Customer Technical Support Services Agreement

Exhibit 10.13

Portions of this Exhibit 10.13 marked by a [__] have been omitted pursuant to a request for confidential treatment filed separately with the Commission.

CUSTOMER TECHNICAL SUPPORT SERVICES AGREEMENT

Between CIRCUIT CITY STORES, INC., a Virginia corporation (" Circuit City" )


and


SPARE BACKUP INC., a California corporation (" Provider" )


Circuit City agrees to engage Provider for the Term (as defined in Section 1), and Provider agrees to accept such engagement by Circuit City, to perform the remote data storage and protection services and related administrative services described in the Services Specifications attached hereto as Schedule 1 (" Services" ), as may be modified by the Parties (as defined in Section 1) from time to time in writing, during the Term and subject to the following:


1.

The attached Terms and Conditions for Services


2.

Schedule 1 Services Specifications


Circuit City and Provider each acknowledge that they agree to be bound by the terms of this Customer Technical Support Services Agreement (" Agreement" ) and each has caused this Agreement to be executed below by its authorized representative.


Provider:


SPARE BACKUP, INC.


By: /s/ Cery Perle


Name: Cery Perle

Title: Chief Executive Officer

Circuit City:


CIRCUIT CITY STORES, INC.


By: /s/ Marc Sieger


Name: Marc Sieger

Title: Senior Vice President


Principal Business Address :

73061 El Paseo

Palm Desert, CA 92260


With a copy to:


David L. Stanton, Esq.

Pillsbury Winthrop Shaw Pittman, LLP

725 S. Figueroa, St., Suite 2800

Los Angeles, CA 90046

Fax (213) 629-1033


Principal Business Address :

9954 Mayland Drive

Richmond, Virginia 23233

Facsimile: (804) 527-4173


With a copy to:


Legal Department- Commercial Group

Circuit City Stores, Inc.

9950 Mayland Drive

Richmond, Virginia 23233

Fax: (804) 527-4877


Effective Date : August 2, 2006


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Portions of this Exhibit 10.13 marked by a [__] have been omitted pursuant to a request for confidential treatment filed separately with the Commission.

TERMS AND CONDITIONS FOR SERVICES

1.

DEFINITIONS

As used in this Agreement and its Schedules and Exhibits, the following terms shall have the following meanings:


1.1.

" Activated Customer" means an Enrolled Customer that activates the Services within ninety (90) days of the end of the Free Trial Period, and for which Provider charges at least one (1) valid Service Fee.


1.2.

" Agreement" has the meaning ascribed to it in the Preamble, and includes all Exhibits and Schedules hereto.


1.3.

" Bounty" has the meaning ascribed to it in Section 3.1.


1.4.

" Circuit City Customer Information" means (a) the names, street and email addresses, and other personally identifying information of Circuit City Customers, (b) financial information such as credit card numbers and payment history of Circuit City Customers, and (c) any other information that is obtained, directly or indirectly, by either Party from Circuit City Customers in the course of performance of this Agreement.


1.5.

" Circuit City Customers" has the meaning ascribed to it in Section 2.1.


1.6.

" Circuit City Indemnitees" has the meaning ascribed to it in Section 5.2.


1.7.

" Circuit City Trademarks" means the trade names, service marks, trademarks and logos set forth in Exhibit C to Schedule 1 .


1.8.

" Co-branded Landing Page" has the meaning ascribed to it in Schedule 1 .


1.9.

" Company Information" means Confidential Information and Trade Secrets. Company Information includes information that has been disclosed in confidence to a Party by a third party. With respect to Circuit City, " Company Information" also includes Circuit City Customer Information.


1.10.

" Confidential Information" means any data or information that the recipient should reasonably recognize has value to the disclosing Party and is not generally known by the public.


1.11.

" Content" means text, graphics, trademarks, logos, and other materials provided by a Party for use in the Circuit City Web Site.


1.12.

" Cure Period" has the meaning ascribed to it in Section 9.3.


1.13.

" [______]" and " www. [ ] .com" are the code names used to refer to Circuit City' s new PC Services brand and the corresponding website.


1.14.

" Enrolled Customer" means a Circuit City Customer that enrolls in a Free Trial Offer but is not yet, or does not become, an Activated Customer.


1.15.

" Free Trial Offer" has the meaning ascribed to it in Schedule 1 .


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1.16.

" Installed Customer" means a Circuit City Customer that has the Software installed on his/her personal computer by Circuit City; provided, however, if there is a ten percent (10%) or greater difference between the number of Circuit City Customers that have in-store installations performed by Circuit City, and the number that go on to become Enrolled Customers, then the number of installations performed (as tracked by the $0.01 barcode) and the number Enrolled Customers derived from in-store installations shall be averaged to determine the number of Installed Customers.


