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Exhibit
10.1
RACKABLE SYSTEMS,
INC.
FIRST AMENDMENT TO THE
EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO THE
EMPLOYMENT AGREEMENT (this “ Amendment ”)
dated September 19, 2007 (the “ Effective
Date ”) is executed by and between Rackable Systems,
Inc., a Delaware corporation (the “Company”) and Madhu
Ranganathan (the “ Executive ”). The
Company and the Executive are each individually referred to in this
Amendment as a “ Party ” and are
collectively referred to in this Amendment as the “
Parties . ”
RECITALS
A. Executive and the Company
are parties to an Employment Agreement, dated October 28, 2005
(the “ Employment Agreement ”), which
outlines the general terms of employment for the
Executive.
B. Pursuant to this Amendment
and effective immediately upon the Parties’ mutual execution
and delivery of this Amendment, the Parties desire to amend the
Employment Agreement as follows.
AGREEMENT
In consideration of the mutual promises
and covenants set forth in this Amendment, the receipt and
sufficiency of which are acknowledged by the Parties, the Parties
agree as follows:
1. Amendment to Employment
Agreements. The Parties agree that upon the Effective Date of
this Amendment, the Employment Agreement will be amended as
follows:
1.1 The 4 th full paragraph on Page 1 of the
Employment Agreement shall be amended to include the following
terms at the end of the paragraph: The Company will determine in
its sole discretion whether the performance targets have been
achieved, whether you have earned a bonus, and the amount of any
earned bonus. You must be employed on the bonus payment date to
earn and be eligible to receive any bonus.
1.2 The 2 nd , 3 rd and
4 th
paragraphs on Page 2 of the
Employment Agreement are hereby deleted and replaced in their
entirety with the following:
| 1. |
SERVICE AS EMPLOYEE; OUTSIDE ACTIVITIES. |
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a. |
Location and Duties. You will work at the
Company’s corporate headquarters currently located in
Fremont, California, subject to necessary business travel. During
your employment with the Company, you will devote your best efforts
and substantially all of your business time and attention (except
for vacation periods and reasonable periods of illness or other
incapacity permitted by the Company’s general employment
policies) to the business of the Company. |
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b. |
Company Policies. Your employment relationship with the
Company shall also be governed by the general employment policies
and practices of the Company, including but not limited to the
policies contained in the Company’s Employee Handbook (except
that if the terms of this letter differ from or are in conflict
with the Company’s general employment policies or practices,
this letter will control), and you will be required to abide by
such general employment policies and practices of the
Company. |
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c. |
Other Activities. Throughout your employment with the
Company, you may engage in civic and not-for-profit activities so
long as such activities do not interfere with the performance of
your duties hereunder or present a conflict of interest with the
Company. Subject to the restrictions set forth herein and with the
prior written consent of the Board, you may serve as a director of
other corporations and may devote a reasonable amount of your time
to other types of business or public activities not expressly
mentioned in this paragraph. |
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d. |
Conflict of Interest. During your employment by the
Company, except on behalf of the Company, you will not directly or
indirectly serve as an officer, director, stockholder, employee,
partner, proprietor, investor, joint venturer, associate,
representative or consultant for or on behalf of any other person,
corporation, firm, partnership or other entity whatsoever known by
you to compete with the Company (or is planning or preparing to
compete with the Company), anywhere in the world, in any line of
business engaged in (or planned to be engaged in) by the Company;
provided, however, that you may purchase or otherwise acquire up to
(but not more than) one percent (1%) of any class of
securities of any enterprise (but without participating in the
activities of such enterprise) if such securities are listed on any
national or regional securities exchange. |
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a. |
Definition of “Cause.” For purposes of this
agreement, “Cause” is defined as one or more of the
following events: (i) the indictment or conviction for any
felony, or conviction of any other crime which involves moral
turpitude; (ii) the commission of any other act or omission
involving fraud or intentional deceit with respect to the Company
or any of its affiliates or any of their directors, stockholders,
partners or members; (iii) any act or omission involving
dishonesty that causes material injury to the Company or any of its
affiliates or any of their directors, stockholders, partners or
members; (iv) gross negligence with respect to the Company or
any of its subsidiaries; (v) willful misconduct with respect
to the Company or any of its subsidiaries; (vi) any other
material breach of this agreement or any other agreement referred
to herein (including the Non-Disclosure Agreement); provided,
however, that, it shall only be deemed Cause pursuant to clause
(vi) if you are given written notice describing the basis of
Cause and, if the event is reasonably susceptible of cure, you fail
to cure within thirty (30) days. |
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b. |
Definition of “Good Reason.” For purposes of
this agreement, “Good Reason” is defined as one or more
of the following conditions that occur without your written
consent: (i) the assignment to you, or the removal from you,
of any duties or responsibilities that results in the material
diminution of your authority, duties or responsibilities as SVP,
Chief Financial Officer (“ CFO ”),
including a Change in Control that results in your no longer
serving as the CFO or any similar position; (ii) a material
reduction by the Company of your base salary; (iii) the
Company’s material breach of its obligations to you under
this agreement; or (iv) your office relocation to a location
more than fifty miles from your then present location; provided
however that, it shall only be deemed Good Reason pursuant to the
foregoing definition if (x) the Company is given written
notice from you within ninety (90) days following the first
occurrence of a condition that you consider to constitute Good
Reason describing the condition and fails to remedy such condition
within thirty (30) days following such written notice, and
(y) you resign from employment within ninety (90) days
following the end of the period within which the Company was
entitled to remedy the condition constituting Good Reason but
failed to do so. |
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c. |
Definition of “Change in Control.” For
purposes of this agreement, “Change in Control” means
the occurrence, in a single transaction or in a series of related
transactions, of either of the following events: |
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i. |
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, in either event, 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 |
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ii. |
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. |
The term Change in Control
shall not include a sale of assets, merger or o
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