Document:

Offer Letter - Anthony Gaughan

 Exhibit 10.79 
 June 19, 2007 
 Tony Gaughan 
 Dear Tony,

 On behalf of Rackable Systems Inc., I am pleased to offer you the position of Sr. Vice President and Chief Products Officer, reporting directly to the
President & Chief Executive Officer. 
 This offer is conditioned upon our obtaining the following: 
  

	 	1.	Your signature and date on the enclosed copy of this letter, indicating your acceptance of this offer. 

  

	 	2.	Your signature and date on the enclosed Employee Proprietary Information and Inventions Agreement, which among other things requires that you have not thus far, and you will
not during your employment with Rackable Systems., use or disclose to Rackable Systems any proprietary information or trade secrets of any former employer or other company nor have you or will you bring onto Rackable Systems’ premises any
confidential or proprietary information of any former employer or other company unless such former employer or company has consented to such action in writing. 

  

	 	3.	Satisfactory results from any background and reference checks. 

  

	 	4.	Documentation verifying your identity and legal authority to work in the United States no later than three business days after the date you commence work. Enclosed is a list of
Acceptable Documents that will be necessary for you to show proof of your employment eligibility. 

 Base Salary 
 Your initial compensation will include a base salary rate of $22,500 per month, (equal to $270,000 on an annualized basis) payable bi-weekly in accordance with the
Company’s regular payroll practices. Your base salary will be subject to statutory deductions and withholdings. 
 Incentive Compensation

 You will participate in the Corporate Bonus Plan. You will be eligible for a quarterly bonus of up to $33,750 ($135,000 annual gross) based upon
specific company performance targets. Your incentive compensation is not guaranteed and will be subject to statutory deductions and withholdings. 

 Tony Gaughan 
 Page 2

 Stock Awards 
 It will be recommended to the Board of
Directors to approve a grant for a stock option (Stock Option) to purchase 100,000 shares of the Company’s common stock. The strike price of this Stock Option will be determined by the Fair Market Value of the Common Stock subject to the
Stock Option on the date the Stock Option is granted. Your Stock Option will be subject to a four year vesting schedule, with vesting to commence as of your start date as an employee (Start Date). Your Stock Option shall only vest if you have been
continuously employed by Rackable Systems from the Start Date through the applicable option vesting date (e.g., at the end of the first year of employment or the applicable monthly period thereafter as set forth in the next sentence). Under the
vesting schedule, your Stock Option shares would vest at the rate of 25% upon completion of the first year of employment, with an additional 2.0833% of such shares vesting for each full month of continuous employment completed after the first
anniversary. 
 In addition, it will be recommended to the Board of Directors to approve a restricted stock unit (RSU) of 10,000 shares of the Company’s
common stock. The RSU will be subject to a four year vesting schedule, with vesting to commence as of your Start Date. Under the RSU vesting schedule, your RSU would vest at the rate of 25% upon completion of the first year of employment, with an
additional 6.25% of such shares vesting for each full 3 month period of continuous employment completed after the first anniversary. 
 Your Stock Option and
RSU, if approved, shall be granted subject to all of the terms and conditions set forth in an option and award agreement prepared by Rackable Systems. Any grant of stock options or awards over time in no way alters the employment “at will”
relationship described below. 
 Option Acceleration and Severance upon Change of Control 
 Upon the occurrence of both (a) a Change of Control (as defined in Appendix A) and (b) any one of the following within 12 months after a Change of Control;
Termination Without Cause (as defined in Appendix A) or given a position of substantially lesser responsibility (COC Termination), one year of the unvested shares of your Stock Option and RSU described in this letter shall immediately vest.

 In addition, in the event of a COC Termination, the Company shall provide you a lump sum payment equal to twelve (12) months of your then current
base salary and payment of COBRA premiums for you and your dependents until the earlier of (a) twelve (12) months from the COC Termination date or (b) the date you commence full time employment (including self-employment and/or
consulting work). 
 Other Benefits 
 As a full-time
employee, you will be eligible to participate in the Company’s benefit plans, including the medical, dental, vision, long-term disability and life insurance programs. We have put a great deal of emphasis on our benefits, and expect that they
will continue to evolve as we grow and as the needs of our employees and their families change. In addition, you will begin to earn fifteen days of Paid Time Off (4.62 hours accrued per pay period) in accordance with applicable Company policy. If
you accept this offer of employment, you will be given a copy of Rackable Systems’ benefit plan documents which will describe more fully these and other benefits of your employment. 
 At-Will Employment 
 Employment with Rackable Systems is “at will.” This means that employment is not for a
specific term and can be terminated by you or by the Company at any time for any reason, with or without cause. The at will employment relationship also means that this employment offer, your job duties, title, responsibility, reporting level,
compensation and benefits, as well as any other terms and conditions of employment (with the exception of the employment at will policy itself), may be modified or rescinded at any time in the sole discretion of Rackable Systems. This is the full
and complete agreement 

 Tony Gaughan 
 Page 3

 between us on this term of your employment. Any contrary representations which may have been made or which may be made to you are superseded by this
offer. Any modification of this term must be in writing and signed by you and the Company. 
 Tony, we are pleased that you are interested in Rackable
Systems. As with all important decisions, however, you should make a decision concerning this offer based on your own independent investigation and judgment concerning Rackable Systems’ financial condition and future prospects. Any
representations not contained in this letter, or contrary to those contained in this letter, which have been made to you are expressly superseded by this offer. 
 If you accept this offer, please return to me the signed and dated copy of this letter and the Employee Proprietary Information and Inventions Agreement. Unless you accept on or before June 22, 2007 this offer will expire.

