<PAGE>

                                                                     Exhibit 4.8


     WARRANT AGREEMENT (the "Agreement"), as of dated June 20, 2001, between
Mercator Software, Inc., a Delaware corporation (the "Company"), and Morgan
Howard (UK) Limited, a U.K. corporation (the "Holder").

     WHEREAS, in accordance with the Engagement Letter, dated as of June 20,
2001 by and between the Company and Holder, the Company may from time to time
issue Warrants (the "Warrants") to the Holder, each Warrant entitling the Holder
to purchase, upon the terms and subject to the conditions contained in this
Agreement and the Warrant Certificates (as defined below), one share of common
stock of the Company, subject to adjustment as provided in Section 11 hereof;

     WHEREAS, the Company will issue certificates evidencing the Warrants (the
"Warrant Certificates") and other matters as provided herein.

     NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:

     Section 1.  Warrant Certificates.  The Warrant Certificates (and the Forms
                 --------------------
of Exercise to be set forth on the reverse thereof) shall be substantially in
the forms set forth in Exhibit A attached hereto, and may have such letters,
                       ---------
numbers or other marks of identification and such legends printed, lithographed
or engraved thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement.

     Section 2.  Execution and Countersignature of Warrant Certificates.  The
                 ------------------------------------------------------
Warrant Certificates shall be executed on behalf of the Company by its Chief
Executive Officer, President, Chief Financial Officer or Treasurer (each, a
"Company Officer") under its corporate seal reproduced thereon attested by its
Secretary or Assistant Secretary.  The signature of any of these Company

                                       1
<PAGE>

Officers on any Warrant Certificate may be manual or facsimile.  Warrant
Certificates bearing the manual or facsimile signatures of individuals who were
at any time Company Officers shall bind the Company even if any such individual
ceased to be a Company Officer prior to the execution and delivery of such
Warrant Certificate or was not a Company Officer at the date of this Agreement.

     Section 3.  Issuance of Warrant Certificates.  The Company may, from time
                 --------------------------------
to time, execute Warrant Certificates representing the number of Warrants
issuable pursuant to the Engagement Agreement on the Grant Date and at the
Exercise Price provided in the Engagement Agreement (to which this Agreement is
annexed).  The terms and conditions of the Warrants shall be identical, except
for each tranche of Warrants issued under the Engagement Agreement, the Grant
Date shall be the date on which an employee (whose employment at the Company is
due solely and exclusively to the search efforts of Morgan Howard (UK) Ltd.)
commences employment with the Company or upon the date the Company notifies the
Firm of Cancellation of an assignment (the "Grant Date).

     Section 4.  Transfers.  Warrants are not transferable or assignable, in
                 ---------
whole or in part. Warrant Certificates cancelled pursuant to any provisions of
this Agreement shall not be reissued, and shall be returned to the Company.

     Section 5.  Duration and Exercise of Warrants.  Each series of Warrants
                 ---------------------------------
shall expire at 5:00 p.m. Connecticut time on the third anniversary of the Grant
Date, except as otherwise described in the Warrant Certificate (such date of
expiration being herein referred to as the "Expiration Date").  In the event
that the Expiration Date falls on a day other than a Business Day, the Warrants
shall expire at 5:00 p.m. Connecticut time on the next succeeding Business Day.
A "Business Day" shall mean a day other than a Saturday, Sunday or a public or
national bank holiday or the equivalent for banks generally under the laws of
the State of Connecticut.

                                       2
<PAGE>

     (b)  The Warrants shall become exercisable when the Market Price
(hereinafter defined) is equal to or greater than twice the Market Price on the
Grant Date.

     (c)  For the purpose of this Section, the Market Price shall be the last
reported sale price, or in case no such reported sale takes place on such day,
the average of the last reported sale prices for the last three trading days, in
either case as officially reported by the principal securities exchange on which
the Common Stock is listed or admitted to trading or as reported in the Nasdaq
Market System (National or SmallCap system, as applicable) or, if the Common
Stock is not listed or admitted to trading on any national securities exchange
or quoted on the Nasdaq Market System, the last reported sale price as furnished
by the National Association of Securities Dealers, Inc. through Nasdaq or
similar organization if Nasdaq is no longer reporting such information, or if
the Common Stock is not quoted on Nasdaq, as determined in good faith by
resolution of the Board of Directors of the Company, based on the best
information available to it for the two (2) days immediately preceding such
issuance or sale and the day of such issuance or sale.

