Document:

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                                                                    EXHIBIT 4.19

                               GENERAL MAGIC, INC.
                       NONQUALIFIED STOCK OPTION AGREEMENT

       General Magic, Inc. (the "Company") granted to the individual named below
an option to purchase certain shares of Common Stock of the Company, in the
manner and subject to the provisions of this Option Agreement.

       1.     Summary & Definitions:

                                   SUMMARY

Optionee:                          Kathleen M. Layton

Employee's ID#:                    ###-##-####

Date of Option Grant:              January 2, 2001

Number of Option Shares:           750,000 shares of Common Stock of the Company
                                   as adjusted from time to time pursuant to
                                   paragraph 9 below.

Exercise Price of Options:         $1.5313

                                   DEFINITIONS

"Initial Vesting Date" - Date occurring twelve months after the date on which
your employment with the Company commenced, which date was January 1, 2001 (the
"Start Date").

"Initial Exercise Date" - Date occurring twelve months after the Start Date.

" Vested Ratio" - Except as otherwise provided below, the Vested Ratio shall be
determined as follows:

                                                       Vested Ratio
                                                       ------------

       Prior to Initial Vesting Date                       0

       On Initial Vesting Date, provided the             1/4
       Optionee's Service is continuous from
       the Date of Option Grant until the
       Initial Vesting Date

       Plus
       ----

       For each full month of the Optionee's            1/48
       continuous Service from the Initial
       Vesting Date

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"Option Term Date" -- Ten years after the Date of Option Grant.

"Code" -- Internal Revenue Code of 1986, as amended.

"Company" -- General Magic, Inc., a Delaware corporation, and any successor
corporation thereto.

"Disability"--The Optionee's disability as defined in Section 4(b) of the
Employment Agreement.

"Employment Agreement"--The Employment Agreement between the Company and the
Optionee dated July 15, 2001, effective as of January 1, 2001.

"Participating Company" -- The Company and any present or future parent and/or
subsidiary corporation of the Company while such corporation is a parent or
subsidiary of the Company. For purposes of this Option Agreement, a parent
corporation and a subsidiary corporation shall be as defined in Sections 424(e)
and 424(f) of the Code.

"Participating Company Group" -- At any point in time all corporations
collectively which are then a Participating Company.

"Service" -- Optionee's employment or service with the Participating Company
Group in the capacity of an employee, director or consultant. Optionee's Service
shall not be deemed to have terminated merely because of a change in the
capacity in which Optionee renders Service or a change in the member of the
Participating Company Group for which Optionee renders Service, provided there
is no interruption or termination of Optionee's Service. Optionee's Service
shall be deemed to have terminated either upon an actual termination of Service
or upon the corporation for which Optionee renders Service ceasing to be a
member of the Participating Company Group. Subject to the foregoing, the
Company, in its sole discretion, shall determine whether Optionee's Service has
terminated and the effective date of such termination.

"Special Exercise Termination Date" - The date occurring eighteen (18) months
following the later of (i) the date on which the Optionee's service as Chief
Executive Officer and President of the Company terminated, or (ii) the date on
which the Option is fully vested; provided, however, that such date shall in no
event be later than the Option Term Date.

"Termination Without Cause"--Termination of the Optionee's Service by the
Company other than "for cause" (as defined in Subparagraph 5(a) of the
Employment Agreement), or the Optionee's resignation for "Good Reason" (as
defined in Subparagraph 5(d) of the Employment Agreement).

"Termination Without Cause Following Change in Control"-- Termination of the
Optionee's Service by the Company other than "for cause" (as defined in
Subparagraph 5(a) of the Employment Agreement) or the Optionee's resignation for
"Good Reason" (as defined in Subparagraph 5(d) of the Employment Agreement)
during the period commencing thirty (30) days prior to the date of the Company's
first public announcement that the Company has entered

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into an agreement that would result in a Change in Control and ending one year
following such Change in Control.

       2. Status of the Option. The Option is intended to be a nonqualified
stock option and shall not be treated as an incentive stock option as described
in Section 422 of the Code.

