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DRAFT:
MAY 22, 2000
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 26, 2000
REGISTRATION NO.
333-____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GENERAL MAGIC, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 77-0250147
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
420 NORTH MARY AVENUE, SUNNYVALE CA 94086
(408) 774-4000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
STEVEN MARKMAN
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD OF DIRECTORS
GENERAL MAGIC, INC.
420 NORTH MARY AVENUE, SUNNYVALE CA 94086
(408) 774-4000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Copies to:
RUSSELL C. HANSEN, ESQ. MARY E. DOYLE, ESQ.
MICHAEL MAYES, ESQ. GENERAL COUNSEL
GIBSON, DUNN & CRUTCHER LLP GENERAL MAGIC, INC.
2029 CENTURY PARK EAST SUITE 4000 420 NORTH MARY AVENUE, SUNNYVALE CA 94086
LOS ANGELES, CALIFORNIA 90067 (408) 774-4000
(310) 552-8500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time as described in the Prospectus after the effective date of this
Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed
Proposed Maximum Maximum
Title of Each Class of Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered Per Share Offering Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001
per share 5,715,691(1) $3.078(2) $17,592,896.90 $4,645.00
===============================================================================================================
</TABLE>
(1) Represents 3,689,126 shares of common stock plus an additional 143,365
shares for a total of 3,832,491 shares of common stock or approximately
103.88% of the common stock issuable upon conversion of shares of the
Company's Series H preferred stock offered under this registration statement
and 100% of 1,883,200 shares of common stock issuable upon exercise of
certain warrants to purchase the Company's common stock issued in connection
with the sale of the Series H preferred stock. The number of shares of
common stock included in the registration statement is based on the
Company's good faith estimate of the number of shares of common stock
issuable upon conversion of the Series H preferred stock and assumes
conversion as of May 10, 2000. Pursuant to Rule 416 promulgated under the
Securities Act, this registration statement also covers such indeterminable
number of additional shares of common stock as may become issuable upon
conversion of the Series H preferred stock and exercise of the warrants as a
result of future stock splits, stock dividends or similar transactions.
(2) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) of the Securities Act and based on the average of the high
and low sales prices of the common stock reported on The Nasdaq National
Market on May 25, 2000.
-----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
SUBJECT TO COMPLETION, DATED MAY __, 2000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
5,715,691 SHARES
GENERAL MAGIC, INC.
COMMON STOCK
----------------
The selling stockholders identified in this prospectus are offering up
to 5,715,691 shares of General Magic, Inc. common stock. We will not receive any
proceeds from the sale of common stock by the selling stockholders.
Our common stock is listed on the Nasdaq National Market under the
symbol "GMGC." On May 10, 2000, the last reported sale price of our common stock
on the Nasdaq National Market was $4.125 per share.
THIS INVESTMENT INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 3.
----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------
The date of this prospectus is ________ 2000.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Risk Factors..............................................................3
Special Note Regarding Forward-Looking Statements........................10
Use of Proceeds..........................................................10
About General Magic......................................................10
Selling Stockholders.....................................................11
Plan of Distribution.....................................................16
Legal Matters............................................................17
Experts..................................................................17
Where You Can Find Additional Information About General Magic............17
Documents Incorporated By Reference......................................18
</TABLE>
As used in this prospectus, the terms "we," "us," "our" and "General
Magic" mean General Magic, Inc. and its subsidiaries (unless the context
indicates another meaning), and the term "common stock" means our common stock,
par value $0.001 per share.
Our principal executive offices are located at 420 North Mary Avenue,
Sunnyvale California 94086. Our telephone number is (408) 774-4000.
This prospectus contains trademarks of General Magic and those of other
companies.
<PAGE> 4
RISK FACTORS
An investment in the common stock offered pursuant to this prospectus
involves a high degree of risk and the common stock should not be purchased by
persons who cannot afford the loss of their entire investment. Purchasers should
carefully consider the following risk factors in conjunction with the other
information included in this prospectus.
WE HAVE A HISTORY OF LOSSES. WE EXPECT TO CONTINUE TO INCUR LOSSES, AND
WE MAY NEVER ACHIEVE AND SUSTAIN PROFITABILITY.
Since our inception, we have incurred significant losses, including a
loss of $12.1 million for the three-month period ended March 31, 2000. As of
March 31, 2000, we had an accumulated deficit of $282.9 million. We expect to
have net losses and negative cash flow for at least the next eighteen months. We
plan to continue to spend significant amounts to develop, enhance and maintain
our voice application services and products and to expand our marketing and
sales efforts. As a result, we will need to generate significant revenues to
achieve profitability. Even if we achieve profitability, we may be unable to
maintain or increase profitability on a quarterly or annual basis. If we fail to
achieve and maintain profitability, the price of our stock may decline, perhaps
substantially.
OUR LIMITED FUNDING MAY RESTRICT OUR OPERATIONS AND OUR ABILITY TO
EXECUTE OUR BUSINESS STRATEGY, AND THE AVAILABILITY OF ADDITIONAL FINANCING IS
UNCERTAIN.
Our business model requires us to devote significant financial resources
to the development, enhancement and maintenance of magicTalk, our platform for
delivery of voice application services and products. If we are not able to
successfully manage our existing resources or to secure additional financing in
a timely manner, our ability to generate sufficient revenues may be restricted
and our business curtailed.
Effective July 30, 1999, we entered into a common stock investment
agreement with an institutional investor providing for an equity line of credit.
The common stock investment agreement permits us to require the investor to
purchase from time to time an aggregate of up to $20,000,000 of our common stock
in increments of up to $5,000,000. In addition, the investor has the right to
purchase in its sole discretion up to an aggregate of an additional $6,000,000
of common stock during the term of the common stock investment agreement. On
March 10, 2000, we agreed to amend the common stock investment agreement to
provide the institutional investor with the option to purchase additional shares
of our common stock equal to up to 100% of the amount specified in our put
notice to the investor. The aggregate amount of the equity line, however, was
not increased by this amendment. There are numerous conditions on our right to
draw down under the equity line, including that the closing bid price of the
common stock on the business day immediately preceding a draw down notice must
be at least $2.00 per share and that the common stock is listed on The American
Stock Exchange ("AMEX"), The New York Stock Exchange ("NYSE"), The Nasdaq
National Market or The Nasdaq SmallCap Market. In addition, the dollar amount
specified in any draw down notice will be decreased by one twentieth (1/20) for
each business day during the twenty business days immediately following delivery
of the draw down notice on which the weighted average price of the common stock
is less than $2.062. The weighted average price of our common stock was less
than $2.062 on each business day through much of September, October and the
first half of November of 1999. It is uncertain that we will be able
consistently to meet the closing bid price condition, the listing condition or
any other condition. In addition, although we may request drawdowns in
increments of up to $5,000,000, the actual dollar amount is subject to
limitations based on the daily trading volumes, the market price of our common
stock as well as the investor's percentage ownership of General Magic.
As of May 10, 2000, our capital stock consisted of 100,000,000 shares of
common stock, 51,376,405 of which were issued and outstanding and 35,544,790 of
which were issuable and reserved for issuance pursuant to securities convertible
into or exercisable for shares of our common stock. An additional 6,974,379
shares were reserved pursuant to provisions of agreements governing issuance of
our Series D and Series F preferred stock and those governing warrants issued in
connection with the Series B, Series C, and Series D preferred stock
transactions that require us to reserve a multiple of the shares of common stock
issuable upon conversion of the preferred stock or exercise of the warrants. If,
at the time we elect to draw down under our equity line, we do not have a
sufficient number of authorized but unissued and unreserved shares of common
stock available for issuance under the equity line, we may be unable to draw
down under the equity line. The Company is seeking stockholder approval of an
increase in the Company's authorized capital stock at its 2000 Annual Meeting of
Stockholders. There can be no assurance that we will obtain stockholder approval
of an increase in our authorized capital stock, or that such approval will be
timely.
To support our operations beyond the year 2000, we will be required to
raise additional public or private financing. No assurance can be given that
additional financing will be available or that, if available, it will be
available on terms favorable to General Magic or its stockholders. The
unavailability or timing of revenues and financing may require us to curtail our
operations. In addition, if we are not able to generate revenues or obtain
funding, we may be unable to meet The Nasdaq National Market's continued
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listing requirements, and our common stock could be delisted from that market.
See "-- Our common stock may be delisted from The Nasdaq National Market if we
are not able to demonstrate compliance with the continued listing requirements."
THE MARKET FOR OUR VOICE APPLICATION SERVICES AND PRODUCTS MAY NOT
DEVELOP, WHICH WOULD SUBSTANTIALLY IMPEDE OUR ABILITY TO GENERATE REVENUES.
Our future financial performance depends on growth in demand for voice
application services and products. If the market for voice application services
and products does not develop or if we are unable to capture a significant
portion of that market, either directly or through our partners, our revenues
and our results of operations will be adversely affected.
The market for voice application services and products is relatively new
and still evolving. Currently, there are a limited number of products and
services in this industry. The adoption of voice application services and
products could be hindered by the perceived cost, quality and reliability of
this new technology, as well as the reluctance of businesses that have invested
substantial resources in existing systems, such as touch-tone-based systems, to
replace their current systems with this new technology. Accordingly, in order to
achieve commercial acceptance, we will have to educate prospective customers,
including large, established companies, about the uses and benefits of
voice-driven applications in general and our products in particular. If these
efforts fail, or if our voice application services and products do not achieve
commercial acceptance, our business would be harmed.
