ex10-30.htm


    EXHIBIT
10.30

    


    STOCK PURCHASE
AGREEMENT

     

    THIS
STOCK PURCHASE AGREEMENT (this “Agreement”)
is dated as of October___, 2009, and is entered into by and among ____; ____;
____; ____ and ____; (each individually, an “Investor”
and collectively, the "Investors")
and NeoMagic Corporation, a Delaware corporation (the “Company”),
with the Company and each of the Investors hereinafter being referred to
collectively as the “Parties”
and individually as a “Party.”).

     

    RECITALS

     

    WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Act”),
the Company desires to issue and sell to each Investor, and each Investor
desires to purchase from the Company, common stock and warrants to be issued by
the Company as more fully described below in this Agreement, including the
exhibits hereto;

     

    WHEREAS,
the Company and each  Investor are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 505 of Regulation D (“Regulation
D”) as promulgated by the U.S. Securities and Exchange Commission (the
“SEC”)
under the  Act;

     

    WHEREAS,
concurrently herewith, as part of this offering,  certain other
Investors ____________; _______________ ; and ____________ collectively,
the  "Other Investors")
are purchasing from the Company Twenty Million (20,000,000) Shares of the
Company’s common stock, par value $0.001 (the “Common
Stock”), for an aggregate consideration of Six Hundred Thousand Dollars
(U.S. $600,000), and , in connection with such purchase,
are  receiving an aggregate of Twenty Million (20,000,000) Class A
Warrants and Twenty Million (20,000,000) Class B Warrants;

    


    WHEREAS,
the aggregate consideration payable by the Investors shall be  based
on a purchase price of Three Cents ($.03) (the “Purchase
Price”) for one share of Common Stock, plus one Class A (Employee)
Warrant and one Class B (Employee)Warrant, as defined below, such Common Stock
and Warrants, being collectively referred to hereinafter as the "Securities";
and

     

    WHEREAS,
the Parties hereto desire that, upon the terms and subject to the conditions
contained herein, including payment by  the Investors, in accordance
with Exhibit 1, of an aggregate consideration of One Hundred and Fifty Two
Thousand Four Hundred and Fourteen Dollars and  Forty Four Cents
($152,414.44) to purchase an aggregate of Five Million Eighty Thousand Four
Hundred and Eighty (5,080,480) shares of the Company's Common Stock, issuable at
the Purchase Price  at the Closing, and, in connection with such
purchase, the Investors shall receive the following :

     

    
      
        
        

      

      
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    (a) An aggregate of Two Million Five
Hundred and Forty Thousand TwoHundred and  Forty(2,540,240) Class A
(Employee) Warrants (the"ClassA
(Employee) Warrants"),
to be granted pursuant to the form of the Class A Employee Warrant Agreement
attached as Exhibit 2; and

    


               (b)
An aggregate of Two Million Five Hundred and Forty Thousand TwoHundred and
Forty(2,540,240) Class B (Employee) Warrants (the"ClassB
(Employee) Warrants"),
to be granted pursuant to the form of the Class B Employee Warrant Agreement
attached as Exhibit 3;

    


    WHEREAS,
contemporaneously with the execution and delivery of this Agreement and the
Class A (Employee) Warrant Agreements and Class B (Employee) Warrant Agreements
referenced above, the Parties may be executing and delivering other
contemporaneous agreements executed by the Parties, which together with this
Agreement  and such Warrant Agreements shall be collectively referred
to as the “Transaction
Documents”);

     

    NOW,
THEREFORE, in consideration of the mutual agreements hereinafter set forth, and
such other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereto do hereby covenant, agree, represent
and warrant as follows:

     

    ARTICLE
1

    PURCHASE
AND SALE OF SECURITIES

     

    1.1  
Incorporation of
Recitals.  The recitals to this Agreement set forth above are hereby
incorporated by reference into this Agreement. 

    


    1.2 Purchase of
Securities.  Subject to the satisfaction (or waiver) of the terms
and conditions of this Agreement, each Investor agrees to purchase at the
Closing and the Company agrees to sell and issue to such Investor at the Closing
the Securities set forth opposite its name in Exhibit 1
hereto. 