 Sincerely, 
  
 /s/    MARK BARRENECHEA 
 Mark Barrenechea 
 President & Chief Executive Officer 
 Attachments: 
 Proprietary Information and Inventions Agreement 
 List of Acceptable Documents for I-9 Form 
  
  
 CANDIDATE ACCEPTANCE 
 I accept the offer of
employment with Rackable Systems pursuant to the terms and conditions set forth in this letter. I will start work on July 9, 2007. 
  

									
	 /s/    TONY GAUGHAN
	 		  	 June 22, 2007
	  	
	Candidate’s Signature	 		 		  	Date	  	

 Tony Gaughan 
 Page 4

 Appendix A 
 Definitions 
 Change of Control – means the occurrence, in a single transaction or in a series of related transactions,
of either of the following events: 
 (i) (x) there is consummated (A) a merger, consolidation or similar transaction involving
(directly or indirectly) the Company or (B) a tender offer or exchange offer addressed to the stockholders of the Company and (y), immediately after the consummation of such merger, consolidation or similar transaction or such tender or
exchange offer, 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, in each case in substantially the same proportions as their ownership of the outstanding voting securities of the Company immediately prior to such transaction; or 
 (ii) there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the
Company and its subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries to an entity, more than fifty percent (50%) of the combined voting
power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other
disposition. 
 For the avoidance of doubt, the term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively
for the purpose of changing the domicile of the Company. 
 Termination Without Cause – means a termination by the Company of the
Executive’s employment relationship with the Company for any reason, except the following: 
 (a) the Executive’s non-satisfactory
performance of the Executive’s duties and obligations to the Company, in the good faith determination of the Board of Directors, based on Executive’s actions or failure to perform job duties, as opposed to failure of the Company to meet
specific quantitative targets, and provided that such non-satisfactory performance is due to events that are within the Executive’s control, or his willful disregard in any material respect of any lawful written financial or budgetary
limitations established in good faith by the Board of Directors (Board) or the Company’s Chief Executive Officer (CEO), provided the Board or CEO provides him with written notice of such failure or disregard and provides the Executive with
thirty (30) days to cure such failure or disregard, and the Executive fails to cure such failure or disregard within such thirty (30) days; 
 (b) the Executive’s willful misconduct that causes material and demonstrable injury, monetarily or otherwise, to the Company or any of its subsidiaries, including, but not limited to, misappropriation or
conversion of assets of the Company or any of its subsidiaries (other than non-material assets), provided the Board or CEO provides him with written notice of such misconduct and provides the Executive with thirty (30) days to cure such
misconduct, and the Executive fails to cure such misconduct within such thirty (30) days; or 

 Tony Gaughan 
 Page 5

 (c) the Executive’s conviction or plea of nolo contendre to a crime of moral turpitude causing material and demonstrable
injury to the Company or otherwise demonstrating unfitness to serve as an officer of the Company or conviction of or entry of a plea of nolo contendere to a felony. 
 No act or failure by the Executive shall be deemed “willful” if done, or omitted to be done, in good faith and with the reasonable belief that the action or omission was in the best interest of the Company
or any of its subsidiaries. 

 RACKABLE SYSTEMS, INC. 
 EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT 
 In consideration of
my employment by Rackable Systems, Inc., a Delaware corporation (the “Company”), I hereby agree to the following with respect to my use and development of information and technology of the Company, as more fully set out below. 