The continued development of the market for our voice application
services and products will depend upon the:
- widespread adoption of voice-driven applications by businesses for use
in conducting transactions and managing relationships with their
customers;
- consumer acceptance of such applications; and
- continuing improvements in hardware and software technology that may
reduce the cost and improve the performance of voice solutions.
WE MUST ESTABLISH AND MAINTAIN RELATIONSHIPS WITH CUSTOMERS AND PARTNERS
TO GENERATE REVENUES.
Our business model for voice application services and products depends
on generation of revenue from licensing of our magicTalk communications platform
and from voice application development, support and hosting services. Our
success in generating these revenues depends on our ability to establish and
maintain relationships with organizations that engage in high-volume customer
interactions, such as telecommunications providers and customer interaction
centers, and with partners that currently provide customer relationship
management solutions to these businesses. Competition for relationships with
companies such as these is extremely intense.
WE ARE DEPENDENT ON A FEW CUSTOMERS AND EXPECT TO DERIVE A SIGNIFICANT
AMOUNT OF REVENUE FROM A SINGLE CUSTOMER.
We have entered into commercial arrangements with Qwest Communications
Corporation, Intuit(R) Inc., Excite@Home and the OnStar Corporation, a
subsidiary of General Motors Corporation. Qwest and Intuit have placed their
projects on hold. We plan to advance our relationships with Excite and OnStar,
and in 2000, we expect to derive a significant portion of our revenue from
OnStar. However, we cannot guarantee that we will be able to maintain these
relationships or establish others. It is also uncertain whether the voice
applications contemplated by our current or future partners will be commercially
launched, or if launched, that they will result in significant revenue to
General Magic.
OUR VOICE APPLICATION SERVICES AND PRODUCTS CAN HAVE LONG SALES AND
IMPLEMENTATION CYCLES AND, AS A RESULT, OUR QUARTERLY OPERATING RESULTS AND OUR
STOCK PRICE MAY FLUCTUATE.
Purchase of our voice application services and products requires a
significant expenditure by a customer. Accordingly, the decision to purchase our
services and products typically requires significant pre-purchase evaluation. We
may spend many months educating and providing information to prospective
customers regarding the use and benefits of our voice application services and
products. During this evaluation period, we may expend substantial sales,
marketing and management resources.
After purchase, it may take substantial time and resources to implement
our solution and to integrate it with our customer's existing systems. If we are
performing significant professional services in connection with the
implementation, we do not recognize software revenue until after system
acceptance or deployment. In cases where the contract specifies milestones or
acceptance criteria, we may not be able to recognize services revenue until
these conditions are met. We have in the past and may in the future experience
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unexpected delays in recognizing revenue. Consequently, the length of our sales
and implementation cycles may make it difficult to predict the quarter in which
revenue recognition may occur and may cause revenue and operating results to
vary significantly from period to period. These factors could cause our stock
price to be volatile or to decline.
LOSS OF OR DELAYS IN ACQUIRING A KEY CUSTOMER COULD SUBSTANTIALLY REDUCE
OUR REVENUE IN ANY GIVEN PERIOD AND HARM OUR BUSINESS.
We expect that for at least the next twelve months, a limited number of
customers will account for a substantial portion of our revenue during any given
period. As a result, if we do not acquire a major customer, if a contract is
delayed, cancelled or deferred, or if an anticipated sale is not made, our
revenue would be adversely affected.
IF WE ARE UNABLE TO HIRE ADDITIONAL PERSONNEL, OR TO RETAIN KEY
TECHNICAL, PROFESSIONAL SERVICE, SALES, MARKETING AND OPERATIONAL PERSONNEL, OUR
BUSINESS COULD BE HARMED.
We intend to hire additional personnel, including engineers,
professional service, sales, marketing and operational personnel to support our
business. Competition for these individuals is keen, especially in the San
Francisco Bay Area. We may not be able to attract, assimilate or retain
additional highly qualified personnel. In addition, we rely upon the continued
performance and services of our existing employees, including key managerial,
technical and operational personnel. Our failure to attract, integrate, motivate
and retain additional employees or to motivate and retain existing employees
could harm our business.
INTENSE COMPETITION IN THE MARKET FOR VOICE APPLICATION SERVICES AND
PRODUCTS COULD PREVENT US FROM ACHIEVING OR SUSTAINING PROFITABILITY.
The market for voice application services and products is intensely
competitive. A number of companies have developed, or are expected to develop,
voice applications and/or platform technologies that compete with ours.
Competition in the voice application and platform technologies markets include
personal assistant developers such as CallSciences and Lucent, voice browser
developers such as Nuance, Motorola, Speechworks and Vocalis, and providers of
value-added services such as AccessLine, BriteVoice, Comverse, IntelliVoice,
Webley and Wildfire. Wireless communications infrastructure companies, such as
Ericsson or Phone.com, may extend their offerings to provide the capabilities of
the myTalk communications platform, as may software developers such as Microsoft
and Oracle, or telecommunications companies such as AT&T and Sprint. In
addition, TellMe, in the voice portal category, and CollegeClub.com, EchoBuzz,
eVoice, ShoutMail, ThinkLink and Ureach, in the personal messaging category, are
among the potential competitors of General Magic. Many of these companies have
longer operating histories, significantly greater financial, technical, product
development, marketing and sales resources, greater name recognition, larger
established customer bases, and better-developed distribution channels than we
do. Our present or future competitors may be able to develop products that are
comparable or superior to those we offer, adapt more quickly than we do to new
technologies, evolving industry trends and standards or customer requirements,
or devote greater resources to the development, promotion and sale of their
products than we do. Accordingly, we may not be able to compete effectively in
our markets, competition may intensify and future competition may harm our
business.
TECHNOLOGY CHANGES RAPIDLY IN OUR MARKET, AND OUR FUTURE SUCCESS WILL
DEPEND ON OUR ABILITY TO MEET THE NEEDS OF OUR CUSTOMERS.
The market for voice application services and products is characterized
by rapid technological change, changing customer needs, increasingly frequent
new product introductions and evolving industry standards. The introduction of
products or services embodying new technologies and the emergence of new
industry standards could render our voice application services and products
obsolete and unmarketable.
Our success will depend upon our ability to timely develop and introduce
new voice application services and products, as well as enhancements to our
existing services and products, to keep pace with technological developments and
emerging industry standards and address the changing needs of customers,
partners, users, sponsors, and advertisers. We may not be successful in
developing and marketing new services or products that respond to technological
changes or evolving industry standards. We may experience difficulties that
could delay or prevent the successful development, introduction and marketing of
new services or products. In addition, our new services and products may not
adequately meet the requirements of the marketplace or achieve market
acceptance.
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WE MAY EXPERIENCE DELAYS IN PRODUCT DEVELOPMENT, WHICH COULD ADVERSELY
AFFECT OUR REVENUES OR RESULTS OF OPERATIONS.
Any delays in product development or market launch could adversely
affect our revenues or results of operations. To be successful, we must continue
to develop and enhance technologies to enable us to offer voice application
services and other products deployed on our magicTalk communications platform.
Software product development schedules are difficult to predict because they
involve creativity and may require implementation of original, untried solutions
or the use of new development tools. Our software development efforts have been
delayed in the past. In addition to software development delays, we may also
experience delays in other aspects of product development. Any product
development delays could delay or prevent successful introduction or marketing
of new or improved services or products or the delivery of new versions of our
services or products.
THE FAILURE OR UNAVAILABILITY OF THIRD-PARTY TECHNOLOGIES AND SERVICES
COULD LIMIT OUR ABILITY TO GENERATE REVENUES.
We have incorporated technology developed by third parties in certain of
the voice application services and products offered to our customers, including
the following:
- email servers which process both emails and voicemails;
- calendar and contact software;
- voice recognition software;
- text-to-speech software;
- the billing system; and
- network operations center servers, routers and other equipment.
We will continue to incorporate third-party technologies in future voice
application services and products. We have limited control over whether or when
these third-party technologies will be enhanced. In addition, our competitors
may acquire interests in these third parties or their technologies, which may
render the technology unavailable to us. If a third party fails or refuses to
timely develop, license or support technology necessary to our services or
products, market acceptance of our services or products could be adversely
affected. Moreover, if these third-party technologies fail or otherwise prove to
be not viable, it may have a significant impact on our ability to provide our
services and/or to generate revenues. In addition, we rely and will continue to
rely on services supplied by third parties such as telecommunications, Internet
access and power for services hosted in our network operations center. If these
third-party services fail to meet industry standards for quality and
reliability, market acceptance of our services could be adversely affected.
CONVERSION OF PREFERRED STOCK OR ISSUANCE OF OTHER SECURITIES WOULD
DILUTE CURRENT STOCKHOLDERS.