     (d)  The Warrants represented by each Warrant Certificate shall only be
exercisable for shares of Common Stock of the Company from the Exercise Date
with respect to such Warrants through and including the Expiration Date with
respect to such Warrants. Each Warrant may be exercised on any Business Day on
or prior to 5:00 p.m. Connecticut time on the Expiration Date. After 5:00 p.m.
Connecticut time on the Expiration Date, unexercised Warrants will become wholly
void and of no value.

     (e)  Subject to the provisions of this Agreement, the Holder shall have the
right to purchase from the Company (and the Company shall issue and sell to the
Holder) one fully paid and nonassessable share of Common Stock at the exercise
price (the "Exercise Price") at the time in effect hereunder, upon surrender to
the Company of the Warrant Certificate evidencing the Warrant

                                       3
<PAGE>

exercised, with the Form of Exercise attached therewith duly completed and
signed, and upon payment of the Exercise Price in lawful money of the United
States of America by certified or official bank check payable to the order of
the Company or as pursuant to Section 13 herein. The Exercise Price and the
number of shares of Common Stock purchasable upon exercise of a Warrant shall be
subject to adjustment as provided in Section 11. Except as provided in Section
11, no adjustment shall be made for any cash dividends or other distributions on
or in respect of the Common Stock or other securities purchasable upon the
exercise of a Warrant.

     (f)  Subject to Sections 7 and 13, upon surrender of a Warrant Certificate
and payment of the Exercise Price at the time in effect thereunder and an amount
equal to any applicable transfer tax in cash or by certified check or official
bank check payable to the order of the Company, the Company shall thereupon
promptly cause to be issued and shall deliver to the Holder within a reasonable
time, not exceeding fifteen days, after each Warrant represented by the Warrant
Certificate shall have been exercised, a certificate for the shares of Common
Stock issuable upon the exercise of each Warrant evidenced by such Warrant
Certificate. The Holder shall be deemed to have become the holder of record of
such shares of Common Stock (a "Shareholder") as of the date of the surrender of
such Warrant Certificate and payment of the Exercise Price.

     (g)  The Warrants evidenced by a Warrant Certificate shall be exercisable
at the election of the Holder, either as an entirety or from time to time for
part only of the number of Warrants evidenced by the Warrant Certificate. In the
event that less than all of the Warrants evidenced by a Warrant Certificate
surrendered upon the exercise of Warrants are exercised, a new Warrant
Certificate or Certificates shall be issued for the remaining number of Warrants
evidenced by the Warrant Certificate so surrendered. All Warrant Certificates
surrendered upon exercise of Warrants shall be cancelled by the Company.
Notwithstanding anything herein to the contrary, the Company

                                       4
<PAGE>

may elect to pay cash in lieu of issuing Common Stock as provided in Section
13(a) of this Agreement.

     Section 6.  Exercise Price.  The Exercise Price of each Warrant shall be
                 --------------
two times the per share Market Price of the Common Stock on the Grant Date.

     Section 7.  Payment of Taxes.  The Company shall pay all documentary stamp
                 ----------------
taxes, if any, attributable to the issuance of Warrants and the issuance of
Common Stock upon the exercise of any Warrant; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issuance of any certificates for shares
of Common Stock in a name other than that of the Holder of a Warrant Certificate
surrendered upon the exercise of a Warrant and the Company shall not be required
to issue or deliver such certificates unless or until the persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

     Section 8.  Mutilated or Missing Warrant Certificates.  In case any of the
                 -----------------------------------------
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company
shall issue, in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of and in substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor
and representing an equivalent number of Warrants, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of such
Warrant Certificate and

                                       5
<PAGE>

indemnity, if requested, also satisfactory to the Company. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
requirements and pay such other reasonable charges as the Company may prescribe.

     Section 9.  Reservation of Common Stock.  The Company will at all times
                 ---------------------------
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued shares of Common Stock and shares of Common Stock
held in its Treasury, for the purpose of enabling it to satisfy any obligation
to issue shares of Common Stock upon the exercise of Warrants the maximum number
of shares of Common Stock which are required to be delivered upon the exercise
of all outstanding Warrants.

     The Company covenants that all shares of Common Stock which may be issued
upon the exercise of Warrants will, upon issuance, be duly issued and
outstanding; fully paid and nonassessable and free from all taxes, liens,
charges and security interests with respect to the issuance thereof.

