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Exhibit 10.2
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. 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 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. Retention
Bonus .
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
Executive in an amount equal
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