Exhibit 10.10

RACKABLE SYSTEMS, INC.

2002 STOCK OPTION PLAN

STOCK OPTION AGREEMENT

(NONSTATUTORY STOCK OPTION)

Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Stock
Option Agreement, Rackable Systems, Inc. (the “Company”) has granted you a
nonstatutory stock option under its 2002 Stock Option Plan (the “Plan”) to
purchase the number of shares of the Company’s Common Stock indicated in your
Grant Notice at the exercise price indicated in your Grant Notice.

The details of the Option are as follows:

1. VESTING. Subject to the limitations contained herein, the Option will vest as
provided in your Grant Notice, provided that vesting will cease upon the
termination of your Continuous Service.

2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common Stock
subject to the Option and your exercise price per share referenced in your Grant
Notice may be adjusted from time to time for Capitalization Adjustments.

3. EXERCISE PRIOR TO VESTING (“EARLY EXERCISE”). If permitted in your Grant
Notice (i.e., the “Exercise Schedule” indicates that “Early Exercise” of the
Option is permitted) and subject to the provisions of the Option, you may elect
at any time that is both (i) during the period of your Continuous Service and
(ii) during the term of the Option, to exercise all or part of the Option,
including the nonvested portion of the Option; provided, however, that:

(a) a partial exercise of the Option shall be deemed to cover first vested
shares of Common Stock and then the earliest vesting installment of unvested
shares of Common Stock;

(b) any shares of Common Stock so purchased from installments that have not
vested as of the date of exercise shall be subject to the purchase option in
favor of the Company as described in the Company’s form of Early Exercise Stock
Purchase Agreement; and

(c) you shall enter into the Company’s form of Early Exercise Stock Purchase
Agreement with a vesting schedule that will result in the same vesting as if no
early exercise had occurred.

4. METHOD OF PAYMENT. Payment of the exercise price is due in full upon exercise
of all or any part of the Option. You may elect to make payment of the exercise
price in cash or by check or in any other manner permitted by your Grant Notice,
which may include one or more of the following.

(a) In the Company’s sole discretion at the time your option is exercised and
provided that at the time of exercise the Common Stock is publicly traded and
quoted regularly in The Wall Street Journal, pursuant to a program developed
under Regulation T as promulgated by the Federal Reserve Board that, prior to
the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.

(b) Provided that at the time of exercise the Common Stock is publicly traded
and quoted regularly in The Wall Street Journal, by delivery of already-owned
shares of Common Stock either that you have held for the period required to
avoid a charge to the Company’s reported earnings (generally six (6) months) or
that you did not acquire, directly or indirectly from the Company, that are
owned free and clear of any liens, claims, encumbrances or security interests,
and that are valued at Fair Market Value on the date of exercise. “Delivery” for
these purposes, in the sole discretion of the Company at the time you exercise
your option, shall include delivery to the Company of your attestation of
ownership of such shares of Common Stock in a form approved by the Company.
Notwithstanding the foregoing, you may not exercise your option by tender to the
Company of Common Stock to the extent such tender would violate the provisions
of any law, regulation or agreement restricting the redemption of the Company’s
stock.

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5. WHOLE SHARES. You may exercise the Option only for whole shares of Common
Stock.

6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained
herein, you may not exercise the Option unless the shares of Common Stock
issuable upon such exercise (the “Purchased Shares”) are then registered under
the Securities Act or, if such shares of Common Stock are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act. The exercise of
the Option must also comply with other applicable laws and regulations governing
the Option, and you may not exercise the Option if the Company determines that
such exercise would not be in material compliance with such laws and
regulations.

7. TERM. You may not exercise the Option before the commencement of its term or
after its term expires. The term of the Option commences on the Date of Grant
and expires upon the earliest of the following:

(a) three (3) months after the termination of your Continuous Service for any
reason other than your Disability or death, provided that if during any part of
such three (3)-month period the Option is not exercisable solely because of the
condition set forth in the preceding paragraph relating to “Securities Law
Compliance,” the Option shall not expire until the earlier of the Expiration
Date or until it shall have been exercisable for an aggregate period of three
(3) months after the termination of your Continuous Service;

(b) twelve (12) months after the termination of your Continuous Service due to
your Disability;

(c) eighteen (18) months after your death if you die either during your
Continuous Service or within three (3) months after your Continuous Service
terminates;

(d) the Expiration Date indicated in your Grant Notice; or

(e) the day before the tenth (10th) anniversary of the Date of Grant.

8. EXERCISE.

(a) You may exercise the vested portion of the Option (and the unvested portion
of the Option if your Grant Notice so permits) during its term by delivering a
Notice of Exercise (in a form designated by the Company) together with the
exercise price to the Secretary of the Company, or to such other person as the
Company may designate, during regular business hours, together with such
additional documents as the Company may then require.