     The Company is authorized to requisition from time to time from a transfer
agent for the Common Stock (including the Company if then acting as a transfer
agent) stock certificates required to honor the exercise of outstanding
Warrants.  The Company hereby authorizes its present and any future such
transfer agent to comply with all such requests.  The Company will supply such
transfer agent with duly executed Common Stock certificates for such purposes
and will itself provide or otherwise make available any cash which may be
payable as provided in Section 11.

     Section 10. Stock Exchange or Nasdaq Listings.  The Company will use its
                 ---------------------------------
best efforts to have the shares of Common Stock which are issuable upon exercise
of Warrants listed for trading on any securities exchange or the National
Association of Securities Dealers Automated Quotation System on which the then
outstanding Common Stock is then listed.

                                       6
<PAGE>

     Section 11. Adjustment of Exercise Price and Number and Kind of Securities
                 --------------------------------------------------------------
Purchasable upon Exercise of Warrants.
-------------------------------------

     (a) Adjustment of Exercise Price and Number of Warrants.  The Exercise
         ---------------------------------------------------
Price shall be subject to adjustment from time to time as provided in this
Section 11.  No adjustment of the Exercise Price, however, shall be made in an
amount less than $.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment, if any, which together with any subsequent adjustments so carried
forward shall amount to $.01 per share or more.  Upon each adjustment of the
Exercise Price, the Holder shall thereafter, at or prior to the Expiration Date,
be entitled to purchase, at the Exercise Price resulting from such adjustment,
the number of shares issuable upon exercise of the Warrants (calculated to the
nearest whole share) obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the Exercise Price resulting from such adjustment.

     (b) Subdivision or Combination of Stock.  In case the Company shall at any
         -----------------------------------
time subdivide the outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and the number of shares issuable upon exercise of
the Warrants immediately prior to such subdivision shall be proportionately
increased, and conversely, in case the outstanding shares of Common Stock shall
be combined at any time into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination shall be proportionately increased
and the number of shares issuable upon exercise of the Warrants immediately
prior to such combination shall be proportionately reduced.

                                       7
<PAGE>

     (c) Adjustments for Consolidation, Merger, Sale of Assets, Reorganization,
         ----------------------------------------------------------------------
etc.  In case  the Company (i) consolidates with or merges into any other
---
corporation and is not the continuing  or surviving corporation of such
consolidation or merger, or (ii) permits any other corporation to consolidate
with or merge into the Company and the Company is the continuing or surviving
corporation but, in connection with such consolidation or merger, the Common
Stock of the Company is changed into or exchanged for stock or other securities
of any other corporation or cash or any other assets, or (iii) transfers all or
substantially all of its properties and assets to any other corporation, or (iv)
effects a capital reorganization or reclassification of the capital stock of the
Company in such a way that holders of Common Stock shall be entitled to receive
stock, securities, cash or assets with respect to or in exchange for Common
Stock, then, and in each such case, proper provision shall be made so that, upon
the basis and upon the terms and in the manner provided in this subsection (c),
the Holder, upon the exercise of the Warrants at any time after the consummation
of such consolidation, merger, transfer, reorganization or reclassification,
shall be entitled to receive (at the aggregate Exercise Price in effect for
shares issuable upon such exercise of the Warrants prior to such consummation,
the stock and other securities, cash and assets to which such Holder would have
been entitled upon such consummation if such Holder had so exercised such
Warrants immediately prior thereto (subject to adjustments subsequent to such
corporate action as nearly equivalent as possible to the adjustments provided
for in this Section 11).  Notwithstanding the foregoing, in the event that a
definitive agreement (a "Sale Agreement") is executed with respect to an all
cash transaction involving (i) either a merger or consolidation of the Company
with and into another corporation or (ii) the sale of all or substantially all
of the outstanding shares of Common Stock of the Company, the Company shall have
the right, on three (3) days prior written notice to the Holder, to pay or cause
to be paid to the Holder on or immediately prior to the closing date of the

                                       8
<PAGE>

transactions under the Sale Agreement in full and complete satisfaction and
cancellation of the Warrants, an amount in cash equal to (A) the product of (x)
the price per share of Common Stock payable to the holders of Common Stock under
the Sale Agreement and (y) the number of shares of Common Stock issuable upon
exercise of the Warrants on such date minus (B) the product of (x) the Exercise
Price in effect at such date and (y) the number of shares of Common Stock
issuable upon exercise of the Warrants on such date.

