Common use of Exchange of Interests Clause in Contracts

Exchange of Interests. To accomplish various business purposes, the General Partner of the Partnership has the ability to cause the Partnership to convert to a corporation. The Partnership Agreement specifically contemplates that the Company, through a successor entity, will have an IPO and the General Partner is given broad powers to change the form of the Company from a limited partnership to a corporation by merger or contribution of assets and liabilities, in order to effect an IPO. In addition, if the Company does not have an IPO, the General Partner has determined that it may nevertheless be beneficial to convert to a corporation. At the request of the Underwriters, the General Partner desires that, rather than a merger or contribution of assets and liabilities, the Holders exchange their Units for Common Stock, and that this exchange occur with the possibility that the New Rackspace may not complete the IPO. The exchange will take place on a one Unit for one share of Common Stock basis, except for Yoo, Elmendorf, Condon, Bell, Gr▇▇▇▇ ▇nd Macroweb, each of whom will receive slightly less than one share of Common Stock per Unit exchanged, and except for Trout, which will receive slightly more than one share of Common Stock per Unit exchanged. Each of the Holders agree that at such time that the General Partner contributes all of its Units to New Rackspace, the Units of such Holder and of all of the Holders, without any further act of the Holders, shall be transferred to New Rackspace in exchange for Common Stock in proportion to the Holders' positive Capital Account balances, adjusted by treating the Partnership as having liquidated and its property sold at fair market value, and gains and losses allocated in accordance with Section 11.4 of the Partnership Agreement, which proportions are set forth below (the "Exchange"). The Common Stock received from New Rackspace will have an appropriate legend indicating that it is subject to the restrictions contained in the Partnership Agreement (which restriction shall be removed after the IPO, if it occurs), and that it is restricted stock and may not be sold without an opinion of counsel to the satisfaction of New Rackspace that such sale will not be in violation of the provisions of the Securities Act of 1933. The Holders agree that no fractional shares of Common Stock will be issued, and as a result fractional Units shall be rounded to the nearest whole number as set forth below: Partner Units Exchanged Common Stock to be ------- --------------- received upon Exchange ---------------------- Yoo 3,600,000 3,565,714 Co▇▇▇▇ 800,000 792,380 Elmendorf 400,000 396,190 Gr▇▇▇▇ 50,000 49,523 Be▇▇ 50,000 49,523 Macroweb 10,000 9,904 Trout 7,232,856.2 7,279,619 First Inning 619,047.61 619,048 Is▇▇ 1,219,047.62 1,219,048 Ha▇▇▇▇▇▇ 476,190.48 476,190 Be▇▇▇▇▇▇ 357,142.86 357,143 MiniPat 95,238.10 95,238 2M 119,047.61 119,048 Red Hat 353,356.89 353,357 Norwest 1,015,901 1,015,901 Th▇▇▇▇ ▇e▇▇▇▇ 53,003.53 53,003 --------- ------ Total 16,450,831.94* 16,450,829* *Subject to adjustment for Units held by the New Investors which will be exchanged on a one Unit for one share of Common Stock basis and subject to further adjustment for the exchange of any Units issued pursuant to the Warrant in favor of Trango Capital, LLC (380,952.38 Units), or any other option holder, all of which will be exchanged on the basis of one share of Common Stock for each Unit exchanged. DIRECTORS/RIGHTS OF PARTNERS/PROXIES

