Exhibit 10.1

 

RACKSPACE HOSTING, INC.

SENIOR EXECUTIVE CHANGE OF CONTROL AND SEVERANCE PLAN

AND SUMMARY PLAN DESCRIPTION

 

1.                                      Introduction.  The purpose of this
Rackspace Hosting, Inc. Senior Executive Change of Control and Severance Plan
(the “Plan”) is to provide assurances of specified benefits to certain employees
of the Company whose employment is subject to being involuntarily terminated
other than for death, Disability, or Cause or voluntarily terminated for Good
Reason under the circumstances described in the Plan.  This Plan is a “severance
pay arrangement,” within the meaning of Section 3(2)(B)(i) of ERISA, that is
intended to be excepted from the definitions of “employee pension benefit plan”
and “pension plan” set forth under Section 3(2) of ERISA, and is intended to
meet the descriptive requirements of a plan constituting a “severance pay plan”
within the meaning of regulations published by the Secretary of Labor at Title
29, Code of Federal Regulations §2510.3-2(b).  This document constitutes both
the written instrument under which the Plan is maintained and the required
summary plan description for the Plan.

 

2.                                      Important Terms.  The following words
and phrases, when the initial letter of the term is capitalized, will have the
meanings set forth in this Section 2, unless a different meaning is plainly
required by the context:

 

2.1.                            “Administrator” means the Company, acting
through the Compensation Committee or another duly constituted committee of
members of the Board, or any person to whom the Administrator has delegated any
authority or responsibility with respect to the Plan pursuant to Section 11, but
only to the extent of such delegation.

 

2.2.                            “Board” means the Board of Directors of the
Company.

 

2.3.                            “Cause” shall mean any of the following reasons:

 

(a)                                 Participant’s engagement in illegal conduct
or gross misconduct or gross negligence which is materially injurious to the
Company,

 

(b)                                 Participant’s conviction of, or plea of nolo
contendere or guilty to, a felony or a crime of moral turpitude;

 

(c)                                  Participant’s engagement in fraud,
embezzlement or material misappropriation,

 

(d)                                 Participant’s repeated use of alcohol or
drugs that materially interferes with the performance of Participant’s duties,

 

(e)                                  A material breach by Participant of any
written policies of, or agreement with, the Company (which policy, policies or
agreement previously were provided to Participant), which, if capable of remedy
in the reasonable judgment of the Company, Participant has failed to remedy
within 30 days of receiving written notice thereof from the Administrator to
Participant describing such material breach in reasonable detail and

 

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Participant having had the opportunity to address the Administrator regarding
such alleged material breach; or

 

(f)                                   Participant’s willful and continual
failure substantially to perform his or her duties with the Company (other than
a failure resulting from the Participant’s incapacity due to Disability or
death), which failure has continued for a period of at least 30 days after
written notice thereof from the Administrator to Participant describing in
reasonable detail Participant’s failure to perform such duties or
responsibilities and Participant having had the opportunity to address the
Administrator regarding such alleged failures and Participant having failed to
remedy the same within 30 days of receiving written notice.

 

2.4.                            “Change of Control”

 

(a)                                 “Change of Control” means the first
occurrence of any of the following events:

 

(i)                                     A change in the ownership of the Company
that occurs on the date that any one person, or more than one person acting as a
group (“Person”), acquires ownership of the stock of the Company that, together
with the stock held by such Person, constitutes more than fifty percent (50%) of
the total voting power of the stock of the Company; provided, however, that for
purposes of this subsection, the acquisition of additional stock by any one
Person, who is considered to own more than fifty percent (50%) of the total
voting power of the stock of the Company will not be considered a Change of
Control; or

 

(ii)                                  A change in the effective control of the
Company which occurs on the date that a majority of members of the Board is
replaced during any  twelve (12) month period by members of the Board whose
appointment or election is not endorsed by a majority of the members of the
Board prior to the date of the appointment or election.  For purposes of this
clause (ii), if any Person is considered to be in effective control of the
Company, the acquisition of additional control of the Company by the same Person
will not be considered a Change of Control; or

 

(iii)                               A change in the ownership of a substantial
portion of the Company’s assets which occurs on the date that any Person
acquires (or has acquired during the twelve (12) month period ending on the date
of the most recent acquisition by such person or persons) assets from the
Company that have a total gross fair market value equal to or more than fifty
percent (50%) of the total gross fair market value of all of the assets of the
Company immediately prior to such acquisition or acquisitions; provided,
however, that for purposes of this subsection (iii), the following will not
constitute a change in the ownership of a substantial portion of the Company’s
assets: (A) a transfer to an entity that is controlled by the Company’s
stockholders immediately after the transfer, or (B) a transfer of assets by the
Company to: (1) a stockholder of the Company (immediately before the asset
transfer) in exchange for or with respect to the Company’s stock, (2) an entity,
fifty percent (50%) or more of the total value or voting power of which is
owned, directly or indirectly, by the Company, (3) a Person, that owns, directly
or indirectly, fifty percent (50%) or more of the total value or voting power of
all the outstanding stock of the Company, or (4) an entity, at

 

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least fifty percent (50%) of the total value or voting power of which is owned,
directly or indirectly, by a Person described in this subsection (iii)(B)(3). 
For purposes of this subsection (iii), gross fair market value means the value
of the assets of the Company, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such assets.

 

For purposes of this definition, persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.

 

Notwithstanding the foregoing, a transaction will not be deemed a Change of
Control unless the transaction qualifies as a change in control event within the
meaning of Section 409A.

 

Further and for the avoidance of doubt, a transaction will not constitute a
Change of Control if: (i) its sole purpose is to change the state of the
Company’s incorporation, or (ii) its sole purpose is to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company’s securities immediately before such transaction.

 

2.5.                            “Change of Control Period” means the time period
beginning at the consummation of a Change of Control and ending on the date that
is 24 months following such Change of Control.

 

2.6.                            “Code” means the Internal Revenue Code of 1986,
as amended.

 

2.7.                            “Company” means Rackspace Hosting, Inc., a
Delaware corporation, and any successor that assumes the obligations of the
Company under the Plan, by way of merger, acquisition, consolidation or other
transaction.

 

2.8.                            “Compensation Committee” means the Compensation
Committee of the Board.

 

2.9.                            “Disability” will mean that a Participant has
been unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months.  Alternatively, a Participant will be deemed disabled if
determined to be totally disabled by the Social Security Administration.

 

2.10.                     “Effective Date” means the date the Plan is adopted by
the Board.