As of May 10, 2000, we have 50,000 shares of Series A preferred stock,
399 shares of Series D preferred stock, 350 shares of Series E preferred stock,
525 shares of Series F preferred stock, 1,500 shares of Series G preferred stock
and 2,200 shares of Series H preferred stock outstanding, which are convertible
in the aggregate into 19,119,664 shares of common stock. In addition, we have a
warrant to purchase up to an additional 500 shares of Series G preferred stock
and warrants to purchase an aggregate, as of May 10, 2000, of 2,785,596 shares
of common stock outstanding. We also have an equity line of credit arrangement
under which we could issue up to $25,750,000 in common stock. The holders of
common stock could experience substantial dilution to their investment upon
conversion of the preferred shares, exercise of the warrants, or drawdowns under
the equity line of credit arrangement. The number of shares of common stock
issuable upon the conversion of the Series D preferred stock and the Series F
preferred stock, upon exercise of the warrants issued in connection with the
Series B, Series C, Series D and Series H preferred stock transactions, and
pursuant to the equity line of credit arrangement depends in part on future
prices of our common stock on The Nasdaq National Market. The number of shares
of common stock issued pursuant to the equity line of credit arrangement depends
on the prices of common stock on The Nasdaq National Market shortly before the
date of issuance and sale. We cannot predict the price of the common stock in
the future. If the price of our common stock decreases over time, the number of
shares of common stock issuable upon conversion of the preferred stock, exercise
of the warrants issued in connection with the Series B, Series C, and Series D
preferred stock, and drawdowns under the equity line of credit will increase and
the holders of common stock would experience additional dilution of their
investment. Such dilution could cause the stock price of our common stock to
decrease further. A decrease in the stock price of our common stock could cause
our common stock to be delisted from The Nasdaq National Market. Our board of
directors may authorize issuance of up to 427,101 additional shares of preferred
stock that are convertible into common stock without any action by our
stockholders. In
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addition, our board of directors may authorize the sale of additional shares of
common stock or other equity securities that are convertible into common stock
without any action by our stockholders subject to the aggregate amount of
common stock authorized by our stockholders. The issuance and conversion of any
such preferred stock or equity securities would further dilute the percentage
ownership of our stockholders.
WE MAY BE REQUIRED TO REDEEM THE OUTSTANDING SERIES D PREFERRED STOCK,
SERIES F PREFERRED STOCK OR SERIES H PREFERRED STOCK, WHICH COULD SIGNIFICANTLY
DEPLETE OUR CASH RESERVES AND MATERIALLY AND ADVERSELY AFFECT OUR FINANCIAL
CONDITION.
The holders of the Series D preferred stock, the Series F preferred
stock and the Series H preferred stock have redemption rights if we fail to meet
the requirements of the documents governing each. As of May 10, 2000, 399 shares
of Series D preferred stock, 525 shares of the Series F preferred stock and
2,200 shares of Series H preferred stock were outstanding. The redemption value
of these shares could total as much as approximately $33.2 million. If we were
required to redeem these shares, such payments would deplete our cash reserves,
which could materially and adversely affect our financial condition. In
addition, such a decrease in our cash reserves could cause our common stock to
be delisted from The Nasdaq National Market. We cannot guarantee that we will be
able to meet all of the requirements necessary to avoid a redemption.
IF WE FAIL TO OBTAIN STOCKHOLDER APPROVAL OF THE SERIES G PREFERRED
STOCK TRANSACTION AS REQUIRED BY THE NASDAQ MARKETPLACE RULES AND OUR AGREEMENT
WITH GENERAL MOTORS, WE WOULD BE REQUIRED TO PAY GENERAL MOTORS A SIGNIFICANT
PENALTY THAT WOULD LIKELY HAVE AN ADVERSE AFFECT ON OUR FINANCIAL CONDITION.
We are required under The Nasdaq Marketplace Rules and our agreement
with General Motors, by and through its OnStar subsidiary, to obtain stockholder
approval of the sale or issuance of those shares of our common stock (or
securities convertible into common stock) equal to 20% or more of the
common stock or voting power outstanding before the issuance of the Series G
preferred stock upon (i) the conversion of our Series G preferred stock and (ii)
the exercise of the warrant for the purchase of shares of our Series G preferred
stock. If we do not obtain stockholder approval, we will be required, at our
election, either to pay to General Motors $7 million in cash or 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 General Magic. Failure to obtain stockholder
approval will likely adversely affect our financial condition, and/or result in
increased dilution to the holders of our common stock.
OUR COMMON STOCK MAY BE DELISTED FROM THE NASDAQ NATIONAL MARKET IF WE
ARE NOT ABLE TO DEMONSTRATE COMPLIANCE WITH THE CONTINUED LISTING REQUIREMENTS.
We are subject to the continued listing requirements of The Nasdaq
National Market. As of May 10, 2000, we were in compliance with Nasdaq's
continued listing requirements. In the event that we are not able to maintain
continued compliance with The Nasdaq National Market's "net tangible assets"
requirement or any other of its listing requirements, we would be subject to a
delisting process. In the event that we are delisted, we will seek to list our
common stock on other markets such as The Nasdaq Small Cap Market and The
American Stock Exchange, Inc. We cannot guarantee that we will be able to meet
the listing requirements of these or any other markets. In the event that we are
delisted from The Nasdaq National Market or are not able to list on any other
market, the ability to sell shares of our common stock will be adversely
affected.
OUR FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY COULD IMPAIR OUR
COMPETITIVE POSITION.
Our future success and ability to compete depends in part upon our
proprietary technology and our trademarks, which we attempt to protect under a
combination of patent, copyright, trademark and trade secret laws, as well as
with confidentiality procedures and contractual provisions. These legal
protections afford only limited protection and may be time-consuming and
expensive to obtain and/or maintain. Further, despite our efforts, we may be
unable to prevent third parties from infringing upon or misappropriating our
intellectual property.
We hold fourteen patents issued by the United States Patent and
Trademark Office ("PTO"). We have eight patent applications pending before the
PTO, as well as selected counterpart patent applications pending in foreign
jurisdictions. There is no guarantee that patents will be issued with respect to
our current or future patent applications. Any patents that are issued to us
could be invalidated, circumvented or challenged. If challenged, our patents
might not be upheld or their claims could be narrowed. Our intellectual property
may not be adequate to provide us with a competitive advantage or to prevent
competitors from entering the markets for our products or services.
Additionally, our competitors could independently develop non-infringing
technologies that are competitive with, equivalent to, and/or superior to our
technology. Monitoring infringement and/or misappropriation of intellectual
property can be difficult, and there is no guarantee that we would detect any
infringement or misappropriation of our proprietary rights. Even if we do detect
infringement or misappropriation of our proprietary rights, litigation to
enforce these rights could cause us to divert financial and other resources away
from our business operations. Further, we expect to license our products
internationally, and the laws of some foreign countries would not protect our
proprietary rights to the same extent as do the laws of the United States.
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OUR PRODUCTS MAY INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS,
AND RESULTING CLAIMS AGAINST US COULD BE COSTLY AND REQUIRE US TO ENTER INTO
DISADVANTAGEOUS LICENSE OR ROYALTY ARRANGEMENTS.
The software industry is characterized by the existence of a large
number of patents and frequent litigation based on allegations of patent
infringement and the violation of intellectual property rights. Although we
attempt to avoid infringing proprietary rights of others, third parties may
assert claims against us from time to time alleging infringement,
misappropriation or other violations of proprietary rights, whether or not such
claims have merit. Such claims can be time consuming and expensive to defend and
could require us to cease the use and sale of allegedly infringing products and
services, incur significant litigation costs and expenses, and develop or
acquire non-infringing technology or obtain licenses to the alleged infringing
technology. We may not be able to develop or acquire alternative technologies or
obtain such licenses on commercially reasonable terms.
SECURITY PROBLEMS IN OUR VOICE APPLICATION SERVICES OR PRODUCTS WOULD
LIKELY RESULT IN SIGNIFICANT LIABILITY AND REDUCED REVENUES.
Security vulnerabilities and weaknesses may be discovered in our voice
application services or products, in the licensed technology incorporated in our
voice application services or products, in our network operations center hosting
environment, or in the media by which end users access our voice application
services or products. Any such security problems may require us to expend
significant capital and other resources to alleviate the problems. In addition,
these problems could result in the loss or misuse of personal information,
including credit card numbers, and may limit the number of customers or
subscribers for our voice application services or products. A decrease in the
number of customers could lead to decreased revenues. These problems may also
cause interruptions or delays in the development of enhancements to our voice
application services and products and may result in lawsuits against us.
We will continue to incorporate security technologies in our voice
application services and products. However, such technologies may not be
adequate to prevent break-ins. In addition, weaknesses in the media by which
users access our voice application services and products, including the
Internet, land-line telephones, cellular phones and other wireless devices, may
compromise the security of the electronic information accessed. We intend to
continue to limit our liability to end users and to our customers and partners,
including liability arising from failure of the security technologies
incorporated into our services and products, through contractual provisions.
However, we may not successfully negotiate such limitations with all our
customers and partners, nor may such limitations eliminate liability. We do not
currently have liability insurance to protect against risks associated with
forced break-ins or disruptions.
ANY SOFTWARE DEFECTS IN OUR PRODUCTS COULD HARM OUR BUSINESS AND RESULT
IN LITIGATION.
