EXHIBIT 10.4

 

INDEPENDENT CONTRACTOR SERVICES AGREEMENT

 

THIS AGREEMENT is made as of November 16, 2005, (“Effective Date”) by and
between RACKABLE SYSTEMS, INC and its successors or assignees (“Company”) and
the undersigned JACK RANDALL (“Contractor”).

 

1. ENGAGEMENT OF SERVICES. Company may from time to time submit a Statement of
Work (“SOW”) to Contractor substantially in the form of Exhibit A to this
Agreement. Each SOW shall, when executed by Company and Contractor, form a part
of this Agreement and be subject to the terms and conditions set forth herein.
Subject to the terms of this Agreement, Contractor will use commercially
reasonable efforts to provide the services set forth in each SOW accepted by
Contractor (the “Project(s)”) by the completion dates set forth therein. The
manner and means that Contractor chooses to complete the Projects are in
Contractor’s sole discretion and control. Contractor shall perform the services
necessary to complete the Projects in a timely and professional manner
consistent with industry standards and at a location, place and time that
Contractor deems appropriate. In completing the Projects, Contractor agrees to
provide its own equipment, tools, and other materials at its own expense;
however, Company will make its facilities and equipment available to Contractor
when necessary.

 

2. COMPENSATION.

 

2.1 Fees. Company will pay Contractor the fee specified in each SOW as
Contractor’s sole compensation for the Project, provided such Project meets the
terms of the SOW and this Agreement and is of a quality consistent with industry
standards. Contractor shall be responsible for all expenses incurred in
performing services under this Agreement, except as set forth in the SOW. Upon
termination of this Agreement for any reason prior to completion of an SOW,
Company will pay Contractor fees and expenses on the basis stated in the SOW for
work which is then in progress, within fifteen (15) days of the later of
Contractor’s invoice and the effective date of such termination.

 

2.2 Invoicing. Unless otherwise provided in the applicable SOW, (a) payment to
Contractor of undisputed fees will be due fifteen (15) days following Company’s
receipt of an invoice which contains accurate records of the work performed
sufficient to document the invoiced fees; and (b) Contractor will submit
invoices to Company upon completion of the milestones specified in the
applicable SOW or, if no such milestones are specified, on a monthly basis for
services performed in the previous month.

 

3. INDEPENDENT CONTRACTOR RELATIONSHIP. Contractor’s relationship with Company
will be that of an independent contractor, and nothing in this Agreement should
be construed to create a partnership, joint venture, or employer-employee
relationship. Contractor (a) is not the agent of Company; (b) is not authorized
to make any representation, contract, or commitment on behalf of Company;
(c) will not be entitled to any of the benefits that Company makes available to
its employees, such as group insurance, profit-sharing or retirement benefits
(and waives the right to receive any such benefits); and (d) will be solely
responsible for all tax returns and payments required to be filed with or made
to any federal, state, or local tax authority with respect to Contractor’s
performance of services and receipt of fees under this Agreement. If applicable,
Company will report amounts paid to Contractor by filing Form 1099-MISC with the
Internal Revenue Service, as required by law. Contractor agrees to accept
exclusive liability for complying with all applicable state and federal laws,
including laws governing self-employed individuals, if applicable, such as laws
related to payment of taxes, social security, disability, and other
contributions based on fees paid to Contractor under this Agreement. Company
will not withhold or make payments for social security, unemployment insurance
or disability insurance contributions, or obtain workers’ compensation insurance
on Contractor’s behalf. Contractor hereby agrees to indemnify and defend Company
against any and all such taxes or contributions, including penalties and
interest. Contractor agrees to provide proof of payment of appropriate taxes on
any fees paid to Contractor under this Agreement upon reasonable request of
Company.

