EXHIBIT 10.6
[LETTERHEAD OF MERCATOR SOFTWARE]
June 28, 2001
Mr. Kenneth J. Hall
22 Normandy Lane
Riverside, CT 06878
Dear Ken:
On behalf of Mercator Software, I am pleased to extend an offer of
employment to you as Senior Vice President, Chief Financial Officer, and
Treasurer. In this role you will be a member of the executive management team,
operations committee, strategy council, and participate in the strategic and
operational needs of the business. Your responsibilities shall include the
financial, accounting, tax and investor relations functions of the Company on a
worldwide basis. Ken, I look forward to bringing you on board as a key member of
our executive leadership team. Following are details of our offer to you.
1. Position. You will start in a full-time position on or before July 9, 2001 as
Senior Vice President and Chief Financial Officer reporting to me. By signing
this letter, you confirm to the Company that you are under no contractual or
other legal obligations that would prohibit you from entering employment with or
performing your duties for the Company.
2. Compensation and Employee Benefits. You will be paid a starting salary at the
annual rate of $275,000, subject to an annual compensation review, including
options, each year beginning February 1, 2002, and payable in accordance with
the Company's standard payroll schedule. We will also offer you the opportunity
to participate in the Company's annual incentive bonus plan, under which you
will be eligible to earn, at par, a bonus of 100% of your base salary. The bonus
payout is based upon corporate performance and individual contribution in
meeting our objectives. The payout range is zero to 300% of your base salary.
The bonus will be prorated from July 1, 2001 and is guaranteed to be no less
than 100% of your base salary. $75,000 of the bonus will be paid upon your
start, with the balance payable in the first quarter of 2002, consistent with
when other executives at this level are paid. As a senior executive of the
Company, you will be eligible to participate in all company-sponsored benefits
that the Company makes available to senior executives (e.g., health insurance,
dental insurance, etc.).
3. Stock Options. You will be granted 400,000 stock options upon the
commencement of your employment with an exercise price equal to the fair market
value on the date of grant. 100,000 stock options will vest immediately upon the
date of grant of such the additional 300,000 stock options will vest quarterly
subject to the attached vesting schedule.
Upon a change of control of Mercator, Fifty (50%) percent of your outstanding
unvested stock options will vest and become immediately exercisable. A change of
control will be defined as the acquisition, merger, dissolution, liquidation,
consolidation or sale of all or
Mr. Kenneth J. Hall
June 28, 2001
Page 2
substantially all of the assets of the company. The stock options that you
acquire shall be subject to the terms and conditions of the relevant stock
option plan and stock option agreement and other related agreements to be
entered into by and between you and the Company. In the event your employment is
terminated by death or disability, stock options to be vested within six (6)
months of your death or disability will be vested and be exercisable for the
balance of their original term. The stock options will be granted in the form of
an ISO to the maximum extent permitted by the Plan. Any residual shares will be
in the form of a Non-Qualified stock option grant.
4. Vacation. You will be entitled to four weeks vacation, in addition to
scheduled company holidays.
5. Life Insurance. As a key executive within the company, you will be entitled
to receive term life insurance valued at $1,000,000.
6. Severance. If you are terminated for any reason other than for cause, you
will be entitled to one year's of your then base salary plus a bonus at 100% of
your then base salary, payable biweekly. In addition, all executive benefits for
medical insurance and other executive perquisites will be provided for 12
months. Cause means: (i) your conviction of a felony; (ii) your willful neglect
of your obligations and duties hereunder, which neglect you shall fail to remedy
within ten (10) days after written demand from Mercator; or (iii) you willfully
engage in conduct demonstrably and materially injurious to Mercator, momentarily
or otherwise, and fail to remedy such conduct within ten (10) days after receipt
of Notice thereof from Mercator. For the purpose of this clause, no act, or
failure to act, on your part shall be deemed willful unless done, or omitted to
be done, by you not in good faith and without reasonable belief that your action
or omission was in, or not opposed to, the best interests of Mercator.