Complex software products such as ours may contain errors, defects and
bugs. With the planned release of any product, we may discover these errors,
defects and bugs, and, as a result, our products may take longer than expected
to develop. In addition, we may discover that remedies for errors or bugs may be
technologically unfeasible. Delivery of products with undetected production
defects or reliability, quality or compatibility problems could damage our
reputation. Errors, defects or bugs could also cause interruptions, delays or a
cessation of sales to our customers. We could be required to expend significant
capital and other resources to remedy these problems. In addition, customers
whose businesses are disrupted by these errors, defects and bugs could bring
claims against us. Although our contracts typically contain provisions designed
to limit our exposure to liability claims, a claim brought against us, even if
unsuccessful, could be time-consuming, divert management's attention, result in
costly litigation and harm our reputation. Moreover, existing or future laws or
unfavorable judicial decisions could limit the enforceability of the limitation
of liability, disclaimer of warranty or other protective provisions contained in
our contracts.
A CLAIM FOR DAMAGES COULD MATERIALLY AND ADVERSELY AFFECT OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
We may be subject to claims for damages related to system errors and
other defects in the services we host for our customers or in our General Magic
branded services. Agreements with end users of these services typically contain
provisions designed to limit exposure to potential product liability claims.
However, these provisions may not be sufficient to protect us from liability.
Moreover, a claim brought against us, even if unsuccessful, could be
time-consuming, divert management's attention, result in costly litigation and
harm our reputation. We currently have liability insurance to protect against
certain risks associated with system errors and other defects in our services.
However, we cannot guarantee that such insurance will be sufficient.
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<PAGE> 10
WE DEPEND ON THE INTEGRITY AND RELIABILITY OF OUR SOFTWARE, COMPUTER
HARDWARE SYSTEMS AND NETWORK INFRASTRUCTURE, AND ANY INADEQUACIES MAY RESULT IN
SUBSTANTIAL INTERRUPTIONS TO OUR SERVICE.
Our ability to host services for our customers depends on the integrity
of our software, computer hardware systems and network infrastructure, and the
reliability of software and services supplied by our vendors, including
providers of telecommunications and electric power. We have encountered, and may
encounter in the future, errors in our software or our system design, or
inadequacies in the software and services supplied by our vendors. Any such
errors or inadequacies may result in substantial interruptions to our services
or those we host for our customers. Our errors may be expensive or difficult to
correct in a timely manner, and we may have little or no control over whether
any inadequacies in software or services supplied to us by third parties are
timely corrected, if at all.
OUR NETWORK OPERATIONS CENTER MAY NOT BE ABLE TO ACCOMMODATE SIGNIFICANT
INCREASES IN DEMAND, WHICH MAY RESULT IN A DECREASE IN REVENUES AND A DECLINE IN
OUR STOCK PRICE.
Since the launch of our myTalk service and the Excite Voicemail service,
we have also experienced interruptions or slow-downs in service due to increases
in the number of users served by our network operations center. In the event
that we experience sudden unplanned increases in the number of users of the
services hosted in our network operations center, our network operations center
may not be capable of meeting the resulting increase in demand.
OUR STOCK PRICE HAS BEEN EXTREMELY VOLATILE, AND EXTREME PRICE
FLUCTUATIONS COULD ADVERSELY AFFECT YOUR INVESTMENT.
The market price of our common stock has been extremely volatile. From
January 1, 2000 to March 31, 2000, the closing price of our common stock has
varied significantly from a high of $17.313 to a low of $4.031 per share.
Publicized events and announcements may have a significant impact on the
market price of our common stock. For example, shortfalls in our revenue or net
income, conversions of preferred stock into common stock, delays in development
of our services or products, disruptions in our services, or announcements of
partnerships, technological innovations or new products or services by our
competitors could have the effect of temporarily or permanently driving down the
price of our common stock. In addition, the stock market from time to time
experiences extreme price and volume fluctuations that particularly affect the
market prices for emerging and technology companies, such as ours. Such price
and volume fluctuations are often unrelated or disproportionate to the operating
performance of the affected companies. These broad market fluctuations may
adversely affect your ability to sell your shares at a price equal to or above
the price you purchased them. In addition, a decrease in the stock price of our
common stock could cause our common stock to be delisted from The Nasdaq
National Market.
DELAWARE LAW AND CERTAIN PROVISIONS OF OUR CHARTER DOCUMENTS MAY INHIBIT
A CHANGE OF CONTROL OF GENERAL MAGIC.
Delaware law and provisions of our charter documents may make it more
difficult for a third party to acquire, or may discourage a third party from
attempting to acquire, General Magic. We are subject to the anti-takeover
provisions of the Delaware General Corporation Law, which could delay a merger,
tender offer or proxy contest or make such a transaction more difficult. In
addition, provisions of our certificate of incorporation and bylaws may have the
effect of delaying or preventing a change in control or in management, or may
limit the price that certain investors may be willing to pay in the future for
shares of our common stock. These provisions include:
- authority to issue "blank check" preferred stock, which is preferred
stock that can be issued by the board of directors without prior
stockholder approval, with rights senior to those of common stock;
- prohibition on stockholder action by written consent;
- requirement that a two-thirds vote of the stockholders is required to
amend the bylaws; and
- advance notice requirements for submitting nominations for election to
the board of directors and for proposing matters that can be acted
upon by stockholders at a meeting.
Furthermore, the Series D preferred stock and the Series F preferred
stock provide holders rights to redemption of their Series D preferred stock or
Series F preferred stock, as the case may be, or penalty payments upon a change
in control. In addition, the documents governing the Series D preferred stock
and Series F preferred stock prohibit changes of control unless the surviving
entity assumes all of our obligations under the Series D preferred stock or
Series F preferred stock, as the case may be, and is a publicly
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<PAGE> 11
traded corporation traded on The Nasdaq National Market, NYSE or AMEX. All of
these rights could make an acquisition even more difficult.
OUR FACILITY IS LOCATED NEAR KNOWN EARTHQUAKE FAULTS, AND THE OCCURRENCE
OF AN EARTHQUAKE OR OTHER NATURAL DISASTER COULD CAUSE SIGNIFICANT DAMAGE TO OUR
FACILITY THAT MAY REQUIRE US TO CEASE OR CURTAIL OPERATIONS.
Our facility is located in the San Francisco Bay Area near known
earthquake faults and is vulnerable to damage from earthquakes. In October 1989,
a major earthquake that caused significant property damage and a number of
fatalities struck this area. We do not have redundant, multiple site capacity,
and so are also vulnerable to damage from other types of disasters, including
fire, floods, power loss, communications failures and similar events. Any damage
to our facility could lead to interruptions in the services hosted in our
network operations center and loss of subscriber information, and could
substantially if not totally impair our ability to operate our business. The
insurance we maintain may not be adequate to cover our losses resulting from
disasters or other business interruptions.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Risk Factors" and "About General Magic"
and elsewhere in this prospectus constitute forward-looking statements that
involve substantial uncertainties.
We have based these forward-looking statements on our current
expectations and projections about future events. In some cases, you can
identify forward-looking statements by terms such as "may," "hope," "will,"
"should," "expect," "plan," "anticipate," "intend," "believe," "estimate,"
"predict," "potential" or "continue," the negative of these terms or other
comparable terminology. The forward-looking statements contained in this
prospectus involve known and unknown risks, uncertainties and other factors that
may cause industry trends or our actual results, performance or achievements to
be materially different from any future trends, results, performance or
achievements expressed or implied by these statements. These factors include,
among others, our history of losses, our limited funding, the availability of
additional financing, the failure of the market for our voice application
services and products to develop, our ability to establish and maintain good
relationships with customers and partners, our dependence on a single customer
for a significant amount of our revenue and others listed under "Risk Factors,"
elsewhere in this prospectus, and in our Securities and Exchange Commission
filings.
We cannot guarantee future results, performance or achievements. We do
not intend to update this prospectus to conform any forward-looking statements
to actual results. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares offered
pursuant to this prospectus by the selling stockholders, and all proceeds will
go to the selling stockholders to be used for their own purposes.
ABOUT GENERAL MAGIC
We were incorporated in California in May 1990. We reincorporated in
Delaware in February 1995 and completed the initial public offering of our
common stock in February 1995. Our principal executive offices are located at
420 North Mary Avenue, Sunnyvale, California 94082, and our telephone number at
that location is (408) 774-4000.
General Magic, Inc. is a voice applications services provider that
enables businesses to give their customers voice access to information and
services, whether provided through customer interaction centers, over
telecommunications networks or through the Internet. We develop and deploy our
voice applications on our magicTalk(TM) communications platform and offer
hosting services for those applications in our state-of-the-art network
operations center.
Our principal target market is businesses with high volume customer
interactions, such as telecommunications service, customer relationship
management and e-commerce providers. We have also developed General Magic
branded services that demonstrate the attributes of our communications platform
and voice user interface technologies, and that have permitted us to evolve the
capabilities of the platform to meet the requirements of large scale
applications. However, we plan to focus on developing voice applications for the
business-to-business market, and on May 18, 2000 announced our plan to
discontinue the General Magic branded myTalk consumer service. Our
patent-pending communications platform and personality-rich voice user interface
technologies provide the foundation for all of our voice solutions and services.