 

4. INTELLECTUAL PROPERTY RIGHTS.

 

4.1 Confidential Information. Contractor agrees that during the term of this
Agreement and thereafter, except as expressly authorized in writing by the Chief
Executive Officer (the “CEO”) of Company, it (a) will not use or permit the use
of Confidential Information (defined below) in any manner or for any purpose not
expressly set forth in this Agreement; (b) will not disclose, lecture upon,
publish, or permit others to disclose, lecture upon, or publish any such
Confidential Information to any third party without first obtaining the CEO’s
express written consent on a case-by-case basis; (c) will limit access to
Confidential Information to Contractor personnel who need to know such
information in connection with their work for Company; and (d) will not remove
any tangible embodiment of any Confidential Information from Company’s premises
without Company’s prior written consent. “Confidential Information” includes,
but is not limited to, all information related to Company’s business and its
actual or anticipated research and development, including without limitation
(i) trade secrets, inventions, ideas, processes, computer source and object
code, formulae, data, programs, other works of authorship, know-

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how, improvements, discoveries, developments, designs, and techniques;
(ii) information regarding products or plans for research and development,
marketing and business plans, budgets, financial statements, contracts, prices,
suppliers, and customers; (iii) information regarding the skills and
compensation of Company’s employees, contractors, and any other service
providers of Company; (iv) the existence of any business discussions,
negotiations, or agreements between Company and any third party; and (v) all
such information related to any third party that is disclosed to Company or to
Contractor during the course of Company’s business (“Third Party Information”).
Notwithstanding the foregoing, it is understood that Contractor is free to use
information which is generally known in the trade or industry, information which
is not gained as a result of a breach of this Agreement, and Contractor’s own
skill, knowledge, know-how, and experience.

 

4.2 Competitive or Conflicting Engagements. Contractor agrees, during the term
of this Agreement, not to enter into a contract or accept an obligation that is
inconsistent or incompatible with Contractor’s obligations under this Agreement.
Contractor warrants that there is no such contract or obligation in effect as of
the Effective Date. Contractor further agrees not to disclose to Company, bring
onto Company’s premises, or induce Company to use any confidential information
that belongs to anyone other than Company or Contractor. In addition, Contractor
agrees that, during the term of this Agreement, it will not perform, or agree to
perform, any services for any third party that engages, or plans to engage, in
any business or activity competitive with that of Company.

 

4.3 Inventions and Intellectual Property Rights. As used in this Agreement, the
term “Invention” means any ideas, concepts, information, materials, processes,
data, programs, know-how, improvements, discoveries, developments, designs,
artwork, formulae, other copyrightable works, and techniques and all
Intellectual Property Rights therein. The term “Intellectual Property Rights”
means all trade secrets, copyrights, trademarks, mask work rights, patents and
other intellectual property rights recognized by the laws of any country.

 

4.4 Background Technology. As used in this Agreement, the term “Background
Technology” means all Inventions developed by Contractor other than in the
course of providing services to Company hereunder and all Inventions acquired or
licensed by Contractor that Contractor uses in performing services under this
Agreement or incorporates into Work Product (defined below). Contractor will
disclose any Background Technology in the SOW in which Contractor proposes to
use or incorporate such Background Technology. If no Background Technology is
disclosed in an SOW, Contractor warrants that it will not use Background
Technology or incorporate it into Work Product provided pursuant thereto.
Notwithstanding the foregoing, Contractor agrees that it will not incorporate
into Work Product or otherwise deliver to Company any software code licensed
under the GNU GPL or LGPL or any other license that by its terms requires, or
conditions the use or distribution of such code on, the disclosure, licensing,
or distribution of the Work Product or any source code owned or licensed by
Company.

 

4.5 License to Background Technology. Subject to Company’s performance of its
obligations hereunder, Contractor hereby grants to Company a non-exclusive,
perpetual, fully-paid and royalty-free, irrevocable and world-wide right, with
rights to sublicense through multiple levels of sublicensees, to reproduce, make
derivative works of, distribute, publicly perform, and publicly display in any
form or medium, whether now known or later developed, make, have made, use,
sell, import, offer for sale, and exercise any and all present or future rights
in the Background Technology incorporated or used in Work Product for the
purpose of developing and marketing Company products.