    


    1.3 Closing Date. 
The closing (the “Closing”)
of the purchase and sale of the Common Stock and the Warrants shall take place
at 11:00 a.m., Pacific Time on October __, 2009, subject to any required
notification of satisfaction of the conditions to the Closing set forth herein,
or on such later date as is mutually agreed to by the Company and the Investors
(the “Closing
Date”).  The Closing shall occur on the Closing Date at the offices
of the Company at 780 Montague Expressway, Suite 504, San Jose, California (or
such other place as is mutually agreed to by the Company and the
Investors).

     

    1.4 Closing Deliveries. 
(a) At the Closing, the Company shall deliver or cause to be delivered to
each Investor the following (the “Company
Deliverables”):

     

    
      
        
        

      

      
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    (i)
irrevocable instructions addressed to the Company’s transfer agent instructing
it to issue a certificate or to make an appropriate book entry evidencing the
Shares, registered in the name of such Investor;

     

    (ii) the Class A and Class B (Employee)
Warrant Agreements, duly executed by the Company, granting the number
of  Class A and Class B (Employee)Warrants to be delivered to the
Investor in accordance with Exhibit 1 hereto ;   

     

    (b) 
At the Closing, each Investor shall deliver or cause to be delivered to the
Company the consideration set forth below on the Investor's signature page,
pursuant to the Company's  standard authorization to withhold
form.

    


    


    ARTICLE
2

     

    REPRESENTATIONS
AND WARRANTIES

    OF THE INVESTORS

    


    Except
for the representation and warranty set forth in Section 2.1 (b) below made
solely by Young and Zaidi , each of the  Investors represents and
warrants to the Company that, as of the date hereof and as of the
Closing:

     

    2.1 Status of
Investor.

    


    (a)   Investor has such
knowledge and experience in financial and business matters that he or she is
capable of evaluating the merits and risks of an investment in the
Securities.

     

    (b)   Young and Zaidi are
executive officers of the Company and, as such, each is an “accredited investor”
as defined in Rule 501(a) under the Act.  Each Investor is not a
registered broker-dealer under Section 15 of the Securities Exchange Act of
1934, as amended (the "1934
Act").   

    


    (c) 
Investor is acquiring the Securities as principal for its own account for
investment purposes only and not with a view to or with the intent of
distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Investor’s right at all times  to sell or
otherwise dispose of all or any part of such Securities in compliance with the
six(6) month or greater holding period set forth in Rule 144 promulgated under
the Act and in compliance with other applicable federal and state securities
laws.  Subject to the immediately preceding sentence, nothing contained
herein shall be deemed a representation or warranty by such Investor to hold the
Securities for any period of time.  Such Investor does not have any
agreement or understanding, directly or indirectly, with any person to
distribute any of the Securities.

     

    
      
        
        

      

      
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    (d) 
Investor has not directly or indirectly, nor has any person acting on behalf of
or pursuant to any understanding with such Investor, engaged in any transactions
in the securities of the Company (including, without limitation, any short sales
as defined in Rule 200 promulgated under Regulation SHO under the 1934 Act
and all types of direct and indirect stock pledges, forward sale contracts,
options, puts, calls, short sales, swaps and similar arrangements (including on
a total return basis), and sales and other transactions through non-US broker
dealers or foreign regulated brokers (“Short
Sales”) involving the Company’s securities) since the the 30th day prior
to the date of this Agreement.  Such Investor covenants that neither it nor
any person acting on its behalf or pursuant to any understanding with it will
engage in any transactions in the securities of the Company (including Short
Sales) prior to the time that the transactions contemplated by this Agreement
are publicly disclosed.

     

    2.2 Access to
Information.  Investor has been, and remains an employee of the
Company; is intimately familiar with the business and operations of the Company;
and has been furnished with such materials and has been given such access to
information relating to the Company as he or she has requested. Each Investor
has also been afforded the full opportunity to ask questions regarding the
Company and the Securities, all to the extent that the Investor has found
necessary to make an informed decision regarding the Investor’s entering into
this Agreement. In particular, each Investor specifically confirms that in
connection with making this investment, he or she has reviewed the most recent
SEC periodic report on Form 10-K and the Company's subsequent SEC reports on
Forms 8-K and 10-Q previously provided by the Company. In addition, Investor
confirms that he or she is aware that the Company's prior and current SEC
reports are available to the Investor on line at www.sec.gov. Investor
also confirms that he or she has been advised that the proceeds of this offering
are to be utilized as provided in Section 4.1 below.

