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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. __________)*
General Magic, Inc.
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(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
370253 10 6
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(CUSIP Number)
Kimberly K. Hudolin, Esq.
General Motors Legal Staff
New Center One Building
Mail Code: 482-208-835
3031 West Grand Boulevard
Detroit, Michigan 48202
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
December 9, 1999
------------------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of (S)(S)240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [_].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See (S)240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 370253 10 6 13D Page 2 of 8 Pages
- ----------------------- ---------------------
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NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY).
General Motors Corporation FEIN No. 38-0572515
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS (SEE INSTRUCTIONS)
4
WC
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(D) or 2(E)
[_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 11,876,484
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 11,876,484
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
11,876,484
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12 (SEE INSTRUCTIONS)
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
22.1%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
14
CO
- ------------------------------------------------------------------------------
<PAGE>
Item 1. Security and Issuer
The class of equity securities to which this statement relates is the
common stock, par value $.001 per share (the "Common Stock") of General Magic,
Inc. ("General Magic" or "Issuer") with its principal executive offices at 420
North Mary Avenue, Sunnyvale, CA 94086.
Item 2. Identify and Background
(a) This Statement is filed by General Motors Corporation, a Delaware
corporation ("General Motors" or "GM").
(b) GM's business address is 100 Renaissance Center, Detroit, Michigan
48243-7301. The names, business addresses and principal businesses of each of
the directors and executive officers of GM are set forth on Schedule I hereto
and incorporated by reference herein.
(c) General Motors is engaged in the design, manufacturing and marketing of
cars, trucks, locomotives, and heavy duty transmissions and related parts and
accessories, and financing and insurance operations.
(d) During the past five years, neither GM nor, to the best of its
knowledge, any of its executive officers or directors has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the past five years, neither GM nor, to the best of its
knowledge, any of its executive officers or directors has been party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceedings was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
(f) To the best knowledge of GM, each of its executive officers and
directors is a United States citizen, other than Nobuyuki Idei, who is a citizen
of Japan, Percy N. Barnevik, who is a citizen of Sweden, and Eckhard Pfeiffer,
who is a citizen of Germany.
Item 3. Source and Amount of Funds or Other Consideration
General Motors purchased 1,500 shares of General Magic's voting, non-
redeemable Series G Convertible Preferred Stock (the "Series G Preferred") for
$15,000,000, and the Warrant (as described in Item 4) for a purchase price of
$1,000.00. The source of such consideration was cash on hand.
Item 4. Purpose of Transaction
GM has invested $15,001,000 in General Magic in exchange for 1,500 shares
of Series G Preferred, plus a warrant to purchase up to an additional $5 million
worth of Series G Preferred (the "Warrant"). This investment in General Magic
was made in connection with a development and licensing agreement for General
Magic's magicTalk voice user interface platform technology.
The Warrant is exercisable for 500 shares of Series G Preferred at a
current exercise price of $10,000 per share. General Motors has agreed not to
exercise the Warrant unless General Magic (a) obtains the approval of its
stockholders as required by applicable rules and regulations of NASDAQ for
issuance of Common Stock in excess of 19.99% of outstanding shares of Common
Stock as of December 9, 1999 or (b) obtains a written opinion of outside counsel
to General Magic that such approval is not required, which opinion is reasonably
satisfactory to General Motors.
Each Series G Preferred share is convertible into that number of shares of
Common Stock obtained by dividing the conversion amount by the conversion price.
The conversion amount equals $10,000 and the conversion price equals $1.684 per
share. However, General Motors has agreed that it will not convert the shares
of Series G Preferred to the extent that the shares issued upon conversion would
exceed 19.99% of General Magic's Common Stock outstanding as of December 9,
1999, unless General Magic (a) obtains the approval of its stockholders as
required by the applicable rules and regulations of NASDAQ for the issuance by
General Magic of that portion of the shares of Series G Preferred that may not
be converted without exceeding 19.99% of General Magic's outstanding shares of
Common Stock as of December 9, 1999 or (b) obtains a written opinion of outside
counsel to General Magic that such approval is not required, which opinion is
reasonably satisfactory to General Motors.
The terms of the Series G Preferred provide that GM may elect a member to
General Magic's Board of Directors. This right terminates upon the earlier of
(i) the date upon which less than 600 shares of Series G Preferred are
outstanding, (ii) the date upon which GM and its affiliates own less than a
majority of the outstanding shares of Series G Preferred and (iii) the date of
consummation of an acquisition of General Magic or the sale of all or
substantially all of General Magic's assets. In addition, the holders of the
Series G Preferred have the right to vote with the Common Stock as though part
of that class and are entitled to the number of votes equal to the largest
number of whole shares of Common Stock into which the Series G Preferred could
be converted.
Except as described above in this Item 4, GM does not have any plans or
proposals that relate to or would result in any of the actions or events
specified in clauses (a) through (j) of Item 4 of Schedule 13D. Notwithstanding
the foregoing, GM may determine to change its intent with respect to the Issuer
at any time in the future. General Motors intends to vote its shares of Series G
Preferred as it deems appropriate from time to time. In determining from time to
time whether to sell its shares of the Series G Preferred (and in what amounts)
or to retain such shares, General Motors will take into consideration such
factors as it deems relevant, including the business and prospects of the
Issuer, anticipated future developments concerning the Issuer, existing and
anticipated market conditions from time to time, general economic conditions,
regulatory matters, and other opportunities available to General Motors. General
Motors reserves the right to acquire additional securities of the Issuer in the
open market, in privately negotiated transactions (which may be with the Issuer
or with third parties) or otherwise, to dispose of all or
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a portion of its holdings of securities of the Issuer or to change its intention
with respect to any or all of the matters referred to in this Item 4.
Item 5. Interest in Securities of the Issuer
(a) Based on information provided to General Motors by the Issuer, there
were 41,924,616 shares of Common Stock of the Issuer outstanding on December 9,
1999.
General Motors owns Series G Preferred convertible into 8,907,363 shares of
Common Stock. In addition, the Warrant is exercisable for 500 shares of Series G
Preferred, which are convertible into 2,969,121 shares of Common Stock. However,
GM has agreed not to convert its Series G Preferred or exercise its Warrant in
excess of 19.99% of the Issuer's outstanding shares of Common Stock without (1)
obtaining the approval of the Issuer's shareholders as required by applicable
rules and regulations of NASDAQ or (2) obtaining a written opinion of outside
counsel to General Magic that such approval is not required, which opinion is
reasonably satisfactory to General Motors. Under Rule 13d-3 under the Exchange
Act, General Motors may be deemed to beneficially own the shares of Common Stock
that can be acquired upon conversion of the Series G Preferred.
On a fully converted basis, as of the date of this Statement, GM may be
deemed to beneficially own an aggregate of 11,876,484 shares of Common Stock,
which represents approximately 22.1% of the Issuer's outstanding Common Stock.
(b) In the event of any conversion of the Series G Preferred, GM is the
entity having sole power to vote, direct the vote, dispose or direct the
disposition of any Common Stock.
(c) There have not been any transactions in the Common Stock effected by
or for the account of GM or any of its executive officers or directors during
the past 60 days, nor has GM converted the Series G Preferred or exercised the
Warrant at any time since their respective acquisition.
(d) GM does not know of any other person having the right to receive or
the power to direct the receipt of dividends from, or the proceeds from the sale
of, the Series G Preferred, the Warrant or the underlying shares of Common
Stock.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
The following description is a summary only, and is qualified in its
entirety by reference to the agreements attached as exhibits hereto.
In addition to the contracts and agreements described in Item 4 above,
General Motors has certain registration rights with respect to the Common Stock
issuable upon conversion of the Series G Preferred, including those issued
pursuant to the Warrant (the "Registrable Securities"), pursuant to a
registration rights agreement, dated November 9, 1999 (the "Registration Rights
Agreement"), between the Issuer and General Motors. Pursuant to the
Registration Rights Agreement, General Motors may, at any time, demand
registration of the Registrable Securities. General Magic is not required to
register such shares unless the Registrable Securities sought to be registered
comprise at least forty percent of all Registrable Securities then held by GM or
the anticipated aggregate public offering price (after underwriting discounts
and commissions) is $5,000,000. GM is entitled to two demand registrations. In
addition, GM has the right to piggyback on certain registrations for public
offerings of General Magic's securities.
These rights are subject to the Issuer's right to defer the timing of a
demand registration and an underwriters' right to cut back shares in an
underwritten offering.
Other than the Registration Rights Agreement and the other agreements
described in Item 4 or Item 5 above, there are no contracts, arrangements,
understandings, or relationships between General Motors or, to the best of its
knowledge, any executive officer or director of GM, and any other person with
respect to any securities of the Issuer, including any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any
securities of the Issuer, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.
