Exhibit
      10.3

    
 

    First
      Amendment to

     

    Retention
      Bonus Agreement

     

    This
      First Amendment to Retention Bonus Agreement (“First
      Amendment”),
      effective as of January 9, 2007 (“First
      Amendment Effective Date”),
      is
      made and entered into between Rackable Systems, Inc., a Delaware corporation
      (the “Company”),
      and
      Giovanni Coglitore, (the “Executive”).
      The
      Company and the Executive are each individually referred to in this First
      Amendment as a “Party”
and
      are
      collectively referred to in this Agreement as the “Parties.”

     

    RECITALS

     

    A. The
      Executive and the Company are parties to a Retention Agreement dated September
      12, 2006 (the “Retention
      Agreement”).

     

    B. The
      Executive and the Company wish to amend the Retention Agreement to account
      for
      the excise tax imposed by Section 4999 of the Code. 

    


    In
      consideration of the mutual promises set forth herein, and other good and
      valuable consideration the sufficiency of which is hereby acknowledged by each
      party, the parties hereby agree as follows:

     

    AMENDMENT

    


    1. Section
      1.2(z) of the Retention Agreement shall be changed to “December 31,
      2007.”

    


    2. Section
      2.1 of the Retention Agreement shall be deleted and replaced with the
      following:

    


    “2.1
       Cash
      Payment.  If
      the
      Company enters into a definitive agreement for a Change in Control on or before
      the Agreement Termination Date, and if the Closing of such Change in Control
      shall occur, the Company shall make a cash payment to the Executive in an amount
      equal to $2,500,000 (less required deductions and withholdings) as described
      in
      section 2.3 (the “Retention
      Bonus”).”
      

    


    3. Section
      2.2 of the Retention Agreement shall be deleted and replaced with the
      following:

     

    “2.2   
      [Intentionally
      Deleted]” 

    


    3.  
      Section
      2.3(a) of the Retention Agreement shall be deleted and replaced with the
      following:

    


    “2.3(a)
      Except as otherwise provided herein, the payment of the Retention Bonus shall
      be
      paid in a lump-sum payment, subject to applicable withholding, within five
      (5)
      business days after the close of the Change in Control.”

    4. Continued
      Effect; Conflicts.
      Except
      as expressly amended by this First Amendment, all terms and conditions of the
      Retention Agreement remain unchanged and will continue in full force and effect.
      In the event of any conflict between the terms set forth in this First Amendment
      and the terms set forth in the Retention Agreement, the terms of this First
      Amendment will govern.
      Any
      capitalized terms not defined in this First Amendment shall have the meaning
      set
      forth in the Retention Agreement. 

     

    5. Counterparts;
      Facsimiles.
      This
      First Amendment may be executed in multiple counterparts, each of which will
      be
      deemed an original, but all of which taken together will constitute one and
      the
      same instrument. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6. Complete
      Agreement. This First Amendment, together with the
      Retention Agreement, embodies the complete agreement and understanding among
      the
      parties and supersedes and preempts any prior understandings, agreements or
      representations by or among the parties, written or oral, which may have related
      to the subject matter hereof in any way. For the avoidance of doubt, this
      Agreement does not supersede or preempt any provisions of the Employment
      Agreement. 

     

    7. Additional
      Provisions. Sections 3, 4, 6, 7, 9, 10, 13, 14 and
      15 of the Retention Agreement shall apply equally to this First Amendment as
      if
      set forth herein, with references to “this Agreement” being changed to
      references to “this First Amendment”. 

     

    


     

    IN
      WITNESS WHEREOF,
      the
      Parties hereto have executed this First Amendment as of the First Amendment
      Effective Date.

     

    


    
      	
              RACKABLE
                SYSTEMS, INC.

               

              By:
                /s/ Thomas Barton

              Name: 
                Thomas Barton

              Title:
                CEO

              Signature
                Date: January 9, 2007

            	
              GIOVANNI
                COGLITORE

               

              By:
                /s/ Giovanni Coglitore

              Name: 
                Giovanni Coglitore

              Title:
                CTO

              Signature
                Date: January 9, 2007