Edgar Filing: Rackable Systems, Inc.

Name and Business Address

Present Principal Occupation

Richard L. Leza, Jr.
2090 Liliano Drive
Sierra Madre, CA 91024

Private Investor

Steve Montoya
162 Twin Oaks Drive
Los Gatos, CA 95032

Consultant to early seed-stage startups in energy efficiency, networking, telecom, and security.

SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant
o

Filed by a Party other than the Registrant
x

Check the appropriate box:

x Preliminary Proxy Statement		o Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

o Definitive Proxy Statement

o Definitive Additional Materials

o Soliciting Material Pursuant to Rule 14a-12

RACKABLE SYSTEMS, INC.

(Name of Registrant as Specified in its Charter)

RICHARD L. LEZA, JR.

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

x
No fee required.

o
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)		Title of each class of securities to which transaction applies:
(2)		Aggregate number of securities to which transaction applies:
(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)		Proposed maximum aggregate value of transaction:
(5)		Total fee paid:

o
Fee paid previously with preliminary materials.

o
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)		Amount previously paid:
(2)		Form, Schedule or Registration Statement No.:
(3)		Filing Party:
(4)		Date Filed:

ANNUAL MEETING OF STOCKHOLDERS OF
RACKABLE SYSTEMS, INC.
TO BE HELD ON ________, 2008

________________

PROXY STATEMENT OF
RICHARD L. LEZA, JR.

________________

This proxy statement and the enclosed GOLD proxy card are being furnished to you, the stockholders of RACKABLE SYSTEMS, INC. (“Rackable Systems” or the “Company”), in connection with the solicitation of proxies by Richard L. Leza, Jr., for use at the 2008 annual meeting of stockholders of Rackable Systems, and at any adjournments, postponements or reschedulings thereof (the “2008 Annual Meeting”).

Mr. Leza is proposing and soliciting proxies in support of a slate of two nominees, referred to as the Leza nominees, to stand for election to the Board of Directors at the 2008 Annual Meeting. The Leza nominees are Richard L. Leza, Jr., and Steve Montoya, and they will be standing for election in opposition to the nominees of the Board of Directors. According to the Company’s proxy statement filed on __________, 2008, there are seven positions on the Board of Directors that are open for election at the 2008 Annual Meeting and the directors elected to these positions will serve until the 2009 Annual Meeting and until their respective successors are duly elected.

MR. LEZA URGES YOU TO VOTE “FOR” THE LEZA NOMINEES ON THE ENCLOSED GOLD PROXY CARD.

As discussed in more detail under the heading “Election of Directors” in this proxy statement, stockholders who vote on the GOLD proxy card furnished by Mr. Leza will be able to vote for the election of the two Leza Nominees. The Leza Nominees, if elected, will constitute a minority of the members of the Board of Directors and accordingly, if the full Board of Directors is present at a meeting, the Leza Nominees, by themselves, will not be able to cause any action to be taken or not to be taken by the Board of Directors.

Mr. Leza is also soliciting proxies for a stockholder proposal to urge the Board of Directors to adopt a policy that stockholders be given the opportunity to vote on an advisory management resolution at each annual meeting to ratify the compensation of the named executive officers of Rackable Systems set forth in Rackable Systems’ proxy statement’s Summary Compensation Table (the “SCT”) and the accompanying disclosure of material factors provided to understand the SCT. Rackable Systems’ Board of Directors rejected this proposal in its March 13, 2008 press release.

As discussed in more detail under the heading “Stockholder Proposal re: Say-on-Pay” in this proxy statement, stockholders who vote on the GOLD proxy card furnished by Mr. Leza will be able to vote in favor of this proposal.

MR. LEZA URGES YOU TO VOTE “FOR” THE PROPOSAL ON THE ENCLOSED GOLD PROXY CARD AND GIVE STOCKHOLDERS THE OPPORTUNITY TO VOTE ON AN ADVISORY MANAGEMENT RESOLUTION TO RATIFY EXECUTIVE COMPENSATION AT EACH ANNUAL MEETING.

The 2008 Annual Meeting is scheduled to be held on ________, ________, 2008 at ______ [a.m.][p.m.] (________ time) at _________________. Rackable Systems has set ________, 2008 as the record date for determining stockholders entitled to notice of and to vote at the 2008 Annual Meeting. Rackable Systems reported in its annual report on Form 10-K filed on March 13, 2008 that as of March 6, 2008, 29,635,258 shares of its common stock were issued and outstanding. As of the date of this filing, Mr. Leza is the beneficial owner of 2,600 shares of common stock of Rackable Systems.

Information concerning Mr. Leza and the Leza Nominees, who are the participants in this solicitation of proxies (the “Participants”), is provided in this proxy statement under the headings “Election of Directors” and “Information About the Participants” and in Annex A attached hereto.

