Document:

Form of RSU Agreement Under 2007 Long Term Incentive Plan (Performance Based)

 Exhibit 10.6(D) 
 Final Form 
 RACKSPACE HOSTING, INC. 
 2007 LONG-TERM INCENTIVE PLAN 
 NOTICE OF GRANT OF RESTRICTED STOCK UNITS 

 (Performance Based Vesting) 
 Unless otherwise defined herein, the terms defined in the 2007 Long-Term Incentive Plan (the “Plan”) will have the same defined meanings in this Notice of Grant of Restricted Stock Units (the “Notice of
Grant”) and Terms and Conditions of Restricted Stock Units, attached hereto as Exhibit A (together, the “Agreement”). 
  

					
	Participant:	  	____________________________________	  	 
			
	Address:	  	____________________________________	  	
			
		  	____________________________________	  	

 The Participant has been granted an Award of Restricted Stock Units, subject to the terms and
conditions of the Plan and this Agreement, as follows: 
  

					
	Grant Number	  	____________________________________	  	 
			
	Date of Grant	  	____________________________________	  	
			
	Maximum Number of Restricted Stock Units	  	____________________________________	  	
			
	Performance Period	  	____________________________________	  	
		
	 Performance Matrix
	  	The number of Restricted Stock Units, if any, in which you may vest in accordance with the Vesting Schedule below will depend upon achievement of goals based on the Company’s
[INSERT PERFORMANCE TARGET] during the Performance Period or Truncated Performance Period, as applicable, and will be determined in accordance with Section 1 of Exhibit A and the Performance Matrix, attached hereto as Exhibit B.

		
	 Vesting Schedule
	  	The Participant will vest on the date the Administrator determines and certifies the number of Restricted Stock Units earned in accordance with Section 1 of Exhibit A and
the Performance Matrix, attached hereto as Exhibit B, provided that such determination will be made within forty-five (45) days after the end of the Performance Period, which ends on
[            ], or the end of the Truncated Performance Period, as applicable. In the event the Participant ceases to be a Service Provider for any reason before the Participant
vests in the Restricted Stock Units, the Restricted Stock Units and the Participant’s right to receive any Shares hereunder will immediately terminate, except as set forth in Section 4 of Exhibit A.

 By the Participant’s signature and the signature of the Company’s representative below, the
Participant and the Company agree that this Award of Restricted Stock Units is granted under and governed by the terms and conditions of the Plan and this Agreement. PLEASE BE SURE TO READ THE EXHIBIT(S) ATTACHED HERETO, WHICH CONTAIN(S) MATERIAL
TERMS AND CONDITIONS OF THIS AGREEMENT. The Participant has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the
Plan and this Agreement. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to the Plan and this Agreement. The Participant further agrees to
notify the Company upon any change in the residence address indicated above. 
 The Participant acknowledges and agrees that by clicking the
“ACCEPT” button on the [            ] on-line grant agreement response page, it will act as the Participant’s electronic signature to this Agreement and will result in
a contract between the Participant and the Company with respect to this Award. 
 If an automated acceptance is not utilized, then the
Parties enter into this Agreement upon the execution of the signature lines below: 
  

									
	PARTICIPANT:	 		 		 	RACKSPACE HOSTING, INC.
				
	______________________________________________	 		 		 	By: ______________________________________________
	Signature	 		 		 		 	
					
	______________________________________________	 		 		 		 	
	Printed Name	 		 		 	Name/Title: _______________________________________

  

			
	Residence Address:
	
	 
	
	 
	
	 
	Facsimile #:	 	 
		
	Email:	 	 

  