(b) By exercising the Option you agree that, as a condition to any exercise of
the Option, the Company may require you to enter into an arrangement providing
for the payment by you to the Company of any tax withholding obligation of the
Company arising by reason of (1) the exercise of the Option, (2) the lapse of
any substantial risk of forfeiture to which the shares of Common Stock are
subject at the time of exercise, or (3) the disposition of shares of Common
Stock acquired upon such exercise.

(c) By exercising the Option you agree that the Company (or a representative of
the underwriter(s)) may, in connection with the first underwritten registration
of the offering of any securities of the Company under the Securities Act,
require that you not sell, dispose of, transfer, make any short sale of, grant
any option for the purchase of, or enter into any hedging or similar transaction
with the same economic effect as a sale, any shares of Common Stock or other
securities of the Company held by you, for a period of time specified by the
underwriter(s) (not to exceed one hundred eighty (180) days) following the
effective date of the registration statement of the Company filed under the
Securities Act. You further agree to execute and deliver such other agreements
as may be reasonably requested by the Company and/or the underwriter(s) that are
consistent with the foregoing or that are necessary to give further effect
thereto. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to your shares of Common Stock until the
end of such period. The underwriters of the Company’s stock are intended third
party beneficiaries of this Section 8(c) and shall have the right, power and
authority to enforce the provisions hereof as though they were a party hereto.

9. TRANSFERABILITY. The Option is not transferable, except by will or by the
laws of descent and distribution, and is exercisable during your life only by
you. Notwithstanding the foregoing, by delivering written notice to the Company,
in a form satisfactory to the Company, you may designate a third party who, in
the event of your death, shall thereafter be entitled to exercise the Option.

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10. CHANGE IN CONTROL. If a Change in Control occurs and your Continuous Service
with the Company has not terminated as of, or immediately prior to, the
effective time of the Change in Control, then, as of the effective time of such
Change in Control, the vesting and exercisability of your option shall be
accelerated in full.

11. RIGHT OF FIRST REFUSAL. Shares of Common Stock that you acquire upon
exercise of the Option are subject to any right of first refusal that may be
described in the Company’s bylaws in effect at such time the Company elects to
exercise its right. The Company’s right of first refusal shall expire on the
first date upon which any security of the Company is listed (or approved for
listing) upon notice of issuance on a national securities exchange or on the
Nasdaq National Market of the Nasdaq Stock Market (or any successor thereto).

12. RIGHT OF REPURCHASE. To the extent, if any, provided in the Company’s bylaws
as amended from time to time, the Company shall have the right to repurchase all
or any part of the shares of Common Stock you acquire pursuant to the exercise
of the Option.

13. OPTION NOT A SERVICE CONTRACT. The Option is not an employment or service
contract, and nothing in the Option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or an Affiliate, or of the Company or an Affiliate to continue your employment.
In addition, nothing in the Option shall obligate the Company or an Affiliate,
their respective shareholders, Board members, officers or employees to continue
any relationship that you might have as a director or consultant for the Company
or an Affiliate.

14. WITHHOLDING OBLIGATIONS.

(a) At the time you exercise the Option, in whole or in part, or at any time
thereafter as requested by the Company, you hereby authorize withholding from
payroll and any other amounts payable to you, and otherwise agree to make
adequate provision for (including by means of a “cashless exercise” pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or
an Affiliate, if any, which arise in connection with the Option.

(b) Upon your request and subject to approval by the Company, in its sole
discretion, and compliance with any applicable conditions or restrictions of
law, the Company may withhold from fully vested shares of Common Stock otherwise
issuable to you upon the exercise of the Option a number of whole shares of
Common Stock having a Fair Market Value, determined by the Company as of the
date of exercise, not in excess of the minimum amount of tax required to be
withheld by law. If the date of determination of any tax withholding obligation
is deferred to a date later than the date of exercise of the Option, share
withholding pursuant to the preceding sentence shall not be permitted unless you
make a proper and timely election under Section 83(b) of the Code, covering the
aggregate number of shares of Common Stock acquired upon such exercise with
respect to which such determination is otherwise deferred, to accelerate the
determination of such tax withholding obligation to the date of exercise of the
Option. Notwithstanding the filing of such election, shares of Common Stock
shall be withheld solely from fully vested shares of Common Stock determined as
of the date of exercise of the Option that are otherwise issuable to you upon
such exercise. Any adverse consequences to you arising in connection with such
share withholding procedure shall be your sole responsibility.

(c) You may not exercise the Option unless the tax withholding obligations of
the Company and/or any Affiliate are satisfied. Accordingly, you may not be able
to exercise the Option when desired even though it is vested, and the Company
shall have no obligation to issue a certificate for such shares of Common Stock
or release such shares of Common Stock from any escrow provided for herein.

