Exhibit 10.1

 

[Digital Insight Corporation Letterhead]

 

December 8, 2004

 

Paul Pucino

9867 Gloucester Dr

Beverly Hills, CA 90210

 

Dear Paul:

 

We are pleased to offer you the position of Executive Vice President & Chief
Financial Officer with Digital Insight Corporation (the “Company” or “Digital
Insight”). I couldn’t be more pleased that we will be working together and am
eagerly looking forward to your arrival. I know that you are working through the
question of start date which we should discuss when you have a good sense of
when that is likely to be. In any case, I’ll assume it will be no later than
January 31, 2005 and, hopefully, earlier.

 

In your capacity as EVP/CFO, you will report directly to me. You will be
classified as an exempt, full time employee and receive an annual salary of
$300, 000, which will be paid in accordance with the Company’s normal pay
procedures. Additionally, commencing on your hire date, you will be eligible to
participate in the Company’s Executive Incentive Program with targeted bonus
compensation equal to 70% of your annual salary subject to the terms and
conditions of the program. For performance in 2005 and 2006, the bonus award
will have a minimum guarantee of $150,000. The amount of the bonus award above
$150,000 for 2005 and 2006 and for the entire bonus award from 2007 forward is
subject to the sole discretion of the Company, based upon performance targets
for you and/or the Company. Also, Digital Insight will provide you with a
sign-on bonus of $125,000 to be paid with the first full payroll cycle following
your date of hire.

 

Subject to Board approval, you will be granted a stock option to purchase
250,000 shares of Digital Insight Common Stock. The exercise price of the option
will be the fair market value on your start date, which is equal to the Nasdaq
closing price of the Company’s stock on the previous trading day. The shares
underlying the option will vest over a 48-month period with 25% vesting 12
months after your date of hire and 1/48th of the total grant vesting monthly
thereafter. The stock option grant is subject to the standard terms and
conditions of the Company’s stock option plan and will be documented separately
by the Company’s standard stock option agreement.

 

Additionally, subject to your performance and approval of the Board, you will be
entitled to participate in the Company’s annual “follow-on” option program
commencing in January 2006. Your annual options will be in the range of 30,000
to 50,000 options.

 

Following a “Change in Control” of the Company, in the event of a termination
other than for “Cause,” subject to your execution and delivery of a release in
form acceptable to the Company you will receive (i) an amount equal to 18 months
base salary plus 18 months equivalent bonus; and (ii) 100% vesting acceleration
of the remaining unvested shares underlying your option as of the termination
date.

 

As used in this letter, termination for “Cause” means a termination of service,
based upon a finding by the Company, acting in good faith and based on its
reasonable belief at the time, that you:

 

  • Are or have been dishonest, incompetent, or grossly negligent in the
discharge of your duties to the Company or have refused to perform stated or
assigned duties; or have committed a theft or embezzlement, or a breach of
confidentiality or unauthorized disclosure or use of inside information,
customer lists, trade secrets or other confidential information, or a breach of
fiduciary duty involving personal profit, or a willful violation of any state or
federal law, or of Company rules or policy, in any material respect; or have
been convicted of a felony.

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  • Have materially breached any of the provisions of any agreement with the
Company or an affiliated entity; or

 

  • Have engaged in unfair competition with, or otherwise acted intentionally in
a manner injurious to the reputation, business or assets of the Company; or have
induced a customer to break or terminate any contract with the Company or an
affiliate; or have induced any principal for whom the Company (or an affiliate)
acts as agent to terminate such agency relationship.

 

A termination for Cause will be deemed to occur (subject to reinstatement upon a
contrary final determination by the Board) on the date when the Company first
delivers notice to you of a decision to invoke a termination for Cause and will
be final in all respects on the date final written notice of a termination for
Cause is delivered to you.

 

For the above purposes, a termination by the Company other than for Cause
includes a termination of employment by you within 30 days following the
assignment of any duties to you which is materially inconsistent with, or
reflecting a materially adverse change in, your position, duties,
responsibilities or status with the Company; provided you shall have first
notified the Company in writing describing the event(s) which constitute such
termination right and the Company failed to cure such event(s) within 30 days
after receipt of such written notice.

