Exhibit 10.2


 


January 24, 2005


 


NAME


c/o Digital Impact, Inc.


177 Bovet Road, Suite 200


San Mateo, CA 94402


 


Retention Agreement


 


Dear NAME:


 
Digital Impact, Inc. and its subsidiaries (collectively, the “Company”) considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel.  Further, the Board of Directors of the Company (the “Board”) recognizes that the possibility of a change in control exists, and that such possibility, and the uncertainty and questions that it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.
 
The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the management of the Company, including you, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from any possible change in control of the Company.
 
In order to induce you to remain in the employ of the Company, the Company agrees that you will receive the benefits set forth in this letter agreement (this “Agreement”) in the event your employment with the Company is terminated following a Change in Control (as defined on Schedule A) under the circumstances described below.
 


1.             Termination
Following Change in Control.  If a
Change in Control occurs, you will be entitled to the benefits provided in
Section 2 hereof upon the subsequent termination of your employment by the
Company without Cause (as defined on Schedule A) or by you for Good Reason (as
defined on Schedule A) during the twelve-month period following such Change in
Control (the “Covered Period”).  Any purported termination of your employment
by the Company or by you shall be communicated by a Notice of Termination to
the other party hereto in accordance with Section 6(e) hereof.  For purposes of this Agreement, a “Notice of Termination” shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.


 





















 


2.             Compensation
upon Termination.


 


(a)           Severance
Benefits.  If your employment by the
Company is terminated during the Covered Period by the Company without Cause or
by you for Good Reason, then you shall be entitled to the following benefits:


 


(i)            Severance.  The
Company shall pay you in a cash lump sum within fifteen (15) days following the
effective date of your termination of employment (the “Date
of Termination”) the full amount of any earned but unpaid base
salary through the Date of Termination, plus a cash payment for all bonuses and
sales commissions earned but unpaid (as reasonably determined by the Company)
and unused vacation time which you may have accrued as of the Date of
Termination.  In addition, the Company
shall pay you in a cash lump sum, within fifteen (15) days following the Date
of Termination, an amount (the “Severance Payment”)
equal to six (6) months of your annual base salary on the Termination Date
(without giving effect to any salary reductions which constitute Good
Reason).  The Severance Payment shall be
in lieu of any other severance payments which you are entitled to receive under
any other severance pay plan or arrangement sponsored by the Company or any of
its subsidiaries (including, without limitation, any agreement).


 


(ii)           Benefit Continuation. 
You and your eligible dependents may elect to continue group health,
dental and vision coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”).  Provided that you and/or your eligible
dependents are eligible for and elect continuation coverage pursuant to COBRA,
the Company will reimburse you and your eligible dependents for COBRA premiums
until the earlier of (i) six (6) months from the termination date; or (ii) the
date you or your dependents, as applicable, are no longer eligible to receive
continuation coverage pursuant to COBRA. 
You and your dependents shall be responsible for payment of your COBRA
premiums for the remaining COBRA period.


 


(b)           Equity.  If your employment is terminated during the
Covered Period by the Company without Cause or by you for Good Reason, your
unvested Company equity-based incentive awards including, without limitation,
restricted stock, restricted units and stock options, shall vest in their
entirety.


 


(c)           No
Mitigation.  You shall not be
required to mitigate the amount of any payment or benefit provided for in this
Section 2 by seeking other employment or otherwise.


 


(d)           Withholding.  All
payments and benefits will be subject to applicable withholding.


 





















 


3.             Golden
Parachute Excise Taxes. 
Notwithstanding anything herein to the contrary, if any payment or
benefit hereunder or otherwise payable to you constitutes a “parachute payment”
(as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as
amended (the “Code”)), and the net
after-tax amount of any such parachute payment is less than the net after-tax
amount if the aggregate payments and benefits to be made to you were three
times your “base amount” (as defined in Section 280G(b)(3) of the Code), less
$1.00, then the aggregate of the amounts constituting the parachute payments
shall be reduced to an amount equal to three times your base amount, less
$1.00.  The determinations to be made
with respect to this Section 3(b) (other than any determination as to
which parachute payments shall be reduced, which shall be made by you in your
sole discretion) shall be made by the Company’s independent accountants, which
shall be paid by the Company for the services to be provided hereunder.  For purposes of making the calculations
required by this Section, the accountants may make reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code.  You and the Company shall furnish
to the accountants such information and documents as the accountants may
reasonably request in order to make a determination under this Section.


