Document:

RAX Ex-10.2_03.31.15

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is between Rackspace US, Inc. ("Company") and Scott Crenshaw (“Employee”).

		
	1.
	TERM OF EMPLOYMENT

Subject to final approval from the Compensation Committee of the Board of Directors, this Agreement commences April 1, 2015 (“Effective Date”), and ends on March 31, 2018 (the "Employment Period"), and shall thereafter be automatically extended for one year periods unless either Company or Employee gives written notice of non-renewal on or before January 31, 2018 (but not before January 1, 2018), or annually on or before January 31 thereafter (but no earlier than January 1). Notice of non-renewal may only be given between January 1 and January 31. The term “Employment Period” shall refer to the Employment Period if and as so extended.

		
	2.
	TITLE AND EXCLUSIVE SERVICES

		
	(a)
	Title and Duties. Employee’s title is Senior Vice President, Strategy & Product, and he will perform job duties that are usual and customary for this position. This position will be based in San Antonio, Texas for the first year of employment. Thereafter, Employee may exercise his discretion to determine whether the position will be based in San Antonio or in Austin, subject to reasonable requirements to be in San Antonio or other offices as may be required to fulfill his duties. The Company reserves the right to assign to the Employee duties of a different nature commensurate with his position and title, either additional to, or instead of, those referred to above, it being understood that Employee will not be assigned duties which Employee cannot reasonably perform or that are not consistent with his position and title.

		
	(b)
	Exclusive Services. Employee shall not be employed or render services elsewhere during the Employment Period.  Provided, however, that nothing in this paragraph shall be construed to place any limitations on Employee’s paid or unpaid board memberships or charitable endeavors, subject to Company’s pre-approval process and Code of Conduct.

		
	3.
	COMPENSATION AND BENEFITS

		
	(a)
	Base Salary. Employee shall be paid a starting base salary of Four Hundred Thousand Dollars ($400,000) and shall be eligible for increases in base salary consistent with Company’s ordinary compensation cycles and process.

		
	(b)
	Bonus. Employee is eligible for an annualized bonus target of 80% of his salary based on the Rackspace Cash Bonus Plan as specified in the plan and as approved by the board of directors or compensation committee.

1

		
	(c)
	Signing Bonus. Employee will be paid a Signing Bonus of Five Hundred Thousand Dollars ($500,000) payable on the first paycheck and subject to the following claw-back provisions. The bonus is an advance payment that is actually earned throughout the initial Employment Period. Therefore, entitlement to the bonus is contingent upon Employee’s continued employment with the Company, as follows:  (i) if, prior to March 31, 2016, employment is terminated by the Company for Cause, as outlined in Section 8(c), Employee agrees that he is legally obligated to and will reimburse Rackspace for the unearned pro rata portion of the Signing Bonus based on the length of completed employment under this Agreement; and (ii) if, after March 31, 2016 but prior to March 31, 2018, Employee’s employment is terminated by the Company for Cause, as outlined in Section 8(c), Employee agrees that he is legally obligated to and will reimburse Rackspace for the unearned pro rata portion of one-half of the Signing Bonus based on the length of employment under this Agreement. For purposes of clarity: if, prior to March 31, 2018, Employee terminates his employment for Good Reason, as outlined in Section 8(d), or in the event his employment is terminated by the Company without Cause, Employee is not legally obligated to reimburse the Company for the Signing Bonus, nor will the Company demand such reimbursement. 

		
	(d)
	Relocation. Employee will receive a relocation package which includes a full pack and move and a lump sum relocation advance of $67,000 (less taxes). These benefits will be administered by Company’s relocation partner, Relocation Synergy. In the event employment ends within the first year for any reason other than termination by the Company without Cause or by the Employee for Good Reason, Employee agrees to reimburse a pro-rata portion of the relocation advance based on the length of completed employment.  Furthermore, Company agrees to provide Employee with certain additional benefits pertaining to his relocation as outlined in the Relocation Letter, attached hereto as Exhibit A.

		
	(e)
	Equity. Pending final compensation committee approval, Employee will be granted an equity award that will have an aggregate accounting value of approximately $3,000,000. Two-thirds (2/3) of the equity award, or approximately $2,000,000 in accounting value, will be granted in the form of Restricted Stock Units, or RSUs, and would vest over a period of two years in the following installments: 50% of the shares underlying the grant vest on the first anniversary of the grant date and the remaining 50% on the second anniversary. The remaining one-third of the equity award will be granted in the form of Performance Stock Units, or PSUs. The performance criteria in the PSU agreement will be substantially the same as those provided to other members of the Rackspace Senior Leadership Team, with vesting conditional on achieving a pre-determined revenue threshold on one of three possible Determination Dates (as defined in the award agreement). The number of RSUs and target number of PSUs granted will be based upon the aforementioned accounting values and the closing market value of the stock on the date of grant. The equity award is expected to be granted within 90 days of the Effective Date. The awards will be issued pursuant to a Company approved equity plan and standard forms of agreement, which outline the vesting schedule and other terms.

		
	(f)
	PTO. Employee is eligible for PTO (paid time off) subject to the Employee Handbook.

		
	(g)
	Employment Benefit Plans. Employee may participate in employee benefit plans in which other similarly situated employees may participate, according to the terms of applicable policies and as stated in the Employee Handbook. Employee acknowledges receipt of the Employee Handbook available on the intercompany website and will review and abide by its terms.

		
	(h)
	Expenses. Company will reimburse Employee for business expenses pursuant to Company policy.

