<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): NOVEMBER 9, 1999
GENERAL MAGIC, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
DELAWARE 000-25374 77-0250147
<S> <C> <C>
(State or Other Jurisdiction of (Commission File Number) (IRS Employer Identification No.)
Incorporation)
420 NORTH MARY AVENUE 94086
SUNNYVALE, CALIFORNIA (Zip Code)
(Address of Principal Executive Offices)
</TABLE>
Registrant's telephone number, including area code: (408) 774-4000
NONE
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On November 9, 1999, General Magic, Inc. (the "Company") entered into a
Series G Preferred Stock and Warrant Purchase Agreement (the "Stock Purchase
Agreement") in which the Company agreed to issue and sell 1,500 shares of its
Series G Convertible Preferred Stock (the "Series G Stock") for $15,000,000 and
a warrant to purchase up to 500 additional shares of the Company's Series G
Stock for $1,000 (the "Warrant") to General Motors Corporation by and through
its OnStar division ("General Motors") for an aggregate purchase price of
$15,001,000 (the "Series G Financing").
Under a letter agreement dated as of December 9, 1999, the closing date
of the Series G Financing (the "Letter Agreement"), General Motors agreed that
it would not exercise or permit a transferee to exercise the right to convert
shares of the Series G Stock into shares of the Company's Common Stock to the
extent that the shares of Common Stock issuable upon conversion would exceed
19.99% of the outstanding shares of the Company's Common Stock as of December 9,
1999 (the "Exchange Cap") unless the Company (i) obtains the approval of its
stockholders as required by Rule 4460(i) and applicable regulations of Nasdaq
for issuance of Common Stock (or securities convertible into or exercisable for
Common Stock) in excess of the Exchange Cap or (ii) obtains a written opinion
reasonably satisfactory to General Motors from outside counsel to the Company
that such approval is not required. Furthermore, General Motors agreed not to
exercise, nor to allow a transferee to exercise, the Warrant unless the Company
(i) obtains such stockholder approval or (ii) obtains such written opinion.
The Letter Agreement requires the Company to seek and use reasonable
best efforts to obtain either (a) the stockholder approval required by the
applicable rules and regulations of Nasdaq for the issuance by the Company of
(i) that portion of the Series G Stock that may not be converted without
exceeding the Exchange Cap, (ii) the Warrant, and (iii) shares of the Company's
Common Stock (or securities convertible into or exercisable for Common Stock)
issuable upon conversion of such portion of the Series G Stock or upon exercise
of the Warrant or (b) an opinion of counsel reasonably satisfactory to General
Motors that such approval is not required.
Should the Company fail to obtain the approval of its stockholders or an
opinion of counsel reasonably satisfactory to General Motors, then the Company
must, at the absolute discretion of the Company, either (i) pay to General
Motors $7 million in cash, or (ii) pay to General Motors $3.5 million in cash
and credit $3.5 million against amounts then owed or next owing by General
Motors to the Company.
Subject to the provisions of the Letter Agreement, the shares of Series
G Stock are convertible, at the option of the holder, into Common Stock of the
Company at a conversion rate equal to $10,000 divided by $1.684 (as adjusted for
any stock dividends, combinations, splits, reclassifications, exchanges,
recapitalizations, capital reorganizations, and the like with respect to such
shares). In addition, upon the consent of the holders of at least fifty percent
of the Series G Stock then outstanding, all outstanding shares of the Series G
Stock will be converted into shares of Common Stock
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automatically and without any further action by the holders of such shares,
subject to the provisions of the Letter Agreement.
The holders of Series G Stock are entitled to receive, when, if and as
declared by the Board of Directors, noncumulative cash dividends at the rate of
7% of $10,000 per annum on each outstanding share of Series G Stock (as adjusted
for any stock dividends, combinations, splits, recapitalizations and the like
with respect to such shares).
The holders of Series G Stock are entitled to vote together with the
Common Stock as though part of that class and are entitled to vote on all
matters the number of votes equal to the largest number of whole shares of
Common Stock into which the holder's shares of Series G Stock may be converted.
The holders of Series G Stock are entitled to vote as a separate class (i) on
any matter as to which such class would be entitled to vote under applicable
law, (ii) on any matter proposing to change any provision of the Certificate of
Designations, Preferences and Rights of Series G Convertible Preferred Stock
(the "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 for the benefit
of, the holders of the Series G Stock, unless all series of preferred stock are
so altered or changed and (iii) on any matter to increase or decrease the number
of authorized shares of Series G Stock.
Furthermore, the holders of the Series G Stock, voting as a separate
class, have the right to elect one 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
Stock 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
Stock (as adjusted for stock splits, recombinations, reclassifications and the
like), and (iii) the date of consummation of an Acquisition or Asset Transfer,
as those terms are defined in Section 3(b) of the Certificate of Designations.
In addition to the Series G Financing, General Motors and the Company
entered into a Development and License Agreement, dated November 9, 1999 (the
"License Agreement", and together with the Series G Financing, the
"Transaction"). In compliance with the terms of the License Agreement, General
Motors paid to the Company a one-time, non-refundable license fee of $5,000,000
in consideration of licenses to use certain of the Company's technology and for
related development work to be done by the Company.
On December 14, 1999, the Company announced in a press release
describing the closing of the Transaction that the Company would recognize
$5,000,000 in the fourth quarter of 1999 in connection with the Transaction.
Although the Company did receive $20,001,000 on or about December 9, 1999
including the $15,000,000 payment for the Series G Stock, the $1,000 payment for
the Warrant and the $5,000,000 non-refundable license fee, the Company
subsequently determined, based on recent Securities and Exchange Commission
pronouncements on the recognition of revenue(1) and current accounting
literature, to use the contract method of accounting for the Transaction, which
requires that the Company recognize the revenue under the Transaction based on a
percentage of completion method over the period from the inception of the
License Agreement on November 9, 1999 until July 2000, the month by which the
Company expects the OnStar virtual advisor to be commercially launched. The
Company expects the total amount of revenue
- --------
(1) See Commissioner Isaac C. Hunt Jr., Remarks at the 27th Annual AICPA
National Conference on Current SEC Developments (Dec. 7, 1999) (transcript
available at http://www.sec.gov/news/speeches/spch325.htm); Revenue
Recognition in Financial Statements, Exchange Act Release No. SAB 101,
17 C.F.R. Part 211 (Dec. 3, 1999).
<PAGE> 4
to be recognized in connection with the Transaction using contract accounting
to be approximately $6,000,000 of which approximately $300,000 is expected to be
recognized in the fourth quarter of 1999.
The foregoing description is qualified in its entirety by the Stock
Purchase Agreement, the Letter Agreement, the License Agreement, and the other
agreements and instruments executed in connection with the Series G Financing,
copies of which are attached as exhibits to this Current Report on Form 8-K.
<PAGE> 5
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibits are filed with this report on Form 8-K:
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<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1 Certificate of Designations, Preferences and Rights of Series
G Convertible Preferred Stock of General Magic, Inc.
4.1* Series G Preferred Stock and Warrant Purchase Agreement
between General Magic, Inc. and General Motors Corporation,
by and through its OnStar Division, dated November 9, 1999
(without exhibits).
4.2 Letter Agreement of General Motors Corporation and General
Magic, Inc. dated as of December 9, 1999.
4.3 Form of Warrant for the Purchase of Shares of Series G
Convertible Preferred Stock of General Magic, Inc.
4.4 Registration Rights Agreement, dated November 9, 1999 by and
between General Magic, Inc. and General Motors Corporation by
and through its OnStar division.
99.1+ Development and License Agreement, dated November 9, 1999 by
and between General Magic, Inc. and General Motors
Corporation by and through its OnStar division.
</TABLE>
- -------------------
* The Company agrees to furnish supplementally a copy of any omitted schedule to
the SEC upon request.
+ Portions of this document have been omitted pursuant to a confidential
treatment request filed with the Securities and Exchange Commission. Such
portions have been provided separately to the Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL MAGIC, INC.
Dated: January 28, 2000 By: /s/ Mary E. Doyle
-------------------------------
Mary E. Doyle
General Counsel and Secretary
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EXHIBIT INDEX
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<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1 Certificate of Designations, Preferences and Rights of Series
G Convertible Preferred Stock of General Magic, Inc.
4.1* Series G Preferred Stock and Warrant Purchase Agreement
between General Magic, Inc. and General Motors Corporation,
by and through its OnStar Division, dated November 9, 1999
(without exhibits).
4.2 Letter Agreement of General Motors Corporation and General
Magic, Inc. dated as of December 9, 1999.
4.3 Form of Warrant for the Purchase of Shares of Series G
Convertible Preferred Stock of General Magic, Inc.
4.4 Registration Rights Agreement, dated November 9, 1999 by and
between General Magic, Inc. and General Motors Corporation by
and through its OnStar division.
99.1+ Development and License Agreement, dated November 9, 1999 by
and between General Magic, Inc. and General Motors
Corporation by and through its OnStar division.
</TABLE>
- ------------------
* The Company agrees to furnish supplementally a copy of any omitted schedule to
the SEC upon request.
+ Portions of this document have been omitted pursuant to a confidential
treatment request filed with the securities and exchange commission. Such
portions have been provided separately to the commission.
<PAGE> 1
EXHIBIT 3.1
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
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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 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
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power immediately after such consolidation, merger or reorganization (an
"Acquisition"); or
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
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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 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
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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 (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
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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 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
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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 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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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
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<PAGE> 1
EXHIBIT 4.1
SERIES G PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
BETWEEN
GENERAL MAGIC, INC.
AND
GENERAL MOTORS CORPORATION,
BY AND THROUGH ITS ONSTAR DIVISION
DATED NOVEMBER 9, 1999
<PAGE> 2
SERIES G PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT
THIS SERIES G PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (this
"Agreement") is made as of November 9th, 1999, by and between GENERAL MAGIC,
INC., a Delaware corporation with its principal office at 420 North Mary Avenue,
Sunnyvale, California 94086 (the "Company"), and GENERAL MOTORS CORPORATION, a
Delaware corporation, by and through its ONSTAR DIVISION, with an address at 888
West Big Beaver Avenue, Suite 200, Troy, Michigan 48084 (the "Purchaser").
AGREEMENT
IN CONSIDERATION of the mutual covenants and agreements contained
herein, and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the Company and the Purchaser agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SECURITIES. Subject to the terms and
conditions of this Agreement, the Company has, or before the Closing (as defined
below) will have, authorized the sale and issuance of (a) up to 1,500 shares of
its Series G Convertible Preferred Stock (the "Series G Stock") having the terms
set forth in the Certificate of Designations, Preferences and Rights in
substantially the form attached as Exhibit A (the "Certificate of Designations")
and (b) a warrant, in substantially the form attached hereto as Exhibit B (the
"Warrant"), to purchase up to 500 additional shares of the Company's Series G
Stock. The Series G Stock and the Warrant are collectively referred to herein as
the "Securities."
1.2 SALE AND PURCHASE. Subject to the terms and conditions of
this Agreement, and in reliance on the representations and warranties contained
herein, at the Closing the Company agrees to issue and sell to the Purchaser,
and the Purchaser agrees to purchase from the Company for an aggregate purchase
price of $15,001,000: (a) 1,500 shares of Series G Stock at purchase price of
$10,000.00 per share, and (b) the Warrant at a purchase price of $1,000.00. The
shares of Series G Stock issuable upon exercise of the Warrant will be
hereinafter referred to as the "Warrant Shares." The shares of the Company's
Common Stock issuable upon conversion of the shares of Series G Stock purchased
and sold pursuant to this Agreement and the shares of Common Stock issuable upon
conversion of Series G Stock purchasable under the Warrant will be collectively
hereinafter referred to as the "Conversion Shares."
2. CLOSING AND DELIVERY.
2.1 CLOSING. Subject to the terms and conditions of Section 6,
the closing of the sale and purchase of the Series G Stock and the Warrant shall
be held at 2:00 p.m. on the third business day immediately following the
completion of all conditions to closing hereunder or waiver of such conditions,
including receipt of any necessary governmental approvals (the
<PAGE> 3
"Closing Date") at the offices of the Company, or at such other time and place
as the Company and Purchaser may agree.
2.2 DELIVERY. At the Closing, subject to the terms and conditions
hereof, the Company will issue and deliver to Purchaser (a) a stock certificate,
in the name designated by Purchaser, representing the shares of Series G Stock
deliverable at such Closing, dated as of the Closing, and (b) the Warrant, in
each case against payment of the purchase price therefor by wire transfer,
unless other means of payment shall have been agreed upon by Purchaser and the
Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Subject to and
except as disclosed by the Company in the Schedule of Exceptions attached hereto
as Exhibit C, the Company hereby represents and warrants and covenants to
Purchaser as of the date of this Agreement and as of the Closing Date as
follows:
3.1 AUTHORIZATION. All corporate action necessary for the
authorization, execution and delivery of this Agreement has been taken. The
Company has the requisite corporate power to enter into this Agreement and carry
out and perform its obligations under the terms of this Agreement. At the
Closing, the Company will have the requisite corporate power to sell the shares
of Series G Stock and the Warrant to be sold at such Closing. This Agreement has
been duly authorized, executed and delivered by the Company and, upon due
execution and delivery by Purchaser, this Agreement will be a valid and binding
obligation of the Company, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by equitable principles.
3.2 NO CONFLICT WITH OTHER INSTRUMENTS. The execution, delivery
and performance by the Company of its obligations under this Agreement, the
Certificate of Designations and the Warrant and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without
limitation, the reservation for issuance and issuance of the Conversion Shares
and the Warrant Shares) will not (i) result in a violation of the Certificate of
Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of preferred stock of the Company or the By-laws of the
Company; (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment or acceleration or cancellation of, any
material agreement, indenture or instrument to which the Company is a party; or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of the principal market or exchange on which the Common
Stock is traded or listed) applicable to the Company or by which any property or
asset of the Company is bound or affected. The Company is not in violation of
any term of or in default under (x) its Certificate of Incorporation, any
Certificate of Designations, Preferences and Rights of any outstanding series of
preferred stock or By-laws, or (y) any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company, except for such violations which
have not had and, to the knowledge of the Company, will not have a material
adverse effect on the condition (financial or otherwise), business or results of
operations of the Company (a "Material Adverse Effect"). The business of the
Company is not being conducted in violation of any law, ordinance or regulation
of any governmental entity, except for
2
<PAGE> 4
any violations that individually or in the aggregate will not have a Material
Adverse Effect. Except as set forth in Schedule 3.2, the Company complies with
and is not in violation of the listing requirements of The Nasdaq National
Market ("Nasdaq") as in effect on the date hereof and the Closing Date and is
not aware of any facts which would reasonably lead to delisting or suspension of
the Common Stock by Nasdaq in the foreseeable future. Immediately after the
Closing, the Company shall meet the "net tangible assets" requirement required
under "Maintenance Standard 1" as set forth in Section 4450(1)(a)(3) of the
Marketplace Rule of Nasdaq.
3.3 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and carry on its business as
now conducted and as proposed to be conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure so to qualify or be in good standing would have a Material Adverse
Effect.
3.4 CAPITALIZATION.
(a) The authorized capital stock of the Company consists
of 100,000,000 shares of Common Stock, of which 41,254,159 shares were issued
and outstanding as of November 5, 1999, and 50,000 shares of Series A Preferred
Stock, of which 50,000 shares are outstanding, 12,000 shares of Series B
Preferred Stock, no shares of which are outstanding, 3,000 shares of Series C
Preferred Stock, no shares of which are outstanding, 1,000 shares of Series D
Preferred Stock, of which 1,000 shares are outstanding, 699 shares of Series E
Preferred Stock, of which 599 shares are outstanding, 1,000 shares of Series F
Preferred Stock, of which 1,000 shares are outstanding, and 2,000 shares of
Series G Preferred Stock, none of which are outstanding immediately prior to the
Closing. All issued and outstanding shares have been duly authorized and validly
issued, and are fully paid and nonassessable, and such shares and all
outstanding options, warrants, convertible notes and other securities of the
Company have been issued in compliance with all applicable federal and state
securities laws.
(b) Except as described on Schedule 3.4(b), after giving
effect to the sale of the securities hereunder, there are no preemptive or other
outstanding rights, options, warrants, conversion rights or agreements for the
purchase or acquisition from the Company of any shares of its capital stock or
other securities of the Company. Except as described on Schedule 3.4(b), the
Company has not granted or agreed to grant to any person or entity any rights
(including piggyback registration rights) to have any securities of the Company
registered with the United States Securities and Exchange Commission ("SEC") or
any other governmental authority.
3.5 SUBSIDIARIES. Except as set forth on Schedule 3.5, the
Company does not presently own or control, directly or indirectly, and has no
stock or other interest as owner or principal in, any other corporation or
partnership, joint venture, association or other business venture or entity.