Item 7. Material to Be Filed as Exhibits
Exhibit 1 Certificate of Designations, Preferences and Rights of Series G
Convertible Preferred Stock of General Magic, Inc. filed with the
Delaware Secretary of State on December 7, 1999.
Exhibit 2 Warrant issued to General Motors for the Purchase of Shares of
Series G Convertible Preferred Stock.
Exhibit 3 Registration Rights Agreement, dated as of November 9, 1999 by
and between General Magic, Inc. and General Motors Corporation.
Exhibit 4* Letter Agreement dated as of December 9, 1999 between General
Magic, Inc. and General Motors Corporation regarding limitations
on the exercise of the Series G Convertible Preferred Stock and
the Warrant issued to General Motors.
*To be filed by amendment.
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
GENERAL MOTORS CORPORATION
By: /s/ Thomas A. Gottschalk
------------------------
Name: Thomas A. Gottschalk
Title: Sr. Vice President and General
Counsel
Date: December 17, 1999
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EXHIBIT INDEX
Exhibit No.
Exhibit 1 Certificate of Designations, Preferences and Rights of Series G
Convertible Preferred Stock of General Magic, Inc. filed with the
Delaware Secretary of State on December 7, 1999.
Exhibit 2 Warrant issued to General Motors for the Purchase of Shares of
Series G Convertible Preferred Stock.
Exhibit 3 Registration Rights Agreement, dated as of November 9, 1999 by
and between General Magic, Inc. and General Motors Corporation.
Exhibit 4* Letter Agreement dated as of December 9, 1999 between General
Magic, Inc. and General Motors Corporation regarding limitations
on the exercise of the Series G Convertible Preferred Stock and
the Warrant issued to General Motors.
* To be filed by amendment.
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
GENERAL MOTORS CORPORATION
The name, business address, present principal occupation or employment, and
the name, principal business and address of any corporation or other
organization in which such employment is conducted, of each of the directors and
executive officers of General Motors Corporation is set forth below. Unless
otherwise specified, the business address of each person listed below is 100
Renaissance Center, Detroit, Michigan 48243-7301.
<TABLE>
<CAPTION>
NAME AND BUSINESS POSITION WITH GM PRINCIPAL OCCUPATION, IF
ADDRESS OTHER THAN AS EXECUTIVE
OFFICER OF GM
<S> <C> <C>
Percy N. Barnevik Director Chairman, ABB Asea Brown
ABB Asea Brown Ltd. Boveri Ltd.
Affolternstasse 44
Box 8131
CH-8050 Zurich, Switzerland
John H. Bryan Director Chairman and Chief Executive
Sara Lee Corporation Officer, Sara Lee Corporation
Three First National Plaza, 46th Fl.
Chicago, Il 60602-4260
Thomas E. Everhart Director Professor Emeritus and Professor
California Institute of Technology of Electrical Engineering and
1200 E. California Blvd. Applied Physics, California
Mail Code 202-31 Institute of Technology
Pasadena, CA 91125
Charles T. Fischer, III Director
John D. Finnegan Executive Vice President;
Chairman and President, General
Motors Acceptance Corporation
George M. C. Fisher Director Chairman of the Board,
Eastman Kodak Company Eastman Kodak Company
343 State Street
Rochester, NY 14650-0229
Louis R. Hughes Executive Vice President; New
Business Strategies
Nobuyuki Idei Director President and CEO, Sony
Sony Corporation Corporation
6-735 Kitashinagawa
Shinagawa-ku Tokyo 141-0001
Karen Katen Director President, Pfizer U.S.
Pfizer Inc. Pharmaceuticals Group; Executive
235 East 42/nd/ Street V.P., Pfizer Pharmaceuticals
New York, NY 10017-5755 Group;
</TABLE>
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<TABLE>
<CAPTION>
NAME AND BUSINESS POSITION WITH GM PRINCIPAL OCCUPATION, IF
ADDRESS OTHER THAN AS EXECUTIVE
OFFICER OF GM
<S> <C> <C>
J. Michael Losh Executive Vice President; Chief
Financial Officer
J. Willard Marriott, Jr. Director Chairman and Chief Executive
Marriott International, Inc. Officer, Marriott International, Inc.
One Marriott Drive
Washington, D.C. 20058
Ann D. McLaughlin Director Chairman, The Aspen Institute
The Aspen Institute
133 New Hampshire Ave, NW
Suite 1070
Washington, D.C. 20036
Harry J. Pearce Vice Chairman of the Board
Eckhard Pfeiffer Director President and Chief Executive
Compaq Computer Corp. Officer, Compaq Computer
20555 S. H. 249 Corporation
Houston, TX 77070
John G. Smale Director
The Procter & Gamble Company
P.O. Box 599
Mailbox #16
Cincinnati, OH 45201-0599
John F. Smith, Jr. Chairman of the Board and Chief
Executive Officer
Louis W. Sullivan Director President, Morehouse School of
Morehouse School of Medicine Medicine
720 Westview Drive, S.W.
Atlanta, GA 30310-1495
G. Richard Wagoner, Jr. President, Chief Operating
Officer and Director
Dennis Weatherstone Director
c/o J. P. Morgan & Co.,
Incorporated
60 Wall Street, 21/st/ Floor
New York, NY 10260
Ronald L. Zarrella Executive Vice President;
President, GM North America
</TABLE>
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<PAGE>
Exhibit 1
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF SERIES G CONVERTIBLE PREFERRED STOCK
OF GENERAL MAGIC, INC.
General Magic, Inc. (the "Company"), a corporation organized and existing
under the General Corporation Law of the State of Delaware, does hereby certify
that, pursuant to authority conferred upon the Board of Directors of the Company
by the Certificate of Incorporation, as amended, of the Company, and pursuant to
Section 151 of the General Corporation Law of the State of Delaware, the Board
of Directors of the Company adopted resolutions (i) authorizing a series of the
Company's previously authorized preferred stock, par value $0.001 per share, and
(ii) providing for the designation, rights, preferences and privileges of two
thousand (2,000) shares of Series G Convertible Preferred Stock of the Company,
as follows:
Resolved, that the Company is authorized to issue two thousand (2,000)
shares of Series G Convertible Preferred Stock of the Company (the "Series
G Preferred"), par value $0.001 per share, which shall have the following
powers, rights, preferences and privileges:
1. Dividend Rights.
a. Holders of Series G Preferred, in preference to the holders of the
Company's common stock, par value $.001 per share ("Common Stock") or any other
capital stock of the Company of any class junior in rank to the Series G
Preferred in respect of the preferences as to the distributions and payments on
the liquidation, dissolution or winding up of the Company ("Junior Stock") and
on a pari passu basis with the holders of the Company's Series A Convertible
Preferred Stock, the Series B Convertible Preferred Stock, the Series C
Convertible Preferred Stock, the Series D Convertible Preferred Stock, the
Series E Convertible Preferred Stock, the Series F Convertible Preferred Stock
and any other classes or series of preferred stock of the Company that are of
equal rank to the Series G Preferred in respect of the preferences as to the
distributions and payments on the liquidation, dissolution or winding up of the
Company (the "Pari Passu Stock"), shall be entitled to receive, when, if and as
declared by the Board of Directors, cash dividends at the rate of seven percent
(7%) of $10,000 per annum on each outstanding share of Series G Preferred (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares). Dividends shall be declared and set
aside out of funds or assets of the Company legally available therefor. Such
dividends shall be payable only upon resolution of the Board of Directors and
shall be noncumulative.
b. So long as any shares of Series G Preferred shall be outstanding, no
dividend, whether in cash or property, shall be paid or declared, nor shall any
other distribution be made, on any Junior Stock, nor shall any shares of any
Junior Stock of the Company be purchased, redeemed, or otherwise acquired for
value by the Company (except for acquisitions of Common Stock by the Company
pursuant to a repurchase plan approved by the Board of Directors or pursuant to
agreements which permit the Company to repurchase such shares upon termination
of services to the Company or in exercise of the Company's right of first
<PAGE>
refusal upon a proposed transfer) until all dividends (set forth in Section 1(a)
above) on the Series G Preferred shall have been paid or declared and set apart.
In the event dividends are paid on any share of Common Stock, an additional
dividend shall be paid with respect to all outstanding shares of Series G
Preferred in an amount equal per share (on an as-if-converted to Common Stock
basis) to the amount paid or set aside for each share of Common Stock. The
provisions of this Section 1(b) shall not, however, apply to (i) a dividend
payable in Common Stock, (ii) the acquisition of shares of any Junior Stock in
exchange for shares of any other Junior Stock, or (iii) any repurchase of any
outstanding securities of the Company that is unanimously approved by the
Company's Board of Directors.