2

		
	(i)
	Indemnification.  During the Employment Period and throughout any applicable statute of limitations, the Company will, to the maximum extent permitted by law (whether by contract, charter, by-laws or permissive or mandatory statute), indemnify and hold Employee harmless against expenses, including reasonable attorneys’ fees, judgments, fines, settlements, and other amounts actually or reasonably incurred in connection with any proceeding arising by reason of and during the course and scope of Employee’s employment with the Company, with the exception of any deliberate criminal or fraudulent acts.  Employee will be named as an insured under a standard officers’ and directors’ liability insurance policy, which shall be purchased and maintained by the Company.  

		
	4.
	NONDISCLOSURE OF CONFIDENTIAL INFORMATION

		
	(a)
	Company has provided and will continue to provide to Employee confidential information and trade secrets including but not limited to Company’s operational, sales, marketing, personally identifiable information about employees, employee contact information and/or materials used for training and or/employee development, and engineering information, customer lists, business contracts, partner agreements, pricing and strategy information, product and cost or pricing data, compensation information, strategic business plans, budgets, financial statements, and other information Company treats as confidential or proprietary (collectively the “Confidential Information”). This section is not intended to limit Employee’s rights to discuss Employee’s compensation or other terms and conditions of employment as allowed by law. Employee acknowledges that such Confidential Information is proprietary and agrees not to disclose it to anyone outside Company except to the extent that (i) it is necessary in connection with performing his duties; (ii) Employee is required by court order to disclose the Confidential Information, provided that Employee shall promptly inform Company, shall cooperate with Company to obtain a protective order or otherwise restrict disclosure, and shall only disclose Confidential Information to the minimum extent necessary to comply with the court order. Employee agrees to never use Confidential Information in competing, directly or indirectly, with Company. When employment ends, Employee will immediately return all Confidential Information to Company.

		
	(b)
	The terms of this Section 4 shall survive the expiration or termination of this Agreement for any reason.

		
	5.
	NON-HIRE OF COMPANY EMPLOYEES

		
	(a)
	To further preserve the Confidential Information, during employment and for twelve

(12) months after employment ends (“Non-Hire Period”), Employee will not, directly or indirectly, (i) hire or engage any current employee of Company, including anyone employed by or providing services to Company within the 6-month period preceding Employee’s last day of employment or engagement; (ii) solicit or encourage any employee to terminate employment or services with Company; or (iii) solicit or encourage any employee to accept employment with or provide services to Employee or any business associated with Employee.

		
	(b)
	The terms of this Section 5 shall survive the expiration or termination of this Agreement for any reason.

3

		
	6.
	NON-SOLICITATION OF CUSTOMERS

		
	(a)
	To further preserve the Confidential Information, Employee agrees not to solicit Company’s customers for six (6) months after employment ends (the “Non-Solicitation Period”) for or in connection with the provision of any services substantially similar to those services provided by the Company (as set forth in Section 7).  This Agreement shall not prevent Employee from otherwise soliciting the Company’s customers.

		
	(b)
	The terms of this Section 6 shall survive the expiration or termination of this Agreement for any reason.

		
	7.
	NON-COMPETITION AGREEMENT

		
	(a)
	To further preserve the Confidential Information, Employee agrees that during employment and for six (6) months after employment ends (the “Restricted Period”), Employee will not work, as an employee, contractor, officer, owner, consultant, or director, in any business anywhere in the world that sells hosting and information technology services substantially similar to those services provided by the Company, namely (i) provisioning, hosting, management, monitoring, supporting, or maintenance of applications, computer servers (whether dedicated, shared or virtual) and network connectivity in a datacenter for remote use via the Internet, (ii) hosted email, storage, collaboration, compute, virtual networking and similar services, and (iii)  all similar related services, all of the foregoing being defined for the purposes of this Agreement as "Hosting.” Provided, however, that this Agreement shall not prohibit Employee from owning not more than five percent (5%) of the outstanding stock of any class of a publicly-traded company providing Hosting services, nor shall it prohibit Employee from working for a company whose affiliate(s), division(s), subdivision(s), and/or business unit(s) provide(s) Hosting services substantially similar to those provided by the Company, so long as Employee does not work for (and provides no services to) the affiliate(s), division(s), subdivision(s) and/or business unit(s) providing Hosting services.

		
	(b)
	The terms of this Section 7 shall survive the expiration or termination of this Agreement for any reason.

		
	8.
	TERMINATION

This Agreement may be terminated by mutual written agreement or:

		
	(a)
	Death. The date of Employee’s death shall be the termination date.

		
	(b)
	Disability. Company may terminate this Agreement and/or Employee’s employment if Employee is unable to perform the essential functions of his full-time position for more than 180 days in any 12 month period, subject to applicable law.

4

		
	(c)
	Termination By Company. Company may terminate employment with or without Cause. “Cause” means:

(i)willful misconduct, including, without limitation, violation of sexual or other harassment policy, gross negligence, misappropriation of or material misrepresentation regarding property of Company, other than customary and de minimis use of Company property for personal purposes, as determined in the discretion of Company, which discretion shall be exercised in good faith, or failure to take reasonable and appropriate action to prevent material injury to the financial condition, business or reputation of the Company;

(ii) non-performance of duties (other than by reason of disability);

(iii)failure to follow lawful directives of the Company or consistent failure to meet reasonable performance objectives following a written warning and opportunity to cure for one quarter;

(iv)a felony conviction or indictment, a plea of nolo contendere by Employee, or other conduct by Employee that has or would result in material injury to Company’s reputation, including indictment or conviction of fraud, theft, embezzlement, or a crime involving moral turpitude;

(v)a material breach of this Agreement; or

(vi)a significant violation of Company’s employment and management policies.

