Employment Agreement - Mark Palomba




 Exhibit 10.34 
  
 

 
  
 May 17, 2004 
  
 Mr. Mark Palomba 
  
 Dear Mark, 
  
 On behalf of Critical Path, Inc. (the “Company”), I am pleased to offer you the positions of Executive Vice President, Worldwide Services and Support and
Executive Vice President, Asia Pacific. Speaking for myself, as well as other members of the Company’s management team, we are all very impressed with your credentials and we look forward to your future success in this position. 
  
 The terms of your employment with the Company are set forth below: 
  

			
	Position	  	 You will be Executive Vice President, Worldwide Services and Support and Executive Vice President, Asia Pacific for the Company, reporting to Mark
Ferrer, Chief Executive Officer, working out of the Company’s office in Washington, DC or from your home office. You will have responsibility for sales, services and support in the Asia Pacific region as well. This is an exempt position. As an
executive officer, you will be covered by our standard form Indemnification Agreement as well as our Directors and Officers Liability Insurance.
  
 You agree to the best of your ability that you will at all times loyally and conscientiously perform all of the duties and obligations required of you pursuant to the
express and implicit terms hereof, and to the reasonable satisfaction of the Company. During the term of your employment, you further agree that you will devote all of your business time and attention to the business of the
Company.

		
	Start Date	  	Subject to fulfillment of any conditions imposed by this letter agreement, you will commence this new position with the Company on May 24, 2004. Kim Trask of our Human Resources
Department will contact you regarding your new hire orientation.
		
	Compensation	  	Your base salary will be $250,000.00 on an annualized basis. Your salary will be payable in two equal payments per month pursuant to the Company’s regular payroll
practices.
		
	Bonus	  	You will be eligible to participate in the 2004 Critical Path Sales Incentive Plan. Your on-target bonus earnings at 100% attainment is $125,000 annually. Your bonus will be based on achievement
of the Company’s revenue and profit goals for PSO and SUSS. Additional details of this plan will be presented to you on or around your start date.
		
	Review	  	Your base salary will be reviewed annually as part of the Company’s salary review process. However, nothing in this provision changes the at-will nature of the employment
relationship.
		
	Benefits	  	The Company offers you and your eligible dependents generous Medical, Dental, and Vision benefits. You will also receive Short-term Disability, Long-term Disability, and Life Insurance coverage
of no less than $300,000 per year. In addition, the Company offers employees the opportunity to participate in its Flexible Spending Account,

  
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	 	  	Employee Assistance Program, 401(k) Plan, and Employee Stock Purchase Plan. A complete overview of benefits will be presented to you on or around your date of hire.
		
	Paid Time Off	  	Members of the executive staff are not eligible to accrue Paid Time Off (PTO). You should schedule time off for the year based on your tenure with the Company and the number of days allowed per
year according to our policy, a copy of which will be given to you at orientation. If you should leave the Company for any reason, you will not receive any PTO payout on your final paycheck.
		
	Stock Options	  	 In connection with the commencement of your employment, the Company will recommend that the Compensation Committee of the Board of Directors grant
you an option to purchase 350,000 shares of the Company’s Common Stock (“Shares”) with an exercise price equal to the closing price of Critical Path’s stock on the last trading day prior to the date of Grant. These Shares will
vest over four years, with 12.5% vesting on your six-month anniversary with the Company, and 1/48th of the original
grant amount vesting monthly thereafter. Vesting will, of course, depend on your continued employment with the Company. These Shares will be subject to the terms of the applicable Company Stock Option Plan and the Stock Option Agreement between you
and the Company. Following the consummation of the Company’s rights offering, the Company agrees in good faith to review and improve your equity position, taking into account the dilution associated with the rights offering and any additional
grants given to other executive team member.
  
 In the event of a Change of
Control of the Company, any unvested Shares originally granted will vest immediately should your employment be terminated without Cause or if you terminate your employment for Good Reason, each such event occurring within six (6) months of such
Change of Control, all as such terms are defined in Appendix A.

		
	Severance	  	To the extent you are terminated for any reason without Cause (as defined on Appendix A), you will receive, upon termination, a severance payment equal to nine (9) months base salary
continuation, plus nine (9) months medical benefits continuation. You will also receive a total of nine (9) months post severance to exercise any previously vested options.
		
	Proof of Right to Work	  	For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States. A list of
acceptable documents is available for your reference. Please have your identity and employment eligibility document(s) with you for your new hire orientation.
		
	Proprietary Information and Inventions Agreement	  	Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution and submission of the Company’s Proprietary Information and Inventions
Agreement (“Proprietary Agreement”), a copy of which has been provided to you with this offer letter.
		
	At-Will Employment	  	Notwithstanding the Company’s obligation described herein, your employment with the Company will be on an “at-will” basis, meaning that either you or the Company may terminate
your employment at any time for any reason or no reason, without further obligation or liability.
		
	Dispute Resolution Procedure	  	You and the Company (“the parties”) agree that any dispute arising out of or related to the employment relationship between them, including the termination of that relationship and any
allegations of unfair or discriminatory treatment arising under state or federal law or otherwise, that cannot be resolved through the Company’s informal grievance

  

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	 	  	procedure, shall be resolved by final and binding arbitration in San Francisco, California, except where the law specifically forbids the use of arbitration as a final and binding remedy. The
following dispute resolution shall apply:
		
	 	  	 (a)    The complainant shall provide the other party with a written statement of the claim identifying any supporting
witnesses or documents and the requested relief.