    


    2.3 Understanding of Risks
Associated with the Acquisition of the Securities.  Investor
understands that an investment in the Securities is speculative and subject to
numerous risks, including but not limited to the risks set forth in the
Company’s filings with the SEC under the heading “Risk Factors.”  Without
limiting those disclosures, the Company hereby specifically advises each
Investor that there is an extremely limited trading volume for the Company's
Common Stock, which is not currently listed on NASDAQ, and the Company cannot
and is not providing any assurance that this situation will change after
Investor's purchase hereunder.

    


    2.4 Understanding of Nature
of Securities.  Investor understands that:

     

    (a) 
the Securities have not been registered by the Company under the Act or any
State Act (as defined below), and the Company does not intend to register the
Securities for sale under the Act or any State Act in reliance, among other
things, on the exemptions from registration available under Regulation D and
under Section 25102(f) of the California Corporate Securities Law of 1968, as
amended.

     

    
      
        
        

      

      
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    (b) 
the Securities are “restricted securities” as that term is defined in
Rule 144 under the Act and, as such, may only be resold subject to six (6)
months or greater holding periods, which will only commence upon payment for the
Common Stock (or exercise and payment for the Warrant Shares), and any re-sale
is subject also to the volume and other limitations contained in  Rule
144, a copy of which is available to the Investor on request. 

     

    (c) the
certificates, if any, evidencing the Securities shall include provisions
substantially in the form of the legend set forth below, which Investor has
read, understands and agrees to be bound by:

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR UNDER APPLICABLE STATE SECURITIES ACTS (THE “STATE
ACTS”). NOR IS SUCH REGISTRATION CONTEMPLATED.  SUCH SECURITIES
MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
UNLESS REGISTERED UNDER THE ACT OR THE STATE ACTS, EXCEPT UPON DELIVERY TO THE
COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE BOARD OF DIRECTORS OF THE
COMPANY AND TO LEGAL COUNSEL FOR THE COMPANY THAT REGISTRATION IS NOT REQUIRED
FOR SUCH TRANSFER OR THE SUBMISSION TO THE BOARD OF DIRECTORS AND SUCH COUNSEL
OF SATISFACTORY EVIDENCE THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE
ACT OR STATE ACTS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.

     

    (d) the
Company may, from time to time, make stop transfer notations in the Company’s
records to ensure compliance with the Act and any applicable State
Acts.

     

    (e)
Investor agrees, prior to any transfer of the Securities, to give written notice
to the Company expressing Investor's desire to effect such transfer and
describing briefly the proposed transfer.  Upon receiving such notice, the
Company shall present copies thereof to counsel for the Company and the
following provisions shall apply:

     

    (i)           
If, in the opinion of such counsel, the proposed transfer of such Securities may
be effected without registration of such Securities under the Act and the State
Acts, the Company shall promptly thereafter notify the person desiring to
transfer such Securities, whereupon such person shall be entitled to transfer
such Securities, all in accordance with the terms of the notice delivered by
such person to the Company and upon such further terms and conditions as shall
be required by the Company to ensure compliance with the Act and the State
Acts.

     

    (ii)          
If, in the opinion of such counsel, the proposed transfer of such Securities may
not be effected without registration of such Securities under the Act and the
State Acts, a copy of such opinion shall be promptly delivered to the person who
has proposed such transfer, and such proposed transfer shall not be made unless
such registration is then in effect.

     

    
      
        
        

      

      
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    2.5  
Investment
Intent.  Investor represents and warrants that:

     

    (a)    
Investor is acquiring the Securities for the Investor’s own account and not on
behalf of any other person.

     

    (b)   
Investor is the sole party in interest in this investment in the Securities and
is acquiring the Securities for investment and not for distribution or with the
intent of dividing Investor’s participation, profits or income , if
any,  with others or of selling, assigning, transferring or otherwise
disposing of the Securities.

     

    2.6 Further Assurances. 
Investor will execute and deliver to the Company any document, or do any other
act or thing, which the Company may reasonably request in connection with the
acquisition or transfer of the Securities.