2. Voting Rights. The holders of shares of Series G Preferred shall vote
together with the Common Stock as though part of that class and shall be
entitled to vote on all matters and shall be entitled to that number of votes
equal to the largest number of whole shares of Common Stock into which such
holder's shares of Series G Preferred could be converted under Section 4 hereof
at the record date for the determination of stockholders entitled to vote on
such matter or, if no such record date is established, at the date such vote is
taken or any written consent of stockholders is solicited. The holders of
shares of Series G Preferred shall be entitled to vote as a separate class on
any matter as to which such class would be entitled to vote under applicable
law, and as provided in Section 5 below.
3. Liquidation Rights.
a. Upon any liquidation, dissolution, or winding up of the Company, whether
voluntary or involuntary, the holders of Series G Preferred shall be entitled to
be paid out of the assets of the Company before any distribution or payment
shall be made to the holders of any Junior Stock and on a pari passu basis with
the Pari Passu Stock, an amount per share of Series G Preferred equal to $10,000
(as adjusted for any stock dividends, combinations, splits, recapitalizations
and the like with respect to such shares), plus any declared and unpaid
dividends, for each share of Series G Preferred held by them. If, upon any such
liquidation, distribution, or winding up, the assets of the Company shall be
insufficient to make payment in full to all holders of Series G Preferred and
the Pari Passu Stock of the liquidation preference set forth in this Section
3(a), then such assets shall be distributed among the holders of Series G
Preferred and the Pari Passu Stock at the time outstanding, ratably in
proportion to the full amounts to which they would otherwise be respectively
entitled.
b. The following events shall be considered a liquidation under this
Section:
i. any consolidation or merger of the Company with or into any other
corporation or other entity or person, or any other corporate
reorganization, in which the stockholders of the Company immediately prior
to such consolidation, merger or reorganization, own less than a majority
of the Company's voting power immediately after such consolidation, merger
or reorganization (an "Acquisition"); or
2
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ii. a sale of all or substantially all of the assets of the Company
(an "Asset Transfer").
4. Conversion Rights. The holders of the Series G Preferred shall have the
following rights with respect to the conversion of the Series G Preferred into
shares of Common Stock (the "Conversion Rights"):
a. Optional Conversion. Subject to and in compliance with the provisions
of this Section 4, any shares of Series G Preferred may, at the option of the
holder, be converted at any time into fully-paid and nonassessable shares of
Common Stock. The number of shares of Common Stock to which a holder of Series
G Preferred shall be entitled upon conversion shall be the product obtained by
multiplying the "Series G Preferred Conversion Rate" then in effect (determined
as provided in Section 4(c)) by the number of shares of Series G Preferred being
converted.
b. Mandatory Conversion. All outstanding shares of Series G Preferred
shall be converted automatically into the number of shares of Common Stock into
which such shares of Series G Preferred are convertible pursuant to Section 4(a)
hereof upon the consent of the holders of at least fifty percent (50%) of the
Series G Preferred then outstanding, without any further action by the holders
of such shares.
c. Series G Preferred Conversion Rate. The conversion rate in effect at
any time for conversion of the Series G Preferred (the "Series G Preferred
Conversion Rate") shall be the quotient obtained by dividing $10,000 by the
"Series G Preferred Conversion Price," calculated as provided in Section 4(d).
d. Series G Preferred Conversion Price. The conversion price for the
Series G Preferred shall initially be $1.684 (the "Series G Preferred Conversion
Price"). Such initial Series G Preferred Conversion Price shall be adjusted from
time to time in accordance with this Section 4. All references to the Series G
Preferred Conversion Price herein shall mean the Series G Preferred Conversion
Price as so adjusted.
e. Mechanics of Conversion. Each holder of Series G Preferred who desires
to convert the same into shares of Common Stock pursuant to this Section 4 shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Company or any transfer agent for the Series G Preferred, and shall give
written notice to the Company at such office that such holder elects to convert
the same. Such notice shall state the number of shares of Series G Preferred
being converted. As promptly as practicable after the Series G Preferred
Conversion Date (as defined below), the Company shall issue and shall deliver to
the holder of shares of Series G Preferred being converted, such certificate or
certificates as it may request for the number of whole shares of Common Stock
issuable upon the conversion of such Series G Preferred in accordance with the
provisions of this Section 4. Such conversion shall be deemed to have been
effected immediately prior to the close of business on the Series G Preferred
Conversion Date. At such time, the rights of the holder as holder of the
converted shares of Series G Preferred shall cease and the person or persons in
whose name
3
<PAGE>
or names any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares of Common Stock represented thereby.
"Series G Conversion Date" means: (i) the date when such written notice
required by Section 4(e) is received by the Company, together with the
certificate or certificates representing the shares of Series G Preferred being
converted, or (ii) the date on which any event occurs causing a mandatory
conversion of the shares of Series G Preferred pursuant to Section 4(b).
f. Adjustment for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the date that the first share of Series G
Preferred is issued (the "Original Issue Date") effect a subdivision of the
outstanding Common Stock without a corresponding subdivision of the Series G
Preferred, the Series G Preferred Conversion Price in effect immediately before
that subdivision shall be proportionately decreased. Conversely, if the Company
shall at any time or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock into a smaller number of shares without a
corresponding combination of the Series G Preferred, the Series G Preferred
Conversion Price in effect immediately before the combination shall be
proportionately increased. Any adjustment under this Section 4(f) shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
g. Adjustment for Common Stock Dividends and Distributions. If the
Company at any time or from time to time after the Original Issue Date makes, or
fixes a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in additional shares of Common
Stock, in each such event the Series G Preferred Conversion Price that is then
in effect shall be decreased as of the time of such issuance or, in the event
such record date is fixed, as of the close of business on such record date, by
multiplying the Series G Preferred Conversion Price then in effect by a fraction
(i) the numerator of which is the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (ii) the denominator of which is the total
number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such dividend or
distribution; provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Series G Preferred Conversion Price shall be recomputed
accordingly as of the close of business on such record date and thereafter the
Series G Preferred Conversion Price shall be adjusted pursuant to this Section
4(g) to reflect the actual payment of such dividend or distribution.
h. Adjustment for Reclassification, Exchange and Substitution. If at any
time or from time to time after the Original Issue Date, the Common Stock
issuable upon the conversion of the Series G Preferred is changed into the same
or a different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise
4
<PAGE>
(other than an Acquisition or Asset Transfer as defined in Section 3(b) or a
subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation or sale of assets provided for elsewhere in this Section
4), in any such event each holder of Series G Preferred shall have the right
thereafter to convert such stock into the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other change by holders of the maximum number of shares of Common Stock into
which such shares of Series G Preferred could have been converted immediately
prior to such recapitalization, reclassification or change, all subject to
further adjustment as provided herein or with respect to such other securities
or property by the terms thereof.
i. Reorganizations, Mergers, Consolidations or Sales of Assets. If at any
time or from time to time after the Original Issue Date, there is a capital
reorganization of the Common Stock (other than an Acquisition or Asset Transfer
as defined in Section 3(b) or a recapitalization, subdivision, combination,
reclassification, exchange or substitution of shares provided for elsewhere in
this Section 4), as a part of such capital reorganization, provision shall be
made so that the holders of the Series G Preferred shall thereafter be entitled
to receive upon conversion of the Series G Preferred the number of shares of
stock or other securities or property of the Company to which a holder of the
number of shares of Common Stock deliverable upon conversion would have been
entitled on such capital reorganization, subject to adjustment in respect of
such stock or securities by the terms thereof. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 4
with respect to the rights of the holders of Series G Preferred after the
capital reorganization to the end that the provisions of this Section 4
(including adjustment of the Series G Preferred Conversion Price then in effect
and the number of shares issuable upon conversion of the Series G Preferred)
shall be applicable after that event and be as nearly equivalent as practicable.
j. Certificate of Adjustment. In each case of an adjustment or
readjustment of the Series G Preferred Conversion Price for the number of shares
of Common Stock or other securities issuable upon conversion of the Series G
Preferred, if the Series G Preferred is then convertible pursuant to this
Section 4, the Company, at its expense, shall compute such adjustment or
readjustment in accordance with the provisions hereof and prepare a certificate
showing such adjustment or readjustment, and shall mail such certificate, by
first class mail, postage prepaid, to each registered holder of Series G
Preferred at the holder's address as shown in the Company's books. The
certificate shall set forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (i) such adjustment or readjustment, (ii) the Series G Preferred
Conversion Price at the time in effect and (iii) the type and amount, if any, of
other property which at the time would be received upon conversion of the Series
G Preferred.