		
	(d)
	Termination By Employee For Good Reason. Employee may terminate his employment at any time for “Good Reason,” which is: (i) Company’s repeated failure to comply with a material term of this Agreement (including but not limited to the position location agreement in section 2(a)) after written notice by Employee specifying the alleged failure; or (ii) a substantial and unusual reduction in responsibilities and authority; or (iii) the relocation, without good business reason, of Employee’s position to a facility or a location more than ninety (90) miles from the then-current location of the position as provided in section 2(a), without Employee’s express written consent, within twelve months following a change of control.  If Employee elects to terminate his employment for “Good Reason,” Employee must first provide Company written notice within thirty (30) days, after which Company shall have sixty (60) days to cure. If Company has not cured and Employee elects to terminate his employment, he must do so within ten (10) days after the end of the cure period. "Change in Control” means the occurrence of any of the following events:  

5

		
	(i)
	a change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group, (“Person”) acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection (i), the acquisition of additional stock by any one Person, who is considered to own more than fifty percent (50%) of the total voting power of the stock of the Company will not be considered a Change in Control; or 

		
	(ii)
	a change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.  For purposes of this clause (ii), if any Person is considered to effectively control the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or

		
	(iii)
	a change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3).  For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase, or acquisition of stock, or similar business transaction with the Company. 

		
	9.
	COMPENSATION UPON TERMINATION

		
	(a)
	Death. Company shall, within 30 days, pay to Employee’s designee or, if no person is designated, to Employee’s estate, Employee’s accrued and unpaid Base Salary and bonus, subject to the terms of any applicable bonus plan, through the date of termination, and any payments required under applicable employee benefit plans.

		
	(b)
	Disability. Company shall, within 30 days, pay all accrued and unpaid base Salary and bonus, subject to the terms of any applicable bonus plan, through the termination date and any payments required under applicable employee benefit plans.

6

		
	(c)
	Termination By Company For Cause: Company shall, within 30 days, pay to Employee his accrued and unpaid Base Salary through the termination date and any payments required under applicable employee benefit plans.

		
	(d)
	Non-Renewal By Employee. If Employee gives notice of non-renewal under Section 1, Company shall determine the termination date and will pay accrued and unpaid Base Salary through the termination date, and any payments required under applicable employee benefit plans. If the termination date is before the end of the then current Employment Period, and if Employee signs a Severance Agreement and General Release of claims in a form satisfactory to Company, then Company will, in periodic payments in accordance with ordinary payroll practices and deductions, pay Employee an amount equal to his pro-rata Base Salary through the end of the then current Employment Period (“Severance Pay Period”).

		
	(e)
	Termination With Severance.

		
	(1)
	Termination By Company Without Cause or Termination by Employee for Good Reason - Severance: If Company terminates employment without Cause and not by reason of death or disability or if Employee terminates for Good Reason, Company will pay the accrued and unpaid Base Salary through the termination date and any payments required under applicable employee benefit plans. In addition, if Employee signs a Severance Agreement and General Release of claims in a form satisfactory to Company, Company will pay Employee, in periodic payments in accordance with ordinary payroll practices and deductions, Employee’s current Base Salary for six (6) months (the “Severance Payments” or “Severance Pay Period”) 

		
	(2)
	Non-Renewal By Company - Severance: If employment ends because Company gives notice of non-renewal under Section 1, Company shall determine the termination date, even if such date is prior to the end of the Employment Period and will pay the accrued and unpaid Base Salary through the termination date and any payments required under applicable employee benefit plans. In addition, if Employee signs a Severance Agreement and General Release of claims in a form satisfactory to Company, Company will pay Employee, in periodic payments in accordance with ordinary payroll practices and deductions, Employee’s current Base Salary for six (6) months (the “Severance Payments” or “Severance Pay Period”).

		
	(3)
	Employment by Competitor or Re-hire During Severance Pay Period:

		
	(i)
	If Employee competes with Company or is hired or engaged in any capacity by any competitor of Company during any Severance Pay Period, then the Severance Payments shall cease. The foregoing shall not affect Company’s right to enforce the Non- Compete pursuant to Section 7. For purposes of this sub-section, a “competitor” of Company means: any business anywhere in the world that sells Hosting as defined in Section 7.  

		
	(ii)
	If Employee is rehired on a full-time basis by Company or employed on a full-time basis by or performing services in any non-competitive capacity or business during any Severance Pay Period, the Severance Payments shall cease.

7

		
	10.
	OWNERSHIP OF MATERIALS

Employee agrees that all inventions, improvements, discoveries, designs, technology, and works of authorship (including but not limited to computer software) made, created, conceived, or reduced to practice by Employee, whether alone or in cooperation with others, during employment, together with all patent, trademark, copyright, trade secret, and other intellectual property rights related to any of the foregoing throughout the world, are among other things works made for hire and belong exclusively to the Company, and Employee hereby assigns all such rights to the Company. Employee agrees to execute any documents, testify in any legal proceedings, and do all things necessary or desirable to secure Company’s rights to the foregoing, including without limitation executing inventors’ declarations and assignment forms. If there is a separate signed agreement between you and the Company including terms directly related to intellectual property rights, then the intellectual property terms of that agreement shall control.

		
	11.
	PARTIES BENEFITED; ASSIGNMENTS

This Agreement shall be binding upon Employee, his heirs and his personal representative or representatives, and upon Company and its respective successors and assigns. Neither this Agreement nor any rights or obligations hereunder may be assigned by Employee, other than by will or by the laws of descent and distribution.

		
	12.
	GOVERNING LAW

This Agreement shall be governed by the laws of the State of Texas and Employee expressly consents to the personal jurisdiction of the Texas state and federal courts for any lawsuit relating to this Agreement.