		
	 	  	 (b)    The respondent shall furnish a statement of the relief, if any, that it is willing to provide, and identify
supporting witnesses or documents. If the matter is not resolved, the parties shall submit the dispute to nonbinding mediation, paid for by the Company, before a mediator to be selected by the parties.

		
	 	  	 (c)    If the matter is not resolved through mediation, the parties agree that the dispute shall be resolved by binding
arbitration. If the parties are unable to jointly select an arbitrator, they will obtain a list of arbitrators in San Francisco County, California, from the Federal Mediation and Conciliation Service and select an arbitrator by striking names from
that list.

		
	 	  	 (d)    The arbitrator shall have the authority to determine whether the conduct complained of in section (a) of this
section violates the complainant’s rights and, if so, to grant any relief authorized by law; subject to the exclusions of section (g) below. The arbitrator shall not have the authority to modify, change, or refuse to enforce the terms of any
employment agreement between the parties, or change any lawful policy or benefit plan.

		
	 	  	 (e)    The Company shall bear the costs of the arbitration if you prevail. If the Company prevails, you will pay half the
cost of the arbitration or $500, whichever is less. Each party shall pay its own attorney’s fees, unless the arbitrator orders otherwise pursuant to applicable law.

		
	 	  	 (f)     Arbitration shall be the exclusive final remedy for any dispute between the parties, such as disputes
involving claims for discrimination or harassment (such as claims under the Fair Employment and Housing Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, or the Age Discrimination in Employment Act), wrongful
termination, breach of contract, breach of public policy, physical or mental harm or distress, or any other disputes, and the parties agree that no dispute shall be submitted to arbitration where the complainant has not complied with the preliminary
steps provided for in sections (a) and (b) above.

		
	 	  	 (g)    The parties agree that the arbitration award shall be enforceable in any court having jurisdiction to enforce this
agreement, so long as the arbitrator’s findings of fact are supported by substantial evidence on the whole and the arbitrator has not made errors of law; however, either party may bring an action in a court of competent jurisdiction regarding
or related to inventions that you may claim to have developed prior to joining the Company, pursuant to California Labor Code Section 2870 (“Disputes Related to Inventions”). The parties further agree that for Disputes Related to
Inventions which the parties have elected to submit to arbitration, each party retains the right to seek preliminary injunctive relief in court in order to preserve the status quo or prevent irreparable injury before the matter can be heard in
arbitration.

		
	Offer Conditions	  	This offer is null and void if not accepted or declined by close of business on May 17, 2004. This offer is also contingent upon receiving your completed employment application and the
successful results of our independent verification of your application and reference checks.

  
 We are delighted to be able to extend
you this offer and look forward to working with you. To indicate your acceptance of the Company’s offer, please sign and date this letter in the space provided below and return it to Donna Spinola in the Human Resources department (if by fax,
then to 415.541.2301), along with a signed and dated copy of the Proprietary Agreement. This letter, together with the Proprietary Agreement, constitute the full, complete, and exclusive agreement between you and the Company regarding the matters
herein and supersedes any prior representations or agreements, whether written or 

  

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oral. This letter may not be modified or amended except by a written agreement, signed by the Company and by you. 
  

									
	 ACCEPTED AND AGREED:
	 	 	 	 CRITICAL PATH, INC.

					
	Name:	 	 Mark Palomba
	 	 	 	By:	 	/s/ Mark Ferrer
	 	 	 	 	 	 	 	 	Mark Ferrer
	 	 	 	 	 	 	 	 	Chief Executive Officer
					
	Signed:	 	 /s/ Mark Palomba
	 	 	 	 	 	 
					
	Date:	 	 5/17/04
	 	 	 	 	 	 

  

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 APPENDIX A 
  
 “Change of Control” shall mean the consummation of one of the following: (i) the acquisition of 50% or more of the outstanding stock of the Company pursuant to
a tender or exchange offer validly made under any federal or state law (other than a tender offer by the Company) or other share acquisition transaction; (ii) a merger, consolidation or other reorganization of the Company (other than a
reincorporation of the Company), if after giving effect to such merger, consolidation or other reorganization of the Company, the shareholders of the Company immediately prior to such merger, consolidation or other reorganization do not represent a
majority in interest of the holders of voting securities (on a fully diluted basis) with the ordinary voting power to elect directors of the surviving entity after such merger, consolidation or other reorganization; (iii) the sale of all or
substantially all of the assets of the Company to a third party who is not an affiliate of the Company. 
  
 “Cause” shall mean (i) failure or refusal to perform a lawful directive of the CEO or the Board of Directors of the Company that is consistent with your duties and responsibilities as set forth in this
Agreement, (ii) willful misconduct or material violation of your fiduciary obligations to the Company, (iii) you perform your duties in a grossly negligent manner, or (iv) you are convicted of any crime that has a material adverse impact on (A) your
ability to perform your duties hereunder, (B) the Company or (C) the Company’s business. 
  
 “Good Reason” shall be deemed to occur if there is (a)(1) a material adverse change in your position causing such position to be of significantly less stature or of significantly less responsibility, (2) a
material adverse change in title, (3) a material reduction of employee’s base salary, or (4) a material change in your bonus structure or bonus targets such that your total potential compensation will necessarily be materially reduced; and (b)
within the sixty (60) day period immediately following any of the foregoing events employee elects to terminate his employment voluntarily. 
  

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