       3. Administration. All questions of interpretation concerning this Option
Agreement shall be determined by the Board of Directors of the Company (the
"Board") and/or by a duly appointed committee of the Board having such powers as
shall be specified by the Board. Any subsequent references herein to the Board
shall also mean the committee if such committee has been appointed. All
determinations by the Board shall be final and binding upon all persons having
an interest in the Option. Any officer of a Participating Company shall have the
authority to act on behalf of the Company with respect to any matter, right,
obligation, or election which is the responsibility of or which is allocated to
the Company herein, provided the officer has apparent authority with respect to
such matter, right, obligation, or election.

       4. Exercise of the Option.

              (a) Right to Exercise. Except as provided in paragraph 4(f) below,
the Option shall first become exercisable on the Initial Exercise Date. The
Option shall be exercisable on and after the Initial Exercise Date and prior to
the termination of the Option in the amount equal to the Number of Option Shares
multiplied by the Vested Ratio as set forth in paragraph 1 above, less the
number of shares previously acquired upon exercise of the Option. In no event
shall the Option be exercisable for more shares than the Number of Option
Shares.

              (b) Method of Exercise. The Option shall be exercisable by written
notice to the Company which shall state the election to exercise the Option, the
number of shares for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. Such written notice shall be signed by the Optionee and shall
be delivered in person, by certified or registered mail, return receipt
requested, or by facsimile transmission to the Chief Financial Officer of the
Company, or other authorized representative of the Participating Company Group,
prior to the termination of the Option as set forth in paragraph 6 below,
accompanied by full payment of the exercise price for the number of shares being
purchased.

              (c) Form of Payment of Exercise Price. Payment of the exercise
price for the number of shares for which the Option is being exercised shall be
made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of
shares of the Company's Common Stock owned by the Optionee and having a fair
market value not less than the exercise price, which either have been owned by
the Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company, (iii) by Immediate Sales Proceeds, as defined
below, or (iv) by any combination of the foregoing. Notwithstanding the
foregoing, the Option may not be exercised by tender to the Company of shares of
the Company's Common Stock to the extent such tender of stock would constitute a
violation of the provisions of any law, regulation and/or agreement restricting
the redemption of the Company's Common Stock. "Immediate Sales Proceeds" shall
mean the assignment in form acceptable to the Company of the proceeds of a sale
of some or all

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of the shares acquired upon the exercise of the Option pursuant to a program
and/or procedure approved by the Company (including, without limitation, through
an exercise complying with the provisions of Regulation T as promulgated from
time to time by the Board of Governors of the Federal Reserve System). The
Company reserves, at any and all times, the right, in the Company's sole and
absolute discretion, to decline to approve any such program and/or procedure.

              (d) Tax Withholding. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
hereby authorizes payroll withholding and otherwise agrees to make adequate
provision for foreign, federal and state tax withholding obligations of the
Participating Company Group, if any, which arise in connection with the Option,
including, without limitation, obligations arising upon (i) the exercise, in
whole or in part, of the Option, (ii) the transfer, in whole or in part, of any
shares acquired on exercise of the Option, (iii) the operation of any law or
regulation providing for the imputation of interest, or (iv) the lapsing of any
restriction with respect to any shares acquired on exercise of the Option. The
Optionee is cautioned that the Option is not exercisable unless the
Participating Company Group's withholding obligations are satisfied.
Accordingly, the Optionee may not be able to exercise the Option when desired
even though the Option is vested, and the Company shall have no obligation to
issue a certificate for such shares.

              (e) Certificate Registration. Except in the event the exercise
price is paid by Immediate Sales Proceeds, the certificate or certificates for
the shares as to which the Option is exercised shall be registered in the name
of the Optionee, or, if applicable, the heirs of the Optionee.