1.17.

" Material Default Notice" has the meaning ascribed to it in Section 9.3.


1.18.

" Online Customer" means a Circuit City Customer that becomes an Enrolled Customer through the Co-branded Landing Page.


1.19.

" Parties" means collectively, Circuit City and Provider.


1.20.

" Party" means individually, Circuit City or Provider, as applicable.


1.21.

" Provider Indemnitees" has the meaning ascribed to it in Section 5.3.


1.22.

" Reports" means the reports, documentation and other work product to be delivered to Circuit City as a result of the performance of the Services by Provider under this Agreement and as further described in Schedule 1 .


1.23.

" Sales Taxes" has the meaning ascribed to it in Section 3.3.


1.24.

" Scheduled Maintenance Downtime" has the meaning ascribed to it in Exhibit B to Schedule 1 .


1.25.

" Service Fees" means such fees for the Services provided to the Circuit City Customers as shall be mutually agreed to by the Parties in writing.


1.26.

" Services" has the meaning ascribed to it in the Preamble.


1.27.

" Software" means the software, which will contain a unique Circuit City identifier, that a customer must have installed on his/her personal computer in order to use the Services.


1.28.

" Spare Backup Trademarks" means the trade names, service marks, trademarks and logos set forth in Exhibit C to Schedule 1 .


1.29.

" Term" has the meaning ascribed to it in Section 9.1.


1.30.

" Terms of Service" has the meaning ascribed to it in Section 2.7.


1.31.

" Trade Secrets" means information that is protectable as a trade secret under applicable law, which includes all information, without regard to form, which: (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy, including, but not limited to, any technical or non-technical data, formulae, patterns, compilations, programs, devices, methods or techniques.


1.32.

" Uptime" has the meaning ascribed to it in Exhibit B to Schedule 1 .


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Portions of this Exhibit 10.13 marked by a [__] have been omitted pursuant to a request for confidential treatment filed separately with the Commission.

2.

SERVICES


2.1.

Services . Provider will provide the Services for Circuit City Customers in accordance with the terms and conditions set forth in this Agreement and for the Service Fees. A customer may become a " Circuit City Customer" by (i) having the Software installed on his/her personal computer at a Circuit City store; or (ii) downloading the Software from the Co-Branded Landing Page; all in accordance with Schedule 1 . Provider shall make available to Circuit City Customers a Free Trial Offer of the Services. Circuit City Customers will also be entitled to most favored customer pricing such that the Service Fees will be the same or lower than the fees for the same or similar services Provider charges to its direct customers at www.sparebackup.com .


2.2.

In-Store Services; Change of Stores . Circuit City shall market the Services by making installation of the Software one of the services performed by [______] . Circuit City will offer its customers installation of the Software, free of charge, on their personal computers. In order to track installation of the Software for purposes of determining the Guaranteed Bounty due to Circuit City as set forth in Section 3.1.1, Circuit City will create a one cent ($0.01) barcode for the installation of the Software that will be tracked through Circuit City' s point of sale systems each time an installation is performed. Circuit City may add to or remove the number of stores offering the Services in its sole discretion by providing Provider with thirty (30) days' advance written notice. Circuit City may also utilize competitors of Provider for in-store services or online services similar to the Services, although it is not Circuit City' s current intention to do so. In consideration of Spare Backups investment in the launch, Circuit City will grant Spare Backup a six (6) month exclusive as an " independent on line backup service." Notwithstanding, this will not restrict Circuit City from offering other on line backup services that may be bundled in future software products offered by Circuit City e.g. McAfee, Microsoft, etc.


2.3.

Co-branded Landing Page . During the Term, Provider shall host the Co-branded Landing Page as described herein and in Schedule 1 . The Co-branded Landing Page may be accessed by Circuit City Customers directly or through links on www.circuitcity.com and www. [ ] .com . The Co-branded Landing Page shall have all the functionality of the current version of Provider' s web site at www.sparebackup.com and the Parties shall develop a mutually acceptable real time system to track enrollments by Circuit City Customers for purposes of determining the Bounty set forth in Section 3.1. The Co-branded Landing Page shall be customized in a manner mutually determined by the Parties, and will include branding for both of the Parties.


2.4.