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<PAGE> 5
3.6 VALID ISSUANCE OF STOCK.
(a) The shares of Series G Stock (the "Purchased Shares")
and the Warrant which will be purchased by Purchaser hereunder, when issued,
sold and delivered in accordance with the terms hereof for the consideration
expressed herein, will be duly and validly authorized and issued, fully paid and
nonassessable, will be delivered to Purchaser free and clear of all liens,
pledges, claims, encumbrances, security interests or other restrictions, except
for restrictions on transfer contemplated herein or imposed to ensure compliance
with the Securities Act of 1933, as amended (the "Securities Act"), and, based
in part upon the representations of Purchaser in Section 4.3 of this Agreement,
will be issued in compliance with all applicable federal and state securities
laws.
(b) The Warrant Shares and Conversion Shares have been
duly and validly reserved for issuance, and upon issuance in accordance with the
terms of the Warrant and the Certificate of Designations, respectively, will be
duly and validly issued, fully paid and nonassessable, will be delivered to
Purchaser free and clear of all liens, pledges, claims, encumbrances, security
interests or other restrictions, except for restrictions on transfer
contemplated herein or imposed to ensure compliance with the Securities Act,
and, based in part upon the representations of Purchaser in Section 4.3 of this
Agreement, will be issued in compliance with all applicable federal and state
securities laws.
(c) The shares of Series G Stock and the Conversion Shares
are not subject to preemptive rights, rights of first refusal or any other
similar rights of the stockholders of the Company.
(d) Except as set forth on Schedule 3.6(d), the issuance
of the Securities will not require the Company to issue any additional capital
stock of the Company pursuant to any anti-dilution provision or otherwise.
3.7 LITIGATION. There is no action, suit or proceeding pending
nor, to its knowledge, any action, suit, proceeding or investigation currently
threatened against the Company, nor, to its knowledge, is there any basis
therefor, which could have a Material Adverse Effect. The foregoing includes,
without limitation, any action, suit, proceeding or investigation, pending or
threatened, that questions the validity of this Agreement or the right of the
Company to enter into the Agreement.
3.8 GOVERNMENTAL CONSENTS. Except as set forth on Schedule 3.8,
no consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state, local or provincial
governmental authority on the part of the Company is required in connection with
the consummation of the transactions contemplated by this Agreement, except for
notices required or permitted to be filed with certain state and federal
securities commissions, which notices will be filed on a timely basis.
3.9 NO MATERIAL CHANGE. Except as set forth on Schedule 3.9,
since June 30, 1999, there has been no material adverse change in the financial
condition, business or results of operations of the Company which has not been
publicly disclosed pursuant to an SEC filing or otherwise disclosed to Purchaser
in the Schedule of Exceptions as of the date of this Agreement.
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<PAGE> 6
3.10 PROPRIETARY RIGHTS AND INFORMATION AGREEMENT. Each former
and current employee, officer, consultant and contractor of the Company has
entered into and executed a Proprietary Rights and Information Agreement in the
form attached to this Agreement as Exhibit D or an employment or consulting
agreement containing substantially similar terms.
3.11 INTELLECTUAL PROPERTY. The Company owns or possesses
adequate rights or licenses to use all trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct its business as now conducted. Except as set forth
on Schedule 3.11, none of the Company's trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets or
other intellectual property rights have expired or terminated, or are expected
to expire or terminate within two (2) years from the date of this Agreement,
where the result of such expiration or termination would have, individually or
in the aggregate, a Material Adverse Effect. The Company does not have any
knowledge of any infringement by the Company of trademarks, trade name rights,
patents, patent rights, copyrights, inventions, licenses, service names, service
marks, service mark registrations, trade secret or other similar rights of
others which infringement could have a Material Adverse Effect, and, except as
set forth on Schedule 3.11, there is no claim, action or proceeding being made
or brought against, or to the Company's knowledge, being threatened against, the
Company regarding trademarks, trade name rights, patents, patent rights,
inventions, copyrights, licenses, service names, service marks, service mark
registrations, trade secrets or other infringement. The Company has taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of its intellectual properties.
3.12 COMPLIANCE. The Company has not been advised, and has no
reason to believe, that it is not conducting its business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations; except where failure to be so in
compliance would not have a Material Adverse Effect.
3.13 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed
in a timely manner all documents that it was required to file with the SEC under
Sections 13, 14(a) and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), during the twelve (12) months preceding the date of this
Agreement. As of their respective filing dates (or, if amended prior to the date
of this Agreement, when amended), all documents filed by the Company with the
SEC (the "SEC Documents") complied in all material respects with the
requirements of the Exchange Act. None of the SEC Documents as of their
respective dates contained any untrue statement of material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the
SEC Documents (the "Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. The Financial Statements have
been prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the financial position of the Company at
the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring adjustments).
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<PAGE> 7
3.14 NO BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based on arrangements made
by the Company.
3.15 DISCLOSURE. Neither the representations or warranties made
by Company in this Agreement, nor in the final Schedule of Exceptions or any
certificate or document executed and/or delivered by the Company pursuant to
this Agreement, when taken together, contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements or
facts contained herein or therein not misleading in light of the circumstances
in which they were furnished.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to the Company as follows:
4.1 LEGAL POWER. Purchaser has the requisite legal power to enter
into this Agreement, to carry out and perform its obligations under the terms of
this Agreement and, at the Closing, will have the requisite legal power to
purchase the Securities.
4.2 DUE EXECUTION. This Agreement has been duly authorized,
executed and delivered by Purchaser, and, upon due execution and delivery by the
Company, this Agreement will be a valid and binding obligation of Purchaser,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
or by equitable principles.
4.3 INVESTMENT REPRESENTATIONS. In connection with the purchase
of the Securities, the Purchaser makes the following representations:
(a) the Purchaser is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investments in shares representing an investment decision like that involved in
the purchase of the Securities, including investments in securities issued by
the Company, and has requested, received, reviewed and considered all
information it deems relevant in making an informed decision to purchase the
Securities;
(b) the Purchaser is acquiring the Securities in the
ordinary course of its business and for its own account for investment only (as
defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976
and the regulations thereunder) and with no present intention of distributing
any such Securities or any arrangements or understanding with any other persons
regarding the distribution of such Securities;
(c) the Purchaser will not, directly or indirectly, offer,
sell, pledge, transfer, or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the Securities or
capital stock of the Company issuable upon exercise or conversion thereof except
in compliance with the Securities Act, the rules and regulations of the SEC, and
the restrictions provided under the Registration Rights Agreement to be entered
into by the parties in substantially the form attached hereto as Exhibit E;
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<PAGE> 8
(d) the Purchaser has completed or caused to be completed
the Stock Certificate Questionnaire, attached hereto as Appendix I, and the
answers thereto are true and correct to the best knowledge of the Purchaser as
of the date hereof;
(e) the Purchaser has not, in connection with its decision
to purchase the Securities, relied upon representations and warranties of the
Company other than those contained herein;
(f) the Purchaser is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act;
(g) the Purchaser understands that (i) the Securities have
not been registered under the Securities Act by reason of a specific exemption
therefrom, that such Securities must be held by Purchaser, and that Purchaser
must, therefore, bear the economic risk of such investment, until a subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration; (ii) the Securities will be endorsed with the following
legends:
(1) 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 THE 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.
(2) THE TRANSFER OF THE SHARES REPRESENTED BY THIS
STOCK CERTIFICATE IS RESTRICTED PURSUANT TO THE TERMS OF A REGISTRATION RIGHTS
AGREEMENT DATED NOVEMBER __, 1999; and
(3) Any legend required to be placed thereon by the
Company's Bylaws or under applicable state securities laws; and
(iii) the Company will instruct any transfer agent not to register the transfer
of the shares of Securities purchased pursuant to this Agreement (or any portion
thereof) unless the conditions specified in the foregoing legends are satisfied,
until such time as a transfer is made pursuant to the terms of this Agreement
and in compliance with Rule 144 or pursuant to a registration statement or if
the opinion of counsel referred to above is to the further effect that such
legend is not required in order to establish compliance with any provisions of
the Securities Act or this Agreement; and
(h) the Purchaser has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Securities purchased hereunder.
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4.4 NO BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based on arrangements made
by Purchaser.
5. OTHER COVENANTS.
5.1 THIRD PARTY CONSENTS. Each party shall use its commercially
reasonable efforts to obtain and to cooperate with the other party in the effort
to obtain, as soon as reasonably practicable, all permits, authorizations,
consents, waivers and approvals from third parties or governmental authorities
necessary to consummate this Agreement and the transactions contemplated hereby.
All such consents shall be at each party's own expense.
5.2 CERTAIN NOTIFICATIONS. Each party shall promptly notify the
other in writing of the occurrence of any event which will or could reasonably
be expected to result in the failure to satisfy any of the conditions to the
obligations of such party specified in Section 6.1 or 6.2, as the case may be,
of this Agreement.
5.3 ANTITRUST MATTERS. The Company and Purchaser shall prepare
and file, and shall in all respects cooperate with each other in the preparation
and filing of, any documents required in connection with providing notification
to the Federal Trade Commission and the Antitrust Division of the Department of
Justice of the transactions contemplated hereunder, and shall respond, or
cooperate in responding, to any inquiry made by either with respect to such
transactions.
6. CONDITIONS TO CLOSING.
6.1 CONDITIONS TO OBLIGATIONS OF PURCHASER AT CLOSING.
Purchaser's obligation to purchase the Series G Stock and Warrant at the Closing
is subject to the fulfillment to Purchaser's satisfaction, on or prior to the
Closing, of all of the following conditions, any of which may be waived by
Purchaser in writing:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects on the Closing Date
with the same force and effect as if they had been made on and as of said date,
and the Company shall have performed and complied with all obligations and
conditions herein required to be performed or complied with by it on or prior to
the Closing.
(b) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to counsel to the Purchaser, and counsel to
the Purchaser shall have received all such counterpart executed originals or
certified or other copies of such documents as they may reasonably request,
including, but not limited to, the Warrant.
(c) CERTIFICATE OF DESIGNATIONS. The Certificate of
Designations shall have been filed with the Delaware Secretary of State.
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<PAGE> 10
(d) QUALIFICATIONS, LEGAL INVESTMENT. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Securities shall have been duly obtained and
shall be effective on and as of the Closing. No stop order or other order
enjoining the sale of such Securities shall have been issued and no proceedings
for such purpose shall be pending or, to the knowledge of the Company,
threatened by the SEC, or any commissioner of corporations or similar officer of
any state having jurisdiction over this transaction. At the time of the Closing,
the sale and issuance of the Securities shall be legally permitted by all laws
and regulations to which the Purchaser and the Company are subject.
(e) OPINION OF COMPANY COUNSEL. Purchaser shall have
received an opinion from Cooley Godward LLP, counsel for the Company, dated as
of the date of the Closing.
(f) TRANSACTION DOCUMENTS. The Company shall have executed
and delivered to the Purchaser this Agreement, the Registration Rights
Agreement, in substantially the form attached hereto as Exhibit E, and the
Development and License Agreement, in substantially the form attached hereto as
Exhibit F.
(g) OFFICER'S CERTIFICATE. The Company shall have executed
and delivered to the Purchaser a writing signed on its behalf by its Chief
Executive Officer certifying the completion of the conditions required by
Section 6.1(a).
(h) CLOSING. The Closing shall have occurred on or before
December 31, 1999, or such later date as may be agreed by the parties in
writing, except to the extent failure to close by such date is caused by the
delay of Purchaser.
If any of the foregoing conditions are not either satisfied or waived in writing
by Purchaser, Purchaser may terminate this Agreement without further liability.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AT CLOSING. The
Company's obligation to issue and sell the Securities to be sold at the Closing
is subject to the fulfillment to the Company's satisfaction, on or prior to the
Closing of the following conditions, any of which may be waived by the Company:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties made by the Purchaser in Section 4 hereof shall
be true and correct in all material respects at the date of the Closing with the
same force and effect as if they had been made on and as of the date hereof.
(b) PERFORMANCE OF OBLIGATIONS. Purchaser shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by it on or before the Closing.
(c) QUALIFICATIONS, LEGAL INVESTMENT. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Securities shall have been duly obtained and
shall be effective on and as of the Closing. No stop order or other
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<PAGE> 11
order enjoining the sale of such Securities shall have been issued and no
proceedings for such purpose shall be pending or, to the knowledge of the
Company, threatened by the SEC, or any commissioner of corporations or similar
officer of any state having jurisdiction over this transaction. At the time of
the Closing the sale and issuance of the Securities shall be legally permitted
by all laws and regulations to which the Purchaser and the Company are subject.
(d) TRANSACTION DOCUMENTS. The Purchaser shall have
executed and delivered to the Company the Registration Rights Agreement, in
substantially the form attached hereto as Exhibit E, and the Development and
License Agreement, in substantially the form attached hereto as Exhibit F.
(e) CLOSING. The Closing shall have occurred on or before
December 31, 1999, or such later date as may be agreed by the parties in
writing, except to the extent failure to close by such date is caused by the
delay of the Company.
If any of the foregoing conditions are not either satisfied or waived in writing
by the Company, the Company may terminate this Agreement, without further
liability.
7. MISCELLANEOUS.
7.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates for the securities delivered
pursuant hereto shall survive the execution of this Agreement, the delivery to
the Purchaser of the Securities being purchased and the payment therefor and
shall expire on the fourth anniversary of the date hereof.
7.2 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the substantive laws of the State of California
and the United States of America, without regard to choice of law rules.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, and permitted assigns of the parties hereto.
7.4 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto, and
the other documents delivered pursuant hereto, constitute the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and no party shall be liable or bound to any other party in any manner by any
representations, warranties, covenants, or agreements except as specifically set
forth herein or therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided herein.
7.5 SEVERABILITY. Whenever possible, each provision of the
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Agreement is held to be prohibited
by or invalid under applicable law, such
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provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of the 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.
7.6 AMENDMENT AND WAIVER. Except as otherwise provided herein,
any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely), with the written consent of the Company and the holders of a
majority of the Series G Stock then outstanding.
7.7 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 first above written, (c) upon transmission of telegram or
facsimile (with telephonic notice), or (d) upon confirmed delivery by overnight
commercial courier service.
7.8 FEES AND EXPENSES. Except as otherwise provided herein, each
of the Company and the Purchaser shall bear the expenses and legal fees incurred
on its behalf with respect to this Agreement and the transactions contemplated
hereby.
7.9 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
7.10 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
7.11 NASDAQ. The Company will promptly file a Notification of
Listing of Additional Shares with Nasdaq covering the Securities. The Company
agrees to take all action reasonably necessary to maintain the listing of its
Common Stock on Nasdaq.
7.12 FURTHER ASSURANCES. From and after the date of this
Agreement, upon the request of the Purchaser or the Company, the Company and the
Purchaser shall execute and deliver such instruments, documents or other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
7.13 PUBLICITY. The Company and Purchaser shall each have the
right to prior approval of the issuance of any press release or other public
statement with respect to the transactions contemplated hereby with the
understanding that the parties shall make a joint press release upon execution
of this Agreement. Notwithstanding the foregoing, each party shall be entitled,
without the prior approval of the other party, to make any press release or
other public disclosure with respect to such transaction as is required by
applicable law and regulations
11
<PAGE> 13
(although such other party shall be consulted in connection with any such press
release or other public disclosure prior to its release and shall be provided a
copy thereof).
12
<PAGE> 14
IN WITNESS WHEREOF, the foregoing Agreement is hereby executed as of the
date first above written.
COMPANY:
GENERAL MAGIC, INC.
By: /s/ Steven Markman
---------------------------------
Name: Steven Markman
-------------------------------
Title: CEO
------------------------------
PURCHASER:
GENERAL MOTORS CORPORATION,
BY AND THROUGH ITS ONSTAR DIVISION
By: /s/ F.H. Cooke
---------------------------------
Name: F.H. Cooke
-------------------------------
Title: Executive Director, OnStar
------------------------------
<PAGE> 15
APPENDIX I
GENERAL MAGIC, INC.
STOCK CERTIFICATE QUESTIONNAIRE
In connection with the Agreement, please provide us with the following
information:
1. The exact name that your shares of
Series G Stock are to be registered
in (this is the name that will appear
on your stock certificate(s)). You
may use a nominee name if
appropriate:
General Motors Corporation
------------------------------
2. The relationship between the
Purchaser of the Series G Stock and
the Registered Holder listed in
response to item 1 above: Same
------------------------------
3. The mailing address of the Registered
Holder listed in response to item 1
above:
c/o General Motors Legal Staff
------------------------------
Attention: Kimberly K. Hudolin
------------------------------
New Center One Building
------------------------------
Mail Code: 482-208-835
------------------------------
3031 West Grand Boulevard
------------------------------
Detroit, Michigan 48202
------------------------------
4. The Social Security Number or Tax
Identification Number of the
Registered Holder listed in response
to item 1 above: 38-0572515
------------------------------
<PAGE> 1
EXHIBIT 4.2
General Motors Corporation
OnStar
1400 Stevenson Highway
Troy, Michigan 48083
As of December 9, 1999
General Magic, Inc.