              (f) Restrictions on Grant of the Option and Issuance of Shares.
The grant of the Option and the issuance of the shares upon exercise of the
Option shall be subject to compliance with all applicable requirements of
foreign, federal or state law with respect to such securities. The Option may
not be exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable federal or state securities laws or other law or
regulations. In addition, the Option may not be exercised unless (i) a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares issuable upon exercise of
the Option may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act. THE OPTIONEE IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISABLE UNLESS THE FOREGOING CONDITIONS
ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION
WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. Questions concerning this
restriction should be directed to the Chief Financial Officer of the Company. As
a condition to the exercise of the Option, the Company may require the Optionee
to satisfy any qualifications that may be necessary or appropriate to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.

              (g) Fractional Shares. The Company shall not be required to issue
fractional shares upon the exercise of the Option.

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       5. Non-Transferability of the Option. The Option may be exercised during
the lifetime of the Optionee only by the Optionee and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution.

       6. Termination of the Option. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Term Date as defined
above, (b) the last date for exercising the Option following termination of
Service as described in paragraph 7 below, or (c) a Transfer of Control as
described in paragraph 8 below.

       7. Termination of Service.

              (a) Option Exercisability and Vesting. Except as provided in this
paragraph 7(a), the Option shall terminate and may not be exercised after
termination of the Optionee's Service with the Participating Company Group.

                     (i) Death or Disability. If the Optionee's Service with the
Participating Company Group terminates because of the death or Disability of the
Optionee, (1) the Option will continue to vest to the extent provided in
Subparagraph 4(b) of the Employment Agreement, and (2) the Option may be
exercised, to the extent unexercised and exercisable by the Optionee on the
proposed exercise date, by the Optionee (or the Optionee's legal representative)
at any time prior to the Special Exercise Termination Date. The Optionee's
Service shall be deemed to have terminated on account of death if the Optionee
dies within three (3) months after the Optionee's termination of Service.

                     (ii) Termination Without Cause. If the Optionee's Service
with the Participating Company Group terminates due to Termination Without
Cause, (1) the Option will continue to vest for two years from the date of
termination, and (2) the Option may be exercised, to the extent unexercised and
exercisable by the Optionee on the proposed exercise date, by the Optionee at
any time prior to the Special Exercise Termination Date.

                     (iii) Termination Without Cause Following Change in
Control. Notwithstanding any provision of paragraphs 8 or 9 below to the
contrary, if the Optionee's Service with the Participating Company Group
terminates due to Termination Without Cause Following Change in Control, (1) any
unexercised portion of the Option shall become immediately exercisable and
vested in full as of the date of the Optionee's termination of Service, and (2)
the Option may be exercised, to the extent unexercised and exercisable by the
Optionee on the proposed exercise date, by the Optionee at any time prior to the
Special Exercise Termination Date.

                     (iv) Other Termination of Service. If the Optionee Service
with the Participating Company Group terminates for any reason except as set
forth in Sections 7(a)(i), (ii) or (iii) above, the Option, to the extent
unexercised and exercisable by the Optionee on the date on which the Optionee's
Service terminated, may be exercised by the Optionee within three (3) months
after the date on which the Optionee's Service terminates, but in any event no
later than the Option Term Date.

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              (b) Exercise Prevented by Law. Except as provided in this
paragraph 7, the Option shall terminate and may not be exercised after the
Optionee's employment with the Participating Company Group terminates unless the
exercise of the Option in accordance with this paragraph 7 is prevented by the
provisions of paragraph 4(f) above. If the exercise of the Option is so
prevented, the Option shall remain exercisable until three (3) months after the
date the Optionee is notified by the Company that the Option is exercisable, but
in any event no later than the Option Term Date.

              (c) Optionee Subject to Section 16(b). Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth above would subject the Optionee to suit under Section 16(b) of the
Exchange Act, the Option shall remain exercisable until the earliest to occur of
(i) the tenth (10th) day following the date on which the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of employment, or (iii) the Option Term Date.

