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EXHIBIT 4.5
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "AGREEMENT") is made and entered into
as of February 27, 1998 by and between General Magic, Inc., a Delaware
corporation (the "COMPANY") and Microsoft Corporation, a Washington corporation
("MICROSOFT").
RECITALS
A. Microsoft has agreed to purchase from the Company, and the Company has
agreed to sell to Microsoft, an aggregate of fifty thousand (50,000) shares of
the Company's Series A Convertible Preferred Stock, par value $0.001 (the
"SERIES A SHARES"), on the terms and conditions set forth in the Certificate of
Designation (the "CERTIFICATE") attached as Exhibit A to that certain Preferred
Stock Purchase Agreement, dated February 26, 1998, by and between the Company
and Microsoft (the "PREFERRED STOCK PURCHASE AGREEMENT").
B. The Preferred Stock Purchase Agreement provides that Microsoft shall
be granted certain information and registration rights, all as more fully set
forth herein.
C. Terms beginning with an initial capital which are not otherwise
defined herein shall have the same meaning as set forth in the Certificate which
is incorporated as Exhibit A to the Preferred Stock Purchase Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
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 of 1933, as amended
("SECURITIES ACT"), and the declaration or ordering of 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 ("COMMON STOCK") issued
or issuable upon the conversion of any Series A Shares as defined in and issued
pursuant to the Certificate; (2) all shares of Common Stock of the Company
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as a dividend or other distribution with respect to, or in
exchange for, in replacement of or in connection with a share split of, all such
shares of Common Stock described in clause (1) of this subsection (b); and (3)
all shares of Common Stock of the Company owned by Microsoft, but excluding any
shares acquired by Microsoft in breach of any agreement with the Company;
excluding in all cases, however, any Registrable Securities sold by a person in
a transaction in which rights under this Section 1 are not assigned in
accordance with this Agreement or sold to the public or sold pursuant to Rule
144 promulgated under the Securities Act.
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1.2 Demand Registration.
(a) Request for Registration. If the Company shall receive at
any time a written request from Microsoft that the Company file a registration
statement under the Securities Act covering the registration of 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
Microsoft, and effect, as soon as practicable thereafter, but in no event later
than sixty (60) days following receipt by Microsoft of the Request
Acknowledgment, the registration under the Securities Act of such Registrable
Securities which Microsoft so requests to be registered; provided that the
Registrable Securities requested by Microsoft to be registered pursuant to such
Registration Request must either: (i) be at least forty-five percent (45%) of
all Registrable Securities then held by Microsoft (including all Registrable
Securities issuable pursuant to the exercise or conversion of any warrant, right
or other security) or (ii) have an anticipated aggregate public offering price
(after any underwriting discounts and commissions) of not less than $1,000,000.
(b) Underwriting. If Microsoft 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 (an "UNDERWRITTEN
OFFERING"), then Microsoft 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 Microsoft to include its Registrable Securities in such registration
shall be conditioned upon Microsoft's participation in such underwriting and the
inclusion of Microsoft's Registrable Securities in the underwriting to the
extent provided herein. If Microsoft proposes to distribute its 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 Microsoft, which approval shall not
be unreasonably withheld. Any Registrable Securities excluded and withdrawn from
such underwriting shall be withdrawn from the registration.
(c) Maximum Number of Demand Registrations. The Company is
obligated to effect only two (2) such registrations pursuant to this Section
1.2.
(d) Delay. If GM shall furnish to Microsoft a certificate signed
by the President of GM stating that, in the good faith judgment of the Board of
Directors of GM, the commencement of an Underwritten Offering pursuant to this
Section 1.2 would (i) require disclosure of material information GM has a bona
fide business purpose of retaining as confidential or (ii) have a material
adverse effect on GM or its shareholders, in relation to any financing,
acquisition, corporate reorganization or other material transaction contemplated
by the Board of Directors of GM, involving GM or any of its affiliates, in each
case as determined by GM, then GM may direct that the commencement of the
Underwritten Offering be delayed for a period not in excess of ninety (90) days,
and may only exercise this right once within any twelve (12) month period.