     (d) Notice of Adjustment.  Whenever the number of shares issuable upon the
         --------------------
exercise of the Warrants or the Exercise Price is adjusted, as provided in this
Section 11, the Company shall prepare and mail to the Holder a certificate
setting forth (i) the Exercise Price and the number of shares issuable upon the
exercise of the Warrants after such adjustment, (ii) a brief statement of the
facts requiring such adjustment and (iii) the computation by which such
adjustment was made.

     (e) No Change of Warrant Necessary.  Irrespective of any adjustment in the
         ------------------------------
Exercise Price or in the number or kind of shares issuable upon exercise of the
Warrants, the Warrants may continue to express the same price and number and
kind of shares as are stated in the Warrants as initially issued.

     (f) Successive Transactions.  The provisions of this Section 11 shall
         -----------------------
similarly apply to successive transactions.

     Section 12.  Fractional Shares of Common Stock.  The Company may, but will
                  ---------------------------------
not be required to, issue fractions of shares of Common Stock or to distribute
shares of Common Stock certificates which evidence fractions of shares upon the
exercise of the Warrants; provided, however, that in lieu of fractional shares
of Common Stock the Company shall make a cash payment thereof for equal in
amount to the product of the applicable fraction multiplied by the current
market price of shares of the Company's Common Stock then in effect.

                                       9
<PAGE>

     Section 13.  Exercise Options.
                  ----------------

     (a) Cash In Lieu of Exercise. At any time prior to the Expiration Date, the
         ------------------------
Holder may notify the Company of its intent to exchange the Warrants represented
by the Warrant Certificates in whole or in part (a "Warrant Exchange") into the
number of fully paid and non-assessable shares of Common Stock determined in
accordance with this Section 13, by surrendering such Warrant Certificate(s) at
the principal office of the Company or at the office of its Transfer Agent,
accompanied by a notice stating such Holder's intent to effect such exchange and
the number of Warrants to be exchanged (the "Notice of Exchange").  Upon receipt
of a Notice of Exchange, the Company shall have the option in its sole
discretion to pay to Holder cash in lieu of Common Stock issuable upon Holder's
exercise of Warrants, if, on a fully diluted basis, Holder's total ownership in
the Company on the date of a Notice of Exchange (defined below) exceeds ten
percent (10%) of the total outstanding Common Stock on the date on which the
Notice of Exchange is received by the Company.  For the purpose of this Section
13(a), "ownership" means Holder's ownership of the Company's Common or Preferred
Stock and securities convertible into shares of Common or Preferred Stock.  If
the Company elects to exercise its cash payment option under this Section 13(a),
the Company shall notify Holder of such election within five (5) days of the
Company's receipt of the Notice of Exchange. If the Company elects to exercise
its cash payment option, the Company shall pay to Holder in cash an amount per
share equal to the difference between the Exercise Price and Market Price.  The
Company shall pay any cash due to Holder as follows:  one third of such sum
within ten (10) days of the date of the Company's receipt of the Notice of
Exchange and the balance in cash paid one third thereof on each of the first and
second anniversaries of the day after the date of Notice of Exchange.  Any
unpaid sums shall accrue interest at six percent (6%) per year.

                                       10
<PAGE>

     (h)  Cashless Exercise. At any time prior to the Expiration Date and
          -----------------
subject to Section 13(a), the Holder may do a Warrant Exchange for the number of
fully paid and non-assessable shares of Common Stock determined in accordance
with this Section 13(b), by surrendering such Warrant Certificate(s) at the
principal office of the Company or at the office of its Transfer Agent,
accompanied by a Notice of Exchange. Certificates for the shares issuable upon
such Warrant Exchange and, if applicable, a Warrant Certificate of like tenor
evidencing the balance of the shares remaining subject to the Holder's Warrant
Certificate(s), shall be issued as of the date of the Notice of Exchange and
delivered to the Holder within fifteen (15) business days following the date
that the Notice of Exchange is received by the Company (the "Exchange Date"). In
connection with any Warrant Exchange, the Holder's Warrant Certificate(s) shall
represent the right to subscribe for and acquire the number of shares of Common
Stock (rounded to the next highest integer) equal to the product of (A) the
number of shares covered by the Warrant Certificate(s) that are being exchanged
as specified by the Holder in its Notice of Exchange (the "Total Share Number")
multiplied by (B) a fraction, the numerator of which is the Market Price
(defined below) of the Company's Common Stock less the then existing Exercise
Price per share and the denominator of which is the Market Price.

