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                                                                    EXHIBIT 10.6

     This LOAN MODIFICATION AGREEMENT, dated as of December [18], 1998 (this 
"Agreement"), is between GENERAL MAGIC, INC., a Delaware corporation 
("Borrower") and SILICON VALLEY BANK ("Bank").

                                    Recitals

     A. In addition to any obligations which may be owing by Borrower to Bank, 
Borrower is indebted to Bank pursuant to a Loan and Security Agreement, dated 
as of December [___], 1997 (as may have been amended to the date hereof, the 
"Loan Agreement"). The term "Obligations" and the other terms defined in the 
Loan Agreement are used herein with the same meanings unless otherwise defined 
herein.

     B. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by 
the Collateral described in the Loan Agreement and an Intellectual Property 
Security Agreement. The foregoing security documents, the Loan Agreement and 
all other documents evidencing or securing the Obligations are called the 
"Existing Loan Documents" herein.

     The parties hereto hereby agree as follows:

     1.   Amendments.

     The Loan Agreement is hereby amended:

          (a)  To amend and restate in their entirety certain definitions in 
Section 1.1, as follows:

               "Current Liabilities" means, as of any applicable date, all 
               amounts that should, in accordance with GAAP, be included as 
               current liabilities on the consolidated balance sheet of 
               Borrower and its Subsidiaries, as at such date, including all 
               Indebtedness that is payable upon demand or within one year from 
               the date of determination thereof unless such Indebtedness is 
               renewable or extendable at the option of Borrower or any 
               Subsidiary to a date more than one year from the date of 
               determination, but excluding Subordinated Debt and current 
               deferred revenues.

               "Debt Service Coverage Ratio" means for any fiscal quarter of 
               Borrower on a consolidated basis, the ratio of (a) the sum of 
               quarterly net income, quarterly depreciation and amortization, 
               and quarterly interest expenses minus any income from 
               capitalized software development to (b) the sum of capital lease 
               payments due during such quarter, the current portion of long 
               term debt during such quarter, and quarterly interest expenses.

          (b)  To amend the defined term "Equipment Availability Date" in 
Section 1.1 thereof, to insert the word "End" after the words "Equipment 
Availability."

          (c)  To amend subsection (f) of the definition of "Permitted Liens" 
in Section 1.1 thereof, to substitute the word "constituting" before the words 
"an Event of Default" with the word "constituting."



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        (d)     To amend and restate in its entirety Exhibit C thereof in the 
form attached hereto.

        (e)     To amend subsection (f) of Section 3.1 thereof, to substitute 
the number "2.5" before the word "Section" with the number "2.4."

        (f)     To amend and restate in its entirety Section 5.2 as follows:

                5.2 Due Authorization; No Conflict. The execution, delivery, and
                performance of the Loan Documents are within Borrower's powers,
                have been duly authorized, and are not in conflict with nor
                constitute a breach of any provision contained in Borrower's
                Articles/Certificate of Incorporation or Bylaws, nor will they
                constitute an event of default under any material agreement to
                which Borrower is a party or by which Borrower is bound, nor is
                Borrower in default under any agreement to which it is a party
                or by which it is bound, which default could have a Material
                Adverse Effect.

        (g)     To amend and restate in its entirety Section 6.3 as follows:

                6.3. Financial Statements, Reports, Certificates. Borrower shall
                deliver to Bank: (a) as soon as available, but in any event
                within 30 days after the end of each month, a company prepared
                consolidated balance sheet and income statement covering
                Borrower's consolidated operations during such period, in a form
                and certified by an officer of Borrower reasonably acceptable to
                Bank; (b) as soon as available, but in any event within 120 days
                after the end of Borrower's fiscal year, audited consolidated
                financial statements of Borrower prepared in accordance with
                GAAP, consistently applied, together with an unqualified opinion
                on such financial statements of an independent certified public
                accounting firm reasonably acceptable to Bank; (c) within five
                days of filing, copies of all reports on Form 10-K, 10-Q and 8-K
                filed with the Securities and Exchange Commission and at the
                request of Bank, all statements, reports and notices sent or
                made available generally by Borrower to its security holders or
                to any holders of Subordinated Debt; (d) promptly upon receipt
                of notice thereof, a report of any legal actions pending or
                threatened against Borrower or any Subsidiary that could result
                in damages or costs to Borrower or any Subsidiary of $100,000 or
                more; (e) prompt notice of any material change in the
                composition of the Intellectual Property Collateral, including,
                but not limited to, any subsequent ownership right of the
                Borrower in or to any Copyright, Patent or Trademark not
                specified in any intellectual property security agreement
                between Borrower and Bank or knowledge of an event that
                materially adversely effects the value of the Intellectual
                Property Collateral; and (f) such budgets, sales projections,
                operating plans or other financial information as Bank may
                reasonably request from time to time.

                Borrower shall deliver to Bank with each of the monthly
                financial statements a Compliance Certificate signed by a
                Responsible Officer in




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                     substantially the form of Exhibit C hereto, together with,
                     at any month-end where the outstanding balance of
                     Borrower's accounts receivable (determined in accordance
                     with GAAP) exceed $250,000, a detailed accounts receivable
                     aging as at the end of such month.