420 N. Mary Avenue
Sunnyvale, CA 94086
Ladies and Gentlemen:
Reference is made to the Series G Preferred Stock and Warrant Purchase
Agreement, dated November 9, 1999 (the "STOCK PURCHASE AGREEMENT"), by and
between General Magic, Inc., a Delaware corporation (the "COMPANY"), and General
Motors Corporation, a Delaware corporation ("GENERAL MOTORS"), by and through
its Onstar Division and the Warrant for the Purchase of Shares of Series G
Convertible Preferred Stock dated December 9, by and among the Company and
General Motors. All capitalized terms used in this letter agreement have the
meaning defined for them in the Stock Purchase Agreement unless otherwise
defined in this letter agreement.
This letter will confirm the agreement of the Company and General Motors
as follows:
1. LIMITATION ON NUMBER OF CONVERSION SHARES. Notwithstanding any
provision of the Stock Purchase Agreement, the Warrant or the Certificate of
Designations, General Motors shall not exercise, and will not permit any
subsequent transferee holding shares of the Series G Stock (A "TRANSFEREE") to
exercise, the right to convert shares of the Series G Stock into shares of the
Company's Common Stock to the extent that the shares of Common Stock issuable
upon conversion would exceed 19.99% of the outstanding shares of the Company's
Common Stock as of December 9, 1999 (the "EXCHANGE CAP"), except that such
limitation shall not apply in the event that the Company (i) obtains the
approval of its stockholders as required by Rule 4460(i) (attached) and
applicable regulations of NASDAQ for issuance of Common Stock (or securities
convertible into or exercisable for Common Stock) in excess of the Exchange Cap
or (ii) obtains a written opinion from outside counsel to the Company that such
approval is not required, which opinion shall be reasonably satisfactory to
General Motors.
2. LIMITATION ON EXERCISE OF WARRANT. Notwithstanding any provision of
the Warrant, General Motors shall not exercise, and will not permit any
Transferee to exercise, the Warrant unless the Company (i) obtains the approval
of its stockholders as required by Rule 4460(i) (attached) and applicable
regulations of NASDAQ for issuance of Common Stock (or securities convertible
into or exercisable for Common Stock) in excess of 19.99% of the outstanding
shares or voting power of the Company's Common Stock as of December 9, 1999 or
(ii) obtains a written opinion from outside counsel to the Company that such
approval is not required, which opinion shall be reasonably satisfactory to
General Motors.
3. STOCKHOLDER APPROVAL. The Company shall, at its 2000 Annual Meeting
of Stockholders (or any Special Meeting of Stockholders called for other
purposes prior to such
<PAGE> 2
General Magic, Inc.
December 9, 1999
Annual Meeting), seek and use reasonable best efforts to obtain stockholder
approval, as required by the applicable rules and regulations of NASDAQ, for the
issuance by the Company of (a) that portion of the Series G Stock that may not
be converted without exceeding the Exchange Cap, (b) the Warrant and (c) shares
of Common Stock (or securities convertible into or exercisable for Common Stock)
issuable upon conversion of such portion of the Series G Stock or upon exercise
of the Warrant.
4. FAILURE TO OBTAIN STOCKHOLDER APPROVAL OR OPINION. In the event that
the Company shall fail to obtain the approval of its stockholders as set forth
in paragraph 3 above or an opinion of counsel as contemplated by paragraphs 1
and 2 above, the Company shall, in full satisfaction of any claims of General
Motors that may arise in connection with such failure under this side letter
agreement, the Stock Purchase Agreement, the Warrant, the Certificate of
Designations, or any related documents, remit to General Motors $7 million to be
distributed, at the sole option of the Company, in one of the following two
forms: (i) the Company may pay (or cause to be paid) to General Motors $7
million in cash, or (ii) the Company may pay (or cause to be paid) to General
Motors $3.5 million in cash and credit $3.5 million against amounts then owed or
next owing to the Company, including amounts due or owing under or in connection
with the Development and License Agreement dated effective November 9, 1999, by
and among the Company and General Motors. In the event that the Company shall
fail to obtain such stockholder approval or such opinion of counsel, General
Motors shall return to the Company for cancellation (i) the Warrant and (ii) a
stock certificate or stock certificates (duly endorsed or accompanied by duly
executed stock powers) representing that portion of the Series G Stock that may
not be converted without exceeding the Exchange Cap.
5. GOVERNING LAW. This letter agreement shall be construed and enforced
in accordance with, and governed by, the internal laws of the State of
California, without regard to its conflict of laws rules.
6. COUNTERPARTS. This letter 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.
Very truly yours,
GENERAL MOTORS CORPORATION
by and through its Onstar Division
By: /s/ F. H. Cooke
------------------------------------
Name: F. H. Cooke
-------------------------------
Title: Executive Director
------------------------------
Agreed and Accepted:
GENERAL MAGIC, INC.
By: /s/ Steven Markman
------------------------------------
Name: Steven Markman
-------------------------------
Title: Chairman, President and CEO
------------------------------
<PAGE> 3
Attachment to Letter Agreement dated December 9, 1999
NASD Rule 4460(i)
(i) Shareholder Approval
(1) Each NNM issuer shall require shareholder approval of a plan or
arrangement under subparagraph (A) below, or prior to the issuance of
designated securities under subparagraph (B), (C), or (D) below:
(A) when a stock option or purchase plan is to be established or
other arrangement made pursuant to which stock may be acquired by officers
or directors, except for warrants or rights issued generally to security
holders of the company or broadly based plans or arrangements including
other employees (e.g. ESOPs). In a case where the shares are issued to a
person not previously employed by the company, as an inducement essential
to the individual's entering into an employment contract with the company,
shareholder approval will generally not be required. The establishment of a
plan or arrangement under which the amount of securities which may be
issued does not exceed the lesser of 1% of the number of shares of common
stock, 1% of the voting power outstanding, or 25,000 shares will not
generally require shareholder approval;
(B) when the issuance will result in a change of control of the
issuer;
(C) in connection with the acquisition of the stock or assets of
another company if:
(i) any director, officer or substantial shareholder of the
issuer has a 5% or greater interest (or such persons collectively have
a 10% or greater interest), directly or indirectly, in the company or
assets to be acquired or in the consideration to be paid in the
transaction or series of related transactions and the present or
potential issuance of common stock, or securities convertible into or
exercisable for common stock, could result in an increase in
outstanding common shares or voting power of 5% or more; or
(ii) where, due to the present or potential issuance of common
stock, or securities convertible into or exercisable for common stock,
other than a public offering for cash:
a. the common stock has or will have upon issuance voting
power equal to or in excess of 20% of the voting power
outstanding before the issuance of stock or securities
convertible into or exercisable for common stock; or
b. the number of shares of common stock to be issued is or
will be equal to or in excess of 20% of the number of shares or
common stock outstanding before the issuance of the stock or
securities; or
(D) in connection with a transaction other than a public offering
involving:
<PAGE> 4
(i) the sale or issuance by the issuer of common stock
(or securities convertible into or exercisable for common
stock) at a price less than the greater of book or market value
which together with sales by officers, directors or substantial
shareholders of the company equals 20% or more of common stock
or 20% or more of the voting power outstanding before the
issuance; or
(ii) the sale or issuance by the company of common stock
(or securities convertible into or exercisable common stock)
equal to 20% or more of the common stock or 20% or more of the
voting power outstanding before the issuance for less than the
greater of book or market value of the stock.
(2) Exceptions may be made upon application to Nasdaq when:
(A) the delay in securing stockholder approval would seriously
jeopardize the financial viability of the enterprise; and
(B) reliance by the company on this exception is expressly
approved by the Audit Committee or a comparable body of the Board of
Directors.
A company relying on this exception must mail to all
shareholders not later than ten days before issuance of the securities a
letter alerting them to its omission to seek the shareholder approval
that would otherwise be required and indicating that the Audit Committee
of the Board or a comparable body has expressly approved the exception.
(3) Only shares actually issued and outstanding (excluding treasury
shares or shares held by a subsidiary) are to be used in making any calculation
provided for in this paragraph (i). Unissued shares reserved for issuance upon
conversion of securities or upon exercise of options or warrants will not be
regarded as outstanding.
(4) Voting power outstanding as used in this Rule refers to the
aggregate number of votes which may be cast by holders of those securities
outstanding which entitle the holders thereof to vote generally on all matters
submitted to the company's security holders for a vote.
(5) An interest consisting of less than either 5% of the number of
shares of common stock or 5% of the voting power outstanding of an issuer or
party shall not be considered a substantial interest or cause the holder of
such an interest to be regarded as a substantial security holder.
(6) Where shareholder approval is required, the minimum vote which will
constitute shareholder approval shall be a majority of the total votes cast on
the proposal in person or by proxy.
<PAGE> 1
Exhibit 4.3
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> 2
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:
Y (A-B/Z)
X = ---------
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)
2
<PAGE> 3
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.
3
<PAGE> 4
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
4
<PAGE> 5
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> 6
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> 7
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> 8
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 November , 1999.
GENERAL MAGIC, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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<PAGE> 9
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> 1
EXHIBIT 4.4
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
<PAGE> 2
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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<PAGE> 3
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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<PAGE> 4
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 obligated 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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<PAGE> 5
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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<PAGE> 6
(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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<PAGE> 7
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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<PAGE> 8
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
8
<PAGE> 9
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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<PAGE> 10
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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<PAGE> 11
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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<PAGE> 14
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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<PAGE> 15
IN WITNESS WHEREOF, the foregoing Registration Rights Agreement is hereby
executed as of the date first above written.
COMPANY:
GENERAL MAGIC, INC.
By: /s/ Steven Markman
---------------------------------
Name: Steven Markman
-------------------------------
Title: CEO
------------------------------
PURCHASER:
GENERAL MOTORS CORPORATION
By and through its OnStar Division
By: /s/ F.H. Cooke
---------------------------------
Name: F.H. Cooke
-------------------------------
Title: Executive Director, OnStar
------------------------------
15
<PAGE> 1
EXHIBIT 99.01
CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTIONS 200.80(B)(4), 200.83
AND 230.406.
DEVELOPMENT AND LICENSE AGREEMENT
THIS DEVELOPMENT AND LICENSE AGREEMENT is made effective as of November
9, 1999 (the "Effective Date") by GENERAL MAGIC, INC., a Delaware corporation
having a place of business at 420 North Mary Avenue, Sunnyvale, California 94086
("Magic"), and GENERAL MOTORS CORPORATION, a Delaware corporation having a place
of business at 888 West Big Beaver Avenue, Suite 200, Troy, Michigan 48084, by
and through its OnStar division ("GM").
BACKGROUND
A. Magic has designed, developed, and deployed a voice-accessible
service known as the Portico virtual assistant service (the "Portico Service").
In addition, Magic has expertise in building and operating voice-accessible
network services.
B. GM desires to license from Magic a custom-branded version of the
Portico Service, to be hosted initially in Magic's network operations center in
Sunnyvale, California, for initial deployment primarily through equipment
installed onboard vehicles as part of GM's OnStar system.
C. Magic is willing to develop a custom-branded version of the Portico
Service for GM, and to host and operate this custom-branded version of the
Service for GM as part of GM's OnStar system, and to assist GM to transition
this custom-branded version of the Service to a call center operated by GM's
OnStar division on the terms and conditions set forth in this Agreement.
The Parties therefore agree as follows:
AGREEMENT
1. DEFINITIONS. As used in this Agreement:
1.1. "ACCEPTANCE TEST PLAN" means a written plan for testing and either
accepting or rejecting Magic Deliverables individually and the OnStar Service as
a whole, which will include the testing procedures to be used and the
responsibilities of each Party in performing the tests, to be developed and
mutually approved pursuant to Section 2.1 (Development Services), as such plan
may be modified and updated from time to time by written agreement of the
Parties.
1.2. "AFFILIATE" means, with respect to GM, Saab Automobile AB and any
entity that GM directly or indirectly controls, where "control" means ownership
of more than fifty percent (50%) of the outstanding voting securities or voting
interests of the entity in question.
1.3. "API" means an applications programmer's interface.
1.4. "CUSTOM FEATURES" means additional features or functionality of the
OnStar Service requested by GM after the Launch Date pursuant to Section 2.6
(Custom Features).
1.5. "EXECUTABLE CODE" means the fully compiled version of a software
program that can be executed by a computer and used by an end user without
further compilation.
<PAGE> 2
1.6. "FIELD OF USE" means services designed to be used primarily through
equipment installed onboard vehicles.
1.7. "GM BACKGROUND TECHNOLOGY" means all software, programming code,
APIs, development tools, speech recognition engines, hardware and other
technology existing as of the Effective Date and used by GM to develop, operate,
or maintain the OnStar System as it exists as of the Effective Date.
1.8. "GM DELIVERABLES" has the meaning given to such term in Section 2.7
(GM Background Technology).
1.9. "GM MARKS" means the trade names and trademarks of GM and its
Affiliates used in connection with the OnStar Service.
1.10. "ILLICIT CODE" means any hidden files, any automatically
replicating, transmitting or activating computer program, any virus (or other
malicious computer program), or any hardware-limiting or software-limiting
function (including, but not limited to, any key, node lock, time-out or other
similar functions), whether implemented by electronic or other means.
1.11. "IMPROVEMENT" (1) when made by the party that owns the Background
Technology, means, with respect to any software or other technology, any and all
(a) enhanced, modified, updated, or upgraded versions thereof, (b) translations,
abridgments, revisions, derivative works, or other forms in which the same may
be recast, transformed, or adapted, and (c) improvements thereon, regardless of
whether any portion thereof is or may be validly copyrighted, patented, or
protected as a trade secret; and (2) when made by the other party means, with
respect to any software, any and all (a) enhanced, modified, updated, or
upgraded versions thereof, (b) translations, abridgments, revisions, derivative
works, or other forms in which the same may be recast, transformed, or adapted,
and (c) improvements thereon that may be validly copyrighted.
1.12. "INITIAL PHASE" means the period of development of the OnStar
Service pursuant to Section 2.1 (Development Services) up through the Launch
Date.
1.13. "INTELLECTUAL PROPERTY RIGHTS" means all current and future
copyrights, trade secrets, patents and other patent rights, utility models, mask
work rights, moral rights, and all other intellectual property rights (except
for trademarks, trade names, and service marks) in any jurisdiction in the
world, including all applications and registrations with respect thereto.
1.14. "LAUNCH DATE" means the date on which the OnStar Service is first
made commercially available.
1.15. "LICENSE FEE" means the five million dollar ($5,000,000) fee to
be paid by GM to Magic pursuant to Section 6.1 (License Fee).
1.16. "MAGIC BACKGROUND TECHNOLOGY" means Magic Software and all other
software, programming code, APIs, development tools, speech recognition engines,
hardware and other technology existing as of the Effective Date and used by
Magic to develop, operate, or maintain the Portico Service.
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<PAGE> 3
1.17. "MAGIC DELIVERABLES" means the items listed in Exhibit A, as it
may be amended from time to time by the Parties, to be developed by Magic and
delivered to GM in the course of development of the OnStar Service during the
Initial Phase, which will be specifically identified in accordance with Section
2.1 (Development Services).
1.18. "MAGIC SOFTWARE" means the proprietary software owned by Magic and
necessary to operate the OnStar Service, including any and all Updates thereto
furnished to GM.
1.19. "MATERIAL BREACH" of this Agreement by GM means any of the
following: (a) non-payment by GM of the License Fee; and (b) non-payment by GM
of the Support Fees during the term of this Agreement.
1.20. "'031 PATENT" means Magic's U.S. patent number 5,603,031 titled
"System and Method for Distributed Computation Based on Movement, Execution, and
Interaction of Processes in a Network."
1.21. "ONSTAR ITEMS" means the elements of the voice user interface and
graphical user interface customizations (including dialogue scripts, voice
prompts, and grammar enhancements for the voice user interface) developed by
Magic specifically for GM (including, by way of example, all XML scripts created
using any scripting tool during the term of this Agreement unless such
development is funded by Magic).
1.22. "ONSTAR SERVICE" means the custom-branded version of the Portico
Service designed for use primarily through equipment installed onboard vehicles,
to be developed by Magic for GM pursuant to this Agreement (including any Custom
Features developed pursuant to this Agreement).
1.23. "ONSTAR SYSTEM" means the interactive communications system
provided by GM and known as OnStar. It is expected that the OnStar Service will
be one component of the OnStar System.
1.24. "PARTY" means either Magic or GM, as the context requires, and
"Parties" means both Magic and GM.
1.25. "PERSON-MONTH" means the amount of time equivalent to one person
working full-time (i.e., forty (40) hours per week) for one full calendar month
(taking into account weekends and nationally recognized holidays).
1.26. "SCHEDULE" means the schedule for completion of various aspects of
the development work to be undertaken during the Initial Phase, as such
schedule, listed in Exhibit A, may be modified and updated from time to time in
accordance with Section 2.8 (Changes).
1.27. "SOURCE CODE" means the human-readable version of a software
program that can be compiled into Executable Code.
1.28. "SPECIFICATIONS" means the specifications for the OnStar Service,
to be developed and mutually approved pursuant to Section 2.1 (Development
Services), as such specifications, listed in Exhibit A, may be modified and
updated from time to time in accordance with Section 2.8 (Changes).