		
	13.
	DEFINITION OF COMPANY

“Company” shall include Rackspace US, Inc., and its past, present and future divisions, operating companies, subsidiaries and affiliates.

		
	14.
	LITIGATION AND REGULATORY COOPERATION

During and after employment, Employee shall reasonably cooperate in the defense or prosecution of claims, investigations, or other actions which relate to events or occurrences during employment. Employee’s cooperation shall include being available to prepare for discovery or trial and to act as a witness. Company will pay an hourly rate (based on Base Salary as of the last day of employment) for cooperation that occurs after employment, and reimburse Employee for reasonable expenses, including travel expenses, reasonable attorneys’ fees and costs.

8

		
	15.
	DISPUTE RESOLUTION

		
	(a)
	Injunctive Relief: Employee agrees that irreparable damages to Company will result from Employee's breach of this Agreement, including loss of revenue, loss of goodwill associated with Employee as a result of employment, and/or loss of the benefit to Company of any training, confidential, and/or trade secret information provided to Employee, and any other tangible and intangible investments made to and on behalf of Employee. A breach or threat of breach of this Agreement shall give the non-breaching party the right to seek a temporary restraining order and a preliminary or permanent injunction enjoining the breaching party from violating this Agreement in order to prevent immediate and irreparable harm. The breaching party shall pay to the non- breaching party reasonable attorneys’ fees and costs associated with enforcement of this Agreement, including any appeals. Pursuit of equitable relief under this Agreement shall have no effect regarding the continued enforceability of the Arbitration Section below. Remedies for breach under this Section are cumulative and not exclusive; the parties may elect to pursue any remedies available under this Agreement. 

		
	(b)
	Arbitration: The parties agree that any dispute or claim, that could be brought in court including discrimination or retaliation claims, relating to this Agreement or arising out of Employee's employment or termination of employment, shall, upon timely written request of either party, be submitted to binding arbitration, except claims regarding: (i) workers’ compensation benefits; (ii) unemployment benefits; (iii) Company’s employee welfare benefit plans, if the plan contains a final and binding appeal procedure for the resolution of disputes under the plan; (iv) wage and hour disputes within the jurisdiction of any state Labor Commissioner; and (v) issues that could be brought before  the National Labor Relations Board or covered by the National Labor Relations Act. This Agreement is not intended to prohibit the Employee from filing a claim or communicating with any governmental agency including the Equal Employment Opportunity Commission, the National Labor Relations Board or the Department of Labor. The arbitration shall be conducted in San Antonio, Texas. The arbitration shall proceed in accordance with the National Rules for Resolution of Employment Disputes of the American Arbitration Association (“AAA”) in effect at the time the claim or dispute arose, unless other rules are agreed upon by the parties. Unless agreed to in writing, the arbitration shall be conducted by one arbitrator from AAA or a comparable arbitration service, and who is selected pursuant to the National Rules for Resolution of Employment Disputes of the AAA, or other rules as the parties may agree to in writing. Any claims received after the applicable statute of limitations period shall be deemed null and void; nothing in this Agreement, however, shall operate to shorten any statutory or common law statutes of limitations. The parties further agree that by entering into this Agreement, the right to participate in a class or collective action is waived. CLAIMS MAY BE ASSERTED AGAINST THE OTHER PARTY ONLY IN AN INDIVIDUAL CAPACITY AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. Further, unless the parties agree otherwise, the arbitrator may not consolidate more than one person's claims, and may not otherwise preside over any form of a representative, collective or class proceeding. If this specific provision is found to be unenforceable, then the entirety of this arbitration provision shall be null and void. The arbitrator shall issue a reasoned award with findings of fact and conclusions of law. Either party may bring an action in any court of competent jurisdiction to compel arbitration under this Agreement, or to enforce or vacate an arbitration award. However, in actions seeking to vacate an award, the standard of review to be applied by said court to the arbitrator’s findings of fact and conclusions of law will be the same as that applied by an appellate court reviewing a decision of a trial court sitting without a jury, unless state law requires otherwise. Company will pay the actual fee for the arbitrator and the claimant’s filing 

9

fee. Each party will pay their own attorneys’ fees and other expenses. Unless otherwise provided by law and awarded by the arbitrator, each party will pay its own attorneys’ fees and other costs. 

		
	16.
	REPRESENTATIONS AND WARRANTIES OF EMPLOYEE

Employee shall keep all terms of this Agreement confidential, except as may be disclosed to Employee’s spouse, accountants or attorneys. Employee represents that he is under no contractual or other restriction inconsistent with the execution of this Agreement, the performance of his duties hereunder, or the rights of Company. Employee authorizes the Company to inform any prospective employer of the existence and terms of this Agreement without liability for interference with Employee’s prospective employment. Employee represents that he is under no disability that prevents him from performing the essential functions of his position, with or without reasonable accommodation.

		
	17.
	SECTION 409A COMPLIANCE

Payments under this Agreement (the “Payments”) shall be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A, the Regulations, applicable case law and administrative guidance. All Payments shall be deemed to come from an unfunded plan. Notwithstanding any provision in this Agreement, all Payments subject to Section 409A will not be accelerated in time or schedule. Employee and Company will not be able to change the designated time or form of any Payments subject to Section 409A. In addition, all Severance Payments that are deferred compensation and subject to Section 409A will only be payable upon a "separation from service" (as that term is defined at Section 1.409A-1(h) of the Treasury Regulations) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single "service recipient" with the Company under Section 1.409A-1(h)(3). All references in this Agreement to a termination of employment and correlative terms shall be construed to require a "separation from service.”