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YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the 2008 Annual Meeting, you are urged to sign and date the enclosed GOLD proxy card and return it in the postage-paid envelope provided. Properly voting the enclosed GOLD proxy card will revoke any proxy previously signed by you. WE URGE YOU NOT TO RETURN ANY PROXY SENT TO YOU BY RACKABLE SYSTEMS.

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The date of this proxy statement is _____, 2008. Mr. Leza intends to mail the proxy statement and the GOLD proxy card to stockholders of Rackable Systems on or about _____, 2008.

THIS SOLICITATION IS BEING MADE BY RICHARD L. LEZA, JR., AND NOT BY OR ON BEHALF OF THE BOARD OF DIRECTORS OR MANAGEMENT OF RACKABLE SYSTEMS.

If you have any questions concerning this proxy statement or need help voting your shares, please call the firm assisting Mr. Leza in his solicitation of proxies:

D.F. King & Co., Inc.
48 Wall Street
New York, New York 10005
Call Toll Free: (800) 848-3416
All Others Call Collect: (212) 269-5550

ELECTION OF DIRECTORS

Rackable System’s Board of Directors currently consists of seven directors. Each director to be elected will hold office until the next annual meeting of stockholders and until his successor is elected, or until director’s death, resignation or removal.

Mr. Leza has nominated two members to stand for election to the Board of Directors, and based on the most current information available, we believe Rackable Systems is designating seven incumbent nominees to stand for election, referred to as the Rackable Systems Nominees.

Accordingly, there would be nine nominees (two Leza Nominees and seven Rackable Systems Nominees) for seven director positions on the Board of Directors. Stockholders who vote on the GOLD proxy card furnished by Mr. Leza will be able to vote for the two Leza Nominees. Stockholders who use Rackable Systems’ proxy card will not be able to vote for any of the Leza Nominees. Accordingly, any stockholder who wishes to vote for the Leza Nominees should vote on Mr. Leza’s GOLD proxy card.

The seven Rackable Systems Nominees are identified in the proxy statement filed by Rackable Systems on ________, 2008. Any stockholder who wishes to vote for one of the Leza Nominees and for six of the Rackable Systems Nominees will be unable to do so on either Mr. Leza’s GOLD proxy card or Rackable Systems’ proxy card, and may only do so by voting by ballot at the 2008 Annual Meeting. Stockholders who use the GOLD proxy card may vote for or against any Leza Nominee by putting an X in the space provided.

The Leza Nominees are Richard L. Leza, Jr. and Steve Montoya. Based on their extensive business and professional experience, we believe that the Leza Nominees are highly qualified to serve as directors of Rackable Systems. Each Nominee has consented to serve as a director of Rackable Systems if elected and to be named in this proxy statement and in Mr. Leza’s other soliciting materials as a Leza Nominee.

Information About the Leza Nominees

Each Leza Nominee has furnished the information about him that is provided in this proxy statement. Additional disclosure regarding the Leza Nominees and the other participants in our solicitation can be found in Annex A to this proxy statement. Such disclosure includes: the principal place of business and address of each Participant, the amount of Rackable Systems common stock beneficially owned by each Participant, each Participant’s transactions in Rackable Systems’ securities during the past two years, a description of any arrangements, transactions or relationships among the Participants, the Leza Nominees and Rackable Systems, a description of any legal proceedings involving any Leza Nominee and a statement regarding compliance with Section 16(a) of the Exchange Act by each Leza Nominee.

Neither of the Leza Nominees is an affiliate of Rackable Systems. Neither of the Leza Nominees nor any of their respective immediate family members is an employee of, or a consultant to, or has any other contractual relationship with Rackable Systems. Neither of the Leza Nominees is or has been a partner of or otherwise employed by any present or former auditor of Rackable Systems in the past five years and neither of them is an officer of a company of which the other Leza Nominee is also a board member. We believe that, when elected, each of the Leza Nominees will be independent for purposes of the audit committee independence requirements of the Sarbanes-Oxley Act of 2002 and the existing Nasdaq listing requirements for audit committees.

Richard L. Leza, Jr., was a Director and co-founder of GWA Capital Partners, LLC, a registered investment advisor, from 2002-2007. From 2000 to 2003, Mr. Leza was a private investment banker working directly with Board Chairmen and CEOs to raise capital and increase Wall Street sponsorship. From 1996 to 2000, Mr. Leza was involved in sell-side research. Over the course of his career, Mr. Leza has been directly involved with three proxy contests, three IPOs, five secondary offerings, two acquisitions, and has helped raise over $36 million in private placement funds for his clients.

