-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EGmgRgFdQ+Y4o4Qm57uBEAh0qzTqEFHHMNKzJ/oGhjVIEsCyVpCnFhoyotlam4K5 tEe8Z7xLPpPfxn8vBbHv9w== 0000950131-99-006763.txt : 19991221 0000950131-99-006763.hdr.sgml : 19991221 ACCESSION NUMBER: 0000950131-99-006763 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19991220 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL MAGIC INC CENTRAL INDEX KEY: 0000933524 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 770250147 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-45293 FILM NUMBER: 99777742 BUSINESS ADDRESS: STREET 1: 420 N MARY AVE CITY: SUNNYVALE STATE: CA ZIP: 94086 BUSINESS PHONE: 4087744000 MAIL ADDRESS: STREET 1: 420 N MARY AVENUE CITY: SUNNYVALE STATE: CA ZIP: 94086 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL MOTORS CORP CENTRAL INDEX KEY: 0000040730 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 380572515 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 100 RENAISSANCE CTR CITY: DETROIT STATE: MI ZIP: 48265-1000 BUSINESS PHONE: 3135565000 MAIL ADDRESS: STREET 1: 3044 W GRAND BOULEVARD CITY: DETROIT STATE: MI ZIP: 48202-3091 SC 13D 1 SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Schedule 13D Under the Securities Exchange Act of 1934 (Amendment No. __________)* General Magic, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 370253 10 6 - -------------------------------------------------------------------------------- (CUSIP Number) Kimberly K. Hudolin, Esq. General Motors Legal Staff New Center One Building Mail Code: 482-208-835 3031 West Grand Boulevard Detroit, Michigan 48202 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 9, 1999 ------------------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of (S)(S)240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [_]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See (S)240.13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ----------------------- --------------------- CUSIP No. 370253 10 6 13D Page 2 of 8 Pages - ----------------------- --------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY). General Motors Corporation FEIN No. 38-0572515 - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) 2 (a) [_] (b) [_] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (SEE INSTRUCTIONS) 4 WC - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT 5 TO ITEMS 2(D) or 2(E) [_] - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 11,876,484 SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 0 OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 11,876,484 PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 0 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 11,876,484 - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (SEE INSTRUCTIONS) [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 22.1% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 CO - ------------------------------------------------------------------------------ Item 1. Security and Issuer The class of equity securities to which this statement relates is the common stock, par value $.001 per share (the "Common Stock") of General Magic, Inc. ("General Magic" or "Issuer") with its principal executive offices at 420 North Mary Avenue, Sunnyvale, CA 94086. Item 2. Identify and Background (a) This Statement is filed by General Motors Corporation, a Delaware corporation ("General Motors" or "GM"). (b) GM's business address is 100 Renaissance Center, Detroit, Michigan 48243-7301. The names, business addresses and principal businesses of each of the directors and executive officers of GM are set forth on Schedule I hereto and incorporated by reference herein. (c) General Motors is engaged in the design, manufacturing and marketing of cars, trucks, locomotives, and heavy duty transmissions and related parts and accessories, and financing and insurance operations. (d) During the past five years, neither GM nor, to the best of its knowledge, any of its executive officers or directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the past five years, neither GM nor, to the best of its knowledge, any of its executive officers or directors has been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceedings was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) To the best knowledge of GM, each of its executive officers and directors is a United States citizen, other than Nobuyuki Idei, who is a citizen of Japan, Percy N. Barnevik, who is a citizen of Sweden, and Eckhard Pfeiffer, who is a citizen of Germany. Item 3. Source and Amount of Funds or Other Consideration General Motors purchased 1,500 shares of General Magic's voting, non- redeemable Series G Convertible Preferred Stock (the "Series G Preferred") for $15,000,000, and the Warrant (as described in Item 4) for a purchase price of $1,000.00. The source of such consideration was cash on hand. Item 4. Purpose of Transaction GM has invested $15,001,000 in General Magic in exchange for 1,500 shares of Series G Preferred, plus a warrant to purchase up to an additional $5 million worth of Series G Preferred (the "Warrant"). This investment in General Magic was made in connection with a development and licensing agreement for General Magic's magicTalk voice user interface platform technology. The Warrant is exercisable for 500 shares of Series G Preferred at a current exercise price of $10,000 per share. General Motors has agreed not to exercise the Warrant unless General Magic (a) obtains the approval of its stockholders as required by applicable rules and regulations of NASDAQ for issuance of Common Stock in excess of 19.99% of outstanding shares of Common Stock as of December 9, 1999 or (b) obtains a written opinion of outside counsel to General Magic that such approval is not required, which opinion is reasonably satisfactory to General Motors. Each Series G Preferred share is convertible into that number of shares of Common Stock obtained by dividing the conversion amount by the conversion price. The conversion amount equals $10,000 and the conversion price equals $1.684 per share. However, General Motors has agreed that it will not convert the shares of Series G Preferred to the extent that the shares issued upon conversion would exceed 19.99% of General Magic's Common Stock outstanding as of December 9, 1999, unless General Magic (a) obtains the approval of its stockholders as required by the applicable rules and regulations of NASDAQ for the issuance by General Magic of that portion of the shares of Series G Preferred that may not be converted without exceeding 19.99% of General Magic's outstanding shares of Common Stock as of December 9, 1999 or (b) obtains a written opinion of outside counsel to General Magic that such approval is not required, which opinion is reasonably satisfactory to General Motors. The terms of the Series G Preferred provide that GM may elect a member to General Magic's Board of Directors. This right terminates upon the earlier of (i) the date upon which less than 600 shares of Series G Preferred are outstanding, (ii) the date upon which GM and its affiliates own less than a majority of the outstanding shares of Series G Preferred and (iii) the date of consummation of an acquisition of General Magic or the sale of all or substantially all of General Magic's assets. In addition, the holders of the Series G Preferred have the right to vote with the Common Stock as though part of that class and are entitled to the number of votes equal to the largest number of whole shares of Common Stock into which the Series G Preferred could be converted. Except as described above in this Item 4, GM does not have any plans or proposals that relate to or would result in any of the actions or events specified in clauses (a) through (j) of Item 4 of Schedule 13D. Notwithstanding the foregoing, GM may determine to change its intent with respect to the Issuer at any time in the future. General Motors intends to vote its shares of Series G Preferred as it deems appropriate from time to time. In determining from time to time whether to sell its shares of the Series G Preferred (and in what amounts) or to retain such shares, General Motors will take into consideration such factors as it deems relevant, including the business and prospects of the Issuer, anticipated future developments concerning the Issuer, existing and anticipated market conditions from time to time, general economic conditions, regulatory matters, and other opportunities available to General Motors. General Motors reserves the right to acquire additional securities of the Issuer in the open market, in privately negotiated transactions (which may be with the Issuer or with third parties) or otherwise, to dispose of all or 3 of 8 a portion of its holdings of securities of the Issuer or to change its intention with respect to any or all of the matters referred to in this Item 4. Item 5. Interest in Securities of the Issuer (a) Based on information provided to General Motors by the Issuer, there were 41,924,616 shares of Common Stock of the Issuer outstanding on December 9, 1999. General Motors owns Series G Preferred convertible into 8,907,363 shares of Common Stock. In addition, the Warrant is exercisable for 500 shares of Series G Preferred, which are convertible into 2,969,121 shares of Common Stock. However, GM has agreed not to convert its Series G Preferred or exercise its Warrant in excess of 19.99% of the Issuer's outstanding shares of Common Stock without (1) obtaining the approval of the Issuer's shareholders as required by applicable rules and regulations of NASDAQ or (2) obtaining a written opinion of outside counsel to General Magic that such approval is not required, which opinion is reasonably satisfactory to General Motors. Under Rule 13d-3 under the Exchange Act, General Motors may be deemed to beneficially own the shares of Common Stock that can be acquired upon conversion of the Series G Preferred. On a fully converted basis, as of the date of this Statement, GM may be deemed to beneficially own an aggregate of 11,876,484 shares of Common Stock, which represents approximately 22.1% of the Issuer's outstanding Common Stock. (b) In the event of any conversion of the Series G Preferred, GM is the entity having sole power to vote, direct the vote, dispose or direct the disposition of any Common Stock. (c) There have not been any transactions in the Common Stock effected by or for the account of GM or any of its executive officers or directors during the past 60 days, nor has GM converted the Series G Preferred or exercised the Warrant at any time since their respective acquisition. (d) GM does not know of any other person having the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Series G Preferred, the Warrant or the underlying shares of Common Stock. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. The following description is a summary only, and is qualified in its entirety by reference to the agreements attached as exhibits hereto. In addition to the contracts and agreements described in Item 4 above, General Motors has certain registration rights with respect to the Common Stock issuable upon conversion of the Series G Preferred, including those issued pursuant to the Warrant (the "Registrable Securities"), pursuant to a registration rights agreement, dated November 9, 1999 (the "Registration Rights Agreement"), between the Issuer and General Motors. Pursuant to the Registration Rights Agreement, General Motors may, at any time, demand registration of the Registrable Securities. General Magic is not required to register such shares unless the Registrable Securities sought to be registered comprise at least forty percent of all Registrable Securities then held by GM or the anticipated aggregate public offering price (after underwriting discounts and commissions) is $5,000,000. GM is entitled to two demand registrations. In addition, GM has the right to piggyback on certain registrations for public offerings of General Magic's securities. These rights are subject to the Issuer's right to defer the timing of a demand registration and an underwriters' right to cut back shares in an underwritten offering. Other than the Registration Rights Agreement and the other agreements described in Item 4 or Item 5 above, there are no contracts, arrangements, understandings, or relationships between General Motors or, to the best of its knowledge, any executive officer or director of GM, and any other person with respect to any securities of the Issuer, including any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Issuer, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. Item 7. Material to Be Filed as Exhibits Exhibit 1 Certificate of Designations, Preferences and Rights of Series G Convertible Preferred Stock of General Magic, Inc. filed with the Delaware Secretary of State on December 7, 1999. Exhibit 2 Warrant issued to General Motors for the Purchase of Shares of Series G Convertible Preferred Stock. Exhibit 3 Registration Rights Agreement, dated as of November 9, 1999 by and between General Magic, Inc. and General Motors Corporation. Exhibit 4* Letter Agreement dated as of December 9, 1999 between General Magic, Inc. and General Motors Corporation regarding limitations on the exercise of the Series G Convertible Preferred Stock and the Warrant issued to General Motors. *To be filed by amendment. 4 of 8 Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. GENERAL MOTORS CORPORATION By: /s/ Thomas A. Gottschalk ------------------------ Name: Thomas A. Gottschalk Title: Sr. Vice President and General Counsel Date: December 17, 1999 5 of 8 EXHIBIT INDEX Exhibit No. Exhibit 1 Certificate of Designations, Preferences and Rights of Series G Convertible Preferred Stock of General Magic, Inc. filed with the Delaware Secretary of State on December 7, 1999. Exhibit 2 Warrant issued to General Motors for the Purchase of Shares of Series G Convertible Preferred Stock. Exhibit 3 Registration Rights Agreement, dated as of November 9, 1999 by and between General Magic, Inc. and General Motors Corporation. Exhibit 4* Letter Agreement dated as of December 9, 1999 between General Magic, Inc. and General Motors Corporation regarding limitations on the exercise of the Series G Convertible Preferred Stock and the Warrant issued to General Motors. * To be filed by amendment. 6 of 8 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF GENERAL MOTORS CORPORATION The name, business address, present principal occupation or employment, and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the directors and executive officers of General Motors Corporation is set forth below. Unless otherwise specified, the business address of each person listed below is 100 Renaissance Center, Detroit, Michigan 48243-7301.
NAME AND BUSINESS POSITION WITH GM PRINCIPAL OCCUPATION, IF ADDRESS OTHER THAN AS EXECUTIVE OFFICER OF GM Percy N. Barnevik Director Chairman, ABB Asea Brown ABB Asea Brown Ltd. Boveri Ltd. Affolternstasse 44 Box 8131 CH-8050 Zurich, Switzerland John H. Bryan Director Chairman and Chief Executive Sara Lee Corporation Officer, Sara Lee Corporation Three First National Plaza, 46th Fl. Chicago, Il 60602-4260 Thomas E. Everhart Director Professor Emeritus and Professor California Institute of Technology of Electrical Engineering and 1200 E. California Blvd. Applied Physics, California Mail Code 202-31 Institute of Technology Pasadena, CA 91125 Charles T. Fischer, III Director John D. Finnegan Executive Vice President; Chairman and President, General Motors Acceptance Corporation George M. C. Fisher Director Chairman of the Board, Eastman Kodak Company Eastman Kodak Company 343 State Street Rochester, NY 14650-0229 Louis R. Hughes Executive Vice President; New Business Strategies Nobuyuki Idei Director President and CEO, Sony Sony Corporation Corporation 6-735 Kitashinagawa Shinagawa-ku Tokyo 141-0001 Karen Katen Director President, Pfizer U.S. Pfizer Inc. Pharmaceuticals Group; Executive 235 East 42/nd/ Street V.P., Pfizer Pharmaceuticals New York, NY 10017-5755 Group;
7 of 8
NAME AND BUSINESS POSITION WITH GM PRINCIPAL OCCUPATION, IF ADDRESS OTHER THAN AS EXECUTIVE OFFICER OF GM J. Michael Losh Executive Vice President; Chief Financial Officer J. Willard Marriott, Jr. Director Chairman and Chief Executive Marriott International, Inc. Officer, Marriott International, Inc. One Marriott Drive Washington, D.C. 20058 Ann D. McLaughlin Director Chairman, The Aspen Institute The Aspen Institute 133 New Hampshire Ave, NW Suite 1070 Washington, D.C. 20036 Harry J. Pearce Vice Chairman of the Board Eckhard Pfeiffer Director President and Chief Executive Compaq Computer Corp. Officer, Compaq Computer 20555 S. H. 249 Corporation Houston, TX 77070 John G. Smale Director The Procter & Gamble Company P.O. Box 599 Mailbox #16 Cincinnati, OH 45201-0599 John F. Smith, Jr. Chairman of the Board and Chief Executive Officer Louis W. Sullivan Director President, Morehouse School of Morehouse School of Medicine Medicine 720 Westview Drive, S.W. Atlanta, GA 30310-1495 G. Richard Wagoner, Jr. President, Chief Operating Officer and Director Dennis Weatherstone Director c/o J. P. Morgan & Co., Incorporated 60 Wall Street, 21/st/ Floor New York, NY 10260 Ronald L. Zarrella Executive Vice President; President, GM North America
8 of 8 EX-1 2 CERTIFICATE OF DESIGNATIONS Exhibit 1 CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES G CONVERTIBLE PREFERRED STOCK OF GENERAL MAGIC, INC. General Magic, Inc. (the "Company"), a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify that, pursuant to authority conferred upon the Board of Directors of the Company by the Certificate of Incorporation, as amended, of the Company, and pursuant to Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Company adopted resolutions (i) authorizing a series of the Company's previously authorized preferred stock, par value $0.001 per share, and (ii) providing for the designation, rights, preferences and privileges of two thousand (2,000) shares of Series G Convertible Preferred Stock of the Company, as follows: Resolved, that the Company is authorized to issue two thousand (2,000) shares of Series G Convertible Preferred Stock of the Company (the "Series G Preferred"), par value $0.001 per share, which shall have the following powers, rights, preferences and privileges: 1. Dividend Rights. a. Holders of Series G Preferred, in preference to the holders of the Company's common stock, par value $.001 per share ("Common Stock") or any other capital stock of the Company of any class junior in rank to the Series G Preferred in respect of the preferences as to the distributions and payments on the liquidation, dissolution or winding up of the Company ("Junior Stock") and on a pari passu basis with the holders of the Company's Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock, the Series D Convertible Preferred Stock, the Series E Convertible Preferred Stock, the Series F Convertible Preferred Stock and any other classes or series of preferred stock of the Company that are of equal rank to the Series G Preferred in respect of the preferences as to the distributions and payments on the liquidation, dissolution or winding up of the Company (the "Pari Passu Stock"), shall be entitled to receive, when, if and as declared by the Board of Directors, cash dividends at the rate of seven percent (7%) of $10,000 per annum on each outstanding share of Series G Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares). Dividends shall be declared and set aside out of funds or assets of the Company legally available therefor. Such dividends shall be payable only upon resolution of the Board of Directors and shall be noncumulative. b. So long as any shares of Series G Preferred shall be outstanding, no dividend, whether in cash or property, shall be paid or declared, nor shall any other distribution be made, on any Junior Stock, nor shall any shares of any Junior Stock of the Company be purchased, redeemed, or otherwise acquired for value by the Company (except for acquisitions of Common Stock by the Company pursuant to a repurchase plan approved by the Board of Directors or pursuant to agreements which permit the Company to repurchase such shares upon termination of services to the Company or in exercise of the Company's right of first refusal upon a proposed transfer) until all dividends (set forth in Section 1(a) above) on the Series G Preferred shall have been paid or declared and set apart. In the event dividends are paid on any share of Common Stock, an additional dividend shall be paid with respect to all outstanding shares of Series G Preferred in an amount equal per share (on an as-if-converted to Common Stock basis) to the amount paid or set aside for each share of Common Stock. The provisions of this Section 1(b) shall not, however, apply to (i) a dividend payable in Common Stock, (ii) the acquisition of shares of any Junior Stock in exchange for shares of any other Junior Stock, or (iii) any repurchase of any outstanding securities of the Company that is unanimously approved by the Company's Board of Directors. 