1. Proprietary Information.  
 (a) Confidential Restrictions. I agree to hold in strict confidence and in trust for the sole benefit of the Company all Proprietary Information (as defined below) that I may have access to during the course of my employment with the
Company and will not disclose any Proprietary Information, directly or indirectly, to anyone outside of the Company, or use, copy, publish, summarize, or remove from Company premises such information (or remove from the premises any other property
of the Company) except (i) during my employment to the extent necessary to carry out my responsibilities as an employee of the Company or (ii) after termination of my employment, as specifically authorized by the President of the Company.
I further understand that the publication of any Proprietary Information through literature or speeches must be approved in advance in writing by the President of the Company. “Proprietary Information” shall mean all information and any
idea in whatever form, tangible or intangible, whether disclosed to or learned or developed by me, pertaining in any manner to the business of the Company (or any affiliate of it that might be formed) or to the Company’s customers, suppliers,
licensors and other commercial partners unless: (i) the information is or becomes publicly known through lawful means; (ii) the information was rightfully in my possession or part of my general knowledge prior to my employment by the
Company; or (iii) the information is disclosed to me without confidential or proprietary restriction by a third party who rightfully possesses the information (without confidential or proprietary restriction) and did not learn of it, directly
or indirectly, from the Company. 
 (b) Third Party Information. I recognize that the Company has received and in the future will
receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree that I owe the Company
and such third parties, during the term of my employment and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm, or corporation (except as necessary in
carrying out my work for the Company consistent with the Company’s agreement with such third party) or to use it for the benefit of anyone other than for the Company or such third party (consistent with the Company’s agreement with such
third party) without the express written authorization of the President of the Company. 
 (c) Interference with Business. I hereby
acknowledge that pursuit of the activities forbidden by this Section 1(c) would necessarily involve the use or disclosure of Proprietary Information in breach of Section 1, but that proof of such breach would be extremely difficult. To
forestall such disclosure, use, and breach, I agree that for the term of this Agreement and for a period of one (1) year after termination of my employment with the Company, I shall not, for myself or any third party, directly or indirectly
(i) divert or attempt to divert from the Company (or any affiliate of it that might be formed) any business of any kind in which it is engaged, including, without limitation, the solicitation of or interference with any of its suppliers or
customers; (ii) employ, solicit for employment, or recommend for employment any person employed by the Company (or by any affiliate of it that might be formed) during the period of such person’s employment and for a period of one
(1) year thereafter; or (iii) engage in any business activity that is or may be competitive with the Company (or any affiliate of it that might be formed). I understand that none of my activities will be prohibited under this
Section 1(c) if I can prove that the action was taken without the use in any way of Proprietary Information. 

 2. Inventions.  
 (a) Defined; Statutory Notice. I understand that during the term of my employment, there are certain restrictions on my development of technology,
ideas, and inventions, referred to in this Agreement as “Invention Ideas.” The term Invention Ideas means any and all ideas, processes, trademarks, service marks, inventions, technology, computer programs, original works of authorship,
designs, formulas, discoveries, patents, copyrights, and all improvements, rights, and claims related to the foregoing that are conceived, developed, or reduced to practice by me alone or with others except to the extent that California Labor Code
Section 2870 lawfully prohibits the assignment of rights in such ideas, processes, inventions, etc. I understand that Section 2870(a) provides: 
 Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either: 
 (1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably
anticipated research or development of the employer. 
 (2) Result from any work performed by the employee for the employer.

 (b) Records of Invention Ideas. I agree to maintain adequate and current written records on the development of all Invention Ideas
and to disclose promptly to the Company all Invention Ideas and relevant records, which records will remain the sole property of the Company. I further agree that all information and records pertaining to any idea, process, trademark, service mark,
invention, technology, computer program, original work of authorship, design, formula, discovery, patent, or copyright that I do not believe to be an Invention Idea, but is conceived, developed, or reduced to practice by me (alone or with others)
during my period of employment or during the one-year period following termination of my employment, shall be promptly disclosed to the Company (such disclosure to be received in confidence). The Company shall examine such information to determine
if in fact the idea, process, or invention, etc., is an Invention Idea subject to this Agreement. 
 (c) Assignment. I agree to
assign to the Company, without further consideration, my entire right, title, and interest (throughout the United States and in all foreign countries), free and clear of all liens and encumbrances, in and to each Invention Idea, which shall be the
sole property of the Company, whether or not patentable. In the event any Invention Idea shall be deemed by the Company to be patentable or otherwise registrable, I will assist the Company (at its expense) in obtaining letters patent or other
applicable registrations thereon and I will execute all documents and do all other things (including testifying at the Company’s expense) necessary or proper to obtain letters patent or other applicable registrations thereon and to vest the
Company with full title thereto. Should the Company be unable to secure my signature on any document necessary to apply for, prosecute, obtain, or enforce any patent, copyright, or other right or protection relating to any Invention Idea, whether
due to my mental or physical incapacity or any other cause, I hereby irrevocably designate and appoint the Company and each of its duly authorized officers and agents as my agent and attorney-in-fact, to act for and in my behalf and 