k. Notices of Record Date. Upon (i) any taking by the Company of a record
of the holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend or other distribution,
or (ii) any Acquisition (as defined in Section 3(b)) or other capital
reorganization of the Company, any reclassification or recapitalization of the
capital stock of the Company, any merger or consolidation of the
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<PAGE>
Company with or into any other corporation, or any Asset Transfer (as defined in
Section 3(b)), or any voluntary or involuntary dissolution, liquidation or
winding up of the Company, the Company shall mail to each holder of Series G
Preferred at least ten (10) days prior to the record date specified therein (or
such shorter period approved by a majority of the outstanding Series G
Preferred), a notice specifying (A) the date on which any such record is to be
taken for the purpose of such dividend or distribution and a description of such
dividend or distribution, (B) the date on which any such Acquisition,
reorganization, reclassification, transfer, consolidation, merger, Asset
Transfer, dissolution, liquidation or winding up is expected to become
effective, and (C) the date, if any, that is to be fixed as to when the holders
of record of Common Stock (or other securities) shall be entitled to exchange
their shares of Common Stock (or other securities) for securities or other
property deliverable upon such Acquisition, reorganization, reclassification,
transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or
winding up.
l. Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of Series G Preferred, and the number of shares of Common Stock
to be issued shall be rounded down to the nearest whole share. All shares of
Common Stock (including fractions thereof) issuable upon conversion of more than
one share of Series G Preferred by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result in the issuance of
any fractional share.
m. Reservation of Stock Issuable Upon Conversion. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the
shares of the Series G Preferred, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series G Preferred. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series G Preferred, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
n. Notices. Any notice required by the provisions of this Section 4 shall
be in writing and shall be deemed effectively given: (i) upon personal delivery
to the party to be notified, (ii) when sent by confirmed telex or facsimile if
sent during normal business hours of the recipient; if not, then on the next
business day, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All notices shall be
addressed to each holder of record at the address of such holder appearing on
the books of the Company.
5. Protective Provisions. The approval of the holders of a majority of the
then outstanding Series G Preferred shall be required for (a) any change to this
Certificate of Designations or the Company's Certificate of Incorporation if
such action would adversely alter or change the preferences, rights, privileges
or powers of, or the restrictions provided
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for the benefit of, the holders of the Series G Preferred, unless all series of
preferred stock are so altered or changed; and (b) any increase or decrease in
the number of authorized shares of Series G Preferred.
6. No Reissuance of Series G Preferred. No share or shares of Series G
Preferred acquired by the Company by reason of redemption, purchase, conversion
or otherwise shall be reissued.
7. Election of Director. The holders of the Series G Preferred, voting as a
separate class, shall have the right to elect one (1) member of the Company's
Board of Directors until the earlier of (i) the date upon which less than 600
shares (as adjusted for stock splits, recombinations, reclassifications and the
like) of Series G Preferred are outstanding, (ii) the date upon which General
Motors Corporation and its Affiliates own less than a majority of the
outstanding shares of Series G Preferred (as adjusted for stock splits,
recombinations, reclassifications and the like), and (iii) the date of
consummation of an Acquisition or Asset Transfer. For purposes hereof, the term
"Affiliates" with respect to General Motors Corporation shall mean Saab
Automobile AB and any entity controlled directly or indirectly by General Motors
Corporation, where "control" means the ownership of more than fifty percent
(50%) of the outstanding voting securities or voting interests of the entity in
question.
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<PAGE>
In Witness Whereof, the Company has caused this Certificate of Designations
to be signed by Steven Markman, its President and Chief Executive Officer, this
7th day of December, 1999.
General Magic, Inc.
/s/ Steven Markman
----------------------------------
Steven Markman
President and Chief Executive Officer
8
<PAGE>
Exhibit 2
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
General Magic, Inc.
Warrant for the Purchase of Shares of Series G Convertible Preferred Stock
No. 01 up to 500 shares
For Value Received, General Magic, Inc., a Delaware corporation (the "Company"),
with its principal office at 420 N. Mary Avenue, Sunnyvale, California 94086,
hereby certifies that General Motors Corporation, a Delaware corporation (the
"Holder") is entitled, subject to the provisions of this Warrant, to purchase
from the Company at any time or times on or after the date hereof, but not after
5:00 p.m. Pacific Time on the Expiration Date (as defined below) up to Five
Hundred (500) fully paid and nonassessable shares of Series G Convertible
Preferred Stock of the Company (the "Series G Stock"), at an exercise price per
share equal to Ten Thousand Dollars ($10,000.00) (the "Exercise Price").
"Expiration Date" means the earlier of (i) the date three (3) years from the
original date of this Warrant or, if such date falls on a Saturday, Sunday or
other day on which banks are required or authorized to be closed in the State of
California (a "Holiday"), the next preceding date that is not a Holiday, or (ii)
the date the Holder and its Affiliates cease to own at least fifty percent (50%)
of the Series G Stock issued under that certain Series G Preferred Stock and
Warrant Purchase Agreement between the Company and the Holder dated November 9,
1999 (the "Purchase Agreement").
The number of shares of Series G Stock to be received upon the exercise of
this Warrant and the price to be paid for a share of Series G Stock are subject
to adjustment from time to time as hereinafter set forth. The shares of Series
G Stock deliverable upon such exercise, as adjusted from time to time, together
with the shares of common stock of the Company ("Common Stock") issuable upon
either (i) the net issue exercise of this Warrant pursuant to Section 1(b) (the
"Net Exercise Stock") or (ii) conversion of the Series G Stock deliverable upon
exercise of the Warrant, are hereinafter sometimes referred to as "Warrant
Shares."
<PAGE>
Section 1. Exercise of Warrant; Net Issue Exercise.
(a) General. This Warrant may be exercised in whole or in part on any
business day prior to the Expiration Date by presentation and surrender to the
Company at its principal office at the address set forth in the initial
paragraph hereof (or at such other address as the Company may hereafter notify
the Holder in writing) with the Purchase Form annexed hereto duly executed and
accompanied by proper payment of the Exercise Price in lawful money of the
United States of America in the form of a check, wire transfer of funds, notice
of election of net issue as provided in Section 1(b) below, or cancellation of
indebtedness of the Company to the Holder, subject to collection, for the number
of shares of Series G Stock specified in the Purchase Form. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant, execute and deliver a new Warrant evidencing the rights of the Holder
thereof to purchase the balance of the shares of Series G Stock purchasable
hereunder. Upon receipt by the Company of this Warrant and such Purchase Form,
together with proper payment of the Exercise Price, at such office, the Holder
shall be deemed to be the holder of record of such number of shares of Series G
Stock or Net Exercise Stock, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such Warrant
Shares shall not then be actually delivered to the Holder.
(b) Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of the share(s) of Common Stock into which a
share of Series G Stock is convertible is greater than the Exercise Price (at
the date of exercise), in lieu of exercising this Warrant for cash, the Holder
may elect to receive Common Stock into which the Series G Stock is convertible
equal to the value (as determined below) of this Warrant (or the portion thereof
being canceled) by surrender of this Warrant at the principal office of the
Company together with the properly endorsed Purchase Form and notice of such
election in which event the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:
X = Y (A-B/Z)
---------
A
Where
X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Common Stock or other capital stock
into which the Series G Stock purchasable under the Warrant is convertible (at
the date of exercise) or, if only a portion of the Warrant is being exercised,
the portion of the Warrant being canceled (at the date of exercise)
A = the fair market value of one share of the Company's Common
Stock (at the date of exercise)
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<PAGE>
B = Exercise Price (as adjusted to the date of exercise)
Z = The number of shares of Common Stock into which one share of
Series G Stock is convertible pursuant to the Company's Certificate of
Incorporation as of the date of exercise.
For purposes of the above calculation, current fair market value of Common Stock
shall mean with respect to each share of Common Stock:
(i) if traded on a national securities exchange or The Nasdaq National
Market (or similar national quotation system), the fair market value
shall be deemed to be the closing price (last reported sale) on the
day the current fair market value of the securities is being
determined;
(ii) if traded over-the-counter, the fair market value shall be deemed
to be the closing bid price quoted on the day the current fair market
value of the securities is being determined; or
(iii) if at any time the Common Stock is not traded as described in
(i) or (ii) above, the current fair market value shall be the highest
price per share which the Company could obtain from a willing buyer
(not a current employee or director) for shares of Common Stock sold
by the Company, from authorized but unissued shares, as determined in
good faith by its Board of Directors, unless the Company shall become
subject to a merger, acquisition or other consolidation pursuant to
which the Company is not the surviving party, in which case the fair
market value shall be deemed to be the value received by the holders
of the Company's Common Stock on a common equivalent basis pursuant to
such merger or acquisition.
