Form of Indemnity Agreement



 Exhibit 10.7 
  
 INDEMNITY AGREEMENT 
  
 THIS INDEMNITY AGREEMENT (the “Agreement”) is made and entered into this
             day of
                            , 2005 by and between RACKABLE SYSTEMS,
INC., a Delaware corporation (the “Corporation”), and                  (“Agent”). 
  
 RECITALS 
  
 WHEREAS, Agent has performed and performs a valuable
service to the Corporation in his capacity as              of the Corporation; 
  
 WHEREAS, the stockholders of the Corporation have adopted bylaws (the “Bylaws”) providing for the indemnification of the
directors, officers, employees and other agents of the Corporation, including persons serving at the request of the Corporation in such capacities with other corporations or enterprises, as authorized by the Delaware General Corporation Law, as
amended (the “Code”); 
  
 WHEREAS,
the Bylaws and the Code, by their non-exclusive nature, permit contracts between the Corporation and its agents, officers, employees and other agents with respect to indemnification of such persons; and 
  
 WHEREAS, in consideration for Agent’s past service
and in order to induce Agent to continue to serve as                  of the Corporation, the Corporation has determined and agreed to enter into this Agreement
with Agent; 
  
 NOW,
THEREFORE, in consideration of Agent’s past service and/or continued service as                  after the date hereof, the parties hereto
agree as follows: 
  
 AGREEMENT 

 
 1. Services to the Corporation. Agent will serve, at the will of
the Corporation or under separate contract, if any such contract exists, as                  of the Corporation or as a director, officer or other fiduciary of an
affiliate of the Corporation (including any employee benefit plan of the Corporation) faithfully and to the best of his ability so long as he is duly elected and qualified in accordance with the provisions of the Bylaws or other applicable charter
documents of the Corporation or such affiliate; provided, however, that Agent may at any time and for any reason resign from such position (subject to any contractual obligation that Agent may have assumed apart from this Agreement) and that
the Corporation or any affiliate shall have no obligation under this Agreement to continue Agent in any such position. 
  
 2. Indemnity of Agent. The Corporation hereby agrees to hold harmless and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and the Code, as the same may be amended from time to time (but, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than the Bylaws or the Code permitted prior to
adoption of such amendment). 
  

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 3. Additional Indemnity. In addition to and not in limitation of the indemnification otherwise
provided for herein, and subject only to the exclusions set forth in Section 4 hereof, the Corporation hereby further agrees to hold harmless and indemnify Agent: 
  
 (a) against any and all expenses (including attorneys’ fees), witness fees, damages, judgments, fines and
amounts paid in settlement and any other amounts that Agent becomes legally obligated to pay because of any claim or claims made against or by him in connection with any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative (including an action by or in the right of the Corporation) to which Agent is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that Agent is, was
or at any time becomes a director, officer, employee or other agent of Corporation, or is or was serving or at any time serves at the request of the Corporation as a director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise; and 
  
 (b) otherwise to the fullest extent as may be provided to Agent by the Corporation under the non-exclusivity provisions of the Code and the Bylaws. 
  
 4. Limitations on Additional Indemnity. No indemnity pursuant to Section 3 hereof shall be paid by the Corporation:

  
 (a) on account of any claim against Agent solely for
an accounting of profits made from the purchase or sale by Agent of securities of the Corporation pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state
or local statutory law; 
  
 (b) on account of Agent’s
conduct that is established by a final judgment as knowingly fraudulent or deliberately dishonest or that constituted willful misconduct; 
  
 (c) on account of Agent’s conduct that is established by a final judgment as constituting a breach of Agent’s duty of loyalty to the
Corporation or resulting in any personal profit or advantage to which Agent was not legally entitled; 
  
 (d) for which payment is actually made to Agent under a valid and collectible insurance policy or under a valid and enforceable indemnity clause,
bylaw or agreement, except in respect of any excess beyond payment under such insurance, clause, bylaw or agreement; 
  
 (e) if indemnification is not lawful (and, in this respect, both the Corporation and Agent have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the federal securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for
adjudication); or 
  
 (f) in connection with any proceeding
(or part thereof) initiated by Agent, or any proceeding by Agent against the Corporation or its directors, officers, employees or other agents, unless (i) such indemnification is expressly required to be made by law, (ii) the 

  

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proceeding was authorized by the Board of Directors of the Corporation, (iii) such indemnification is provided by the Corporation, in its sole discretion,
pursuant to the powers vested in the Corporation under the Code, or (iv) the proceeding is initiated pursuant to Section 9 hereof. 
  
 5. Continuation of Indemnity. All agreements and obligations of the Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was serving at the request of the Corporation as a director, officer, employee or other agent of another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise) and shall continue thereafter so long as Agent shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative, by
reason of the fact that Agent was serving in the capacity referred to herein. 
  
 6. Partial Indemnification. Agent shall be entitled under this Agreement to indemnification by the Corporation for a portion of the expenses (including attorneys’ fees), witness fees, damages, judgments,
fines and amounts paid in settlement and any other amounts that Agent becomes legally obligated to pay in connection with any action, suit or proceeding referred to in Section 3 hereof even if not entitled hereunder to indemnification for the total
amount thereof, and the Corporation shall indemnify Agent for the portion thereof to which Agent is entitled. 
  