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 EXHIBIT A 
 TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS 
 1. Grant. 
 a. The Company hereby grants to the Participant named in the Notice of Grant (the “Participant”) under the Plan an
Award of the Maximum Number of Restricted Stock Units set forth in the Notice of Grant, subject to all of the terms and conditions in this Agreement and the Plan, which is incorporated herein by reference. Subject to Section 35(c) of the Plan,
in the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan will prevail. 
 b. [INSERT PERFORMANCE TARGET] for the Performance Period or Truncated Performance Period (as defined below), as applicable, as set forth
in Exhibit B will determine the number of Restricted Stock Units in which the Participant will vest, if at all, and such number only may be less than or equal to the Maximum Number of Restricted Stock Units set forth in the Notice of Grant.
Any unvested Restricted Stock Units will be immediately cancelled and forfeited at no cost to the Company. 
 c. [INSERT
PERFORMANCE TARGET] for the Performance Period or Truncated Performance Period will be determined and certified by the Administrator as soon as practicable following the end of the Performance Period or Truncated Performance Period, as applicable,
but in no event later than forty-five (45) days thereafter (such date of determination, the “Determination Date”). Except as set forth in Section 4 below, in order to be eligible to vest in any of the Restricted
Stock Units, the Participant must be employed through the Determination Date. Unless otherwise determined by the Administrator, the Restricted Stock Units will be settled in shares of Company Common Stock as soon as possible after the Determination
Date, but in no event later than forty-five (45) days following the Determination Date. 
 d. When Shares are paid to the
Participant in payment for vested Restricted Stock Units, par value will be deemed paid by the Participant for each Restricted Stock Unit by services rendered by the Participant to the Company, and will be subject to the appropriate tax
withholdings. 
 2. Company’s Obligation to Pay. Each Restricted Stock Unit represents the right to receive a Share on the date
it vests (or at such later time indicated in this Agreement). Unless and until the Restricted Stock Units will have vested in the manner set forth in Sections 3, 4 or 5 of this Agreement or Section 25 of the Plan, the Participant will have
no right to payment of any such Restricted Stock Units. Prior to actual payment of any vested Restricted Stock Units, such Restricted Stock Units will represent an unsecured obligation of the Company, payable (if at all) only from the general assets
of the Company. Any Restricted Stock Units that vest in accordance with this Agreement will be paid to the Participant (or in the event of the Participant’s death, to his or her properly designated beneficiary or estate) in whole Shares,
subject to the Participant satisfying any applicable tax withholding obligations as set forth in Section 9. Subject to the provisions of Section 5, such vested Restricted Stock Units shall be 

  

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paid in whole Shares as soon as practicable after vesting, but in each such case within the period ending no later than the later of (i) the end of the
calendar year that includes the vesting date or (ii) the date that is the fifteenth (15th) day of the third (3rd) month following the vesting date. 
 3.
Vesting Schedule. Except as provided in Sections 4 or 5 of this Agreement and Section 25 of the Plan, and subject to Section 6, the Restricted Stock Units awarded by this Agreement will vest in accordance with the vesting provisions
set forth in the Notice of Grant. [TO BE INCLUDED IF SEPARATE ARRANGEMENTS PROVIDE FOR ACCELERATED VESTING: which shall be deemed to include any acceleration of vesting provisions included in the Participant’s [NAME OF Employment Agreement or
Severance Agreement or other arrangement that includes vesting], dated [DATE]] Restricted Stock Units scheduled to vest on a certain date or upon the occurrence of a certain condition will not vest in the Participant in accordance with any of the
provisions of this Agreement, unless the Participant will have been continuously a Service Provider from the Date of Grant until the date such vesting occurs. 
 4. Death, Disability, or Change in Control. 
 a. Truncated Performance Period.
In the event (i) the Participant ceases to be a Service Provider as a result of his death or Disability or (ii) of the consummation of a Change in Control, in each case during the Performance Period, the Performance Period shall
automatically be truncated so as to terminate upon the date the Participant ceased to be a Service Provider or upon the date of the consummation of the Change in Control, as applicable (the “Truncated Performance Period”).
The Company’s performance during such Truncated Performance Period relative to the performance metrics set forth in Exhibit B, as determined pursuant to this Section 4, shall determine the number of Restricted Stock Units in which
the Participant shall vest as of the end of the Truncated Performance Period, which, with respect to such Truncated Performance Period, shall be the same amount as if the Company had performed at the equivalent relative level through the full
three-year performance period. In order to be eligible to vest in any of the Restricted Stock Units, the Participant must remain a Service Provider through the last day of the Truncated Performance Period. 
 b. Death or Disability Award Calculation. In the event a Participant’s death or Disability results in a Truncated Performance
Period, notwithstanding anything in this Agreement to the contrary, [INSERT PERFORMANCE TARGET] shall be determined by comparing (x) the average Fair Market Value for a share of Common Stock for the twenty (20) trading days immediately
prior to the first day of the Performance Period and (y) the average Fair Market Value for a share of Common Stock for the twenty (20) trading days immediately prior to and including the last day of the Truncated Performance Period.

 c. Change of Control Award Calculation. In the event a Change of Control results in a Truncated Performance Period,
notwithstanding anything in this Agreement to the contrary, [INSERT PERFORMANCE TARGET] shall be determined by comparing (x) the average Fair Market Value for a share of Common Stock for the twenty (20) trading days immediately prior to
the first day of the Performance Period and (y) the per share price paid for a share of Common Stock in connection with the Change of Control. 
  