Section 2. Issuance of New Warrant. In the event of any exercise of the
rights represented by this Warrant, certificates for the Series G Stock or Net
Exercise Stock so purchased shall be delivered to the holder hereof as soon as
practicable (but not later than ten (10) business days after exercise) and,
unless this Warrant has been fully exercised or has expired, a new Warrant
representing the portion of the Series G Stock, if any, with respect to which
this Warrant shall not then have been exercised shall also be issued to the
holder hereof within a reasonable time (but not later than ten (10) business
days after exercise). Such exercise shall be deemed to have been made
immediately prior to the close of business on the date of surrender of this
Warrant.
Section 3. Reservation of Shares. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant all shares of its Series G Stock or other shares of capital stock of the
Company from time to time issuable upon exercise of this Warrant. All such
shares shall be duly authorized and, when issued upon such exercise in
accordance with the terms of this Warrant, shall be validly issued, fully paid
and nonassessable.
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<PAGE>
Section 4. Fractional Interest. The Company will not issue a fractional
share of Series G Stock or Common Stock upon exercise of this Warrant. Instead,
the Company will deliver its check for the current fair market value of the
fractional share, as determined in good faith by the Board of Directors of the
Company.
Section 5. Replacement of Warrant. Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant,
and (in the case of loss, theft or destruction) of indemnification satisfactory
to the Company, and upon surrender and cancellation of this Warrant, if
mutilated, the Company shall execute and deliver a new Warrant of like tenor and
date.
Section 6. Rights of the Holder. The holder shall not, by virtue hereof,
be entitled to any rights of a stockholder in the Company, either at law or
equity, and the rights of the holder are limited to those expressed in this
Warrant. Nothing contained in this Warrant shall be construed as conferring upon
the holder hereof the right to vote or to consent or to receive notice as a
stockholder of the Company on any matters or with respect to any rights
whatsoever as a stockholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby
or the Series G Stock purchasable hereunder until, and only to the extent that,
this Warrant shall have been exercised in accordance with its terms.
Section 7. Adjustment of Exercise Price and Number of Shares. The number
and kind of securities purchasable upon the exercise of the Warrant and the
Exercise Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) Reclassification of Outstanding Securities. In case of any
reclassification, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), the Company shall execute a new Warrant (in form and substance
reasonably satisfactory to the holder of this Warrant) providing that the holder
of this Warrant shall have the right to exercise such new Warrant and upon such
exercise to receive, in lieu of each share of Series G Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification or
change by a holder of one share of Series G Stock. Such new Warrant shall
provide for adjustments that shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Section 7. The provisions of this
subsection (a) shall similarly apply to successive reclassification or changes.
(b) Subdivisions or Combination of Shares. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its Series G Stock, the Exercise Price and the number of Series G Stock issuable
upon exercise hereof shall be proportionately adjusted.
(c) Stock Dividends. If the Company at any time while this Warrant is
outstanding and unexpired shall pay a dividend payable in shares of Series G
Stock (except any distribution specifically provided for in the foregoing
subsections (a) and (b)), then the Exercise
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<PAGE>
Price shall be adjusted, from and after the date of determination of
stockholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Exercise Price in effect immediately prior to such
date of determination by a fraction (a) the numerator of which shall be the
total number of shares of Series G Stock outstanding immediately prior to such
dividend or distribution, and (b) the denominator of which shall be the total
number of shares of Series G Stock outstanding immediately after such dividend
or distribution and the number of shares of Series G Stock subject to this
Warrant shall be proportionately adjusted.
(d) Notice of Record Date. In the event of any taking by the Company
of a record of its stockholders for the purpose of determining stockholders who
are entitled to receive payment of any dividend (other than a cash dividend) or
other distribution, any right to subscribe for, purchase or otherwise acquire
any share of any class or any other securities or property, or to receive any
other right, or for the purpose of determining stockholders who are entitled to
vote in connection with any proposed merger or consolidation of the Company with
or into any other corporation, or any proposed sale, lease or conveyance of all
or substantially all of the assets of the Company, or any proposed liquidation,
dissolution or winding up of the Company, the Company shall mail to the holder
of this Warrant, at least ten (10) days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right.
(e) No Adjustment Upon Exercise of Warrants. No adjustments shall be
made under any Section herein in connection with the issuance of the Series G
Stock subsequent to exercise of the Warrant.
Section 8. Officer's Certificate. Whenever the Exercise Price shall be
adjusted as required by the provisions of Section 7, the Company shall deliver
an officer's certificate showing the adjusted Exercise Price determined as
herein provided, setting forth in reasonable detail the facts requiring such
adjustment and the manner of computing such adjustment. Each such officer's
certificate shall be signed by the chairman, chief executive officer, president
or chief financial officer of the Company.
Section 9. Mergers, Consolidation, Sales. In the case of any proposed
consolidation or merger of the Company with another entity, or the proposed sale
of all or substantially all of its assets to another person or entity, lawful
and adequate provision shall be made whereby the holder of this Warrant shall
thereafter have the right to receive upon the basis and upon substantially the
terms and conditions specified herein, in lieu of the shares of the Series G
Stock of the Company immediately theretofore purchasable hereunder, such shares
of stock, securities or assets as may (by virtue of such consolidation, merger
or sale) be issued or payable with respect to or in exchange for the number of
shares of such Series G Stock purchasable hereunder immediately before such
consolidation, merger, or sale. In any case appropriate provision shall be made
with respect to the rights and interests of the holder of this Warrant to the
end that the provisions hereof shall thereafter be applicable as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of this Warrant.
5
<PAGE>
Section 10. Transfer Restrictions; Representations of Holder.
(a) This Warrant is transferable only to Affiliates of the Holder (as
defined herein) without the written consent of the Company, and to other persons
only with the consent of the Company; provided, however, that any transfer or
assignment shall be subject to the conditions set forth in Section 10(b), and
such transferee shall confirm in writing the representations set forth in
Section 10(b) and shall agree to be bound by the terms of this Warrant. For
purposes hereof, the term Affiliate with respect to the Holder shall mean Saab
Automobile AB and any entity controlled directly or indirectly by Holder, where
"control" means the ownership of more than fifty percent (50%) of the
outstanding voting securities or voting interests of the entity in question.
(b) This Warrant may not be exercised and neither this Warrant nor any of
the Warrant Shares, nor any interest in either, may be sold, assigned, pledged,
hypothecated, encumbered or in any other manner transferred or disposed of, in
whole or in part, except in compliance with applicable United States federal and
state securities or Blue Sky laws and the terms and conditions hereof. Each
Warrant shall bear a legend in substantially the same form as the legend set
forth on the first page of this Warrant. Each certificate for Warrant Shares
issued upon exercise of this Warrant shall bear a legend substantially in the
following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
Any certificate for any Warrant Shares issued at any time in exchange or
substitution for any certificate for any Warrant Shares bearing such legend
shall also bear such legend unless, in the opinion of counsel for the Company,
the Warrant Shares represented thereby need no longer be subject to the
restrictions contained herein. The provisions of this Section 10 shall be
binding upon all subsequent holders of certificates for Warrant Shares bearing
the above legend and all subsequent holders of this Warrant, if any. In
addition, in connection with the issuance of this Warrant, the Holder
specifically represents to the Company by acceptance of this Warrant as follows:
(a) The Holder is aware of the Company's business affairs and
financial condition, and has acquired information about the Company sufficient
to reach an informed and
6
<PAGE>
knowledgeable decision to acquire this Warrant. The Holder is acquiring this
Warrant (and the underlying Warrant Shares) for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof in violation of the Securities Act of 1933, as amended
(the "Act").
(b) The Holder understands that neither this Warrant nor the Warrant
Shares have been registered under the Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the Holder's investment intent as expressed herein.
(c) The Holder further understands that this Warrant (and the Warrant
Shares) must be held indefinitely unless subsequently registered under the Act
and qualified under any applicable state securities laws, or unless exemptions
from registration and qualification are otherwise available. Moreover, the
Holder understands that the Company is under no obligation to register and
qualify this Warrant.
(d) The Holder is aware of the provisions of Rule 144 promulgated
under the Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of such issuer), in a non-public offering subject to the
satisfaction of certain conditions, if applicable, including, among other
things: the availability of certain public information about the Company, the
resale occurring not less than one year after the party has purchased and paid
for the securities to be sold; and the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended).
(e) The Holder further understands that at the time Holder wishes to
sell the Warrant Shares there may be no public market upon which to make such a
sale, and that, except as set forth in the Purchase Agreement and related
Registration Rights Agreement, the Company is under no obligation to register
the Warrant Shares.
(f) The Holder further understands that in the event all of the
requirements of Rule 144 are not satisfied, registration under the Act,
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
staff of the Securities and Exchange Commission has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own risk.
