of directors.
iBEAM shall not assign this Agreement or any right, interest or benefit under
this Agreement without the prior written consent of AOL, which will not
unreasonably be withheld. Assumption of this Agreement by any successor to iBEAM
(including, without limitation, by way of merger or consolidation) shall be
subject to AOL's prior written approval, which will not unreasonably be
withheld. In the event of any Change of Control of iBEAM or any assignment or
assumption of this Agreement, without AOL's prior written consent, AOL shall
have the right to terminate this Agreement upon written notice to iBEAM. Subject
to the foregoing, this Agreement shall be fully binding upon, inure to the
benefit of and be enforceable by the Parties hereto and their respective
successors and assigns.

     16. Force Majeure.  During the term of this Agreement, neither Party shall
         -------------
be in default of its obligations to the extent that its performance is delayed
or prevented by causes beyond its reasonable control, including but not limited
to acts of God, natural disasters, bankruptcy of a vendor, strikes and other
labor disturbances, acts of war or civil disturbance, or other equivalent or
comparable events.

                                       10
<PAGE>

     17. Notices.  All notices or reports permitted or required under this
         -------
Agreement shall be in writing and shall be delivered by personal delivery,
nationally recognized overnight courier, telegram, or facsimile transmission or
by registered mail, return receipt requested.  Notices shall be sent to the
signatories of this Agreement at the address set forth above or such other
address as either party may specify in writing.  Notices shall be effective upon
receipt. In the case of AOL, such notice will be provided to both the President,
Business Affairs (fax no. 703-[*]) and the Deputy General Counsel (fax no. 703-
[*]), each at the address of AOL set forth in the first paragraph of this
Agreement.  In the case of iBEAM, except as otherwise specified herein, the
notice address will be the address for iBEAM set forth in the first paragraph of
this Agreement, with the other relevant notice information, including the
recipient for notice and, as applicable, such recipient's fax number or e-mail
address, to be as reasonably identified by iBEAM.

     18. Injunctive Relief.  It is understood and agreed that, notwithstanding
         -----------------
any other provisions of this Agreement, breach of the provisions of this
Agreement by a Party will cause the other Party irreparable damage for which
recovery of money damages would be inadequate and that the non-breaching Party
may therefore seek timely injunctive relief to protect its rights under this
Agreement in addition to any and all remedies at law.

     19. No Agency.  Nothing contained herein shall be construed as creating any
         ---------
agency, partnership, or other form of joint enterprise between the Parties.

     20. Full Power.  Each Party warrants that it has full power to enter into
         ----------
and perform this Agreement and the person signing this Agreement on such Party's
behalf has been duly authorized and empowered to enter into this Agreement. Each
Party further acknowledges that it has read this Agreement, understands it, and
agrees to be bound by it.

     21. Survival.  Sections 10 ("Limitation of Liability"), 12 ("Public
         --------
Relations & Confidentiality"), 13 ("Audit Rights"), 14 ("Confidentiality"), 18
("Injunctive Relief"), 19 ("No Agency"), 21 ("Survival"), and 22 ("Legal
Matters") of this Agreement shall survive cancellation, termination or
expiration of this Agreement.

     22. Legal Matters.  This Agreement represents the entire agreement between
         -------------
the Parties regarding the subject matter hereof.  If any part of this Agreement
is held invalid or unenforceable, that portion shall be construed in a manner
consistent with applicable law to reflect, as nearly as possible, the original
intentions of the Parties, and the remaining portions shall remain in full force
and effect.  The laws of the State of Delaware, excluding its conflicts-of-law
rules, shall govern this Agreement.  The terms and conditions of this Agreement
supercede all previous agreements, proposals or representations related to the
subject matter hereof.

                                       11

[*] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

                              AMERICA ONLINE, INC.


                              By: _____________________________


                              Title:____________________________


                              iBEAM BROADCASTING, INC.


                              By: _____________________________


                              Title: ____________________________

                                       12

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