              (d) Leave of Absence. For purposes hereof, the Optionee's
employment with the Participating Company Group shall not be deemed to terminate
if the Optionee takes any military leave, sick leave, or other bona fide leave
of absence approved by the Company of ninety (90) days or less. In the event of
a leave in excess of ninety (90) days, the Optionee's employment shall be deemed
to terminate on the ninety-first (91st) day of the leave unless the Optionee's
right to reemployment with the Participating Company Group remains guaranteed by
statute or contract. Notwithstanding the foregoing, however, a leave of absence
shall be treated as employment for purposes of determining the Optionee's Vested
Ratio if and only if the leave of absence is designated by the Company as (or
required by law to be) a leave for which vesting credit is given.

       8. Ownership Change and Transfer of Control. For purposes hereof, the
"Control Company" shall mean the Participating Company whose stock is subject to
the Option. An "Ownership Change" shall be deemed to have occurred in the event
any of the following occurs with respect to the Control Company:

              (a) the direct or indirect sale or exchange by the stockholders of
the Control Company of all or substantially all of the stock of the Control
Company;

              (b) a merger in which the Control Company is a party; or

              (c) the sale, exchange, or transfer (including, without
limitation, pursuant to a liquidation or dissolution) of all or substantially
all of the Control Company's assets (other than a sale, exchange, or transfer to
one (1) or more corporations where the stockholders of the Control Company
before such sale, exchange, or transfer retain, directly or indirectly, at least
a majority of the beneficial interest in the voting stock of the corporation(s)
to which the assets were transferred).

              A "Transfer of Control" shall mean either (i) a "Change in
Control" as defined in Subparagraph 5(c) of the Employment Agreement, or (ii) an
Ownership Change in which the stockholders of the Control Company before such
Ownership Change do not retain, directly or

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indirectly, at least a majority of the beneficial interest in the voting stock
of the Control Company after such transaction or in which the Control Company is
not the surviving corporation.

              In the event of a Transfer of Control, the surviving, continuing,
successor or purchasing corporation or parent corporation thereof, as the case
may be (the "Acquiring Corporation"), shall either assume the Company's rights
and obligations under this Option Agreement or substitute for the Option a
substantially equivalent option for the Acquiring Corporation's stock. In the
event the Acquiring Corporation elects not to assume the Company's rights and
obligations under the Option Agreement or substitute for the Option in
connection with the Transfer of Control, any unexercised portion of the Option
shall become immediately exercisable and vested in full as of the date ten (10)
days prior to the date of the Transfer of Control. Any exercise of the Option
that was permissible solely by reason of this paragraph 8 shall be conditioned
upon the consummation of the Transfer of Control. The Option shall terminate
effective as of the date of the Transfer of Control to the extent that the
Option is neither assumed nor substituted for by the Acquiring Corporation in
connection with the Transfer of Control nor exercised as of the date of the
Transfer of Control.

       9. Effect of Change in Stock Subject to the Option. Appropriate
adjustments shall be made in the number, exercise price and class of shares of
stock subject to the Option in the event of a stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or like
change in the capital structure of the Company. In the event a majority of the
shares which are of the same class as the shares that are subject to the Option
are exchanged for, converted into, or otherwise become (whether or not pursuant
to an Ownership Change) shares of another corporation (the "New Shares"), the
Company may unilaterally amend the Option to provide that the Option is
exercisable for New Shares. In the event of any such amendment, the number of
shares and the exercise price shall be adjusted in a fair and equitable manner.

       10. Rights as a Stockholder or Employee. The Optionee shall have no
rights as a stockholder with respect to any shares covered by the Option until
the Option has been exercised pursuant to paragraph 4(b) above and the Company
has received full payment for the shares for which the Option has been
exercised. No adjustment shall be made for dividends or distributions or other
rights for which the record date is prior to the date of exercise and payment in
full, except as provided in paragraph 9 above. Nothing in the Option shall
confer upon the Optionee any right to continue in the employ of a Participating
Company or interfere in any way with any right of the Participating Company
Group to terminate the Optionee's employment at any time.

       11. Legends. The Company may at any time place legends referencing any
applicable federal, state and/or foreign securities law restrictions on all
certificates representing shares of stock subject to the provisions of this
Option Agreement. The Optionee shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to the Option in the possession of the Optionee in order to effectuate
the provisions of this Paragraph 11.