 


4.             Successors;
Binding Agreement.


 


(a)           Assumption
by Successor.  The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.  Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle you to compensation from
the Company in the same amount and on the same terms as you would be entitled
hereunder if you had terminated your employment for Good Reason following a
Change in Control, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the Date of
Termination.  As used in this Agreement, “the
Company” shall mean the Company as hereinbefore defined and any successor to
its business or assets which assumes and agrees to perform this Agreement by
operation of law, by agreement or otherwise.


 


(b)           Enforceability
by Beneficiaries.  This Agreement
shall inure to the benefit of and be enforceable by your personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.  If you should die
while any amount would still be payable to you hereunder if you had continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee, legatee or other
designee or, if there is no such designee, to your estate.


 





















 


5.             Arbitration.


 


(a)           Procedure.  Any dispute or controversy arising out of,
relating to, or in connection with this Agreement, or the interpretation,
validity, construction, performance, breach, or termination thereof, shall be
settled by binding arbitration to be held in San Mateo County, California, in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American
Arbitration Association (the “Rules”).  The arbitrator may grant injunctions or other
relief in such dispute or controversy. 
The decision of the arbitrator shall be final, conclusive and binding on
the parties to the arbitration.  Judgment
may be entered on the arbitrator’s decision in any court having
jurisdiction.  The arbitrator(s) shall
apply California law to the merits of any dispute or claim, without reference
to conflicts of law rules.  The
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law.  You hereby consent to the personal
jurisdiction of the state and federal courts located in California for any
action or proceeding arising from or relating to this Agreement or relating to
any arbitration in which the parties are participants.


 


(b)           At-Will Employment.  You understand that nothing in this Section
modifies your at-will employment status. 
Either party can terminate the employment relationship at any time, with
or without Cause.


 


(c)           Acknowledgment.  You have read and understand this Section,
which discusses arbitration.  You
understand that submitting any claims arising out of, relating to, or in
connection with this Agreement, or the interpretation, validity, construction,
performance, breach or termination thereof to binding arbitration, constitutes
a waiver of your right to a jury trial and relates to the resolution of all
disputes relating to all aspects of the employer/employee relationship,
including, but not limited to, the following claims:


 


(i)            Any and all claims for wrongful discharge of employment, breach of
contract, both express and implied, breach of the covenant of good faith and
fair dealing, both express and implied, negligent or intentional infliction of
emotional distress, negligent or intentional misrepresentation, negligent or
intentional interference with contract or prospective economic advantage and
defamation.


 


(ii)           Any and all claims for violation of any federal, state or municipal
statute, including, but not limited to, Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of
1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards
Act, the California Fair Employment and Housing Act, and Labor Code Section
201, et seq; and


 


(iii)          Any and all claims arising out of any other laws and regulations relating
to employment or employment discrimination.


 





















 


6.             Miscellaneous.


 


(a)           Amendments;
Waivers.  No provision of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.


 


(b)           Entire
Agreement.  No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party that are not expressly set
forth in this Agreement and this Agreement shall supersede all prior
agreements, negotiations, correspondence, undertakings and communications of
the parties, oral or written, with respect to the subject matter hereof.


 


(c)           Governing
Law.  The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of California.


 


(d)           Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.


 


(e)           Notice.  For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
Digital Impact, Inc., 177 Bovet Road, Suite 200, San Mateo, CA 94402; Attn.:
General Counsel, or to you at your address as set forth in the records of the
Company, or to such other address as either party may furnish to the other in
writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.