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<PAGE> 4
1.29. "SUBSCRIBER" means an individual who has subscribed to the OnStar
Service pursuant to a signed, written agreement as described in Section 3.9
(Subscriber Agreements).
1.30. "UPDATE" means any new version of Magic Software that Magic
implements for the Portico Service.
1.31. "USER DATA" means data regarding Subscribers collected by Magic in
the course of providing the OnStar Service, including names, addresses, and
telephone numbers, as well as all messages and folders created by users of the
OnStar Service.
2. DEVELOPMENT OF ONSTAR SERVICE
2.1. DEVELOPMENT SERVICES. Magic will use diligent efforts to develop
the OnStar Service, to work with GM to make modifications to the OnStar System
as necessary to integrate the OnStar Service into the OnStar System's call
center, and to support GM in the transition of the OnStar Service into the
OnStar System's call center, all in accordance with the Schedule and the
Specifications and with assistance and input from GM as described below and in
Section 2.3 (Project Management). This work is expected to include, among other
things: (a) the development, mutual approval, and refinement of the list of
Magic Deliverables, Specifications, and Acceptance Test Plan; (b) the
development of interfaces between Magic Background Technology and the OnStar
System; and (c) the evaluation, testing, and acceptance of the OnStar Service in
accordance with Section 2.5 (Acceptance Testing). ). While Magic Deliverables,
Specifications and Acceptance Test Plan will be mutually agreed to, it is
understood that (a) GM will have strategic control of all aspects of the
OnStar-specific version of the desktop for the OnStar Service and (b) the
Specifications and Acceptance Test Plan will have the purpose of achieving [**].
2.2. COMMITTED RESOURCES. Magic will provide, [**] to GM (other than
reimbursement of reasonable travel expenses as provided in Section 6.6
(Expenses)), [**] working on the development of the OnStar Service as described
in Section 2.1 (Development Services). Any additional engineering services
requested by GM and provided by Magic with regard to the OnStar Service
(including the development of Custom Features pursuant to Section 2.6 (Custom
Features)) will be charged to GM at [**] unless the Parties agree in writing on
specific [**] by GM to Magic for such services.
2.3. PROJECT MANAGEMENT. Each Party will appoint a team of employees who
will be jointly responsible for managing the development work during the Initial
Phase. Each Party may replace the personnel on its project management team or
add new people to the team from time to time as it deems necessary or
appropriate. Each Party will designate one member of its team as the "Project
Manager"; it will be the responsibility of the Project Managers to ensure
orderly conduct of the development work and to attempt in good faith to resolve
any disputes between the Parties as they arise. Each Party may replace its
Project Manager or other members of its project team from time to time as it
deems necessary or appropriate, provided that each Party will use reasonable
efforts to minimize such replacements. The Project Managers will be empowered to
grant approvals with respect to Schedules, Specifications, and determinations of
whether the OnStar Service, or any Custom Feature, is suitable for commercial
release. However, the Project Managers will not have the authority to amend the
terms of this Agreement. Each Party will instruct its personnel to adhere, when
they are on the other Party's
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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<PAGE> 5
premises, to the workplace rules and policies of the other Party of which they
are informed by the other Party.
2.4. INDEPENDENT CONTRACTORS. Magic will use diligent efforts to have
[**] who will be working on the development of the OnStar Service during the
Initial Phase sign independent contractor agreements with GM that [**] Magic
becomes [**]. GM will approve the form of independent contractor agreement
before any such agreement is provided to [**], and provide Magic with [**] Magic
will be authorized to [**].
2.5. ACCEPTANCE TESTING. Upon delivery of Magic Deliverables, the
Parties will conduct testing of such Magic Deliverables in accordance with the
Acceptance Test Plan to determine whether such Magic Deliverables meet the
applicable Specifications in all material respects. Upon completion of the
development of the OnStar Service during the Initial Phase, the Parties will
conduct testing of the OnStar Service as a whole in accordance with the
Acceptance Test Plan to determine whether the OnStar Service operates in
accordance with the Specifications in all material respects. If the testing
results indicate that any Magic Deliverable meets the applicable Specifications
in all material respects, such Magic Deliverable will be deemed accepted.
Similarly, if the testing results indicate that the OnStar Service operates in
accordance with Specifications in all material respects, the OnStar Service will
be deemed accepted. Otherwise, Magic will use commercially reasonable efforts to
modify Magic Deliverables or the OnStar Service (as the case may be) and
acceptance testing (in accordance with the Acceptance Test Plan) will be
repeated as necessary until Magic Deliverables meet the applicable
Specifications in all material respects or the OnStar Service operates in
accordance with the Specifications in all material respects. If required, Magic
will perform the work necessary to modify and retest the OnStar Service [**]
(Committed Resources). If any Magic Deliverable or the OnStar Service as a whole
has not been accepted after three (3) rounds of testing as described above,
Magic will offer to GM, [**], the API documentation and other tools necessary to
develop or modify the Magic Deliverable or the OnStar Service and GM will have a
non-exclusive, non-transferable, limited license to use such API documentation
and tools solely to develop and modify the Magic Deliverable or the OnStar
Service until it is accepted as set forth above.
2.6. TIMING OF DELIVERY. The parties have reviewed the requirements
listed in Exhibit A and agree that they represent the proposed baseline
features, subject to further scoping of the GM requirements and technical
feasibility, intended for commercial release of the OnStar Service on the Launch
Date and the Parties have a reasonable expectation that the OnStar Service with
these features can be Launched in the OnStar System by July 1, 2000, subject to
further review as indicated above.
2.7. CUSTOM FEATURES
2.7.1. REQUESTS BY GM. After the Launch Date, GM may request that
Magic develop Custom Features by submitting to Magic a written request
describing the desired Custom Features in reasonable detail. Within thirty (30)
days of receiving such a request, Magic will evaluate the request and provide a
written response to GM identifying whether Magic believes it is feasible to
develop and implement the requested Custom Features, the anticipated
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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<PAGE> 6
amount of time needed to do so, and the cost of doing so. Unless Magic believes
that it is not feasible to develop and implement the requested Custom Features
(in which case Magic will provide a reasonably detailed explanation of the
reasons for this belief) or GM rejects Magic's estimate of the time and cost of
developing and implementing the requested Custom Features, the Parties will work
together to adopt a development schedule, specifications (which will become part
of the Specifications when jointly approved), and payment terms for the
requested Custom Features unless included in the Committed Resources, all of
which must be mutually approved in writing. Magic's written response will
include (i) a written description of the work Magic anticipates performing in
connection with the Custom Features; (ii) a schedule for commencing and
completing the Custom Features; (iii) Magic's prospective non-recurring charges
for such Custom Features; (iv) any increase or decrease in the recurring charges
as a result of the implementation of the Custom Features; (v) a description of
any software to be developed or modified by Magic or hardware to be provided by
Magic in connection with such Custom Features; (vi) the software, hardware, and
other resources and run-time requirements necessary to develop and operate any
new applications; (vii) the human resources necessary to develop and operate any
new applications or provide the Custom Features; (viii) list of any existing
software, hardware and/or other resources included in or to be used in
connection with such Custom Features; and (ix) suggested acceptance test
criteria and procedures in respect of any new applications or any products or
services.
2.7.2. DEVELOPMENT AND IMPLEMENTATION. Magic will use commercially
reasonable efforts to develop and implement Custom Features pursuant to the
mutually approved development schedule. If Magic is unable to develop or
implement the Custom Features in a timely fashion, Magic will offer to GM, [**],
the API documentation and other tools necessary to develop the Custom Features
so that GM may develop these Custom Features, and GM will have a non-exclusive,
non-transferable, limited license to use such API documentation and tools solely
to develop and implement these Custom Features. GM will deliver to Magic the
complete Source Code and technical documentation for any Improvements to the
Magic Background Technology delivered by Magic to GM under this Section 2.6.2
that are developed by or for GM.
2.8. GM BACKGROUND TECHNOLOGY. GM will deliver to Magic those components
of the GM Background Technology as the parties mutually agree are reasonably
necessary in order for Magic to develop, operate, and support the OnStar Service
and any Custom Features (collectively, the "GM Deliverables"). Magic will have a
non-exclusive, non-transferable (except as provided in Section 12.7
(Assignment)), royalty-free license during the term of this Agreement to use and
reproduce, and to the extent necessary modify and create Improvements to or
from, the GM Deliverables, solely for the purpose of developing, operating, and
supporting, the OnStar Service and any Custom Features. The GM Deliverables will
be considered Confidential Information of GM subject to Section 7
(Confidentiality).
2.9 CHANGES. Any change to the Schedule or the Specifications will
require the written approval of each Party's Project Manager. Any proposal to
change the Schedule or Specifications will be submitted in writing to both
Project Managers, who will then have fifteen (15) days to review the proposal
and communicate with each other regarding the proposal. If the proposal is not
approved in writing by each Party's Project Manager within fifteen (15) days,
the proposal will have no effect and will not be binding on either Party, it
being understood that the parties will use commercially reasonable efforts to
implement GM's strategy for the OnStar version of the desktop and to maintain
the performance of the OnStar Service at the level of [**]
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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[**]. During the term of this Agreement, GM will have priority at least as great
as that of any other customer or development or joint venture partner of Magic
to additional services from Magic as proposed changes may require.
2.10 WARRANTIES AND INDEMNIFICATION. Magic shall, upon GM's request and
at GM's cost, enforce all warranties or indemnifications given by
suppliers/licensors of software included in the OnStar Service to the extent
that such warranties and indemnifications are not assignable to GM and that
Magic determines not to assign them to GM.
2.11 INVENTORY. Magic shall provide to GM in January of each year during
this Agreement, an inventory, effective January 1 in any given year, of all
software platforms and applications utilized by Magic in connection with the
provision of the OnStar Service. Such inventory shall identify, in respect of
each software program, the version or release number and whether the copy of the
software program is: (i) GM Software or Magic Software; (ii) licensed or owned
and, if licensed, who the licensor and licensee are; and (iii) dedicated to GM
or shared with third parties.
2.12 SOFTWARE. The OnStar Service developed by Magic:
(i) shall not contain Illicit Code (as defined in
Exhibit A); and
(ii) shall not alter, damage or erase any data or
software in the OnStar Service without control of a
person operating the computing equipment on which
it resides.
As the sole and exclusive remedy to the occurrence of any
event prohibited in 2.12 (i) or (ii), Magic shall
immediately undertake, at no cost to GM, to remove such
virus, and to correct and repair any damage to data or
software caused by such virus
3. PROVISION OF ONSTAR SERVICE
3.1. LICENSES TO GM. Subject to the terms and conditions of this
Agreement, Magic hereby grants to GM the following worldwide, perpetual and
irrevocable (except as provided in Section 11.3 (Effects of Termination)),
non-transferable (except as provided in Section 14.7 (Assignment)),
non-exclusive (except as provided in Section 3.2 (Exclusivity)) licenses, under
all of Magic's applicable Intellectual Property Rights including the '031
Patent:
(a) to use all Magic Background Technology and all
Improvements thereto (other than OnStar Items) in the
Field of Use;
(b) to use and reproduce and to sublicense third party
contractors providing hosting services for the OnStar
System to use and reproduce (in Executable Code form only)
the Magic Software as necessary to operate the OnStar
Service as delivered by Magic and/or as extended by or for
GM solely within the Field of Use; and
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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(c) to use, reproduce, modify, and create Improvements to the
Source Code for the Company Software, as necessary to
operate and support the OnStar Service solely within the
Field of Use (it being understood that this Source Code
license may be exercised by GM only upon the release of
the Source Code and related materials from escrow as
described in Section 3.2 (Source Code Escrow)).
GM understands and agrees that the OnStar Service will be offered and provided
only within the Field of Use unless the Parties agree in writing on the
royalties to be paid by GM to Magic for offering and providing the OnStar
Service outside the Field of Use. At GM's request, Magic will negotiate in good
faith with GM concerning a royalty-bearing, non-exclusive license to market the
OnStar Service to [**] on commercially reasonable mutually agreeable terms.
3.2. SOURCE CODE ESCROW. Upon execution of this Agreement, the Parties
will enter a source code escrow agreement in the form of Exhibit B (Source Code
Escrow Agreement) providing for deposit by Magic of the Source Code of the Magic
Software with an escrow agent satisfactory to both Parties. The Source Code
escrow agreement referred to above will provide for a release of the source code
and related escrow materials to GM only upon the occurrence of one of the
following events: (a) Magic voluntarily enters into bankruptcy proceedings, (b)
involuntary bankruptcy proceedings are commenced against Magic and not
discharged within ninety (90) days, or (c) Magic refuses to provide maintenance
and support for the OnStar Service on reasonable commercial terms following the
expiration or termination of this Agreement for any reason other than a Material
Breach by GM. GM will pay all fees and expenses of the escrow agent.
3.3. EXCLUSIVITY. Magic agrees that (a) for a period of [**] after the
Launch Date, Magic will not license the Magic Background Technology for use in
services within the Field of Use, and (b) for a period of [**] from the date of
GM's delivery of the applicable OnStar Item, Magic will not transfer or
sublicense its rights under its license to the OnStar Items (as set forth in
Section 4.9 (License of OnStar Items to Magic)) to any vehicle manufacturer or
any supplier thereof for use in services within the Field of Use. However,
unless otherwise agreed by the Parties in writing, (i) clause (a) of the
preceding sentence will cease to be of any force or effect if the Launch Date
does not occur within [**] from the Effective Date, and (ii) clause (b) of the
preceding sentence will cease to be of any force or effect if the Launch Date
does not occur within [**] from the Effective Date and at such time GM has no
present plans to commercially deploy the OnStar Service, in each case unless and
only to the extent that any such delay is caused by Magic's failure to fulfill
its obligations to develop the OnStar Service under this Agreement.
3.4. INITIAL HOSTING AND CUSTOMER SUPPORT BY MAGIC. Initially Magic will
host the OnStar Service (but not other parts of the OnStar System) in its
network operations center, which is currently located in Sunnyvale, California.
Magic will also provide second-level customer support for the OnStar Service as
described in Exhibit C (Second Level Support); however, GM will be solely
responsible for providing all first-level customer support for the OnStar
Service and all customer support for other aspects of the OnStar System such as
theft protection and lock-outs. While Magic is hosting the OnStar Service for
GM, Magic will use reasonable commercial efforts to achieve the service levels
set forth in Exhibit D (Service Levels). Exhibits
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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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C and D will be added in a form mutually agreed to by the Parties within 60 days
after the Effective Date.
3.5. TRANSITION TO GM. At GM's request, Magic will transition the
hosting and customer support for the OnStar Service to GM as follows. Magic will
deliver to GM a copy of all Magic Software, in executable code form. Magic will
also identify all hardware and third party software needed to operate the OnStar
Service; GM will be responsible for obtaining all required licenses for such
third party software and content, and all hardware and telecommunications
services needed to operate the OnStar Service, at its own expense. Magic will
assist in the installation, configuration, and implementation of the hardware,
Magic software and the third party software described above at GM's facilities,
as GM may reasonably request, at Magic's then-current standard hourly rates to
the extent not accomplished with the Committed Resources. Magic will invoice GM
for these fees, as well as any reasonable travel and other expenses actually
incurred by Magic in providing this assistance, on a monthly basis unless the
Parties agree otherwise in writing.
3.6. TECHNICAL SUPPORT. During the term of this Agreement, and provided
that GM is current in its payment of the Support Fees, (a) Magic will use
diligent efforts to correct any reproducible errors that cause the OnStar
Service not to conform to the Specifications in all material respects, and (b)
Magic will provide Updates to GM [**].
3.7. BRANDING. The OnStar Service will be marketed and provided under
the trade names and trademarks of GM (including "OnStar"). Any use of Magic's
trade names or trademarks by GM (other than references to Magic in accordance
with Section 14.9 (Publicity)) will require the express prior written approval
of Magic. As long as Magic is hosting the OnStar Service pursuant to Section 3.4
(Initial Hosting and Customer Support by Magic) or otherwise, Magic will have a
non-exclusive, non-transferable (except as provided in Section 14.7
(Assignment)), fully-paid and royalty-free license to use the GM Marks solely to
the extent necessary to operate the OnStar Service on behalf of GM and its
Affiliates. All use of the GM Marks of GM by Magic will inure to the benefit of
GM and its Affiliates. All rights to the GM Marks not expressly licensed to
Magic in this Agreement are reserved to GM and its Affiliates.
3.8. SUBSCRIBER PRICING AND BILLING. As between the Parties, GM will
determine in its sole discretion the fees to be charged to Subscribers, customer
support, and any ancillary services provided by GM or Magic in connection with
the OnStar Service. As between the Parties, GM will be solely responsible for
billing Subscribers on a monthly basis. Once a month, at the end of each month,
Magic will create a CD-ROM containing the preceding month's daily call detail
reports (CDRs) for OnStar Service Subscriber accounts in Magic's standard format
and transmit it to GM. If GM requests modifications to Magic's standard format,
Magic will use commercially reasonable efforts to provide the CDRs in accordance
with the requested modifications. As between the Parties, GM will be solely
responsible for collecting payment from all Subscribers; any failure by GM to
collect amounts owed from such Subscribers will not be a breach of this
Agreement and will not affect GM's payment obligations to Magic hereunder.
