Rackable Systems,
Inc.
RETENTION BONUS
AGREEMENT
This Retention Bonus Agreement
(this “ Agreement ”), dated
September 12, 2006 (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 ”). The Employment Agreement outlines
the general terms of employment for the Executive.
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.
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 any Change in
Control.
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:
1.1
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
Agreement Termination
Date . The earliest to occur of: (w) the date the
Executive resigns his employment without “Good Reason”
as defined in Section 1.13 below (x) the date the Executive is
subject to an Involuntary Termination With Cause as defined in
Section 1.7 below; (y) the Subsidiary Plan Creation Date; and (z)
June 26, 2007.
1.3
Board
.
The Board of Directors of the
Company.
1.4
Change in
Control . The occurrence, in a single transaction or in a
series of related transactions, of either of the following
events:
(a) (x) there is consummated (A) a merger,
consolidation or similar transaction involving (directly or
indirectly) the Company or (B) a tender offer or exchange offer
addressed to the stockholders of the Company and (y), immediately
after the consummation of such merger, consolidation or similar
transaction or such tender or exchange offer, the stockholders of
the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing
more than fifty percent (50%) of the combined outstanding voting
power of the surviving Entity in such merger, consolidation or
similar transaction or (B) more than fifty percent (50%) of the
combined outstanding voting power of the parent of the surviving
Entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their Ownership
of the outstanding voting securities of the Company immediately
prior to such transaction; or
(b)
there is consummated a sale, lease,
exclusive license or other disposition of all or substantially all
of the consolidated assets of the Company and its Subsidiaries,
other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries to an Entity, more than fifty percent (50%) of the
combined voting power of the voting securities of which are Owned
by stockholders of the Company in substantially the same
proportions as their Ownership of the outstanding voting securities
of the Company immediately prior to such sale, lease, license or
other disposition.
For the
avoidance of doubt, the term Change in Control shall not include a
sale of assets, merger or other transaction effected exclusively
for the purpose of changing the domicile of the Company.
1.5
Code
.
The Internal Revenue Code of 1986,
as amended.
1.6
Entity . A corporation, partnership, limited liability
company or other entity.
1.7
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) Executive’s willful 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 other budgetary limitations established in good faith
by the Board, provided the Board provides him with written notice
of such refusal or disregard and provides Executive with thirty
(30) days to cure;
(b) 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 Executive with thirty (30) days to cure; or
(c) Executive’s conviction or plea of nolo
contendre to a crime of moral turpitude (as defined under
California Law) causing material and demonstrable injury to the
Company or otherwise demonstrating gross 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.
1.8
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.
1.9
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.
1.10
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%).
1.11
Subsidiary
Plan . A business plan for the establishment of a
Subsidiary of the Company (the initial purpose of which is the
design and marketing of a self contained, mobile data center), to
be (x) created by the Executive, (y) presented by the Executive to
the Board for approval, and (z) approved by the Board and funded by
the Company.
1.12
Subsidiary Plan Creation
Date . The date, following the approval of the
Subsidiary Plan by the Board, on which the Subsidiary that is the
subject to the Subsidiary Plan is first funded by the
Company.
1.13
Resignation for Good
Reason .
Executive shall be deemed to have resigned with “Good
Reason” if he resigns after any of the following: (x) the
reduction of Executive’s cash compensation by more than 10%;
(y) a change in Executive’s job title, reporting structure,
duties, or authority; or (z) the relocation of Executive’s
principal place of work by 30 or more miles.
2.1
Cash
Payment. Subject to
Section 2.2, if the Company enters into a definitive agreement for
a Change in Control on or before the Agreement Termination Date,
and if the closing of such Change in Control shall occur, the
Company shall make a cash payment to the Execu