    


    2.7 Ability to Bear
Economic Risk.  Investor has adequate means of providing for his or
her current needs and possible future contingencies, and has no need, and
anticipates no need in the foreseeable future, to sell the Securities which he
or she is acquiring pursuant to this Agreement. Investor is able to bear the
economic risks related to the acquisition of the Securities and, consequently,
without limiting the generality of the foregoing, is able to hold the Securities
for an indefinite period of time and has sufficient net worth to sustain a loss
of its entire interest in the Company in the event such loss should occur. 
Investor has no need for liquidity with respect to the Securities being
purchased hereunder.

     

    2.8 Tax Matters. 
Investor has reviewed with Investor’s own tax advisors the federal, state, local
and foreign tax consequences arising in connection with the acquisition of the
Securities (including any tax consequences that may result under recently
enacted tax legislation).  Investor is relying solely on such advisors and
not on any statements or representations of the Company or any of its agents and
understands that Investor (and not the Company) shall be responsible for
Investor’s own tax liability that may arise as a result of this
transaction.

     

    2.9 Accuracy of
Representations.  All of the representations and information
provided herein and any additional information that Investor has furnished to
the Company or its agents with respect to Investor’s financial position and
business experience is accurate and complete as of the date of this
Agreement.  If there should be any material adverse change in any such
representation or information prior to the Closing, Investor will immediately
furnish accurate and complete information concerning any such material change to
the Company.

     

    
      
        
        

      

      
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    2.10
Piggyback Registration
Rights.  If at any time following the Closing Date the Company
proposes to register any of the Securities under the Act (other than an
underwritten public offering or a registration on Form S-8 or S-4, or any
successor forms, relating to Common Stock issuable upon exercise of employee
stock options or in connection with any employee benefit or similar plan of the
Company or in connection with a direct or indirect acquisition by the Company of
another entity), whether or not for sale for its own account, the Company shall
each such time give prompt notice at least ten (10) days prior to the
anticipated filing date of the registration statement relating to such
registration to Investor, which notice shall offer Investor the opportunity to
include in such registration statement the number of Securities such Investor
may request. Upon the request of Investor made within five (5) days after
the receipt of notice from the Company (which request shall specify the number
and nature of the Securities intended to be registered by Investor, which may
include the shares of Common Stock issuable upon exercise of the
Warrants      (the "Warrant
Shares"), the Company shall use all reasonable efforts to effect the
registration under the Act of all Securities that the Company has been so
requested to register by the Investors, to the extent requisite to permit the
disposition of the Securities so to be registered, provided that if, at any time
after giving notice of its intention to register any Securities pursuant to this
Section 2.10 and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register such Securities, the Company shall give notice to Investor and,
thereupon, shall be relieved of its obligation to register any Securities in
connection with such registration. The obligations under this Section 2.10
shall expire when all of the Securities are saleable by Investors pursuant to
Rule 144 without limitation as to volume.

     

     

    ARTICLE
3

    


    REPRESENTATIONS
AND WARRANTIES

    OF
THE COMPANY

     

     The
Company represents and warrants to each of the Investors that, as of the date
hereof and as of the Closing:

    


    3.1 Issuance of
Securities.  The issuance of the Securities has been duly
authorized by all necessary corporate action and, when paid for and issued in
accordance with the terms of the Transaction Documents, the Securities will be
duly and validly issued, free and clear of all liens and encumbrances of the
Company. In addition, any Shares of Common Stock issued upon exercise of the
Warrants will be validly issued, fully paid and nonassessable and free and clear
from all preemptive or similar rights, and all liens and encumbrances of the
Company, with the holders being entitled to all rights accorded to a holder of
Common Stock.  Assuming the accuracy of each of the representations
and warranties set forth in Section 2 of this Agreement, the Company's offer and
issuance of the Securities to the Investors pursuant to this Agreement shall be
exempt from registration under the Act.

    


    
      
        
        

      

      
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    3.2 No
Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby (including, without limitation, the issuance
of Warrants and reservation for issuance and issuance of the Warrant Shares)
will not (i) result in a violation of any certificate of incorporation,
certificate of designation or bylaws or any other constituent document of the
Company or of any of its Subsidiaries, or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) in any respect under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or (iii)
result in a violation of any federal or state law, rule, regulation, order,
judgment or decree (including securities laws applicable to the Company or any
of its Subsidiaries) by which any property or asset of the Company or any of its
Subsidiaries is bound or affected.