 

2.11.                     “Exchange Act” means the U.S. Securities Exchange Act
of 1934, as amended.

 

2.12.                     “Equity Awards” means a Participant’s stock options,
stock appreciation rights, restricted stock, restricted stock units, performance
shares, performance stock units and any other Company equity compensation awards
that are outstanding as of the closing of the Change in Control.

 

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2.13.                     “ERISA” means the Employee Retirement Income Security
Act of 1974, as amended.

 

2.14.                     “Good Reason” shall mean the Participant’s voluntary
resignation as an employee of the Company within 30 days following the
expiration of any Cure Period after one of the following conditions has come
into existence without his or her consent:

 

(i)                                     A change in Participant’s position
within the Company (or a parent or subsidiary employing Participant) that
materially reduces Participant’s level of duties, authority or responsibilities
as in effect immediately prior to the Change of Control, but excluding any
change or reduction due solely to the Company’s ceasing to be an independent
publicly traded company and/or becoming a privately held subsidiary of another
entity (and, for the avoidance of doubt, not due to any action taken by the
Company or any parent or subsidiary of the Company after the Change of Control);

 

(ii)                                  A reduction in Participant’s level of
annual base salary and/or annual target cash bonus by a combined amount that is
10% or more of the sum of the Participant’s annual base salary immediately prior
to such reduction and the Participant’s annual target cash bonus immediately
prior to such reduction (other than in connection with a similar one-time
decrease for substantially all other comparable employees of the Company);

 

(iii)                               The Company (or a parent or subsidiary
employing Participant) requires Participant to relocate the principal place of
performance of Participant’s duties to a location more than 50 miles from
Participant’s primary residence at the time of consummation of the Change of
Control, provided, however, that if Participant has been commuting more than 50
miles to the principal place of performance of Participant’s duties prior to the
consummation of the Change of Control, the relocation must increase
Participant’s commute by more than 50 miles; or

 

(iv)                              The material breach by the Company (or a
parent or subsidiary employing Participant) of the agreement under which
Participant provides services to the Company (or a parent or subsidiary
employing Participant).

 

The Participant’s resignation will not constitute a resignation for “Good
Reason” unless the Participant first provides the Company (or a parent or
subsidiary employing the Participant) with written notice of the acts or
omissions constituting the grounds for “Good Reason” within 90 days of the
initial existence of the grounds for “Good Reason” and the Company (or a parent
or subsidiary employing Participant) has 30 days following the date of such
notice to cure the condition constituting “Good Reason” (the “Cure Period”).

 

2.15.                     “Involuntary Termination” means a termination of
employment of a Participant under the circumstances described in Section 4.

 

2.16.                     “Non-Employee Director” means a member of the Board
who is not an employee of the Company.  Non-Employee Directors are not eligible
for Severance Benefits.

 

2.17.                     “Participant” means an employee of the Company or of
any subsidiary of the Company who (a) has been designated by the Administrator
to participate in the Plan

 

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and (b) has timely and properly executed and delivered a Participation Agreement
to the Company.

 

2.18.                     “Participation Agreement” means the individual
agreement (as will be provided in separate cover as Appendix A) provided by the
Administrator to a Participant under the Plan, which has been signed and
accepted by the Participant.

 

2.19.                     “Plan” means the Rackspace Hosting, Inc. Senior
Executive Change of Control and Severance Plan, as set forth in this document,
and as hereafter amended from time to time.

 

2.20.                     “Restriction Period” means the period beginning on the
date of a Participant’s Involuntary Termination and continuing for (i) eighteen
(18) months for the Chief Executive Officer of the Company, (ii) fifteen (15)
months for Tier II Participants (as designated in the applicable Participation
Agreement) and (iii) twelve (12) months for Tier III Participants (as designated
in the applicable Participation Agreement), in each case, following the date of
such Involuntary Termination.

 

2.21.                     “Section 409A Limit” means 2 times the lesser of:
(i) the Participant’s annualized compensation based upon the annual rate of pay
paid to the Participant during the Participant’s taxable year preceding the
Participant’s taxable year of the Participant’s termination of employment as
determined under, and with such adjustments as are set forth in, Treasury
Regulation 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance
issued with respect thereto; or (ii) the maximum amount that may be taken into
account under a qualified plan pursuant to Section 401(a)(17) of the Code for
the year in which the Participant’s employment is terminated.

 

2.22.                     “Severance Benefits” means the compensation and other
benefits that the Participant will be provided in the circumstances described in
Section 4.

 

3.                                      Eligibility for Severance Benefits.  An
individual is eligible for Severance Benefits, as described in Section 4, only
if he or she experiences an Involuntary Termination.  A Non-Employee Director is
not eligible for Severance Benefits.

 

4.                                      Involuntary Termination During the
Change of Control Period.  If, during the Change of Control Period, (i) a
Participant terminates his or her employment with the Company (or any parent or
subsidiary of the Company) for Good Reason, or (ii) the Company (or any parent
or subsidiary of the Company) terminates the Participant’s employment for a
reason other than Cause, the Participant’s death or Disability (in either case,
an “Involuntary Termination”), then, in each case, subject to the Participant’s
compliance with Section 6, the Participant will receive the following Severance
Benefits, subject to the terms and conditions of the Plan:

 

4.1.                            Cash Severance Benefits.  A payment of cash
severance equal to the amount set forth in the Participant’s Participation
Agreement.

 

4.2.                            Medical Benefits.  If provided in the
Participant’s Participation Agreement, Participant shall be entitled to receive
a lump sum cash payment in an aggregate

 

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amount equal to the applicable premium cost for continued Company group health
coverage for the Participant and any spouse and/or dependents of the Participant
(“Family Members”) pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1986, as amended (“COBRA”), based on the elections with respect to health
coverage for the Participant and the Participant’s Family Members in effect as
of immediately prior to the Participant’s Involuntary Termination (which amount
will be based on the premium for the first month of COBRA coverage), for the
period set forth in the Participant’s Participation Agreement, which lump sum
payment will be made regardless of whether the Participant elects COBRA
continuation coverage.

 

4.3.                            Outplacement Services.  If and to the extent
specifically provided in the Participant’s Participation Agreement, Participant
shall be entitled to transitional outplacement benefits.