     (i)  For the purpose of this Section 13, Market Price, which shall be
calculated on the date on which the Notice of Exchange is received by the
Company, shall be the last reported sale price, or in case no such reported sale
takes place on such day, the average of the last reported sale prices for the
last three trading days, in either case as officially reported by the principal
securities exchange on which the Common Stock is listed or admitted to trading
or as reported in the Nasdaq Market System (National or SmallCap system, as
applicable) or, if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on the Nasdaq Market System, the last
reported

                                       11
<PAGE>

sale price as furnished by the National Association of Securities Dealers, Inc.
through Nasdaq or similar organization if Nasdaq is no longer reporting such
information, or if the Common Stock is not quoted on Nasdaq, as determined in
good faith by resolution of the Board of Directors of the Company, based on the
best information available to it for the two (2) days immediately preceding such
issuance or sale and the day of such issuance or sale.

     Section 14.  Restrictions on Transferability.
                  -------------------------------

     The Warrant Certificates and the shares of Common Stock issuable upon
exercise of the Warrants shall not be transferable except upon the conditions
specified in this Section 14, which conditions are intended to insure compliance
with the provisions of the Securities Act in respect of the transfer of any
Warrant Certificate or any shares of Common Stock issuable upon exercise of the
Warrants.
          (a)     Restrictive Legend; Holder's Representation.  Unless and until
                  -------------------------------------------
otherwise permitted by this Section 14, each certificate representing shares of
Common Stock issuable upon exercise of the Warrants, and any certificate issued
at any time upon transfer of, or in exchange for or replacement of, any
certificate bearing the legend set forth below shall be stamped or otherwise
imprinted with a legend in substantially the following form:

       "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS
     AND THE TRANSFER, RESALE OR OTHER DISPOSITION OF SUCH SECURITIES MAY BE
     MADE ONLY PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
     SECURITIES ACT OR A VALID EXEMPTION THEREFROM AND IN COMPLIANCE WITH ALL
     APPLICABLE STATE SECURITIES LAWS, AND BY DELIVERY OF AN OPINION OF COUNSEL
     SATISFACTORY TO THE COMPANY THAT THERE IS SUCH AN EXEMPTION.

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
     CONDITIONS OF THAT CERTAIN WARRANT AGREEMENT DATED AS OF _____________,
     2001, BY AND BETWEEN THE HOLDER AND THE

                                       12
<PAGE>

     COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO
     THE SECRETARY OF THE COMPANY."

     The Holder represents to the Company that it is acquiring the Warrants and
will acquire the shares of Common Stock issuable upon exercise of the Warrants
(if at all) for its own account and not with a view to any public distribution
thereof.  The acquisition of any Warrants or shares of Common Stock issuable
upon exercise of the Warrants by the Holder on the date of this Agreement or
upon exercise of a Warrant shall constitute the Holder's reaffirmation of such
representation.  The Holder further represents to the Company that it is an
"accredited investor" as defined in Regulation D under the Securities Act.  The
Holder understands that the Warrants and the shares of Common Stock issuable
upon exercise of the Warrants have not been registered under the Securities Act
and may only be sold or otherwise disposed of in compliance with the Securities
Act.  The Holder by its acceptance of such security further understands that
such security may bear a legend as contemplated by this Section 14.

     All Warrant Certificates issued upon transfer, division or combination of,
or in substitution for, any Warrant Certificate or Warrant Certificates entitled
to bear such legend shall have a similar legend endorsed thereon.

     Section 15.  Registration Rights.  (a) For a period of two (2) years from
                  -------------------
the Grant Date, if the Company shall determine to register any of its
securities, for its own account or the account of any of its shareholders, other
than a registration on Form S-8 or on Form S-4 or on Form S-3 relating solely to
an SEC Rule 145 transaction or relating solely to a merger, recapitalization,
share exchange, consolidation, acquisition or similar transaction, the Company
will:

     (i)  promptly give to the Holder written notice thereof; and

                                      13
<PAGE>

     (ii) include in such registration, and in any underwriting involved
therein, all the shares of Common Stock issued or issuable upon exercise of the
Warrants specified in a written request or requests, made within 30 days after
receipt of such written notice from the Company, by the Holder, except as set
forth in subsection 15(b) and (c) below.