		
	18.
	MISCELLANEOUS

This Agreement is not effective unless fully executed by all parties, including the President of the Company, and approved by the board of directors or compensation committee as required by Company. This Agreement contains the entire agreement of the parties on the subject matters in this agreement and supersedes any prior written or oral agreements or understandings between the parties except as noted in Section 10 above.  No modification shall be valid unless in writing and signed by the parties. This Agreement may be executed in counterparts, a counterpart transmitted via electronic means, and all executed counterparts, when taken together, shall constitute sufficient proof of the parties’ entry into this Agreement. The parties agree to execute any further or future documents which may be necessary to allow the full performance of this Agreement. The failure of a party to require performance of any provision of this Agreement shall not affect the right of such party to later enforce any provision. A waiver of the breach of any term or condition of this Agreement shall not be deemed a waiver of any subsequent breach of the same or any other term or condition.

10

If any provision of this Agreement shall, for any reason, be held unenforceable, such unenforceability shall not affect the remaining provisions hereof, except as specifically noted in this Agreement, or the application of such provisions to other persons or circumstances, all of which shall be enforced to the greatest extent permitted by law. Company and Employee agree that the restrictions contained in Section 4, 5, 6, and 7, are reasonable in scope and duration and are necessary to protect Confidential Information. If any restrictive covenant is held to be unenforceable because of the scope, duration or geographic area, the parties agree that the court or arbitrator may reduce the scope, duration, or geographic area, and in its reduced form, such provision shall be enforceable. Should Employee violate the provisions of Sections 5, 6, or 7, then in addition to all other remedies available to Company, the duration of these covenants shall be extended for the period of time when Employee began such violation until he permanently ceases such violation. The headings in this Agreement are inserted for convenience of reference only and shall not control the meaning of any provision hereof.

[REMAINDER OF THE PAGE LEFT INTENTIONALLY BLANK]

11

Upon full execution by all parties, this Agreement shall be effective on the later date of the two signatures below:

EMPLOYEE:

/s/ Scott Crenshaw                    Date:    February 24, 2015            
 Scott Crenshaw

COMPANY:

/s/ William Taylor Rhodes                Date:     February 25, 2015            
Rackspace US, Inc.
By:  William Taylor Rhodes, President
and CEO

12

EXHIBIT A

        

Dear Scott,
The relocation details outlined below apply to your offer as a Senior Vice President, Product & Strategy.  The logistics of your move will be managed by Relocation Synergy on behalf of Rackspace.
Thank you,
Rackspace

	
		
	Benefit
	Summary Description

	Lump Sum Allowance:
	You will be provided a $67,000 (less taxes) lump sum to use for all out of Pocket expense not provided in your relocation benefit package.  Relocation Synergy will process this payment upon signing your relocation payback agreement.

	Return Trips Home:
	Up to thirteen (13) trips home while in temporary housing.  Economy flights or mileage reimbursement at IRS current rate.  These trips are being furnished in recognition of the fact that your job duties are based in San Antonio, and that it is necessary for you to commute home periodically while your family prepares to relocate to San Antonio.   As such, these trips are considered business travel and should be exempt from tax.

	Temporary Living:
	We are offering you up to 90 days of temporary housing and you will work directly with Relocation Synergy to coordinate those arrangements.  Temporary housing is considered business expense and therefore tax-free, due to the fact that you are required to live and work in San Antonio while you wait for your family to relocate.

	Shipment of Household Goods:
	Rackspace will cover a full pack, load, ship and unload of your household goods, as well as the relocation of up to two (2) automobiles.

13RAX Ex-10.3_03.31.15

                            

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is between Rackspace US, Inc. ("Company") and Joe Saporito (“Employee”).

		
	1.
	TERM OF EMPLOYMENT

This Agreement commences March 11, 2015 (“Effective Date”), and ends on March 31, 2017 (the "Employment Period, and shall thereafter be automatically extended for one year periods unless either Company or Employee gives written notice of non-renewal on or before January 31, 2017 (but not before January 1, 2017), or annually on or before January 31 thereafter (but no earlier than January 1).  Notice of non-renewal may only be given between January 1 and January 31. The term “Employment Period” shall refer to the Employment Period if and as so extended.

		
	2.
	TITLE AND EXCLUSIVE SERVICES

		
	(a)
	Title and Duties. Employee’s title is Chief Accounting Officer, and he will perform job duties that are usual and customary for this position.  The Company reserves the right to assign to the Employee duties of a different nature, either additional to, or instead of, those referred to above, it being understood that Employee will not be assigned duties which Employee cannot reasonably perform.  

		
	(b)
	Exclusive Services. Employee shall not be employed or render services elsewhere during the Employment Period. Notwithstanding the foregoing, Company agrees to allow Employee to continue to serve in his position as Director with US Dataworks, Inc.

		
	3.
	COMPENSATION AND BENEFITS

		
	(a)
	Base Salary. Employee shall be paid a base salary of Three Hundred Thousand Dollars ($300,000) effective February 21, 2015 and shall be eligible for increases in base salary consistent with Company’s ordinary compensation cycles and process.

		
	(b)
	Bonus. Employee is eligible for a bonus target set as a percentage of annual salary, subject to the Rackspace Cash Bonus Plan and as approved by the board of directors or compensation committee.

		
	(c)
	Equity. Employee is eligible for equity grants consistent with Company’s ordinary compensation cycles, dates, and process. 

		
	(d)
	PTO. Employee is eligible for PTO (paid time off) subject to the Employee Handbook.

		
	(e)
	Employment Benefit Plans. Employee may participate in employee benefit plans in which other similarly situated employees may participate, according to the terms of applicable policies and as stated in the Employee Handbook. Employee acknowledges receipt of the Employee Handbook available on the intercompany website and will review and abide by its terms.

		
	(f)
	Expenses. Company will reimburse Employee for business expenses pursuant to Company policy.