    


    3.3 Consents.  Neither
the Company nor any of its Subsidiaries is required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency or any regulatory or self-regulatory agency or any other
person in order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents, in each case in accordance
with the terms thereof, except for (a) the filing with the SEC of (i) a Form D
with respect to the transactions contemplated hereby and (ii) any registration
statements in accordance with Section 2.10 and (b) the filing with the
California Department of Corporations of a Notice pursuant to Section 25102(f)
of the California Corporate Securities Act of 1968, as amended.

    


    3.4 No General
Solicitation.  Neither the Company, nor any of its Subsidiaries
or Affiliates ( as defined below), nor any Person acting on its or their behalf,
has engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with the offer or sale of the
Securities.

    


    3.5 Delisting from NASDAQ; No
Integrated Offering.  The Company has been delisted from
NASDAQ. In addition, none of the Company, its Subsidiaries, any of their
Affiliates, and any person acting on their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of the issuance of
any of the Securities under the Act, whether through integration with prior
offerings or otherwise.  None of the Company, its Subsidiaries, their
Affiliates and any person acting on their behalf will take any action or steps
referred to in the preceding sentence that would require registration of the
issuance of any of the Securities under the Act or cause the offering of the
Securities to be integrated with other offerings.

    


    
      
        
        

      

      
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    3.6 SEC Documents; Financial
Statements.  During the two (2) years prior to the date hereof,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements, notes and
documents incorporated by reference therein being hereinafter referred to as the
"SEC
Documents").  True, correct and complete copies of the SEC
Documents have been made available to the Investors through the EDGAR
system.  As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. As of their respective filing dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).

    


    3.7 Foreign Corrupt
Practices.  Since January 1, 2007, neither the Company nor any
of its Subsidiaries nor any director, officer, agent, employee or other person
acting on behalf of the Company or any of its Subsidiaries has, in the course of
its actions for, or on behalf of, the Company or any of its Subsidiaries (i)
used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated  any provision of the
U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.

     

    3.8 Sarbanes-Oxley
Act.  The Company is currently not subject to the requirements
of the Sarbanes-Oxley Act of 2002.

     

                   
3.9 Employee Relations
The Company and its Subsidiaries are in compliance with all federal,
state and local laws and regulations respecting labor, employment and employment
practices and benefits, terms and conditions of employment and wages and hours,
except where failures to be in compliance would not, in the aggregate,
reasonably be expected to result in a Material Adverse Effect (as defined in
Section 3.13 below).

     

    3.10 Intellectual Property
Rights

    


    (a) The Company and its Subsidiaries
own or possess adequate rights or licenses to use all trademarks, trade names,
service marks and all applications and registrations therefor, patents, patent
rights, copyrights, original works of authorship (including computer software)
and all applications and registrations therefor, inventions, trade secrets and
other intellectual property rights ("Intellectual
Property Rights") necessary to conduct their respective businesses as now
conducted.

    


    
      
        
        

      

      
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              (b)  The
Company does not have any knowledge of any infringement by the Company or its
Subsidiaries of Intellectual Property Rights of others.  No claim,
action or proceeding has been brought, or to the knowledge of the Company, has
been threatened, by or against the Company or its Subsidiaries regarding the
infringement, misappropriation or other violation of any Intellectual Property
Rights, other than any claim, action or proceeding which has since been
resolved.  Neither the Company nor any of its Subsidiaries is aware of
any existing facts which are likely to give rise to any infringement of
Intellectual Property Rights of others or infringement claims, actions or
proceedings.  The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of their
material Intellectual Property Rights.

     

    3.11 Internal Accounting and
Disclosure Controls. Subject to the disclosures contained in the SEC
Documents, the Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset and liability accountability, (iii)
access to assets or incurrence of liabilities is permitted only in accordance
with management's general or specific authorization and (iv) the recorded
accountability for assets and liabilities is compared with the existing assets
and liabilities at reasonable intervals and appropriate action is taken with
respect to any difference. Subject to the disclosures contained in the SEC
Documents , the Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-14 under the 1934 Act) that are designed to ensure
that information required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the SEC,
including, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the 1934 Act is accumulated and communicated to the Company's
management, including its principal executive officer or officers and its
principal financial officer or officers, as appropriate.