You shall have the right to terminate your employment under this Agreement by
Notice within thirty (30) days of the occurrence of Good Reason. "Good Reason"
means, without your written consent, the occurrence of any of the following: (i)
a significant diminution of, or the assignment to you of any duties inconsistent
with your title, status, duties or responsibilities specified in the
introductory paragraph hereof; (ii) a reduction by Mercator in your annual Bas
Salary as in effect on the date hereof or as the same may be increased from time
to time or your target bonus as a percentage of Base Salary; (iii) the failure
by Mercator to provide or continue in effect (a) any benefit specified herein or
(b) any compensation plan or other fringe benefit provided by Mercator in which
you are then participating which by itself or in the aggregate is material to
your total compensation unless there shall have been instituted a replacement or
substitute plan or fringe benefit providing comparable value; (iv) the
relocation of your office at Mercator more than fifty (50) miles from Wilton,
CT; or (v) the failure of Mercator to obtain the written assumption of this
Agreement by any successor to all or substantially all of its assets or business
within thirty (30) days after a merger, consolidation, sale or a Change of
Control as defined above.
Mr. Kenneth J. Hall
June 28, 2001
Page 3
If there is a change of control of the Company, as defined in paragraph 3, and
within one year following this change of control, you are constructively
terminated as defined in this agreement, Mercator, or its successor, shall pay
you eighteen (18) months of your then base salary, and a bonus at 150% of your
annual base salary in accordance with the Company's usual payroll practices. In
addition, all executive benefits for medical insurance and other executive
perquisites will be provided for 12 months.
7. Outside Activities. While you render services to the Company, you agree that
you will not engage in any other employment, consulting or other business
activity without the written consent of the Company. You also will not assist
any person or entity in competing with the Company, in preparing to compete with
the Company, or in hiring any employees or consultants of the Company.
8. Employment Relationship. The term of your employment with the Company is for
no specific period of time. Your employment with the Company will be "at will,"
meaning that either you or the Company may terminate your employment at any time
and for any reason, with or without cause with 30 days notice. This is the full
and complete agreement between you and the Company on this term. Although your
job duties, title, compensation and benefits, as well as the Company's personnel
policies and procedures, may change from time to time, the "at will" nature of
your employment may only be changed in an express written agreement signed by
you and the Company.
9. Withholding Taxes. All amounts of compensation referred to in this letter are
subject to reduction by the Company to meet all applicable withholding and
payroll tax requirements.
10. Conditions of Employment. Upon joining Mercator, you will be required to
sign the enclosed Conditions of Employment agreement that includes
non-disclosure and non-compete clauses which set forth conditions relating to
the security and protection of the Company's trade secrets. In addition, you
will be required to comply with and periodically sign a certification of
compliance with Mercator's Insider Trading Policy.
11. Entire Agreement. This letter supersedes and replaces any prior
understandings or agreements, whether oral or written, between you and the
Company regarding the subject matter described in this letter.
We hope that you find the foregoing terms acceptable. You may indicate
your agreement with these terms and accept this offer by signing and dating the
line provided below and returning the executed copy to the undersigned. The
terms and conditions of this offer are contingent upon the satisfactory
completion of reference checks and, as required by law, upon your providing
legal proof of your identify and authorization to work in the United States.
Mr. Kenneth J. Hall
June 28, 2001
Page 4
I look forward to working with you and having you as a member of my
executive team.
If you have any questions, please call me at (203) 563-1201.
Very truly yours,
MERCATOR SOFTWARE, INC.
/s/ Roy C. King
Roy C. King
Chief Executive Officer and Chairman
I have read and accept this employment offer:
/s/ Kenneth J. Hall Date:
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Signature of Kenneth J. Hall
July 9, 2001
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Agreed start date
Mr. Kenneth J. Hall
June 28, 2001
Page 5
Attachment - Vesting Schedule
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# of Options Date of Vesting
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100,000 Date of Grant
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21,430 10/09/01
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21,430 1/09/02
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21,430 4/09/02
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21,430 7/09/02
--------------------------------
21,430 10/09/02
--------------------------------
21,430 1/09/03
--------------------------------
21,430 4/09/03
--------------------------------
21,430 7/09/03
--------------------------------
21,430 10/09/03
--------------------------------
21,430 1/09/04
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21,430 4/09/04
--------------------------------
21,430 7/09/04
--------------------------------
21,430 10/09/04
--------------------------------
21,410 1/09/05
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