Section 12. Governing Law. This Warrant is delivered in the State of
California and shall be construed in accordance with and governed by the laws of
that State, without regard to its conflicts of laws principles.
Section 13. Modification and Waiver. Neither this Warrant nor any term
hereof may be amended, waived, discharged or terminated other than by an
instrument in writing signed by the Company and by the holder hereof.
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<PAGE>
Section 14. Notices. Any notice, request or other document required or
permitted to be given or delivered to the holder hereof or the Company shall be
delivered or shall be sent by certified mail, confirmed facsimile or personal
delivery, to the holder at the holder's address as shown on the books of the
Company or to the Company at the address indicated therefor in the first
paragraph of this Warrant or such other address as the Company shall have
notified the holder.
Section 15. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and do
not constitute a part of this Warrant.
Section 16. Entire Agreement. This Warrant, together with the Purchase
Agreement and the documents delivered pursuant thereto, constitutes the entire
agreement between the parties pertaining to the subject matter herein and
supersedes all prior and contemporaneous agreements, representations and
undertakings of the parties.
In Witness Whereof, the Company has duly caused this Warrant to be signed
by its duly authorized officer and to be dated as of December 9, 1999.
General Magic, Inc.
By: /s/ Steven Markman
---------------------------------
Name: Steven Markman
-------------------------------
Title: Chief Executive Officer
-------------------------------
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<PAGE>
PURCHASE FORM
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________________ (_________)/1/ shares of Series G
Preferred Stock of General Magic, Inc. and herewith [makes payment of __________
_____________ Dollars ($________) therefor] [elects a Net Issue Exercise
pursuant to the provision of Section 1 of the within Warrant for _________
shares of Common Stock (as calculated in accordance with the terms therewith)],
and requests that the certificates for such shares be issued in the name of, and
delivered to, __________________________________________, whose address is
_______________________________________________________________.
The undersigned represents that it is acquiring such shares for its own
account for investment and not with a view to or for sale in connection with any
distribution thereof (subject, however, to any requirement of law that the
disposition thereof shall at all times be within its control).
Dated: _______________
(Signature must conform in all
respects to name of holder)
By:________________________________
Title:_____________________________
- ---------------------
/1/ Insert here the number of shares called for on the face of the Warrant
(or, in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised), in either case without making any adjustment for
additional Warrant Shares or any other stock or the adjustment provisions of the
Warrant, which may be deliverable upon exercise.
<PAGE>
Exhibit 3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into
as of the 9th day of November, 1999, by and between General Magic, Inc., a
Delaware corporation (the "Company"), and General Motors Corporation, a Delaware
corporation, by and through its OnStar division (the "Purchaser").
RECITALS
A. The Company has agreed, upon the terms and subject to the conditions of
the Series G Preferred Stock and Warrant Purchase Agreement (the "Preferred
Stock Purchase Agreement"), to issue and sell to Purchaser (i) shares of the
Company's Series G Convertible Preferred Stock (the "Series G Stock"), which
will be convertible into shares of the Company's common stock, par value $0.001
per share (the "Common Stock"), in accordance with the terms of the Company's
Certificate of Designations, Preferences and Rights of Series G Convertible
Preferred Stock (the "Certificate of Designations"); and (ii) a warrant to
acquire up to 500 additional shares of the Company's Series G Stock (the
"Warrant").
B. To induce the Purchaser to execute and deliver the Preferred Stock
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations promulgated thereunder, as well as applicable state
securities laws.
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENT
1. Registration Rights.
1.1 Definitions. For purposes of this Section 1:
(a) Registration. The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration statement by
the U.S. Securities and Exchange Commission (the "SEC").
(b) Registrable Securities. The term "Registrable Securities"
means: (1) all the shares of Common Stock of the Company issued or issuable upon
the conversion of any shares of Series G Stock issued pursuant to the Preferred
Stock Purchase Agreement or upon exercise of the Warrant (collectively, the
"Conversion Shares"); (2) all shares of Common Stock issued or issuable with
respect to the Conversion Shares, the Series G Stock or the Warrant as a result
of any stock split, stock dividend, recapitalization, exchange or similar event;
provided, however, that
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notwithstanding Section 2.2 below, such shares of Common Stock shall no longer
be treated as Registrable Securities after they have been sold to or through a
broker or dealer or underwriter in a public distribution or a public securities
transaction, whether in a registered offering, pursuant to Rule 144 or
otherwise, and whether or not sold to an Affiliate (as defined in Section 2.2
below).
1.2 Demand Registration.
(a) Request for Registration. If the Company shall receive at any
time a written request from Purchaser that the Company effect a registration
with respect to Registrable Securities pursuant to this Section 1.2 (a
"Registration Request"), then the Company shall, within ten (10) business days
of the receipt of such Registration Request, give written acknowledgment thereof
("Request Acknowledgment") to Purchaser, and effect, as soon as practicable
thereafter, but in no event later than sixty (60) days following receipt by
Purchaser of the Request Acknowledgment, such registration; provided, however,
that the Company shall not be obligated to take any action to effect any such
registration: (i) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, unless the Company is already subject to service in such
jurisdiction; (ii) unless the Registrable Securities sought to be registered by
Purchaser comprise at least forty percent (40%) of all Registrable Securities
then held by Purchaser (including all Registrable Securities issuable pursuant
to the exercise or conversion of any warrant, right or other security) or have
an anticipated aggregate public offering price (after any underwriting discounts
and commissions) of $5,000,000; or (iii) after the Company has effected two such
registrations pursuant to this Section 1.2.
(b) Underwriting. If Purchaser initiates the registration request
under this Section 1.2 and intends to distribute the Registrable Securities
covered by its request by means of an underwriting, then Purchaser shall so
advise the Company as a part of its request made pursuant to this Section 1.2
and the Company shall include such information in the written notice referred to
in subsection 1.2(a). In such event, the right of Purchaser to include its
Registrable Securities in such registration shall be conditioned upon
Purchaser's participation in such underwriting and the inclusion of Purchaser's
Registrable Securities in the underwriting to the extent provided herein. If
Purchaser proposes to distribute its Registrable Securities through such
underwriting, it shall enter into an underwriting agreement in customary form
with the managing underwriter or underwriters selected for such underwriting by
the Company and approved by Purchaser, which approval shall not be unreasonably
withheld. Any Registrable Securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the registration.
(c) Delay. If the Company shall furnish to Purchaser a
certificate signed by the President of the Company stating that, in the good
faith judgment of the Board of Directors of the Company, the filing of a
registration statement pursuant to this Section 1.2 would (i) require disclosure
of material information the Company has a bona fide business purpose of
retaining as confidential or (ii) have a
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material adverse effect on the Company or its shareholders, in relation to any
financing, acquisition, corporate reorganization or other material transaction
contemplated by the Board of Directors of the Company, involving the Company or
any of its affiliates, in each case as determined by the Company, then the
Company may direct that the filing of a registration statement be delayed for a
period not in excess of one hundred twenty (120) days, but may only exercise
this right once within any twelve (12) month period.
1.3 Piggyback Registrations. The Company shall notify Purchaser in
writing at least fifteen (15) business days prior to filing any registration
statement under the Securities Act for purposes of effecting a public offering
of securities of the Company (including, but not limited to, registration
statements relating to a secondary offering of securities of the Company, and
registration statements relating to any registration under Section 1.2 of this
Agreement, but excluding registration statements relating to any employee
benefit plan or a transaction under Rule 145 of the Securities Act) and will
afford Purchaser an opportunity to include in such registration statement all or
any part of the Registrable Securities then held by Purchaser. If Purchaser
desires to include in any such registration statement all or any part of its
Registrable Securities, Purchaser shall, within ten (10) business days after
receipt of the above-described notice from the Company, so notify the Company in
writing, and in such notice shall inform the Company of the number of
Registrable Securities Purchaser wishes to include in such registration
statement. If Purchaser decides not to include all of its Registrable
Securities in any registration statement thereafter filed by the Company,
Purchaser shall nevertheless continue to have the right to include any
Registrable Securities in any subsequent registration statement or registration
statements as may be filed by the Company with respect to offerings of its
securities, all upon the terms and conditions set forth herein. An election by
Purchaser to include Registrable Securities in any registration statement
pursuant to this Section 1.3 shall not under any circumstances constitute a
request for registration by Purchaser under Section 1.2 hereof.