2. Voting Rights. The holders of shares of Series G Preferred shall vote together with the Common Stock as though part of that class and shall be entitled to vote on all matters and shall be entitled to that number of votes equal to the largest number of whole shares of Common Stock into which such holder's shares of Series G Preferred could be converted under Section 4 hereof at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited. The holders of shares of Series G Preferred shall be entitled to vote as a separate class on any matter as to which such class would be entitled to vote under applicable law, and as provided in Section 5 below. 3. Liquidation Rights. a. Upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the holders of Series G Preferred shall be entitled to be paid out of the assets of the Company before any distribution or payment shall be made to the holders of any Junior Stock and on a pari passu basis with the Pari Passu Stock, an amount per share of Series G Preferred equal to $10,000 (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares), plus any declared and unpaid dividends, for each share of Series G Preferred held by them. If, upon any such liquidation, distribution, or winding up, the assets of the Company shall be insufficient to make payment in full to all holders of Series G Preferred and the Pari Passu Stock of the liquidation preference set forth in this Section 3(a), then such assets shall be distributed among the holders of Series G Preferred and the Pari Passu Stock at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled. b. The following events shall be considered a liquidation under this Section: i. any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, own less than a majority of the Company's voting power immediately after such consolidation, merger or reorganization (an "Acquisition"); or 2 ii. a sale of all or substantially all of the assets of the Company (an "Asset Transfer"). 4. Conversion Rights. The holders of the Series G Preferred shall have the following rights with respect to the conversion of the Series G Preferred into shares of Common Stock (the "Conversion Rights"): a. Optional Conversion. Subject to and in compliance with the provisions of this Section 4, any shares of Series G Preferred may, at the option of the holder, be converted at any time into fully-paid and nonassessable shares of Common Stock. The number of shares of Common Stock to which a holder of Series G Preferred shall be entitled upon conversion shall be the product obtained by multiplying the "Series G Preferred Conversion Rate" then in effect (determined as provided in Section 4(c)) by the number of shares of Series G Preferred being converted. b. Mandatory Conversion. All outstanding shares of Series G Preferred shall be converted automatically into the number of shares of Common Stock into which such shares of Series G Preferred are convertible pursuant to Section 4(a) hereof upon the consent of the holders of at least fifty percent (50%) of the Series G Preferred then outstanding, without any further action by the holders of such shares. c. Series G Preferred Conversion Rate. The conversion rate in effect at any time for conversion of the Series G Preferred (the "Series G Preferred Conversion Rate") shall be the quotient obtained by dividing $10,000 by the "Series G Preferred Conversion Price," calculated as provided in Section 4(d). d. Series G Preferred Conversion Price. The conversion price for the Series G Preferred shall initially be $1.684 (the "Series G Preferred Conversion Price"). Such initial Series G Preferred Conversion Price shall be adjusted from time to time in accordance with this Section 4. All references to the Series G Preferred Conversion Price herein shall mean the Series G Preferred Conversion Price as so adjusted. e. Mechanics of Conversion. Each holder of Series G Preferred who desires to convert the same into shares of Common Stock pursuant to this Section 4 shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Company or any transfer agent for the Series G Preferred, and shall give written notice to the Company at such office that such holder elects to convert the same. Such notice shall state the number of shares of Series G Preferred being converted. As promptly as practicable after the Series G Preferred Conversion Date (as defined below), the Company shall issue and shall deliver to the holder of shares of Series G Preferred being converted, such certificate or certificates as it may request for the number of whole shares of Common Stock issuable upon the conversion of such Series G Preferred in accordance with the provisions of this Section 4. Such conversion shall be deemed to have been effected immediately prior to the close of business on the Series G Preferred Conversion Date. At such time, the rights of the holder as holder of the converted shares of Series G Preferred shall cease and the person or persons in whose name 3 or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common Stock represented thereby. "Series G Conversion Date" means: (i) the date when such written notice required by Section 4(e) is received by the Company, together with the certificate or certificates representing the shares of Series G Preferred being converted, or (ii) the date on which any event occurs causing a mandatory conversion of the shares of Series G Preferred pursuant to Section 4(b). f. Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the date that the first share of Series G Preferred is issued (the "Original Issue Date") effect a subdivision of the outstanding Common Stock without a corresponding subdivision of the Series G Preferred, the Series G Preferred Conversion Price in effect immediately before that subdivision shall be proportionately decreased. Conversely, if the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock into a smaller number of shares without a corresponding combination of the Series G Preferred, the Series G Preferred Conversion Price in effect immediately before the combination shall be proportionately increased. Any adjustment under this Section 4(f) shall become effective at the close of business on the date the subdivision or combination becomes effective. g. Adjustment for Common Stock Dividends and Distributions. If the Company at any time or from time to time after the Original Issue Date makes, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, in each such event the Series G Preferred Conversion Price that is then in effect shall be decreased as of the time of such issuance or, in the event such record date is fixed, as of the close of business on such record date, by multiplying the Series G Preferred Conversion Price then in effect by a fraction (i) the numerator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and (ii) the denominator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Series G Preferred Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Series G Preferred Conversion Price shall be adjusted pursuant to this Section 4(g) to reflect the actual payment of such dividend or distribution. h. Adjustment for Reclassification, Exchange and Substitution. If at any time or from time to time after the Original Issue Date, the Common Stock issuable upon the conversion of the Series G Preferred is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise 4 (other than an Acquisition or Asset Transfer as defined in Section 3(b) or a subdivision or combination of shares or stock dividend or a reorganization, merger, consolidation or sale of assets provided for elsewhere in this Section 4), in any such event each holder of Series G Preferred shall have the right thereafter to convert such stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the maximum number of shares of Common Stock into which such shares of Series G Preferred could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof. i. Reorganizations, Mergers, Consolidations or Sales of Assets. If at any time or from time to time after the Original Issue Date, there is a capital reorganization of the Common Stock (other than an Acquisition or Asset Transfer as defined in Section 3(b) or a recapitalization, subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this Section 4), as a part of such capital reorganization, provision shall be made so that the holders of the Series G Preferred shall thereafter be entitled to receive upon conversion of the Series G Preferred the number of shares of stock or other securities or property of the Company to which a holder of the number of shares of Common Stock deliverable upon conversion would have been entitled on such capital reorganization, subject to adjustment in respect of such stock or securities by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 4 with respect to the rights of the holders of Series G Preferred after the capital reorganization to the end that the provisions of this Section 4 (including adjustment of the Series G Preferred Conversion Price then in effect and the number of shares issuable upon conversion of the Series G Preferred) shall be applicable after that event and be as nearly equivalent as practicable. j. Certificate of Adjustment. In each case of an adjustment or readjustment of the Series G Preferred Conversion Price for the number of shares of Common Stock or other securities issuable upon conversion of the Series G Preferred, if the Series G Preferred is then convertible pursuant to this Section 4, the Company, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each registered holder of Series G Preferred at the holder's address as shown in the Company's books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) such adjustment or readjustment, (ii) the Series G Preferred Conversion Price at the time in effect and (iii) the type and amount, if any, of other property which at the time would be received upon conversion of the Series G Preferred. k. Notices of Record Date. Upon (i) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or (ii) any Acquisition (as defined in Section 3(b)) or other capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, any merger or consolidation of the 5 Company with or into any other corporation, or any Asset Transfer (as defined in Section 3(b)), or any voluntary or involuntary dissolution, liquidation or winding up of the Company, the Company shall mail to each holder of Series G Preferred at least ten (10) days prior to the record date specified therein (or such shorter period approved by a majority of the outstanding Series G Preferred), a notice specifying (A) the date on which any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution, (B) the date on which any such Acquisition, reorganization, reclassification, transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or winding up is expected to become effective, and (C) the date, if any, that is to be fixed as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such Acquisition, reorganization, reclassification, transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or winding up. l. Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of Series G Preferred, and the number of shares of Common Stock to be issued shall be rounded down to the nearest whole share. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series G Preferred by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. m. Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series G Preferred, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series G Preferred. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series G Preferred, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. n. Notices. Any notice required by the provisions of this Section 4 shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All notices shall be addressed to each holder of record at the address of such holder appearing on the books of the Company. 5. Protective Provisions. The approval of the holders of a majority of the then outstanding Series G Preferred shall be required for (a) any change to this Certificate of Designations or the Company's Certificate of Incorporation if such action would adversely alter or change the preferences, rights, privileges or powers of, or the restrictions provided 6 for the benefit of, the holders of the Series G Preferred, unless all series of preferred stock are so altered or changed; and (b) any increase or decrease in the number of authorized shares of Series G Preferred. 6. No Reissuance of Series G Preferred. No share or shares of Series G Preferred acquired by the Company by reason of redemption, purchase, conversion or otherwise shall be reissued. 7. Election of Director. The holders of the Series G Preferred, voting as a separate class, shall have the right to elect one (1) member of the Company's Board of Directors until the earlier of (i) the date upon which less than 600 shares (as adjusted for stock splits, recombinations, reclassifications and the like) of Series G Preferred are outstanding, (ii) the date upon which General Motors Corporation and its Affiliates own less than a majority of the outstanding shares of Series G Preferred (as adjusted for stock splits, recombinations, reclassifications and the like), and (iii) the date of consummation of an Acquisition or Asset Transfer. For purposes hereof, the term "Affiliates" with respect to General Motors Corporation shall mean Saab Automobile AB and any entity controlled directly or indirectly by General Motors Corporation, where "control" means the ownership of more than fifty percent (50%) of the outstanding voting securities or voting interests of the entity in question. 7 In Witness Whereof, the Company has caused this Certificate of Designations to be signed by Steven Markman, its President and Chief Executive Officer, this 7th day of December, 1999. General Magic, Inc. /s/ Steven Markman ---------------------------------- Steven Markman President and Chief Executive Officer 8 EX-2 3 WARRANT ISSUED TO GENERAL MOTORS Exhibit 2 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. General Magic, Inc. Warrant for the Purchase of Shares of Series G Convertible Preferred Stock No. 01 up to 500 shares For Value Received, General Magic, Inc., a Delaware corporation (the "Company"), with its principal office at 420 N. Mary Avenue, Sunnyvale, California 94086, hereby certifies that General Motors Corporation, a Delaware corporation (the "Holder") is entitled, subject to the provisions of this Warrant, to purchase from the Company at any time or times on or after the date hereof, but not after 5:00 p.m. Pacific Time on the Expiration Date (as defined below) up to Five Hundred (500) fully paid and nonassessable shares of Series G Convertible Preferred Stock of the Company (the "Series G Stock"), at an exercise price per share equal to Ten Thousand Dollars ($10,000.00) (the "Exercise Price"). "Expiration Date" means the earlier of (i) the date three (3) years from the original date of this Warrant or, if such date falls on a Saturday, Sunday or other day on which banks are required or authorized to be closed in the State of California (a "Holiday"), the next preceding date that is not a Holiday, or (ii) the date the Holder and its Affiliates cease to own at least fifty percent (50%) of the Series G Stock issued under that certain Series G Preferred Stock and Warrant Purchase Agreement between the Company and the Holder dated November 9, 1999 (the "Purchase Agreement"). The number of shares of Series G Stock to be received upon the exercise of this Warrant and the price to be paid for a share of Series G Stock are subject to adjustment from time to time as hereinafter set forth. The shares of Series G Stock deliverable upon such exercise, as adjusted from time to time, together with the shares of common stock of the Company ("Common Stock") issuable upon either (i) the net issue exercise of this Warrant pursuant to Section 1(b) (the "Net Exercise Stock") or (ii) conversion of the Series G Stock deliverable upon exercise of the Warrant, are hereinafter sometimes referred to as "Warrant Shares." Section 1. Exercise of Warrant; Net Issue Exercise. (a) General. This Warrant may be exercised in whole or in part on any business day prior to the Expiration Date by presentation and surrender to the Company at its principal office at the address set forth in the initial paragraph hereof (or at such other address as the Company may hereafter notify the Holder in writing) with the Purchase Form annexed hereto duly executed and accompanied by proper payment of the Exercise Price in lawful money of the United States of America in the form of a check, wire transfer of funds, notice of election of net issue as provided in Section 1(b) below, or cancellation of indebtedness of the Company to the Holder, subject to collection, for the number of shares of Series G Stock specified in the Purchase Form. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the shares of Series G Stock purchasable hereunder. Upon receipt by the Company of this Warrant and such Purchase Form, together with proper payment of the Exercise Price, at such office, the Holder shall be deemed to be the holder of record of such number of shares of Series G Stock or Net Exercise Stock, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder. (b) Net Issue Exercise. Notwithstanding any provisions herein to the contrary, if the fair market value of the share(s) of Common Stock into which a share of Series G Stock is convertible is greater than the Exercise Price (at the date of exercise), in lieu of exercising this Warrant for cash, the Holder may elect to receive Common Stock into which the Series G Stock is convertible equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Purchase Form and notice of such election in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: X = Y (A-B/Z) --------- A Where X = the number of shares of Common Stock to be issued to the Holder Y = the number of shares of Common Stock or other capital stock into which the Series G Stock purchasable under the Warrant is convertible (at the date of exercise) or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of exercise) A = the fair market value of one share of the Company's Common Stock (at the date of exercise) 2 B = Exercise Price (as adjusted to the date of exercise) Z = The number of shares of Common Stock into which one share of Series G Stock is convertible pursuant to the Company's Certificate of Incorporation as of the date of exercise. For purposes of the above calculation, current fair market value of Common Stock shall mean with respect to each share of Common Stock: (i) if traded on a national securities exchange or The Nasdaq National Market (or similar national quotation system), the fair market value shall be deemed to be the closing price (last reported sale) on the day the current fair market value of the securities is being determined; (ii) if traded over-the-counter, the fair market value shall be deemed to be the closing bid price quoted on the day the current fair market value of the securities is being determined; or (iii) if at any time the Common Stock is not traded as described in (i) or (ii) above, the current fair market value shall be the highest price per share which the Company could obtain from a willing buyer (not a current employee or director) for shares of Common Stock sold by the Company, from authorized but unissued shares, as determined in good faith by its Board of Directors, unless the Company shall become subject to a merger, acquisition or other consolidation pursuant to which the Company is not the surviving party, in which case the fair market value shall be deemed to be the value received by the holders of the Company's Common Stock on a common equivalent basis pursuant to such merger or acquisition. Section 2. Issuance of New Warrant. In the event of any exercise of the rights represented by this Warrant, certificates for the Series G Stock or Net Exercise Stock so purchased shall be delivered to the holder hereof as soon as practicable (but not later than ten (10) business days after exercise) and, unless this Warrant has been fully exercised or has expired, a new Warrant representing the portion of the Series G Stock, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the holder hereof within a reasonable time (but not later than ten (10) business days after exercise). Such exercise shall be deemed to have been made immediately prior to the close of business on the date of surrender of this Warrant. Section 3. Reservation of Shares. The Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of this Warrant all shares of its Series G Stock or other shares of capital stock of the Company from time to time issuable upon exercise of this Warrant. All such shares shall be duly authorized and, when issued upon such exercise in accordance with the terms of this Warrant, shall be validly issued, fully paid and nonassessable. 