     (b)  Underwriting.  If the registration of which the Company gives notice
          -------------
is for a registered public offering involving a firm-commitment underwriting,
the Company shall so advise the Holder as a part of the written notice given
pursuant to subsection 15(a)(i).  In such event the right of the Holder pursuant
to this subsection 15 shall be conditioned upon the Holder's participation in
such underwriting and the inclusion of the Holder's Common Stock in the
underwriting to the extent provided herein.  The Holder proposing to distribute
its securities through such underwriting shall (together with the Company and
the other shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form (and not inconsistent
with the terms hereof) with the underwriter or underwriters selected for such
underwriting by the Company.

     (c)  In the case of any registration of Common Stock by the Company in a
firm-commitment underwriting, if the managing underwriters give written advice
to the Company that marketing factors require a limitation on all or any part of
the number of shares of Common Stock (or other securities convertible into or
exercisable or exchangeable for Common Stock) to be offered and sold by
stockholders of the Company in such offering, there shall be included in the
offering: (i) first, all securities proposed by the Company to be sold for its
account; and (ii) second, that number of shares of Common Stock, if any,
requested to be included in such registration statement by the Holder and by
other stockholders of the Company having contractual rights to include shares in
such registration, on a pro rata basis based upon the number of shares of Common
Stock each Holder and

                                      A-14
<PAGE>

each such other stockholder beneficially owns, except that where such a
registration is solely for another shareholder, such shareholder shall be
considered before the Holder.

     (d)  The shares of Common Stock issuable upon exercise of the Warrants
covered by an effective registration statement may be transferred by the Holder
for as long as the registration statement is effective.  Not withstanding the
foregoing, the Holder shall not offer or sell on the open market more than
100,000 shares of such Common Stock issuable upon exercise of the Warrants
during a period of five (5) consecutive trading days at any time for the term of
this Agreement. If the Holder does not comply with this section 15(d), the
Company has a right to amend the registration statement and to remove from
registration any of Common Stock issuable upon exercise of the Warrants which
remains unsold by the Holder.

     (e)  If at any time after giving notice pursuant to 15(a) hereof and prior
to the effective date of any such registration statement, the Company shall
determine for any reason not to register or to delay registration of its
securities, the Company may give written notice of such determination to Holder
who has requested inclusion of Common Stock issuable upon exercise of the
Warrants in such registration statement and, thereupon the Company (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Common Stock and (ii) in the case of a determination to delay
registration, shall be permitted to delay registering any Common Stock for the
same period as the delay in registering other securities included in such
registration statement.

     (f)  The Company will notify Holder at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, included an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing, and Holder shall thereupon forthwith discontinue use of such
prospectus until receipt of notice from the Company that use of such prospectus
may be resumed or receipt of prospectus supplement or amendment so that such
prospectus will not contain such untrue statement or omission.

     (g)  Holder included in any registration shall promptly furnish to the
Company such information regarding the Holder and the distribution proposed by
the Holder as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to
herein.

     Section 16.  Notices.   All notices, demands or other communications
                  -------
hereunder shall be in writing and shall be deemed to have been duly given if
delivered in person, via registered or certified mail, return receipt requested,
postage prepaid, or by nationally recognized overnight courier services:

             (a)  If to the Company, to:

                  Mercator Software, Inc.
                  45 Danbury Road,
                  Wilton, Connecticut  06897
                  Attention: Chief Executive Officer

                  with a copy to:

                  Gould & Wilkie LLP
                  One Chase Manhattan Plaza
                  New York, N.Y.  10005-1401
                  Attention: Paul A. Soden, Esq.

             (b)  if to Holder, to:

                  Morgan Howard (UK) Limited
                  40-43 Chancery Lane
                  London WC2A 1JB
                  Attention: Alister Piggott

                                      15
<PAGE>

or at such other address as may have been furnished by such person in writing to
the other parties. Any such notice, demand or other communication shall be
deemed to have been given on the date actually delivered (or delivery is
refused) or as of the date deposited with the courier, as the case may be.