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 5. Administrator Discretion. 
 a. The Administrator, in its discretion, may accelerate the vesting of the balance,
or some lesser portion of the balance, of the unvested Restricted Stock Units at any time, subject to the terms of the Plan. If so accelerated, such Restricted Stock Units will be considered as having vested as of the date specified by the
Administrator. Subject to the provisions of this Section 5 and Section 6, if the Administrator, in its discretion, accelerates the vesting of the balance, or some lesser portion of the balance, of the Restricted Stock Units, the payment of
such accelerated Restricted Stock Units shall be made as soon as practicable after the new vesting date, but, except as provided in this Agreement, in no event later than the later of (i) the end of the calendar year that includes the vesting
date or (ii) the date that is the fifteenth (15th) day of the third (3rd) month following the applicable vesting date; provided, however, if the Restricted Stock Units are “deferred compensation” within the meaning of Section 409A,
the payment of such accelerated portion of the Award of Restricted Stock Units nevertheless shall be made at the same time or times as if such Award had vested in accordance with the vesting schedule set forth in Section 3, including any
necessary application of Section 5(b) (whether or not the Participant remains employed by the Company or an Affiliate as of such date(s)), unless an earlier payment date, in the judgment of the Administrator, would not cause the Participant to
incur an additional tax under Section 409A, in which case, payment of such accelerated Award shall be made no later than the date that is the fifteenth (15th) day of the third (3rd) month (and in all cases within ninety (90) days) following the earliest
permissible payment date that would not cause the Participant to incur an additional tax under Section 409A, subject to Section 5(b) with respect to specified employees. Notwithstanding the foregoing, any delay in payment pursuant to this
Section 5(a) will cease upon the Participant’s death and such payment will be made as soon as practicable after the date of the Participant’s death (and in all cases within ninety (90) days following such death). For purposes of
this Agreement, “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and any proposed, temporary or final Treasury Regulations and Internal Revenue Service guidance thereunder, as
each may be amended from time to time. 
 b. Notwithstanding anything in the Plan or this Agreement to the contrary, if the
vesting of the balance, or some lesser portion of the balance, of the Restricted Stock Units is accelerated in connection with the Participant’s termination as a Service Provider, such accelerated Restricted Stock Units will not be payable by
virtue of such acceleration until and unless the Participant has a “separation from service” within the meaning of Section 409A. Further, and notwithstanding anything in the Plan or this Agreement to the contrary if any such
accelerated Restricted Stock Units would otherwise become payable upon a “separation from service” within the meaning of Section 409A, and if (x) the Participant is a “specified employee” within the meaning of
Section 409A at the time of such “separation from service” (other than due to the Employee’s death) and (y) the payment of such accelerated Restricted Stock Units will result in the imposition of additional tax under
Section 409A if paid to the Participant on or within the six (6) month period following the Participant’s termination as a Service Provider, then the payment of such accelerated Restricted Stock Units will not be made until the date
six (6) months and one (1) day following the date of the Participant’s “separation from service”, unless the Participant dies following his or her termination as a Service Provider, in which case, the Restricted Stock Units
will be paid in Shares to the Participant’s estate as soon as practicable following his or her death (and in all cases within ninety (90) days of the Participant’s death). It 

  