Creative Control of the Co-branded Landing Page . The Parties shall mutually agree on the placement of each Party' s logo and branding within the Co-branded Landing Page. The interface between www.circuitcity.com and www. [ ] .com , and the Co-branded Landing Page shall be mutually agreed to by the Parties, and consistent with the technology of www.circuitcity.com and www. [ ] .com , and the Co-branded Landing Page. Provider shall be solely responsible for the functional framework and information architecture of the Co-branded Landing Page, which may be changed by Provider without notice provided that any such changes do not require changes to www.circuitcity.com or www. [ ] .com , or additional engineering efforts by Circuit City, in which case Provider shall obtain Circuit City' s reasonable written consent to such changes. Furthermore, Provider agrees that it will provide Circuit City with advance written notice of any modifications to the Co-branded Landing Page that affects the appearance or positioning of the Circuit City Trademarks, in which case Circuit City shall have the right, in its sole discretion, to approve said modifications. In any event, Provider agrees that such modifications will not have a material adverse effect on the overall prominence and accessibility of Circuit City co-branding.


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Portions of this Exhibit 10.13 marked by a [__] have been omitted pursuant to a request for confidential treatment filed separately with the Commission.


2.5.

Service Order Processing . Provider shall directly process all Circuit City Customer enrollments and activations of the Service. All Circuit City Customer direct orders will be quality controlled through procedures as mutually agreed by the Parties.


2.6.

Policies . As a condition to enrolling in or activating the Services, Circuit City Customers will be required to confirm a terms of service set forth in an end user license agreement that contains restrictions, representations and limitations, and that instructs the user to contact Provider directly with any issues regarding the Services (the " Terms of Service" ). The Terms of Service shall be mutually agreed to by the Parties. The Co-branded Landing Page shall also (a) contain privacy policies as agreed upon between Circuit City and Provider consistent with this Agreement; and (b) identify the collection and use of information by Provider, as approved in advance in writing by Circuit City. Provider shall be responsible for complying with all such policies. Any changes to such policies must be approved in writing in advance by Circuit City, which approval shall not be unreasonably withheld or delayed.


2.7.

Maintenance and Support . Provider shall provide first-level customer support for the Co-branded Landing Page. The Co-branded Landing Page shall prominently identify Provider as the primary point of contact for support issues relating to the Services. Provider shall provide support under Provider' s trade name only. In addition, Provider' s customer support services shall be available to assist Circuit City' s store personnel with the Co-branded Landing Page.

3.

BOUNTY; MARKETING FUNDS


3.1.

Bounty .


3.1.1

Escrow Agreement; Guaranteed Bounty . Provider will, as of fourteen (14) days after the Effective Date, deposit One Million Dollars ($1,000,000) into an Escrow Account to be paid to Circuit City in accordance with the terms of the Escrow Agreement. Within thirty (30) days of the Effective Date, Circuit City and Provider will enter into an Escrow Agreement with a mutually agreeable escrow agent (the " Escrow Agent" ). The escrowed funds will be used to pay Circuit City a guaranteed Bounty of [______] Dollars ($ [_____] ), for each of the first [___________] ( [________] ) Installed Customers or Online Customers.

- By way of example only: If there are [______] Online Customers, all [______] would count towards the first [____________] ( [______] ). If Circuit City performs [______] installations (as tracked by the $0.01 barcode), and only [______] of those become Enrolled Customers, then [______] (( [______] + [______] )/2) of the in-store installations will count towards the first [___________] ( [______] ). In sum, [______] ( [______] + [______] ) of the first [______] Circuit City Customers would have been achieved.


3.1.2

Bounty for Installations . After the first [__________] ( [______] ) of the sum of Installed Customers and Online Customers, for which Circuit City will receive the guaranteed Bounty amount set forth in Section 3.1.1, Circuit City will receive a Bounty (as calculated below) for every Installed Customer or Online Customer. Based on the results of the first [__________] ( [______] ) Circuit City Customers, Provider will calculate a conversion rate by dividing the number of Activated Customers (the numerator) by the number of the sum of Installed Customers and Online Customers (the denominator) (the " Conversion Rate" ). The Conversion Rate will then be multiplied by [______] Dollars ($ [____] ) to establish the amount of the Bounty per Installed Customer or Online Customer. The Bounty amount will be recalculated every six months using the same formula above (always using $ [____] as the base line Bounty). By way of example only, if the Conversion Rate is 70%, the Bounty for the next six months would be $ [_____] ($ [_____] x 70% = $ [_____] ). Notwithstanding anything to the contrary above, at no time will the Bounty exceed

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Portions of this Exhibit 10.13 marked by a [__] have been omitted pursuant to a request for confidential treatment filed separately with the Commission.

[_____] dollars ($ [_____] ) or drop below [______] dollars ($ [_____] ) per Installed Customer or Online Customer, regardless of the Conversion Rate. All Bounties due under this Section shall be paid by Provider to Circuit City within forty-five (45) days of the end of the month in which the Circuit City Customer became an Installed Customer or Online Customer.


3.2.

Marketing Funds . On the Effective Date, Provider agrees to provide Circuit City with marketing funds in the amount of Two Hundred Thousand Dollars ($200,000) to be used as outlined in Schedule 1 .