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<PAGE> 12
In June 1999, Excite@Home launched the Excite Voicemail service, a free
advertising-supported service that allows Excite users to receive voicemail and
faxes in their Excite email accounts. Excite Voicemail employs our
communications platform and voice user interface technologies to guide callers
in leaving voicemail messages and faxes for registered Excite members. In
November 1999, in connection with the sale of Series G Convertible Preferred
Stock, we entered into a licensing and technology agreement with General Motors
Corporation through its subsidiary, the OnStar Corporation ("OnStar"). OnStar
has selected the magicTalk communications platform and custom voice user
interface for its OnStar Virtual Advisor that will provide hands-free
voice-activated access to Web-based information services in vehicles.
Although we have made significant progress in our strategy to develop
and market voice application services and products, we are subject to all of the
risks inherent in the establishment of a new business enterprise. To succeed, we
must, among other things, secure adequate financial and human resources to meet
our requirements; achieve market acceptance for our voice application services
and products; establish and maintain relationships with businesses with high
volume customer interactions; establish and maintain alliances with companies
that offer technology solutions for businesses with high volume customer
interactions; respond effectively to competitive developments; meet the
challenges inherent in the timely development and deployment of complex
technologies; generate sufficient revenues from our services and products to
permit us to operate profitably; and protect our intellectual property. Any
failure to achieve these objectives could have a material adverse effect on our
business, operating results and financial condition.
SELLING STOCKHOLDERS
The following table sets forth information with respect to the selling
stockholders as of May 10, 2000 and the shares of common stock beneficially
owned by each selling stockholder that may be offered pursuant to this
prospectus. Except as otherwise indicated, to our knowledge, all persons listed
below have sole voting and investment power with respect to their securities.
This information has been obtained from the selling stockholders.
<TABLE>
<CAPTION>
TOTAL SHARES
PREFERRED STOCK WARRANTS OF COMMON STOCK
-------------------------------- -------------------------------- ---------------------------------------
SHARES OF SHARES OF SHARES OF
UNDERLYING UNDERLYING SHARES OF COMMON STOCK
SHARES OF SHARES OF COMMON SHARES OF SHARES OF COMMON COMMON SHARES OF BENEFICIALLY
UNDERLYING COMMON STOCK UNDERLYING COMMON STOCK STOCK COMMON OWNED
COMMON STOCK AFTER THE COMMON STOCK AFTER THE BENEFICIALLY STOCK AFTER THE
SELLING STOCKHOLDER STOCK OFFERED OFFERING STOCK OFFERED OFFERING OWNED OFFERED OFFERING(1)
---------- --------- --------- ---------- ---------- ---------- ------------ --------- --------------
# %
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HFTP Investment LLC 1,215,736 1,262,981 -- 682,932 620,600 62,332 1,898,668 1,883,581 62,332 *
Halifax Fund, L.P. 4,901,585 1,071,356 3,870,306 884,776 526,440 358,336 5,786,361 1,597,796 4,228,642 7.6
Palladin Partners I, L.P. 276,685 60,971 217,995 38,284 29,960 8,324 314,969 90,931 226,319 *
Palladin Overseas
Fund Limited 160,294 34,840 126,757 21,504 17,120 4,384 181,798 51,960 131,141 *
The Gleneagles Fund
Company 474,618 104,522 374,006 59,306 51,360 7,946 533,924 155,882 381,952 *
Lancer Securities
(Cayman) Ltd. 160,294 34,840 126,757 18,901 17,120 1,781 179,195 51,960 128,538 *
Fisher Capital Ltd. 1,874,222 820,502 1,084,413 413,861 403,176 10,685 2,288,083 1,223,678 1,095,098 2.1
Wingate Capital Ltd. 1,148,867 442,479 722,941 233,452 217,424 16,028 1,382,319 659,903 738,969 1.4
TOTALS 10,212,301 3,832,491 6,523,175 2,353,016 1,883,200 469,816 12,565,317 5,715,691 6,992,991
</TABLE>
- --------------
* Less than 1%
(1) No selling stockholder may convert or exercise the Series D preferred
stock, the Series F preferred stock or the Series H preferred stock, or the
warrants owned by it if such conversion or exercise would result in that
selling stockholder, together with its affiliates, beneficially owning more
than 4.99% of the then outstanding common stock excluding the non-converted
portion of the preferred shares and the unexercised warrants.
NOTES REGARDING PREFERRED STOCK AND WARRANTS
The preferred stock referenced in the table represents Series D
Convertible Preferred Stock, Series F Convertible Preferred Stock and Series H
Convertible Preferred Stock.
The information relating to the number of shares underlying the
preferred stock and warrants assumes conversion or exercise as of May 10, 2000.
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NOTES REGARDING NUMBER OF SHARES TO BE OFFERED
The conversion price of the Series H preferred stock and the exercise
price of the warrants are subject to adjustment for events which cannot be
predicted by us at this time, including the length of time each Series H
preferred share is held. Consequently, the number of shares to be offered by the
selling stockholders as set forth in the table represents an estimate. The
actual number of shares of common stock issuable upon conversion of the Series H
preferred stock and exercise of warrants could be materially less or more.
Nevertheless, we have registered, and the number of shares offered by each
selling stockholder as set forth in the table includes:
- 103.88% of the common stock issuable upon conversion of the Series H
preferred stock held by such selling stockholder as of May 10, 2000.
- 100% of the common stock issuable upon exercise of the warrants issued
in connection with the Series H preferred stock held by such selling
stockholder as of May 10, 2000.
See "-- Relationships between the Selling Stockholders and Us."
NOTES REGARDING NUMBER OF SHARES OWNED AFTER OFFERING
Because the selling stockholders may offer all, some or none of their
common stock, we cannot provide a definitive estimate of the number of shares
that each selling stockholder will hold after the offering. The shares
beneficially owned after the offering column assumes the sale of all shares
offered. The percentage owned after the offering column is based on 51,376,405
shares of common stock outstanding as of May 10, 2000.
NOTES REGARDING BENEFICIAL OWNERSHIP
Except as set forth below, each of the selling stockholders has sole
voting and investment power with respect to all shares of General Magic common
stock shown as beneficially owned by it.
The number of shares of common stock set forth in the table as
underlying the preferred stock and the warrants or as beneficially owned by each
selling stockholder assumes conversion or exercise of all of the Series D
preferred stock, the Series F preferred stock and the Series H preferred stock
and the warrants held by such selling stockholder. However, no selling
stockholder may convert or exercise the Series D preferred stock, the Series F
preferred stock or the Series H preferred stock or the warrants owned by it if
such conversion or exercise would result in that selling stockholder, together
with its affiliates, beneficially owning more than 4.99% of the then outstanding
common stock excluding the non-converted portion of the preferred shares and the
unexercised warrants.
Promethean Investment Group L.L.C. is the general partner of Themis
Partners L.P. and the investment advisor for each of Heracles Fund and HFTP
Investment LLC. Consequently, Promethean has voting control and investment
discretion over securities of General Magic held by Themis, Heracles and HFTP.
As of May 10, 2000, Themis held 65,921 shares of common stock issuable upon the
exercise of warrants and Heracles held 81,543 shares of common stock issuable
upon the exercise of warrants. The ownership for each of Themis, Heracles and
HFTP does not include the ownership information for the other entities.
Promethean and each of Themis, Heracles and HFTP disclaim beneficial ownership
of the securities of General Magic held by all other entities controlled by
Promethean.
The Palladin Group L.P. or an affiliate is the investment manager for
each of Halifax Fund, L.P., Palladin Partners I, L.P., Palladin Overseas Fund
Limited, The Gleneagles Fund Company, and Lancer Securities (Cayman) Ltd.
Consequently, The Palladin Group has voting control and investment discretion
over securities held by such entities. The ownership for each such entity does
not include the ownership information for the other entities. The Palladin Group
and each such entity disclaim beneficial ownership of the securities of General
Magic held by all other entities over which The Palladin Group has voting
control and investment discretion.
The Palladin Group L.P. is under common control with Cripple Creek
Securities, LLC. See "-- Relationships between the Selling Stockholders and Us"
below.
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<PAGE> 14
Citadel Limited Partnership is the trading manager of each of Fisher
Capital Ltd. and Wingate Capital Ltd. Consequently, Citadel has voting control
and investment discretion over securities held by such entities. The ownership
for each such entity does not include the ownership information for the other
entities. Citadel and each such entity disclaim beneficial ownership of the
securities of General Magic held by all other entities controlled by Citadel.
RELATIONSHIPS BETWEEN THE SELLING STOCKHOLDERS AND US
None of the selling stockholders has held any position or office or has
had any other material relationship with General Magic or any of our affiliates
within the past three years other than as a result of its ownership of shares of
our securities. This information is based upon information provided by the
selling stockholders.
In April 2000, we issued to the selling stockholders an aggregate of
2,200 shares of our Series H Convertible Preferred Stock and warrants to acquire
1,883,200 shares of common stock pursuant to a securities purchase agreement. We
are advised by each selling stockholder that it purchased the Series H preferred
stock and warrants in the ordinary course of its business and, at the time such
selling stockholder purchased the Series H preferred stock and warrants, it was
not a party to any agreement or other understanding to distribute the
securities, directly or indirectly. In connection with the issuance of our
Series H preferred stock, we paid approximately $660,000 to Promethean Capital
Group, LLC pursuant to a Placement Agent Agreement providing for the payment of
a 3% commission on the total dollar value of the subscriptions obtained by
Promethean Capital to purchase shares of our Series H preferred stock, or
$22,000,000. Promethean Capital served as the exclusive sales agent for the
Series H offering.
