1
EXHIBIT 99.3
STOCK OPTION EXERCISE NOTICE AND AGREEMENT
Secretary
GAMBIT AUTOMATED DESIGN, INC.
______________________________________
______________________________________
1. EXERCISE OF OPTION. The undersigned ("Optionee") hereby elects to exercise
Optionee's option to purchase shares of the common stock (the "Shares") of
GAMBIT AUTOMATED DESIGN, INC., a California Corporation (the "Company"), under
and pursuant to the Company's 1990 Stock Option Plan (the "Plan") and the [ ]
Incentive/[ ] Nonqualified Stock Option Grant dated ________, 19__ (the
"Option").
2. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option and agrees to abide by and
be bound by their terms and conditions. Optionee represents that Optionee is
purchasing the Shares for Optionee's own account for investment and not with a
view to, or for sale in connection with, a distribution of any of such Shares.
3. COMPLIANCE WITH SECURITIES LAWS. Optionee understands and acknowledges that
the Shares have not been registered under the Securities Act of 1933, as amended
(the "1933 Act"), and, notwithstanding any other provision of the Grant to the
contrary, the exercise of any rights to purchase any Shares are expressly
conditioned upon compliance with the Act and all applicable state securities
laws. Optionee agrees to cooperate with the Company to ensure compliance with
such laws. The Shares are being issued under the 1933 act pursuant to (check
applicable box):
[ ] the exemption provided by Rule 504;
[ ] the exemption provided by Rule 701; or
[ ] section 4(2) of the 1933 Act.
4. FEDERAL RESTRICTIONS ON TRANSFER. Optionee understands that the Shares must
be held indefinitely unless they are registered under the 1933 Act or unless an
exemption from such registration is available and that the certificate(s)
representing the Shares may bear a legend to that effect. Optionee understands
that the Company is under no obligation to register the Shares and that an
exemption may not be available or may not permit Optionee to transfer Shares in
the amounts or at the times proposed by Optionee.
(a) RULE 144. Optionee has been advised that Rule 144 promulgated under the 1933
Act, which permits certain resales of unregistered securities, is not presently
available with respect to the Shares and, in any event, requires that the Shares
be paid for and then held for a minimum of two years before they may be resold
under Rule 144. Prior to an initial public offering of the Company's stock, only
Rule 144(k), which requires that the Shares be paid for and held for a minimum
of three years, will be available. Additional restrictions apply to sales of the
Shares by officers, directors or major shareholders of the Company
("affiliates").
(b) RULE 701. If the exemption relied upon for exercise of the Shares is Rule
701, the Shares will become freely tradeable, subject to limited conditions
regarding the method of sale by non-affiliates 90 days after the first sale of
common stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the SEC, subject to any lengthier
market standoff agreement contained in this Agreement or entered into by the
Optionee. Affiliates must comply with the provisions (other than the holding
period requirements) of Rule 144.
5. STATE LAW RESTRICTIONS ON TRANSFER. Optionee understands that transfer of the
Shares may be restricted by Section 260.141.11 of the Rules of the California
Commissioner of Corporations, a copy of which is attached hereto, and that the
certificate(s) representing the Shares may bear a legend to that effect.
Page 1 of 3
2
GAMBIT AUTOMATED DESIGN, INC. STOCK OPTION EXERCISE NOTICE AND AGREEMENT
- -------------------------------------------------------------------------------
6. MARKET STANDOFF AGREEMENT. Optionee agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any public offering of the Company's securities,
Optionee will not sell or otherwise dispose of any Shares without the prior
written consent of the Company or such underwriters, as the case may be, for a
period of time (not to exceed 180 days) from the effective date of such
registration as the Company or the underwriters may specify for employee
shareholders generally.
7. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held by Optionee or any
transferee (either being sometimes referred to herein as the "Holder") may be
sold or otherwise transferred (including transfer by gift or operation of law),
the Company shall have a right of first refusal to purchase the Shares on the
terms and conditions set forth in this Section (the "Right of First Refusal").
(a) NOTICE OF PROPOSED TRANSFER. The Holder of the Shares shall deliver to the
Company a written notice (the "Notice") stating: (i) the Holder's bona fide
intention to sell or otherwise transfer such Shares; (ii) the name of each
proposed purchaser or other transferee ("Proposed Transferee"); (iii) the number
of Shares to be transferred to each Proposed Transferee; and (iv) the bona fide
cash price or other consideration for which the holder proposes to transfer the
Shares (the "Offered Price"); and the Holder shall offer to sell the Shares at
the Offered Price to the Company.
