M E M O R A N D U M
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Date: August 19, 2003
To: Mercator's Employees
From: Linda Austin
Re: Tendering Your Shares and Stock Option Information
As you know, Mercator has entered into a Merger Agreement with Ascential
Software Corporation and a newly formed subsidiary of Ascential (known as Greek
Acquisition Corp.). Pursuant to the Merger Agreement, the subsidiary has
commenced a "tender offer" for all of the outstanding shares of Mercator's
common stock at a price of $3.00 per share, net to the seller in cash. The
tender offer, which commenced on August 8, 2003, is presently scheduled to
expire on Monday, September 8, 2003, subject to extension. After the tender
offer is completed, the Merger Agreement contemplates a merger of the newly
formed subsidiary with Mercator, with Mercator becoming a wholly owned
subsidiary of Ascential. This memo contains information relating to the tender
of your Mercator shares as well as the treatment and/or potential exercise of
your Mercator stock options in connection with this transaction.
TENDER OF SHARES OWNED OUTRIGHT (INCLUDING ESPP)
If you are a Mercator stockholder, you will receive a tender offer package
from Ascential either directly or, if you own shares through a broker, through
your broker (for example, E*Trade will provide packages for employees who own
Mercator stock through their participation in the ESPP). The tender offer
package contains detailed instructions on how to tender your shares should you
wish to do so. PLEASE CONFIRM THAT, IN ALL CASES, YOUR BROKER HAS YOUR CURRENT
ADDRESS AND CONTACT INFORMATION. If you do not receive your tender offer package
by the end of the week of August 18, 2003, please contact your broker. If you
are an E*Trade customer, please call 1-800-838-0908 (US) or 1-650-599-0125
(international).
If you have physical Mercator stock certificates in your possession, your
package will have instructions on how to surrender the certificates with the
forms you complete in order to tender the shares, should you wish to do so.
Please do NOT sign the back of the certificate. We would also suggest that you
use an overnight courier with respect to the receipt or delivery of any of the
tender-related documents for tracking purposes.
For those employees currently enrolled in the ESPP, the last purchase will
be effectuated immediately prior to the closing of the Merger. The terms of the
ESPP and the Merger Agreement provide that those shares will be converted
automatically upon closing of the Merger and those employees will receive
$3.00 per share for stock purchased under the ESPP.
IF THE MERGER IS COMPLETED, SHAREHOLDERS WHO DO NOT TENDER THEIR SHARES
WILL RECEIVE $3.00 PER SHARE AUTOMATICALLY UPON CLOSING OF THE MERGER.
TREATMENT OF YOUR STOCK OPTIONS
All of your outstanding Mercator options will be "rolled over" (i.e.
converted into options for Ascential shares) upon completion of the merger as
follows (and all other terms and provisions of these options will remain the
same):
1. The exercise price of these options will be converted into the
average of:
(a) the average price of Ascential's stock during the 20-trading
day period prior to July 28, 2003 (namely, $16.92); and
(b) the average price of Ascential's stock during the 20-trading
day period preceding the fifth trading day prior to the merger
of Ascential's wholly-owned subsidiary into Mercator (the
merger would take place after completion of the tender offer
and
satisfaction of certain conditions). For this example, we are
using $15.8725, which is the average of the 20 days prior to
this memo, making the average of the prices in (a) and (b)
$16.3963.
2. The number of shares issuable upon exercise of these options will be
converted by multiplying the number of shares of Mercator common
stock to which you are entitled upon exercise of your stock options,
by the quotient obtained by dividing $3.00 by the average of the two
numbers referred to in #1(a) and (b) above (which is 0.1829).
For example, if you have an option to purchase 1,000 shares of
Mercator at $2.00 per share, this option would convert to the
following:
1,000 Mercator shares x 0.1829 = 182 Ascential shares
And your exercise price would be: $2.00 / 0.1829 = $10.9349 per new
share
As you can see, the conversion gives you essentially the same value
of your original option grant (the minimal difference is due to
rounding/estimates):
1,000 Mercator shares at $2.00 = $2,000.00 FMV
182 Ascential shares at $10.9349 = $1,990.15 FMV
3. UNTIL THE MERGER IS COMPLETED, THERE IS NO CHANGE TO YOUR OPTION(S)
AND/OR YOUR ABILITY TO EXERCISE THEM. You can exercise them at any
time or wait until after the conversion, subject to applicable
blackout periods and Mercator's insider trading policy. If you
choose to do a cash exercise of your options (i.e. purchasing them
outright and receiving the shares), you can hold the shares, which
will be converted in the merger into the right to receive the same
price you would receive in the tender offer, or tender them now and
receive the offer price upon consummation of the tender offer.
4. All Mercator employees are entitled to acceleration of vesting of
your stock options to some degree under the Company's Change of
Control Protection Plan (the "COC Plan"). The COC Plan provides
employees with acceleration of vesting as follows (i) one year
acceleration of unvested options (i.e. all options that would vest
within one year of the change of control are immediately vested)
upon the change of control transaction, and (ii) in the event of
constructive dismissal within six months of the change of control
transaction, acceleration of all unvested options upon the date of
termination.
For purposes of the COC Plan, "constructive dismissal" is defined as
the occurrence of any of the following, without employee's written
consent: (i) a significant diminution of, or the assignment to the
employee of any duties inconsistent with the employee's title,
status, duties or responsibilities, (ii) a reduction in annual base
salary as in effect on the date hereof or as may be increased from
time to time, target bonus or fringe benefit which by itself or in
the aggregate is material to employee's compensation, (iii) the
relocation of employee's office more than fifty miles from the
employee's current location, or (iv) the failure to obtain the
written assumption of employee's employment agreement by any
successor to all or substantially all of its assets or business
within 30 days after a merger, consolidation, sale or a change of
control.
Please keep in mind that a "change of control" (and the acceleration
and conversion pertaining thereto) does not occur unless and until
51% of the outstanding shares of Mercator have been purchased by
Ascential in the tender offer.
We will update you as appropriate throughout the tender process. Of course, if
you have any questions regarding this memorandum, please do not hesitate to
contact me at extension 1260. Thanks.
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