The terms of the warrants issued in April 2000 are as follows:
The warrants are immediately exercisable for an aggregate of 1,883,200
shares of our common stock at an exercise price of $5.84. They have a term of
three years. The number of shares issuable upon exercise of the warrants will
change in the event of any of the following:
- stock splits, stock dividends or similar transactions;
- our issuance or sale or deemed issuance or sale of shares of common
stock at a price less than the then current exercise price, which will
trigger certain customary antidilution protections contained in the
warrant, which is filed as an exhibit to the registration statement of
which this prospectus is a part; and
- our failure to have declared effective within 75 days after issuance
and to maintain, thereafter, the registration statement relating to
shares issuable upon exercise of the warrants.
The terms of the Series H preferred shares are as follows:
Dividends. The Series H preferred shares shall not bear dividends.
Conversion Rights. Subject to certain limitations that relate to the
number of shares of common stock that a holder of Series H preferred shares or
its affiliates may beneficially own or be deemed to beneficially own, each
Series H preferred share is convertible, at the option of the holder, into that
number of shares of common stock obtained by dividing the conversion amount by
the conversion price. The conversion amount of a Series H preferred share equals
$10,000 plus an amount determined by the following formula: (.02)(N/365)
($10,000), where N equals the number of days from April 20, 2000 to April 20,
2002 or the conversion date, whichever is earlier.
Conversion Price. The conversion price of each Series H preferred share
as of May 10, 2000 was $5.97.
Anti-Dilution Adjustments to Conversion Price. The Series H conversion
price may change in the event of stock splits, stock dividends or similar
transactions.
Conversion at Our Option. We will have a right to require holders to
convert all of the outstanding Series H preferred shares the later of April 20,
2001 or the date on which this registration statement is declared effective by
the Securities and Exchange Commission if:
- this registration statement is effective and available for the sale of
all conversion shares on each day during the 20-trading day period
prior to the conversion; and
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<PAGE> 15
- we have not delayed the disclosure of material non-public information
concerning our company that, in the opinion of our counsel, is
required to be disclosed, on any day during the 20-trading day period
prior to the conversion.
Automatic Conversion/Redemption. The outstanding Series H preferred
shares will automatically convert into common stock on April 20, 2002, unless we
elect to redeem the shares at that time at a price approximately equal to the
conversion amount.
Right of Participation. Subject to certain limitations, from October 21
to December 31, 2000, the holders of the Series H preferred shares have a right
to participate in the following types of securities issuances by us during that
period by purchasing 50% of the securities to be so issued:
- convertible securities that are convertible into or exchangeable for
common stock at a conversion price which may vary with the market
price of the common stock;
- shares of common stock issued at a price which is less than the
conversion price on the issuance date of such shares; and
- convertible securities that are convertible into or exchangeable for
common stock at a conversion price which is less than the conversion
price on the issuance date of such shares.
Our Redemption Rights Upon a Change of Control. We may redeem all of the
Series H preferred shares at a per share price equal to approximately 115% of
the conversion amount upon a consolidation, merger or other business combination
resulting in a change of control if:
- this registration statement is effective and available for the sale of
all conversion shares on each day during the 10 day period prior to
the redemption;
- we have delivered all shares of common stock upon conversion on a
timely basis; and
- we have otherwise satisfied our obligations and are not in default
under the documents governing the rights of the Series H preferred
shares.
Redemption Rights of Holders Upon a Triggering Event. The Series H
holders are entitled to require us to redeem some or all of their shares at a
per share price equal to the greater of 130% of the conversion amount and a
price based upon a multiple of the then applicable conversion rate and the
closing bid prices of the Company's common stock on certain dates, at the time
of any of the following events: - our notification to any holder of Series H
preferred shares of our intention not to comply with proper requests for
conversion; or
- our failure to timely convert any of the Series H preferred shares.
Registration Delay Payments. We are obligated under the terms of a
Registration Rights Agreement to prepare, and, as soon as practicable, file with
the SEC a registration statement covering the resale of all of the shares which
may be issued when the Series H preferred shares are converted and the warrants
are exercised. If this registration statement is not declared effective by the
SEC by July 4, 2000, or if sales cannot be made under this registration
statement after it has been declared effective, then in addition to any other
relief that the holders of Series H preferred shares may be entitled to, we must
pay to them an amount in cash per share held equal to:
- $10,000 multiplied by
- the sum of
(a) .00067, for each day that this registration statement is not
declared effective by the SEC after July 4, 2000, plus
(b) the product of (x) .00067 multiplied by (y) the number of days
after the date this registration statement has been declared
effective by the SEC that it is not available for sales of at
least all of the conversion shares.
We may, however, delay for 15 consecutive calendar days, but no more
than 45 calendar in the aggregate during any consecutive 365-day period, the
disclosure of material non-public information concerning our company that, in
the opinion of our counsel, is required to be disclosed, provided we notify the
holders of the Series H preferred shares of our doing so. Such a delay in
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<PAGE> 16
registration is allowed under the Registration Rights Agreement and will not
create a right of payment for the holders of the Series H preferred shares.
If we are required to make registration delay payments, we must make
these payments within five business days of (i) the first day of the month in
which the delay or unavailability of registration occurred, or, if earlier (ii)
the date on which the delay or unavailability of registration is cured. If we
fail to make these payments in a timely manner, then our payment obligation will
bear interest at a rate of 1.5% per month, or the maximum rate permitted by law,
pro rated for partial months. We must make these payments in cash unless the
holder elects to have the amounts due added to the conversion amount for the
holder's shares. If we fail to make these payments within 15 days of their due
date, then each Series H holder has the right to require us to issue to it
common stock in lieu of these payments in an amount equal to:
- the quotient of
(a) all registration delay payments due, plus any interest that
accrued on them, divided by
(b) the lowest closing bid price of our common stock during the
period beginning on the date of the defect in registration that
gave rise to a right of receipt of registration delay payments
and ending on the day that we receive notice of election to
receive common stock.
Voting Rights. Holders of Series H preferred shares generally have no
voting rights, except where required by law. However, the vote of two-thirds of
the then outstanding Series H preferred shares is required to change their
powers, designations, preferences and rights or to issue Series H preferred
shares not provided for initially in the Series H financing transaction.
Liquidation Rights. In the event we liquidate, dissolve or wind up, we
must pay the Series H holders an amount per share equal to the conversion
amount, or $10,000 per share plus an amount determined by the following formula:
(.02)(N/365)($10,000), where N equals the number of days form April 20, 2000 to
April 20, 2002 or the conversion date, whichever is earlier. We must pay the
Series H holders before we pay the holders of common stock.
The summary set forth above is not intended to be a complete description
of all of the terms of the documents governing the Series H preferred shares and
the warrants. Please refer to the copies of the relevant documents filed as
exhibits to our Current Report on Form 8-K filed with the SEC on March 31, 2000.
In March 1999, we issued to the selling stockholders an aggregate of
1,685 shares of our Series D Convertible Preferred Stock and warrants to
purchase an aggregate of 126,375 shares of common stock pursuant to a securities
purchase agreement. In September 1999, the selling stockholders exchanged an
aggregate of 842 shares of the Series D preferred stock for 842 shares of our
Series F Convertible Preferred Stock. In connection with the issuance of the
Series H preferred shares, the holders of Series D and Series F preferred stock
agreed to convert all of their shares of Series D and Series F preferred stock
into shares of our common stock by October 23, 2000 provided that the price of
our common stock does not fall below $4.00 a share. This conversion date will be
extended for Palladin Partners I., L.P., Palladin Overseas Fund, Ltd., The
Gleneagles Fund Company and Lancer Securities, Ltd. if we issue a put notice to
Cripple Creek Securities, LLC under our equity line of credit arrangement with
them, which is described in further detail below.
Previously, we issued 5 1/2% Cumulative Convertible Series B Preferred
Stock and Series C Convertible Preferred Stock to some of the selling
stockholders. As of the date of this prospectus, all of the shares of Series B
preferred stock and Series C preferred stock have been converted into our common
stock.
Effective July 1999, we entered into a Common Stock Investment
Agreement, which provides for an equity line of credit arrangement, with Cripple
Creek Securities, LLC. Cripple Creek is under common control with the Palladin
Group, L.P. The equity line of credit is available to us during the period
beginning August 25, 1999 and ending August 24, 2001. During that period, we may
require Cripple Creek to purchase, from time to time, an aggregate of up to
$20,000,000 of our common stock in increments of up to $5,000,000. In addition,
pursuant to a March 10, 2000 amendment, Cripple Creek has the right to purchase
in its sole discretion up to 100% of each increment requested by us, up to an
aggregate of an additional $6,000,000 of common stock during the term of the
equity line of credit. However, there are numerous conditions on our right to
draw down under the equity line, and there can be no assurance that we will be
able to draw down on the line in an amount totaling $20,000,000, if at all. On
November 23, 1999, we sold 125,000 shares of its common stock at $2.00 per share
for an aggregate purchase price of $250,000 under the equity line of credit
pursuant to a draw down notice that we delivered on September 10, 1999. The
summary set forth above is not intended to be a complete description of all of
the terms of the documents governing the equity line of credit. Please refer to
the copies of the relevant documents filed as exhibits to our Annual Report on
Form 10-K filed with the SEC on March 30, 2000.