3.9. SUBSCRIBER AGREEMENTS. Subscribers to the OnStar Service will be
required to sign a written agreement with GM or one of its Affiliates that
disclaims all warranties and liabilities on behalf of Magic (which may be
referred to as GM's "supplier" in such agreement) and contains restrictions and
disclaimers regarding the content available through the OnStar
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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Service consistent with the disclaimers and restrictions in Magic's standard
Portico subscriber agreement (a copy of which has been furnished to GM).
3.10. USER DATA. User Data will be kept in a format that is jointly
specified and approved by Magic and GM. Magic will maintain a tape backup
facility for all User Data. GM will have the option to request that all or any
portion of the User Data be delivered to GM on a monthly basis or, at GM's
expense, more frequently. As long as Magic is hosting and operating the OnStar
Service for GM, Magic will have a non-exclusive, royalty-free, irrevocable
license to access, reproduce, and use any User Data for the purpose of
developing, operating, and supporting the OnStar Service (including the
administration of Subscriber accounts), subject to GM's applicable privacy
policies (which will be furnished to Magic in writing), and to compile such User
Data into aggregate data that cannot be attributed to, or used to identify, any
individual Subscriber.
4. OWNERSHIP AND LICENSES OF INTELLECTUAL PROPERTY RIGHTS
4.1. MAGIC BACKGROUND TECHNOLOGY. As between (a) Magic and (b) GM and
its Affiliates, Magic retains exclusive ownership of all Intellectual Property
Rights in and to the Magic Background Technology, the Portico Service, and
Magic's trade names and trademarks. Except as expressly provided in this
Agreement, all right, title, and interest to or in the foregoing are reserved by
Magic.
4.2. GM BACKGROUND TECHNOLOGY. As between (a) Magic and (b) GM and its
Affiliates, GM and its Affiliates retain exclusive ownership of all Intellectual
Property Rights in and to the GM Background Technology, the OnStar System
(except for those portions that under 4.1 are owned by Magic) and the GM Marks.
Except as expressly provided in this Agreement, all right, title, and interest
to or in the foregoing are reserved by GM and its Affiliates.
4.3. IMPROVEMENTS TO MAGIC BACKGROUND TECHNOLOGY. As between (a) Magic
and (b) GM and its Affiliates, except as specifically provided in Section 4.5
(OnStar Items), Magic will exclusively own all Intellectual Property Rights in
and to all Improvements made by Magic (or by GM pursuant to Section 2.5
(Acceptance Testing) or Section 2.6.2 (Development and Implementation)) to the
Magic Background Technology (including any Improvements made to the platform for
the Service). Except as expressly provided in this Agreement, all right, title,
and interest to or in any such Improvements are reserved to Magic.
4.4. IMPROVEMENTS TO GM BACKGROUND TECHNOLOGY. As between (a) Magic and
(b) GM and its Affiliates, GM and its Affiliates will exclusively own all
Intellectual Property Rights in and to all Improvements made by GM or any of its
Affiliates (or by Magic pursuant to Section 2.7 (GM Background Technology)) to
the GM Background Technology. Except as expressly provided in this Agreement,
all right, title, and interest to or in any such Improvements are reserved to GM
and its Affiliates.
4.5. ONSTAR ITEMS. As between (a) Magic and (b) GM and its Affiliates,
GM will exclusively own all Intellectual Property Rights in and to the OnStar
Items. Except as expressly provided in this Agreement, all right, title, and
interest to or in any OnStar Items are reserved to GM and its Affiliates. It is
understood that ownership of the OnStar Items by GM and its Affiliates will not
preclude Magic from recreating elements of dialogue scripts, voice prompts,
grammars, and other elements of the program code for the OnStar Items that
cannot be
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implemented in a different manner because of the merger of the idea and the
expression they convey.
4.6. USER DATA. As between (a) Magic and (b) GM and its Affiliates, all
User Data will be owned exclusively by GM, and any aggregate data compiled by
Magic solely from User Data ("GM Aggregate Data") pursuant to Section 3.10 (User
Data) will be owned exclusively by GM. Except as expressly provided in this
Agreement, all right, title, and interest to or in User Data are reserved to GM
and its Affiliates, and all right, title, and interest to or in such GM
Aggregate Data are reserved to GM, with the exception that Magic can use the GM
Aggregate Data in connection with other aggregate data to create gross aggregate
data for use by Magic. Upon OnStar's request, Magic will deliver copies of the
GM Aggregate Data to OnStar once per month in Magic's then standard format.
4.7. ASSIGNMENT OF RIGHTS TO IMPROVEMENTS. To the extent that either
Party (the "Creator") creates Improvements that will be owned by the other Party
(the "Owner") pursuant to this Agreement, the Creator hereby irrevocably and
unconditionally assigns to the Owner all of the Creator's Copyrights in such
Improvements. If any such Copyrights are inherently non-assignable, the Creator
hereby irrevocably and unconditionally waives the enforcement of such rights
against the Owner and the Owner's employees, agents, and customers. If any such
Copyrights are inherently non-waivable, the Creator hereby grants the Owner an
exclusive (even as to the Creator), worldwide, perpetual and irrevocable
license, under such non-assignable, non-waivable Copyrights, to use, reproduce,
modify, create Improvements from, distribute, perform, display, make, have made,
sell, offer for sale, import, and otherwise practice and exploit in any manner
now known or hereafter conceived, such Improvements. And for any other
Intellectual Property Rights inherent in the Improvements, the Creator grants a
worldwide, perpetual and irrevocable license, under such other Intellectual
Property Rights, to use, reproduce, modify, create Improvements from,
distribute, perform, display, make, have made, sell, offer for sale, import, and
otherwise practice and exploit in any manner now known or hereafter conceived,
such Improvements.
4.8. COOPERATION. Each Party agrees to cooperate with the other party in
executing and filing any documents and taking any other action necessary or
reasonably requested by the other party in order to give effect to the foregoing
allocation of Intellectual Property Rights.
4.9. LICENSE OF ONSTAR ITEMS TO MAGIC. GM hereby grants (on behalf of
itself and its Affiliates, to the extent that GM has actual authority to do so,
and to the extent GM does not have actual authority to do so, the rights granted
to Affiliate(s) hereunder are conditioned upon the Affiliate(s) agreeing to
hereby grant) to Magic a worldwide, perpetual and irrevocable, non-transferable
(except as provided in Section 14.7 (Assignment)), non-exclusive, royalty-free
and fully paid license, under all of GM's and its Affiliates' applicable
Intellectual Property Rights, except as provided by Section 4.10, to use,
reproduce, perform, display, distribute, modify, and create Improvements to the
OnStar Items created during the term of this Agreement, as follows:
(a) during the [**] exclusivity period set forth in clause (b)
of Section 3.3 (Exclusivity), as such exclusivity period
may be shortened in accordance with Section 3.3
(Exclusivity), Magic may exercise these licensed rights
only outside the Field of Use; and
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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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(b) after the expiration or termination of such exclusivity
period, Magic may exercise these licensed rights for any
purpose;
provided, however, that in either case Magic may not copy or reuse any XML or
other scripts included in the OnStar Items; the foregoing limitation does not
prevent the re-creation of XML or other scripts that cannot be implemented in a
different manner because of the merger of the idea and the expression they
convey. GM will deliver to Magic any OnStar Items necessary to operate and
support the OnStar Service (including Source Code) not already in Magic's
possession upon completion of the development thereof.
4.10. LICENSE TO MAGIC OF PATENTED INVENTIONS. GM will decide, on a
case-by-case basis, whether to license to Magic any patented inventions
independently developed by GM (or any of its Affiliates) for applications that
may be deployed using the Magic Background Technology or any Improvements
thereto owned by Magic.
4.11. PROPRIETARY RIGHTS PROTECTION. Except as expressly permitted in
Section 3.1 (License to GM), GM may not reproduce, alter, adapt, modify, create
Improvements to, distribute, sublicense, transfer, rent, lease, loan, timeshare,
otherwise make available to third parties, reverse engineer, decompile,
disassemble, or otherwise attempt to derive the Source Code for the Magic
Software. All copyright, trademark and other proprietary rights notices on or in
the copy of the Magic Software provided by Magic to GM must be reproduced on or
in all copies thereof made by or for GM or any of its Affiliates. No such
notices will affect the rights or obligations of either party to this agreement.
5. RIGHT TO BID. During the term of this Agreement, GM's OnStar Division
will provide Magic the right to bid upon all work outsourced by GM's OnStar
Division to perform development, hosting, and maintenance related to
voice-enabled services. This right to bid will apply only to development,
hosting, and maintenance services controlled by GM's OnStar Division (or its
successor).
6. FEES AND ROYALTIES
6.1. LICENSE FEE. Upon execution of this Agreement or closing of the
Series G Preferred Stock Purchase Agreement, whichever is later, GM will pay
Magic a one-time, non-refundable License Fee of five million dollars
($5,000,000) in consideration of the licenses granted to GM in Section 3.1
(Licenses to GM) and the development work done by Magic during the Initial
Phase. Upon payment in full of the License Fee, the licenses granted to GM in
Section 3.1 (Licenses to GM) will be royalty-free, except as provided in Section
6.2 (Royalties).
6.2. ROYALTIES. If GM provides the OnStar Service to Subscribers who
drive vehicles not manufactured by GM or any of its Affiliates, GM will pay
Magic a royalty as follows: [**] per year per subscriber for a period of (i)
[**] after Launch Date or (ii) until the number of subscribers in vehicles not
manufactured by GM or any of its Affiliates exceeds [**], whichever occurs
first. At that time, the Parties will enter into good faith negotiations to
establish a reasonable royalty rate for future use of the OnStar Service by such
Subscribers. If the Parties cannot agree upon the reasonable royalty rate, the
Parties will utilize the Dispute Resolution provisions of Article 11 to
determine the reasonable royalty rate.
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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6.3. CUSTOM FEATURE DEVELOPMENT FEES. Pursuant to Section 2.6 (Custom
Features), before Magic will begin work on any Custom Features, the Parties must
agree on the fees to be paid to Magic for development of such Custom Features.
6.4. HOSTING FEES AND TRANSITION FEES. GM will pay the hosting fees
based upon the model in Exhibit F. In addition, GM will pay Magic fees, to the
extent not included in the Committed Resources, for Magic's assistance in the
transition of the hosting and customer support of the OnStar Service to GM, as
provided in Section 3.5 (Transition to GM).
6.5. SUPPORT FEES. During the term of this Agreement and contingent upon
closing of the Series G Preferred Stock Purchase Agreement, GM will pay Magic an
annual Support Fee of [**], due and payable quarterly on the first day of each
Quarter. As used above, "Quarter" means a three (3) month period beginning on
the first day of the first month following the Launch Date or any successive
three (3) month period. For example, if the Launch Date occurs on May 15, 2000,
the first Quarter will begin on June 1, 2000, the second Quarter will begin on
September 1, 2000, and so on. After the expiration or termination of this
Agreement (unless such termination is due to a Material Breach by GM), GM may
continue to receive technical support services from Magic at Magic's
then-current standard rates, pursuant to a separate agreement.
6.6. EXPENSES. Except as incurred under Section 2.11 or with respect to
repeat acceptance testing under Section 2.5, GM will pay or reimburse Magic for
all reasonable travel expenses (including airfare, lodging, local
transportation, meals, and other out-of-pocket expenses) actually incurred by
Magic or its personnel in performing development work, engineering services, or
other services for GM under this Agreement, in accordance with GM's then-current
expense reimbursement policies and procedures, which will be provided to Magic
in writing.
6.7. PAYMENT TERMS.
6.7.1. INVOICING. Magic shall issue invoices to the address
specified by GM in a format and on the media agreed upon by GM and Magic.
6.7.2. SUPPORTING DOCUMENTATION. Magic shall provide GM with such
supporting documentation and other information as reasonably requested by GM to
verify the accuracy of any invoice.
6.7.3. PAYMENT. Magic shall provide GM with invoices on a monthly
basis on or before the 15th day of each calendar month for all services
performed by Magic, including under the Committed Resources (for tracking
purposes), and all related charges incurred by GM during the immediately prior
calendar month. The last business day of the calendar month shall be the cut-off
for delivered services and related charges to be invoiced in the next calendar
month. GM shall pay invoices in accordance with its standard global payment
terms, Multilateral Netting System (MNS--2), that establishes the standard
minimum payment terms as the 2nd day of the 2nd month, following the shipment or
receipt of services or any materials used in connection therewith, in General
Motors Corporation's receiving system. Any payment by GM is without prejudice of
its right to contest the accuracy of any charges.
6.7.4 FEE DISPUTES
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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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6.7.4.1. CONTINUING OBLIGATION OF PARTIES. Each of GM and Magic
acknowledges that the performance of this Agreement is critical to the
business and operations of GM and Magic. Therefore, in the event GM bona
fide disputes all or any portion of an invoice submitted by Magic, GM
may withhold payment, except for the License Fee and the Support Fee, of
the amount subject to the dispute; provided, however, that: (i) GM shall
continue to pay any undisputed amount when it becomes due and payable in
accordance with this Agreement; and (ii) Magic shall continue to provide
the Services or otherwise perform its obligations under this Agreement.
6.7.4.2. RESOLUTION OF DISPUTES. The Parties shall resolve the
dispute in accordance with the audit or dispute resolution procedures
set forth in this Agreement. No failure by GM to identify a contested
charge or charges prior to payment of the invoiced amount shall limit or
waive any of GM's rights or remedies with respect to such charges,
including GM's right to withhold such disputed amounts, except for the
License Fee and the Support Fee, from subsequent charges due to Magic.
Unpaid charges that are in dispute shall not be considered a basis for
default under this Agreement, except for the License Fee and the Support
Fee.
6.7.4.3. PAYMENT OF DISPUTED AMOUNT. In the event that it is
determined that one Party should pay all or part of a disputed amount to
the other, such Party shall pay such amount plus interest at a rate per
annum equal to the base rate established by LIBOR as of the date the
disputed amount would otherwise have been due or a comparable financial
institution mutually agreed to by GM and Magic. Unpaid charges that are
in dispute shall not be considered a basis for termination under this
Agreement.
6.8. TAXES
6.8.1. INFORMATION. Each Party shall provide and make available to
the other Party any applicable resale certificates, information regarding
out-of-jurisdiction sales or use of products or services, and other exemption
certificates or information reasonably requested by the other Party.
6.8.2. STRUCTURE. The Parties agree to utilize reasonable efforts
to structure the provision and receipt of services, as the case may be, in such
a fashion as to minimize, to the extent legally permissible, any sales, use,
value-added, withholding, and similar taxes payable by GM.
6.8.3. PAYMENT. Taxes will be allocated between the parties based
upon incidence by operation of law.
6.8.4. TAX CREDIT. In the event that Magic is entitled to claim a
foreign tax credit benefit with regard to withholding taxes associated with
cross border payments under any agreement with GM, the Parties agree that GM
shall not be charged or otherwise billed for such taxes.
6.8.5. COOPERATION. The Parties shall reasonably cooperate with
each other in connection with the other Party's efforts to minimize its
liability for taxes, to the extent legally permissible, and to support the other
Party upon audit by applicable taxing authorities in the following manner:
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6.8.5.1. COOPERATION AND REVIEW OF MAGIC BILLING AND COLLECTION
SYSTEM. The Parties will work together to ensure that the taxability
positions are jointly discussed. Further, Magic agrees to allow GM tax
staff, at least annually, and more frequently if reasonably requested by
GM, and at GM's expense, to review Magic's billing and collection
systems relating to taxes collected by Magic from GM under this
Agreement.
6.8.5.2. AUDIT. In the event that a taxing authority does not
agree to audit the charges payable in connection with this Agreement for
sales and use tax purposes, as part of Magic's sales and use tax audits,
and proposes to assess sales and use taxes directly against GM on the
aggregate charges for services provided to GM for which taxes are not
collected, Magic shall work directly with the taxing authority to
address audit concerns as they pertain to the charges or sales and use
taxes payable in connection with this Agreement. In the event that the
taxing authority requires any documentation to be submitted directly by
GM, Magic agrees to cooperate with GM in providing the necessary
documentation.
6.8.5.3. PAYMENT OF PENALTIES. Each party ("Tax Indemnitor")
agrees to pay and to hold the other party harmless against any penalty,
interest, or additional tax that may be assessed or levied as a result
of the failure or delay of the Tax Indemnitor or its agents to file any
return or information required by law, rule or regulation. Each party
agrees to provide reasonable assistance to the other party should the
other party contest any taxes imposed on it that result from this
Agreement.
7. CONFIDENTIALITY
7.1. CONFIDENTIALITY OBLIGATIONS.
7.1.1. STANDARD OF CARE. Each Party shall protect all Confidential
Information of the other Party with the same degree of care as it uses to avoid
unauthorized use, disclosure, publication or dissemination of its own
confidential information of a similar nature, but in no event less than a
reasonable degree of care. For purposes of this Agreement, Confidential
Information of GM shall mean GM Confidential Information and Confidential
Information of Magic shall mean Magic Confidential Information.
