Employment Agreement - Critical Path Inc. and Lawrence P. Reinhold
AGREEMENT
THIS AGREEMENT (hereafter "Agreement"), entered into this 15th day of
May, 2001, between LAWRENCE P. REINHOLD (the "Executive") and CRITICAL PATH,
INC. (the "Company"),
W I T N E S S E T H:
WHEREAS, the Executive is an Executive Vice President and the Chief
Financial Officer of the Company pursuant to a letter agreement dated December
4, 2000 (the "Employment Agreement"); and
WHEREAS, the Executive and the Company have considered that Executive
may presently be entitled to terminate his employment for Good Reason (as
defined in the Employment Agreement) and receive the severance benefits
described in paragraphs 2 and 3 of the Employment Agreement upon a termination
for Good Reason; and
WHEREAS, the Executive and the Company desire that the Executive remain
in the employ of the Company at this time; and
WHEREAS, the Executive and the Company wish to provide that upon a
future resignation or other termination of employment the Executive be provided
certain severance benefits asset forth herein:
NOW, THEREFORE, in exchange for the good and valuable consideration set
forth herein, the adequacy of which is specifically acknowledged, the Executive
and the Company hereby agree as follows:
1. Continued Employment.
(a) The Executive shall continue to provide services consistent with his
current position until such time as the Executive or the Company elects to
terminate such employment, which either party may do at any time for any reason.
For so long as the Executive shall remain in such position, the Company
covenants and agrees that:
(i) The Company's Board of Directors and its executive management
shall keep the Executive fully informed in all material respects as to
all matters that impact his responsibilities as the Company's Chief
Financial Officer, including, without limitation, matters relating to
accounting, finance, financial reporting, disclosure, legal, forward
guidance, SEC filings and SEC/NASDAQ compliance. The Executive may from
time to time circulate a list summarizing such matters to the Company's
Board of Directors and executive management, following which the Board
of Directors and executive management will provide timely feedback as to
the accuracy and completeness of the matters described in the list.
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(ii) The Executive shall be assigned reasonable and lawful duties
commensurate with his position as Chief Financial Officer of the
Company.
(iii) The Executive shall have responsibility for resolving any
disputed issues of accounting, financial reporting and SEC reporting.
(b) Notwithstanding anything to the contrary set forth in the Employment
Agreement, in the event that (i) the Executive resigns his employment following
August 15, 2001, or such earlier date as the Executive may select in the event
of a breach of the Company's covenants set forth in paragraph 1(a) above, or
(ii) the Company terminates the Executive's employment at any time (the date of
such a resignation or termination being hereafter referred to as the
"Resignation Date"), the Executive shall receive, upon his execution of a
Release in the form set forth in Exhibit A, the benefits set forth in paragraph
2.
2. Severance Benefits.
(a) On the Resignation Date, the Company shall pay to the Executive, in
a lump sum less applicable taxes and withholding, his accrued wages through that
date, all accrued, unused vacation, and a payment equal to six (6) months'
current base salary. In addition, the Company shall pay the Executive a portion
of the Annual Bonus (as defined below), less applicable taxes and withholdings.
The Company shall determine the amount of the annual bonus in its discretion
(the "Annual Bonus"); provided, however, that the Annual Bonus shall be no less
than one hundred fifty thousand dollars ($150,000) and no more than two hundred
twenty-five thousand dollars ($225,000); and further provided that if the
Executive resigns prior to August 15, 2001 other than by reason of a breach by
the Company of its obligations under paragraph 1 of this Agreement, then the
Company may reduce the amount of the Annual Bonus paid to the Executive
according to the following formula: .25 times the Annual Bonus times the number
of days worked by the Executive after the date of this Agreement, divided by 90.
If the Executive elects COBRA coverage, then the Company shall pay the
Executive's COBRA premiums for a period of six (6) months following the
Resignation Date. To the extent that there are other fringe benefits that
continue to be provided both before and following the Resignation Date, such
benefits will continue to be characterized as they have in the past. The Company
shall also pay the reasonable cost of moving the contents of the Executive's
apartment and vehicles from San Francisco, California to Naperville, Illinois,
in an amount not to exceed ten thousand dollars ($10,000).