(b) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within 30 days after receipt
of the Notice, the Company may, by giving written notice to the Holder, elect to
purchase all of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.
(c) PURCHASE PRICE. The purchase price for the Shares purchased under this
Section shall be the Offered Price. If the Offered Price includes consideration
other than cash, the cash equivalent value of the non-cash consideration shall
be determined by the Board of Directors of the Company in good faith.
(d) PAYMENT. Payment of the purchase price shall be made, at the option of the
Company, either (i) in cash (by check), by cancellation of all or a portion of
any outstanding indebtedness of the Holder to the Company, or by any combination
thereof within 60 days after receipt of the Notice or (ii) in the manner and at
the time(s) set forth in the Notice.
(e) HOLDER'S RIGHT TO TRANSFER. If all of the Shares proposed in the Notice to
be transferred to a given proposed Transferee are not purchased by the Company
and/or its assignee(s) as provided in this Section, then the Holder may sell or
otherwise transfer such shares to that Proposed Transferee at the Offered Price
or at a higher price, provided that such sale or other transfer is consummated
within 120 days after the date of the Notice and provided further that any such
sale or other transfer is effected in accordance with any applicable securities
laws and the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company shall again be offered the Right of First Refusal,
before any Shares held by the Holder may be sold or otherwise transferred.
(f) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything to the contrary contained
in this Section notwithstanding, the transfer of any or all of the Shares during
the Optionee's lifetime or on Optionee's death by will or intestacy to
Optionee's immediate family or a trust for the benefit of Optionee or Optionee's
immediate family shall be exempt from the provisions of this Section. As used
herein, "immediate family" shall mean spouse, lineal descendant or antecedent,
father, mother, brother or sister or anyone else approved in advance by the
Board of Directors. In such case, the transferee or other recipient shall
receive and hold the Shares so transferred subject to the provisions of this
Section, and there shall be no further transfer of such Shares except in
accordance with the terms of this Section.
(g) TERMINATION OF RIGHT OF FIRST REFUSAL. The Right of First Refusal shall
terminate as to any Shares 90 days after the first sale of common stock of the
Company to the general public pursuant to a registration statement filed with
and declared effected by the Securities and Exchange Commission (other than a
registration statement solely covering an employee benefit plan or corporate
reorganization)
Page 2 of 3
3
GAMBIT AUTOMATED DESIGN, INC. STOCK OPTION EXERCISE NOTICE AND AGREEMENT
- -------------------------------------------------------------------------------
8. LEGENDS. Optionee understands and agrees that the Shares are subject to a
right of first refusal held by the Company (or its assignee(s)) as set forth
herein and that the certificate(s) representing the Shares will bear the
following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON PUBLIC RESALE AND TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE
ISSUER AND/OR ITS ASSIGNEE(S) AND MAY NOT BE TRANSFERRED EXCEPT AS SET FORTH IN
AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY
OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE
SHARES."
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE
SECURITIES ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH."
The California Commissioner of Corporations may require that the following
legend also be placed upon the share certificate(s) evidencing ownership of the
Shares:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
Optionee acknowledges receipt of a copy of Section 260.141.11 of the Rules of
the California Corporations Commissioner, a copy of which is attached hereto.
9. STOP-TRANSFER NOTICES. Optionee understands and agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop-transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
10. TAX CONSEQUENCES. Optionee understands that Optionee may suffer adverse tax
consequences as a result of Optionee's purchase or disposition of the Shares.
Optionee represents that Optionee has consulted with any tax consultant(s)
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.
11. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company the aggregate
purchase price of the Shares that Optionee has elected to purchase and has made
provision for the payment of any federal or state withholding taxes required to
be paid or withheld by the Company.
12. ENTIRE AGREEMENT. The Plan and Option are incorporated herein by reference.
This Agreement, the Plan and the Option constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the subject matter hereof, and is
governed by California law except for that body of law pertaining to conflict of
laws.
Submitted by: Accepted by:
OPTIONEE:
GAMBIT AUTOMATED DESIGN, INC.
By: ____________________________
Address: ____________________________ Its: ____________________________
____________________________
Dated: ____________________________ Dated: ____________________________
Page 3 of 3