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is the intent of this Agreement to comply with the requirements of Section 409A so that none of the Restricted Stock Units to be provided under this
Agreement or Shares issuable thereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. 
 6. Forfeiture upon Termination of Status as a Service Provider. Except as otherwise set forth in this Agreement, the balance of the Restricted
Stock Units that have not vested as of the time of the Participant’s termination as a Service Provider for any or no reason will be forfeited and automatically transferred to and reacquired by the Company at no cost to the Company and the
Participant’s right to acquire any Shares hereunder will immediately terminate. 
 7. Death of the Participant. Any distribution
or delivery to be made to the Participant under this Agreement will, if the Participant is then deceased, be made to the Participant’s designated beneficiary, provided such beneficiary has been designated prior to the Participant’s death
in a form acceptable to the Administrator or, if no such beneficiary has been designated or survives the Participant, the administrator or executor of the Participant’s estate. Any such transferee must furnish the Company with (a) written
notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer. 
 8. Limitation on Payments. 
 a. In the event that the severance and benefits provided for in this Agreement or otherwise payable to the Participant (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) but
for this Section 8, would be subject to the excise tax imposed by Section 4999 of the Code, then the Participant’s benefits under Agreement or other severance or benefits 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 excise tax under Section 4999 of the Code, 
 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 the Participant on an after-tax basis, of the greatest amount of severance
benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code. Any taxes due under Section 4999 shall be the responsibility of the Participant. 
 b. In the event of a reduction in accordance with subsection 8(a), the reduction shall occur in the following order: (1) reduction of
cash payments; (2) reduction of vesting acceleration of equity awards; and (3) reduction of other benefits paid or provided to the Participant. If, as a result of any reduction required by Section 8(a), amounts previously paid to the
Participant exceed the amount to which the Participant is entitled, the Participant will promptly return the excess amount to the Company. 
  

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 c. Unless the Company and the Participant otherwise agree in writing, any determination
required under this Section 8 will be made in writing by a major national “Big Four” accounting firm selected by the Company (the “Accountants”), whose determination will be conclusive and binding upon the Participant and
the Company for all purposes. For purposes of making the calculations required by this Section 8, the Accountants may, after taking into account the information provided by the Participant, make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Participant will furnish to the Accountants such information and documents as
the Accountants may reasonably request in order to make a determination under this Section. The Company will bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 8. 
 9. Withholding of Taxes. When Shares are issued as payment for vested Restricted Stock Units, the Company (or the employing Parent or Subsidiary)
will withhold a portion of the Shares that have an aggregate market value sufficient to pay the minimum federal, state and local income, employment and any other applicable taxes required to be withheld by the Company (or the employing Parent or
Subsidiary) with respect to the Shares, unless the Company, in its sole discretion, requires the Participant to make alternate arrangements satisfactory to the Company for such withholdings in advance of the arising of any withholding obligations.
[The number of Shares withheld pursuant to the prior sentence will be rounded up to the nearest whole Share, with no refund provided in the U.S. for any value of the Shares withheld in excess of the tax obligation as a result of such rounding, all
pursuant to such procedures as the Administrator may specify from time to time.] 
 Notwithstanding any contrary provision of this Agreement,
no Shares will be issued unless and until all income, employment and other taxes which the Company determines must be withheld or collected with respect to such Shares have been withheld. In addition and to the maximum extent permitted by law, the
Company (or the employing Parent or Subsidiary) has the right to retain without notice from salary or other amounts payable to the Participant, cash having a sufficient value to satisfy any tax withholding obligations that the Company determines
cannot be satisfied through the withholding of otherwise deliverable Shares. All income and other taxes related to the Restricted Stock Units and any Shares delivered in payment thereof are the sole responsibility of the Participant. 
 10. Rights as Stockholder. Neither the Participant nor any person claiming under or through the Participant will have any of the rights or
privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares (which may be in book entry form) will have been issued, recorded on the records of the Company or its
transfer agents or registrars, and delivered to the Participant (including through electronic delivery to a brokerage account). After such issuance, recordation and delivery, the Participant will have all the rights of a stockholder of the Company
with respect to voting such Shares and receipt of dividends and distributions on such Shares. 
  

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 11. No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF
THE RESTRICTED STOCK UNITS PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED THIS AWARD OF RESTRICTED STOCK UNITS OR ACQUIRING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN
EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY
EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE. 
 12. Address for Notices. Any notice to be given to the Company under the terms of this Agreement will be addressed to the Company at Rackspace Hosting, Inc., 9725 Datapoint Drive, Suite 100, San Antonio, TX 78229, or at such other
address as the Company may hereafter designate in writing. 
 13. Change in
Control. Notwithstanding anything in the Plan or this Agreement to the contrary, if the vesting of all or a portion of the Restricted Stock Units accelerates (a) pursuant to Section 25 of the Plan in the event of a Change in Control
that is not a “change in control” within the meaning of Section 409A or (b) pursuant to any other plan or agreement that provides for acceleration in the event of a change in control that is not a “change in control”
within the meaning of Section 409A, then the payment of such accelerated portion of the Award will be made in accordance with the timing of payment rules that apply to discretionary accelerations under Section 5(a) of this Agreement. If
the vesting of all or a portion of the Restricted Stock Units accelerate in the event of a Change in Control that is a “change in control” within the meaning of Section 409A, then the payment of such accelerated Restricted Stock Units
shall be paid no later than the date that is the fifteenth (15th) day of the third (3rd
) month (and in all cases within ninety (90) days) from the vesting date. 
 14.
Grant is Not Transferable. Except to the limited extent provided in Section 7, this grant and the rights and privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law
or otherwise) and will not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any
attempted sale under any execution, attachment or similar process, this grant and the rights and privileges conferred hereby immediately will become null and void. 
 15. Binding Agreement. Subject to the limitation on the transferability of this grant contained herein, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal
representatives, successors and assigns of the parties hereto. 
  