 

4.6 Disclosure of Work Product. As used in this Agreement, the term “Work
Product” means any Invention that is solely or jointly conceived, made, reduced
to practice, or learned by Contractor in the course of any services performed
for Company or with the use of materials of Company during the term of this
Agreement. Contractor agrees to disclose promptly in writing to Company, or any
person designated by Company, all Work Product.

 

4.7 Ownership of Work Product. Contractor agrees that any and all Work Product
shall be the sole and exclusive property of Company.

 

4.8 Assignment of Work Product. If Contractor has any rights to the Work Product
that are not owned by Company upon creation or embodiment, Contractor
irrevocably assigns to Company all right, title and interest worldwide in and to
such Work Product. Except as set forth below, Contractor retains no rights to
use the Work Product and agrees not to challenge the validity of Company’s
ownership in the Work Product.

 

4.9 Waiver or Assignment of Other Rights. If Contractor has any rights to the
Work Product that cannot be assigned to Company, Contractor unconditionally and
irrevocably waives the enforcement of such rights, and all claims and causes of
action of any kind against Company with respect to such rights, and agrees, at
Company’s request and expense, to consent to and join in any action to enforce
such rights. If Contractor has any right to the Work Product that cannot be
assigned to Company or waived by Contractor, Contractor unconditionally and
irrevocably grants to Company during the term of such rights, an exclusive,
irrevocable, perpetual, worldwide, fully paid and royalty-free license, with
rights to sublicense through multiple levels of sublicensees, to reproduce, make
derivative works of, distribute, publicly perform and publicly display in any
form or medium, whether now known or later developed, make, use, sell, import,
offer for sale and exercise any and all such rights.

 

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4.10 Assistance. Contractor agrees to assist Company in every way, both during
and after the term of this Agreement, to obtain and enforce United States and
foreign Intellectual Property Rights relating to Work Product in all countries.
In the event Company is unable to secure Contractor’s signature on any document
needed in connection with such purposes, Contractor hereby irrevocably
designates and appoints Company and its duly authorized officers and agents as
its agent and attorney in fact, which appointment is coupled with an interest,
to act on its behalf to execute and file any such documents and to do all other
lawfully permitted acts to further such purposes with the same legal force and
effect as if executed by Contractor.

 

5. CONTRACTOR REPRESENTATIONS AND WARRANTIES. Contractor hereby represents and
warrants that (a) the Work Product will be an original work of Contractor and
any third parties will have executed assignment of rights reasonably acceptable
to Company prior to being allowed to participate in the development of the Work
Product; (b) the Work Product will conform to the requirements and terms set
forth in the SOW; (c) neither the Work Product nor any element thereof will, to
Contractor’s knowledge, infringe or misappropriate the Intellectual Property
Rights of any third party; (d) neither the Work Product nor any element thereof
will be subject to any restrictions or to any mortgages, liens, pledges,
security interests, or encumbrances; (e) Contractor will not grant, directly or
indirectly, any rights or interest whatsoever in the Work Product to third
parties; (f) Contractor has full right and power to enter into and perform this
Agreement without the consent of any third party; (g) Contractor has an
unqualified right to grant the license to all Background Technology as set forth
in the section titled “License to Background Technology” to Company;
(h) Contractor will comply with all laws and regulations applicable to
Contractor’s obligations under this Agreement; and (i) should Company permit
Contractor to use any of Company’s equipment, or facilities during the term of
this Agreement, such permission shall be gratuitous and Contractor shall be
responsible for any injury to any person (including death) or damage to property
arising out of Contractor’s negligent use of such equipment or facilities.
Except as specifically provided in this Section 5, Contractor makes no other
warranties, either express or implied, as to any other matter whatsoever, and
Contractor hereby expressly disclaims any implied warranties of merchantability,
fitness for any particular purpose or need, accuracy and any warranties that may
arise from course of dealing, course of performance or usage of trade.

