Executive Vice President, Asia Pacific 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,


Critical Path, Inc.

Confidential

Page 1 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 1/48 th 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 Comp ...