MERCATOR SOFTWARE INC
AGREEMENT, RON SMITH
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>6
<FILENAME>dex104.txt
<DESCRIPTION>AGREEMENT, RON SMITH
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.4

[LETTERHEAD OF MERCATOR SOFTWARE]

May 31, 2001

Mr. Ron Smith
2116 Southwest l3th Place
Boynton Beach, FL 33426

Dear Ron:

      On behalf of Mercator Software, I am pleased to extend an offer of
employment to you as Vice President of Operations. In this role you will report
to me and be a member of the operations committee. 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 immediately 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 $160,000, subject to an annual compensation review 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 50% of your base salary. The bonus payout is based
upon corporate and business unit performance and individual contribution in
meeting our objectives. The payout range is zero to 300%. It will be payable in
the first quarter of 2002, consistent with when other executives at this level
are paid. As an executive of the Company, you will be eligible to participate in
the company-sponsored benefits that the Company makes available to senior
executives (e.g., health insurance, dental insurance, etc.).

3. Options. You will be granted 50,000 options upon joining the company with an
exercise price equal to the fair market value on the date of grant. Upon your
start date, 10,000 options will vest immediately, with the remainder vesting
quarterly over a four year period (see attached vesting schedule).

Upon a change of control of Mercator, 50% of your outstanding, unvested stock
options will vest and become immediately exercisable. A change of control will
be defined as the company being acquired and as a result it is no longer
publicly traded. 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.
<PAGE>

Mr. Ron Smith
May 3l, 200l
Page 2


4. Vacation. You will be entitled to four weeks vacation, in addition to
scheduled company holidays.

5. Life Insurance. As an executive within the company, 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.

If there is a change of control of the Company as defined in paragraph 3 herein,
within one year following a change of control of the Company, you may terminate
your employment with the Company if, during that one year period without your
written consent, there has occurred a significant diminution of, or assignment
to you of any duties inconsistent with your title, status, duties or
responsibilities as in effect as of the beginning of your employment with
Mercator. This right of termination can be exercised only if you give written
notice to the Company within thirty (30) days of the occurrence of the
significant diminution of, or assignment to you of any duties inconsistent with
your title, status, duties or responsibilities as in effect as of the beginning
of your employment with Mercator which you rely upon to terminate this
agreement. If you elect to terminate your employment pursuant to this provision,
upon such termination Mercator shall pay you twelve (12) months of base salary
in accordance with the Company's usual payroll practices.

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.
<PAGE>

                          Attachment - Vesting Schedule

                        ---------------------------------
                        # of Options      Date of Vesting
                        ---------------------------------
                           10,000            06/31/01
                        ---------------------------------
                            2,500            09/31/01
                        ---------------------------------
                            2,500            12/31/01
                        ---------------------------------
                            2,500            03/31/02
                        ---------------------------------
                            2,500            06/31/02
                        ---------------------------------
                            2,500            09/31/02
                        ---------------------------------
                            2,500            12/31/02
                        ---------------------------------
                            2,500            03/31/03
                        ---------------------------------
                            2,500            06/31/03
                        ---------------------------------
                            2,500            09/31/03
                        ---------------------------------
                            2,500            12/31/04
                        ---------------------------------
                            2,500            03/31/05
                        ---------------------------------
                            2,500            06/31/05
                        ---------------------------------
<PAGE>

Mr. Ron Smith
May 31, 2001
Page 3


10. Conditions of Employment. Upon joining Mercator, you will be required to
sign the enclosed Condition 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 supercedes 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. As
required by law, your employment with the Company is also contingent upon your
providing legal proof of your identify and authorization to work in the United
States.

      Ron, 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
                                              Executive Officer and Chairman


I have read and accept this employment offer:


/s/ Ron Smith                                 Date: 6/1/2001
----------------------------------                  ------------------------
Signature of Ron Smith

6/1/2001
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Agreed start date

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