Steve Montoya has over 27 years experience in engineering, software and hardware development, operations, marketing and quality assurance. He has had manager, director and executive roles at Hewlett-Packard, StrataCom, Cisco Systems and Nayna Networks. He has experience in launching two start-up companies, including StrataCom, which he helped guide from start-up, through successful IPO, through acquisition by Cisco Systems in 1997 for over $4.6 Billion. Mr. Montoya was a cofounder of Nayna networks, an optical networking company founded in 1999, and successfully raised over $55M in two rounds of venture funding. He has created product concepts, architectures, business initiatives, strategic partnerships and financial controls for engineering departments and has implemented total quality management principles in both engineering and manufacturing.

Each Leza Nominee, if elected, will be entitled to receive compensation customarily paid by Rackable Systems to its directors, which is described in the definitive proxy statement filed by Rackable Systems on ________, 2008.

We have no reason to believe that any of the Leza Nominees will be disqualified or unwilling or unable to serve if elected. Mr. Leza reserves the right to nominate substitute persons if Rackable Systems makes or announces any changes to its Amended and Restated Certificate of Incorporation or Bylaws or takes or announces any other action that has, or if consummated would have, the effect of disqualifying any of the Leza Nominees. In addition, if Rackable Systems causes any additional directors to be voted upon at the 2008 Annual Meeting, Mr. Leza reserves the right to nominate additional persons to fill the added positions. Shares represented by Mr. Leza’s GOLD proxy cards will be voted for any such substitute or additional nominees of Mr. Leza.

Based on the most current information available, we believe Rackable Systems’ Board of Directors (the “Board”) intends to nominate seven candidates for election as directors at the Annual Meeting. This proxy statement is soliciting proxies not only to elect Messrs. Leza and Montoya, but also all of the Rackable Systems nominees other than Messrs. Charles M. Boesenberg and Ronald D. Verdoorn. This gives stockholders who wish to vote for Messrs. Leza and Montoya and such other persons the ability to do so. Under applicable proxy rules we are required either to solicit proxies only for Messrs. Leza and Montoya, which could result in limiting the ability of stockholders to fully exercise their voting rights with respect to Rackable Systems’ nominees, or to solicit for Messrs. Leza and Montoya and for fewer than all of the Rackable Systems’ nominees, which enables a stockholder who desires to vote for Messrs. Leza and Montoya to also vote for those of Rackable Systems’ nominees for whom we are soliciting proxies. We note that even if Messrs. Leza and Montoya are elected, if a majority of the other Board members thereafter determine that it would be desirable that Messrs. Boesenberg and Verdoorn serve as members of the Board, the Board could permit that result by increasing the size of the Board and adding Messrs, Boesenberg and Verdoorn as additional members, if allowed by the Company’s Bylaws and Certificate of Incorporation..

STOCKHOLDER PROPOSAL RE: SAY-ON-PAY

Mr. Leza intends to submit the following proposal for consideration at the 2008 Annual Meeting:

RESOLVED, the shareholders of Rackable Systems, Inc., hereby request that the Board adopt a policy that includes, as a voting item in the proxy statement for each annual meeting, an advisory resolution, proposed by Rackable Systems’ management, to approve the compensation of the named executive officers (“NEOs”) set forth in the proxy statement’s Summary Compensation Table (the “SCT”), and the accompanying narrative disclosure of material factors provided to understand the SCT. The policy should specify appropriate disclosures to ensure shareholders fully understand the vote is advisory and will not abrogate any employment agreement.

Supporting Statement

In our view, senior executive compensation at Rackable Systems has not always been structured in ways that best serve stockholders’ interests. For example, on June 11, 2007, in connection with his May 24, 2007 initial employment agreement, Mark J. Barrenechea was awarded 700,000 options and 150,000 shares of restricted stock. At a closing price of $13.23/share on June 11, 2007, Mr. Barrenechea’s restricted stock grant was valued at $1,984,500. Eight months later, despite no contractual obligation, Mr. Barrenechea was awarded an additional 150,000 shares of restricted stock on February 11, 2008. At a closing price of $8.83/share on February 11, 2008, Mr. Barrenechea’s restricted stock grant was valued at $1,324,500.

To summarize, after only eight months as CEO, the Board had approved total compensation of $3,309,000 in restricted stock and 700,000 options, in addition to a base salary of $350,000 and quarterly cash bonuses totaling over $114,000. HOWEVER, OVER THE SAME EIGHT MONTH PERIOD BETWEEN THE TWO RESTRICTED STOCK GRANTS, THE STOCK PRICE FELL OVER (-33%), LOSING OVER $130 MILLION IN MARKET CAP FOR STOCKHOLDERS.