 

5.                                      Limitation on Payments.  In the event
that the severance and other benefits provided for in this Plan or otherwise
payable to a Participant (i) constitute “parachute payments” within the meaning
of Section 280G of the Code (“280G Payments”), and (ii) but for this Section 5,
would be subject to the excise tax imposed by Section 4999 of the Code (the
“Excise Tax”), then the 280G Payments will be either:

 

(a)                                 delivered in full, or

 

(b)                                 delivered as to such lesser extent which
would result in no portion of such benefits being subject to the Excise Tax,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by Participant on an after-tax basis, of the greatest amount of
benefits, notwithstanding that all or some portion of such benefits may be
taxable under Section 4999 of the Code.  If a reduction in the 280G Payments is
necessary so that no portion of such benefits are subject to the Excise Tax,
reduction will occur in the following order: (i) cancellation of awards granted
“contingent on a change in ownership or control” (within the meaning of Code
Section 280G); (ii) a pro rata reduction of (A) cash payments that are subject
to Section 409A as deferred compensation and (B) cash payments not subject to
Section 409A of the Code; (iii) a pro rata reduction of (A) employee benefits
that are subject to Section 409A as deferred compensation and (B) employee
benefits not subject to Section 409A; and (iv) a pro rata cancellation of
(A) accelerated vesting of equity awards that are subject to Section 409A as
deferred compensation and (B) equity awards not subject to Section 409A.  In the
event that acceleration of vesting of equity awards is to be cancelled, such
acceleration of vesting will be cancelled in the reverse order of the date of
grant of a Participant’s equity awards.

 

Unless Participant and the Company otherwise agree in writing, any determination
required under this Section 5 will be made in writing by the Company’s
independent public accountants immediately prior to the Change of Control or
such other person or entity to which the parties mutually agree (the “Firm”),
whose determination will be conclusive and binding upon Participant and the
Company.  For purposes of making the calculations required by this Section 5 the
Firm may make reasonable assumptions and approximations concerning applicable
taxes and may rely on reasonable, good faith interpretations

 

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concerning the application of Sections 280G and 4999 of the Code.  Participant
and the Company will furnish to the Firm such information and documents as the
Firm may reasonably request in order to make a determination under this
Section 5.  The Company will bear all costs the Firm may incur in connection
with any calculations contemplated by this Section 5.

 

6.                                      Conditions to Receipt of Severance.

 

6.1.                            Release Agreement.  As a condition to receiving
the Severance Benefits, each Participant will be required to sign and not revoke
a separation and release of claims agreement in a form reasonably satisfactory
to the Company (the “Release”).  In no event will the Release include any
post-employment restrictions beyond any such restrictions set forth in this Plan
or that a Participant previously agreed to in written agreements with the
Company, including, for the avoidance of doubt, the Participant’s Participation
Agreement, any employment agreement or any confidentiality, proprietary
information or inventions agreement between the Participant and the Company (the
“Confidentiality Agreement”).  In all cases, the Release must become effective
and irrevocable no later than the 60th day following the Participant’s
Involuntary Termination (the “Release Deadline Date”).  If the Release does not
become effective and irrevocable by the Release Deadline Date, the Participant
will forfeit any right to the Severance Benefits.  In no event will the
Severance Benefits be paid or provided until the Release becomes effective and
irrevocable.

 

6.2.                            Confidential Information.  A Participant’s
receipt of Severance Benefits will be subject to the Participant continuing to
comply with the provisions of this Section 6 and the terms of any
Confidentiality Agreement and such other appropriate agreement between the
Participant and the Company.

 

6.3.                            Restrictive Covenants.

 

(a)                                 Non-Solicitation of Employees.  For the
Restriction Period, Participant will not, directly or indirectly, (i) hire or
engage any current employee of Company or any parent or subsidiary of the
Company, including anyone employed by or providing services to Company (or any
parent or subsidiary of the Company) within the 6-month period preceding
Participant’s last day of employment or engagement; (ii) solicit or encourage
any employee to terminate employment or services with Company (or any parent or
subsidiary of the Company); or (iii) solicit or encourage any employee to accept
employment with or provide services to Participant or any business associated
with Participant.

 

(b)                                 Non-Solicitation of Customers.  For the
Restriction Period, Participant agrees not to solicit any customers of the
Company (or any parent or subsidiary of the Company).

 

(c)                                  Non-Competition.  For the Restriction
Period, Participant will not work, as an employee, contractor, officer, owner,
consultant, or director, in any business anywhere in the world that sells
hosting or information technology services substantially similar to those
service provided by the Company (or any parent or subsidiary of the Company),
namely (i) provisioning, hosting, management, monitoring, supporting, or
maintenance of applications, computer servers (whether dedicated, shared or
virtual) and network connectivity in a

 

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datacenter for remote use via the Internet, (ii) hosted email, storage,
collaboration, computer, virtual networking and similar services, and (iii) all
similar related services.

 

(d)                                 The covenants contained in this Section 6.3
hereof shall be construed as a series of separate covenants, one for each
country, province, state, city or other political subdivision in which the
Company currently engages in its business or, during the term of this Agreement,
becomes engaged in its business.  Except for geographic coverage, each such
separate covenant shall be deemed identical in terms to the covenant contained
in this Section 6.3.  If, in any judicial proceeding, a court refuses to enforce
any of such separate covenants (or any part thereof), then such unenforceable
covenant (or such part) shall be eliminated from this Plan for that Participant
or groups of Participants, as applicable, to the extent necessary to permit the
remaining separate covenants (or portions thereof) to be enforced.  In the event
that the provisions of this Section 6.3 are deemed to exceed the time,
geographic or scope limitations permitted by applicable law, then such
provisions shall be reformed to the maximum time, geographic or scope
limitations, as the case may be, permitted by applicable law.

 

(e)                                  Notwithstanding anything to the contrary in
this Plan or a Participant’s Participation Agreement, the Company’s sole remedy
for a breach of Sections 6.3(a), 6.3(b), or 6.3(c) of the Plan by the Chief
Executive Officer of the Company or a Tier II Participant that first occurs upon
or following the one (1) year anniversary of an Involuntary Termination of such
Participant shall be non-payment of any Severance Benefits not yet paid to such
Participant under this Plan.