1

		
	4.
	NONDISCLOSURE OF CONFIDENTIAL INFORMATION    

		
	(a)
	Company has provided and will continue to provide to Employee confidential information and trade secrets including but not limited to Company’s operational, sales, marketing, personally identifiable information about employees, employee contact information and/or materials used for training and or/employee development, and engineering information, customer lists, business contracts, partner agreements, pricing and strategy information, product and cost or pricing data, compensation information, strategic business plans, budgets, financial statements, and other information Company treats as confidential or proprietary (collectively the “Confidential Information”). This section is not intended to limit Employee’s rights to discuss Employee’s compensation or other terms and conditions of employment as allowed by law. Employee acknowledges that such Confidential Information is proprietary and agrees not to disclose it to anyone outside Company except to the extent that (i) it is necessary in connection with performing his duties; (ii) Employee is required by court order to disclose the Confidential Information, provided that Employee shall promptly inform Company, shall cooperate with Company to obtain a protective order or otherwise restrict disclosure, and shall only disclose Confidential Information to the minimum extent necessary to comply with the court order. Employee agrees to never use Confidential Information in competing, directly or indirectly, with Company. When employment ends, Employee will immediately return all Confidential Information to Company.

		
	(b)
	The terms of this Section 4 shall survive the expiration or termination of this Agreement for any reason.  

    
		
	5.
	NON-HIRE OF COMPANY EMPLOYEES

		
	(a)
	To further preserve the Confidential Information, during employment and for twelve  (12) months after employment ends (“Non-Hire Period”), Employee will not, directly or indirectly, (i) hire or engage any current employee of Company, including anyone employed by or providing services to Company within the 6-month period preceding Employee’s last day of employment or engagement; (ii) solicit or encourage any employee to terminate employment or services with Company; or (iii) solicit or encourage any employee to accept employment with or provide services to Employee or any business associated with Employee. 

		
	(b)
	The terms of this Section 5 shall survive the expiration or termination of this Agreement for any reason.  

		
	6.
	NON-SOLICITATION OF CUSTOMERS

		
	(a)
	To further preserve the Confidential Information, Employee agrees not to solicit Company’s customers for six (6) months after employment ends (the “Non-Solicitation Period”) for or in connection with the provision of any services substantially similar to those service provided by the Company (as set forth in Section7).  This Agreement shall not prevent Employee from otherwise soliciting the Company’s customers.

		
	(b)
	The terms of this Section 6 shall survive the expiration or termination of this Agreement for any reason.  

2

		
	7.
	NON-COMPETITION AGREEMENT

		
	(a)
	To further preserve the Confidential Information, Employee agrees that during employment and for six (6) months after employment ends (the “Restricted Period”), Employee will not work, as an employee, contractor, officer, owner, consultant, or director, in any business anywhere in the world that sells hosting and information technology services substantially similar to those services provided by the Company, namely (i) provisioning, hosting, management, monitoring, supporting, or maintenance of applications, computer servers (whether dedicated, shared or virtual) and network connectivity in a datacenter for remote use via the Internet, (ii) hosted email, storage, collaboration, compute, virtual networking and similar services,  and (iii) all similar related services, all of the foregoing being defined for the purposes of this Agreement as "Hosting.”  Provided, that the forgoing restriction shall not prevent Employee from becoming an employee of or contractor for a division of any Hosting company that does not provide Hosting services, as long as Employee does not, during the Restricted Period, perform services (including but not limited to providing information, advice, strategy, recruiting or any other interaction with regard to business matters) for a division of such company that provides Hosting Services.

		
	(b)
	The terms of this Section 7 shall survive the expiration or termination of this Agreement for any reason. 

		
	8.
	TERMINATION

This Agreement may be terminated by mutual written agreement or:

		
	(a)
	Death. The date of Employee’s death shall be the termination date.

		
	(b)
	Disability. Company may terminate this Agreement and/or Employee’s employment if Employee is unable to perform the essential functions of his full-time position for more than 180 days in any 12 month period, subject to applicable law.

		
	(c)
	Termination By Company. Company may terminate employment with or without Cause. “Cause” means: 

(i) willful misconduct, including, without limitation, violation of sexual or other harassment policy, gross negligence, misappropriation of or material misrepresentation regarding property of Company, other than customary and de minimis use of Company property for personal purposes, as determined in the discretion of Company, or failure to take reasonable and appropriate action to prevent material injury to the financial condition, business or reputation of the Company; 

(ii) non-performance of duties (other than by reason of disability); 

(iii) failure to follow lawful directives of the Company or consistent failure to meet reasonable performance objectives following a written warning and opportunity to cure for one quarter; 

(iv) a felony conviction or indictment, a plea of nolo contendere by Employee, or other conduct by Employee that has or would result in material injury to Company’s reputation, including indictment or conviction of fraud, theft, embezzlement, or a crime involving moral turpitude; 

(v) a material breach of this Agreement; or

3

(vi) a significant violation of Company’s employment and management policies.

		
	9.
	COMPENSATION UPON TERMINATION

		
	(a)
	Death. Company shall, within 30 days, pay to Employee’s designee or, if no person is designated, to Employee’s estate, Employee’s accrued and unpaid Base Salary and bonus, subject to the terms of any applicable bonus plan, through the date of termination, and any payments required under applicable employee benefit plans.

		
	(b)
	Disability. Company shall, within 30 days, pay all accrued and unpaid base Salary and bonus, subject to the terms of any applicable bonus plan, through the termination date and any payments required under applicable employee benefit plans.

		
	(c)
	Termination By Company For Cause: Company shall, within 30 days, pay to Employee his accrued and unpaid Base Salary through the termination date and any payments required under applicable employee benefit plans.