 

6. COMPANY’S OBLIGATIONS.

 

6.1 Cooperation. Company acknowledges that Company’s timely provision of (and
Contractor’s access to) Company facilities, equipment, assistance, cooperation,
and complete and accurate information and data from Company’s officers, agents
and employees (“Cooperation”) is essential to the performance of the Projects
and that Contractor shall not be liable for any deficiency in performing the
Projects if such deficiency results from Company’s failure to provide full
Cooperation as required hereunder. Cooperation includes, but is not limited to,
allocating and engaging additional resources as may be required to assist
Contractor in performing the Projects, and providing all necessary review and
approval of Work Product as required hereunder.

 

6.2 Material Information. Company agrees that each of Company’s Chief Executive
Officer, Executive Vice President of Operations and General Counsel shall not
directly and intentionally disclose to Contractor material non-public
information related to Company; provided, however, that the foregoing shall not
prevent any officer of Company from communicating any information to Contractor
(i) that such officer believes, in good faith, is necessary or advisable in
order for Contractor to perform his obligations under this Agreement, (ii) that
is in response to a request for information made by Contractor in the course of
Contractor performing services under this Agreement, or (iii) that results from
Contractor overhearing or receiving any communication by such officer to another
individual that is directed to such other individual but is overheard or seen by
Contractor.

 

7. TERMINATION.

 

7.1 Termination without Cause. Either party may terminate this Agreement without
cause at its convenience upon fifteen (15) days’ prior written notice to the
other party. Company will pay Contractor only those fees and expenses related to
services actually performed during such notice period, as specified in the SOW.

 

7.2 Termination with Cause. Either party may terminate this Agreement
immediately in the event that the other party has materially breached the
Agreement and fails to cure such breach within fifteen (15) days of receipt of
notice by the non-breaching party, setting forth in reasonable detail the nature
of the breach. Company may also terminate this Agreement immediately in its sole
discretion in the event of Contractor’s material breach of the section titled
“Intellectual Property Rights.” Company will pay Contractor only those fees and
expenses related to services actually performed during such notice period, as
specified in the SOW.

 

7.3 Return of Company Property. Upon termination of the Agreement or upon
Company’s request at any other time, Contractor will deliver to Company all of
Company’s property, equipment, and documents, together with all copies thereof,
and any other material containing or disclosing any Work Product, Third Party
Information or Confidential Information of Company and certify to Company in
writing that Contractor has fully complied with this obligation. Contractor
further agrees that any property situated on Company’s premises and owned by
Company is subject to inspection by Company personnel at any time with or
without notice.

 

7.4 Survival. The following provisions shall survive termination of this
Agreement: Sections titled

 

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“Intellectual Property Rights,” “Contractor Representations and Warranties,”
“Indemnification,” “Return of Company Property,” “Survival,” and “General
Provisions.”

 

8. MULTI-EMPLOYEE CONTRACTOR. If Contractor will be hiring employees or agents
to provide services pursuant to this Agreement, Contractor must obtain Company’s
prior written consent to such hiring, and before any Contractor employee or
agent performs services in connection with this Agreement or has access to
Confidential Information, the employee or agent and Contractor must have entered
into a binding written agreement expressly for the benefit of Company that
contains provisions substantially equivalent to the sections of this Agreement
titled “Engagement of Services” and “Intellectual Property Rights.” At Company’s
request, Contractor will provide Company with copies of such agreements. Company
reserves the right to refuse or limit Contractor’s use of any employee or agent
or to require Contractor to remove any employee or agent already engaged in the
performance of the services. Company’s exercise of such right will in no way
limit Contractor’s obligations under this Agreement. Contractor agrees (a) that
its employees and agents shall not be entitled to or eligible for any benefits
that Company may make available to its employees; (b) to limit access to the
Confidential Information to employees or agents of Contractor who have a
reasonable need to have such access in order to perform the services pursuant to
this Agreement; and (c) to be solely responsible for all expenses incurred by
any of its employees or agents in performing the services or otherwise
performing its obligations under this Agreement, except as set forth in the SOW.