7.1.2. RESTRICTED DISCLOSURE. Each Party shall not use for its own
benefit or the benefit of any third party, or disclose, publish, release,
transfer or otherwise make available to any third party, any Confidential
Information of the other Party without the other Party's prior written consent.
Each of GM and Magic, however, shall be permitted to disclose Confidential
Information of the other to contractors and third parties, and its accountants,
attorneys and other agents and its affiliates or subsidiaries to the extent such
disclosure is reasonably necessary for the performance of its duties and
obligations hereunder or, with respect to GM, its use and enjoyment of the
OnStar System and OnStar Service, provided, however, that each of Magic and GM
shall be responsible for any violation of the confidentiality obligations set
forth herein by any of the foregoing. Each Party's obligations under this
Agreement as to non-tangible Confidential Information shall expire after a
period of [**] from the date of disclosure of such non-tangible Confidential
Information, except as with regard to non-tangible Confidential Information
related to Source Code of Magic delivered to GM under Section 2.6.2 or under
Section 3.2 or related to Source Code of GM delivered to Magic under Section
2.7.
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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7.1.3. EXCLUSIONS. The obligations in this Section 7.1 shall not
restrict any disclosure of Confidential Information received by one Party (the
"Receiving Party") from the other Party (the "Disclosing Party") where the
Receiving Party can demonstrate that: (a) such Confidential Information was
independently developed by the Receiving Party prior to its receipt thereof
without violating its obligations hereunder or any of the Disclosing Party's
proprietary rights; (b) such Confidential Information is or becomes publicly
known (other than through unauthorized disclosure by the Receiving Party); (d)
such Confidential Information was already known to the Receiving Party prior to
its receipt thereof without any obligation of confidentiality; (e) such
Confidential Information is received by the Receiving Party from a third party
without any obligation of confidentiality; or (f) the Receiving Party is
required to do so pursuant to any applicable law (provided that the Receiving
Party shall provide reasonable prior written notice to the Disclosing Party of
such disclosure).
7.1.4. DEFINITION OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, "Confidential Information" of a Party means the information and
documents identified in this Agreement as confidential information of such
Party, as well as any and all other information that (i) such Party considers to
be confidential or proprietary to its business (including trade secrets,
technical information relating to ongoing research and development, business
strategies, marketing plans, customer lists, and financial data) and (ii) either
(A) is clearly labeled or identified as confidential or proprietary when
disclosed to the other Party or (B) the other Party knew, or under the
circumstances, should have known, was considered confidential or proprietary by
the disclosing Party.
7.1.5. NON-PROPRIETARY KNOW-HOW. For the avoidance of doubt neither
GM nor Magic shall be prevented from making use of know-how and principles
learned or experience gained of a non-proprietary and non-confidential nature.
8. REPRESENTATIONS AND WARRANTIES
8.1. BY GM. GM represents and warrants as follows:
8.1.1. CORPORATE AUTHORITY. GM is as an organization duly
incorporated, validly existing and in good standing, and has all requisite
corporate power and authority to execute, deliver and perform its obligations
under the Agreement. GM is duly licensed, authorized or qualified to do business
and is in good standing in every jurisdiction in which a license, authorization
or qualification is required for the ownership or leasing of its assets or the
transaction of business of the character transacted by it except where the
failure to be so licensed, authorized or qualified would not have a material
adverse effect on GM's ability to fulfill its obligations under the Agreement.
The execution, delivery and performance of the Agreement have been duly
authorized by GM.
8.1.2. COMPLIANCE WITH LAWS AND REGULATIONS. GM shall comply with
all applicable laws and regulations applicable to GM and shall obtain all
applicable permits and licenses required of GM in connection with its
obligations under the Agreement. GM has not made any unauthorized disclosure of
any Magic Confidential Information.
8.1.3. NO INFRINGEMENT OR MISAPPROPRIATION. GM Background
Technology and all Improvements made by GM thereto during the term of this
Agreement do not and will not infringe upon the proprietary rights of any third
party (except as may have been caused by a
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modification by Magic or Magic agents, contractors or suppliers or Magic's or
Magic agents', contractors' or suppliers' combination, operation or use with
devices, data or programs furnished by Magic.).
8.1.4. RIGHT TO GRANT LICENSES. GM has the right to grant to Magic
any license to use the GM software and data utilized by Magic pursuant to the
Agreement.
8.2. BY MAGIC. Magic represents and warrants as follows:
8.2.1. CORPORATE AUTHORITY. Magic is an organization duly
incorporated, validly existing and in good standing, and has all requisite
corporate power and authority to execute, deliver and perform its obligations
under the Agreement. Magic is duly licensed, authorized or qualified to do
business and is in good standing in every jurisdiction in which a license,
authorization or qualification is required for the ownership or leasing of its
assets or the transaction of business of the character transacted by it except
where the failure to be so licensed, authorized or qualified would not have a
material adverse effect on Magic's ability to fulfill its obligations under the
Agreement. The execution, delivery and performance of the Agreement have been
duly authorized by Magic.
8.2.2. COMPLIANCE WITH LAWS AND REGULATIONS. Magic shall comply
with all laws and regulations applicable to Magic where failure to do so would
have a material adverse effect on GM's business or on the services. Magic has
not made any unauthorized disclosure of any GM Confidential Information.
8.2.3. NO INFRINGEMENT OR MISAPPROPRIATION. Magic's Background
Technology, any Improvements made by Magic thereto, and the OnStar Service and
any other work product under this Agreement and any modifications to GM
Background Technology performed by Magic will not: (i) infringe upon the patent,
copyright, database right or trademark rights of any third party; or (ii)
misappropriate the trade secret or intellectual property rights of any third
party provided that the warranty stated in this sub-section 8.2.3 will not apply
to infringements or misappropriations as may result from modifications by GM or
GM's contractors or suppliers or GM's or GM contractors' or suppliers'
combination, operation or use with devices, data or programs furnished by GM, or
modifications by Magic on GM's specific request so long as Magic has made
reasonable efforts to ensure that this sub-section 8.2.3 has been complied with.
GM's sole and exclusive remedy for any failure by Magic under this Sub-Section
8.2.3 is as provided under Section 9.2.
8.2.4. RIGHT TO GRANT LICENSES. Magic has the right to grant to GM
any license provided under the Agreement. GM's sole and exclusive remedy for any
failure by Magic under this Sub-Section 8.2.4 is as provided under Section 9.2.
8.3. YEAR 2000.
8.3.1. All Magic Background Technology, OnStar Services,
Improvements by Magic (not including GM Background Technology and Improvements
by GM) must be fully Year 2000 Compliant except as specified herein or by GM.
With respect to Magic's third party software used in or with the OnStar Service,
Magic shall use all reasonable efforts: (i) to obtain from the third-party Magic
a warranty consistent with the warranty set forth in this Section 8.3; and (ii)
to validate that such software is Year 2000 Compliant before using such software
in connection with this Agreement. If Magic is unable to obtain such a warranty
for any such third-party software, Magic shall promptly notify GM and shall
promptly undertake to test such third-
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party software using, at a minimum, GM's Year 2000 Compliance Test Procedure, or
any comparable procedure approved by GM. If such Magic third-party software
fails the Year 2000 Compliance Test Procedure, GM shall have the option to do
one of the following: (i) reject such Magic third-party software and pursue
other alternatives; or (ii) require Magic to install enhancements or upgrades to
such Magic third-party software to render it Year 2000 Compliant.
8.3.2 To be "Year 2000 Compliant" the OnStar Service, software and
hardware must at all times before, during, and after January 1, 2000, accurately
process and handle date and time data (including, but not limited to,
calculating, comparing and sequencing) from, into, and between the twentieth and
twenty-first centuries, and the years 1999 and 2000, including leap year
calculations, to the extent that other information technology used in
combination with OnStar Service, software and hardware properly exchange
date/time data with it. To the extent any OnStar Service, software and hardware
must perform together with any other system, software or hardware, as set forth
in this Agreement, such OnStar Service, software and hardware, when used
together with such system, software or hardware, must properly exchange
date/time data with such system, software or hardware in accordance with the
foregoing warranty.
8.4 DISCLAIMER. EXCEPT AS SET FORTH IN SECTION 8.1 AND SECTION 8.2,
NEITHER GM NOR MAGIC MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES IN RESPECT OF
ITS BACKGROUND TECHNOLOGY AND IMPROVEMENTS AND EACH EXPLICITLY DISCLAIMS ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY, SATISFACTORY QUALITY AND FITNESS FOR A PARTICULAR PURPOSE IN
RESPECT OF THE SERVICES, THE SOFTWARE OR THE HARDWARE. MAGIC MAKES NO WARRANTY
AS TO THE RESULTS THAT MAY BE OBTAINED FROM USE OF THE ONSTAR SERVICE OR THE
ACCURACY OR RELIABILITY OF ANY TRANSACTIONS CONDUCTED OR INFORMATION, GOODS OR
SERVICES OBTAINED THROUGH THE ONSTAR SERVICE (INCLUDING CONTENT PROVIDED BY
THIRD PARTIES). MAGIC'S SUPPLIERS DISCLAIM ALL REPRESENTATIONS AND WARRANTIES,
EXPRESS AND IMPLIED.
9. INDEMNIFICATION AND LIABILITIES
9.1 INDEMNITY BY GM. GM shall indemnify Magic, and its successors and assigns
and its officers, directors, employees, subcontractors, consultants,
representatives and agents, from and against any and all losses, damages,
injuries (including death), causes of action, claims, penalties, interest,
additional taxes, demands and expenses, including reasonable legal fees and
expenses, of any kind or nature arising out or on account of, or resulting from,
any claim or allegation of a third party: (i) that GM's Background Technology
and Improvements made by GM thereto provided to Magic by GM under this Agreement
infringe upon or misappropriate the proprietary rights of any third party
(except as may have been caused by a modification by Magic or Magic's
contractors or suppliers or Magic's or Magic's contractors' or suppliers'
combination, operation or use with devices, data or programs furnished by
Magic); (ii) relating to the inaccuracy or untruthfulness of any representation
or warranty made by GM under this Agreement; (iii) relating to GM's failure to
obtain GM consents; (iv) relating to any liability of
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Magic arising out of GM's failure to comply with any relevant data protection or
similar legislation in any jurisdiction where the services under this agreement
are being provided or which data is being transported/transmitted or Magic's
failure so to comply to the extent that such failure was caused by GM's
negligent acts or omissions; and (v) relating to any duties or obligations to GM
contractors or suppliers under this Agreement. GM will include in its subscriber
agreements a disclaimer of liability of General Magic to the subscriber (this
disclaimer may be in the form of a disclaimer of all suppliers) and GM will
indemnify Magic against any third party claims arising from GM's not placing
this clause in any subscriber agreements. GM shall indemnify Magic from any
costs and expenses incurred in connection with the enforcement of this Section
9.1.
9.2 INDEMNITY BY MAGIC. Magic shall indemnify GM, its successors and
assigns and its officers, directors, employees, subcontractors, consultants,
representatives and agents, from and against any and all losses, damages,
injuries (including death), causes of action, claims, penalties, interest,
additional taxes, demands and expenses, including reasonable legal fees and
expenses, of any kind or nature arising out or on account of, or resulting from,
any claim or allegation of a third party: (i) that the OnStar Background
Technology and Improvements made by Magic thereto under this Agreement, any
modifications to GM Background Technology and Improvements performed by Magic
pursuant to this Agreement infringe upon or misappropriate the proprietary
rights of any third party (except as may have been caused by a modification by
GM or GM's contractors or suppliers or GM's or GM's contractors' or suppliers'
combination, operation or use with devices, data or programs furnished by GM);
(ii) relating to inaccuracy or untruthfulness of any representation or warranty
made by Magic under this Agreement, except as otherwise specified in this
Agreement; (iii) relating to Magic's failure to obtain Magic consents; (iv)
relating to non-compliance by Magic with third party agreements; (v) relating to
any liability of GM arising out of Magic's failure to comply with any relevant
data protection or similar legislation in any jurisdiction where the services
under this Agreement are being provided or which data is being
transported/transmitted or GM's failure so to comply to the extent that such
failure was caused by Magic's negligent acts or omissions; and/or (vii) relating
to Magic's failure to implement physical or data security controls imposed by
the Agreement. Magic shall indemnify GM from any costs and expenses incurred in
connection with the enforcement of this Section 9.2.
9.3 CROSS-INDEMNITY. Each of GM and Magic shall indemnify, defend and
hold harmless the other Party, its directors, officers and employees, from any
and all claims, actions, damages, liabilities, costs and expenses, including
reasonable attorneys' fees and expenses, for: (i) the death or personal injury
of third parties, including invitees or employees of the indemnitor, arising out
of, or in any way resulting from, the gross negligence or willful acts or
omissions of the indemnitor or any of its agents, employees or representatives;
and/or (ii) the damage, loss or destruction of real or tangible personal
property of the other Party or third parties, including invitees or employees of
the indemnitor, arising out of, or in any way resulting from, the gross
negligence or willful acts or omissions of the indemnitor or its agents,
employees or representatives. The Indemnifying Party shall indemnify the
Indemnified Party from any costs and expenses incurred in connection with the
enforcement of this Section 9.3.
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9.4 INFRINGEMENT. In the event of any claim pursuant to Section 8.2.3 or
Section 9.2(i), or if in GM's and Magic's jointly agreed opinion, any software
provided by or through Magic is likely to become the subject of any such claim,
then GM shall do one of the following.
9.4.1 RIGHT TO CONTINUE USE (GM). GM shall, at Magic's request,
attempt to obtain the right to continue to use the software in question on
reasonable commercial terms, such terms to be agreed by Magic. If so obtained,
then Magic shall reimburse GM the costs of obtaining or securing the continued
right to use such software.
9.4.2 RIGHT TO CONTINUE USE (MAGIC), MODIFICATION OR SUBSTITUTION.
If (1) above does not apply either due to GM's failure to obtain the right to
continue to use the software in question after reasonably diligent effort or
Magic's reasonable failure to agree to such terms, then Magic shall (in its
discretion): (i) obtain the right to continue the use of the software in
question; (ii) modify the software in question so that it does not infringe but
remains equivalent; or (iii) substitute equivalent, non-infringing items for the
software in question, or substitute non-infringing items for the software
without material loss of functionality. The costs relating to Magic providing
any of (i), (ii) and (iii) above shall be borne by GM unless Magic is proven to
be in breach of warranty pursuant to Section 8.2.3 or a claim is made by GM
pursuant to Section 9.2(i). This provision is without prejudice to GM's and/or
Magic's rights to any claim for any amounts due relating to any breach of
warranty pursuant to this Article 9.
9.5 INDEMNIFICATION PROCEDURES. If any civil, criminal, administrative
or investigative action or proceeding (each, a "Claim") is commenced against a
Party entitled to indemnification under Section 9.1, Section 9.2 or Section 9.3
(an "Indemnified Party"), notice thereof shall be given to the Party that is
obligated to provide indemnification (the "Indemnifying Party") as promptly as
practicable. After such notice, if the Indemnifying Party shall acknowledge in
writing to such Indemnified Party that the Agreement applies with respect to
such Claim, then the Indemnifying Party shall be entitled, if it so elects, in a
notice delivered to the Indemnified Party not less than 10 days prior to the
date on which a response to such Claim is due, to immediately take control of
the defense and investigation of such Claim and to employ and engage attorneys
of its sole choice to handle and defend the same, at the Indemnifying Party's
sole cost and expense. The Indemnified Party shall cooperate in all reasonable
respects with the Indemnifying Party and its attorneys in the investigation,
trial and defense of such Claim and any appeal arising therefrom; provided,
however, that the Indemnified Party may, at its own cost and expense,
participate, through its attorneys or otherwise, in such investigation, trial
and defense of such Claim and any appeal arising therefrom. No settlement of a
Claim that involves a remedy other than the payment of money by the Indemnifying
Party shall be entered into without the written consent of the Indemnified
Party. After notice by the Indemnifying Party to the Indemnified Party of its
election to assume full control of the defense of any such Claim, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
expenses incurred thereafter by such Indemnified Party in connection with the
defense of that Claim.
If the Indemnifying Party does not assume full control over the defense
of a Claim subject to such defense as provided in this Section 9.5, the
Indemnifying Party may participate in such defense, at its sole cost and
expense, and the Indemnified Party shall have the right to defend the Claim in
such manner as it may deem appropriate, at the cost and expense of the
Indemnifying Party.
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9.6 DIRECT DAMAGES. Neither GM nor Magic shall be liable to the other
Party for any direct damages arising out of or relating to its performance under
the Agreement, whether based on an action or claim in contract, equity,
negligence, tort or otherwise, for all events, acts or omissions, in an amount
to exceed in the aggregate an amount equal to [**] pursuant to this Agreement.