 

6.4.                            Non-Disparagement.  Participant shall not,
whether in writing, orally or through any medium (including, but not limited to,
the press or other media, computer networks or bulletin boards, or any other
form of communication), malign, defame, denigrate, disparage or otherwise damage
or assail the reputation, integrity or professionalism of the Company, its
subsidiaries or affiliates or their respective predecessors and successors, or
any of the current or former directors, officers, employees, shareholders,
partners, members, agents or representatives, or the reputation, integrity or
professionalism of any of the foregoing, with respect to any of their respective
activities, or otherwise publish (whether in writing or orally) statements that
tend to portray any of the aforementioned parties in an unfavorable light;
provided, however, that any such statements or actions that are isolated and
inadvertent will not constitute a breach of this Section 6.4; and provided
further, however, that this paragraph shall not restrict any true and accurate
statement made by Participant pursuant to legal process in connection with any
deposition, interrogatory, testimony, discovery, arbitration, litigation, or
pursuant to any investigation, order, request or requirement of any governmental
agency or self-regulatory organization having jurisdiction over the Company or
Participant.

 

6.5.                            Cooperation.  Participant will at all times
following Participant’s Involuntary Termination assist the Company and its
affiliates in the defense of any claims, or potential claims that may be made or
threatened to be made against the Company or any of its affiliates in any
action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise, and will assist the Company and its affiliates in
the prosecution of any claims that may be made by the Company or any of its
affiliates in any such action, suit

 

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or proceeding, to the extent that such claims may relate to Participant’s
employment or the period of Participant’s employment by the Company, subject to
reasonable accommodation to avoid unreasonable interference with Participant’s
personal or business activities. Participant agrees, unless precluded by law, to
promptly inform the Company if Participant is asked to participate (or otherwise
become involved) in any action, suit or proceeding involving such claims or
potential claims. Participant also agrees, unless precluded by law, to promptly
inform the Company if Participant is asked to assist in any investigation
(whether governmental or otherwise) of the Company or any of its affiliates (or
their actions), regardless of whether a lawsuit has then been filed against the
Company or any of its affiliates with respect to such investigation. 
Participant shall be entitled to reimbursement, upon receipt by the Company of
suitable documentation, for Participant’s reasonable out-of-pocket expenses
(including travel costs) and any other expenses that are pre-approved by the
Company, in either case, for the assistance provided under this paragraph. 
Notwithstanding the foregoing, the provisions of this Section 6.4 with respect
to reimbursement of expenses shall in no way affect Participant’s rights to be
indemnified and/or advanced expenses in accordance with the Company’s corporate
documents and/or in accordance with this Plan.

 

6.6.                            Violation of Conditions. Severance Benefits will
terminate immediately for a Participant if the Participant, at any time,
violates any of the provisions of the Plan, the applicable Participation
Agreement, or any other agreement referenced in this Section 6 between the
Participant and the Company or its affiliates.

 

7.                                      Timing of Severance Benefits.  Provided
that the Release becomes effective and irrevocable by the Release Deadline Date
and subject to Section 9, the Severance Benefits will be paid, or in the case of
installments, will commence, on the first Company payroll date following the
Release Deadline Date (such payment date, the “Severance Start Date”), and any
Severance Benefits otherwise payable to the Participant during the period
immediately following the Participant’s termination of employment with the
Company through the Severance Start Date will be paid in a lump sum to the
Participant on the Severance Start Date, with any remaining payments to be made
as provided in this Plan or the Participant’s Participation Agreement, as
applicable.

 

8.                                      Exclusive Benefit.  The Severance
Benefits shall be the exclusive benefit for a Participant related to termination
of employment and/or change of control during the Change of Control Period
(including, without limitation, under any applicable employment or severance
agreement or plan), except that, with respect to Equity Awards, the accelerated
vesting and post-termination exercise period rights set forth in Sections 19 and
24 of the Company’s 2007 Long-Term Incentive Plan (the “2007 Plan”) in
connection with a Change in Control (as defined in the 2007 Plan) or the
applicable award agreement under the 2007 Plan shall continue to apply.

 

9.                                      Section 409A.

 

9.1.                            Notwithstanding anything to the contrary in this
Plan, no Severance Benefits to be paid or provided to a Participant, if any,
under this Plan that, when considered together with any other severance payments
or separation benefits, are considered deferred

 

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compensation under Section 409A of the Code, and the final regulations and any
guidance promulgated thereunder (“Section 409A”) (together, the “Deferred
Payments”) will be paid or provided until the Participant has a “separation from
service” within the meaning of Section 409A.  Similarly, no Severance Benefits
payable to a Participant, if any, under this Plan that otherwise would be exempt
from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be
payable until the Participant has a “separation from service” within the meaning
of Section 409A.

 

9.2.                            It is intended that the Severance Benefits will
be either exempt from Section 409A as a payment that would fall within the
“short-term deferral period” as described in Section 9.4 below or as resulting
from an involuntary separation from service as described in Section 9.5 below or
will be compliant with Section 409A.  In no event will a Participant have
discretion to determine the taxable year of payment of any Deferred Payment.

 

9.3.                            Notwithstanding anything to the contrary in this
Plan, if a Participant is a “specified employee” within the meaning of
Section 409A at the time of the Participant’s separation from service (other
than due to death), then the Deferred Payments, if any, that are payable within
the first 6 months following the Participant’s separation from service, will
become payable on the date 6 months and 1 day following the date of the
Participant’s separation from service.  All subsequent Deferred Payments, if
any, will be payable in accordance with the payment schedule applicable to each
payment or benefit.  Notwithstanding anything herein to the contrary, in the
event of the Participant’s death following the Participant’s separation from
service, but before the 6 month anniversary of the separation from service, then
any payments delayed in accordance with this paragraph will be payable in a lump
sum as soon as administratively practicable after the date of the Participant’s
death and all other Deferred Payments will be payable in accordance with the
payment schedule applicable to each payment or benefit.  Each payment and
benefit payable under this Plan is intended to constitute a separate payment
under Section 1.409A-2(b)(2) of the Treasury Regulations.

 

9.4.                            Any amount paid under this Plan that satisfies
the requirements of the “short-term deferral” rule set forth in
Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred
Payments for purposes of this Section 9.

 

9.5.                            Any amount paid under this Plan that qualifies
as a payment made as a result of an involuntary separation from service pursuant
to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed
the Section 409A Limit will not constitute Deferred Payments for purposes of
this Section 9.

 

9.6.                            The foregoing provisions are intended to comply
with or be exempt from the requirements of Section 409A so that none of the
Severance Benefits will be subject to the additional tax imposed under
Section 409A, and any ambiguities herein will be interpreted to so comply or be
exempt.  Notwithstanding anything to the contrary in the Plan, including but not
limited to Sections 11 and 14, the Company reserves the right to amend the Plan
as it deems necessary or advisable, in its sole discretion and without the
consent of the Participants, to comply with Section 409A or to avoid income
recognition under Section 409A prior to the actual payment of Severance Benefits
or imposition of any additional tax.  In no

 

10

--------------------------------------------------------------------------------

 

event will the Company reimburse a Participant for any taxes or other costs that
may be imposed on the Participant as result of Section 409A.