We believe that the current rules governing senior executive compensation, including SEC rules and stock exchange listing standards, do not provide stockholders with sufficient influence over pay practices – nor do they afford enough mechanisms for providing input to the Board from the true owners of the Company. Accordingly, we urge Rackable Systems’ Board to allow stockholders to express their opinion about senior executive compensation at Rackable Systems by establishing an annual referendum process. The results of such vote would, we think, provide Rackable Systems with useful information about whether stockholders view the Company’s senior executive compensation, as reported each year, to be in stockholders’ best interests.

The advisory vote proposed here is similar to the non-binding vote required since 2003 at the annual meetings of all U.K.-listed firms, allowing stockholders to cast an advisory vote on the “directors’ remuneration report,” which discloses executive compensation. Similar Say-on-Pay proposals were passed in 2007 at Ingersoll-Rand, Blockbuster, Motorola and Verizon Communications.

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MR. LEZA URGES YOU TO VOTE “FOR” THE LEZA NOMINEES AND “FOR” THE PROPOSAL TO GIVE STOCKHOLDERS THE OPPORTUNITY TO VOTE ON AN ADVISORY MANAGEMENT RESOLUTION TO RATIFY EXECUTIVE COMPENSATION AT EACH ANNUAL MEETING, BY SIGNING, DATING AND RETURNING THE ENCLOSED GOLD PROXY CARD (AND NOT TO RETURN ANY PROXY CARD SENT TO YOU BY RACKABLE SYSTEMS).

VOTING PROCEDURES

To support the Leza Nominees and the proposal to give stockholders the opportunity to vote on an advisory management resolution to ratify executive compensation at each annual meeting. at the 2008 Annual Meeting, please sign and date the enclosed GOLD proxy card and return it to D.F. King & Co., Inc. in the enclosed postage-paid envelope. Submitting a proxy will not affect your right to attend the 2008 Annual Meeting and vote in person. Only holders of common stock of Rackable Systems on the record date are entitled to vote at the 2008

Annual Meeting. The record date is ___________, 2008. The date of the 2008 Annual Meeting is ___________, 2008.

How do I vote in person?

If you own shares of common stock of Rackable Systems on the record date you may attend the 2008 Annual Meeting and vote in person. If you are not the record holder of your shares, please refer to the discussion following the question “What if I am not the record holder of my shares?"

How do I vote by proxy?

To vote by proxy, you should complete, sign and date the enclosed GOLD proxy card and return it promptly in the enclosed postage-paid envelope.

To be able to vote your shares in accordance with your instructions at the 2008 Annual Meeting, we must receive your proxy as soon as possible, but in any event, prior to the shares being voted at the meeting.

If your shares are held by your bank or broker, you can vote by proxy as follows:

	•		Vote by Telephone – Please call toll-free from the U.S. or Canada the phone number listed on your voting instruction form and follow the simple instructions provided. You will be required to provide the unique control number printed on your voting instruction form.

	•		Vote by Internet – Please access the website listed on your proxy card and follow the simple instructions provided. You will be required to provide the unique control number printed on your voting instruction form.

			You may vote by telephone or Internet 24 hours a day, 7 days a week until 11:59 p.m. Eastern Time, the day before the 2008 Annual Meeting. Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you had executed a proxy card.

	•		Vote by Mail – If you do not have access to a touch-tine telephone or to the Internet or wish to vote by mail, please sign, date and return the proxy card in the envelope provided, or mail to: D.F. King & Co., Inc. 48 Wall Street, 22^nd Floor, New York, NY 1005.

The telephone and Internet voting procedures use a control number that appears on your GOLD voting instruction form to authenticate you as a stockholder and to allow you to confirm that your voting instructions have been correctly recorded. If you vote by Internet or telephone, you do not need to return the GOLD proxy card.

Your proxy voting instructions, whether by Internet, telephone or mail, cover all shares of common stock registered in your name.

What if I am not the record holder of my shares?

If your shares are held in the name of a brokerage firm, bank nominee or other institution, only it can give a proxy with respect to your shares. You should receive a proxy card from your bank or broker, which you must return in the envelope provided in order to have your shares voted. If you need assistance, please contact our solicitor, D.F. King & Co., Inc., by telephone at 1-800-848-3416. Banks and brokers may call D.F. King collect at (212) 269-5550.

If you do not have record ownership of your shares, (your shares are held in “street name” by a bank or broker), and want to vote in person at the 2008 Annual Meeting, you may obtain a document called a “legal proxy” from the record holder of your shares and bring it to the 2008 Annual Meeting in order to vote in person. If you need assistance, please contact our solicitor, D.F. King & Co., Inc., by telephone at 1-800-848-3416. Banks and brokers may call D.F. King collect at (212) 269-5550.

What should I do if I receive a proxy card solicited by the incumbent Board of Directors of Rackable Systems?