              (h)    To amend and restate in its entirety Section 6.9 as 
                     follows:

                     6.9   Tangible Net Worth. Borrower shall maintain, as of
                     the last day of each calendar month, a Tangible Net Worth
                     of not less than $14,000,000 plus (a) 25% of proceeds (net
                     of reasonable offering and issuance costs) received by
                     Borrower after June 22, 1998, with respect to the issuance
                     of equity securities by Borrower and (b) 25% of cumulative
                     quarterly net income (not excluding any losses), measured
                     as of the last fiscal quarter.

              (i)    To amend and restate in its entirety Section 7.3 as 
                     follows:

                     7.3   Mergers or Acquisitions. Merge or consolidate, or
                     permit any of its Subsidiaries to merge or consolidate,
                     with or into any other business organization, or acquire,
                     or permit any of its Subsidiaries to acquire, all or
                     substantially all of the capital stock or property of
                     another Person except (i) such transactions that do not
                     involve an amount that in the aggregate exceeds $1,000,000
                     in cash or property (other than equity securities of the
                     Borrower) during the term of this Agreement; and, in
                     addition to the transactions permitted under clause (i),
                     (ii) an acquisition of a single company for a total cash
                     outlay not to exceed $1,000,000; provided that in the case
                     of (i) or (ii), Borrower shall be the surviving or
                     continuing corporation.

       2.     Corresponding Amendments. The Existing Loan Documents are hereby 
amended wherever necessary to reflect the changes described above.

       3.     No Defenses. Borrower agrees that it has no defenses against the 
obligations to pay any amounts under the Obligations.

       4.     Continuing Validity. Borrower understands and agrees that in 
modifying the existing Obligations, Bank is relying upon Borrower's 
representations, warranties, and agreements, as set forth in the Existing Loan 
Documents. Except as expressly modified pursuant to this Agreement, the terms 
of the Existing Loan Documents remain unchanged and in full force and effect. 
Bank's agreement to modifications to the existing Obligations pursuant to this 
Agreement in no way shall obligate Bank to make any future modifications to the 
Obligations. Nothing in this Agreement shall constitute a satisfaction of the 
Obligations. It is the intention of Bank and Borrower to retain as liable 
parties all makers and endorsers of Existing Loan Documents, unless the party 
is expressly released by Bank in writing. No maker, endorser, or guarantor will 
be released by virtue of this Agreement. The terms of this paragraph apply not 
only to this Agreement, but also to all subsequent loan modification agreements.



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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be 
executed as of the date first above written.


BORROWER:                                BANK:

GENERAL MAGIC, INC.,                     SILICON VALLEY BANK
a Delaware corporation
                                                                                
By  /s/ JAMES MCCORMICK                  By  [Signature Illegible]
  ---------------------------------        ------------------------------------
   James McCormick

Title:  Sr. VP, Finance and              Title:  V.P.
        Administration and CFO
     




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                                   EXHIBIT C
                             COMPLIANCE CERTIFICATE

TO:       SILICON VALLEY BANK

FROM:     GENERAL MAGIC, INC.

     The undersigned authorized officer of ___________________ hereby certifies 
that in accordance with the terms and conditions of the Loan and Security 
Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is in 
complete compliance for the period ending _________ with all required covenants 
except as noted below and (ii) all representations and warranties of Borrower 
stated in the Agreement are true and correct in all material respects as of the 
date hereof. Attached herewith are the required documents supporting the above 
certification. The Officer further certifies that these are prepared in 
accordance with Generally Accepted Accounting Principles (GAAP) and are 
consistently applied from one period to the next except as explained in an 
accompanying letter or footnotes. The Officer expressly acknowledges that no 
borrowings may be requested by the Borrower at any time or date of 
determination that Borrower is not in compliance with any of the terms of the 
Agreement, and that such compliance is determined not just at the date this 
certificate is delivered.

   PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.

<TABLE>
<CAPTION>
REPORTING COVENANT                REQUIRED                                  COMPLIES
------------------                --------                                  --------
<S>                               <C>                                       <C>
Monthly financial statements      Monthly within 30 days                    Yes    No
Annual (CPA audited)              FYE within 120 days                       Yes    No
[10Q and 10K                      Within 5 days after filing with the SEC]  Yes    No
A/R Agings                        Monthly within 30 days                    Yes    No
</TABLE>

<TABLE>
<CAPTION>
FINANCIAL COVENANT                REQUIRED       ACTUAL                     COMPLIES
------------------                --------       ------                     --------
<S>                               <C>            <C>                        <C>
Maintain on a Monthly Basis:

Minimum Quick Ratio               2.00:1.00       ____:1.0                  Yes    No
Minimum Liquidity Ratio           2.00:1.00       ____:1.0                  Yes    No
Minimum Tangible Net Worth        $14,000,000                               Yes    No
Plus 25% Equity Proceeds          $________                                 Yes    No
Plus 25% Quarterly Net Income     $________                                 Yes    NO

Maintain on a Quarterly Basis:

Minimum Debt Service Ratio        1.50:1.00       ____:1.0                  Yes    No

Maintain at all times:

Liquidity:                        $12,000,000     $______                   Yes    No
</TABLE>



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             BANK USE ONLY

Received By: ______________________

Date: ____________________

Reviewed By: ______________________

Compliance Status:  Yes/No

COMMENTS REGARDING EXCEPTIONS:

Sincerely,

_________________________ Date: ____________
SIGNATURE

_________________________
TITLE




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