 

As used in this offer letter, a “Change in Control” means any of the following
transactions to which the Company is a party:

 

  (i) a merger or consolidation in which the Company is not the surviving
entity, except for (A) a transaction the principal purpose of which is to change
the state of the Company’s incorporation, or (B) a transaction in which the
Company’s stockholders immediately prior to such merger or consolidation hold
(by virtue of securities received in exchange for their shares in the Company)
securities of the surviving entity representing more than fifty percent (50%) of
the total voting power of such entity immediately after such transaction;

 

  (ii) the sale, transfer or other disposition of all or substantially all of
the assets of the Company unless the Company’s stockholders immediately prior to
such sale, transfer or other disposition hold (by virtue of securities received
in exchange for their shares in the Company) securities of the purchaser or
other transferee representing more than fifty percent (50%) of the total voting
power of such entity immediately after such transaction; or

 

  (iii) any reverse merger in which the Company is the surviving entity but in
which the Company’s stockholders immediately prior to such merger do not hold
(by virtue of their

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     shares in the Company held immediately prior to such transaction)
securities of the Company representing more than fifty percent (50%) of the
total voting power of the Company immediately after such transaction.

 

You will be eligible to receive Company benefits enjoyed by all Digital Insight
employees in accordance with the eligibility terms and conditions of these
programs. As an executive of the Company you will be exempt from the normal
limits on paid time off that are defined in the Employee Handbook, and the
Company will not accrue paid time off for you. It is expected that you will take
paid time off as needed and at your discretion, subject only to the approval of
your supervisor. Participation in the Company’s AXIS.ABLE Flex Benefits program
will be effective on the first of the month following 30 days of employment.
These programs will be reviewed with you in detail during your new hire
orientation.

 

As a condition of your employment with Digital Insight, you will be required to
sign an employee Nondisclosure Agreement which requires, among other provisions,
the assignment of patent and other intellectual property rights to any invention
made during your employment at the Company and non-disclosure of proprietary
information. You agree that, during the term of your employment with the
Company, you will not engage in any other employment, occupation, consulting or
other business activity directly related to the business in which the Company is
now involved or becomes involved during the term of your employment, nor will
you engage in any other activities that conflict with your obligations to the
Company. As an employee of the Company, you will also be expected to abide by
other Company rules, regulations and policies and acknowledge in writing that
you have read and agree to abide by the Company’s Employee Handbook and the Code
of Ethics and Business Conduct (once they have been made available to you).
Employment is also conditioned upon satisfactory results from a background
investigation.

 

For purposes of federal immigration law, you will be required to provide proof
of eligibility to work in the United States. Such documentation must be provided
to us within three (3) business days of your date of hire, or the Company’s
employment relationship with you may be terminated.

 

It is understood that employment is at the mutual consent of the employee and
the Company. Accordingly, either the employee or the Company can terminate the
employment relationship at will, at any time, with or without cause or advance
notice, and without further obligation except as defined in this letter.

 

For clarification and the protection of both you and the Company, this letter
represents the sole agreement between you and Digital Insight. It constitutes
and expresses the entire agreement regarding your employment. Any previous
promises, representations or understanding relative to any terms and conditions
are not to be considered as part of this offer unless expressed here in writing.
This letter may not be modified or amended except by a written agreement, signed
by you and the Chairman, President, and Chief Executive Officer.

 

Again, I, the management team, and Board are really looking forward to working
together. Don’t hesitate to call if you have any questions.

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To accept this offer, please sign and date this letter below and return it to me
via fax at (818) 871-2939.

 

I am delighted to extend this offer to you, and look forward to working with you
at Digital Insight.

 

Very truly yours,

DIGITAL INSIGHT CORP.

 

/s/ Jeff Stiefler

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Jeff Stiefler

Chairman, President, and Chief Executive Officer

 

Acknowledged and agreed to:

/s/ Paul Pucino

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Paul Pucino