    


    3.12 Manipulation of
Price.  The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result, or that could reasonably be expected to cause or result, in
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii), sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the
Securities or (iii) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.

    


    
      
        
        

      

      
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    3.13 Material Adverse
Effect. As used herein the term, "Material
Adverse Effect" means any material adverse effect on the business,
properties, assets, operations, results of operations or financial condition of
the Company and its Subsidiaries, taken as a whole, or on the transactions
contemplated hereby or in the other Transaction Documents, or on the authority
or ability of the Company to perform its obligations under the Transaction
Documents.

     

    


    ARTICLE
4

    COMPANY
COVENANTS

     

    4.1           Use of
Proceeds.  The Company will use the proceeds from the sale of
the Securities for general corporate purposes, including general and
administrative expenses and payment of outstanding liabilities, and not for the
redemption or repurchase of any of its or its Subsidiaries' equity
securities.

     

    4.2 Disclosure of Transactions
and Other Material Information.  On or before the fourth
business day following the Closing Date, the Company shall issue a press release
and file a Current Report on Form 8-K, in compliance with applicable SEC
regulations.

    


    ARTICLE
5

    INDEMNIFICATION

     

    The
Investors recognizes that the Company’s entering into this Agreement will be
based to a material extent upon the Investors' representations and warranties
set forth herein and Investors agree to indemnify and hold harmless the Company
and its officers, directors, counsel, employees and other agents from and
against any and all loss, damages, liabilities or expenses including reasonable
attorneys’ fees which any such person may incur by reason of or in connection
with any misrepresentation made by Investors in this Agreement or otherwise, any
breach by Investors of their agreements with the Company or any sale or
distribution of any Securities by Investors in violation of the Act or State
Acts.  All representations and warranties of Investors contained in this
Agreement shall survive this Agreement.

     

    ARTICLE
6

    MISCELLANEOUS
PROVISIONS

     

    6.1 Captions and
Headings. The Article and Section headings throughout this
Agreement are for convenience of reference only and shall in no way be deemed to
define, limit, or alter any provision of this Agreement.

     

    
      
        
        

      

      
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    6.2 Entire Agreement;
Amendment.  This Agreement, together with the previously executed
non-disclosure agreements applicable to this transaction and the Class A and
Class B Warrant Agreements being entered into at the Closing set forth the
entire agreement and understanding of the Parties and shall supersede all prior
agreements and understandings.  No amendment of the Agreement shall be made
without the express written consent of the Parties.

     

    6.3 Severability. 
The invalidity or unenforceability of any particular provision of this Agreement
shall not affect any other provision hereof, and all other provisions hereof
shall continue to be enforceable to the maximum extent permitted by
law.

     

    6.4 Governing Law. 
This Agreement shall be governed by and construed in accordance with the laws of
the State of California, without reference to principles of conflicts of
laws.

     

    6.5 Notices.  All
notices, requests, demands, consents, and other communications hereunder shall
be transmitted in writing and shall be deemed to have been duly given when
hand-delivered or sent by certified mail, postage prepaid, with return receipt
requested, addressed to the Parties as follows:

    


     To
the Company:

    


    780 Montague Expressway, Suite 504, San
Jose, California95131, Attention: Chief
Executive Officer; and

    


     To
each Investor:

    


    As set forth on Exhibit 1

    


     Any
Party may change its address for purposes of this Section by giving notice
as provided herein.

    


    6.6 Counterparts.  This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
all counterparts have been signed by each Party and delivered to the other
Parties; provided that a facsimile signature shall be considered due execution
and shall be binding upon the signatory thereto with the same force and effect
as if the signature were an original.

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
Parties hereto as of the date first above written.

     

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	
                                                                                          NEOMAGIC
      CORPORATION

                                                                                        	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By: 	
                                                                                          /s/

                                                                                        	 	 	
                                                                                        	 
	 	
                                                                                          Douglas
      R. Young, Chief Executive Officer

                                                                                        	 	 	
                                                                                           

                                                                                        	 
	 	
                                                                                           

                                                                                        	 	 	
                                                                                           

                                                                                        	 


                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        



    

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