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 16. Restrictions on Sale of Securities. The Shares issued as payment for vested Restricted Stock
Units under this Agreement will be registered under U.S. federal securities laws and will be freely tradable upon receipt. However, the Participant’s subsequent sale of the Shares may be subject to any market blackout-period that may be imposed
by the Company and must comply with the Company’s insider trading policies, and any other applicable securities laws. 
 17.
Additional Conditions to Issuance of Stock. The Company shall not be required to issue any certificate or certificates for Shares hereunder prior to fulfillment of all the following conditions: (a) the admission of such Shares to listing
on all stock exchanges on which such class of stock is then listed; (b) the completion of any registration or other qualification of such Shares under any U.S. state or federal law or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable; (c) the obtaining of any approval or other clearance from any U.S. state or federal
governmental agency, which the Administrator shall, in its absolute discretion, determine to be necessary or advisable; and (d) the lapse of such reasonable period of time following the date of vesting of the Restricted Stock Units as the
Administrator may establish from time to time for reasons of administrative convenience. 
 18. Plan Governs. This Agreement is
subject to all terms and provisions of the Plan. In the event of a conflict between one or more provisions of this Agreement and one or more provisions of the Plan, the provisions of the Plan will govern. Capitalized terms used and not defined in
this Agreement will have the meaning set forth in the Plan. 
 19. Administrator Authority. The Administrator will have the power to
interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination
of whether or not any Restricted Stock Units have vested). All actions taken and all interpretations and determinations made by the Administrator in good faith will be final and binding upon the Participant, the Company and all other interested
persons. No member of the Administrator will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement. 
 20. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to Restricted Stock Units awarded under
the Plan or future Restricted Stock Units that may be awarded under the Plan by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by
electronic delivery and agrees to participate in the Plan through any on-line or electronic system established and maintained by the Company or another third party designated by the Company. 
 21. Captions. Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this
Agreement. 
  

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 22. Agreement Severable. In the event that any provision of this Agreement becomes or is declared
by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect. 
 23.
Modifications to the Agreement. This Agreement constitutes the entire understanding of the parties on the subjects covered. The Participant expressly warrants that he or she is not accepting this Agreement in reliance on any promises,
representations, or inducements other than those contained herein. Modifications to this Agreement or the Plan can be made only in an express written contract executed by a duly authorized officer of the Company. Notwithstanding anything to the
contrary in the Plan or this Agreement, the Company may revise this Agreement as it deems necessary or advisable, in its sole discretion and without the consent of the Participant, to comply with Section 409A or to otherwise avoid imposition of
any additional tax or income recognition under Section 409A in connection to this Award of Restricted Stock Units. Each payment and benefit payable under this Agreement is intended to constitute separate payments for purposes of
Section 1.409A-2(b)(2) of the Treasury Regulations. 
 24. Amendment, Suspension or Termination of the Plan. By accepting this
Award, the Participant expressly warrants that he or she has received an Award of Restricted Stock Units under the Plan, and has received, read and understood a description of the Plan. the Participant understands that the Plan is discretionary in
nature and may be amended, suspended or terminated by the Company at any time. 
 25. Governing Law. This Agreement shall be governed
by the laws of the State of Texas, without giving effect to the conflict of law principles thereof. For purposes of litigating any dispute that arises under this Award of Restricted Stock Units or this Agreement, the parties hereby submit to and
consent to the jurisdiction of the State of Texas, and agree that such litigation shall be conducted in the courts of Bexar County, Texas, or the federal courts for the United States for the Western District of Texas, and no other courts,
where this Award of Restricted Stock Units is made and/or to be performed. 
 [Remainder of Page Intentionally Left Blank] 