 
stead, to execute and file any such document, and to do all other lawfully permitted acts to further the prosecution, issuance, and enforcement of patents,
copyrights, or other rights or protections with the same force and effect as if executed and delivered by me. 
 (d) Exclusions.
Except as disclosed in Exhibit A, there are no ideas, processes, trademarks, service marks, inventions, technology, computer programs, original works of authorship, designs, formulas, discoveries, patents, copyrights, or improvements to the
foregoing that I wish to exclude from the operation of this Agreement. 
 (e) Post-Termination Period. I acknowledge that because of
the difficulty of establishing when any idea, process, invention, etc., is first conceived or developed by me, or whether it results from access to Proprietary Information or the Company’s equipment, facilities and data, I agree that any idea,
process, trademark, service mark, invention, technology, computer program, original work of authorship, design, formula, discovery, patent, copyright, or any improvement, rights, or claims related to the foregoing shall be presumed to be an
Invention Idea if it is conceived, developed, used, sold, exploited, or reduced to practice by me or with my aid within one (1) year after my termination of employment with the Company. I can rebut the above presumption if I prove that the
invention, idea, process, etc., is not an Invention Idea as defined in paragraph 2(a). 
 I understand that nothing in this Agreement is intended to
expand the scope of protection provided me by Sections 2870 through 2872 of the California Labor Code. 
 3. Former or Conflicting
Obligations. During my employment with the Company, I will not disclose to the Company, or use, or induce the Company to use, any proprietary information or trade secrets of others. I represent that my performance of this Agreement will not
breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Company. I certify that I have no outstanding agreement or obligation that is in conflict with any of the
provisions of this Agreement, or that would preclude me from complying with the provisions hereof. I further certify that during the term of my employment with the Company, I will not engage in any other employment, occupation, consulting or other
business activity directly related to the business in which the Company is now involved or becomes involved during the term of such employment. 
 4. Government Contracts. I understand that the Company has or may enter into contracts with the government under which certain intellectual property rights will be required to be protected, assigned, licensed, or otherwise
transferred and I hereby agree to execute such other documents and agreements as are necessary to enable the Company to meet its obligations under any such government contracts. 
 5. Termination. I hereby acknowledge and agree that all personal property, including, without limitation, all books, manuals, records,
models, drawings, reports, notes, contracts, lists, blueprints, and other documents or materials or copies thereof, Proprietary Information, and equipment furnished to or prepared by me in the course of or incident to my employment, belong to the
Company and will be promptly returned to the Company upon termination of my employment with the Company. Following my termination, I will not retain any written or other tangible material containing any Proprietary Information or information
pertaining to any Invention Idea. I understand that my obligations contained herein will survive the termination of my employment. In the event of termination of my employment, I agree to sign and deliver to the Company a Termination Certificate in
the form attached hereto as Exhibit B. 

 6. Miscellaneous Provisions.  
 (a) Assignment. I agree that the Company may assign to another person or entity any of its rights under this Agreement, including, without
limitation, any successor in interest to the Company or its business operations. This Agreement shall be binding upon me and my heirs, executors, administrators, and successors, and shall inure to the benefit of the Company’s successors and
assigns. 
 (b) Governing Law; Severability. The validity, interpretation, enforceability, and performance of this Agreement shall be
governed by and construed in accordance with the laws of the State of California. If any provision of this Agreement, or application thereof to any person, place, or circumstance, shall be held by a court of competent jurisdiction to be invalid,
unenforceable, or void, the remainder of this Agreement and such provisions as applied to other persons, places, and circumstances shall remain in full force and effect. 
 (c) Entire Agreement. The terms of this Agreement are the final expression of my agreement with respect to the subject matter hereof and may not be contradicted by evidence of any prior or contemporaneous
agreement. This Agreement shall constitute the complete and exclusive statement of its terms and no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding involving this Agreement. 
 (d) Application of this Agreement. I hereby agree that my obligations set forth in Sections 1 and 2 hereof and the definitions of
Proprietary Information and Invention Ideas contained therein shall be equally applicable to Proprietary Information and Invention Ideas relating to any work performed by me for the Company prior to the execution of this Agreement. 
  

					
	Date: June 22, 2007	 		 	 /s/    Tony Gaughan

		 		 	Signature
			
		 		 	 Tony Gaughan

		 		 	Printed Name

 EXHIBIT A 
 Employee’s Prior Inventions 
 Except as set forth below, there are no ideas, processes,
trademarks, service marks, inventions, technology, computer programs, original works of authorship, designs, formulas, discoveries, patents, copyrights, or any claims, rights, or improvements to the foregoing that I wish to exclude from the
operation of this Agreement: 

 EXHIBIT B 
 TERMINATION CERTIFICATE CONCERNING 
 PROPRIETARY INFORMATION AND INVENTIONS 
 This is to certify that I have returned all personal property of the Company, including, without limitation, all books, manuals, records, models,
drawings, reports, notes, contracts, lists, blueprints, and other documents and materials, Proprietary Information, and equipment furnished to or prepared by me in the course of or incident to my employment with the Company, and that I did not make
or distribute any copies of the foregoing. 
 I further certify that I have reviewed the Employee Proprietary Information and Inventions
Agreement signed by me and that I have complied with and will continue to comply with all of its terms, including, without limitation, (i) the reporting of any invention, process, or idea, etc. conceived or developed by me and covered by the
Agreement and (ii) the preservation as confidential of all Proprietary Information pertaining to the Company. This certificate in no way limits my responsibilities or the Company’s rights under the Agreement. 
 On termination of my employment with the Company, I will be employed by
                             [name of new employer]
                                         
                            [in the
                             division] and I will be working in connection with the following
projects: 
 [generally describe the projects] 
  