 

10.                               Withholdings.  The Company will withhold from
any Severance Benefits all applicable U.S. federal, state, local and non-U.S.
taxes required to be withheld and any other required payroll deductions.

 

11.                               Administration.  The Company is the
administrator of the Plan (within the meaning of section 3(16)(A) of ERISA). 
The Plan will be administered and interpreted by the Administrator (in his or
her sole discretion).  The Administrator is the “named fiduciary” of the Plan
for purposes of ERISA and will be subject to the fiduciary standards of ERISA
when acting in such capacity.  Any decision made or other action taken by the
Administrator with respect to the Plan, and any interpretation by the
Administrator of any term or condition of the Plan, or any related document,
will be conclusive and binding on all persons and be given the maximum possible
deference allowed by law.  In accordance with Section 2.1, the Administrator
(a) may, in its sole discretion and on such terms and conditions as it may
provide, delegate in writing to one or more officers of the Company all or any
portion of its authority or responsibility with respect to the Plan, and (b) has
the authority to act for the Company (in a non-fiduciary capacity) as to any
matter pertaining to the Plan; provided, however, that any Plan amendment or
termination or any other action that reasonably could be expected to increase
materially the cost of the Plan must be approved by the Board.

 

12.                               Eligibility to Participate.  To the extent
that the Administrator has delegated administrative authority or responsibility
to one or more officers of the Company in accordance with Sections 2.1 and 11,
each such officer will not be excluded from participating in the Plan if
otherwise eligible, but he or she is not entitled to act upon or make
determinations regarding any matters pertaining specifically to his or her own
benefit or eligibility under the Plan.  The Administrator will act upon and make
determinations regarding any matters pertaining specifically to the benefit or
eligibility of each such officer under the Plan.

 

13.                               Term.  The Plan will become effective upon the
Effective Date.  The Plan automatically will expire 12 months after the
Effective Date, provided that, if a Change of Control occurs prior to the
expiration of the Plan, or if a written agreement is signed by the Company for a
transaction that (if effected) would constitute a Change of Control, the term of
the Plan automatically will be extended as long as is necessary or appropriate
to provide the Severance Benefits with respect to such Change of Control.  If a
Participant becomes entitled to Severance Benefits during the term of the Plan,
the Plan will not terminate until all of the obligations of the Company with
respect to the Plan have been satisfied.  Further, if an initial occurrence of
an act or omission by the Company constituting the grounds for Good Reason has
occurred (the “Initial Grounds”), and the expiration date of the Cure Period
with respect to such Initial Grounds could occur following the expiration of the
term of the Plan, then the term of the Plan will extend automatically through
the date that is 30 days following the expiration of such Cure Period, but such
extension of the term shall only apply with respect to the Initial Grounds.

 

11

--------------------------------------------------------------------------------

 

14.                               Amendment or Termination.  The Company, by
action of the Administrator, reserves the right to amend or terminate the Plan
at any time, without advance notice to any Participant and without regard to the
effect of the amendment or termination on any Participant or on any other
individual, subject to the following and Section 13.  Any amendment or
termination of the Plan will be in writing.  Notwithstanding the foregoing, any
amendment to the Plan that (a) causes an individual to cease to be a
Participant, or (b) reduces or alters to the detriment of the Participant the
Severance Benefits potentially payable to that Participant (including, without
limitation, imposing additional conditions or modifying the timing of payment),
will not be effective without that Participant’s written consent.  Any action of
the Company in amending or terminating the Plan will be taken in a non-fiduciary
capacity.

 

15.                               Claims and Appeals.

 

(a)                                 Claims Procedure.  Any employee or other
person who believes he or she is entitled to any Severance Benefits may submit a
claim in writing to the Administrator within 90 days of the earlier of (i) the
date the claimant learned the amount of his or her Severance Benefits or
(ii) the date the claimant learned that he or she will not be entitled to any
Severance Benefits.  If the claim is denied (in full or in part), the claimant
will be provided a written notice explaining the specific reasons for the denial
and referring to the provisions of the Plan on which the denial is based.  The
notice also will describe any additional information needed to support the claim
and the Plan’s procedures for appealing the denial.  The denial notice will be
provided within 90 days after the claim is received.  If special circumstances
require an extension of time (up to 90 days), written notice of the extension
will be given within the initial 90 day period.  This notice of extension will
indicate the special circumstances requiring the extension of time and the date
by which the Administrator expects to render its decision on the claim.

 

(b)                                 Appeal Procedure.  If the claimant’s claim
is denied, the claimant (or his or her authorized representative) may apply in
writing to the Administrator for a review of the decision denying the claim. 
Review must be requested within 60 days following the date the claimant received
the written notice of their claim denial or else the claimant loses the right to
review.  The claimant (or representative) then has the right to review and
obtain copies of all documents and other information relevant to the claim, upon
request and at no charge, and to submit issues and comments in writing.  The
Administrator will provide written notice of its decision on review within 60
days after it receives a review request.  If additional time (up to 60 days) is
needed to review the request, the claimant (or representative) will be given
written notice of the reason for the delay.  This notice of extension will
indicate the special circumstances requiring the extension of time and the date
by which the Administrator expects to render its decision.  If the claim is
denied (in full or in part), the claimant will be provided a written notice
explaining the specific reasons for the denial and referring to the provisions
of the Plan on which the denial is based.  The notice also will include a
statement that the claimant will be provided, upon request and free of charge,
reasonable access to, and copies of, all documents and other information
relevant to the claim and a statement regarding the claimant’s right to bring an
action under Section 502(a) of ERISA.

 

12

--------------------------------------------------------------------------------

 

16.                               Attorneys’ Fees.  The parties shall each bear
their own expenses, legal fees and other fees incurred in connection with this
Plan.

 

17.                               Source of Payments.  All payments under the
Plan will be paid from the general funds of the Company; no separate fund will
be established under the Plan, and the Plan will have no assets.  No right of
any person to receive any payment under the Plan will be any greater than the
right of any other general unsecured creditor of the Company.

