1. | TERM OF EMPLOYMENT |
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. |
(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. |
(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 |
(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 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 |
(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: |
(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: |
(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. |
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 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. |
10. | OWNERSHIP OF MATERIALS |
11. | PARTIES BENEFITED; ASSIGNMENTS |
12. | GOVERNING LAW |
13. | DEFINITION OF COMPANY |
14. | LITIGATION AND REGULATORY COOPERATION |
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 |
16. | REPRESENTATIONS AND WARRANTIES OF EMPLOYEE |
17. | SECTION 409A COMPLIANCE |
18. | MISCELLANEOUS |
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. |