  
  
  
  
  
  
  
  
  
  
  
 Dated:
                     
  

	
	  

	Signature
	
	  

	Printed NameEmployment Agreement Restatement Amendment # 1 - Anthony Gaughan

 Exhibit 10.80 
 

 
 46600 Landing Parkway 
 Fremont, California 94538 
 P. 408.240.8300 
 F. 408.321.0293 
 www.rackable.com 
 January 23, 2008 
 Tony Gaughan 
  

	 	Re:	Employment Agreement Restatement and Amendment #1 

 Dear Tony: 

Rackable Systems, Inc. (the “Company”) and you entered into an employment agreement dated June 19, 2007 (attached as Exhibit A, the
“Offer Letter”) governing the terms of your employment. The parties desire to restate and amend the Offer Letter based on the terms and conditions herein (“Amendment #1). (The Offer Letter, as amended by this Amendment
#1, shall be collectively referred to herein as the “Agreement”). In the event of a conflict between the provisions of this Amendment #1 and the Offer Letter, the provisions of this Amendment #1 shall prevail. The parties agree that in
consideration of your continued at-will employment and the exchange and receipt by the parties of other good and valuable consideration, the following terms and conditions shall govern your employment: 
  

	1.	POSITION. Commencing on July 16, 2007 (“Start Date”) and continuing beyond the date of this Amendment #1, you will serve in an executive capacity in the
role of Chief Products Officer and Senior Vice President, reporting to the Company’s Chief Executive Officer (the “CEO”). Specifically, for purposes of this Agreement, your executive capacity role will be responsibility for the
Company’s overall product functions in the corporation. This includes worldwide engineering, Rackable Labs, and RapidScale. Of course, the Company may change your position, duties, and work location from time to time in its discretion subject
to the terms of this Agreement. 

  

	2.	COMPENSATION. 

  

	 	a.	Base Salary. Your base salary is $270,000, less standard payroll deductions and withholdings. You will be paid bi-weekly in accordance with Company practice and policy.

	 	 b.
	 Performance Bonus. In addition, you will be eligible to earn a quarterly performance bonus1 target of $33,750, based upon both your performance and the Company’s performance with respect to applicable performance targets which are expected to
include revenue and profitability targets and other organizational milestones (“Targets”), set solely by the CEO. The bonus payment shall be earned upon the fulfillments of Targets and is payable within a reasonable period of time.
The Company will determine in its sole discretion whether the Targets have been achieved, whether you have earned a bonus, and the amount of any earned bonus. You must be employed on the bonus payment date to earn and be eligible to receive any
bonus. 

  

	 	c.	Review of Compensation. Your base salary and bonus eligibility will be reviewed on an annual or more frequent basis by the Compensation Committee and are subject to change in
the discretion of the Compensation Committee, subject to the terms of the Agreement. 

  

	3.	STOCK AWARDS. 

  

	 	a.	Initial Grants. To the extent that you have been issued an Option and/or RSU pursuant to the Offer Letter (“Initial Grants”), the provisions of the Offer
Letter and your individual Option and/or Restricted Stock Unit Award Agreement relating to such the Initial Grants shall remain in full force and effect without modification by this Amendment #1. This includes, without limitation, those provisions
in the Offer Letter and your individual Option and/or Restricted Stock Unit Award Agreement relating to the vesting and acceleration upon change of control of the Initial Grants. Nothing in this Amendment #1 will be construed to modify the
provisions of the 2006 New Recruit Equity Incentive Plan (the “2006 Plan”) and your individual Option and/or Restricted Stock Unit Award Agreement, which govern the Initial Grants. 

  

	 	b.	Following Grants. Subject to Compensation Committee approval, the Company may issue you additional awards (“Following Grants”) pursuant to the 2005 Equity
Incentive Plan (the “2005 Plan”) in the form of options to purchase shares of the Company’s common stock at an exercise price equal to the fair market value of the stock as of the date of grant as determined by the Compensation
Committee; and/or the right to receive shares of the Company’s common stock. Following Grants will be subject to a four-year vesting period subject to your continuous service to the Company as an employee or consultant, with one sixteenth
(1/16) of the Following Grant shares vesting for each full Company quarter of your continuous service as an employee or consultant (as defined in the 2005 Plan), following the grant date of the Following Grants. Nothing in this Amendment #1
will be construed to modify the provisions of the 2005 Plan and your individual Following Grant Award Agreement(s), which will govern Following Grants. 

  

	4.	EMPLOYEE BENEFITS. You are eligible to participate in the Company’s standard employee benefit plans in accordance with the terms and conditions of the plans and
applicable policies which may be in effect from time to time, and provided by the Company to its 

  
  

	 1
	 Performance bonuses are aligned to the Company’s quarterly financial reporting periods (each such quarter, a
“Company Quarter”); your initial quarterly participation will be adjusted pro rata based upon your Start Date. 

 executive employees generally, including but not limited to group health insurance coverage, disability
insurance, life insurance, ESPP, 401(k) Plan, and paid time off and paid holidays. You will be eligible for reimbursement of your legitimate and documented business expenses incurred in connection with your employment, pursuant to the Company’s
standard reimbursement expense policy and practices. The Company may modify its benefits programs and policies from time to time in its discretion. 
  