 

18.                               Inalienability.  In no event may any current
or former employee of the Company or any of its subsidiaries or affiliates sell,
transfer, anticipate, assign or otherwise dispose of any right or interest under
the Plan.  At no time will any such right or interest be subject to the claims
of creditors nor liable to attachment, execution or other legal process.

 

19.                               No Enlargement of Employment Rights.  Neither
the establishment or maintenance or amendment of the Plan, nor the making of any
benefit payment hereunder, will be construed to confer upon any individual any
right to continue to be an employee of the Company.  The Company expressly
reserves the right to discharge any of its employees at any time, with or
without cause.  However, as described in the Plan, a Participant may be entitled
to Severance Benefits depending upon the circumstances of his or her termination
of employment.

 

20.                               Successors.  Any successor to the Company of
all or substantially all of the Company’s business and/or assets (whether direct
or indirect and whether by purchase, merger, consolidation, liquidation or other
transaction) will assume the obligations under the Plan and agree expressly to
perform the obligations under the Plan in the same manner and to the same extent
as the Company would be required to perform such obligations in the absence of a
succession.  For all purposes under the Plan, the term “Company” will include
any successor to the Company’s business and/or assets which become bound by the
terms of the Plan by operation of law, or otherwise.

 

21.                               Applicable Law.  The provisions of the Plan
will be construed, administered and enforced in accordance with ERISA and, to
the extent applicable, the internal substantive laws of the state of Texas (but
not its conflict of laws provisions).

 

22.                               Severability.  If any provision of the Plan is
held invalid or unenforceable, its invalidity or unenforceability will not
affect any other provision of the Plan, and the Plan will be construed and
enforced as if such provision had not been included.

 

23.                               Headings.  Headings in this Plan document are
for purposes of reference only and will not limit or otherwise affect the
meaning hereof.

 

24.                               Indemnification.  The Company hereby agrees to
indemnify and hold harmless the officers and employees of the Company, and the
members of its Board, from all losses, claims, costs or other liabilities
arising from their acts or omissions in connection with the administration,
amendment or termination of the Plan, to the maximum extent permitted by
applicable law.  This indemnity will cover all such liabilities, including
judgments, settlements and costs of defense.  The Company will provide this
indemnity from its own funds to the

 

13

--------------------------------------------------------------------------------

 

extent that insurance does not cover such liabilities.  This indemnity is in
addition to and not in lieu of any other indemnity provided to such person by
the Company.

 

25.                               Additional Information.

 

Plan Name:

Rackspace Hosting, Inc. Senior Executive Change of Control and Severance Plan

 

 

Plan Sponsor:

Rackspace Hosting, Inc.

 

1 Fanatical Place

 

City of Windcrest

 

San Antonio, Texas 78218

 

(210) 312-4000

 

 

Identification Numbers:

EIN: 74-3016523

 

PLAN:

 

 

Plan Year:

Company’s fiscal year

 

 

Plan Administrator:

Rackspace Hosting, Inc.

 

Attention: Administrator of the Rackspace Hosting, Inc. Senior Executive Change
of Control and Severance Plan

 

1 Fanatical Place

 

City of Windcrest

 

San Antonio, Texas 78218

 

(210) 312-4000

 

 

Agent for Service of Legal Process:

Rackspace Hosting, Inc.

Attention: General Counsel

 

1 Fanatical Place

 

City of Windcrest

 

San Antonio, Texas 78218

 

(210) 312-4000

 

 

 

Service of process also may be made upon the Administrator.

 

 

Type of Plan

Severance Plan

 

 

Plan Costs

The cost of the Plan is paid by the Employer.

 

26.                               Statement of ERISA Rights.

 

As a Participant under the Plan, you have certain rights and protections under
ERISA:

 

(a)                                 You may examine (without charge) all Plan
documents, including any amendments and copies of all documents filed with the
U.S. Department of Labor.

 

14

--------------------------------------------------------------------------------

 

These documents are available for your review in the Company’s Human Resources
Department.

 

(b)                                 You may obtain copies of all Plan documents
and other Plan information upon written request to the Administrator.  A
reasonable charge may be made for such copies.

 

In addition to creating rights for Participants, ERISA imposes duties upon the
people who are responsible for the operation of the Plan.  The people who
operate the Plan (called “fiduciaries”) have a duty to do so prudently and in
the interests of you and the other Participants.  No one, including the Company
or any other person, may fire you or otherwise discriminate against you in any
way to prevent you from obtaining a benefit under the Plan or exercising your
rights under ERISA.  If your claim for a severance benefit is denied, in whole
or in part, you must receive a written explanation of the reason for the
denial.  You have the right to have the denial of your claim reviewed.  (The
claim review procedure is explained in Section 15 above.)

 

Under ERISA, there are steps you can take to enforce the above rights.  For
example, if you request materials and do not receive them within 30 days, you
may file suit in a federal court.  In such a case, the court may require the
Administrator to provide the materials and to pay you up to $110 a day until you
receive the materials, unless the materials were not sent due to reasons beyond
the control of the Administrator.  If you have a claim which is denied or
ignored, in whole or in part, you may file suit in a federal court.  If it
should happen that you are discriminated against for asserting your rights, you
may seek assistance from the U.S. Department of Labor, or you may file suit in a
federal court.

 

In any case, the court will decide who will pay court costs and legal fees.  If
you are successful, the court may order the person you have sued to pay these
costs and fees.  If you lose, the court may order you to pay these costs and
fees, for example, if it finds that your claim is frivolous.

 

If you have any questions regarding the Plan, please contact the Administrator. 
If you have any questions about this statement or about your rights under ERISA,
you may contact the nearest area office of the Employee Benefits Security
Administration (formerly the Pension and Welfare Benefits Administration), U.S.
Department of Labor, listed in your telephone directory, or the Division of
Technical Assistance and Inquiries, Employee Benefits Security Administration,
U.S. Department of Labor, 200 Constitution Avenue, N.W. Washington, D.C. 20210. 
You also may obtain certain publications about your rights and responsibilities
under ERISA by calling the publications hotline of the Employee Benefits
Security Administration.

 

o 0 o

 

15

--------------------------------------------------------------------------------

 

CHIEF EXECUTIVE OFFICER

 

Appendix A

 

Rackspace Hosting, Inc. Senior Executive Change of Control and Severance Plan
Participation Agreement

 

Rackspace Hosting, Inc. (the “Company”) is pleased to inform you, [NAME], that
you have been selected to participate in the Company’s Senior Executive Change
of Control and Severance Plan (the “Plan”) as a Participant.