If you submit a proxy to us by signing and returning the enclosed GOLD proxy card, do not sign or return the proxy card solicited by Rackable Systems’ incumbent Board of Directors or follow any voting instructions provided by Rackable Systems unless you intend to change your vote, because only your latest-dated proxy will be counted.

If you have already sent a proxy card to Rackable Systems, you may revoke it and provide your support to the Leza Nominees by signing, dating and returning the enclosed GOLD proxy card.

What if I want to revoke my proxy?

If you give a proxy, you may revoke it at any time before it is voted on your behalf by:

•		submitting a duly executed new proxy bearing a later date; or

•		giving written notice of revocation to either D.F. King & Co., Inc. at 48 Wall Street, New York, New York 10005 or to Rackable Systems at 46600 Landing Parkway, Fremont, California 94538, Attn: Secretary; or

•		attending and voting in person at the 2008 Annual Meeting.

If you choose to revoke a proxy by giving written notice or by submitting a later-dated proxy to Rackable Systems, we would appreciate if you would assist us in representing the interests of stockholders on an informed basis by sending us a copy of your revocation or proxy or by calling D.F. King & Co., Inc. at 1-800-848-3416. Banks and brokers may call D.F. King collect at (212) 269-5550. Remember, your latest-dated proxy is the only one that counts.

If I plan to attend the 2008 Annual Meeting, should I still submit a proxy?

Whether or not you plan to attend the 2008 Annual Meeting, we urge you to submit a proxy. Returning the enclosed proxy card will not affect your right to attend the 2008 Annual Meeting and vote.

Who can vote?

You are eligible to vote or to execute a proxy only if you own shares of common stock of Rackable Systems on the record date for the 2008 Annual Meeting. Even if you sell your shares after the record date, you will retain the right to execute a proxy in connection with the 2008 Annual Meeting. It is important that you grant a proxy regarding shares you held on the record date, or vote those shares in person, even if you no longer own those shares.

How many votes do I have?

With respect to each matter to be considered at the 2008 Annual Meeting, each stockholder will have one vote for each share of common stock of Rackable Systems held by it on the record date. Based on documents publicly filed by Rackable Systems, Rackable Systems has no outstanding voting securities other than its shares of common stock.

How will my shares be voted?

If you give an executed proxy on the accompanying GOLD proxy card, your shares will be voted as you direct. If you submit an executed proxy to us without instructions, our representatives will vote your shares “FOR” the two Leza Nominees (as discussed in the “Election of Directors” section of this proxy statement) and “FOR” the stockholder proposal to give stockholders the opportunity to vote on an advisory management resolution to ratify executive compensation at each annual meeting, (as discussed in the “Stockholder Proposal re: Say-On-Pay” section of this proxy statement). Submitting a GOLD proxy card will entitle our representatives to vote your shares in accordance with their discretion on matters not described in this proxy statement that may arise at the 2008 Annual Meeting.

Our representatives will not vote your shares to postpone or adjourn the meeting to solicit additional proxies or on any other matters precluded by proxy rules.

Unless a proxy specifies otherwise, it will be presumed to relate to all shares held of record on the record date by the person who submitted it.

What is a quorum and why is it necessary?

Conducting business at the 2008 Annual Meeting requires a quorum. Stockholders representing a majority of the outstanding shares entitled to vote at the 2008 Annual Meeting represented in person or by proxy shall constitute a quorum.

What vote is required to approve each proposal and how will votes be counted?

According to the Company’s Bylaws, if a quorum is present, directors will be elected by the votes of a plurality of the shares present in person or by proxy and entitled to vote on the election of directors. All other matters, if any, shall be approved by the vote of a majority of the votes cast, excluding abstentions.

Required information concerning the necessary vote to approve any other matters being voted upon at the 2008 Annual Meeting and the effects, if any, of abstentions and broker non-votes on such other matters, are set forth in the definitive proxy statement filed by Rackable Systems and, in accordance with Rule 14a-5(c) under the Exchange Act, reference is made to such proxy statement for such information.

How can I receive more information?

If you have any questions about giving your proxy or about our solicitation, or if you require assistance, please call D.F. King & Co., Inc. at 1-800-848-3416. Banks and brokers may call D.F. King collect at (212) 269-5550.

PROXY SOLICITATION AND EXPENSES

The solicitation to which this proxy statement relates is being made by the Participants. The Participants may solicit proxies in person and by mail, press release, advertisements in newspapers, magazines and/or trade publications, telephone, telecopier, telegraph, electronic mail, Internet (World Wide Web) publication, television, radio and newspapers. No person identified above has or will receive compensation for soliciting proxies.

The Participants will ask banks, brokers, custodians, nominees, other institutional holders and other fiduciaries to forward all soliciting materials to the beneficial owners of the shares that those institutions hold of record. Mr. Leza will reimburse those institutions for reasonable expenses that they incur in connection with forwarding our materials.