(b) Effective as of the Resignation Date, all unamortized principal and
interest on that certain loan in the principal amount of one million seven
hundred thousand dollars ($1,700,000) from the Company to the Executive shall be
forgiven.
(c) Receipt of the benefits described in this paragraph 2 is conditioned
on the Executive executing the Release in the form set forth in Exhibit A.
(d) The Executive understands and agrees that he shall be responsible
for the reporting and payment of taxes with respect to the amounts paid to him
under set forth in paragraph 2 of this Agreement.
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3. Stock Options. Upon execution of this Agreement, and in lieu of the
option grants provided for in paragraph 3 of the Employment Agreement, the
Company shall issue to the Executive an option (the "Option") to purchase one
hundred twenty-one thousand eight hundred seventy-five (121,875) shares of the
Company's common stock (the "Option Shares") at an exercise price per share
equal to the fair market value of the Company's common stock on the date of
grant (based on the closing price per share on the grant date, as reported by
the Nasdaq Stock Market). The Option shall be an incentive stock option to the
fullest extent permitted by applicable law. Fifty percent (50%) of the Option
Shares shall be fully vested upon grant and the remaining Option Shares shall
vest upon the Resignation Date, provided however, that if the Executive resigns
prior to August 15, 2001 other than by reason of a breach by the Company of its
obligations under paragraph 1 of this Agreement, then the number of shares
vested upon the Resignation Date shall be reduced by: .43 times the Option
Shares, times the number of days worked by the Executive after the date of this
Agreement, divided by 90. The Option shall remain exercisable for a period of
six (6) months following the Resignation Date.
4. Attorney's Fees. The Company shall reimburse the Executive for all
attorneys' fees and costs expended in the negotiation and drafting of this
Agreement, in an amount not to exceed fifteen thousand dollars ($15,000).
5. Choice of Law. This Agreement shall in all respects be governed and
construed in accordance with the laws of the State of California, including all
matters of construction, validity and performance, without regard to conflicts
of law principles.
6. Notices. All notices, demands or other communications regarding this
Agreement shall be in writing and shall be sufficiently given if either
personally delivered or sent by registered or certified mail, return receipt
requested, postage paid, addressed as follows:
(a) If to the Company: Critical Path, Inc.
532 Folsom Street
San Francisco, CA 94105
Attn: Chief Executive Officer
(b) If to the Executive: Mr. Lawrence P. Reinhold
3207 Plantation Court
Naperville, IL 60564
Either party may change the address at which it is to receive notice by
informing the other party of the change in writing.
7. Severability. Except as otherwise specified below, should any portion
of this Agreement be found void or unenforceable for any reason by an arbitrator
or by a court of competent jurisdiction, the parties intend that such provision
be limited or modified so as to make it enforceable in a manner most closely
adhering to the parties' intent, and if such provision cannot be modified to be
enforceable, the unenforceable portion shall be deemed severed from the
remaining portions of this Agreement, which shall otherwise remain in full force
and effect. If any portion of this Agreement is so found to be void or
unenforceable for any reason in
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regard to any one or more persons, entities, or subject matters, such portion
shall remain in full force and effect with respect to all other persons,
entities, and subject matters.
8. Understanding and Authority. The parties understand and agree that
all terms of this Agreement are contractual and are not a mere recital, and
represent and warrant that they are competent to covenant and agree as herein
provided.
9. Entire Agreement. This Agreement contains the entire agreement of the
parties regarding the subject matter of this Agreement, and supersedes all prior
oral and written agreements, understandings, commitments, and practices between
them. Notwithstanding the generality of the foregoing, the parties agree that
the Option and the Option Shares shall, in all respects not specifically
addressed herein, remain subject to all provisions of the 1998 Stock Plan, and
that the continuing obligation provisions of the Company's Proprietary
Information and Invention Assignment Agreement remain in effect. No oral
modification, express or implied, may alter or vary the terms of this Agreement.
No amendments to this Agreement may be made except by an express written
agreement signed by both the Executive and the Chairman of the Board of the
Company. To the extent that any provisions of this Agreement conflict with the
provisions of the Employment Agreement, the provisions of this Agreement shall
control.