 

9. LIMITATION OF LIABILITY.

 

9.1 General Limitation. Contractor’s aggregate liability to Company for damages
in connection with this Agreement and the Projects or any Work Product provided
pursuant to this Agreement, regardless of the form of action giving rise to such
liability (under any theory, whether in contract, tort, statutory or otherwise)
shall not exceed the aggregate fees paid by Company to Contractor pursuant to
the SOW giving rise to such damages.

 

9.2 Limitation on Other Damages. To the extent permitted by applicable law and
notwithstanding anything in this Agreement to the contrary or any failure of
essential purpose of any limited remedy or limitation of liability, Contractor
shall not be liable for any indirect, exemplary, special, consequential or
incidental damages of any kind, or for any damages resulting from loss or
interruption of business, lost data or lost profits, arising out of or relating
to this Agreement or the subject matter hereof, however caused, even if
Contractor has been advised of or should have known of the possibility of such
damages.

 

10. GENERAL PROVISIONS.

 

10.1 9.1 Governing Law and Venue. This Agreement and any action related thereto
will be governed, controlled, interpreted, and defined by and under the laws of
the State of California, without giving effect to any conflicts of laws
principles that require the application of the law of a different state.
Contractor hereby expressly consents to the personal jurisdiction and venue in
the state and federal courts for the county in which Company’s principal place
of business is located for any lawsuit filed there against Contractor by Company
arising from or related to this Agreement.

 

10.2 Severability. If any provision of this Agreement is, for any reason, held
to be invalid or unenforceable, the other provisions of this Agreement will be
unimpaired and the invalid or unenforceable provision will be deemed modified so
that it is valid and enforceable to the maximum extent permitted by law.

 

10.3 No Assignment. This Agreement, and Contractor’s rights and obligations
herein, may not be assigned, subcontracted, delegated, or otherwise transferred
by Contractor without Company’s prior written consent, and any attempted
assignment, subcontract, delegation, or transfer in violation of the foregoing
will be null and void. The terms of this Agreement shall be binding upon
assignees.

 

10.4 Notices. Each party must deliver all notices or other communications
required or permitted under this Agreement in writing to the other party at the
address listed on the signature page, by courier, by certified or registered
mail (postage prepaid and return receipt requested), or by a
nationally-recognized express mail service. Notice will be effective upon
receipt or refusal of delivery. If delivered by certified or registered mail,
any such notice will be considered to have been given five (5) business days
after it was mailed, as evidenced by the postmark. If delivered by courier or
express mail service, any such notice shall be considered to have been given on
the delivery date reflected by the courier or express mail service receipt. Each
party may change its address for receipt of notice by giving notice of such
change to the other party.

 

10.5 Injunctive Relief. Contractor acknowledges that, because its services are
personal and unique and because Contractor will have access to Confidential
Information of Company, any breach of this Agreement by Contractor would cause
irreparable injury to Company for which monetary damages would not be an
adequate remedy and, therefore, will entitle Company to injunctive relief
(including specific performance). The rights and remedies provided to each party
in this Agreement are cumulative and in addition to any other rights and
remedies available to such party at law or in equity.

 

10.6 Waiver. Any waiver or failure to enforce any provision of this Agreement on
one occasion will not be deemed a waiver of any other provision or of such
provision on any other occasion.

 

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10.7 Export. Contractor agrees not to export, directly or indirectly, any U.S.
technical data acquired from Company or any products utilizing such data, to
countries outside the United States, because such export could be in violation
of the United States export laws or regulations.

