Employment Agreement - Critical Path Inc. and Robert A. Shipp
October 9, 2002
Robert A. Shipp
c/o Critical Path
350 The Embarcadero
San Francisco, CA 94105
Dear Al,
On behalf of Critical Path, Inc. (the "Company"), I am pleased to offer you the
position of President. 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 the President of the Company with worldwide
responsibility for Sales, Field Marketing, the Professional
Services Organization, and Sales Engineering. You will work
out of the Company's offices in San Francisco and report to
William E. McGlashan, Jr., Chief Executive Officer and
Chairman of the Board of Directors. This is an exempt
position.
You agree to the best of your ability and experience that you
will at all times loyally and conscientiously perform all of
the duties and obligations required of and from 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 Thursday, October 10, 2002. Your new hire
orientation will take place at 9:15am on your Start Date at
our Headquarters office in San Francisco.
COMPENSATION Your base salary will be $350,000 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 2002 and 2003
Critical Path Sales Incentive Bonus Plan. Your on-target bonus
earnings at 100% attainment is $350,000 annually. Fifty
percent of your bonus is based on achievement of the Company's
revenue goals, and 50% is based on achievement of the
Company's expense goals. The Company's revenue goals must be
achieved before there is any bonus payment, as discussed in
the Plan. In addition you will be eligible for an additional
$350,000 bonus for performance beyond 100% attainment and
based on mutually agreed goals.
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.
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Confidential
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BENEFITS The Company will provide you and your eligible dependents with
generous Medical, Dental, and Vision benefits. You will also
receive Short-term Disability, Long-term Disability, and Life
Insurance. In addition, the Company offers employees the
opportunity to participate in its Flexible Spending Account,
Employee Assistance Program, 401(k) Plan, and Employee Stock
Purchase Plan. A complete overview of benefits will be
presented to you on October 10, 2002.
PAID TIME OFF You will receive 18 paid days off per year for the first four
complete years of service. This Paid Time Off will accrue at
the rate of 6 hours per pay period, or 12 hours per month.
STOCK OPTIONS In connection with the commencement of your employment, the
Company will recommend that the Board Compensation Committee
grant you an option to purchase 2,000,000 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.
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 twelve (12) 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,
you will receive, upon termination, a severance payment equal
to nine (9) months' base salary. Such severance benefit,
however, is not applicable until after your six-month
anniversary with the Company.
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
procedure, shall be resolved by final and binding arbitration
in San Francisco, California,
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Confidential
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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 Thursday, October 10, 2002. This offer is
also contingent upon receiving your completed employment
application and the successful results of our independent
verification of your application.
Critical Path, Inc.
Confidential
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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 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 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:_______________________________ By: /s/ William E. McGlashan, Jr.
--------------------------------
William E. McGlashan, Jr.
Chief Executive Officer and
Signed: /s/ Robert Allen Shipp Chairman of the Board of
---------------------------- Directors
Date:_______________________________
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Confidential
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Date: October 10, 2002
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 offer validly made under any federal or state law (other than a tender
offer by the Company); (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 directive of the Chief
Executive Officer or of the Board of Directors of the Company that is consistent
with your duties and responsibilities as set forth in paragraph 1 hereof
(provided, that the Company provides to you written notice specifying the nature
of such failure or refusal and the actions needed to be taken by you to cure the
same and such failure or refusal is not cured by you within thirty (30) days of
receipt of such notice), (ii) you shall have been determined to be guilty of
willful misconduct or be in material violation of your fiduciary obligations to
the Company (provided, that the Company provides to you written notice
specifying the nature of such breach and actions needed to be taken by you to
cure same and such breach is not cured by you within ten (10) days of receipt of
such notice), (iii) you perform your duties in a grossly negligent manner, or
(iv) 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 (a)(1) there is a material adverse
change in employee's position causing such position to be of significantly less
stature or of significantly less responsibility, (2) there is a change in title,
(3) employee no longer reports to the Chief Executive Officer, (4) a material
reduction of employee's base salary compensation, (5) employee's refusal to
relocate to a facility or location more than fifty (50) miles from the Company's
current location; and (b) within the sixty (60) day period immediately following
such material change or reduction employee elects to terminate his employment
voluntarily.
Critical Path, Inc.
Confidential
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