 7. Notification and Defense of Claim. Not later than thirty (30) days after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the Corporation under this Agreement, notify the Corporation of the commencement thereof; but the omission so to notify the Corporation will not relieve it from any
liability which it may have to Agent otherwise than under this Agreement. With respect to any such action, suit or proceeding as to which Agent notifies the Corporation of the commencement thereof: 
  
 (a) the Corporation will be entitled to participate therein at its
own expense; 
  
 (b) except as otherwise provided below,
the Corporation may, at its option and jointly with any other indemnifying party similarly notified and electing to assume such defense, assume the defense thereof, with counsel reasonably satisfactory to Agent. After notice from the Corporation to
Agent of its election to assume the defense thereof, the Corporation will not be liable to Agent under this Agreement for any legal or other expenses subsequently incurred by Agent in connection with the defense thereof except for reasonable costs
of investigation or otherwise as provided below. Agent shall have the right to employ separate counsel in such action, suit or proceeding but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the
defense thereof shall be at the expense of Agent unless (i) the employment of counsel by Agent has been authorized by the Corporation, (ii) Agent shall have reasonably concluded, and so notified the Corporation, that there is an actual conflict of
interest between the Corporation and Agent in the conduct of the defense of such action or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of
Agent’s separate counsel shall be at the 

  

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expense of the Corporation. The Corporation shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the
Corporation or as to which Agent shall have made the conclusion provided for in clause (ii) above; and 
  
 (c) the Corporation shall not be liable to indemnify Agent under this Agreement for any amounts paid in settlement of any action or claim effected
without its written consent, which shall not be unreasonably withheld. The Corporation shall be permitted to settle any action except that it shall not settle any action or claim in any manner which would impose any penalty or limitation on Agent
without Agent’s written consent, which may be given or withheld in Agent’s sole discretion. 
  
 8. Expenses. The Corporation shall advance, prior to the final disposition of any proceeding, promptly following request therefor, all expenses
incurred by Agent in connection with such proceeding upon receipt of an undertaking by or on behalf of Agent to repay said amounts if it shall be determined ultimately that Agent is not entitled to be indemnified under the provisions of this
Agreement, the Bylaws, the Code or otherwise. 
  
 9.
Enforcement. Any right to indemnification or advances granted by this Agreement to Agent shall be enforceable by or on behalf of Agent in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or
in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefor. Agent, in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting his claim. It shall
be a defense to any action for which a claim for indemnification is made under Section 3 hereof (other than an action brought to enforce a claim for expenses pursuant to Section 8 hereof, provided that the required undertaking has been
tendered to the Corporation) that Agent is not entitled to indemnification because of the limitations set forth in Section 4 hereof. Neither the failure of the Corporation (including its Board of Directors or its stockholders) to have made a
determination prior to the commencement of such enforcement action that indemnification of Agent is proper in the circumstances, nor an actual determination by the Corporation (including its Board of Directors or its stockholders) that such
indemnification is improper shall be a defense to the action or create a presumption that Agent is not entitled to indemnification under this Agreement or otherwise. 
  
 10. Subrogation. In the event of payment under this Agreement, the Corporation shall be subrogated to the extent of
such payment to all of the rights of recovery of Agent, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Corporation effectively to bring suit to enforce such rights.

  
 11. Non-Exclusivity of Rights. The rights conferred on
Agent by this Agreement shall not be exclusive of any other right which Agent may have or hereafter acquire under any statute, provision of the Corporation’s Certificate of Incorporation or Bylaws, agreement, vote of stockholders or directors,
or otherwise, both as to action in his official capacity and as to action in another capacity while holding office. 
  

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 12. Survival of Rights. 
  
 (a) The rights conferred on Agent by this Agreement shall continue after Agent has ceased to be a director, officer,
employee or other agent of the Corporation or to serve at the request of the Corporation as a director, officer, employee or other agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise and shall
inure to the benefit of Agent’s heirs, executors and administrators. 
  
 (b) The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation, expressly
to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place. 
  
 13. Separability. Each of the provisions of this Agreement is a separate and distinct agreement and independent of
the others, so that if any provision hereof shall be held to be invalid for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof. Furthermore, if this Agreement shall be
invalidated in its entirety on any ground, then the Corporation shall nevertheless indemnify Agent to the fullest extent provided by the Bylaws, the Code or any other applicable law. 
  
 14. Governing Law. This Agreement shall be interpreted and enforced in accordance with the laws of the State of
Delaware. 
  
 15. Amendment and Termination. No amendment,
modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto. 
  
 16. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same Agreement. Only one such counterpart need be produced to evidence the existence of this Agreement. 
  
 17. Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not be
deemed to constitute part of this Agreement or to affect the construction hereof. 
  
 18. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered by hand to the party to whom such
communication was directed or (ii) upon the third business day after the date on which such communication was mailed if mailed by certified or registered mail with postage prepaid: 
  

	 	(a)	If to Agent, at the address indicated on the signature page hereof. 

  

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	 	(b)	If to the Corporation, to: 

  
 Rackable Systems, Inc. 
 1933 Milmont Drive

 Milpitas, California 95035 
  
 or to such other address as may have been furnished to Agent by the Corporation. 
  

IN WITNESS WHEREOF, the parties hereto have executed this Indemnity Agreement on and as of the day
and year first above written. 
  

			
	RACKABLE SYSTEMS, INC.
		
	By:	 	  


	 	 	Tom Barton
	 	 	President and Chief Executive Officer
	
	AGENT
		
	By:	 	  


	Name:	 	  


	Address:	 	  


	 	 	  




  

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