If a registration statement under which the Company gives notice under this
Section 1.3 is for an underwritten offering, then the Company shall so advise
Purchaser. In such event, the right of Purchaser to be included in a
registration pursuant to this Section 1.3 shall be conditioned upon Purchaser's
participation in such underwriting, and the inclusion of Purchaser's Registrable
Securities in the underwriting to the extent provided herein. If Purchaser
proposes to distribute its Registrable Securities through such underwriting,
Purchaser shall enter into an underwriting agreement in customary form with the
managing underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing
underwriter determines in good faith that marketing factors require a limitation
of the number of shares to be underwritten, then the managing underwriter(s) may
exclude shares (including Registrable Securities) from the registration and the
underwriting, and the number of shares that may be included in the registration
and the underwriting shall be allocated, first, to the Company or other party
for whom the registration is being effected, second, to Purchaser and to other
holders of securities of the Company with piggyback registration rights on a pro
rata basis based on the total number of registrable securities then held by
Purchaser and such other holders, and third, to such persons as the Board of
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Directors of the Company may approve. If Purchaser disapproves of the terms of
any such underwriting, Purchaser may elect to withdraw therefrom by written
notice to the Company and the underwriter. Any Registrable Securities excluded
or withdrawn from such underwriting shall be excluded and withdrawn from the
registration.
The Company shall have the right to terminate or withdraw any registration
initiated by it under this Section 1.3 prior to the effectiveness of such
registration, whether or not Purchaser has elected to include Registrable
Securities in such registration.
1.4 Form S-3 Registration. In case the Company shall receive from
Purchaser a written request that the Company effect a registration on Form S-3
with respect to all or a part of the Registrable Securities owned by Purchaser,
then the Company will, as soon as reasonably practicable, effect such
registration on Form S-3 as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of Purchaser's
Registrable Securities as are specified in such request; provided, however, that
the Company shall not be oblligated to effect any such registration,
qualification or compliance pursuant to this Section 1.4:
(i) if Form S-3 is not available for such offering by Purchaser;
(ii) if the aggregate value of the Registrable Securities
proposed to be sold by Purchaser in such offering is less than $1,000,000;
(iii) if the Company shall furnish to Purchaser a certificate
signed by the President or Chief Executive Officer of the Company stating that,
in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such Form S-3
registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement no more
than once during any twelve month period for a period of not more than one
hundred twenty (120) days after receipt of the request of Purchaser under this
Section 1.4;
(iv) if the Company has, within the twelve (12) month period
preceding the date of such request, already effected two (2) registrations
pursuant to Section 1.2 and 1.4; or
(v) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.
Only one (1) Form S-3 registration shall be deemed to be a demand
registration as described in Section 1.2 above.
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1.5 Obligations of the Company.
(a) Expenses. All expenses incurred in connection with all
registrations pursuant to Sections 1.2, 1.3 and 1.4, including without
limitation all registration and qualification fees, printers' and accounting
fees, fees and disbursements of counsel for the Company (but excluding
underwriters' and brokers' discounts and commissions and fees and disbursements
of counsel for Purchaser), shall be borne by the Company; provided, however,
that Purchaser shall bear all expenses incurred in connection with any
registration requested pursuant to Section 1.2 or 1.4 within six months after
the date of this Agreement. Purchaser shall bear its proportionate share (based
on the total number of shares sold in such registration other than for the
account of the Company) of all underwriting discounts or commissions payable to
underwriters or brokers in connection with such offerings.
(b) Registration. Whenever required to effect the registration of
any Registrable Securities under this Agreement, the Company shall, as
expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities, use its best efforts to cause such
registration statement to become effective and, upon the request of Purchaser,
keep such registration statement effective for up to ninety (90) days plus any
additional periods represented by any "Black-Out Period" (as defined in the last
paragraph of Section 1.5(b) below) or until the distribution described in the
registration statement has been completed.
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as the Company may determine to be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
(iii) Furnish to Purchaser such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as it may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by it and included in such registration.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by
Purchaser, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
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(v) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Purchaser
shall also enter into and perform its obligations under such an agreement.
(vi) Notify Purchaser at any time when a prospectus relating
to the Registrable Securities 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, includes an untrue statement
of a material fact or omits to state a material fact necessary, in light of the
circumstances under which made, to make the statements therein not misleading,
and, at the request of Purchaser, the Company will promptly prepare and provide
to it a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of Purchaser's Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary, in light of the circumstances under which
made, to make the statements therein not misleading.
(vii) Furnish, at the reasonable request of Purchaser, on
the date that its Registrable Securities are delivered to the underwriters for
sale, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated as of such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering and reasonably satisfactory to
Purchaser, addressed to the underwriters, if any, and to Purchaser, and (ii) a
"comfort" letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering and reasonably satisfactory to Purchaser, addressed to the
underwriters, if any, and to Purchaser.
(viii) Purchaser agrees that if the Company has delivered
preliminary or final prospectuses to Purchaser and after having done so (a) the
Company determines that the prospectus needs to be amended or supplemented to
comply with the requirements of the Securities Act, (b) a stop order suspending
the effectiveness of the registration statement is issued by the SEC or (c) the
Company shall, in good faith and for business reasons, enter into negotiations
relating to or otherwise commence a material business transaction, including,
without limitation, the acquisition or divestiture of assets or the offering or
sale of securities, then the Company shall promptly notify Purchaser and
Purchaser shall immediately cease making offers and sales of Registrable
Securities and return all remaining prospectuses to the Company. Following such
amendment or supplement, the lifting of any stop order or the completion or
termination of any material transaction, the Company shall promptly provide
Purchaser with revised prospectuses, and, following receipt of the revised
prospectuses, Purchaser shall be free to resume making offers of the Registrable
Securities, or any portion thereof. The period during which the Company
exercises its rights as described in this paragraph to postpone, delay or
interrupt the offer and sale of the Registrable Securities or during the
pendency of any
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stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court shall be referred to herein as the "Black-Out
Period."
1.6 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 1.2, 1.3 or
1.4 that Purchaser shall furnish to the Company such information regarding
itself, the Registrable Securities held by it, and the intended method of
disposition of such securities and such other information as the Company may
reasonably request to timely effect the registration of its Registrable
Securities.
1.7 Indemnification. In the event any Registrable Securities are
included in a registration statement under Sections 1.2, 1.3 or 1.4:
(a) By the Company. The Company agrees to indemnify and hold
harmless Purchaser, each of its directors and officers, any underwriters (as
defined in the Securities Act) for the Purchaser and each person, if any, who
controls Purchaser within the meaning of the Securities Act, against any losses,
claims, damages, liabilities or expenses to which Purchaser or such officer or
director, underwriter or controlling person may become subject, under the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any other federal or state statutory law or regulation, or at common
law or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of the Company), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the registration
statement, including the prospectus, financial statements and schedules, and all
other documents filed as a part thereof or incorporated by reference therein, as
amended at the time of effectiveness of the registration statement, including
any information deemed to be a part thereof as of the time of the effectiveness
pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434 of the rules and
regulations, or the prospectus, in the form first filed with the SEC pursuant to
Rule 424(b) of the regulations, or filed as part of the registration statement
at the time of effectiveness if no Rule 424(b) filing is required (the
"Prospectus"), or any amendment or supplement thereto, (ii) the omission or
alleged omission to state in any of them a material fact required to be stated
therein or necessary to make the statements in any of them not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act or any federal or state securities law in connection with the
offering covered by such registration statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations"), and will reimburse
Purchaser and each such officer or director, underwriter or controlling person
for any legal and other expenses as such expenses are reasonably incurred by
Purchaser or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in the
registration statement, the Prospectus or any amendment or supplement thereto in
reliance upon and
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in conformity with written information furnished to the Company by or on behalf
of Purchaser expressly for use therein, (ii) the failure of Purchaser to comply
with the covenants and agreements contained in this Agreement respecting the
sale of the Registrable Securities, (iii) the inaccuracy of any representations
made by Purchaser herein, or (iv) any statement or omission in any Prospectus
that is corrected in any subsequent Prospectus that was delivered to Purchaser
prior to the pertinent sale or sales by Purchaser.
(b) By Purchaser. Purchaser will indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the registration
statement and each person, if any, who controls the Company within the meaning
of the Securities Act, against any losses, claims, damages, liabilities or
expenses to which the Company, each of its directors, each of its officers who
signed the registration statement or controlling person may become subject,
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of Purchaser) insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any Violation, in each case to the extent, but only to the
extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any Purchaser
expressly for use therein, and will reimburse the Company, each of its
directors, each of its officers who signed the registration statement or
controlling person for any legal and other expenses reasonably incurred by the
Company, each of its directors, each of its officers who signed the registration
statement or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action.