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1.3 Piggyback Registrations. The Company shall notify Microsoft in
writing at least thirty (30) 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 secondary offerings of securities of the Company, and
registration statements relating to any registration under Section 1.2 or
Section 1.4 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 Microsoft an opportunity to include in such registration
statement all or any part of the Registrable Securities then held by Microsoft.
If Microsoft desires to include in any such registration statement all or any
part of its Registrable Securities, Microsoft shall, within twenty (20) 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 Microsoft wishes to include in such registration
statement. If Microsoft decides not to include all of its Registrable Securities
in any registration statement thereafter filed by the Company, Microsoft 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 Microsoft 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 Microsoft 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
Microsoft. In such event, the right of Microsoft to be included in a
registration pursuant to this Section 1.3 shall be conditioned upon Microsoft's
participation in such underwriting and the inclusion of Microsoft's Registrable
Securities in the underwriting to the extent provided herein. If Microsoft
proposes to distribute its Registrable Securities through such underwriting,
Microsoft 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, second, to
Microsoft 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 Microsoft and such other holders, and third, to each of
the directors, officers, employees, consultants, contractors, advisors and
vendors requesting inclusion of their shares of Common Stock or Preferred Stock
(as applicable) in such registration statement on a pro rata basis based on the
total number of shares of Common Stock or Preferred Stock (as applicable) then
held by each such party. If Microsoft disapproves of the terms of any such
underwriting, Microsoft 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.
1.4 Form S-3 Registration. In case the Company shall receive from
Microsoft 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 Microsoft,
then the Company will, as soon as reasonably
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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
Microsoft's Registrable Securities as are specified in such request; provided,
however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 1.4:
(i) if Form S-3 is not available for such offering by
Microsoft;
(ii) if the aggregate value of the Registrable Securities
proposed to be sold by Microsoft in such offering is no more than $1,000,000;
(iii) if the Company shall furnish to Microsoft 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 shareholders
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 90 days after receipt of the request of Microsoft 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 for
Microsoft pursuant to Section 1.2 and Section 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.
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), shall be borne by the
Company. Microsoft 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 Microsoft,
keep such registration statement effective
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for up to ninety (90) days plus any additional periods represented by any
"Black-Out Period" (as defined in the last paragraph of Subsection 1.5(b)
below).
(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 Microsoft 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
Microsoft, 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.
(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. Microsoft
shall also enter into and perform its obligations under such an agreement.
(vi) Notify Microsoft 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 Microsoft, 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 Microsoft'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 request of Microsoft, 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 Microsoft,
addressed to the underwriters, if any, and to Microsoft 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
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certified public accountants to underwriters in an underwritten public offering
and reasonably satisfactory to Microsoft, addressed to the underwriters, if any,
and to Microsoft.
(viii) Microsoft agrees that if the Company has delivered
preliminary or final prospectuses to Microsoft 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 Microsoft and
Microsoft 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
Microsoft with revised prospectuses and, following receipt of the revised
prospectuses, Microsoft 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 stop order, injunction or other order or requirement of the SEC
or any other governmental agency or court shall be referred to herein as
"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 Microsoft 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. To the extent permitted by law, the Company
will indemnify and hold harmless Microsoft, the officers and directors of
Microsoft, any underwriter (as defined in the Securities Act) for Microsoft and
each person, if any, who controls Microsoft or its underwriter within the
meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended, (the "1934 ACT"), against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations (collectively a
"VIOLATION"):
(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto;
(ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or
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(iii) any violation or alleged violation by the Company of
the Securities Act, the 1934 Act, any federal or state securities law or any
rule or regulation promulgated under the Securities Act, the 1934 Act or any
federal or state securities law in connection with the offering covered by such
registration statement;
and the Company will reimburse Microsoft, its officers or directors, underwriter
or controlling persons for any legal or other expenses reasonably incurred by
them, as incurred, in connection with investigating or defending any such loss,
claim, damage, liability or action; provided however, that the indemnity
agreement contained in this subsection 1.7(a) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by or on behalf of Microsoft, its officers, directors,
underwriter or controlling persons or by Microsoft's failure to deliver a copy
of the registration statement or prospectus or any amendments or supplements
thereto after the Company has furnished Microsoft or its underwriters with
copies of the same.