15. NOTICES. Any notices provided for in the Option shall be given in writing
and shall be deemed effectively given upon receipt or, in the case of notices
delivered by mail by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the last address you
provided to the Company.

DEFINITIONS.

(a) “Affiliate” means any parent corporation or subsidiary corporation of the
Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

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(b) “Board” means the Board of Directors of the Company.

(c) “Capitalization Adjustments” means a change made in the Common Stock subject
to the Option without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
distribution, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company).

(d) “Change in Control” means the merger, consolidation, sale of all or
substantially all of the Company’s assets or similar transaction involving
(directly or indirectly) the Company if, immediately after the consummation of
such merger, consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not own, directly or indirectly, either
(A) outstanding voting securities representing more than fifty percent (50%) of
the combined outstanding voting power of the surviving Entity in such merger,
consolidation or similar transaction or (B) more than fifty percent (50%) of the
combined outstanding voting power of the parent of the surviving Entity in such
merger, consolidation or similar transaction. A Change in Control shall not
include the public offering of the Company’s securities pursuant to the
Securities Act or any similar law then in force.

(e) “Code” means the Internal Revenue Code of 1986, as amended.

(f) “Common Stock” means the common stock of the Company.

(g) “Continuous Service” means that the Participant’s service with the Company
or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. A change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or
Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant’s service with the Company or an Affiliate, shall not terminate a
Participant’s Continuous Service. For example, a change in status from an
employee of the Company to a consultant to an Affiliate or to a Director shall
not constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party’s sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave. Notwithstanding the foregoing, a leave of absence
shall be treated as Continuous Service for purposes of vesting in the Option
only to such extent as may be provided in the Company’s leave of absence policy
or in the written terms of the Participant’s leave of absence.

(h) “Disability” means the inability of a person, in the opinion of a qualified
physician acceptable to the Company, to perform the major duties of that
person’s position with the Company or an Affiliate because of the sickness or
injury of the person.

(i) “Fair Market Value” means, as of any date, the value of the Common Stock
determined as follows:

(i) If the Common Stock is listed on any established stock exchange or traded on
the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value
of a share of Common Stock shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or market
(or the exchange or market with the greatest volume of trading in the Common
Stock) on the last market trading day prior to the day of determination, as
reported in The Wall Street Journal or such other source as the Board deems
reliable.

(ii) In the absence of such markets for the Common Stock, the Fair Market Value
shall be determined in good faith by the Board.

(j) “Securities Act” means the Securities Act of 1933, as amended.

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RACKABLE SYSTEMS, INC.

STOCK OPTION GRANT NOTICE

2002 STOCK OPTION PLAN

Rackable Systems, Inc. (the “Company”), pursuant to its 2002 Stock Option Plan,
hereby grants to Optionholder an option to purchase the number of shares of the
Company’s Common Stock set forth below. This option is subject to all of the
terms and conditions as set forth herein and in the Stock Option Agreement and
the Notice of Exercise, all of which are attached hereto and incorporated herein
in their entirety.

 

Optionholder:

  

 

  

Date of Grant:

  

 

  

Vesting Commencement Date:

  

 

  

Number of Shares Subject to Option:

  

 

  

Exercise Price (Per Share):

  

 

  

Total Exercise Price:

  

 

  

Expiration Date:

  

 

  

 

Type of Grant:   

¨        Incentive Stock Option1

  

x       Nonstatutory Stock Option

Exercise Schedule:   

¨        Same as Vesting Schedule

  

x       Early Exercise Permitted

Vesting Schedule:    1/48th of the shares vest for each month of service as a
director following the Vesting Commencement Date. Payment:    By one or a
combination of the following items (described in the Stock Option Agreement):   

x       By cash or check

     

x       Pursuant to a Regulation T Program if the Shares are publicly traded

  

x       By delivery of already-owned shares if the Shares are publicly traded

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Stock Option Grant Notice and
the Stock Option Agreement. Optionholder further acknowledges that as of the
Date of Grant, this Stock Option Grant Notice and the Stock Option Agreement set
forth the entire understanding between Optionholder and the Company regarding
the acquisition of stock in the Company and supersede all prior oral and written
agreements on that subject.

 

RACKABLE SYSTEMS, INC.    OPTIONHOLDER: By:     

 

     

 

     Signature          Signature Title:     

 

      Date:   

 

Date:     

 

        

ATTACHMENTS: Stock Option Agreement and Notice of Exercise

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1 If this is an Incentive Stock Option, it (plus other outstanding Incentive
Stock Options) cannot be first exercisable for more than $100,000 in value
(measured by exercise price) in any calendar year. Any excess over $100,000 is a
Nonstatutory Stock Option.