15
<PAGE> 17
PLAN OF DISTRIBUTION
The selling stockholders or their respective pledgees, donees,
transferees or other successors in interest may, from time to time, sell all or
a portion of the shares on The Nasdaq National Market, in privately negotiated
transactions or otherwise. Shares may be sold at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
such market prices or at negotiated prices. The shares may be sold by the
selling stockholders by one or more of the following methods, without
limitation:
- block trades in which the broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
- purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
- an exchange distribution in accordance with the rules of such
exchange;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
- privately negotiated transactions;
- short sales;
- through the writing of options on the shares;
- in one or more underwritten offerings on a firm commitment or best
effort basis; and
- a combination of any such methods of sale.
In effecting sales, brokers and dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate.
Broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share. To the extent such
broker-dealer is unable to do so acting as agent for a selling stockholder, to
purchase as principal any unsold shares at the stipulated price. Broker-dealers
who acquire shares as principals may thereafter resell such shares from time to
time in transactions in The Nasdaq National Market at prices and on terms then
prevailing at the time of sale, at prices related to the then-current market
price or in negotiated transactions. Broker-dealers may use block transactions
and sales to and through broker-dealers, including transactions of the nature
described above. The selling stockholders may also sell the shares in accordance
with Rule 144 under the Securities Act of 1933, as amended, rather than pursuant
to this prospectus.
From time to time, one or more of the selling stockholders may pledge,
hypothecate or grant a security interest in some or all of the shares owned by
them. The pledgees, secured parties or persons to whom such securities have been
hypothecated will, upon foreclosure in the event of default, be deemed to be
selling stockholders. The number of a selling stockholder's shares offered under
this prospectus will decrease as and when it takes such actions. The plan of
distribution for such selling stockholder's shares will otherwise remain
unchanged. In addition, a selling stockholder may, from time to time, sell short
the common stock of General Magic, and in such instances, this prospectus may be
delivered in connection with such short sales and the shares offered under this
prospectus may be used to cover such short sales.
To the extent required under the Securities Act of 1933, as amended, the
aggregate amount of selling stockholders' shares of common stock being offered
and the terms of the offering, the names of any such agents, brokers, dealers or
underwriters and any applicable commission with respect to a particular offer
will be set forth in an accompanying prospectus supplement. Any underwriters,
dealers, brokers or agents participating in the distribution of the common stock
may receive compensation in the form of underwriting discounts, concessions,
commissions or fees from a selling stockholder and/or purchasers of selling
stockholders' shares of common stock, for whom they may act (which compensation
as to a particular broker-dealer might be in excess of customary commissions).
The selling stockholders and any broker-dealers or agents that
participate with the selling stockholders in sales of the shares may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933, as
amended, in connection with such sales. In such event, any commissions received
by such broker-dealers or agents and any profit on the resale of the shares
purchased by them may be deemed to be an underwriting commission or discount
under the Securities Act of 1933, as amended.
16
<PAGE> 18
A selling stockholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the common
stock in the course of hedging the positions they assume with such selling
stockholder, including, without limitation, in connection with distributions of
the common stock by such broker-dealers. A selling stockholder may enter into
option or other transactions with broker-dealers that involve the delivery of
the shares offered hereby to the broker-dealers, who may then resell or
otherwise transfer such shares. A selling stockholder may also loan or pledge
the shares offered hereby to a broker-dealer and the broker-dealer may sell the
shares offered hereby so loaned or upon a default may sell or otherwise transfer
the pledged shares offered hereby.
The selling stockholders and any other persons participating in the sale
or distribution of the shares will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, which provisions may limit the timing of purchases and sales of any
of the shares by the selling stockholders or any other such person. The
foregoing may affect the marketability of the shares.
We have agreed to indemnify in certain circumstances the selling
stockholders and the broker-dealers and agents who may be deemed to be
underwriters, if any, of the securities covered by the registration statement,
against certain liabilities, including liabilities under the Securities Act of
1933, as amended. The selling stockholders have agreed to indemnify in certain
circumstances General Magic against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
The shares of common stock were originally issued to the selling
stockholders pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended, provided by Section 4(2) thereof. We agreed
to register the common stock under the Securities Act of 1933, as amended.
LEGAL MATTERS
The validity of the shares of General Magic common stock covered by this
Prospectus will be passed upon by Gibson, Dunn & Crutcher LLP, Los Angeles,
California.
EXPERTS
The consolidated financial statements of General Magic, Inc. as of
December 31, 1999 and for each of the years in the three-year period ended
December 31, 1999, and for the period from May 1, 1990 (inception) to December
31, 1999 have been incorporated herein by reference and in the registration
statement in reliance upon the report of KPMG LLP, independent auditors,
incorporated herein by reference and upon the authority of said firm as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION ABOUT GENERAL MAGIC
We have filed with the Securities and Exchange Commission a Registration
Statement on Form S-3 under the Securities Act that registers the securities
covered by this prospectus. The registration statement, including the attached
exhibits and schedules, contains additional relevant information about us and
our common stock. The rules and regulations of the SEC allow us to omit certain
information included in the registration statement from this prospectus and this
prospectus does not contain all of the information set forth in the registration
statement. You should read the registration statement for further information
about us and our common stock.
In addition, we file reports, proxy statements and other information
with the SEC under the Securities Exchange Act of 1934. You may read and copy
this information at the following locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like us, who file
electronically with the SEC. The address of that site is http://www.sec.gov.
17
<PAGE> 19
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be a part of this prospectus, except
for any information that is superseded by information that is included directly
in this document.
This prospectus incorporates by reference the documents listed below
that we have previously filed with the SEC. They contain important information
about us and our financial results.
OUR SEC FILINGS:
1. Our Annual Report on Form 10-K for the year ended December 31, 1999,
filed with the Securities and Exchange Commission on March 30, 2000.
2. Our Current Report on Form 8-K filed with the Securities and Exchange
Commission on March 31, 2000.
3. Our Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on May 15, 2000.
4. Our Definitive Proxy Statement on Form DEF14 filed with the
Securities and Exchange Commission on May 12, 2000.
5. Amendment No. 1 to our Annual Report on Form 10-K, filed with the
Securities and Exchange Commission on Form 10-K/A on April 28, 2000.
6. Our Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 22, 2000.
7. The description of the common stock contained in our Registration
Statement on Form 8-A filed under the Securities Exchange Act of
1934, as amended, including any amendment or report filed for the
purpose of updating such description.
We also incorporate by reference any documents that we may file with the
SEC after the date of this prospectus until such time as all the shares of
common stock covered by this prospectus have been sold. These documents could
include periodic reports, such as Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K, as well as proxy statements.
You can obtain any of the documents incorporated by reference in this
document through us or from the SEC through the SEC's web site at the address
described above. Documents incorporated by reference are available from us
without charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit in this prospectus. You can
obtain documents incorporated by reference in this prospectus by requesting them
from us in writing or by telephone at the following address:
General Magic, Inc.
Investor Relations
420 North Mary Avenue
Sunnyvale, California 94086
Telephone: (408) 774-4000
If you request any incorporated documents from us, we will mail them to
you by first class mail, or another equally prompt means, within one business
day after we receive your request.
We have not authorized anyone to give any information or make any
representation about General Magic that is different from, or in addition to,
that contained in this prospectus or in any of the materials that we've
incorporated into this document. Therefore, if anyone does give you information
of this sort, you should not rely on it. If you are in a jurisdiction where
offers to sell, or solicitations of offers to purchase, the securities offered
by this document or the solicitation of proxies is unlawful, or if you are a
person to whom it is unlawful to direct these types of activities, then the
offer presented in this document does not extend to you. The information
contained in this document speaks only as of the date of this document unless
the information specifically indicates that another date applies.
18
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable in
connection with the sale and distribution of the securities being registered,
other than underwriting discounts and commissions. All of the amounts shown are
estimates, except for the SEC registration fee:
<TABLE>
<CAPTION>
AMOUNT
ITEM TO BE PAID
- ----------------------------------------------------------------------------- -----------
<S> <C>
SEC Registration fee........................................................ $ 4,645
Nasdaq filing fee........................................................... 17,500
Accounting fees and expenses................................................ 20,000
Legal fees and expenses..................................................... 10,000
Printing and engraving expenses............................................. 2,500
Miscellaneous............................................................... --
-------
Total....................................................................... $54,645
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits a
corporation to include in its charter documents and in agreements with its
directors and officers provisions expanding the scope of indemnification beyond
that specifically provided by the Delaware law. The Registrant's Bylaws provide
that the Registrant shall indemnify to the full extent authorized by law any
person made or threatened to be made a party to an action or a proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he or she, his or her testator or intestate was or is a director, officer
or employee of the Registrant or any predecessor of the Registrant or serves or
served any other enterprise as a director, officer or employee at the request of
the Registrant or a predecessor of the Registrant. The Registrant's Bylaws also
provide that the Registrant may enter into one or more agreements with any
person which provides for indemnification greater or different than that
provided in such Bylaws. We have entered into such indemnification agreements
with our directors and officers.