		
	(d)
	Non-Renewal By Employee. If Employee gives notice of non-renewal under Section 1, Company shall determine the termination date and will pay accrued and unpaid Base Salary through the termination date, and any payments required under applicable employee benefit plans. If the termination date is before the end of the then current Employment Period, and if Employee signs a Severance Agreement and General Release of claims in a form satisfactory to Company, then Company will, in periodic payments in accordance with ordinary payroll practices and deductions, pay Employee an amount equal to his pro-rata Base Salary through the end of the then current Employment Period (“Severance Pay Period”).

		
	(e)
	Termination With Severance. 

		
	(1)
	Termination By Company Without Cause - Severance: If Company terminates employment without Cause and not by reason of death or disability, Company will pay the accrued and unpaid Base Salary through the termination date and any payments required under applicable employee benefit plans. In addition, if Employee signs a Severance Agreement and General Release of claims in a form satisfactory to Company, Company will pay Employee, in periodic payments in accordance with ordinary payroll practices and deductions, Employee’s current Base Salary for six (6) months (the “Severance Payments” or “Severance Pay Period”). 

		
	(2)
	Non-Renewal By Company - Severance: If employment ends because Company gives notice of non-renewal under Section 1, Company shall determine the termination date, even if such date is prior to the end of the Employment Period and will pay the accrued and unpaid Base Salary through the termination date and any payments required under applicable employee benefit plans. In addition, if Employee signs a Severance Agreement and General Release of claims in a form satisfactory to Company, Company will pay Employee, in periodic payments in accordance with ordinary payroll practices and deductions, Employee’s current Base Salary for six (6) months (the “Severance Payments” or “Severance Pay Period”). 

4

		
	(3)
	Employment by Competitor or Re-hire During Severance Pay Period: 

(i)    If Employee competes with Company, or is hired or engaged in any capacity by any competitor of Company (to be determined in Company’s discretion), during any Severance Pay Period, then the Severance Payments shall cease. The foregoing shall not affect Company’s right to enforce the Non-Compete pursuant to Section 7. For purposes of this sub-section, a “competitor” of Company means: any business anywhere in the world that sells Hosting as defined in Section 7.

(ii)    If Employee is rehired by Company or employed by or performing services in any non-competitive capacity or business during any Severance Pay Period, the Severance Payments shall cease.

		
	10.
	OWNERSHIP OF MATERIALS

Employee agrees that all inventions, improvements, discoveries, designs, technology, and works of authorship (including but not limited to computer software) made, created, conceived, or reduced to practice by Employee, whether alone or in cooperation with others, during employment, together with all patent, trademark, copyright, trade secret, and other intellectual property rights related to any of the foregoing throughout the world, are among other things works made for hire and belong exclusively to the Company, and Employee hereby assigns all such rights to the Company. Employee agrees to execute any documents, testify in any legal proceedings, and do all things necessary or desirable to secure Company’s rights to the foregoing, including without limitation executing inventors’ declarations and assignment forms. If there is a separate signed agreement between Employee and the Company including terms directly related to intellectual property rights, then the intellectual property terms of that agreement shall control.
		
	11.
	PARTIES BENEFITED; ASSIGNMENTS

This Agreement shall be binding upon Employee, his heirs and his personal representative or representatives, and upon Company and its respective successors and assigns. Neither this Agreement nor any rights or obligations hereunder may be assigned by Employee, other than by will or by the laws of descent and distribution.

		
	12.
	GOVERNING LAW

This Agreement shall be governed by the laws of the State of Texas and Employee expressly consents to the personal jurisdiction of the Texas state and federal courts for any lawsuit relating to this Agreement.

		
	13.
	DEFINITION OF COMPANY

“Company” shall include Rackspace US, Inc., and its past, present and future divisions, operating companies, subsidiaries and affiliates.

5

		
	14.
	LITIGATION AND REGULATORY COOPERATION

During and after employment, Employee shall reasonably cooperate in the defense or prosecution of claims, investigations, or other actions which relate to events or occurrences during employment. Employee’s cooperation shall include being available to prepare for discovery or trial and to act as a witness. Company will pay an hourly rate (based on Base Salary as of the last day of employment) for cooperation that occurs after employment, and reimburse for reasonable expenses, including travel expenses, reasonable attorneys’ fees and costs.

		
	15.
	DISPUTE RESOLUTION 

		
	(a)
	Injunctive Relief: Employee agrees that irreparable damages to Company will result from Employee's breach of this Agreement, including loss of revenue, loss of goodwill associated with Employee as a result of employment, and/or loss of the benefit to Company of any training, confidential, and/or trade secret information provided to Employee, and any other tangible and intangible investments made to and on behalf of Employee. A breach or threat of breach of this Agreement shall give the non-breaching party the right to seek a temporary restraining order and a preliminary or permanent injunction enjoining the breaching party from violating this Agreement in order to prevent immediate and irreparable harm. The breaching party shall pay to the non-breaching party reasonable attorneys’ fees and costs associated with enforcement of this Agreement, including any appeals. Pursuit of equitable relief under this Agreement shall have no effect regarding the continued enforceability of the Arbitration Section below. Remedies for breach under this Section are cumulative and not exclusive; the parties may elect to pursue any remedies available under this Agreement.