The parties have carefully read this Agreement in its entirety; fully
understand and agree to its terms and provisions; and intend and agree that it
is final and binding on all parties.
IN WITNESS WHEREOF, and intending to be legally bound, the parties have
executed the foregoing on the dates shown below.
CRITICAL PATH, INC.
/s/ Lawrence P Reinhold By /s/ David Hayden
----------------------------
Lawrence P. Reinhold
Name David Hayden
Title Executive Chairman
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EXHIBIT A
RELEASE OF CLAIMS
This Release of Claims (hereafter "Agreement") is entered into this 17th
day of August, 2001, between Lawrence P. Reinhold (the "Executive") and Critical
Path, Inc. (the "Company").
WHEREAS, the Executive and the Company are parties to an agreement dated
May 15, 2001 to the Executive's December 4, 2000 employment agreement (the
"Supplemental Agreement"); and
WHEREAS, the Executive and the Company agree to a mutual separation of
the Executive's employment as of August 31, 2001 and desire to execute this
Agreement pursuant to paragraph 2(c) of the Supplemental Agreement in order to
document the termination of their employment relationship and fully and finally
to resolve all matters between them;
THEREFORE, in exchange for the good and valuable consideration set forth
herein, the adequacy of which is specifically acknowledged, the Executive and
the Company hereby agree as follows:
1. General Release of Claims by the Executive.
(a) Except for the obligations set forth in this Agreement, the
Executive, on behalf of himself and his executors, heirs, representatives and
assigns, hereby agrees to release and forever discharge the Company and its
investors, predecessors, successors and their respective parent corporations,
affiliates, related, and/or subsidiary entities, and all of their past and
present directors, shareholders, officers, general or limited partners,
employees, agents, and attorneys, and agents and representatives of such
entities, and employee benefit plans in which the Executive is or has been a
participant by virtue of his employment with Company, from any and all claims,
debts, demands, accounts, judgments, rights, causes of action, equitable relief,
damages, costs, charges, complaints, obligations, promises, agreements,
controversies, suits, expenses, compensation, responsibility and liability of
every kind and character whatsoever (including attorneys' fees and costs),
whether in law or equity, known or unknown, asserted or unasserted, suspected or
unsuspected (collectively "Claims"), which the Executive has or may have had
against such entities based on any events or circumstances arising or occurring
on or prior to the date hereof or on or prior to the Resignation Date, arising
directly or indirectly out of, relating to, or in any other way involving in any
manner whatsoever the Executive's employment by the Company or the separation
thereof, and any and all claims arising under federal, state, or local laws
relating to employment. This release specifically includes, but is not limited
to, any and all claims for wrongful discharge or demotion, breach of express or
implied contract, breach of the implied covenant of good faith and fair dealing,
inducement of breach, termination in violation of public policy, retaliation,
fraud, intentional or negligent misrepresentation, defamation, conspiracy,
tortious denial of contract, intentional or negligent infliction of emotional
distress, assault, battery, false imprisonment, interference with proprietary
interests, failure to pay wages, bonuses, commissions, benefits, vacation pay,
severance pay, or other compensation of any sort, negligence, negligent
retention, unlawful efforts to prevent employment, violation of federal or state
constitutional rights, discrimination or harassment on the basis of race, color,
sex,
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religion, national origin, age, ancestry, marital status, family status, sexual
orientation, physical disability, mental disability, or medical condition and/or
any statutes, rules, regulations or ordinances, whether federal, state or local,
including, but not limited to, any claims arising under Title VII of the Civil
Rights Act of 1964, as amended, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, the Older Workers Benefit Protection Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act, the
Family and Medical Leave Act, the California Fair Employment and Housing Act,
the California Family Rights Act, claims for wages under the California Labor
Code, and any and all similar federal, state or local statutes, ordinances, and
regulations. Notwithstanding the generality of the foregoing, the Executive does
not release his right to a defense and indemnity from the Company pursuant to
the Indemnity Agreement entered into between the parties or as provided by law.