3 Section 4. Fractional Interest. The Company will not issue a fractional share of Series G Stock or Common Stock upon exercise of this Warrant. Instead, the Company will deliver its check for the current fair market value of the fractional share, as determined in good faith by the Board of Directors of the Company. Section 5. Replacement of Warrant. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of indemnification satisfactory to the Company, and upon surrender and cancellation of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date. Section 6. Rights of the Holder. The holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the holder are limited to those expressed in this Warrant. Nothing contained in this Warrant shall be construed as conferring upon the holder hereof the right to vote or to consent or to receive notice as a stockholder of the Company on any matters or with respect to any rights whatsoever as a stockholder of the Company. No dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the Series G Stock purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised in accordance with its terms. Section 7. Adjustment of Exercise Price and Number of Shares. The number and kind of securities purchasable upon the exercise of the Warrant and the Exercise Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows: (a) Reclassification of Outstanding Securities. In case of any reclassification, change or conversion of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), the Company shall execute a new Warrant (in form and substance reasonably satisfactory to the holder of this Warrant) providing that the holder of this Warrant shall have the right to exercise such new Warrant and upon such exercise to receive, in lieu of each share of Series G Stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification or change by a holder of one share of Series G Stock. Such new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 7. The provisions of this subsection (a) shall similarly apply to successive reclassification or changes. (b) Subdivisions or Combination of Shares. If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Series G Stock, the Exercise Price and the number of Series G Stock issuable upon exercise hereof shall be proportionately adjusted. (c) Stock Dividends. If the Company at any time while this Warrant is outstanding and unexpired shall pay a dividend payable in shares of Series G Stock (except any distribution specifically provided for in the foregoing subsections (a) and (b)), then the Exercise 4 Price shall be adjusted, from and after the date of determination of stockholders entitled to receive such dividend or distribution, to that price determined by multiplying the Exercise Price in effect immediately prior to such date of determination by a fraction (a) the numerator of which shall be the total number of shares of Series G Stock outstanding immediately prior to such dividend or distribution, and (b) the denominator of which shall be the total number of shares of Series G Stock outstanding immediately after such dividend or distribution and the number of shares of Series G Stock subject to this Warrant shall be proportionately adjusted. (d) Notice of Record Date. In the event of any taking by the Company of a record of its stockholders for the purpose of determining stockholders who are entitled to receive payment of any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining stockholders who are entitled to vote in connection with any proposed merger or consolidation of the Company with or into any other corporation, or any proposed sale, lease or conveyance of all or substantially all of the assets of the Company, or any proposed liquidation, dissolution or winding up of the Company, the Company shall mail to the holder of this Warrant, at least ten (10) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right. (e) No Adjustment Upon Exercise of Warrants. No adjustments shall be made under any Section herein in connection with the issuance of the Series G Stock subsequent to exercise of the Warrant. Section 8. Officer's Certificate. Whenever the Exercise Price shall be adjusted as required by the provisions of Section 7, the Company shall deliver an officer's certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment and the manner of computing such adjustment. Each such officer's certificate shall be signed by the chairman, chief executive officer, president or chief financial officer of the Company. Section 9. Mergers, Consolidation, Sales. In the case of any proposed consolidation or merger of the Company with another entity, or the proposed sale of all or substantially all of its assets to another person or entity, lawful and adequate provision shall be made whereby the holder of this Warrant shall thereafter have the right to receive upon the basis and upon substantially the terms and conditions specified herein, in lieu of the shares of the Series G Stock of the Company immediately theretofore purchasable hereunder, such shares of stock, securities or assets as may (by virtue of such consolidation, merger or sale) be issued or payable with respect to or in exchange for the number of shares of such Series G Stock purchasable hereunder immediately before such consolidation, merger, or sale. In any case appropriate provision shall be made with respect to the rights and interests of the holder of this Warrant to the end that the provisions hereof shall thereafter be applicable as nearly as may be, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise of this Warrant. 5 Section 10. Transfer Restrictions; Representations of Holder. (a) This Warrant is transferable only to Affiliates of the Holder (as defined herein) without the written consent of the Company, and to other persons only with the consent of the Company; provided, however, that any transfer or assignment shall be subject to the conditions set forth in Section 10(b), and such transferee shall confirm in writing the representations set forth in Section 10(b) and shall agree to be bound by the terms of this Warrant. For purposes hereof, the term Affiliate with respect to the Holder shall mean Saab Automobile AB and any entity controlled directly or indirectly by Holder, where "control" means the ownership of more than fifty percent (50%) of the outstanding voting securities or voting interests of the entity in question. (b) This Warrant may not be exercised and neither this Warrant nor any of the Warrant Shares, nor any interest in either, may be sold, assigned, pledged, hypothecated, encumbered or in any other manner transferred or disposed of, in whole or in part, except in compliance with applicable United States federal and state securities or Blue Sky laws and the terms and conditions hereof. Each Warrant shall bear a legend in substantially the same form as the legend set forth on the first page of this Warrant. Each certificate for Warrant Shares issued upon exercise of this Warrant shall bear a legend substantially in the following form: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. Any certificate for any Warrant Shares issued at any time in exchange or substitution for any certificate for any Warrant Shares bearing such legend shall also bear such legend unless, in the opinion of counsel for the Company, the Warrant Shares represented thereby need no longer be subject to the restrictions contained herein. The provisions of this Section 10 shall be binding upon all subsequent holders of certificates for Warrant Shares bearing the above legend and all subsequent holders of this Warrant, if any. In addition, in connection with the issuance of this Warrant, the Holder specifically represents to the Company by acceptance of this Warrant as follows: (a) The Holder is aware of the Company's business affairs and financial condition, and has acquired information about the Company sufficient to reach an informed and 6 knowledgeable decision to acquire this Warrant. The Holder is acquiring this Warrant (and the underlying Warrant Shares) for its own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof in violation of the Securities Act of 1933, as amended (the "Act"). (b) The Holder understands that neither this Warrant nor the Warrant Shares have been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder's investment intent as expressed herein. (c) The Holder further understands that this Warrant (and the Warrant Shares) must be held indefinitely unless subsequently registered under the Act and qualified under any applicable state securities laws, or unless exemptions from registration and qualification are otherwise available. Moreover, the Holder understands that the Company is under no obligation to register and qualify this Warrant. (d) The Holder is aware of the provisions of Rule 144 promulgated under the Act, which, in substance, permit limited public resale of "restricted securities" acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions, if applicable, including, among other things: the availability of certain public information about the Company, the resale occurring not less than one year after the party has purchased and paid for the securities to be sold; and the sale being made through a broker in an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934, as amended). (e) The Holder further understands that at the time Holder wishes to sell the Warrant Shares there may be no public market upon which to make such a sale, and that, except as set forth in the Purchase Agreement and related Registration Rights Agreement, the Company is under no obligation to register the Warrant Shares. (f) The Holder further understands that in the event all of the requirements of Rule 144 are not satisfied, registration under the Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Section 12. Governing Law. This Warrant is delivered in the State of California and shall be construed in accordance with and governed by the laws of that State, without regard to its conflicts of laws principles. Section 13. Modification and Waiver. Neither this Warrant nor any term hereof may be amended, waived, discharged or terminated other than by an instrument in writing signed by the Company and by the holder hereof. 7 Section 14. Notices. Any notice, request or other document required or permitted to be given or delivered to the holder hereof or the Company shall be delivered or shall be sent by certified mail, confirmed facsimile or personal delivery, to the holder at the holder's address as shown on the books of the Company or to the Company at the address indicated therefor in the first paragraph of this Warrant or such other address as the Company shall have notified the holder. Section 15. Descriptive Headings. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. Section 16. Entire Agreement. This Warrant, together with the Purchase Agreement and the documents delivered pursuant thereto, constitutes the entire agreement between the parties pertaining to the subject matter herein and supersedes all prior and contemporaneous agreements, representations and undertakings of the parties. In Witness Whereof, the Company has duly caused this Warrant to be signed by its duly authorized officer and to be dated as of December 9, 1999. General Magic, Inc. By: /s/ Steven Markman --------------------------------- Name: Steven Markman ------------------------------- Title: Chief Executive Officer ------------------------------- 8 PURCHASE FORM The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, _________________ (_________)/1/ shares of Series G Preferred Stock of General Magic, Inc. and herewith [makes payment of __________ _____________ Dollars ($________) therefor] [elects a Net Issue Exercise pursuant to the provision of Section 1 of the within Warrant for _________ shares of Common Stock (as calculated in accordance with the terms therewith)], and requests that the certificates for such shares be issued in the name of, and delivered to, __________________________________________, whose address is _______________________________________________________________. The undersigned represents that it is acquiring such shares for its own account for investment and not with a view to or for sale in connection with any distribution thereof (subject, however, to any requirement of law that the disposition thereof shall at all times be within its control). Dated: _______________ (Signature must conform in all respects to name of holder) By:________________________________ Title:_____________________________ - --------------------- /1/ Insert here the number of shares called for on the face of the Warrant (or, in the case of a partial exercise, the portion thereof as to which the Warrant is being exercised), in either case without making any adjustment for additional Warrant Shares or any other stock or the adjustment provisions of the Warrant, which may be deliverable upon exercise. EX-3 4 REGISTRATION RIGHTS AGREEMENT DATED 11/09/1999 Exhibit 3 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into as of the 9th day of November, 1999, by and between General Magic, Inc., a Delaware corporation (the "Company"), and General Motors Corporation, a Delaware corporation, by and through its OnStar division (the "Purchaser"). RECITALS A. The Company has agreed, upon the terms and subject to the conditions of the Series G Preferred Stock and Warrant Purchase Agreement (the "Preferred Stock Purchase Agreement"), to issue and sell to Purchaser (i) shares of the Company's Series G Convertible Preferred Stock (the "Series G Stock"), which will be convertible into shares of the Company's common stock, par value $0.001 per share (the "Common Stock"), in accordance with the terms of the Company's Certificate of Designations, Preferences and Rights of Series G Convertible Preferred Stock (the "Certificate of Designations"); and (ii) a warrant to acquire up to 500 additional shares of the Company's Series G Stock (the "Warrant"). B. To induce the Purchaser to execute and deliver the Preferred Stock Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended (the "Securities Act"), and the rules and regulations promulgated thereunder, as well as applicable state securities laws. NOW, THEREFORE, the parties hereto agree as follows: AGREEMENT 1. Registration Rights. 1.1 Definitions. For purposes of this Section 1: (a) Registration. The terms "register," "registered," and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement by the U.S. Securities and Exchange Commission (the "SEC"). (b) Registrable Securities. The term "Registrable Securities" means: (1) all the shares of Common Stock of the Company issued or issuable upon the conversion of any shares of Series G Stock issued pursuant to the Preferred Stock Purchase Agreement or upon exercise of the Warrant (collectively, the "Conversion Shares"); (2) all shares of Common Stock issued or issuable with respect to the Conversion Shares, the Series G Stock or the Warrant as a result of any stock split, stock dividend, recapitalization, exchange or similar event; provided, however, that notwithstanding Section 2.2 below, such shares of Common Stock shall no longer be treated as Registrable Securities after they have been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, whether in a registered offering, pursuant to Rule 144 or otherwise, and whether or not sold to an Affiliate (as defined in Section 2.2 below). 1.2 Demand Registration. (a) Request for Registration. If the Company shall receive at any time a written request from Purchaser that the Company effect a registration with respect to Registrable Securities pursuant to this Section 1.2 (a "Registration Request"), then the Company shall, within ten (10) business days of the receipt of such Registration Request, give written acknowledgment thereof ("Request Acknowledgment") to Purchaser, and effect, as soon as practicable thereafter, but in no event later than sixty (60) days following receipt by Purchaser of the Request Acknowledgment, such registration; provided, however, that the Company shall not be obligated to take any action to effect any such registration: (i) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, unless the Company is already subject to service in such jurisdiction; (ii) unless the Registrable Securities sought to be registered by Purchaser comprise at least forty percent (40%) of all Registrable Securities then held by Purchaser (including all Registrable Securities issuable pursuant to the exercise or conversion of any warrant, right or other security) or have an anticipated aggregate public offering price (after any underwriting discounts and commissions) of $5,000,000; or (iii) after the Company has effected two such registrations pursuant to this Section 1.2. (b) Underwriting. If Purchaser initiates the registration request under this Section 1.2 and intends to distribute the Registrable Securities covered by its request by means of an underwriting, then Purchaser shall so advise the Company as a part of its request made pursuant to this Section 1.2 and the Company shall include such information in the written notice referred to in subsection 1.2(a). In such event, the right of Purchaser to include its Registrable Securities in such registration shall be conditioned upon Purchaser's participation in such underwriting and the inclusion of Purchaser's Registrable Securities in the underwriting to the extent provided herein. If Purchaser proposes to distribute its Registrable Securities through such underwriting, it shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such underwriting by the Company and approved by Purchaser, which approval shall not be unreasonably withheld. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. (c) Delay. If the Company shall furnish to Purchaser a certificate signed by the President of the Company stating that, in the good faith judgment of the Board of Directors of the Company, the filing of a registration statement pursuant to this Section 1.2 would (i) require disclosure of material information the Company has a bona fide business purpose of retaining as confidential or (ii) have a 2 material adverse effect on the Company or its shareholders, in relation to any financing, acquisition, corporate reorganization or other material transaction contemplated by the Board of Directors of the Company, involving the Company or any of its affiliates, in each case as determined by the Company, then the Company may direct that the filing of a registration statement be delayed for a period not in excess of one hundred twenty (120) days, but may only exercise this right once within any twelve (12) month period. 1.3 Piggyback Registrations. The Company shall notify Purchaser in writing at least fifteen (15) business days prior to filing any registration statement under the Securities Act for purposes of effecting a public offering of securities of the Company (including, but not limited to, registration statements relating to a secondary offering of securities of the Company, and registration statements relating to any registration under Section 1.2 of this Agreement, but excluding registration statements relating to any employee benefit plan or a transaction under Rule 145 of the Securities Act) and will afford Purchaser an opportunity to include in such registration statement all or any part of the Registrable Securities then held by Purchaser. If Purchaser desires to include in any such registration statement all or any part of its Registrable Securities, Purchaser shall, within ten (10) business days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Securities Purchaser wishes to include in such registration statement. If Purchaser decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, Purchaser shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein. An election by Purchaser to include Registrable Securities in any registration statement pursuant to this Section 1.3 shall not under any circumstances constitute a request for registration by Purchaser under Section 1.2 hereof. If a registration statement under which the Company gives notice under this Section 1.3 is for an underwritten offering, then the Company shall so advise Purchaser. In such event, the right of Purchaser to be included in a registration pursuant to this Section 1.3 shall be conditioned upon Purchaser's participation in such underwriting, and the inclusion of Purchaser's Registrable Securities in the underwriting to the extent provided herein. If Purchaser proposes to distribute its Registrable Securities through such underwriting, Purchaser shall enter into an underwriting agreement in customary form with the managing underwriter or underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Agreement, if the managing underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude shares (including Registrable Securities) from the registration and the underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated, first, to the Company or other party for whom the registration is being effected, second, to Purchaser and to other holders of securities of the Company with piggyback registration rights on a pro rata basis based on the total number of registrable securities then held by Purchaser and such other holders, and third, to such persons as the Board of 3 Directors of the Company may approve. If Purchaser disapproves of the terms of any such underwriting, Purchaser may elect to withdraw therefrom by written notice to the Company and the underwriter. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.3 prior to the effectiveness of such registration, whether or not Purchaser has elected to include Registrable Securities in such registration. 1.4 Form S-3 Registration. In case the Company shall receive from Purchaser a written request that the Company effect a registration on Form S-3 with respect to all or a part of the Registrable Securities owned by Purchaser, then the Company will, as soon as reasonably practicable, effect such registration on Form S-3 as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of Purchaser's Registrable Securities as are specified in such request; provided, however, that the Company shall not be oblligated to effect any such registration, qualification or compliance pursuant to this Section 1.4: (i) if Form S-3 is not available for such offering by Purchaser; (ii) if the aggregate value of the Registrable Securities proposed to be sold by Purchaser in such offering is less than $1,000,000; (iii) if the Company shall furnish to Purchaser a certificate signed by the President or Chief Executive Officer of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such Form S-3 registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement no more than once during any twelve month period for a period of not more than one hundred twenty (120) days after receipt of the request of Purchaser under this Section 1.4; (iv) if the Company has, within the twelve (12) month period preceding the date of such request, already effected two (2) registrations pursuant to Section 1.2 and 1.4; or (v) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance. Only one (1) Form S-3 registration shall be deemed to be a demand registration as described in Section 1.2 above. 4 1.5 Obligations of the Company. (a) Expenses. All expenses incurred in connection with all registrations pursuant to Sections 1.2, 1.3 and 1.4, including without limitation all registration and qualification fees, printers' and accounting fees, fees and disbursements of counsel for the Company (but excluding underwriters' and brokers' discounts and commissions and fees and disbursements of counsel for Purchaser), shall be borne by the Company; provided, however, that Purchaser shall bear all expenses incurred in connection with any registration requested pursuant to Section 1.2 or 1.4 within six months after the date of this Agreement. Purchaser shall bear its proportionate share (based on the total number of shares sold in such registration other than for the account of the Company) of all underwriting discounts or commissions payable to underwriters or brokers in connection with such offerings. (b) Registration. Whenever required to effect the registration of any Registrable Securities under this Agreement, the Company shall, as expeditiously as reasonably possible: (i) Prepare and file with the SEC a registration statement with respect to such Registrable Securities, use its best efforts to cause such registration statement to become effective and, upon the request of Purchaser, keep such registration statement effective for up to ninety (90) days plus any additional periods represented by any "Black-Out Period" (as defined in the last paragraph of Section 1.5(b) below) or until the distribution described in the registration statement has been completed. (ii) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as the Company may determine to be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement. (iii) Furnish to Purchaser such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as it may reasonably request in order to facilitate the disposition of the Registrable Securities owned by it and included in such registration. (iv) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by Purchaser, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 5 (v) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Purchaser shall also enter into and perform its obligations under such an agreement. (vi) Notify Purchaser at any time when a prospectus relating to the Registrable Securities is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact necessary, in light of the circumstances under which made, to make the statements therein not misleading, and, at the request of Purchaser, the Company will promptly prepare and provide to it a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of Purchaser's Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary, in light of the circumstances under which made, to make the statements therein not misleading. (vii) Furnish, at the reasonable request of Purchaser, on the date that its Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to Purchaser, addressed to the underwriters, if any, and to Purchaser, and (ii) a "comfort" letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to Purchaser, addressed to the underwriters, if any, and to Purchaser. (viii) Purchaser agrees that if the Company has delivered preliminary or final prospectuses to Purchaser and after having done so (a) the Company determines that the prospectus needs to be amended or supplemented to comply with the requirements of the Securities Act, (b) a stop order suspending the effectiveness of the registration statement is issued by the SEC or (c) the Company shall, in good faith and for business reasons, enter into negotiations relating to or otherwise commence a material business transaction, including, without limitation, the acquisition or divestiture of assets or the offering or sale of securities, then the Company shall promptly notify Purchaser and Purchaser shall immediately cease making offers and sales of Registrable Securities and return all remaining prospectuses to the Company. Following such amendment or supplement, the lifting of any stop order or the completion or termination of any material transaction, the Company shall promptly provide Purchaser with revised prospectuses, and, following receipt of the revised prospectuses, Purchaser shall be free to resume making offers of the Registrable Securities, or any portion thereof. The period during which the Company exercises its rights as described in this paragraph to postpone, delay or interrupt the offer and sale of the Registrable Securities or during the pendency of any 6 stop order, injunction or other order or requirement of the SEC or any other governmental agency or court shall be referred to herein as the "Black-Out Period." 1.6 Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Sections 1.2, 1.3 or 1.4 that Purchaser shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities and such other information as the Company may reasonably request to timely effect the registration of its Registrable Securities. 1.7 Indemnification. In the event any Registrable Securities are included in a registration statement under Sections 1.2, 1.3 or 1.4: (a) By the Company. The Company agrees to indemnify and hold harmless Purchaser, each of its directors and officers, any underwriters (as defined in the Securities Act) for the Purchaser and each person, if any, who controls Purchaser within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which Purchaser or such officer or director, underwriter or controlling person may become subject, under the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the registration statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof or incorporated by reference therein, as amended at the time of effectiveness of the registration statement, including any information deemed to be a part thereof as of the time of the effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434 of the rules and regulations, or the prospectus, in the form first filed with the SEC pursuant to Rule 424(b) of the regulations, or filed as part of the registration statement at the time of effectiveness if no Rule 424(b) filing is required (the "Prospectus"), or any amendment or supplement thereto, (ii) the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any federal or state securities law in connection with the offering covered by such registration statement (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations"), and will reimburse Purchaser and each such officer or director, underwriter or controlling person for any legal and other expenses as such expenses are reasonably incurred by Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the registration statement, the Prospectus or any amendment or supplement thereto in reliance upon and 7 in conformity with written information furnished to the Company by or on behalf of Purchaser expressly for use therein, (ii) the failure of Purchaser to comply with the covenants and agreements contained in this Agreement respecting the sale of the Registrable Securities, (iii) the inaccuracy of any representations made by Purchaser herein, or (iv) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to Purchaser prior to the pertinent sale or sales by Purchaser. (b) By Purchaser. Purchaser will indemnify and hold harmless the Company, each of its directors, each of its officers who signed the registration statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed the registration statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any Violation, in each case to the extent, but only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the registration statement or controlling person for any legal and other expenses reasonably incurred by the Company, each of its directors, each of its officers who signed the registration statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. (c) Notice. Promptly after receipt by an indemnified party under this Section 1.7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 1.7, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 1.7 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be a conflict between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such 8 legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 1.7 