		
	(b)
	Arbitration: The parties agree that any dispute or claim, that could be brought in court including discrimination or retaliation claims, relating to this Agreement or arising out of Employee's employment or termination of employment, shall, upon timely written request of either party, be submitted to binding arbitration, except claims regarding: (i) workers’ compensation benefits; (ii) unemployment benefits; (iii)  Company’s employee welfare benefit plans, if the plan contains a final and binding appeal procedure for the resolution of disputes under the plan; (iv) wage and hour disputes within the jurisdiction of any state Labor Commissioner; and (v) issues that could be brought before the National Labor Relations Board or covered by the National Labor Relations Act. This Agreement is not intended to prohibit the Employee from filing a claim or communicating with any governmental agency including the Equal Employment Opportunity Commission, the National Labor Relations Board or the Department of Labor. The arbitration shall be conducted in San Antonio, Texas. The arbitration shall proceed in accordance with the National Rules for Resolution of Employment Disputes of the American Arbitration Association (“AAA”) in effect at the time the claim or dispute arose, unless other rules are agreed upon by the parties. Unless agreed to in writing, the arbitration shall be conducted by one arbitrator from AAA or a comparable arbitration service, and who is selected pursuant to the National Rules for Resolution of Employment Disputes of the AAA, or other rules as the parties may agree to in writing. Any claims received after the applicable statute of limitations period shall be deemed null and void. The parties further agree that by entering into this Agreement, the right to participate in a class or collective action is waived. CLAIMS MAY BE ASSERTED AGAINST THE OTHER PARTY ONLY IN AN INDIVIDUAL CAPACITY AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. Further, unless the parties agree otherwise, the arbitrator may not consolidate more than one person's claims, and may not otherwise preside over any form of a representative, collective 

6

or class proceeding. If this specific provision is found to be unenforceable, then the entirety of this arbitration provision shall be null and void.  The arbitrator shall issue a reasoned award with findings of fact and conclusions of law. Either party may bring an action in any court of competent jurisdiction to compel arbitration under this Agreement, or to enforce or vacate an arbitration award. However, in actions seeking to vacate an award, the standard of review to be applied by said court to the arbitrator’s findings of fact and conclusions of law will be the same as that applied by an appellate court reviewing a decision of a trial court sitting without a jury, unless state law requires otherwise. Company will pay the actual fee for the arbitrator and the claimant’s filing fee; each party will pay their own attorneys’ fees and other expenses. Unless otherwise provided by law and awarded by the arbitrator, each party will pay its own attorneys’ fees and other costs.

		
	16.
	REPRESENTATIONS AND WARRANTIES OF EMPLOYEE

Employee shall keep all terms of this Agreement confidential, except as may be disclosed to Employee’s spouse, accountants or attorneys. Employee represents that he is under no contractual or other restriction inconsistent with the execution of this Agreement, the performance of his duties hereunder, or the rights of Company. Employee authorizes the Company to inform any prospective employer of the existence and terms of this Agreement without liability for interference with Employee’s prospective employment. Employee represents that he is under no disability that prevents him from performing the essential functions of his position, with or without reasonable accommodation.  

		
	17.
	SECTION 409A COMPLIANCE

Payments under this Agreement (the “Payments”) shall be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A, the Regulations, applicable case law and administrative guidance. All Payments shall be deemed to come from an unfunded plan. Notwithstanding any provision in this Agreement, all Payments subject to Section 409A will not be accelerated in time or schedule. Employee and Company will not be able to change the designated time or form of any Payments subject to Section 409A. In addition, all Severance Payments that are deferred compensation and subject to Section 409A will only be payable upon a "separation from service" (as that term is defined at Section 1.409A-1(h) of the Treasury Regulations) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single "service recipient" with the Company under Section 1.409A-1(h)(3). All references in this Agreement to a termination of employment and correlative terms shall be construed to require a "separation from service".
		
	18.
	MISCELLANEOUS

This Agreement is not effective unless fully executed by all parties, including the President or CEO of the Company, and approved by the board of directors or compensation committee as required by Company. This Agreement contains the entire agreement of the parties on the subject matters in this agreement and supersedes any prior written or oral agreements or understandings between the parties except as noted in Section 10 above.   No modification shall be valid unless in writing and signed by the parties. This Agreement may be executed in counterparts, a counterpart transmitted via electronic means, and all executed counterparts, when taken together, shall constitute sufficient proof of the parties’ entry into this Agreement.  The parties agree to execute any further or future documents which may be necessary to allow the full performance of this Agreement.  The failure of a party to require performance of any provision of this Agreement shall not affect the right of such party to later enforce any provision. A waiver of the breach of any term or condition of this Agreement shall not be deemed a waiver of any subsequent breach of the same or any other term or condition. 

7

If any provision of this Agreement shall, for any reason, be held unenforceable, such unenforceability shall not affect the remaining provisions hereof, except as specifically noted in this Agreement, or the application of such provisions to other persons or circumstances, all of which shall be enforced to the greatest extent permitted by law. Company and Employee agree that the restrictions contained in Section 4, 5, 6, and 7, are reasonable in scope and duration and are necessary to protect Confidential Information. If any restrictive covenant is held to be unenforceable because of the scope, duration or geographic area, the parties agree that the court or arbitrator may reduce the scope, duration, or geographic area, and in its reduced form, such provision shall be enforceable. Should Employee violate the provisions of Sections 5, 6, or 7, then in addition to all other remedies available to Company, the duration of these covenants shall be extended for the period of time when Employee began such violation until he permanently ceases such violation. The headings in this Agreement are inserted for convenience of reference only and shall not control the meaning of any provision hereof.

Upon full execution by all parties, this Agreement shall be effective on the later date of the two signature dates below.

EMPLOYEE:

 /s/ Joe Saporito                        Date:  March 11, 2015    
Joe Saporito   

COMPANY:

 /s/ William Taylor Rhodes                     Date:  March 11, 2015    
Rackspace US, Inc.
By: William Taylor Rhodes, 
Its:  President and CEO

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00244-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00244-of-00352.parquet"}]]