     Section 17.  Supplements and Amendments.
                  --------------------------
     (a)  The Company may from time to time supplement or amend this Agreement
without the approval of the Holder in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions with regard to
matters or questions arising hereunder which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the Holder.

     (b)  This Agreement may be changed, waived or terminated only with the
written consent of the Company and Holder.

     Section 18.  No Rights as Shareholders.  Nothing contained in this
                  -------------------------
Agreement or in any of the Warrant Certificates shall be construed as conferring
upon the Holder any rights of a shareholder, including without limitation, the
right to vote, to receive dividends or to consent to, or receive notice as a
shareholder in respect of, any meeting of shareholders for the election of
directors of the Company or for any other matter.

                                      16
<PAGE>

     Section 19.  Successors.  All the covenants and provisions of this
                  ----------
Agreement by or for the benefit of the Company or the Holder shall bind and
inure to the benefit of their respective successors and permitted assigns
hereunder.

     Section 20.  Termination.  This Agreement shall terminate and be of no
                  -----------
further force and effect at, and no Warrant may be exercised after, 5:00 p.m.
Connecticut time on the Expiration Date provided for in Section 5 of this
Agreement.  Notwithstanding the foregoing, this Agreement will terminate on such
earlier date when all Warrants have been exercised and no Warrants remain
outstanding.

     Section 21.  Governing Law. This Agreement and each Warrant issued
                  -------------
hereunder shall be governed by and construed in accordance with the internal
laws of the State of Connecticut, without regard to its conflicts of laws
provisions.

     Section 22.  Jurisdiction:  Service of Process. Any action or proceeding
                  ---------------------------------
arising out of this Agreement may be brought against any of the parties in the
courts of the state of Connecticut, County of Fairfield, or, if it has or can
acquire jurisdiction, in the United States District Court for the District of
Connecticut, and each of the parties consents to the jurisdiction of the state
and federal courts of the State of Connecticut (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein.

     Section 23.  Benefits of this Agreement; Rights of Action.  Nothing in this
                  --------------------------------------------
Agreement shall be construed to give to any person or corporation other than the
Company and the Holder any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company and the Holder.

                                      A-17
<PAGE>

     Section 24.  Counterparts. This Agreement may be executed in one or more
                  ------------
counterparts by facsimile signature, and with counterpart signature pages, each
of which shall be an original, and all of which together shall constitute one
and the same Agreement.

     Section 25.  Headings.  The descriptive headings of the several paragraphs
                  --------
of this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.

     Section 26.  Severability.  If any term, provision, covenant or restriction
                  ------------
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.

                                      A-18
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.

                              MERCATOR SOFTWARE, INC.



                              By:_______________________________________
                                  Name:
                                  Title:

Attest:

_________________________


                              MORGAN HOWARD (UK) LIMITED



                              By:_______________________________________
                                  Name:
                                  Title:

Attest:

_________________________

                                      A-19
<PAGE>

                                   EXHIBIT A
                         [FORM OF WARRANT CERTIFICATE]

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND THE
TRANSFER, RESALE OR OTHER DISPOSITION OF SUCH SECURITIES MAY ONLY BE MADE
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR A
VALID EXEMPTION THEREFROM AND IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES
LAWS, AND BY DELIVERY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
THERE IS SUCH AN EXEMPTION.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF THAT CERTAIN WARRANT AGREEMENT DATED AS OF ___________________,
2001, BY AND BETWEEN THE HOLDER AND THE COMPANY, COPIES OF SUCH AGREEMENT MAY BE
OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.

           EXERCISABLE ONLY ON OR BEFORE 5:00 P.M. CONNECTICUT TIME

                            _______________, 200__

No. W-                                            _________ Warrants

                              WARRANT CERTIFICATE

                            MERCATOR SOFTWARE, INC.