The Registrant maintains insurance on behalf of any person who is a
director or officer against any loss arising from any claim asserted against him
or her and incurred by him or her in any such capacity, subject to certain
exclusions.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Registrant in which
indemnification is being sought nor is the Registrant aware of any threatened
litigation that may result in a claim for indemnification by any director,
officer, employee or other agent of the Registrant.
See also the undertakings set out in response to Item 17 herein.
II-1
<PAGE> 21
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ---------- -------------
<S> <C>
3.1 Certificate of Designations, Preferences and Rights of Series H
Convertible preferred Stock of General Magic, Inc. is incorporated
by reference to Exhibit 4.3 of the Registrant's current report on
Form 8-K filed with the Securities and Exchange Commission on March
31, 2000.
4.1 Securities Purchase Agreement, dated as of March 29, 2000, by and
among General Magic, Inc., a Delaware corporation, and the investors
listed on the Schedule of Buyers attached thereto is incorporated by
reference to Exhibit 4.1 of the Registrant's current report on Form
8-K filed with the Securities and Exchange Commission on March 31,
2000.
4.2 Conversion Agreement, dated as of March 29, 2000, by and among
General Magic, Inc., a Delaware Corporation, and the investors that
are signatories thereto is incorporated by reference to Exhibit 4.2
of the Registrant's current report on Form 8-K filed with the
Securities and Exchange Commission on March 31, 2000.
4.3 Registration Rights Agreement, dated as of March 29, 2000, by and
among General Magic, Inc., a Delaware corporation, and the investors
that are signatories thereto is incorporated herein by reference to
Exhibit 4.4 of the Registrant's current report on Form 8-K filed
with the Securities and Exchange Commission on March 31, 2000.
4.4 Form of Warrant to Purchase Common Stock of General Magic, Inc. is
incorporated herein by reference to Exhibit 4.5 of the Registrant's
current report on Form 8-K filed with the Securities and Exchange
Commission on March 31, 2000.
5.1 Opinion of Gibson Dunn & Crutcher LLP.
23.1 Consent of KPMG LLP, independent auditors
23.2 Consent of Gibson, Dunn & Crutcher LLP (included in its opinion
filed as Exhibit 5.1).
24.1 Power of Attorney (included in Signature Page contained in Part II).
</TABLE>
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement; PROVIDED,
HOWEVER, that paragraphs (A)(1)(i) and (A)(1)(ii) do not
apply if the information required to be
II-2
<PAGE> 22
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
C. The undersigned Registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or
Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3
of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent
or given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such interim
financial information.
D. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant in the successful
defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
E. The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Francisco, State of California on May 26, 2000.
GENERAL MAGIC, INC.
By: /s/ STEVEN MARKMAN
----------------------------------
Steven Markman
President, Chief Executive Officer
and Chairman of the Board of
Directors
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Steven Markman and Rose M. Marcario, and
each of them, as his or her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all amendments
(including post effective amendments) to this Registration Statement on Form
S-3, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or his or her substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title
---------- -----
<S> <C>
/s/ STEVEN MARKMAN Chairman of the Board, Chief Executive Officer May 26, 2000
- ---------------------------------------------- and Director (Principal Executive Officer)
Steven Markman (Acting Principal Financial and Accounting
Officer)
/s/ ROSE M. MARCARIO Chief Financial Officer May 26, 2000
- ---------------------------------------------- (Principal Financial and Accounting Officer)
Rose M. Marcario
/s/ ELIZABETH A. FETTER
- ---------------------------------------------- Director May 26, 2000
Elizabeth A. Fetter
/s/ PHILIP D. KNELL
- ---------------------------------------------- Director May 26, 2000
Philip D. Knell
- ---------------------------------------------- Director
Tom D. Seip
/s/ DENNIS F. STRIGL
- ---------------------------------------------- Director May 26, 2000
Dennis F. Strigl
/s/ SUSAN G. SWENSON
- ---------------------------------------------- Director May 26, 2000
Susan G. Swenson
- ---------------------------------------------- Director
Chester A. Huber, Jr.
</TABLE>
II-4
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ----------- -------------
<S> <C>
3.1 Certificate of Designations, Preferences and Rights of Series H
Convertible preferred Stock of General Magic, Inc. is incorporated
by reference to Exhibit 4.3 of the Registrant's current report on
Form 8-K filed with the Securities and Exchange Commission on March
31, 2000.
4.1 Securities Purchase Agreement, dated as of March 29, 2000, by and
among General Magic, Inc., a Delaware corporation, and the investors
listed on the Schedule of Buyers attached thereto is incorporated by
reference to Exhibit 4.1 of the Registrant's current report on Form
8-K filed with the Securities and Exchange Commission on March 31,
2000.
4.2 Conversion Agreement, dated as of March 29, 2000, by and among
General Magic, Inc., a Delaware Corporation, and the investors that
are signatories thereto is incorporated by reference to Exhibit 4.2
of the Registrant's current report on Form 8-K filed with the
Securities and Exchange Commission on March 31, 2000.
4.3 Registration Rights Agreement, dated as of March 29, 2000, by and
among General Magic, Inc., a Delaware corporation, and the investors
that are signatories thereto is incorporated herein by reference to
Exhibit 4.4 of the Registrant's current report on Form 8-K filed
with the Securities and Exchange Commission on March 31, 2000.
4.4 Form of Warrant to Purchase Common Stock of General Magic, Inc. is
incorporated herein by reference to Exhibit 4.5 of the Registrant's
current report on Form 8-K filed with the Securities and Exchange
Commission on March 31, 2000.
5.1 Opinion of Gibson Dunn & Crutcher LLP.
23.1 Consent of KPMG LLP, independent auditors
23.2 Consent of Gibson, Dunn & Crutcher LLP (included in its opinion
filed as Exhibit 5.1).
24.1 Power of Attorney (included in Signature Page contained in Part II).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
May 25, 2000
(310) 551-8800 C 35473-00001
General Magic, Inc.
420 North Mary Avenue
Sunnyvale, CA 94086
Re: Registration Statement on Form S-3 of General Magic, Inc.
Ladies and Gentlemen:
We refer to the registration statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
by General Magic, Inc., a Delaware corporation (the "Company"), with respect to
the proposed offering by certain selling stockholders of the Company named in
the Registration Statement of up to 5,715,691 shares (the "Shares") of the
common stock of the Company, $.001 par value per share, issuable upon the
conversion of the Company's Series H Convertible Preferred Stock (the "Preferred
Stock") and upon the exercise of certain warrants of the Company, dated April
20, 2000, for the purchase of up to an aggregate of 1,883,200 shares of the
Company's common stock (the "Warrants").
As legal counsel for the Company, we have examined the proceedings taken
and are familiar with the proceedings proposed to be taken by you in connection
with the issuance of the Shares. We have examined the originals or certified
copies of such corporate records, certificates of officers of the Company and/or
public officials and such other documents and have made such other factual and
legal investigations as we have deemed relevant and necessary as the basis for
the opinions set forth below. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as conformed or photostatic copies and the authenticity of the originals of
such copies.
<PAGE> 2
General Magic, Inc.
May 25, 2000
Page 2
Based on our examination mentioned above, subject to the assumptions stated
above and relying on the statements of fact contained in the documents that we
have examined, we are of the opinion that (a) the Shares issuable upon
conversion of the Preferred Stock will be duly and validly issued, fully paid
and non-assessable when issued upon conversion of the Preferred Stock pursuant
to the terms of such Preferred Stock and (b) the Shares issuable upon exercise
of the Warrants will be duly and validly issued, fully paid and non-assessable
when issued and paid for pursuant to the terms of such Warrants.
We are admitted to practice in the State of California and are not admitted
to practice in the State of Delaware. However, for the limited purposes of our
opinion set forth above, we are generally familiar with the General Corporation
Law of the State of Delaware (the "DGCL") as presently in effect and have made
such inquiries as we consider necessary to render this opinion with respect to a
Delaware corporation. This opinion letter is limited to the laws of the State of
California and, to the limited extent set forth above, the DGCL, as such laws
presently exist and to the facts as they presently exist. We express no opinion
with respect to the effect or applicability of the laws of any other
jurisdiction. We assume no obligation to revise or supplement this opinion
letter should the laws of such jurisdictions be changed after the date hereof by
legislative action, judicial decision or otherwise.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the section captioned
"Legal Matters" in the prospectus contained in the Registration Statement. In
giving this consent, we do not admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act or the General
Rules and Regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ GIBSON, DUNN & CRUTCHER
---------------------------
Gibson, Dunn & Crutcher LLP
RCH/MBM
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
General Magic, Inc.:
We consent herein to incorporation by reference in the registration statement to
be filed on or about May 25, 2000 on Form S-3 of General Magic, Inc. of our
report dated January 28, 2000, relating to the consolidated balance sheets of
General Magic, Inc. and subsidiary (a development stage enterprise) as of
December 31, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for each of the years
in the three-year period ended December 31, 1999, and for the period from May 1,
1990 (inception) to December 31, 1999, which report appears in the December 31,
1999, annual report on Form 10-K/A of General Magic, Inc., and to the reference
of our firm under the heading "Experts" in the Prospectus.
/s/ KPMG LLP
Mountain View, California
May 25, 2000
