EXHIBIT 5.3
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "AGREEMENT") is entered into as of
March 31, 1999, by and between Telescan, Inc., a Delaware corporation
("TELESCAN"), and MicroCap Financial ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation
("MICROCAP"),
WHEREAS, contemporaneously with the execution of this Agreement, the
parties are entering into a Stock Exchange Agreement dated as of the date hereof
("EXCHANGE AGREEMENT"), whereby (i) Telescan shall issue and deliver to MicroCap
shares of its common stock, par value $0.01 per share ("TELESCAN COMMON STOCK"),
and (ii) MicroCap shall issue and deliver to Telescan shares of its common
stock, par value $0.001 per share ("MICROCAP COMMON STOCK"); and
WHEREAS, in connection with the transactions contemplated in the
Exchange Agreement, Telescan desires to acquire a non-assignable option (the
"OPTION") to purchase shares of MicroCap Common Stock such that, after giving
effect to the 5,176,161 shares of MicroCap acquired by Telescan in connection
with the Stock Exchange Agreement, Telescan would upon exercise of the Option
then own not more than 19.9% of the then outstanding MicroCap Common Stock (the
"OPTION SHARES"), and;
WHEREAS, MicroCap desires to issue the Option to Telescan, subject to
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. ISSUANCE OF THE OPTION. By execution hereof, MicroCap hereby
grants the Option to Telescan. The exercise price of this Option will be $3.75
per share (the "Exercise Price"). The number of Option Shares and the Exercise
Price per Option Share under this Option are subject to adjustment as provided
in Section 5 hereof and shall in the aggregate upon exercise cause Telescan to
own no more than 19.99% ofthe then outstanding shares of common stock of
MicroCap.
Section 2. CONSIDERATION. As consideration for the Option, Telescan
shall issue and deliver on the date hereof, 25,000 unregistered shares of
Telescan Common Stock to MicroCap. Such shares of Telescan Common Stock shall be
fully paid and nonassessable upon issuance hereunder.
Section 3. EXERCISE OF THE OPTION. The Option may be exercised, in
whole or in part, by the Telescan by written notice to MicroCap at the address
set forth in the Exchange Agreement (specifying the number of Option Shares
being purchased), at any time within the period beginning on the date hereof and
expiring at 5:00 p.m. Houston, Texas time, on March 30, 2000 ("EXERCISE
PERIOD"), and by payment to MicroCap by certified check or bank draft in an
amount equal to the Exercise Price multiplied by the number of shares of
MicroCap Common Stock so purchased.
MicroCap 1000 Stock Option Agreement
Page 1 of 4
MicroCap agrees that the shares of MicroCap Common Stock so purchased shall be
deemed to be issued to Telescan as the record owner thereof as of the close of
business on the date on which payment is made for such shares of MicroCap Common
Stock. Certificates representing the shares of MicroCap Common Stock so
purchased, together with any cash for fractional shares of MicroCap Common Stock
paid pursuant to Section 5(c) hereof, shall be delivered to Telescan promptly.
Section 4. MICROCAP COVENANTS. MicroCap covenants and agrees (a) that
all shares of MicroCap Common Stock which may be issued upon the exercise of the
Option represented by this Agreement, upon issuance and when fully paid for,
will be validly issued, fully paid and nonassessable and free of all taxes,
liens, charges, encumbrances and security interests, (b) that during the
Exercise Period, MicroCap will at all times have authorized, and reserved for
the purpose of issue or transfer upon exercise of the Option evidenced by this
Agreement, sufficient shares of MicroCap Common Stock to provide for the
exercise of the Option represented by this Agreement, and (c) that MicroCap will
take all such action as may be necessary to ensure that the shares of MicroCap
Common Stock issuable upon the exercise of the Option may be so issued without
violation of any applicable law or regulation, or any requirement of any
securities exchange upon which any capital stock of MicroCap may be listed.
Section 5. ADJUSTMENTS.
(a) ADJUSTMENTS. The number of Option Shares and the Exercise
Price per Option Share hereunder are subject to adjustment as follows:
(1) ADJUSTMENT OF EXERCISE PRICE. If at any time
following the issuance of the Option, MicroCap shall issue any MicroCap Common
Stock or any security or evidence of indebtedness which is convertible into or
exchangeable for MicroCap Common Stock, or any warrant, option or other right to
subscribe for or purchase MicroCap Common Stock, or any evidence of indebtedness
which is convertible into or exchangeable for MicroCap Common Stock or which
represents an equivalent claim on assets of MicroCap as does the MicroCap Common
Stock (hereinafter "EQUITY STOCK"), other than Excluded Stock (as hereinafter
defined) for a consideration per share which is less than the Exercise Price
then in effect, then the Exercise Price shall immediately be reduced to equal
the lesser price paid for the Equity Stock. In the case of cash consideration,
the consideration per share received by MicroCap shall be before deduction of
any commissions, fees or expenses. In the case of Equity Stock in the form of
options, warrants, exchangeable or convertible securities or rights thereto,
cash consideration shall be deemed to include the consideration, if any, to be
received by MicroCap upon the exercise, conversion or exchange of same. In the
case of consideration other than cash, the consideration shall be deemed to be
the fair value thereof as determined in good faith by the Board of Directors of
MicroCap. Excluded Stock shall mean (i) all stock issued or reserved for
issuance by MicroCap for stock dividends, (ii) stock issued or reserved for
employee stock options, so long as the total of such options does not exceed 15%
of the MicroCap Common Stock then outstanding, (iii) shares of MicroCap Common
Stock issued in connection with a Change in Control (as provided in Section 6
below), (iv) shares issued, issuable or reserved for issuance upon the operation
of the anti-dilution provisions of any securities of MicroCap, and (v) shares
issued, issuable or reserved for issuance upon exercise of currently outstanding
options, warrants or other rights to purchase securities of MicroCap.