	5.	PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. As a condition of your employment, you are required to abide by the Company’s Proprietary Information and Inventions
Agreement (the “Non-Disclosure Agreement”), attached to the Offer Letter as Exhibit A. 

  

	6.	SERVICE AS EMPLOYEE; OUTSIDE ACTIVITIES. 

  

	 	a.	Location and Duties. You will work at the Company’s corporate headquarters currently located in Fremont, California, subject to necessary business travel. During your
employment with the Company, you will devote your best efforts and substantially all of your business time and attention (except for vacation periods and reasonable periods of illness or other incapacity permitted by the Company’s general
employment policies) to the business of the Company. 

  

	 	b.	Company Policies. Your employment relationship with the Company shall also be governed by the general employment policies and practices of the Company, including but not
limited to the policies contained in the Company’s Employee Handbook (except that if the terms of this letter differ from or are in conflict with the Company’s general employment policies or practices, the Offer Letter as amended by this
Amendment #1 will control), and you will be required to abide by such general employment policies and practices of the Company. 

  

	 	c.	Other Activities. Throughout your employment with the Company, you may engage in civic and not-for-profit activities so long as such activities do not interfere with the
performance of your duties hereunder or present a conflict of interest with the Company. Subject to the restrictions set forth herein and with the prior written consent of the Board, you may serve as a director of other corporations and may devote a
reasonable amount of your time to other types of business or public activities not expressly mentioned in this paragraph. 

  

	 	d.	Conflict of Interest. During your employment by the Company, except on behalf of the Company, you will not directly or indirectly serve as an officer, director, stockholder,
employee, partner, proprietor, investor, joint venturer, associate, representative or consultant for or on behalf of any other person, corporation, firm, partnership or other entity whatsoever known by you to compete with the Company (or is planning
or preparing to compete with the Company), anywhere in the world, in any line of business engaged in (or planned to be engaged in) by the Company; provided, however, that you may purchase or otherwise acquire up to (but not more than) one percent
(1%) of any class of securities of any enterprise (but without participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange. 

	7.	AT-WILL EMPLOYMENT RELATIONSHIP. Your employment relationship with the Company is at-will. Accordingly, both you and the Company may terminate the employment relationship at
any time, with or without Cause (as defined below), and with or without advance notice. 

  

	8.	DEFINITIONS. 

  

	 	a.	Definition of “Cause.” For purposes of the Agreement, “Cause” is defined as one or more of the following events: (i) the indictment or conviction for
a felony or other crime, or any misdemeanor involving moral turpitude; (ii) the commission of any other act or omission involving fraud or intentional deceit with respect to the Company or any of its affiliates or any of their directors,
stockholders, partners or members; (iii) any act or omission involving dishonesty that causes material injury to the Company or any of its affiliates or any of their directors, stockholders, partners or members; (iv) gross negligence with
respect to the Company or any of its subsidiaries; (v) willful misconduct with respect to the Company or any of its subsidiaries; (vi) any other material breach of this agreement or any other agreement referred to herein (including the
Non-Disclosure Agreement); provided, however, that, it shall only be deemed Cause pursuant to clause (vi) if you are given written notice describing the basis of Cause and, if the event is reasonably susceptible of cure, you fail to cure within
thirty (30) days. 

  

	 	b.	Definition of “Good Reason.” For purposes of the Agreement, “Good Reason” is defined as one or more of the following conditions that occur without your
written consent: (i) the assignment to you, or the removal from you, of any duties or responsibilities that results in the material diminution of your authority, duties or responsibilities as Chief Products Officer and Sr. Vice President,
including a Change in Control that results in your no longer serving as the Chief Products Officer and Sr. Vice President or any similar position; (ii) a material reduction by the Company of your base salary; (iii) the Company’s
material breach of its obligations to you under this offer letter agreement; or (iv) your office relocation to a location more than fifty miles from your then present location; provided however that, it shall only be deemed Good Reason pursuant
to the foregoing definition if (x) the Company is given written notice from you within ninety (90) days following the first occurrence of a condition that you consider to constitute Good Reason describing the condition and fails to remedy
such condition within thirty (30) days following such written notice, and (y) you resign from employment within ninety (90) days following the end of the period within which the Company was entitled to remedy the condition
constituting Good Reason but failed to do so. 

  

	 	c.	Definition of “Change in Control.” For purposes of the Agreement, “Change in Control” means the occurrence, in a single transaction or in a series of
related transactions, of either of the following events: 

  

	 	i.	 There is consummated (A) a merger, consolidation or similar transaction involving (directly or indirectly) the Company or (B) a tender offer or
exchange offer addressed to the stockholders of the Company and, in either event, immediately after the consummation of such merger, consolidation or similar transaction or such tender or exchange offer, 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, in each case in
substantially the same proportions as their ownership of the outstanding voting securities of the Company immediately prior to such transaction; or 

  

	 	ii.	There is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries, other
than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially the same proportions as their ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition.