 

10.8 Remedies. All rights and remedies hereunder shall be cumulative, may be
exercised singularly or concurrently and, unless otherwise stated herein, shall
not be deemed exclusive. If any legal action is brought to enforce any
obligations hereunder, the prevailing party shall be entitled to receive its
attorneys’ fees, court costs and other collection expenses, in addition to any
other relief it may receive.

 

10.9 Force Majeure. Both parties shall be excused from performance under this
Agreement and any related SOW for any period to the extent that a party is
prevented from performing any obligation, in whole or in part, as a result of
causes beyond its reasonable control and without its negligent or willful
misconduct, including without limitation, acts of God, natural disasters, war or
other hostilities, labor disputes, civil disturbances, governmental acts, orders
or regulations, third party nonperformance, or failures or fluctuations in
electrical power, heat, light, air conditioning or telecommunications equipment.

 

10.10 Entire Agreement. This Agreement is the final, complete and exclusive
agreement of the parties with respect to the subject matters hereof and
supersedes and merges all prior discussions between the parties with respect to
such subject matters. No modification of or amendment to this Agreement, or any
waiver of any rights under this Agreement, will be effective unless in writing
and signed by Contractor and CEO of Company. The terms of this Agreement will
govern all SOWs and services undertaken by Contractor for Company. In the event
of any conflict between this Agreement and a SOW, the terms of the SOW shall
govern, but only with respect to the services set forth therein.

 

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IN WITNESS WHEREOF, the parties have caused this Independent Contractor Services
Agreement to be executed by their duly authorized representatives.

 

COMPANY:   CONTRACTOR:

/s/ B. Garvey

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/s/ Jack Randall

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(Signature)

 

    (Signature)

By:   B. Garvey   By:   Jack Randall Title:   General Counsel & VP Corp. Dev.  
Title:  

 

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Address:   1933 Milmont Dr.   Address:   7901 Perry Creek Rd.     Milpitas, CA
95035       Fair Play, CA 95684        

 

If Contractor is a natural person, Contractor must provide the following
information for copyright registration purposes only:

        Date of Birth: 7/9/68         Nationality or Domicile: USA

 

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EXHIBIT A

 

STATEMENT OF WORK

 

This Statement of Work (“SOW”) is incorporated into the Independent Contractor
Services Agreement by and between Company and Contractor. This SOW describes
services and Work Product to be performed and provided by Contractor pursuant to
the Agreement. If any item in this SOW is inconsistent with the Agreement prior
to such incorporation, the terms of this SOW will control, but only with respect
to the services to be performed under this SOW.

 

1. Scope of Services: To assist Company with the maintenance, modification and
operation of the Company’s Navision ERP system. To assist the Company with the
implementation of a new Oracle ERP system and the migration of Navision to
Oracle.

 

2. Payment of Fees. Fee will be:

 

Time & Materials Basis: Fee invoiced by Contractor at the rates set forth below;
provided, however, that Contractor will obtain Company’s prior written approval
before providing more than 30 hours of Services in any given week. In the event
that the Agreement or this SOW is terminated prior to completion of the services
set forth in this SOW, Contractor will deliver all work-in-progress to Company
and issue a final invoice on the effective date of termination for all Services
performed for which fees are outstanding. Company will not be obligated to pay
for any non-conforming work product. Contractor’s monthly invoices will list in
reasonable detail, tasks performed and hours spent on such tasks.

 

Rate: $150/hour. Company will not pay for travel time; however, Company will pay
a six-hour minimum fee for all Services that require Consultant to travel to the
San Francisco Bay Area.

 

3. Expenses. Contractor will receive Company’s prior written approval before
incurring any expenses. Notwithstanding the foregoing, Company will reimburse
Contractor for reasonable travel expenses (including airfare, accommodation and
meals), with the exception of expenses incurred in traveling to and from
Company’s offices in Milpitas, California.

 

Signed:    

/s/ B. Garvey

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/s/ Jack Randall

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    for Company   Contractor

 

Dated:11/16/05