MicroCap 1000 Stock Option Agreement
Page 2 of 4
(2) DE MINIMIS ADJUSTMENTS. No adjustments
in the Exercise Price and number of shares of MicroCap Common Stock purchasable
hereunder shall be required unless such adjustment would require an increase or
decrease of at least $0.10 in the Exercise Price; provided, however, that any
adjustments which by reason of this Section 5(a)(2) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest full share.
(b) NOTICE OF ADJUSTMENT. Whenever the number of Option Shares
purchasable upon the exercise of the Option or the Exercise Price is adjusted,
as herein provided, MicroCap shall promptly notify Telescan in writing (such
writing referred to as an "ADJUSTMENT NOTICE") of such adjustment or adjustments
and shall deliver to Telescan a statement setting forth the number of Option
Shares purchasable upon the exercise of the Option and the Exercise Price after
such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.
(c) FRACTIONAL INTEREST. MicroCap shall not be required to
issue fractional shares of MicroCap Common Stock on the exercise of the Option.
The number of full shares of Common Stock which shall be issuable upon an
exercise shall be computed on the basis of the aggregate number of the whole
shares of MicroCap Common Stock purchasable on such exercise. If any fraction of
a share of MicroCap Common Stock would, except for the provisions of this
Section 5(cj be issuable on the exercise of the Option (or specified portion
thereof), MicroCap shall pay an amount in cash equal to the closing price of one
share of MicroCap Common Stock on the date of exercise multiplied by such
fraction, computed to the nearest whole cent.
Section 6. CHANGE IN CONTROL.
(a) OPTIONAL REDEMPTION. In the event there is a Change in
Control (as defined below) of MicroCap, Telescan shall have the right, but not
the obligation, to demand that MicroCap redeem the Option for cash ("REDEMPTION
RIGHT"), in an amount equal to the number of Option Shares remaining thereunder,
multiplied by the difference between the Exercise Price and the consideration
per share to be received by MicroCap stockholders in connection with such Change
in Control ("REDEMPTION CONSIDERATION"). If MicroCap stockholders are to receive
non-cash consideration in connection with a Change of Control, the per share
value thereof shall be determined in good faith by the Board of Directors of
MicroCap.
(b) PROCEDURE. No less than thirty (30) days prior to the
effective date of a transaction constituting a Change in Control, MicroCap shall
give written notice thereof to Telescan, which notice shall contain a reasonable
description of such transaction, including (i) the identity of the parties, (ii)
the consideration to be received by the MicroCap stockholders in connection
therewith, and (iii) any other material terms and conditions. Telescan must then
exercise this Redemption Right by written notice received by MicroCap at least
(5) days prior to the effective date for the transaction constituting a Change
in Control. Telescan may condition the exercise of this Redemption Right upon
the effectiveness of the Change in Control transaction.
MicroCap 1000 Stock Option Agreement
Page 3 of 4
If Telescau exercises its Redemption Right, MicroCap shall be obligated to
deliver the Redemption Consideration to Telescan immediately available funds
upon the consummation of the Change in Control. The failure by Telescan to
exercise its redemption rights under this Section 6 shall not have affect the
Option.
(c) DEFINITION OF CHANGE IN CONTROL. For purposes of this
Section 6, the term "Change in Control" shall mean (i) a transaction or series
of transactions in which MicroCap sells all or substantially all of its assets
or (ii) any merger, share, exchange, consolidation, reorganization,
recapitalization or other business combination pursuant to which shares of
MicroCap Common Stock would be converted into cash, stock securities or other
property of another corporation.
Section 7. NO VOTING RIGHTS. Prior to exercise, this Option shall not
entitle Telescan to any voting rights or other rights as a stockholder of
MicroCap with respect to the Option Shares.
Section 8. CLOSING OF BOOKS. MicroCap will at no time close its
transfer books against the transfer of the Options or of any shares of MicroCap
Common Stock or other securities issuable upon the exercise of the Option in any
manner which interferes with the timely exercise of the Option.
Section 9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the federal laws of the United States and the laws
of the State of Texas, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws of the State of Texas.
Section 10. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 11. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed be be an original, but all of which
shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
AGREED AND ACCEPTED BY:
Company: Telescan, Inc. Company: MicroCap Financial ▇▇▇▇▇▇▇▇.▇▇▇, Inc.
---------------------- -------------------------------------
Signature: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
---------------------- -------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇ ▇▇▇▇▇▇▇▇
---------------------- -------------------------------------
Title: Senior Vice President Title: Sr. V.P.
---------------------- -------------------------------------
Date: 3/31/99 Date: 3/31/99
---------------------- -------------------------------------
MicroCap 1000 Stock Option Agreement
Page 3 of 4