 The term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the
purpose of changing the domicile of the Company. 
  

	9.	CHANGE IN CONTROL SEVERANCE BENEFITS. If, within 12 months following a Change in Control, your employment is terminated by the Company without Cause, or by you for Good
Reason; and if you sign, date, return to the Company and allow to become effective a release of all claims in a form satisfactory to the Company in its sole discretion (the “Release”); then in lieu of any Severance Benefits set
forth in Section 10 herein, you shall be entitled to receive the following severance benefits (the “Change in Control Severance Benefits”): 

  

	 	a.	The vesting of all unvested stock options and all unvested grants of restricted stock herein referred to and any subsequent grants of stock options, restricted stock or any
other stock awards in future plans, shall accelerate in such amount equal to the number of shares that would vest over an additional twenty-four (24) month period as if you have continued to be an employee of the Company for additional
twenty-four (24) months following your termination; 

  

	 	b.	You will be eligible to receive severance pay in the total amount equal to the sum of twelve (12) months of your base salary in effect as of the employment termination
date. For purposes of this Section 9(b), “base salary” as used herein does not include any annual performance bonus or any other bonus payment. The severance pay will be subject to required payroll deductions and withholdings,
and will be paid in twenty-six (26) equal installments over a period of twelve (12) months, with such payments made on the Company’s normal payroll schedule; and 

  

	 	c.	 If you timely elect and continue to remain eligible for continued group health insurance coverage under federal COBRA law or, if applicable, state insurance
laws (collectively, “COBRA”), the Company will pay your COBRA premiums sufficient to continue your group health insurance coverage at the same level in effect as of your employment 

	 	 
termination date (including dependent coverage, if applicable) for twelve (12) months after the employment termination date; provided that, the
Company’s obligation to pay your COBRA premiums will cease earlier if you become eligible for group health insurance coverage through a new employer and you must provide prompt written notice to the Company if you become eligible for group
health insurance coverage through a new employer within twelve (12) months of your employment termination date. 

  

	10.	SEVERANCE BENEFITS. If, at any time other than during the 12 month period following a Change in Control, your employment is terminated by the Company without Cause, or by you
for Good Reason; and if you sign, date, return to the Company and allow to become effective a release of all claims in a form satisfactory to the Company in its sole discretion (the “Release”); then you shall be entitled to receive the
following severance benefits (the “Severance Benefits”): 

  

	 	a.	Severance pay in the total amount equal to the sum of twelve (12) months of your base salary in effect as of the employment termination date. The severance pay will be
subject to required payroll deductions and withholdings, and will be paid in twenty-six (26) equal installments over a period of twelve (12) months, with such payments made on the Company’s normal payroll schedule. For purposes of
this Section 10(a), “base salary” as used herein does not include any annual performance bonus or any other bonus payment; and 

  

	 	b.	If you timely elect and continue to remain eligible for COBRA, the Company will pay your COBRA premiums sufficient to continue your group health insurance coverage at the
same level in effect as of your employment termination date (including dependent coverage, if applicable) for twelve (12) months after the employment termination date; provided that, the Company’s obligation to pay your COBRA premiums will
cease earlier if you become eligible for group health insurance coverage through a new employer and you must provide prompt written notice to the Board if you become eligible for group health insurance coverage through a new employer within twelve
(12) months of your employment termination date. 

  

	11.	CONDITIONS TO ELIGIBILITY TO SEVERANCE BENEFITS OR CHANGE IN CONTROL SEVERANCE BENEFITS. Notwithstanding the foregoing, you will not be eligible for the Severance Benefits or
the Change in Control Severance Benefits if: (A) your employment is terminated for Cause, or if you resign for any reason that does not qualify as Good Reason; or (B) in the event that you materially breach the Non-Disclosure Agreement,
the Release of claims, or any other obligations you owe to the Company after termination of your employment (including but not limited to the provisions of the Non-Disclosure Agreement), and the Company’s obligation to provide the Severance
Benefits or the Change in Control Benefits (or to continue to provide such benefits) will cease immediately and in full as of the date of your breach (in addition to any other remedies available to the Company). 

  

	12.	 DEFERRED COMPENSATION. Anything in the Agreement to the contrary notwithstanding, if the Company reasonably determines that any payments hereunder fail to
satisfy the distribution requirements of Section 409A(a)(2) of the Internal Revenue Code of 1986, as amended (the “Code”) and you concur with such determination in writing, then the payment of such benefit shall be delayed to
the minimum extent necessary so that such 

	 	 
payments are not subject to the provisions of Section 409A(a)(1) of the Code; provided, however, that in no event shall such delay be more than six
(6) months and one (1) day from the date of termination of your employment with the Company. 