 

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 EXHIBIT B 
 PERFORMANCE TARGET 
  

 -11-Offer letter from the Registrant to Bruce Knooihuizen, dated December 19, 2007

 Exhibit 10.38 
  

			
	December 19, 2007	  	

 Mr. Bruce R. Knooihuizen 
 501 W. Heritage Blvd. 
 Edmond, Oklahoma 73025 
 Dear Bruce: 
 We are pleased to extend you an offer to join Rackspace Managed Hosting (the “Company”) as the Chief
Financial Officer for the Company and the Company’s parent corporation, Rackspace, Inc. (“Parent”). The terms and conditions of our employment offer to you are set forth below: 
 1. Employment Commencement. You will commence services as a full-time employee and Chief Financial Officer of the Company as soon as practicable
but no later than March 1, 2008 (and for the purposes of this letter, your start date will be the “Employment Commencement Date”). By signing this offer letter, you represent and warrant to the Company you are under no contractual
commitments inconsistent with your obligations to the Company. 
 2. Position. In your capacity as Chief Financial Officer, you will
report to the Chief Executive Officer, the President and the Board of Directors of the Company and the Parent. Your duties will include responsibility for the financial accounting, reporting and disclosure activities of the Company and the Parent,
including such systems, administration and strategic planning activities as are customary to the position of Chief Financial Officer. 
 3.
Relocation. We agree to reimburse your reasonable relocation expenses in accordance with our policy. We will assign a relocation specialist to you to assist you with your relocation needs. 
 4. Salary. You will be paid a salary at the annual rate of $350,000 per year, commencing on the Employment Commencement Date specified above and
on each anniversary thereof. Your salary will be reviewed every year. 
 5. Bonus. You will be entitled to participate in our cash
incentive program which provides for an annual bonus based on the Company’s financial performance and the evaluation of your performance and contribution to such results. Your personal, annualized target bonus percentage will be 50% of your
base salary. 
 6. Deferred Compensation Plan. At your election all or any portion of your cash compensation may be deferred pursuant
to a deferred compensation plan (rabbi trust) to be established as soon as practicable. The trust will pay administration expenses of the trust and will be entitled to any gain or income therefrom. Company will be entitled to reimbursement for any
taxes paid due to activities of the trust. 
 7. Equity Awards. The Board of Directors of Parent has approved the grant to you of
options to purchase 100,000 shares of Common Stock in our parent corporation, Rackspace, Inc., with an exercise price equal to the current appraised fair market value as of your Employment Commencement Date. The stock options will vest over four
years (25% will become exercisable the first anniversary of your Employment Commencement Date and an additional 25% will vest on each anniversary thereof through the fourth anniversary) and will be issued pursuant to the Rackspace, Inc. 2007 Long
Term Incentive Plan and our standard form of Stock Option Agreement. 
  

			
	 THE MANAGED HOSTING SPECIALISTTM
	  	 9725 Datapoint Drive, Suite 100  |  San Antonio, TX 78229
 PH: 210.447.4000  |  FX: 210.447.4400  |   www.rackspace.com

			
	 Mr. Bruce R. Knooihuizen
 December 19, 2007
 Page 2
	  	

  

 8. Severance Benefit. If you are terminated without Cause or resign for Good Reason at any
time prior to one year from your start date, in addition to any accrued but unpaid Base Salary, accrued vacation and unpaid business expense reimbursements (the “Accrued Obligations”) the Company agrees to provide severance payment in the
amount of $350,000 payable in twelve equal monthly installments. Upon termination of employment for any other reason, including in the event of your death or disability, the Company’s obligation shall be limited to the Accrued Obligations.