Mr. Leza has retained D.F. King & Co., Inc. to solicit proxies on its behalf in connection with the 2008 Annual Meeting. D.F. King may solicit proxies from individuals, banks, brokers, custodians, nominees, other institutional holders and other fiduciaries and will employ approximately 25 people in its efforts. Mr. Leza has agreed to reimburse D.F. King for its reasonable expenses (subject to certain limitations), to indemnify it against certain losses, costs and expenses, and to pay it fees of $50,000.

The entire expense of this proxy solicitation is being borne by Mr. Leza. Mr. Leza may, particularly if the Leza Nominees are elected to Rackable Systems’ Board of Directors, seek reimbursement of its direct, out-of-pocket expenses from Rackable Systems. If necessary, Mr. Leza may seek stockholder approval of any such reimbursement.

In addition to the costs related to the engagement of D.F. King & Co., Inc., costs related to our solicitation of proxies include expenditures for printing, postage, legal services and other related items. Total expenditures are expected to be approximately $100,000. To date, Mr. Leza has incurred approximately $25,000 in furtherance of his proxy solicitation.

INFORMATION ABOUT THE PARTICIPANTS

Mr. Leza and the Leza Nominees are participants in Mr. Leza’s solicitation of proxies for the 2008 Annual Meeting within the meaning of the federal securities laws. Information related to the Participants, including their beneficial ownership of Rackable Systems’ shares of common stock, is set forth on Annex A to this proxy statement and is incorporated into this proxy statement by reference. Except as set forth on Annex A, none of the Participants is party to any commercial dealing with Rackable Systems or its subsidiaries that is required to be discussed in this proxy statement by the federal securities laws. Information in this proxy statement about each Participant was provided by that Participant.

INFORMATION ABOUT RACKABLE SYSTEMS

Based upon documents publicly filed by Rackable Systems, the mailing address of the principal executive offices of Rackable Systems is 46600 Landing Parkway, Fremont, California 94538.

Annex B sets forth information obtained from Rackable Systems’ public filings related to the beneficial ownership of shares of common stock of Rackable Systems and is incorporated in this proxy statement by reference.

Except as otherwise noted herein, the information in this proxy statement concerning Rackable Systems has been taken from or is based upon documents and records on file with the Securities and Exchange Commission (the “SEC”) and other publicly available information. Although Mr. Leza does not have any knowledge indicating that any statement contained herein is untrue, we do not take any responsibility, except to the extent imposed by law, for the accuracy or completeness of statements taken from public documents and records that were not prepared by or on behalf of Mr. Leza, or for any failure by Rackable Systems to disclose events that may affect the significance or accuracy of such information.

OTHER MATTERS TO BE VOTED UPON

Submitting a GOLD proxy card will entitle the named proxies to vote your shares in accordance with their sole discretion on matters not described in this proxy statement that may arise at the 2008 Annual Meeting.

FUTURE STOCKHOLDER PROPOSALS

According to the Company’s proxy statement, proposals of stockholders that are intended to be presented at the Company’s 2009 annual meeting of stockholders must be received by the Company not later than ________, 2008 in order to be included in the proxy statement and proxy relating to that annual meeting. Stockholders who wish to present a proposal for consideration at the Company’s 2009 annual meeting of stockholders, but do not want such proposal included in the Company’s proxy statement, must submit such proposals in accordance with the Company’s Bylaws and they must be received by the Company not later than ________, 2008. Proposals received after that date will be considered untimely and may not be presented at the Company’s 2009 annual meeting of stockholders.

Mr. Leza notes that Rule 14a-8 of the Securities Exchange Act of 1934 (the “Exchange Act”) states that the deadline for submitting a stockholder proposal for a company’s annual meeting shall be no less than 120 calendar days before the date of the company’s proxy statement released to stockholders in connection with the previous year’s annual meeting. Further, Mr. Leza notes that for a proxy to confer discretionary

authority to vote, Rule 14a-4 of the Exchange Act requires that the company have notice of the proposal at least 45 days before the date on which the company first mailed its proxy materials for the prior year’s annual meeting. Such rules also provide that if the date of the company’s annual meeting has been changed by more than 30 days from the date of the previous year’s annual meeting, the deadlines are a reasonable time before the company mails its proxy materials. Accordingly, to the extent the date of the next annual meeting for Rackable Systems is more than 30 days from the date of the 2008 Annual Meeting and depending on the date Rackable Systems mailed its proxy materials for the 2008 Annual Meeting, the dates set forth above may be changed.

