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Exhibit 10.1
Rackable Systems, Inc.
RETENTION AGREEMENT
This Retention Agreement
(this " Agreement
"), effective as of the date of the last signature
on the signature page hereof (the " Effective
Date "), is executed by and between
Rackable Systems, Inc., a Delaware corporation (the "
Company "), and Giovanni
Coglitore (the " Executive
"). The Company and the Executive are each
individually referred to in this Agreement as a "
Party " and are collectively
referred to in this Agreement as the "
Parties ."
Recitals
A. The Executive and
the Company are parties to an Employment Agreement, dated December
23, 2002, as amended effective November 16, 2005 (as so amended,
the " Employment Agreement
"), and a Retention Bonus Agreement, dated September
12, 2006, as amended effective January 9, 2007 as so amended, the
" Bonus Agreement ").
The Employment Agreement outlines the general terms of employment
for the Executive, and the Bonus Agreement provides for a bonus to
be paid to the Executive in the event of a change in control of the
Company.
B. The Parties
desire to enter into this Agreement, which shall be in addition to,
and shall not amend or modify in any way the provisions of, the
Employment Agreement or the Bonus Agreement.
C. The Company
wishes to incentivize the Executive to remain with the Company and
use his best efforts to assist the Company in connection with the
conduct of the Company’s business.
Agreement
In consideration of the mutual promises and
covenants set forth in this Agreement, the receipt and sufficiency
of which are acknowledged by the Parties, the Parties agree as
follows:
1. Certain
Definitions .
1.1 Affiliate
. Any Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by or
is under common control with another Person. For purposes hereof,
"control" means the power to vote or direct the voting of
sufficient securities or other interests to elect a majority of the
directors or to control the management of another
Person.
1.2 Board
. The Board of Directors of the
Company.
1.3 Code .
The Internal Revenue Code of 1986, as
amended.
1.4 Entity
. A corporation, partnership, limited liability
company or other entity.
1.5 Involuntary
Termination With Cause . A termination
by the Company or any of its Subsidiaries of the Executive’s
employment relationship with the Company or any of its Subsidiaries
for any of the following reasons:
(a) the
Executive’s willfull refusal to perform in any material
respect the Executive’s duties or responsibilities for the
Company or any of its Subsidiaries or his willful disregard in any
material respect of any lawful written financial or budgetary
limitations established in good faith by the Board, provided the
Board provides him with written notice of such refusal or disregard
and provides the Executive with thirty (30) days to cure such
refusal or disregard, and the Executive fails to cure such refusal
or disregard within such thirty (30) days;
(b) the
Executive’s willful misconduct that causes material and
demonstrable injury, monetarily or otherwise, to the Company or any
of its Subsidiaries, including, but not limited to,
misappropriation or conversion of assets of the Company or any of
its Subsidiaries (other than non-material assets), provided the
Board provides him with written notice of such misconduct and
provides the Executive with thirty (30) days to cure such
misconduct, and the Executive fails to cure such misconduct within
such thirty (30) days; or
(c) the
Executive’s conviction or plea of nolo
contendre to a crime of moral turpitude causing
material and demonstrable injury to the Company or otherwise
demonstrating unfitness to serve as an officer of the Company or
conviction of or entry of a plea of nolo contendere
to a felony.
No act or failure by the Executive shall be
deemed "willful" if done, or omitted to be done, in good faith and
with the reasonable belief that the action or omission was in the
best interest of the Company or any of its Affiliates. For the
avoidance of doubt, a termination of employment of the Executive
due to death or disability shall not qualify as an Involuntary
Termination With Cause.
1.6 Own, Owned, Owner,
Ownership . A Person shall be deemed to
"Own," to have "Owned," to be the "Owner" of, or to have acquired
"Ownership" of securities if such Person, directly or indirectly,
through any contract, arrangement, understanding, relationship or
otherwise, is the beneficial owner of such securities. For example,
a holder of stock of a corporation (the "direct corporation") is
deemed to Own such stock and to Own a pro rata portion (based on
relative holdings of the stock of the direct corporation) of any
stock of any other corporation Owned by the direct
corporation.
1.7 Person
. An individual, a partnership, a limited
liability company, a corporation, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization
and a governmental entity or any department, agency or political
subdivision thereof.
1.8 Resignation for
Good Reason . The Executive shall be
deemed to have resigned with "Good Reason" if he resigns after any
of the following actions are taken without his written consent: (x)
the reduction of the Executive’s cash compensation by more
than 10%; (y) a material change in the Executive’s job title,
reporting structure, duties, or authority; or (z) the relocation of
the Executive’s principal place of work by 30 or more
miles.
1.9 Subsidiary
. With respect to the Company, (A) any
corporation of which more than fifty percent (50%) of the
outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation
(irrespective of whether, at the time, stock of any other class or
classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time,
directly or indirectly, Owned by the Company, and (B) any Entity
other than a corporation in which the Company has a direct or
indirect interest (whether in the form of voting or participation
in profits or capital contribution) of more than fifty percent
(50%).
2. Retention
Bonus .
2.1 Cash Payment.
The Company shall make a cash payment to the
Executive in an amount equal to $250,000 (less required deductions
and withholdings) on each of December 31, 2007, December 31, 2008,
December 31, 2009, and December 31, 2010 (each such date, a
" Retention Bonus Date "), for a total of $1,000,000 (each such bonus payment on a
Retention Bonus Date, a " Retention Bonus
Payment "); provided,
however , that:
(a) if the
Executive’s employment with the Company is terminated as a
result of either an Involuntary Termination With Cause or the
Executive’s resignation of employment other than a
Resignation for Good Reason, then no Retention Bonus Payment will
be made relating to any Retention Bonus Date following the date of
such termination of employment; and
(b) if the
Executive’s employment with the Company is terminated other
than as a result of an event set forth in Section 2.1(a), then
th
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