3.3.

Taxes and Other Charges . The Party who receives the Service Fees from the Circuit City Customer is responsible for and will pay any taxes incurred or assessed on such Services for which such Party is charged with collecting for, and/or remitting to, an applicable taxing jurisdiction (" Sales Taxes" ). Each Party will be solely responsible for any taxes based upon its net income and any other taxes it incurs in performing its obligations under this Agreement. Neither Party shall be obligated to pay or otherwise be liable or responsible for the Sales Tax obligations of the other Party, and the Parties hereby agree to indemnify and hold the other Party harmless against, any penalty, additional tax or interest that may be assessed or levied as a result of the failure to timely collect or pay any tax, or to file any return, form or information statement that may be required by any governmental agency.


3.4.

Reports; Audit Rights . Each Party will provide regular accounting reports as reasonably requested by the other Party on a monthly basis in connection with payments of the Bounty remittances. Circuit City shall have the right to audit Provider' s books and records related to the provision of the Services. Provider shall maintain all records pertaining to the Services for a period of at least three (3) years after the termination or expiration of this Agreement. Circuit City' s internal or external auditors may audit, copy and inspect the records at reasonable times during the term of this Agreement and for the three (3) year period thereafter to verify Provider' s compliance with this Agreement; provided however , that unless such records or information are directly related to Circuit City, Circuit City shall not be entitled to see or have access to any Confidential Information of Provider. Circuit City will provide Provider with at least ten (10) days' prior written notice of an audit. Provider will make the information reasonably required to conduct the audit available on a timely basis and assist Circuit City and its internal or external auditors as reasonably necessary. Provider shall be responsible for Circuit City' s expenses incurred in connection with an audit, if the audit discloses an underpayment of any Bounty owed to Circuit City in excess of ten percent (10%) over the period under audit. Provider will promptly, but in no event more than ten (10) days after discovery of any underpayment, reimburse Circuit City for such unpaid Bounties together with a five percent (5%) late charge.

4.

REPRESENTATIONS AND WARRANTIES


4.1.

Provider Representations, Warranties and Covenants . Provider hereby represents, warrants and covenants during the term of this Agreement that:


4.1.1

the Services will be performed by Provider at all times in a professional and workmanlike manner;


4.1.2

in Provider' s provision of the Services hereunder, Provider will use employees who are adequately trained and who possess the requisite skills and professional knowledge to perform the Services;


4.1.3

the Services and the Co-branded Landing Page will meet the Performance and Quality Assurance Standards as set forth on Exhibit B to Schedule 1 ;


6


4.1.4

the Circuit City Web Site and any software provided and/or used by Provider to perform the Services (including, but not limited to, the Circuit City Web Site and software used to perform online virus scan, encryption, and other software services) do not include (i) software traps, viruses, worms, trap doors, back doors or other means or functions which will interfere with or otherwise adversely affect use of the Circuit City Web Site, Circuit City' s servers, or Circuit City Customers' personal computers, (ii) software which will damage or destroy data or other property on Circuit City' s servers or on Circuit City Customers' personal computers, or any (iii) master key access, ID, password feature or other means for access except for a Circuit City Customer login required to access the Services;


4.1.5

it has secured all necessary permits, licenses, consents, authorizations and waivers with respect to the Services and the Co-branded Landing Page for the purposes contemplated in this Agreement;


4.1.6

the Co-branded Landing Page, the Services, and the use thereof, do not and will not violate any applicable laws or regulations, including, without limitation, any federal or state privacy laws, or infringe the copyright, trademark or other intellectual property rights of any third party, or constitute defamation, invasion of privacy or the violation of any right of publicity or any other right of any third party;


4.1.7

The Spare Backup Trademark used by Circuit City with Provider' s permission will not infringe any intellectual property right or privacy right of any third party; and


4.1.8

Provider further represents, warrants and covenants, now and during the term of this Agreement, that:


4.1.8.1

Provider is a corporation duly incorporated, validly existing and in good standing under the laws of the State of California and has full power and authority to enter into and perform its obligations under this Agreement and the transactions contemplated in this Agreement;


4.1.8.2

The execution, delivery and performance by Provider of this Agreement has been duly authorized by all necessary action, corporate and otherwise;


4.1.8.3

This Agreement has been duly executed and delivered on behalf of the Provider and constitutes a valid and binding agreement enforceable against Provider in accordance with its terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting the rights of creditors and general principles of equity; and


4.1.8.4

Provider' s performance hereunder is and shall continue to be in compliance with all applicable laws and regulations.


4.2.

Circuit City Representations, Warranties and Covenants . Circuit City hereby represents, warrants and covenants during the term of this Agreement that:


4.2.1

Circu ...