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Questions or requests for additional copies of this proxy statement or if you need assistance in voting for the Leza Nominees, please contact our proxy solicitor:

D.F. King & Co., Inc.
48 Wall Street
New York, New York 10005
Call Toll Free: (800) 848-3416
All Others Call Collect: (212) 269-5550

ANNEX A

INFORMATION CONCERNING RICHARD L. LEZA, JR.,
AND OTHER PARTICIPANTS IN HIS SOLICITATION OF PROXIES

The following persons are, or may be deemed, participants (the “Participants” and, each, a “Participant”) in the solicitation of proxies in support of electing the Leza Nominees to the Board of Directors of Rackable Systems: (i) Richard L. Leza, Jr.; and (ii) the Leza Nominees. The Leza Nominees are Richard L. Leza, Jr., and Steve Montoya.

The present principal occupation or employment of each Leza Nominee is described in this proxy statement under the heading “Election of Directors.”

Security Ownership

The Participants and their associates may be deemed to have beneficial ownership of shares of common stock of Rackable Systems as set forth below.

Name	Amount of Beneficial Ownership Through Options and Otherwise	Percent Of Class
Richard L. Leza, Jr.	2,600	*
Steve Montoya	500	*

*less than 1%

No Participant and no associate of any Participant (within the meaning of the federal proxy rules) beneficially owns any securities of Rackable Systems other than shares of common stock described above. No Participant beneficially owns any securities of any parent or subsidiary of Rackable Systems. No Participant is a holder of record, but not beneficial owner, with respect to any securities of Rackable Systems.

Transactions in Rackable Systems’ Securities

Other than the transactions described below, (and the transactions set forth in “Arrangements, Interests and Transactions” set forth below), no Participant has purchased or sold any securities of Rackable Systems in the past two years.

			Transactions in Rackable Systems Shares of Beneficial Ownership by Richard L. Leza, Jr.
July 23, 2007	Purchase	700
August 1, 2007	Purchase	600
December 21, 2007	Purchase	1,300
			Transactions in Rackable Systems Shares of Beneficial Ownership by Steve Montoya
March 24, 2008	Purchase	500

Arrangements, Interests and Transactions

By virtue of Mr. Montoya agreeing to serve as a nominee for election to the Board, he may be deemed to be acting together with Mr. Leza in connection with the nominations that are the subject of this proxy statement. Otherwise, no Participant is, or was within the past year, a party to any contract, arrangement or understanding with any person with respect to any securities of Rackable Systems, including, but not limited to, joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division of losses or profits, or the giving or withholding of proxies.

During the past year, Mr. Leza wrote 13 standard exchange-traded “put” rights with respect to Rackable Systems’ common stock, with an exercise price of $12.50 per share. Such rights are no longer outstanding.

No Participant, no associate of any Participant and no person who is a party to any arrangement or understanding pursuant to which a Leza Nominee is proposed to be elected has any arrangement or understanding with any person with respect to any future employment by Rackable Systems or its affiliates or with respect to any future transactions to which Rackable Systems or any of its affiliates will or may be a party.

The Leza Nominees have an interest in the solicitation of proxies in support of the Leza Nominees from either direct or indirect beneficial ownership of the shares of common stocks of Rackable Systems. Participants who are Leza Nominees are expected to receive customary compensation from Rackable Systems in exchange for their services as directors, if elected.

There has been no transaction or series of similar transactions since the beginning of Rackable Systems’ last completed fiscal year, and there is no currently proposed transaction or series of similar proposed transactions, to which Rackable Systems or any of its subsidiaries was or is to be a party, in which the amount involved exceeds $60,000 and in which any Participant or any associate of any Participant had, or will have, a direct or indirect material interest.

Additional Information About the Leza Nominees

No Leza Nominee presently holds any positions with Rackable Systems. Other than Mr. Montoya’s agreement to serve as a Leza Nominee, there is no arrangement or understanding between any Leza Nominee and any other person pursuant to which the Leza Nominee was selected as a nominee.

There is no family relationship (within the meaning of the federal securities laws) between any Leza Nominee and (i) any other Leza Nominee or (ii) any director of Rackable Systems, executive officer of Rackable Systems or person nominated by Rackable Systems to become a director or executive officer.

There is, and has been, no legal or other proceeding involving any Leza Nominee that is required to be disclosed under the federal proxy rules.

No Leza Nominee (i) has any business relationship with Rackable Systems that is required to be disclosed by the federal proxy rules; (ii) has had any such relationship since the beginning of Rackable Systems’ most recently completed fiscal year; or (iii) has, since the beginning of Rackable Systems’ last completed fiscal year, been indebted to Rackable Systems or any of its subsidiaries in an amount that exceeds $60,000.

No Leza Nominee and no associate of any Leza Nominee has received any compensation from Rackable Systems as a director or executive officer of Rackable Systems. Had the Leza Nominees been directors of Rackable Systems and members of the compensation committee of Rackable Systems’ Board of Directors during Rackable Systems’ last completed fiscal year, there would have been no compensation committee interlocks within the meaning of the federal proxy rules.