(c) Notice. Promptly after receipt by an indemnified party
under this Section 1.7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 1.7, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party for contribution or otherwise than under the indemnity
agreement contained in this Section 1.7 or to the extent it is not prejudiced as
a proximate result of such failure. In case any such action is brought against
any indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with all other
indemnifying parties similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be a conflict between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such
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legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 1.7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by such
indemnifying party in the case of paragraph (a), representing the indemnified
parties who are parties to such action) or (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of action, in each of which cases the fees and expenses of counsel
shall be at the expense of the indemnifying party.
(d) Limitation. The foregoing indemnity agreements of the Company
and Purchaser are subject to the condition that, insofar as they relate to the
bases for any losses, claims, damages, liabilities or expenses contemplated in
Section 1.7(a) arising out of the preparation and filing of the preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
SEC at the time the registration statement in question becomes effective or in
the amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the
"Final Prospectus"), such indemnity agreement shall not inure to the benefit of
any person if a copy of the Final Prospectus was furnished to the indemnified
party and was not furnished to the person asserting the loss, liability, claim
or damage at or prior to the time such action is required by the Securities Act.
(e) Contribution. If the indemnification provided for in this
Section 1.7 is required by its terms but is for any reason held to be
unavailable to or otherwise insufficient to hold harmless an indemnified party
under paragraphs (a), (b) or (c) of this Section 1.7 in respect to any losses,
claims, damages, liabilities or expenses referred to herein, then each
applicable indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of any losses, claims, damages, liabilities
or expenses referred to herein in such proportion as is appropriate to reflect
the relative fault of the Company and Purchaser in connection with the
statements or omissions or inaccuracies in the representations and warranties in
this Agreement which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of the Company and Purchaser shall be determined by reference to, among
other things, whether the untrue or alleged misstatement of a material fact or
the omission or alleged omission to state a material fact or the inaccurate or
the alleged inaccurate representation and/or warranty relates to information
supplied by the Company or by Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to
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the limitations set forth in Section 1.7(c) any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in Section 1.7(c) with respect to
notice of commencement of any action shall apply if a claim for contribution is
to be made under this paragraph (d); provided, however, that no additional
notice shall be required with respect to any action for which notice has been
give under Section 1.7(c) for purposes of indemnification. The Company and
Purchaser agree that it would not be just and equitable if contribution pursuant
to this Section 1.7(d) were determined solely by pro rata allocation (even if
Purchaser were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this paragraph. Notwithstanding the provisions of this Section 1.7(d),
Purchaser shall not be required to contribute any amount in excess of the amount
by which the amount paid by Purchaser for the Registrable Securities that were
sold pursuant to the registration statement and the amount received by Purchaser
from such sale exceeds the amount of any damages that Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) Survival. The obligations of the Company and the Purchaser
under this Section 1.7 shall survive the completion of any offering of
Registrable Securities in a registration statement, and otherwise.
1.8 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the SEC, which may at any time permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the date hereof;
(b) Use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Exchange Act; and
(c) So long as Purchaser owns any Registrable Securities, to
furnish to Purchaser forthwith upon request (i) a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144,
and of the Securities Act and the Exchange Act, (ii) a copy of the most recent
annual or quarterly report of the Company, and (iii) such other reports and
documents of the Company as Purchaser may reasonably request in availing itself
of any rule or regulation of the Commission allowing Purchaser to sell any such
securities without registration.
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2. Transfer and Assignment; Term.
2.1 Transfer and Assignment. Purchaser may not sell or otherwise
transfer or assign any shares of Series G Preferred, or any voting or other
rights therein, to any person or entity except (i) with the prior written
consent of the Company, or (ii) to an Affiliate of Purchaser (as defined below)
pursuant to the terms of this Agreement. Subject to the provisions of Section
2.2, this provision shall not effect the Purchaser's right to transfer
Conversion Shares.
2.2 Transfer of Rights. Notwithstanding anything herein to the
contrary, the registration rights of Purchaser under Section 1 hereof may be
assigned only (i) with the prior written consent of the Company; or (ii) to an
Affiliate of Purchaser, with such rights being exercisable only for so long as
such entity remains an Affiliate of Purchaser; provided, however that no entity
may be assigned any of the foregoing rights unless the Company is given written
notice by the assigning entity at the time of such assignment stating the name
and address of the assignee and identifying the securities of the Company as to
which the rights in question are being assigned; and provided further that any
such assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement, including without limitation the provisions of
this Section 2. For the purpose of this Agreement, the term Affiliate with
respect to Purchaser shall mean Saab Automobile AB and any entity controlled
directly or indirectly by General Motors Corporation, where "control" means the
ownership of more than fifty percent (50%) of the outstanding voting securities
or voting interests of the entity in question.
2.3 Term. Subject to Section 1.7(f), the Company's obligations
under this Agreement shall terminate on the tenth anniversary of the Closing as
defined in the Preferred Stock Purchase Agreement.
3. General Provisions.
3.1 Assignment. Except as provided in Section 2 above, no party to
this Agreement may assign, by operation of law or otherwise, all or any portion
of its rights, obligations or liabilities under this Agreement.
3.2 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
successors and permitted assigns, any rights or remedies under or by reason of
this Agreement.
3.3 Governing Law. This Agreement shall be governed by and construed
under the internal laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware,
without reference to principles of conflict of laws or choice of laws.
3.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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3.5 Headings. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
3.6 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
and received (a) upon personal delivery, (b) on the fifth day following mailing
by registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company or to Purchaser, as the case may be, at their
respective addresses set forth below, (c), upon transmission of telegram or
facsimile (with telephonic notice), or (d) upon confirmed delivery by overnight
commercial courier service.
If to Purchaser: OnStar
888 West Big Beaver Avenue, Suite 200
Troy, Michigan 48084
Attention: Fred H. Cooke
Telephone: 248-269-1311
Facsimile: 248-269-1549
With a copy to: General Motors Legal Staff
New Center One Building
Mail Code: 482-208-835
3031 West Grand Boulevard
Detroit, Michigan 48202
Attention: Kimberly K. Hudolin, Esq.
Telephone: 313-974-1950
Facsimile: 313-974-0685
If to General Magic: General Magic, Inc.
420 N. Mary Avenue
Sunnyvale, CA 94086
Attention: General Counsel
Telephone: (408) 774-4235
Facsimile: (408) 774-4023
With a copy to: Cooley Godward
Five Palo Alto Square
Palo Alto, CA 94306
Attention: Timothy J. Moore, Esq.
Telephone: (650) 843-5000
Facsimile: (650) 857-0663
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Such addresses may be changed, from time to time, by means of a notice given in
the manner provided in this Section 3.6.
3.7 Attorneys' Fees. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to recover its reasonable attorneys' fees, experts' fees and costs,
including those for pretrial, trial, on appeal, in arbitration and in bankruptcy
and all other costs and necessary disbursements associated with any such
actions, in addition to any other relief to which such party may be entitled.
3.8 Adjustments for Stock Splits, Etc. Wherever in this Agreement
there is a reference to a specific number of shares of Common Stock or preferred
stock of the Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of stock, the
specific number of shares so referenced in this Agreement shall automatically be
proportionally adjusted to reflect the affect on the outstanding shares of such
class or series of stock by such subdivision, combination or stock dividend.
3.9 Aggregation of Stock. All shares held or acquired by the
Purchaser and its Affiliates shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
3.10 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any provision of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holder of
at least a majority of the Registrable Securities. Any amendment or waiver
effected in accordance with this Section 3.10 shall be binding upon Purchaser
and the Company. No waiver of any of the provisions of this Agreement shall be
deemed to be or shall constitute a waiver of any other provisions hereof,
whether or not similar, nor shall any such waiver constitute a continuing
waiver.
3.11 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement. In the event of such invalidity, the parties shall seek to
agree on an alternative enforceable provision that preserves the original
purpose of this Agreement.
3.12 Entire Agreement. This Agreement, the Preferred Stock Purchase
Agreement, the Certificate of Designations and the Warrant constitute the entire
agreement and understanding of the parties with respect to the subject matter
hereof and thereof and supersede any and all prior negotiations, correspondence,
agreements,
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understandings, duties or obligations between the parties with respect to the
subject matter hereof and thereof.
3.13 Expenses. Except as otherwise provided herein, each of the
Company and the Purchaser shall bear the expenses incurred on its behalf with
respect to this Agreement and the transaction contemplated hereby.
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IN WITNESS WHEREOF, the foregoing Registration Rights Agreement is hereby
executed as of the date first above written.
COMPANY:
GENERAL MAGIC, INC.
/s/ Steven Markman
By:______________________________
Steven Markman
Name:____________________________
Chief Executive Officer
Title:___________________________
PURCHASER:
GENERAL MOTORS CORPORATION
By and through its OnStar Division
/s/ F.H. Cooke
By:______________________________
F.H. Cooke
Name:____________________________
Executive Director, Onstar
Title:___________________________
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