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (a), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party. (d) Limitation. The foregoing indemnity agreements of the Company and Purchaser are subject to the condition that, insofar as they relate to the bases for any losses, claims, damages, liabilities or expenses contemplated in Section 1.7(a) arising out of the preparation and filing of the preliminary prospectus but eliminated or remedied in the amended prospectus on file with the SEC at the time the registration statement in question becomes effective or in the amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such indemnity agreement shall not inure to the benefit of any person if a copy of the Final Prospectus was furnished to the indemnified party and was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act. (e) Contribution. If the indemnification provided for in this Section 1.7 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (a), (b) or (c) of this Section 1.7 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein in such proportion as is appropriate to reflect the relative fault of the Company and Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of the Company and Purchaser shall be determined by reference to, among other things, whether the untrue or alleged misstatement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged inaccurate representation and/or warranty relates to information supplied by the Company or by Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to 9 the limitations set forth in Section 1.7(c) any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in Section 1.7(c) with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this paragraph (d); provided, however, that no additional notice shall be required with respect to any action for which notice has been give under Section 1.7(c) for purposes of indemnification. The Company and Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 1.7(d) were determined solely by pro rata allocation (even if Purchaser were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 1.7(d), Purchaser shall not be required to contribute any amount in excess of the amount by which the amount paid by Purchaser for the Registrable Securities that were sold pursuant to the registration statement and the amount received by Purchaser from such sale exceeds the amount of any damages that Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (f) Survival. The obligations of the Company and the Purchaser under this Section 1.7 shall survive the completion of any offering of Registrable Securities in a registration statement, and otherwise. 1.8 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the SEC, which may at any time permit the sale of the Registrable Securities to the public without registration, the Company agrees to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the date hereof; (b) Use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) So long as Purchaser owns any Registrable Securities, to furnish to Purchaser forthwith upon request (i) a written statement by the Company as to its compliance with the reporting requirements of said Rule 144, and of the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such other reports and documents of the Company as Purchaser may reasonably request in availing itself of any rule or regulation of the Commission allowing Purchaser to sell any such securities without registration. 10 2. Transfer and Assignment; Term. 2.1 Transfer and Assignment. Purchaser may not sell or otherwise transfer or assign any shares of Series G Preferred, or any voting or other rights therein, to any person or entity except (i) with the prior written consent of the Company, or (ii) to an Affiliate of Purchaser (as defined below) pursuant to the terms of this Agreement. Subject to the provisions of Section 2.2, this provision shall not effect the Purchaser's right to transfer Conversion Shares. 2.2 Transfer of Rights. Notwithstanding anything herein to the contrary, the registration rights of Purchaser under Section 1 hereof may be assigned only (i) with the prior written consent of the Company; or (ii) to an Affiliate of Purchaser, with such rights being exercisable only for so long as such entity remains an Affiliate of Purchaser; provided, however that no entity may be assigned any of the foregoing rights unless the Company is given written notice by the assigning entity at the time of such assignment stating the name and address of the assignee and identifying the securities of the Company as to which the rights in question are being assigned; and provided further that any such assignee shall receive such assigned rights subject to all the terms and conditions of this Agreement, including without limitation the provisions of this Section 2. For the purpose of this Agreement, the term Affiliate with respect to Purchaser shall mean Saab Automobile AB and any entity controlled directly or indirectly by General Motors Corporation, where "control" means the ownership of more than fifty percent (50%) of the outstanding voting securities or voting interests of the entity in question. 2.3 Term. Subject to Section 1.7(f), the Company's obligations under this Agreement shall terminate on the tenth anniversary of the Closing as defined in the Preferred Stock Purchase Agreement. 3. General Provisions. 3.1 Assignment. Except as provided in Section 2 above, no party to this Agreement may assign, by operation of law or otherwise, all or any portion of its rights, obligations or liabilities under this Agreement. 3.2 Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties hereto and their successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 3.3 Governing Law. This Agreement shall be governed by and construed under the internal laws of the State of Delaware as applied to agreements among Delaware residents entered into and to be performed entirely within Delaware, without reference to principles of conflict of laws or choice of laws. 3.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11 3.5 Headings. The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. All references in this Agreement to sections, paragraphs, exhibits and schedules shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits and schedules attached hereto, all of which exhibits and schedules are incorporated herein by this reference. 3.6 Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be deemed effectively given and received (a) upon personal delivery, (b) on the fifth day following mailing by registered or certified mail, return receipt requested, postage prepaid, addressed to the Company or to Purchaser, as the case may be, at their respective addresses set forth below, (c), upon transmission of telegram or facsimile (with telephonic notice), or (d) upon confirmed delivery by overnight commercial courier service. If to Purchaser: OnStar 888 West Big Beaver Avenue, Suite 200 Troy, Michigan 48084 Attention: Fred H. Cooke Telephone: 248-269-1311 Facsimile: 248-269-1549 With a copy to: General Motors Legal Staff New Center One Building Mail Code: 482-208-835 3031 West Grand Boulevard Detroit, Michigan 48202 Attention: Kimberly K. Hudolin, Esq. Telephone: 313-974-1950 Facsimile: 313-974-0685 If to General Magic: General Magic, Inc. 420 N. Mary Avenue Sunnyvale, CA 94086 Attention: General Counsel Telephone: (408) 774-4235 Facsimile: (408) 774-4023 With a copy to: Cooley Godward Five Palo Alto Square Palo Alto, CA 94306 Attention: Timothy J. Moore, Esq. Telephone: (650) 843-5000 Facsimile: (650) 857-0663 12 Such addresses may be changed, from time to time, by means of a notice given in the manner provided in this Section 3.6. 3.7 Attorneys' Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees, experts' fees and costs, including those for pretrial, trial, on appeal, in arbitration and in bankruptcy and all other costs and necessary disbursements associated with any such actions, in addition to any other relief to which such party may be entitled. 3.8 Adjustments for Stock Splits, Etc. Wherever in this Agreement there is a reference to a specific number of shares of Common Stock or preferred stock of the Company of any class or series, then, upon the occurrence of any subdivision, combination or stock dividend of such class or series of stock, the specific number of shares so referenced in this Agreement shall automatically be proportionally adjusted to reflect the affect on the outstanding shares of such class or series of stock by such subdivision, combination or stock dividend. 3.9 Aggregation of Stock. All shares held or acquired by the Purchaser and its Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 3.10 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any provision of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holder of at least a majority of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 3.10 shall be binding upon Purchaser and the Company. No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a waiver of any other provisions hereof, whether or not similar, nor shall any such waiver constitute a continuing waiver. 3.11 Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. In the event of such invalidity, the parties shall seek to agree on an alternative enforceable provision that preserves the original purpose of this Agreement. 3.12 Entire Agreement. This Agreement, the Preferred Stock Purchase Agreement, the Certificate of Designations and the Warrant constitute the entire agreement and understanding of the parties with respect to the subject matter hereof and thereof and supersede any and all prior negotiations, correspondence, agreements, 13 understandings, duties or obligations between the parties with respect to the subject matter hereof and thereof. 3.13 Expenses. Except as otherwise provided herein, each of the Company and the Purchaser shall bear the expenses incurred on its behalf with respect to this Agreement and the transaction contemplated hereby. 14 IN WITNESS WHEREOF, the foregoing Registration Rights Agreement is hereby executed as of the date first above written. COMPANY: GENERAL MAGIC, INC. /s/ Steven Markman By:______________________________ Steven Markman Name:____________________________ Chief Executive Officer Title:___________________________ PURCHASER: GENERAL MOTORS CORPORATION By and through its OnStar Division /s/ F.H. Cooke By:______________________________ F.H. Cooke Name:____________________________ Executive Director, Onstar Title:___________________________ 15 -----END PRIVACY-ENHANCED MESSAGE-----