 

A copy of the Plan was delivered to you with this Participation Agreement.  Your
participation in the Plan is subject to all of the terms and conditions of the
Plan.  The capitalized terms used but not defined herein will have the meanings
ascribed to them in the Plan.

 

In order to actually become a participant in the Plan, you must complete and
sign this Participation Agreement and return it to [NAME] no later than [DATE],
2016.

 

The Plan describes in detail certain circumstances under which you may become
eligible for Severance Benefits.  As described more fully in the Plan, you may
become eligible for certain Severance Benefits if you incur an Involuntary
Termination.

 

If you become eligible for Severance Benefits as described in the Plan, then
subject to the terms and conditions of the Plan, you will receive:

 

1.                                      Cash Severance Benefits.

 

a.                                      Base Salary.  A payment (less applicable
withholding taxes) equal to 250% of your annual base salary as in effect
immediately prior to your Involuntary Termination or, if greater, at the level
in effect immediately prior to the Change of Control, payable ratably over 30
months in accordance with the Company’s payroll practices as in effect from time
to time.

 

b.                                      Target Bonus.  A payment (less
applicable withholding taxes) equal to 250% of your annual target bonus for the
fiscal year in which your Involuntary Termination occurs or, if greater, 250% of
your annual target bonus in effect immediately prior to the Change of Control,
payable ratably over 30 months in accordance with the Company’s payroll
practices as in effect from time to time.

 

c.                                       Pro-rata Bonus.  A lump-sum payment
(less applicable withholding taxes) equal to the product obtained by multiplying
(x) 100% of the unpaid portion of the actual annual performance bonus that you
otherwise would be entitled to receive based on the actual level of achievement
of the applicable performance objectives for the fiscal year in which your
Involuntary Termination occurs and (y) the fraction obtained by dividing (A) the
number of days from the beginning of the fiscal year in which your Involuntary
Termination occurs until the date of your Involuntary Termination by (B) 365.

 

--------------------------------------------------------------------------------

 

Any amount in this subsection (c) shall be paid at the same time as bonuses for
such fiscal year of the Company are paid to the Company’s other similarly
situated employees.

 

2.                                      Medical Benefits.  You will receive a
lump sum cash payment in an aggregate amount equal to the applicable premium
cost for continued Company group health coverage for you and your Family Members
pursuant to COBRA, based on the elections with respect to health coverage for
you and your Family Members in effect as of immediately prior to your
Involuntary Termination (which amount will be based on the premium for the first
month of COBRA coverage) for a period of 24 months, which lump sum payment will
be made regardless of whether you elect COBRA continuation coverage.

 

3.                                      Outplacement Services.  You will be
entitled to transitional outplacement benefits of up to $25,000 for each of
(i) the year in which your Involuntary Termination occurs and (ii) the year
following such year.

 

In order to receive any Severance Benefits for which you otherwise become
eligible under the Plan, you must sign and deliver to the Company the Release,
which must have become effective and irrevocable within the requisite period.

 

By your signature below, you and the Company agree that your participation in
the Plan is governed by this Participation Agreement and the provisions of the
Plan.  Your signature below confirms that: (1) you have received a copy of the
Senior Executive Change of Control and Severance Plan and Summary Plan
Description; (2) you have carefully read this Participation Agreement and the
Senior Executive Change of Control and Severance Plan and Summary Plan
Description and you acknowledge and agree to its terms, including, but not
limited to, Section 8 of the Senior Executive Change of Control and Severance
Plan and Summary Plan Description; (3) decisions and determinations by the
Administrator under the Plan will be final and binding on you and your
successors.

 

[Signature page follows]

 

--------------------------------------------------------------------------------

 

RACKSPACE HOSTING, INC.

 

PARTICIPANT

 

 

 

 

 

 

Signature

 

Signature

 

 

 

 

 

 

Name

 

Date

 

 

 

 

 

 

Title

 

 

 

Attachment:    Rackspace Hosting, Inc. Senior Executive Change of Control and
Severance Plan and Summary Plan Description

 

[Signature page to the Participation Agreement]

 

--------------------------------------------------------------------------------

 

TIER 2

 

Appendix A

 

Rackspace Hosting, Inc. Senior Executive Change of Control and Severance Plan
Participation Agreement

 

Rackspace Hosting, Inc. (the “Company”) is pleased to inform you, [NAME], that
you have been selected to participate in the Company’s Senior Executive Change
of Control and Severance Plan (the “Plan”) as a Tier 2 Participant.

 

A copy of the Plan was delivered to you with this Participation Agreement.  Your
participation in the Plan is subject to all of the terms and conditions of the
Plan.  The capitalized terms used but not defined herein will have the meanings
ascribed to them in the Plan.

 

In order to actually become a participant in the Plan, you must complete and
sign this Participation Agreement and return it to [NAME] no later than [DATE],
2016.

 

The Plan describes in detail certain circumstances under which you may become
eligible for Severance Benefits.  As described more fully in the Plan, you may
become eligible for certain Severance Benefits if you incur an Involuntary
Termination.

 

If you become eligible for Severance Benefits as described in the Plan, then
subject to the terms and conditions of the Plan, you will receive:

 

1.                                      Cash Severance Benefits.

 

a.                                      Base Salary.  A payment (less applicable
withholding taxes) equal to 200% of your annual base salary as in effect
immediately prior to your Involuntary Termination or, if greater, at the level
in effect immediately prior to the Change of Control, payable ratably over 24
months in accordance with the Company’s payroll practices as in effect from time
to time.

 

b.                                      Target Bonus.  A payment (less
applicable withholding taxes) equal to 200% of your annual target bonus for the
fiscal year in which your Involuntary Termination occurs or, if greater, 200% of
your annual target bonus in effect immediately prior to the Change of Control,
payable ratably over 24 months in accordance with the Company’s payroll
practices as in effect from time to time.

 

c.                                       Pro-rata Bonus.  A lump-sum payment
(less applicable withholding taxes) equal to the product obtained by multiplying
(x) 100% of the unpaid portion of the actual annual performance bonus that you
otherwise would be entitled to receive based on the actual level of achievement
of the applicable performance objectives for the fiscal year in which your
Involuntary Termination occurs and (y) the fraction obtained by dividing (A) the
number of days from the beginning of the fiscal year in which your Involuntary
Termination occurs until the date of your Involuntary Termination by (B) 365.

 

--------------------------------------------------------------------------------

 

Any amount in this subsection (c) shall be paid at the same time as bonuses for
such fiscal year of the Company are paid to the Company’s other similarly
situated employees.