(b) In accordance with the Older Workers Benefit Protection Act of 1990,
the Executive acknowledges that he is aware of the following:
(i) That he is waiving and releasing any and all rights he has or
may have to make claims against the Company for age discrimination under
the federal Age Discrimination in Employment Act (ADEA);
(ii) That he is not waiving or releasing any rights under the ADEA
that may arise after the date he signs this Agreement;
(iii) That he should consult with an attorney regarding this
Agreement before accepting this Agreement;
(iv) That he has twenty-one (21) days from the date this Agreement
is presented to him in which to consider this Agreement and whether he
will enter into it, although he may, in the exercise of his own
discretion, sign or reject it at any time before the twenty-one (21) day
period expires
(v) That, at any time within seven (7) days after executing this
Agreement, Executive may revoke this Agreement; and
(vi) That this Agreement is not enforceable until the revocation
period has passed.
2. General Release of Claims by the Company. The Company hereby agrees
to release and forever discharge the Executive and his executors, heirs,
representatives and assigns, from any and all claims, debts, demands, accounts,
judgments, rights, causes of action, equitable relief, damages, costs, charges,
complaints, obligations, promises, agreements, controversies, suits, expenses,
compensation, responsibility and liability of every kind and character
whatsoever (including attorneys' fees and costs), whether in law or equity,
known or unknown, asserted or unasserted, suspected or unsuspected
(collectively, "Claims"), which the Company has or may have against the
Executive based on any events or circumstances arising or occurring on or prior
to the date hereof or on or prior to the Resignation Date.
3. Waiver of California Civil Code Section 1542. The Executive and the
Company understand and agree that each is hereby giving a full and final release
covering all unknown and
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unanticipated injuries, debts, claims, or damages which may have arisen, or may
arise, in connection with any act or omission by the parties released herein
before and including the date of execution of this Agreement. For that reason,
Executive and the Company hereby waive any and all rights or benefits which
either may have under the terms of California Civil Code section 1542, which
provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH, IF KNOWN BY HIM, MIGHT HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
4. Nondisparagement. The Executive agrees that neither he, nor anyone
acting by, through, or in concert with him, shall disparage or otherwise
communicate negative statements or opinions about the Company, its Board
members, investors, officers, employees or business. The Company agrees that
neither it, nor anyone acting by, through, or in concert with it, shall
disparage or otherwise communicate negative statements or opinions about the
Executive.
5. Agreed Statements. The Company and the Executive shall jointly
approve all press releases or other public statements made concerning the reason
for the Executive's separation from the Company and all statements provided by
the Company in response to any employment reference inquiries regarding the
Executive.
6. Cooperation.
(a) The Executive agrees to give reasonable cooperation to the Company
in any pending or future litigation or arbitration brought by or against the
Company and in any investigation the Company may conduct. The Company shall
compensate the Executive for all time spent giving cooperation to the Company
pursuant to this paragraph 5 at the rate of two hundred fifty dollars ($250) per
hour, including travel time, and shall reimburse the Executive for all travel
and other expenses incurred in compliance with his duty of cooperation.
(b) The Executive shall have the right to choose his own legal counsel
to represent him in any litigation in which the Executive is named as a party,
or investigation, arising out of the Executive's employment by the Company. In
all such matters, the Company shall bear all reasonable costs of the Executive's
defense in accordance with the terms of the Executive's Indemnification
Agreement with the Company, and shall permit the Executive's legal counsel to be
actively involved in the litigation or investigation as either shadow counsel or
counsel of record. The Company shall provide full access to the Executive and
his legal counsel to documents relevant to any investigation, or litigation in
which the Executive is named.
7. Confidential Information; Return of Company Property.
(a) The Executive executed the Company's Proprietary Information and
Invention Assignment Agreement, the commitments of which extend beyond
termination of employment. Except as may be required by law, the Executive shall
maintain in confidence and shall not directly, indirectly or otherwise, use,
disseminate, disclose or publish, or use for his benefit or the benefit of any
person, firm, corporation or other entity, any confidential or proprietary
informa-
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tion of or relating to the Company, including, without limitation, confidential
or proprietary information or trade secrets with respect to the Company's
operations, processes, products, inventions, business practices, finances,
principals, vendors, suppliers, customers, potential customers, marketing
methods, costs, prices, contractual relationships, regulatory status,
compensation paid to employees or other terms of employment, or deliver to any
person, firm, corporation or other entity any document, record, notebook,
computer program or similar repository of or containing any such information.
