EXHIBIT 3
SECOND AMENDMENT TO RIGHTS AGREEMENT
This Second Amendment dated as of August 2, 2003 (this "AMENDMENT") is
between Mercator Software, Inc., a Delaware corporation (the "COMPANY"), and The
Bank of New York, a New York banking corporation, as rights agent (the "RIGHTS
AGENT")
RECITALS
The Company (then known as TSI International Software Ltd.) and the
Rights Agent entered into a Rights Agreement dated as of September 2, 1998, as
amended by the First Amendment thereto dated as of January 8, 2003
(collectively, the "RIGHTS AGREEMENT").
The Company intends to enter into an Agreement and Plan of Merger with
Ascential Software Corporation, a Delaware corporation ("PARENT"), and Greek
Acquisition Corporation, a Delaware corporation and a wholly-owed subsidiary of
Parent ("SUB").
The Company has been advised that Ernest E. Keet, Roy C. King, Constance
F. Galley, James P. Schadt, Dennis G. Sisco, Mark C. Stevens, Michael E. Lehman,
Kenneth J. Hall, David S. Linthicum, Mark W. Register, Thracy Varvoglis, Jill M.
Donohoe, Michael Collins, David L. Goret,, Ron Smith, and Greg O'Brien intend to
enter into a Stock Tender Agreement with Parent and Sub.
The Company and the Rights Agent desire to amend the Rights Agreement in
accordance with Section 27 of the Rights Agreement. Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed to such terms in
the Rights Agreement.
AGREEMENT
The parties agree as follows:
1. AMENDMENT TO DEFINITION OF ACQUIRING PERSON. Section 1(a) of the
Rights Agreement is hereby amended to add the following sentence at the end
thereof:
"Notwithstanding anything to the contrary in this Agreement: (A) neither
Parent, Sub nor any of their respective existing or future Affiliates or
Associates shall be deemed to be an Acquiring Person solely by virtue of (x) the
execution and delivery of the Ascential Merger Agreement or the Common Stock
Option Agreement; (y) the acquisition of Common Shares of the Company (including
the conversion of shares of Common Stock of Sub into Common Shares or other
Common Stock of the Company) pursuant to the Ascential Merger Agreement or the
Common Stock Option Agreement; or (z) the consummation of the other transactions
contemplated in the Ascential Merger Agreement (including, without limitation,
the consummation of the Offer and/or the Merger (each as defined in the
Ascential Merger Agreement) or the Common Stock Option Agreement; and (B)
neither Parent, Sub, Ernest E. Keet, Roy C. King, Constance F. Galley, James P.
Schadt, Dennis G. Sisco, Mark C. Stevens, Michael E. Lehman, Kenneth J. Hall,
David S. Linthicum, Mark W. Register, Thracy Varvoglis, Jill M. Donohoe, Michael
Collins, David L. Goret,, Ron Smith, and Greg O'Brien nor any of
their respective Affiliates or Associates shall be deemed to be an Acquiring
Person solely by virtue of (x) the execution and delivery of the Stock Tender
Agreement; (y) the acquisition of Common Shares of the Company pursuant to the
Stock Tender Agreement; or (z) any actions taken or effected pursuant to the
Stock Tender Agreement (each of the events set forth in the foregoing clauses
(A) and (B), an "EXEMPT EVENT").
2. NEW DEFINITIONS. Section 1 of the Rights Agreement is hereby
amended to add the following defined terms at the end thereof:
"(r) "ASCENTIAL MERGER AGREEMENT" shall mean the Agreement and Plan of
Merger dated as of August 2, 2003, by and among the Company, Ascential Software
Corporation, a Delaware corporation ("PARENT"), and Greek Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent
("SUB") (as it may be amended or supplemented from time to time)."
"(s) "COMMON STOCK OPTION AGREEMENT" shall mean the Common Stock Option
Agreement dated as of August 2, 2003, by and among the Company, Parent and Sub
(as it may be amended or supplemented from time to time)."
"(t) "EXEMPT EVENT" shall have the meaning set forth in Section 1(a)
hereof."
"(u) "PARENT" shall have the meaning set forth in Section 1(r) hereof."