     This Warrant Certificate certifies that Morgan Howard (UK) Limited, a U.K.
corporation, is the registered holder (the "Holder") of _______ Warrants (the
"Warrants") expiring ____________, 200_ to purchase shares of common stock of
Mercator Software, Inc., a Delaware corporation (the "Company").  Each Warrant
entitles the Holder to purchase from the Company, on or after the issuance
hereof, and on or before 5:00 p.m. Connecticut time on ________ one fully paid
and nonassessable share of common stock of the Company, par value $.01 per share
("Common Stock"), at the exercise price (the "Exercise Price") at the time in
effect under the Warrant Agreement (as defined on the reverse hereof), payable
in lawful money of the United States of America, upon surrender of this Warrant
Certificate and payment of such Exercise Price to the Company in Wilton,
Connecticut, subject to the conditions set forth herein and in the Warrant
Agreement, provided, however, that the number or kinds of shares of Common Stock
or other securities (or in certain events other property) purchasable upon
exercise of the Warrants and the Exercise Price referred to on the reverse
hereof may as of the date of this Warrant Certificate have been, or may after
such date be, adjusted as a result of the occurrence of certain events, as more
fully provided in the Warrant Agreement.  Payment of the Exercise Price shall be
made by certified or official bank check payable to the order of the Company or
as provided in Section 13 of the Warrant Agreement.

     No Warrant may be exercised after 5:00 p.m. Connecticut time on __________
,200_(the "Expiration Date").

     Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.

     This Warrant Certificate shall not be valid unless countersigned by the
Holder by the manual signature of one of its authorized officers.

                                      A-1
<PAGE>

                         Void after ____________, 200_

                            MERCATOR SOFTWARE, INC.

     The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to a Warrant Agreement, dated
____________, 2001 (the "Warrant Agreement"), between the Company and Holder,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the Holder.  Capitalized terms used but not defined herein shall
have the meanings assigned to such terms in the Warrant Agreement.  A copy of
the Warrant Agreement is available for inspection at the Company, located at 45
Danbury Road, Wilton, Connecticut, during regular business hours.

     Warrants may be exercised to purchase shares of Common Stock from the
Company at any time, or from time to time on or after ________, 200_ and on or
before the Expiration Date, at the Exercise Price then in effect.  The Holder
may exercise the Warrants represented by this Warrant Certificate by
surrendering the Warrant Certificate with the Form of Exercise attached herewith
properly completed and executed, together with payment of the Exercise Price at
the time in effect, to the Company.  In the event that an exercise of Warrants
evidenced hereby shall be an exercise of less than the total number of Warrants
evidenced hereby, there shall be issued to the Holder a new Warrant Certificate
evidencing the number of Warrants not exercised.  The Holder may exchange the
Warrants represented by this Warrant Certificate by surrendering the Warrant
Certificate with the Form of Exercise attached herewith properly completed and
executed, together with a Notice of Exchange, to the Company.  In the event that
an exchange of Warrants evidenced hereby shall be an exchange of less than the
total number of Warrants evidenced hereby, there shall be issued to the Holder a
new Warrant Certificate evidencing the number of Warrants not exchanged. No
adjustment will be made for any dividends on any shares of Common Stock issuable
upon exercise or exchange of this Warrant.

     The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price may, subject to certain conditions, be adjusted and under
certain circumstances the Warrant may become exercisable for securities or other
assets other than the shares of Common Stock referred to on the face hereof.  If
the Exercise Price is adjusted, the Warrant Agreement provides that the number
of shares of Common Stock purchasable upon the exercise of each Warrant shall be
adjusted.

     The Company may, but shall not be required to, issue fractions of shares of
Common Stock or any certificates that evidence fractional shares of Common
Stock.  In lieu of fractional shares of Common Stock, the Company shall make a
cash payment therefor equal in amount to the product of the applicable fraction
multiplied by the current market price then in effect.

     The Warrants represented by this Warrant Certificate are not transferable
or assignable, in whole or in part. The Company shall make no service or other
charge in connection with any such exchange of this Warrant Certificate, for the
purpose of any exercise hereof, any distribution to the Holder hereof, and for
all other purposes.

                                      A-2
<PAGE>

                              [FORM OF EXERCISE]

          To Be Executed by the Holder in Order to Exercise Warrants

     THE UNDERSIGNED HOLDER hereby irrevocably elects to exercise _____________
Warrants represented by this Warrant Certificate, and to purchase the securities
issuable upon the exercise of such Warrants, and requests that certificates for
such securities shall be issued in the name of

            _______________________________________________________
            (please insert name and taxpayer identification number)

and be delivered to
            _______________________________________________________

            _______________________________________________________

            _______________________________________________________

            _______________________________________________________
                    (please print or type name and address)

and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Holder at the
address stated below:

            _______________________________________________________

            _______________________________________________________

            _______________________________________________________
                                   (Address)


                       _________________________________
                                    (Date)


                       _________________________________
                           (Signature of the Holder)

                                      A-3