Document:

FOURTH LOAN MOD AGREEMENT

  
 Exhibit 10.40 
  
 FOURTH LOAN MODIFICATION AGREEMENT 
  
 This Fourth Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as of August 1, 2002, by and between SILICON VALLEY BANK, a California-chartered bank, with its principal place of business at
3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at One Newton Executive Park, Suite 200, 222l Washington Street, Newton, Massachusetts 02462, doing business under the name “Silicon Valley East”
(“Bank”) and MERCATOR SOFTWARE, INC., a Delaware corporation with its principal place of business at 45 Danbury Road, Wilton, Connecticut 06897(“Borrower”). 
  
 1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to
Bank pursuant to a loan arrangement dated as of June 22, 2001, evidenced by, among other documents, a certain Accounts Receivable Financing Agreement dated as of June 22, 2001, as amended by a certain Accounts Receivable Financing Modification
Agreement dated as of September 18, 2001, as further amended by a certain Second Loan Modification Agreement dated as of November 28, 2001, as further amended by a certain Third Loan Modification Agreement dated June 28, 2002 (the “Loan
Agreement”). Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement. Hereinafter, all indebtedness and obligations owing by Borrower to Bank shall be referred to as the
“Obligations”. 
  
 2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement and in a certain Intellectual Property Security Agreement dated June 22, 200l (the “IP Security Agreement”) (together with any other collateral security granted to Bank, the “Security
Documents”). Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”. 
  

3. DESCRIPTION OF CHANGE IN TERMS. 
  
 Modification to Loan Agreement. The Loan Agreement shall be amended by deleting Section 6.3(L) in its entirety and inserting in lieu thereof the following: 
  
 “(L) Maintain at all times an Adjusted Quick Ratio of at least 1.1 to 1.0, which Adjusted Quick Ratio will be tested by Bank on a monthly basis.”

  
 4. FEES. Borrower shall pay to Bank a modification fee equal to Two Thousand Five Hundred Dollars
($2,500.00), which fee shall be due on the date hereof and shall be deemed fully earned as of the date hereof. The Borrower shall also reimburse Bank for all reasonable legal fees and expenses incurred in connection with this amendment to the
Existing Loan Documents. 
  
 5. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above. 
  
 6. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby
ratifies, confirms, and reaffirms all terms and conditions of all security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations. 
  
 7. NO DEFENSES OF BORROWER. Borrower agrees that, as of this date, it has no defenses against the obligations to pay any amounts
under the Obligations. 
  
 8. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement and the disclosure
referenced on Exhibit A, the terms of the Existing Loan Documents remain unchanged and in full force and effect. Banks agreement to modify the existing Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank to make
any future
 

 
modifications to the Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations. It is the intention of Bank and Borrower to retain as liable
parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will be released by virtue of this Loan Modification Agreement. 
  
 9. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank. 
  
 [signature page follows] 

 
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 This Loan Modification Agreement is executed as a sealed instrument under the
laws of the Commonwealth of Massachusetts as of the date first written above. 
  
 MERCATOR
SOFTWARE, INC. 
  
 By /s/ Kenneth J. Hall 
 Title EVP, CFO and Treasurer 
  
 SILICON VALLEY BANK 
  
 By /s/ David Reich

 Title SVP 

 
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 Exhibit A 
  
 Compliance Certificates previously furnished and furnished herewith to Silicon Valley Bank dated as follows: 
  
 June 30, 2001 
 September 18, 2001 
 September 30, 2002 
 December 31, 2001 
 March 31, 2002 
 June 30, 2002 
 September 20, 2002VARVOGLIS LETTER

  
 EXHIBIT 10.41 
 February 5, 2002 
  
 Thracy P. Varvoglis 
 195
Goodhill Road 
 Weston, CT 06883 
  
 Dear Thracy: 

 
 On behalf of Mercator Software, I am pleased to extend you an offer of employment as Industry Solutions Executive for Financial
Services & Insurance, reporting to Michael Wheeler, SVP for Industry Solutions and Services. As a Mercator VP, your responsibilities shall include developing industry specific strategies and roadmaps; overseeing the execution of our business
plans in the FS & insurance vertical; and identifying, building and deploying industry specific solutions. In this role you will work closely with Marketing, Sales, R&D and our Partners. 
  

Your first day of employment will commence on or before March 1, 2002. Following are details of our offer to you. 
  
 1.    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 rate of $240,000 annually, subject to an annual compensation review each year beginning January 1, 2003, 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 and individual contribution in meeting our
objectives. The payout range is zero to 300%. It will be payable in Q1 of following year, consistent with when other executives at this level are paid, for which you must be an employee at that time. As an executive, you will participate in the
company-sponsored and executive benefits that the Company makes available (e.g., health insurance, dental insurance, etc.). 
  
 3.    Options.    You will be granted 75,000 options upon joining the company with an exercise price equal to the fair market value on the date of hire. Upon your start date 18,750 options will
vest immediately, with the remainder vesting quarterly over a four year period. 
  
 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 substantially all of the
assets of the company. 

  
 The 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, 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. 
  
 4.    Vacation.    You will be entitled to four weeks vacation, in addition to scheduled company holidays. 
  
 5.    Life Insurance.    You will be entitled to receive term life insurance as offered in our employee benefit package. 
  
 6.    Severance.    If you are terminated for any reason other than for cause, you will be entitled to six months’
salary payable biweekly. In addition, executive benefits for medical insurance and other executive perquisites will be provided for six months or until available from another employer, whichever occurs first. Cause means: (i) your conviction of a
felony; (ii) your willful neglect of your obligations and duties hereunder, which neglect you fail to remedy within ten 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 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 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 days of the concurrence of Good Reason. “Good Reason” means, without your consent, the occurrence 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 base salary or
target bonus; (iii) the failure of Mercator to obtain the written assumption of this Agreement by any successor within thirty days after a merger, consolidation, sale or a Change of Control as defined above. 
  
 If there is a change of control of the Company as defined in paragraph 3 herein, 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 twelve (12) months of base salary in accordance with the Company’s usual payroll practices. In addition, executive benefits for medical insurance will be
provided for twelve (12) months or until available from another employer, whichever occurs first. 
  
 7.    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. 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. 
  
 8.    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. 

 
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 9.    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. 
  
 10.    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 will expire on February 8, 2002. As required by law, your employment with
the Company is also contingent upon your providing legal proof of your identity and authorization to work in the United States. 
  
 I look forward to working with you and having you as a member of the executive team. 
  
 If you have
any questions, please call me at (203) 563-1358. 
  
 Very truly yours, 
 MERCATOR SOFTWARE, INC. 
  
 /s/Greg O’Brien 
  
 Greg O’Brien 
 SVP Human Resources 
  
 I have read and accept this employment offer: 
  
 
	 /s/    Thracy Varvoglis
 	 	 Date:
 	 	 2/8/02
 
	 
	 	  	 	 

	 Signature of Thracy Varvoglis
 	 	  	 	  

 

 
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