Section 16(a) Beneficial Ownership Reporting Compliance

No Leza Nominee has failed to file reports related to Rackable Systems that are required by Section 16(a) of the Securities Exchange Act of 1934, as amended.

ANNEX B

STOCK OWNERSHIP BY CERTAIN BENEFICIAL OWNERS

[TO BE INSERTED FROM RACKABLE SYSTEMS’ PROXY STATEMENT, WHEN FILED]

BOARD AND MANAGEMENT OWNERSHIP

[TO BE INSERTED FROM RACKABLE SYSTEMS’ PROXY STATEMENT, WHEN FILED]

P
R
O
X
Y

PROXY CARD

RACKABLE SYSTEMS, INC.

PROXY FOR THE 2008 ANNUAL MEETING OF STOCKHOLDERS
_________, 2008 AT [__:__ [a.m.][p.m.]] (____________ TIME)

THIS PROXY IS SOLICITED BY RICHARD L. LEZA, JR., AND
NOT BY THE BOARD OF DIRECTORS OF RACKABLE SYSTEMS, INC.

The undersigned stockholder of RACKABLE SYSTEMS, INC. hereby appoints Richard L. Leza, Jr., (or his appointed designee) as attorney and proxy, with power of substitution and revocation, to represent the undersigned at the 2008 Annual Meeting of Stockholders of RACKABLE SYSTEMS, INC., to be held on such date, and at such place and time as RACKABLE SYSTEMS, INC. determines, and at any adjournment, postponement or rescheduling thereof, with authority to vote all shares held or owned by the undersigned in accordance with the directions indicated herein.

This proxy, when properly executed, will cause your shares to be voted as you direct. If you return this proxy, properly executed, without specifying a choice, your shares will be voted “FOR” the nominees identified on the reverse side.

(Continued and to be signed on the reverse side)

YOUR VOTE IS VERY IMPORTANT

RICHARD L. LEZA, JR., RECOMMENDS A VOTE “FOR” THE NOMINEES LISTED BELOW.

Proposal

1. Election of Directors.

To elect Messrs. (01) Richard L. Leza, Jr., and (02) Steve Montoya as directors:

o FOR ALL NOMINEES

o WITHHELD FROM ALL NOMINEES

o FOR ALL EXCEPT

Richard L. Leza, Jr., intends to use this proxy to vote (i) FOR Messrs. Richard L. Leza, Jr., and Steve Montoya and (ii) FOR the persons who have been nominated by Rackable Systems other than Messrs. Charles M. Boesenberg and Ronald D. Verdoorn. Richard L. Leza, Jr., is NOT seeking authority to vote for and WILL NOT exercise any authority to vote for, Messrs. Charles M. Boesenberg and Ronald D. Verdoorn. There is no assurance that any of the Rackable Systems nominees will serve as directors if a Leza Nominee is elected to the Board. You should refer to the proxy statement and form of proxy distributed by Rackable Systems for the names, background, qualifications and other information concerning the Rackable Systems nominees.

NOTE: IF YOU DO NOT WISH FOR YOUR SHARES TO BE VOTED “FOR” A PARTICULAR LEZA NOMINEE, MARK THE “FOR ALL EXCEPT” BOX AND WRITE THE NAME(S) OF THE NOMINEE(S) YOU DO NOT SUPPORT ON THE LINE BELOW. YOU MAY ALSO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE OF THE RACKABLE SYSTEMS NOMINEES BY WRITING THE NAME OF THE NOMINEE(S) BELOW:

RICHARD L. LEZA, JR., RECOMMENDS A VOTE “FOR” THE PROPOSAL SET FORTH BELOW.

Proposal

2. Proposal regarding giving stockholders the opportunity to vote on an advisory management resolution to ratify executive compensation at each annual meeting

o FOR

o AGAINST

o ABSTAIN

3. Other Matters.

IN HIS DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY BE PRESENTED TO THE MEETING OR ANY ADJOURNMENT, POSTPONEMENT OR RESCHEDULING THEREOF AND IS UNKNOWN TO MR. LEZA.AND HIS REPRESENTATIVES A REASONABLE TIME BEFORE THE COMMENCEMENT OF MR. LEZA’S SOLICITATION OF PROXIES.

Date ____________________________, 2008

________________________________________________
Signature (Please sign exactly as your name appears to the left)

________________________________________________
Additional Signature (if held jointly)

________________________________________________
Title

Please sign exactly as your name appears above. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. The signer hereby revokes all proxies previously given by the signer to vote at the 2008 Annual Meeting of Stockholders of RACKABLE SYSTEMS, INC., and any adjournment, postponement or rescheduling thereof.