(b) By Microsoft. To the extent permitted by law, Microsoft will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act or the 1934 Act,
any underwriter and each person, if any, who controls such underwriter within
the meaning of the Securities Act or the 1934 Act, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
director, officer, underwriter, or controlling person of the Company may become
subject under the Securities Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by Microsoft expressly for use
in connection with such registration; and Microsoft will reimburse any legal or
other expenses reasonably incurred by the Company or any such director, officer,
underwriter or controlling person, as incurred, in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this subsection 1.7(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of
Microsoft, which consent shall not be unreasonably withheld; and provided
further, that the total amounts payable in indemnity by Microsoft under this
subsection 1.7((b)) in respect of any Violation shall not exceed the proceeds
(net of underwriters' and brokers' discounts and commissions) received by
Microsoft in the registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under
this Section 1.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to
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the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential conflict of interests between such indemnified party
and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.7, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 1.7.
(d) Contribution. If the indemnification provided in this
Section 1.7 is unavailable or insufficient to hold harmless an indemnified party
under subsection 1.7(a) or (b), then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages or liabilities referred to above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other from
the offering of the securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the indemnifying party on the one hand and the
indemnified party on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other equitable considerations. The relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering received by the indemnifying party bear to the total net proceeds
received by the indemnified party. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
related to information supplied by the indemnifying party or information
supplied by the indemnified party, and the parties' relevant intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this paragraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending against any action or claim that is the subject of this section.
Notwithstanding the provisions of this section, Microsoft shall not be required
to contribute any amount in excess of the amount of the total net proceeds (net
of underwriters' and brokers' discounts and commissions) received by Microsoft
from the sale of the securities pursuant to this Agreement. No person guilty of
fraudulent misrepresentation (within the meaning of Section II(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) Survival. The obligations of the Company and Microsoft under
this Section 1.7 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
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1.8 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, 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 effective date of the first registration under the Securities Act
filed by the Company for an offering of its securities to the general public;
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the 1934 Act (at any time after it has become subject to such
reporting requirements); and
(c) So long as Microsoft owns any Registrable Securities, to
furnish to Microsoft 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 1934 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 Microsoft may reasonably request in availing itself
of any rule or regulation of the Commission allowing Microsoft to sell any such
securities without registration.
1.9 Termination of the Company's Obligations. The Company shall have
no obligations pursuant to Sections 1.2 through 1.4 with respect to any
Registrable Securities proposed to be sold by Microsoft in a registration
pursuant to Section 1.2, 1.3 or 1.4 if, in the opinion of counsel to the
Company, all such Registrable Securities proposed to be sold by Microsoft may be
sold in a three month period without registration under the Securities Act
pursuant to Rule 144 under the Securities Act.
2. Transfer and Assignment.
Notwithstanding anything herein to the contrary, the registration rights of
Microsoft under Section 1 hereof may be assigned only to a party who acquires at
least twenty percent (20%) of the total Series A Shares originally acquired by
Microsoft pursuant to the Preferred Stock Purchase Agreement (or the shares of
Common Stock issued upon conversion thereof); provided, however, that no party
may be assigned any of the foregoing rights unless the Company is given written
notice by the assigning party 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.
3. Covenants.
3.1 Standstill. Until the earlier of the sale by Microsoft of more
than fifty percent (50%) of the total Series A Shares originally acquired by
Microsoft pursuant to the
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Preferred Stock Purchase Agreement (or the shares of Common Stock issued upon
conversion thereof) or such time that a third party or parties either (i) makes
a tender offer for forty percent (40%) or more of the combined voting power of
the then outstanding voting securities of the Company or (ii) accumulates
ownership, or executes a letter of intent or other document with the Company
that, when consummated, will result in ownership, of twenty percent (20%) or
more of the combined voting power of the then outstanding voting securities of
the Company (other than accumulations by a group of underwriters), Microsoft
covenants that it will not, unless the prior written consent of the Company has
been obtained: acquire, or permit any Subsidiary of Microsoft to acquire, by
purchase or otherwise, any equity securities of the Company if after such
acquisition Microsoft or any Subsidiary of Microsoft would hold, in the
aggregate, equity securities possessing, or which upon exercise or conversion
would possess equal to or more than twenty percent (20%) of the total combined
voting power of all outstanding voting securities of the Company (assuming
exercise or conversion of all outstanding equity securities of the Company held
by Microsoft or any of its Subsidiaries).