Exchange of Interests. To accomplish various business purposes, the General Partner of the Partnership has the ability to cause the Partnership to convert to a corporation. The Partnership Agreement specifically contemplates that the Company, through a successor entity, will have an IPO and the General Partner is given broad powers to change the form of the Company from a limited partnership to a corporation by merger or contribution of assets and liabilities, in order to effect an IPO. In addition, if the Company does not have an IPO, the General Partner has determined that it may nevertheless be beneficial to convert to a corporation. At the request of the Underwriters, the General Partner desires that, rather than a merger or contribution of assets and liabilities, the Holders exchange their Units for Common Stock, and that this exchange occur with the possibility that the New Rackspace may not complete the IPO. The exchange will take place on a one Unit for one share 1.2 shares of Common Stock basis, except for Yoo, Elmendorf, Condon, Bell, Gr▇▇▇▇ ▇nd Macroweb, each of whom will receive slightly less than one share 1.2 shares of Common Stock per Unit exchanged, and except for Trout, which will receive slightly more than one share 1.2 chares of Common Stock per Unit exchanged. Each of the Holders agree that at such time that the General Partner contributes all of its Units to New Rackspace, the Units of such Holder and of all of the Holders, without any further act of the Holders, shall be transferred to New Rackspace in exchange for Common Stock in proportion to the Holders' positive Capital Account balancesBalances, adjusted by treating the Partnership as having liquidated and its property sold at fair market value, and gains and losses allocated in accordance with Section 11.4 of the Partnership Agreement, which proportions are set forth below (the "Exchange"). The Common Stock received from New Rackspace will have an appropriate legend indicating that it is subject to the restrictions contained in the Partnership Agreement (which restriction shall be removed after the IPO, if it occurs), and that it is restricted stock and may not maynot be sold without an opinion of counsel to the teh satisfaction of New Rackspace that such sale will not be in violation of the provisions of the Securities Act of 1933. The Holders agree that no fractional shares of Common Stock will be issued, and as a result fractional Units shall be rounded to the nearest whole number as set forth below: Partner Units Exchanged Common Stock to be ------- --------------- received Received upon Exchange ---------------------- Yoo Ri▇▇▇▇▇ ▇▇▇ 3,600,000 3,565,714 Co4,278,857 Pa▇▇▇▇▇ ▇▇▇▇▇▇ 800,000 792,380 Elmendorf 950,857 Di▇▇ ▇▇▇▇▇▇▇▇▇ 400,000 396,190 Gr475,429 Ed▇▇▇ ▇▇▇▇▇▇ 50,000 49,523 Be59,428 Br▇▇▇ ▇▇▇▇ 50,000 49,523 Macroweb 59,428 Macroweb, LC 10,000 9,904 Trout 11,885 Trout, Ltd. 7,232,856.2 7,279,619 8,735,543 First Inning Investors, L.P. 619,047.61 619,048 742,858 Is▇▇ ▇apital Partners, I, L.P. 1,219,047.62 1,219,048 1,462,858 The Ha▇▇▇▇▇▇ ▇ompanies 476,190.48 476,190 571,428 Be▇▇▇▇▇▇ ▇iver Capital LC 357,142.86 357,143 428,572 MiniPat & Company, Ltd. 95,238.10 95,238 114,286 2M Techology Ventures, L.P. 119,047.61 119,048 142,858 Red Hat Hat, Inc. 353,356.89 353,357 424,028 Norwest Venture Partners VII, L.P. 1,015,901 1,015,901 Th▇▇▇▇ ▇e▇▇▇▇ 1,219,081 Tailwind Capital Partners 2000, L.P. 53,003.53 53,003 --------- ------ 63,604 Sequoia Capital Franchise Fund 466,431.09 559,717 Sequoia Capital Franchise Partners 63,604.24 76,325 Total 16,450,831.94* 16,450,829* *Subject to adjustment for Units held 16,980,867 20,377,042 It is further agreed that all holders of existing options and warrants granted by the New Investors which Partnership will be exchanged on a one Unit for one share receive 1.2 shares of Common Stock basis and subject to further adjustment for the exchange of any Units issued pursuant to the Warrant in favor of Trango Capital, LLC (380,952.38 Units), or any other option holder, all of which will be exchanged on the basis of one share of Common Stock common stock for each Unit exchanged. DIRECTORS/RIGHTS OF PARTNERS/PROXIESthey are entitled to receive under the applicable options and warrants, subject to any subsequent stock split, reverse split or other recapitalization of Newco.