 For purposes of this Agreement, the term “Cause” shall mean (a) the commission of, or plea of guilty or no contest to, a
felony or a crime involving moral turpitude or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an affiliate, (b) gross negligence or willful misconduct with respect to
the Company or an affiliate. The Board of Directors of Parent or its delegate, in its absolute discretion, shall determine the effect of all matters and questions relating to whether you have been discharged for Cause. “Good
Reason” shall mean and will be deemed to exist if, without your consent, (a) you suffer a material diminution in your duties, responsibilities or effective authority or any adverse changes in your title or position, (b) you
suffer a reduction of Base Salary, (c) the Company fails to pay any earned compensation or to provide for your vested benefits when due and payable, or (d) any material breach of this offer letter; provided, however, that
(i) you must provide written notification of your intention to resign within 60 days after you know; (ii) such event or condition is not corrected, in all material respects; by the Company within 30 days of its receipt of such notice;
(iii) you actually resign your employment with the Company not more than 30 days following the expiration of such 30-day period; and (iv) your termination of employment occurs within two years following the initial occurrence of one or
more of such events. 
 9. Benefits. The Company also offers an excellent benefits package including medical, dental, disability, life
insurance and 401(k). You are eligible to begin your participation in our benefits on your Employment Commencement Date in accordance with the specific terms of the respective benefit plans. You will also be eligible for three weeks of annual
vacation in accordance with the Company’s vacation policies. 
 10. Confidentiality and Intellectual Property Assignment
Agreement. Like all Company employees, you will be required, as a condition to your employment with the Company, to sign the Company’s standard Confidentiality and Intellectual Property Assignment Agreement, a copy of which is attached
hereto as Exhibit A. 
 11. Period of Employment. The contents of this letter do not form an employment contract or alter your at-will
employment status. All Company personnel are at-will employees. This means that either the Company or the employee may terminate the employment relationship at any time, for any reason or no reason. Only the Chief Executive Officer or
President may enter into any agreement to the contrary, whether verbal or written, with any employee. If such Chief Executive Officer or President should choose to enter into an agreement to the contrary, it must be a written agreement signed
by one of such officers to be valid. Any contrary representations which may have been made to you are superseded by this offer. This is the full and complete agreement between you and the Company on this term. Although your job duties, title,
compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and a duly
authorized officer of the Company. 
  

			
	 THE MANAGED HOSTING SPECIALISTTM
	  	 9725 Datapoint Drive, Suite 100  |  San Antonio, TX 78229
 PH: 210.447.4000  |  FX: 210.447.4400  |   www.rackspace.com

			
	 Mr. Bruce R. Knooihuizen
 December 19, 2007
 Page 3
	  	

  

 12. Outside Activities. On and after the Employment Commencement Date, while you render
services to the Company, you will not engage in any other gainful employment, business or activity without the written consent of the Company. While you render services to the Company, you also will not assist any person or organization in competing
with the Company, in preparing to compete with the Company or in hiring any employees of the Company. 
 13. Withholding Taxes. All
forms of compensation referred to in this letter are subject to reduction to reflect applicable withholding and payroll taxes. 
 14.
Entire Agreement. This letter and the Exhibit attached hereto contain all of the terms of your employment with the Company and supersede any prior understandings or agreements, whether oral or written, between you and the Company. 

15. Amendment and Governing Law. This letter agreement may not be amended or modified except by an express written agreement signed by you and
a duly authorized officer of the Company. The terms of this letter agreement and the resolution of any disputes will be governed by Texas law. 
 We hope
that you find the foregoing terms acceptable. You may indicate your agreement with these terms and accept this offer by signing and dating both the enclosed duplicate original of this letter and the enclosed Confidentiality and Intellectual Property
Assignment Agreement and returning them to me. Please note that this offer is made contingent on your passing the Company’s pre-employment screening process, which includes a criminal background check, education verification, and employment
reference check. As required by law, your employment with the Company is also contingent upon your providing legal proof of your identity and authorization to work in the United States. This offer, if not accepted, will expire at the close of
business on December 21, 2007. 
 Again, we are pleased offer you the opportunity to join Rackspace Managed Hosting. We look forward to having you
join us on the Employment Commencement Date and to receiving your services as a Consultant prior to such date. 
  

	
	Sincerely,
	
	/s/ David Belle-Isle
	David Belle-Isle
	Senior Vice President, Human Resources

 I accept the offer to join Rackspace Managed Hosting as Chief Financial Officer of Company and Parent and agree to
the terms outlined above. 
  

					
			
	12/19/2007	 		 	/s/ Bruce R. Knooihuizen
	Date	 		 	Bruce R. Knooihuizen, individually

  

			
	 THE MANAGED HOSTING SPECIALISTTM
	  	 9725 Datapoint Drive, Suite 100  |  San Antonio, TX 78229
 PH: 210.447.4000  |  FX: 210.447.4400  |   www.rackspace.com

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