3.2 Proxy Solicitations; Voting Trusts. Until the earlier of the sale
by Microsoft of more than fifty percent (50%) of the total Series A Shares
originally acquired by Microsoft pursuant to the Preferred Stock Purchase
Agreement (or the shares of Common Stock issued upon conversion thereof) or such
time that a third party or parties either (i) makes a tender offer for forty
percent (40%) or more of the combined voting power of the then outstanding
voting securities of the Company or (ii) accumulates ownership, or executes a
letter of intent or other document with the Company that, when consummated, will
result in ownership, of twenty percent (20%) or more of the combined voting
power of the then outstanding voting securities of the Company (other than
accumulations by a group of underwriters), and for so long as the Company is
subject to the reporting requirements under Section 13(a) of the Exchange Act,
Microsoft and any Subsidiary of Microsoft shall provide ten (10) days advance
written notice to the Board of Directors of the Company before:
(i) becoming a "participant" in a "solicitation" of
proxies, as those terms are defined in Rule 14a-11 and Rule 14a-1, respectively,
of Regulation 14A under the Exchange Act in respect of any voting securities of
the Company that may be outstanding and entitled to vote at any time during such
period;
(ii) forming any group for the purpose of voting, purchasing
or disposing of the Company's securities; or
(iii) depositing any securities of the Company in a voting
trust or subjecting them to a voting agreement or other arrangement of similar
effect;
and shall not engage in any activity listed in (a) through (c) above if the
Company's Board of Directors prior to the end of such ten (10) day period
notifies Microsoft that the Company's Board of Directors by a majority vote does
not approve Microsoft's participation in such activity.
(b) Legend. To assist in effectuating the provisions of this
Section 3, Microsoft hereby consents to the placement of the following legend on
all certificates certifying ownership of any securities purchased by Microsoft
pursuant to the Preferred Stock Purchase
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Agreement until such securities have been sold, transferred or disposed of
pursuant to the requirements of this Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN AGREEMENT
PROVIDING THAT SUCH SECURITIES MAY NOT BE DEPOSITED IN A VOTING TRUST OR
SUBJECTED TO A VOTING AGREEMENT OR SIMILAR ARRANGEMENT EXCEPT IN ACCORDANCE
THEREWITH. A COPY OF SAID AGREEMENT IS ON FILE AT THE OFFICE OF THE
SECRETARY OF GENERAL MAGIC, INC."
4. General Provisions.
4.1 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.
4.2 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 assigns, any rights or remedies under or by reason of this
Agreement.
4.3 Governing Law and Venue. 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.
4.4 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.
4.5 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.
4.6 Notices. All notices, requests, demands or other communications
which are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is (a) deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, or (b) sent by a
nationally recognized overnight express courier, or (iii) by facsimile upon
written confirmation (other than the automatic confirmation that is received
from the recipient's facsimile machine) of receipt by the recipient of such
notice:
If to Microsoft: Microsoft Corporation
Xxx Xxxxxxxxx Xxx
00
00
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxxx Xxxxx & Xxxxx XXX
0000 Xxxxxxxx Center
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to General Magic: General Magic, Inc.
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to: Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Such addresses may be changed, from time to time, by means of a notice given in
the manner provided in this Section 4.6.
4.7 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.
4.8 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.
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4.9 Aggregation of Stock. All shares held or acquired by affiliated
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
4.10 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 Microsoft. Any
amendment or waiver effected in accordance with this Section shall be binding
upon Microsoft and 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. No waiver shall be binding unless expressed as such in a
document executed by the party making the waiver.
4.11 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
4.12 Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations between the parties with respect to the
subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
"COMPANY" "MICROSOFT"
GENERAL MAGIC, INC. MICROSOFT CORPORATION
By: By:
---------------------------------- ------------------------------------
[Name] [Name]
Its: Its:
--------------------------------- -----------------------------------
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