The following (without limitation) shall be considered direct damages and
neither party shall assert that they are consequential damages pursuant to
Section 9.7 to the extent they result from a party's failure to provide the
Services in accordance with the Agreement:
(i) costs and expenses of recreating or reloading any
of GM's lost, stolen or damaged information;
(ii) costs and expenses of implementing a work-around in
respect of Magic's or Magic contractors or
suppliers' failure to provide all or a portion of
the services or any part thereof;
(iii) costs and expenses of replacing lost, stolen or
damaged hardware, software, and materials;
(iv) costs and expenses incurred by GM to correct errors
in software maintenance and enhancements provided
as part of the services or any part thereof;
(v) costs and expenses incurred by GM to procure from
an alternate Magic, or to perform itself, all or
any part of services the performance of which is
the obligation of Magic hereunder, to the extent in
excess of Magic's charges under this Agreement;
(vi) straight time, overtime or related expenses
incurred by GM, including overhead allocations of
GM for GM's employees, wages and salaries of
additional employees, travel expenses, overtime
expenses, telecommunications charges and similar
charges, due to failure of Magic to provide all or
a portion of the services under this Agreement
incurred in connection with (1) through (6) above;
(vii) fines, penalties, assessments or other charges
incurred in connection with any of the above or
such failure; and
(viii) royalty or license fee damages for exceeding the
scope of the Field of Use of the License to GM
under Section 3.1 or for Magic's breaching the
Exclusivity provisions under Section 3.3.
To the extent any amount is paid to either party pursuant to this
Section 9.6, the payment shall be in United States currency.
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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9.7 CONSEQUENTIAL DAMAGES. Neither GM nor Magic shall be liable for, nor
will the measure of damages include, any indirect, special or consequential
damages or amounts for loss of income, profits or savings arising out of or
relating to GM's or Magic's performance under the Agreement.
9.8 EXCLUSIONS. The exclusions of liability set forth in Section 9.6 and
Section 9.7 are not applicable to: (i) indemnification claims as set forth in
Section 9.1(i) and 9.2(i); (ii) Magic's liability arising out of Magic's failure
to comply with restrictions or laws governing User Data in this Agreement and
(iv) GM's liability arising out of failure to comply with laws governing User
Data.
9.9 INJUNCTIVE RELIEF. Both parties acknowledge and agree that a breach
of scope of any license granted hereunder or any data protection clause will
give rise to irreparable injury that is not adequately compensable in damages.
Accordingly, either Party may seek injunctive relief against such breach or
threatened breach in addition to any other legal and equitable remedies
available.
10. TERM AND TERMINATION
10.1. TERM. The initial term of this Agreement (unless earlier
terminated pursuant to Section 11.2 (Termination)) will be three (3) years
beginning on the Effective Date. GM will have a one-time right to renew this
Agreement for an additional one (1) year term by giving written notice of such
renewal to Magic at least ninety (90) days before the expiration of the initial
term. After the renewal term (if any), this Agreement may be extended only by
written agreement of the Parties.
10.2. TERMINATION
10.2.1. FOR MATERIAL BREACH. Magic will have the right to
terminate this Agreement for cause upon written notice to GM if (i) GM has
committed a Material Breach, and (ii) GM has not cured such Material Breach
within thirty (30) days after written notice of such Material Breach from Magic.
10.2.2. FOR FAILURE TO CLOSE EQUITY INVESTMENT. GM intends to
purchase from Magic, and Magic to sell to GM, Fifteen Million Dollars
($15,000,000) of Magic equity securities pursuant to a Series G Preferred Stock
Purchase Agreement being entered into concurrently with this Agreement (the
"Stock Purchase Agreement"). If the purchase and sale of Magic equity securities
pursuant to the Stock Purchase Agreement has not been consummated on or before
December 31, 1999, this Agreement will automatically terminate unless the
Parties otherwise agree in writing.
10.3. EFFECTS OF TERMINATION. Upon expiration or termination of this
Agreement, unless such termination is due to a Material Breach by GM or pursuant
to Section 11.2.2 (For Failure to Close Equity Investment), GM will have the
right to continue offering and providing the OnStar Service in the Field of Use,
and if Magic is still hosting and operating the OnStar Service at the time of
such termination, Magic will assist in the transition of the hosting and
operating of the OnStar Service to GM as provided in Section 3.5 (Transition to
GM) for a reasonable period of time up to ninety (90) days after such
termination. If this Agreement is
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terminated by Magic due to a Material Breach by GM, all licenses granted to GM
under or in connection with this Agreement will immediately terminate. Upon
expiration or termination of this Agreement for any reason and at any time, all
amounts owed to Magic under this Agreement will become immediately due and
payable and each Party will promptly return to the other Party or destroy all
copies of the other Party's Confidential Information that it does not have a
surviving right to use, and certify in writing to the other Party that it has
done so.
10.4. SURVIVAL. Sections 1 (Definitions), 4 (Ownership of Intellectual
Property Rights), 6.7 (Taxes), 6.8 (Payment Terms), 7 (Confidentiality), 8
(Warranties), 9 (Indemnification), 10 (Limitations of Liability), 11.3 (Effects
of Termination), 12 (Dispute Resolution), 13 (General) will survive the
expiration or termination of this Agreement for any reason. Upon payment of the
fees required by sections 6.1 and 6.5, Section 3.1 shall survive expiration or
termination of this Agreement for any reason.
11. DISPUTE RESOLUTION
11.1. ALTERNATIVE DISPUTE RESOLUTION. The Parties will attempt to settle
any claim or controversy arising from this Agreement through consultation and
negotiation in good faith and in a spirit of mutual cooperation. If those
attempts fail, then such dispute will be mediated by either Endispute/Judicial
Arbitration and Mediation Services ("JAMS") in New York, New York or another
mediator mutually acceptable to the parties. Any dispute that the Parties cannot
resolve through negotiation or mediation within thirty (30) days of the date of
the initial demand for negotiation by one of the Parties will be submitted to
binding arbitration, in accordance with Section 12.2 (Arbitration).
11.2. ARBITRATION
11.2.1. CHOICE OF FORUM AND VENUE. Except as set forth in Section
12.1 (Alternative Dispute Resolution), any dispute, controversy or claim arising
from or relating to this Agreement, or the breach, termination, or invalidity
thereof, will be settled by arbitration in New York, New York, in accordance
with the American Arbitration Association rules for complex commercial
arbitrations in effect on the Effective Date. The language of the arbitration
will be English. At the first arbitration hearing, the Parties will (i) agree on
the discovery schedule for the arbitration, (ii) arrange an acceptable procedure
for any law and motion proceedings and (iii) in all respects arrange for the
most expeditious hearing possible of the matters in dispute. The Parties shall
have the right to conduct the discovery only to the extent specifically
authorized by the arbitrator.
11.2.2. SELECTION OF ARBITRATORS. The Parties will choose, by
mutual agreement, one (1) neutral arbitrator to hear the dispute. If the Parties
cannot agree on the selection of the arbitrator within thirty (30) days after a
demand for arbitration has been served, the arbitrator will be selected by JAMS.
11.2.3. AWARD. The award will be made promptly by the arbitrator
and, unless otherwise agreed by the Parties, no later than thirty (30) days from
the date of closing of the hearing, or if oral hearings have been waived, from
the date of transmittal of final statements and proofs to the arbitrator. If the
arbitrator fails to reach a decision within thirty (30) days, the arbitrator
will be discharged, and a new arbitrator will be appointed and will proceed in
the same manner, and the process will be repeated until a decision is finally
reached. The arbitrator will
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be empowered to award only those damages that are permitted in this Agreement,
subject to the disclaimers of damages and liability limits set forth in this
Agreement, but the arbitrator will not have the authority to reform, modify or
materially change this Agreement. Judgment on the award may be entered in any
court having jurisdiction.
11.2.4. PROVISIONAL RELIEF. The arbitrator will have the
authority to issue interim orders for provisional relief, including orders for
injunctive relief, attachment or other provisional remedy, as necessary to
protect either Party's name, proprietary information, trade secrets, know-how,
or any other proprietary right. Any interim order of the arbitrator for any
injunctive or other preliminary relief will be enforceable in any court of
competent jurisdiction. In addition, nothing in this Agreement will be deemed as
preventing either Party from seeking provisional relief from any court of
competent jurisdiction in accordance with Section 14.4 (Injunctive Relief).
11.3. BINDING EFFECT. The award of the arbitrator will be final and
binding upon the parties without appeal or review except as permitted by New
York law. In connection with any application to confirm, correct or vacate the
arbitration award, any appeal of any order rendered pursuant to any such
application, or any other action required to enforce the arbitration award, the
prevailing party will be entitled to recover its reasonable attorneys' fees,
disbursements and costs incurred in any post-arbitration award activities.
12. GENERAL
12.1. RELATIONSHIP OF PARTIES. Nothing in this Agreement will be
construed as creating any agency, partnership, or other form of joint enterprise
between the Parties. Neither Party will have the authority to act or create any
binding obligation on behalf of the other Party, and neither Party will
represent to any third party that it has the authority to act or create any
binding obligation on behalf of the other Party.
12.2. NOTICES. All notices, consents, waivers, and other communications
intended to have legal effect under this Agreement must be in writing, must be
delivered to the other Party at the address set forth at the top of this
Agreement by personal delivery, certified mail (postage pre-paid), or a
nationally recognized overnight courier, and will be effective upon receipt (or
when delivery is refused). Any such notices sent to Magic must be addressed to
the attention of its General Counsel. Each Party may change its address for
receipt of notices by giving notice of the new address to the other Party.
12.3. GOVERNING LAW. This Agreement will be governed by and interpreted
in accordance with the laws of the State of New York excluding any conflict of
law provisions which would require application of another choice of law.
12.4. INJUNCTIVE RELIEF. It is understood and agreed that,
notwithstanding any other provision of this Agreement, any breach of Section
4.11 (Proprietary Rights Protection), Article 7 (Confidentiality Obligations) or
Section 12.10 (Nonsolicitation) by either Party will cause irreparable damage
for which recovery of money damages would be inadequate, and that the
non-breaching Party will therefore be entitled to seek timely injunctive relief
to protect such Party's rights, in addition to any and all remedies available at
law.
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12.5. WAIVER. The failure of either Party to require performance by the
other Party of any provision of this Agreement will not affect the full right to
require such performance at any time thereafter; nor will the waiver by either
Party of a breach of any provision of this Agreement be taken or held to be a
waiver of the provision itself.
12.6. SEVERABILITY. If any provision of this Agreement is unenforceable
or invalid under any applicable law or is so held by applicable court decision,
such unenforceability or invalidity will not render this Agreement unenforceable
or invalid as a whole, and such provision will be changed and interpreted so as
to best accomplish the objectives of such unenforceable or invalid provision
within the limits of applicable law or applicable court decisions.
12.7. ASSIGNMENT. Neither this Agreement nor any rights or obligations
of either Party under this Agreement may be assigned in whole or in part without
the prior written consent of the other Party except (a) Magic may assign this
entire Agreement in connection with a merger or sale of all or substantially all
of its business or assets to a third party that agrees in writing to assume this
Agreement, and (b) GM may assign any or all of its rights under this Agreement
to any of its Affiliates. Any attempted assignment in violation of the preceding
sentence will be void. This Agreement will bind and inure to the benefit of the
respective successors and permitted assigns of the Parties.
12.8. FORCE MAJEURE. Neither Party will be liable for any failure to
fulfill its obligations hereunder due to causes beyond its reasonable control,
including acts of God, fire, explosion, vandalism, cable cut, storm, extreme
temperatures, earthquake, or other similar catastrophes; any law, order,
regulation, direction, action, or request of the United States government, or of
any other government, including state and local governments, having jurisdiction
over either of the Parties, or of any department, agency, commission, court,
bureau, corporation, or other instrumentality of any such government or of any
civil or military authority; national emergencies, insurrection, riots, wars, or
strikes, lock-outs, work stoppages, or other labor difficulties; actions or
inactions of a third party provider or operator of facilities employed in
provision of the OnStar Service; or any other conditions or circumstances beyond
the reasonable control of such Party which impede or affect the OnStar Service
or the transmission of telecommunications services.
12.9. PUBLICITY. Upon execution of this Agreement the Parties will issue
a joint press release in the form of Exhibit E (Press Release). Any further
press releases or public announcements or statements by either Party concerning
this Agreement or the relationship between the Parties must be approved in
advance by both Parties, except each party shall be entitled, without the prior
approval of the other party, to make any press release or other public
disclosure with respect to such transaction as is required by applicable law and
regulations (although such other party shall be consulted in connection with any
such press release or other public disclosure prior to its release and shall be
provided a copy thereof).
12.10. NON-SOLICITATION. During the term of this Agreement and for [**]
thereafter, [**] neither Party may solicit, directly or indirectly, any employee
of the other Party, or hire, as an employee or independent contractor or
otherwise, any person who at that time is, or who in the preceding [**] was, an
employee of the other Party. It is understood that general employment
advertisements not targeted at the other Party's employees will not constitute a
breach of this Section 14.10.
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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12.11. CONSTRUCTION. The section headings appearing in this Agreement
are inserted only as a matter of convenience and in no way define, limit,
construe, or describe the scope or extent of such section or in any way affect
this Agreement. Unless otherwise expressly stated, when used in this Agreement
the word "including" means "including but not limited to." Each Party represents
that it has had the opportunity to participate in the preparation of this
Agreement and hence the Parties agree that the rule of construction that
ambiguities be resolved against the drafting party will not apply to this
Agreement.
12.12. ENTIRE AGREEMENT AND AMENDMENT. This Agreement together with the
Exhibits completely and exclusively states the agreement of the Parties
regarding its subject matter. It supersedes, and its terms govern, all prior
understandings, agreements, or other communications between the parties, oral or
written, regarding such subject matter. This Agreement may be executed in
counterparts and may be amended only in a document signed by both Parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
GENERAL MOTORS CORPORATION GENERAL MAGIC, INC.
By: /s/ F.H. Cooke By: /s/ Steven Markman
----------------------------------------- --------------------------
Name: F.H. Cooke Name: Steven Markman
--------------------------------------- ------------------------
Title: Executive Director, OnStar Title: CEO
------------------------------------ ----------------------
26
<PAGE> 27
EXHIBIT A
DELIVERABLES, SPECIFICATION AND SCHEDULE
<PAGE> 28
OnStar Virtual Advisor - Service Descriptions
The information provided in this attachment will be superceded within thirty
(30) days, from contract execution, by a detailed statement of work. The
products, services and behaviors described in this attachment are indicative of
the required functionality at production launch
(anticipated [**]).
The majority of information shown below was previously provided to General Magic
during consultative meetings held at OnStar in Troy, MI during the week of
October 3, 1999.
The product and service offerings described herein represent custom development.
They may be developed through modifications of existing General Magic property.
CONSUMER CONCEPT STATEMENT
[**]?
[**].
[**].
ACTIVATION OF THE VIRTUAL ADVISOR
The subscriber activates the Virtual Advisor [**] the system. The subscriber
will then [**]. The spoken command [**]. After the subscriber [**].
GENERAL
- Ask for [**].
- This action will [**] site. The subscriber will [**].
PRELIMINARY SERVICE DESCRIPTIONS
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE> 29
[**]
- Ask for [**].
- Obtain [**].
- [**] are defined as:
[**]
[**]
[**]
[**]
- Ask for [**].
- Obtain [**].
- Ask for [**].
- Obtain [**].
- Ask for [**].
- Obtain [**].
[**]
- Ask for [**].
- Obtain [**].
- [**] Obtain [**]. Use the [**].
- [**] is defined as:
[**]
[**]
[**]
[**]
[**]
- Ask for [**].
- Obtain [**].
- Obtain [**].
- [**] is defined as:
[**]
[**]
[**]
- Ask for [**].
- Obtain [**].
- Ask for [**].
- Obtain [**].
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE> 30
[**]
- Ask for [**].
- Obtain [**].
- [**] are defined as:
[**]
[**]
[**] covered will be:
[**]
[**]
[**]
[**]
[**]
[**]
- Ask for [**].
- Obtain [**].
[**]
- Ask for [**].
- Obtain [**].
- [**] are defined as:
[**]
[**]
- Ask for [**].
- Obtain [**].
- [**] are defined as:
[**]
[**]
- Goal is to [**]
- Future of [**]
[**]
- Ask for [**].
- Obtain [**].
- [**] is defined as:
[**]
[**]
[**]
- Ability to [**]
- Ability to [**]
- Ability to [**]
[**]
- Subscriber has [**].
- Service will [**].
- Service will [**].
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE> 31
- System will [**].
[**]
- Ask for [**].
- Obtain [**].
- [**] is defined as:
[**]
[**]
[**]
- Ask for [**].
- Obtain [**].
- [**] is defined as:
[**]
[**]
[**]
[**]
- Ask for [**].
- Obtain [**].
- [**] are defined as:
[**]
[**]
- Ask for [**].
- Obtain [**].
[**]
- Ask for [**].
- Obtain [**].
- [**] is defined as:
[**]
[**]
[**]
- - Ability to [**]
- - Ability to [**]
[**]
- - The Virtual Advisor is to provide [**].
[**]
[**]
[**]
- - All dialogues are [**].