"(v) "STOCK TENDER AGREEMENT" shall mean the Stock Tender Agreement
dated as of August 2, 2003 among Parent, Sub, Ernest E. Keet, Roy C. King,
Constance F. Galley, James P. Schadt, Dennis G. Sisco, Mark C. Stevens, Michael
E. Lehman, Kenneth J. Hall, David S. Linthicum, Mark W. Register, Thracy
Varvoglis, Jill M. Donohoe, Michael Collins, David L. Goret,, Ron Smith, and
Greg O'Brien (as it may be amended or supplemented from time to time)."
"(w) "SUB" shall have the meaning set forth in Section 1(r) hereof."
3. AMENDMENT TO SECTION 3(A). Section 3(a) of the Rights Agreement is
hereby amended to add the following sentence at the end thereof:
"Notwithstanding anything to the contrary in this Agreement, none of a
Shares Acquisition Date, a Distribution Date, or any other separation of Rights
from the underlying Common Shares shall be deemed to have occurred solely by
virtue of an Exempt Event."
4. AMENDMENT TO SECTION 7(A). Section 7(a) of the Rights Agreement is
hereby amended by (a) replacing clause (i) thereof with the following (and
Exhibit B to the Rights Agreement shall be deemed amended accordingly):
"(i) the earlier of: (x) the Close of Business on September 2, 2008; and (y)
the time immediately prior to the Effective Time (as defined in the Ascential
Merger Agreement) (the earlier to occur of (x) and (y), the "FINAL EXPIRATION
DATE"). The Company agrees to promptly
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notify the Rights Agent after the occurrence of the Effective Time stating that
the Final Expiration Date has occurred."
and (b) adding the following sentence at the end thereof:
"Notwithstanding anything to the contrary in this Agreement, no Exempt
Event shall be deemed to be an event that causes the Rights to become
exercisable pursuant to the provisions of this Section 7 or otherwise."
5. AMENDMENT TO SECTION 11. Section 11 of the Rights Agreement is
hereby amended to add the following sentence at the end of the first sentence
thereof:
"Notwithstanding anything to the contrary in this Agreement, no Exempt
Event shall be deemed to be an event of the type described in this Section 11 or
to cause the Rights to be adjusted or become exercisable in accordance with this
Section 11."
6. AMENDMENT TO SECTION 13. Section 13 of the Rights Agreement is
hereby amended by adding the following sentence at the end thereof:
"Notwithstanding anything to the contrary in this Agreement, no Exempt
Event shall be deemed to be an event of the type described in this Section 13 or
to cause the Rights to be adjusted or to become exercisable in accordance with
this Section 13 or otherwise to be subject to any restrictions contained in this
Section 13."
7. AMENDMENT TO SECTION 29. Section 29 of the Rights Agreement is
hereby amended by adding the following sentence at the end thereof:
"Notwithstanding the foregoing, nothing in this Agreement shall be
construed to give any holder of Rights or any other Person any legal or
equitable rights, remedy or claim under this Agreement in connection with any
Exempt Event."
8. MISCELLANEOUS. The term "Agreement" as used in the Rights
Agreement shall be deemed to refer to the Rights Agreement as amended hereby.
The amendments to the Rights Agreement set forth herein shall be effective as of
the date hereof and, except as set forth herein, the Rights Agreement shall
remain in full force and effect and shall be otherwise unaffected hereby. This
Amendment may be executed in any number of counterparts, and each of such
counterparts shall for all purposes be deemed an original, but all such
counterparts shall together constitute but one and the same instrument. Headings
of the several Sections of the Amendment are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof. This Amendment shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to contracts to be made and performed
entirely within such State without giving effect to conflict of laws principles;
PROVIDED, HOWEVER, that all provisions regarding the rights, duties and
obligations of the Rights Agent shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such State. If any provision, covenant or restriction
of this Amendment is held by a court of competent jurisdiction
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or other authority to be invalid, illegal or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Amendment shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
[The next page is the signature page]
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The parties hereto have executed and delivered this Second Amendment as
of the date first written above.
MERCATOR SOFTWARE, INC.
By: /s/ Roy C. King
---------------------------------
Name: Roy C. King
Title: Chairman of the Board,
Chief Executive Officer and
President
THE BANK OF NEW YORK,
as Rights Agent
By: /s/ Joe Varca
---------------------------------
Name: Joe Varca
Title: Vice President
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