The parties hereby stipulate and agree that as between them the foregoing
matters are important, material and confidential proprietary information or
trade secrets and affect the successful conduct of the businesses of the Company
and any successor or assignee of the Company.
(b) The Executive shall deliver to the Company on or before the
Resignation Date all originals and copies of correspondence, drawings, manuals,
letters, notes, notebooks, reports, programs, plans, proposals, financial
documents, or any other documents concerning the Company's customers, business
plans, marketing strategies, products, processes or business of any kind and/or
which contain proprietary information or trade secrets which are in the
possession or control of the Executive or his agents.
(c) The Executive shall return to the Company on or before the
Resignation Date all property of the Company in his possession or control.
8. In the Event of a Claimed Breach. All controversies, claims and
disputes arising out of or relating to this Agreement, including without
limitation any alleged violation of its terms, shall be resolved by final and
binding arbitration before a single neutral arbitrator in San Francisco County,
California in accordance with the dispute resolution rules of the American
Arbitration Association ("AAA"). The arbitration shall be commenced by filing a
demand for arbitration with the AAA, or by a judge mutually agreed upon by the
parties. The arbitrator may award the prevailing party attorneys' fees, as well
as the costs and expenses of the arbitration, including expert fees, if any. The
arbitration award may be enforced in any court of competent jurisdiction.
9. Choice of Law. This Agreement shall in all respects be governed and
construed in accordance with the laws of the State of California, including all
matters of construction, validity and performance, without regard to conflicts
of law principles.
10. Notices. All notices, demands or other communications regarding this
Agreement shall be in writing and shall be sufficiently given if either
personally delivered or sent by registered or certified mail, return receipt
requested, postage paid, addressed as follows:
(a) If to the Company: Critical Path, Inc.
532 Folsom Street
San Francisco, CA 94105
Attn: Chief Executive Officer
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(b) If to the Executive: Mr. Lawrence P. Reinhold
3207 Plantation Court
Naperville, IL 60564
Either party may change the address at which it is to receive notice by
informing the other party of the change in writing.
11. Severability. Except as otherwise specified below, should any
portion of this Agreement be found void or unenforceable for any reason by an
arbitrator or by a court of competent jurisdiction, the parties intend that such
provision be limited or modified so as to make it enforceable in a manner most
closely adhering to the parties' intent, and if such provision cannot be
modified to be enforceable, the unenforceable portion shall be deemed severed
from the remaining portions of this Agreement, which shall otherwise remain in
full force and effect. If any portion of this Agreement is so found to be void
or unenforceable for any reason in regard to any one or more persons, entities,
or subject matters, such portion shall remain in full force and effect with
respect to all other persons, entities, and subject matters.
12. Understanding and Authority. The parties understand and agree that
all terms of this Agreement are contractual and are not a mere recital, and
represent and warrant that they are competent to covenant and agree as herein
provided.
13. Entire Agreement. This Agreement, together with the Supplemental
Agreement contains the entire agreement of the parties regarding the subject
matter of this Agreement, and supersedes all prior oral and written agreements,
understandings, commitments, and practices between them. No oral modification,
express or implied, may alter or vary the terms of this Agreement. No amendments
to this Agreement may be made except by an express written agreement signed by
both the Executive and the Chairman of the Board of the Company.
The parties have carefully read this Agreement in its entirety; fully
understand and agree to its terms and provisions; and intend and agree that it
is final and binding on all parties.
IN WITNESS WHEREOF, and intending to be legally bound, the parties have
executed the foregoing on the dates shown below.
MR. LAWRENCE P. REINHOLD CRITICAL PATH, INC.
By: /s/ Lawrence P. Reinhold By: /s/ David Hayden
Title: Executive Chairman
Date 8/17/01 Date 8/17/01
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