 

2.                                      Medical Benefits.  You will receive a
lump sum cash payment in an aggregate amount equal to the applicable premium
cost for continued Company group health coverage for you and your Family Members
pursuant to COBRA, based on the elections with respect to health coverage for
you and your Family Members in effect as of immediately prior to your
Involuntary Termination (which amount will be based on the premium for the first
month of COBRA coverage) for a period of 18 months, which lump sum payment will
be made regardless of whether you elect COBRA continuation coverage.

 

3.                                      Outplacement Services.  You will be
entitled to transitional outplacement benefits of up to $25,000 for each of
(i) the year in which your Involuntary Termination occurs and (ii) the year
following such year.

 

In order to receive any Severance Benefits for which you otherwise become
eligible under the Plan, you must sign and deliver to the Company the Release,
which must have become effective and irrevocable within the requisite period.

 

By your signature below, you and the Company agree that your participation in
the Plan is governed by this Participation Agreement and the provisions of the
Plan.  Your signature below confirms that: (1) you have received a copy of the
Senior Executive Change of Control and Severance Plan and Summary Plan
Description; (2) you have carefully read this Participation Agreement and the
Senior Executive Change of Control and Severance Plan and Summary Plan
Description and you acknowledge and agree to its terms, including, but not
limited to, Section 8 of the Senior Executive Change of Control and Severance
Plan and Summary Plan Description; (3) decisions and determinations by the
Administrator under the Plan will be final and binding on you and your
successors.

 

[Signature page follows]

 

--------------------------------------------------------------------------------

 

RACKSPACE HOSTING, INC.

 

PARTICIPANT

 

 

 

 

 

 

Signature

 

Signature

 

 

 

 

 

 

Name

 

Date

 

 

 

 

 

 

Title

 

 

 

Attachment:    Rackspace Hosting, Inc. Senior Executive Change of Control and
Severance Plan and Summary Plan Description

 

[Signature page to the Participation Agreement]

 

--------------------------------------------------------------------------------

 

TIER 3

 

Appendix A

 

Rackspace Hosting, Inc. Senior Executive Change of Control and Severance Plan
Participation Agreement

 

Rackspace Hosting, Inc. (the “Company”) is pleased to inform you, [NAME], that
you have been selected to participate in the Company’s Senior Executive Change
of Control and Severance Plan (the “Plan”) as a Tier 3 Participant.

 

A copy of the Plan was delivered to you with this Participation Agreement.  Your
participation in the Plan is subject to all of the terms and conditions of the
Plan.  The capitalized terms used but not defined herein will have the meanings
ascribed to them in the Plan.

 

In order to actually become a participant in the Plan, you must complete and
sign this Participation Agreement and return it to [NAME] no later than [DATE],
2016.

 

The Plan describes in detail certain circumstances under which you may become
eligible for Severance Benefits.  As described more fully in the Plan, you may
become eligible for certain Severance Benefits if you incur an Involuntary
Termination.

 

If you become eligible for Severance Benefits as described in the Plan, then
subject to the terms and conditions of the Plan, you will receive:

 

1.                                      Cash Severance Benefits.

 

a.                                      Base Salary.  A payment (less applicable
withholding taxes) equal to 100% of your annual base salary as in effect
immediately prior to your Involuntary Termination or, if greater, at the level
in effect immediately prior to the Change of Control, payable ratably over 12
months in accordance with the Company’s payroll practices as in effect from time
to time.

 

b.                                      Target Bonus.  A payment (less
applicable withholding taxes) equal to 100% of your annual target bonus for the
fiscal year in which your Involuntary Termination occurs or, if greater, 100% of
your annual target bonus in effect immediately prior to the Change of Control,
payable ratably over 12 months in accordance with the Company’s payroll
practices as in effect from time to time.

 

c.                                       Pro-rata Bonus.  A lump-sum payment
(less applicable withholding taxes) equal to the product obtained by multiplying
(x) 100% of the unpaid portion of the actual annual performance bonus that you
otherwise would be entitled to receive based on the actual level of achievement
of the applicable performance objectives for the fiscal year in which your
Involuntary Termination occurs and (y) the fraction obtained by dividing (A) the
number of days from the beginning of the fiscal year in which your Involuntary
Termination occurs until the date of your Involuntary Termination by (B) 365.

 

--------------------------------------------------------------------------------

 

Any amount in this subsection (c) shall be paid at the same time as bonuses for
such fiscal year of the Company are paid to the Company’s other similarly
situated employees.

 

2.                                      Medical Benefits.  You will receive a
lump sum cash payment in an aggregate amount equal to the applicable premium
cost for continued Company group health coverage for you and your Family Members
pursuant to COBRA, based on the elections with respect to health coverage for
you and your Family Members in effect as of immediately prior to your
Involuntary Termination (which amount will be based on the premium for the first
month of COBRA coverage) for a period of 12 months, which lump sum payment will
be made regardless of whether you elect COBRA continuation coverage.

 

3.                                      Outplacement Services.  You will be
entitled to transitional outplacement benefits of up to $25,000 for each of
(i) the year in which your Involuntary Termination occurs and (ii) the year
following such year.

 

In order to receive any Severance Benefits for which you otherwise become
eligible under the Plan, you must sign and deliver to the Company the Release,
which must have become effective and irrevocable within the requisite period.

 

By your signature below, you and the Company agree that your participation in
the Plan is governed by this Participation Agreement and the provisions of the
Plan.  Your signature below confirms that: (1) you have received a copy of the
Senior Executive Change of Control and Severance Plan and Summary Plan
Description; (2) you have carefully read this Participation Agreement and the
Senior Executive Change of Control and Severance Plan and Summary Plan
Description and you acknowledge and agree to its terms, including, but not
limited to, Section 8 of the Senior Executive Change of Control and Severance
Plan and Summary Plan Description; (3) decisions and determinations by the
Administrator under the Plan will be final and binding on you and your
successors.

 

[Signature page follows]

 

--------------------------------------------------------------------------------

 

RACKSPACE HOSTING, INC.

 

PARTICIPANT

 

 

 

 

 

 

Signature

 

Signature

 

 

 

 

 

 

Name

 

Date

 

 

 

 

 

 

Title

 

 

 

Attachment:    Rackspace Hosting, Inc. Senior Executive Change of Control and
Severance Plan and Summary Plan Description

 

[Signature page to the Participation Agreement]

 

--------------------------------------------------------------------------------