- - General Magic will [**].
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE> 32
MIGRATION PLANNING
- - Concurrent with the proposed product development activity, General Magic
will contribute to a multi-disciplinary team whose [**] will be planning for
and [**] will be the support for the [**] to operate [**] enterprise
application architecture and be physically [**] within [**]. These tasks
will include:
[**]
[**]
[**]
[**]
[**]
[**]
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE> 33
EXHIBIT B
SOURCE CODE ESCROW AGREEMENT
<PAGE> 34
ESCROW AGREEMENT
This ESCROW AGREEMENT is entered into this __ day of __________, 1999, by and
among General Magic, Inc., a corporation organized and existing under the laws
of the State of Delaware, and having its principal offices at 420 North Mary
Avenue, Sunnyvale, California 94086 (hereinafter the "COMPANY"); General Motors
Corporation, a corporation organized and existing under the laws of the State of
Delaware and having its principal offices at 3044 West Grand Boulevard, Detroit,
Michigan (hereinafter "GM"); and ______________ , a corporation organized and
existing under the laws of the State of _______________ and having its principal
offices at _________________ (hereinafter the "Escrow Agent").
WITNESSETH:
WHEREAS, COMPANY and the GM have entered into a Development and License
Agreement (the "License Agreement") dated November 9, 1999, a copy of which is
attached hereto as Exhibit A and incorporated herein by reference, pursuant to
which, among other things, COMPANY will develop for and license to GM a
customized version of its Portico virtual assistant service on the terms and
conditions set forth in the License Agreement; and
WHEREAS, the License Agreement provides that COMPANY and GM will enter into an
escrow agreement providing for deposit by COMPANY of the Source Code and related
documentation for the Magic Software (as each term is defined in the License
Agreement) with an escrow agent, and for release of that Source Code to GM upon
the occurrence of certain events specified in Section 3.2 of the License
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein and for other
valuable consideration, the adequacy and receipt of which are hereby
acknowledged, COMPANY, GM and the Escrow Agent hereby agree as follows:
1. APPOINTMENT. GM and the COMPANY hereby appoint Escrow Agent as the
escrow holder under this Escrow Agreement, and the Escrow Agent
accepts such appointment on the terms and conditions set forth in this
Escrow Agreement.
2. DEPOSIT. Within thirty (30) days following execution of this Escrow
Agreement, the COMPANY shall deliver to the Escrow Agent two (2)
copies of the Source Code for the Magic Software (as such terms are
defined in the License Agreement), consisting of a full source
language statement of the program or programs comprising the Magic
Software, and all existing program maintenance documentation,
including all flow charts, schematics and annotations which comprise
the precoding detailed design specification, and all other material
necessary to allow a reasonably skilled third party programmer or
analyst to maintain or enhance the
<PAGE> 35
Magic Software without the help of any other person or reference to
any other information (collectively, the "Escrow Materials"). The
COMPANY shall promptly supplement the Escrow Materials with the Source
Code and related documentation for all Updates (as defined in the
License Agreement).
3. RECEIPT BY ESCROW AGENT. The Escrow Agent shall acknowledge receipt of
each deposit of Escrow Materials received from COMPANY by sending
written acknowledgement thereof to both GM and COMPANY.
4. RECORDS. The Escrow Agent will keep complete written records of the
activities undertaken and the materials prepared and delivered to the
Escrow Agent pursuant to this Escrow Agreement. COMPANY and GM will
each be entitled at reasonable times during normal business hours, and
upon reasonable notice to the Escrow Agent, to inspect the records of
the Escrow Agent with respect to the Escrow Materials.
5. STORAGE AND SECURITY.
(a) The Escrow Agent shall act as custodian of the Escrow Materials
until the escrow is terminated pursuant to Section 16 of this
Escrow Agreement. The Escrow Agent shall establish, under its
control, a secure receptacle for the purpose of storing the
Escrow Materials; provided, however that the Escrow Agent's
obligation for safekeeping shall be limited to providing the same
degree of care for the Escrow Materials as it maintains for its
valuable documents and those of its customers lodged in the same
location with appropriate atmospheric or other safeguards.
Notwithstanding the foregoing, the parties acknowledge and agree
that the Escrow Agent shall not be responsible for any loss or
damage to any of the Escrow Materials due to changes in such
atmospheric conditions (including, but not limited to, failure of
the air conditioning system), unless such changes are proximately
caused by the gross negligence or malfeasance of the Escrow
Agent.
(b) The Escrow Materials deposited with the Escrow Agent by COMPANY
shall remain the exclusive property of COMPANY.
(c) Except as otherwise provided in this Escrow Agreement, the Escrow
Agent agrees that: (i) it shall not divulge, disclose or
otherwise make available to any party other than COMPANY, or make
any use whatsoever of, the Escrow Materials; (ii) it shall not
permit any person access to the Escrow Materials, except such
2
<PAGE> 36
authorized representatives of the Escrow Agent as may require
access to the Escrow Materials to perform the functions of the
Escrow Agent under this Escrow Agreement; (iii) access to the
Escrow Materials by COMPANY shall be granted by Escrow Agent only
to those persons duly authorized in writing by a competent
officer of COMPANY; and (iv) access to the Escrow Material shall
not be granted without compliance with all security and
identification procedures instituted by the Escrow Agent.
(d) The Escrow Agent shall have no obligation or responsibility to
verify or determine that the Escrow Materials deposited with
Escrow Agent by COMPANY do in fact consist of those items which
COMPANY is obligated to deliver under the License Agreement, and
the Escrow Agent shall bear no responsibility whatsoever to
determine the existence, relevance, completeness, currency or
accuracy of the Escrow Materials.
(e) The Escrow Agent's sole responsibility shall be to accept, store
and deliver the Escrow Materials deposited with it by COMPANY in
accordance with the terms and conditions of this Escrow
Agreement.
6. RELEASE EVENTS.
(a) The Escrow Agent is hereby specifically authorized to provide the
Escrow Materials to GM on the fifth day following written notice
from GM (a "Release Notice") certifying that one or more of the
release events specified in Section 3.2 ("Release Events") of the
License Agreement has occurred, provided that the Escrow Agent
has not received a notarized affidavit executed by an executive
officer of COMPANY certifying that no such event has occurred (a
"Notice of Objection"). A Release Notice must identify which
Release Event has occurred. GM shall provide the COMPANY by
certified mail, return receipt requested, a copy of any Release
Notice delivered to the Escrow Agent pursuant hereto. COMPANY
shall provide GM by certified mail, return receipt requested, a
copy of any Notice of Objection delivered to the Escrow Agent
pursuant hereto.
(b) If the Escrow Agent receives a timely Notice of Objection, the
Escrow Agent shall not release the Escrow Materials, but shall
continue to hold them pursuant to this Escrow Agreement until
otherwise jointly directed by COMPANY and GM, or until resolution
of the dispute pursuant to Section 7 ("Arbitration") of this
Escrow Agreement.
3
<PAGE> 37
7. ARBITRATION. If, subsequent to delivery of a Release Notice to the Escrow
Agent pursuant to Section 6, any dispute arises concerning the delivery of
the Escrow Materials to General Magic by the Escrow Agent, such dispute
will be settled by binding arbitration in New York, New York before a
single arbitrator in accordance with the rules of the American Arbitration
Association. The parties shall use diligent efforts to commence the
arbitration proceeding within ten (10) business days following deliver of
the Notice of Objection. The sole question shall be whether a Release Event
existed at the time a Release Notice was transmitted by GM to the Escrow
Agent. If the arbitrator determines that a Release Event has occurred, the
arbitrator shall enter an award directing that the Escrow Materials be
released to GM. If the arbitrator determines that a Release Event has not
occurred, the arbitrator shall direct the Escrow Agent to continue to hold
the Escrow Materials in accordance with this Escrow Agreement. The
arbitrator shall not have the power to enter any other award or finding,
except that arbitrator may award the prevailing party the fees of the
American Arbitration Association and the reasonable attorneys' fees and
costs incurred by it in the arbitration. The arbitrator shall render an
award within fifteen (15) days after the end of the hearing, and judgment
upon the award rendered by the arbitrator may be entered in any court
having jurisdiction.
8. BANKRUPTCY. GM and COMPANY acknowledge that this Escrow Agreement is an
"agreement supplementary to" the License Agreement as provided in Section
365(n) of Title 11, United States Code ("Bankruptcy Code"). COMPANY
acknowledges that if COMPANY, as a debtor in possession or a trustee in
bankruptcy in a case under the Bankruptcy Code, rejects the License
Agreement or this Escrow Agreement, GM may elect to retain its rights under
the License Agreement and this Escrow Agreement as provided in Section
365(n) of the Bankruptcy Code. Neither COMPANY nor such bankruptcy trustee
will interfere with the rights of GM as provided in the License Agreement
and this Escrow Agreement, including the right to obtain the Escrow
Materials.
9. LIMITATION ON ESCROW AGENT'S RESPONSIBILITY AND LIABILITY
(a) The Escrow Agent will incur no liability for acting upon any
instruction, notice, direction or other document believed by it in
good faith to be genuine and to have been made, signed, sent or
presented by the person or persons authorized to perform such act
under the terms of this Escrow Agreement.
4
<PAGE> 38
(b) COMPANY and GM jointly and severally agree to indemnify the Escrow
Agent from and against any and all third party liabilities, claims,
suits and other proceedings, all judgments and other awards against
the Escrow Agent in connection therewith, and all costs and expenses
incurred in connection with the defense thereof, in each case which
may be imposed on, or incurred by, or asserted against, the Escrow
Agent in any way relating to, or arising out of, this Escrow
Agreement, provided that neither COMPANY nor GM shall be liable for
that portion of any such indemnification amount resulting from the
Escrow Agent's gross negligence or willful misconduct or violation by
the Escrow Agent of any terms or provisions of this Escrow Agreement.
10. NOTICES. All notices, instructions, deliveries, and other communications
required or permitted to be given hereunder or necessary or convenient in
connection herewith shall be in writing and must be delivered to the
intended recipient at the address set forth above (or at such other address
as a party shall designate pursuant to the terms hereof) by personal
delivery, certified mail (postage prepaid), or a nationally recognized
overnight courier, and will be effective upon receipt (or when delivery is
refused).
11. ENTIRE AGREEMENT. This Escrow Agreement sets forth the entire understanding
of the parties hereto with respect to the subject matter hereof.
12. WAIVER, AMENDMENT OR MODIFICATION; SEVERABILITY. This Escrow Agreement
shall not be waived, amended, or modified except by the written agreement
of all the parties hereto. Any invalidity, in whole or in part, of any
provision of this Escrow Agreement shall not affect the validity of any
other of its provisions.
13. GOVERNING LAW. This Escrow Agreement shall be governed by the laws of the
State of New York, without reference to conflict of laws principles.
14. RESIGNATION/REPLACEMENT.
(a) Upon sixty (60) days' prior written notice given to COMPANY and GM,
the Escrow Agent may resign. Within fifteen (15) days after the giving
of such notice, COMPANY and GM shall mutually designate a successor
Escrow Agent. Such successor Escrow Agent shall be bound by the terms
and provisions of this Escrow Agreement. In the event that no such
agreement is reached within such fifteen (15) day period, the Escrow
Agent shall continue to hold the Escrow Materials then held by it and
shall take no further actions and shall have no further
5
<PAGE> 39
obligations hereunder except to cooperate with its successor in order
to effectuate the transfer of its duties to the successor Escrow
Agent.
(b) Upon notice, COMPANY and GM may replace the Escrow Agent with a
successor who shall replace Escrow Agent and be bound by all of the
terms of this Escrow Agreement.
15. ESCROW FEES. GM agrees to pay the fees of the Escrow Agent for its services
hereunder during he term of this Escrow Agreement. Such fees shall consists
of periodical escrow maintenance charges, at Escrow Agent's standard rates,
and fees charged for carrying out its duties hereunder.
16. TERM. This Escrow Agreement will be effective upon execution by all three
parties and will terminate only (a) if and when all of the Escrow Material
are delivered to GM pursuant to Section 8 ("Delivery of Escrow Material to
GM"); (b) upon or at any time after termination of the License Agreement by
COMPANY; or (c) if and when GM notifies COMPANY and the Escrow Agent that
GM desires to terminate this Escrow Agreement. Upon termination of this
Escrow Agreement pursuant to clause (b) or (c) above, the Escrow Agent will
return all copies of the Escrow Materials to the COMPANY.
17. COUNTERPARTS. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
duly executed as of the year and date first above written.
- ------------------------- --------------------------
COMPANY GM
- -------------------------
ESCROW AGENT
<PAGE> 40
EXHIBIT C
SECOND LEVEL CUSTOMER SUPPORT
[to be provided by Magic]
<PAGE> 41
EXHIBIT D
SERVICE LEVELS
<PAGE> 42
EXHIBIT E
PRESS RELEASE
<PAGE> 43
Judy Radlinsky, General Magic Geri Lama, OnStar
1 + 408 774 4290 1 + 248 269 1334
[email protected] [email protected]
ONSTAR AND GENERAL MAGIC SIGN AGREEMENT
TO PROVIDE VOICE ENABLED SERVICES IN VEHICLES
TROY, Mich., and SUNNYVALE, Calif. -- OnStar and General Magic today
announced that OnStar has agreed to take an equity stake of approximately $15
million in General Magic, makers of the innovative magicTalk. OnStar has
selected magicTalk as the voice user interface for the OnStar Virtual Advisor,
which will provide hands-free, voice-activated access to web-based information
services in vehicles. General Magic is expected to provide engineering, network
hosting and consulting services to OnStar as part of the ongoing relationship.
With the magicTalk core technology integrated into the OnStar Virtual
Advisor, OnStar subscribers will be able to access personalized information such
as e-mail, sports, weather, news and market headlines, all through easy-to-use
voice interactions.
"Our relationship with General Magic will allow us to launch our OnStar
Virtual Advisor services faster, and better meet the needs of our rapidly
expanding subscriber base," said Chet Huber, general manager of OnStar. "General
Magic is the leader in technologies that allow people to use conversational
language to interact with voice-enabled services. Subscribers won't have to
memorize complex commands or become technology wizards to have web-based
services delivered in their vehicles."
<PAGE> 44
OnStar and General Magic/Page 2
"The OnStar service is already very popular with consumers, and we are
delighted to work with OnStar to provide customers with the convenience of
voice-enabled access to web content and services," said Steve Markman. "We
believe voice-based services like the OnStar Virtual Advisor represent an
emerging new direction for consumer technology that will help people lead more
productive and enjoyable lives."
OnStar, the innovative safety, security and information service, uses
Global Positioning System (GPS) satellite technology and wireless communications
to link drivers and vehicles to the 24-hour OnStar Center for real-time,
personalized services.
OnStar will be included on nearly one million General Motors vehicles by
the end of 2000, dramatically increasing its subscriber base from the current
level of nearly 100,000. For more information, see http://www.onstar.com
General Magic offers voice-enabled services and technology that make
communication and access to information easy and convenient. The company's
innovative magicTalk voice interface product lets people interact with
information using their own words, as if they were talking to another person.
For more information about General Magic, visit the company's Web site at
http://www.generalmagic.com.
# # #
General Magic notes that this press release contains forward-looking statements.
There are risks and uncertainties that may cause actual results to vary
materially. These and other risk factors are detailed in General Magic's S-3,
filed (list current date when issued) with the Securities and Exchange
Commission.
<PAGE> 45
EXHIBIT F
MODEL FOR HOSTING FEES
<PAGE> 46
ONSTAR NOC MONTHLY COSTS
General Magic Confidential
-----SUBSCRIBER SCENARIOS-------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
[**] [**] [**] [**]
ONSTAR BUSINESS PLAN ASSUMPTIONS:
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
ASSUMPTIONS FOR ESTIMATING [**]:
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**] [**]
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**] [**]
K$ [**] [**] [**] [**] [**] per [**]
[**] [**] [**] [**] [**] [**] servers per [**]
K$ [**] [**] [**] [**] [**] per server
[**] [**] [**] [**] [**] [**] servers per [**]
[**] [**] [**] [**] [**] [**] Isocor per [**]
K$ [**] [**] [**] [**] [**] per server [**]
[**] [**] [**] [**] [**] [**] servers per [**]
K$ [**] [**] [**] [**] [**] per server
[**] [**] [**] [**] [**] [**] servers per [**]
K$ [**] [**] [**] [**] [**] per server
Other misc servers & buildout (1)
K$ [**] [**] [**] [**] [**]
TOTAL CAPITAL [**] [**] [**] [**]
DEPREC PER MONTH [**] [**] [**] [**]
Other Monthly:
[**] [**] [**] [**] [**]
K$ [**] per month
[**] [**] [**] [**] [**] [**]
K$ [**] [**] [**] [**] [**] per quarter [**]
[**]
K$ [**] [**] [**] [**] primarily [**]
[**] [**] [**] [**] [**]
K$ [**] [**] [**] [**] approx [**] per service
TOTAL MONTHLY [**] [**] [**] [**] [**]
Total Per Min [**] [**] [**] [**]
</TABLE>