 


(f)            Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.


 


(g)           No
Contract of Employment.  Nothing in
this Agreement shall be construed as giving you any right to be retained in the
employ of the Company or any subsidiary.


 


(h)           Headings.  The headings contained in this Agreement are
intended solely for convenience and shall not affect the rights of the parties
to this Agreement.


 





















 


If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject.


 


	
  Sincerely,

  
	
   

  
	
  DIGITAL IMPACT, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
   

  
	
  AGREED:

  
	
   

  
	
   

  	
   

  
	
  Signature

  
	
   

  
	
   

  	
   

  
	
  Print Name

  
	
   

  
	
   

  	
   

  
	
  Date

  
				



 





















 


Schedule A


 
Definitions
 
“Cause” shall mean the willful engaging by you in criminal or fraudulent acts or gross misconduct that is demonstrably and materially injurious to the Company, monetarily or otherwise.  No act or failure to act on your part shall be deemed “willful” unless done or omitted to be done by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company.  Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three quarters (3⁄4) of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth above in the first sentence of this subsection and specifying the particulars thereof in detail.
 
“Change in Control” shall mean the happening of any of the following:
 


(i)            The
acquisition, other than from the Company, by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”))
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of the then outstanding shares of common stock of
the Company; provided, however,
that any acquisition by (A) the Company or any of its subsidiaries or (B) any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any of its subsidiaries shall not constitute a Change in Control;


 


(ii)           Individuals
who, as of the date of this Agreement, constitute the Board (the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to the date hereof whose election or
nomination for election by the Company’s shareholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of the directors of the Company (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act);


 


(iii)          Completion
of a reorganization, merger or consolidation (a “Business
Combination”), in each case, with respect to which all or
substantially all of the individuals and entities who were the beneficial
owners of the Company’s common stock immediately prior to such Business
Combination do not own, directly or indirectly, more than 50% of the combined
voting power of the then outstanding voting


 





















 


securities entitled to vote generally in the
election of directors of the corporation resulting from such Business
Combination; or


 


(iv)         A
complete liquidation or dissolution of the Company or a sale or other
disposition of all or substantially all of the assets of the Company other than
to a corporation with respect to which, following such sale or disposition,
owns more than 50% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors; or


 


“Good Reason” shall mean, without your express written consent, any of the following:
 


(i)            A
material and detrimental alteration in your responsibilities from those in
effect immediately prior to the Change in Control; or


 


(ii)           A
reduction by the Company in your annual base salary as in effect on the date
hereof or as the same may be increased from time to time; a reduction in your
annual bonus target (expressed as a percentage of base salary) below the target
in effect for you immediately prior to the Change in Control; or any adverse
change in your long-term incentive opportunities in comparison to those in
effect prior to the Change in Control; or


 


(iii)          The
relocation of the office of the Company where you are employed at the time of
the Change in Control to a location which is more than 35 miles away from such
office or the Company’s requiring you to be based more than 35 miles away from
such office (except for required travel on the Company’s business to an extent
substantially consistent with your customary business travel obligations in the
ordinary course of business prior to the Change in Control); or


 


(iv)          The
failure by the Company to continue to provide you with benefits at least as
favorable, in the aggregate, as those enjoyed by you under any of the Company’s
retirement, life insurance, medical, health and accident, disability or savings
plans in which you were participating at the time of the Change in Control; or


 


(v)           The
failure of the Company to obtain a satisfactory agreement from any successor to
assume and agree to perform this Agreement, as contemplated in Section 4 hereof
or, if the business of the Company for which your services are principally
performed is sold at any time after a Change in Control, the purchaser of such
business shall fail to agree to provide you with the same or a comparable
duties, compensation and benefits as provided to you by the Company immediately
prior to the Change in Control; or


 


(vi)          Any
purported termination of your employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 1 (and, if
applicable, the requirements set out in the definition of “Cause”); for
purposes of this Agreement, no such purported termination shall be effective.