  

	13.	EXCISE TAX. 

  

	 	a.	Anything in the Agreement to the contrary notwithstanding, if any payment or benefit that you would receive pursuant to this offer letter agreement or otherwise
(“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code
(the “Excise Tax”), then such Payment shall be equal to the Reduced Amount (defined below). The “Reduced Amount” shall be either (y) the largest portion of the Payment that would result in no portion of the Payment
(after reduction) being subject to the Excise Tax, or (z) the entire Payment, whichever amount after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest
applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes), results in your receipt, on an after-tax basis, of the greatest amount of the Payment to you.

  

	 	b.	If a reduction in the Payment is to be made, the reduction in payments and/or benefits shall occur in the following order unless you elect in writing a different order
(provided, however, that such election shall be subject to Company approval, such approval not to be unreasonably withheld or delayed, if made on or after the date on which the event that triggers the Payment occurs (the “Payment
Event”)): (1) reduction of cash payments; (2) cancellation of accelerated vesting of equity awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits
paid to you. In the event that acceleration of compensation from your equity awards is to be reduced, such acceleration of vesting shall be canceled in the reverse order of the date of grant unless you elect in writing a different order for
cancellation. 

  

	 	c.	The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Payment Event shall perform the foregoing calculations.
If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Payment Event, a nationally recognized accounting firm appointed by the Board and reasonably approved by you shall
make the determinations required hereunder. The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder. 

  

	 	d.	The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and you
within fifteen (15) calendar days after the date on which your right to a Payment is triggered (if requested at that time by the Company or you) or such other time or times as requested by the Company or you. If the accounting firm determines
that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it shall furnish the Company and you with an opinion reasonably acceptable to you that no Excise Tax will be imposed with respect
to such Payment. The Company shall be entitled to rely upon the accounting firm’s determinations, which shall be final and binding. 

	14.	DISPUTE RESOLUTION. To ensure the rapid and economical resolution of disputes that may arise in connection with your employment, you and the Company agree that any and all
disputes, claims, or causes of action, in law or equity, arising from or relating to the enforcement, breach, performance, execution, or interpretation of this agreement, your employment, or the termination of your employment, shall be resolved, to
the fullest extent permitted by law, by final, binding and confidential arbitration in San Francisco, California conducted before a single arbitrator by Judicial Arbitration and Mediation Services, Inc. (“JAMS”) or its successor, under the
then applicable JAMS rules. By agreeing to this arbitration procedure, both you and the Company waive the right to resolve any such dispute through a trial by jury or judge or by administrative proceeding. The arbitrator shall: (a) have the
authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision including the arbitrator’s essential findings and
conclusions and a statement of the award. The Company shall pay all of JAMS’ arbitration fees. Nothing in this letter agreement shall prevent either you or the Company from obtaining injunctive relief in court if necessary to prevent
irreparable harm pending the conclusion of any arbitration. The parties agree that the arbitrator shall award reasonable attorneys fees and costs to the prevailing party in any action brought hereunder, and the arbitrator shall have discretion to
determine the prevailing party in an arbitration where multiple claims may be at issue. 

  

	15.	MISCELLANEOUS. 

  

	 	a.	General Provisions. The Agreement, including the Non-Disclosure Agreement, constitutes the complete, final and exclusive embodiment of the entire agreement between you and
the Company with regard to the subject matter hereof. It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other agreements, promises, warranties or
representations concerning its subject matter. Changes in your employment terms, other than those expressly reserved herein to the Company’s discretion, only can be made in a writing signed by a duly-authorized member of the Company and you.
The Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors and assigns. If any provision of the Agreement is
determined to be invalid or unenforceable, in whole or in part, this determination shall not affect any other provision of the Agreement and the provision in question shall be modified so as to be rendered enforceable in a manner consistent with the
intent of the parties insofar as possible under applicable law. The Agreement shall be construed and enforced in accordance with the laws of the State of California without regard to conflicts of law principles. Any ambiguity in the Agreement shall
not be construed against either party as the drafter. Any waiver of a breach of the Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder. The Agreement may be
executed in counterparts which shall be deemed to be part of one original, and facsimile signatures shall be equivalent to original signatures. 

	 	b.	Legal Right to Work. As required by law, your continued employment is subject to satisfactory proof of your right to work in the United States. 

  

	16.	ACCEPTANCE. Please sign this Amendment #1 and return them to me as soon as possible to indicate your acceptance of the amended terms of employment with the Company.

  

			
	Sincerely,
	
	Rackable Systems, Inc.
		
	By:	 	 /s/    Jennifer L. Pratt

		 	Jennifer L. Pratt
		 	Vice President, Human Resources
	
	 February 14, 2008

	Date
	
	Understood and Agreed:
	
	 /s/    Tony Gaughan

	Tony Gaughan
	
	 February 14, 2008

	Date

 Exhibit A –Offer Letter, dated June 19, 2007 

 EXHIBIT A 
 OFFER LETTER, DATED JUNE 19, 2007

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