       12. Public Offering. The Optionee hereby agrees that in the event of any
underwritten public offering of stock, the Optionee shall not offer, sell,
contract to sell, pledge, hypothecate, grant any option to purchase or make any
short sale of, or otherwise dispose of any shares of

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stock of the Company or any rights to acquire stock of the Company for such
period of time from and after the effective date of such registration statement
as may be established by the underwriter for such public offering; provided,
however, that such period of time shall not exceed one hundred eighty (180) days
from the effective date of the registration statement to be filed in connection
with such public offering. The foregoing limitation shall not apply to shares
registered in such public offering under the Securities Act.

       13. Binding Effect. This Option Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.

       14. Termination or Amendment. The Board, including any duly appointed
committee of the Board, may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such termination or amendment may adversely
affect the Option or any unexercised portion hereof without the consent of the
Optionee.

       15. Integrated Agreement. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Participating Company Group other than those as set forth
or provided for herein. To the extent contemplated herein, the provisions of
this Option Agreement shall survive any exercise of the Option and shall remain
in full force and effect.

       16. Applicable Law. This Option Agreement shall be governed by the laws
of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.

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                                        GENERAL MAGIC, INC.

                                        By: /s/ Mary E. Doyle
                                           -------------------------------------
                                              Mary E. Doyle

                                        Title: General Counsel
                                              ----------------------------------

                                        Date:
                                             -----------------------------------

       The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement and hereby accepts the Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement.

Name: /s/ Kathleen M. Layton
     -------------------------------
     Kathleen M. Layton

Date: 7/31/01
     -------------------------------

                                       9<PAGE>   1

                                                                    EXHIBIT 4.20

                               GENERAL MAGIC, INC.
                       NONQUALIFIED STOCK OPTION AGREEMENT

       General Magic, Inc. (the "Company") granted to the individual named below
an option to purchase certain shares of Common Stock of the Company, in the
manner and subject to the provisions of this Option Agreement.

       1.     Summary & Definitions:

                                  SUMMARY

Optionee:                          Kathleen M. Layton

Employee's ID#:                    ###-##-####

Date of Option Grant:              January 2, 2001

Number of Option Shares:           750,000 shares of Common Stock of the Company
                                   as adjusted from time to time pursuant to
                                   paragraph 9 below.

Exercise Price of Options:         $1.5313

                                   DEFINITIONS

"Initial Vesting Date" - Date occurring six months after the date on which your
employment with the Company commenced, which date was January 1, 2001 (the
"Start Date").

"Initial Exercise Date" - Date occurring six months after the Start Date.

" Vested Ratio" - Except as otherwise provided below, the Vested Ratio shall be
determined as follows:

                                                      Vested Ratio
                                                      ------------

       Prior to Initial Vesting Date                        0

       On Initial Vesting Date, provided the              1/4
       Optionee's Service is continuous from
       the Date of Option Grant until the
       Initial Vesting Date

       Plus
       ----

       Six months after the Initial Vesting Date,         1/4

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       provided the Optionee's
       Service is continuous from the Date
       of Option Grant until six months
       after the Initial Vesting Date

       Plus
       ----

       One year after the Initial Vesting Date,          1/4
       provided the Optionee's Service is
       continuous from the Date of Option Grant
       until one year after the Initial Vesting
       Date

       Plus
       ----

       Eighteen months after the Initial Vesting Date,   1/4
       provided the Optionee's Service is continuous
       from the Date of Option Grant until eighteen
       months after the Initial Vesting Date

"Option Term Date" -- Ten years after the Date of Option Grant.

"Code" -- Internal Revenue Code of 1986, as amended.

"Company" -- General Magic, Inc., a Delaware corporation, and any successor
corporation thereto.

"Disability"--The Optionee's disability as defined in Section 4(b) of the
Employment Agreement.

"Employment Agreement"--The Employment Agreement between the Company and the
Optionee dated July 15, 2001, effective as of January 1, 2001.

"Participating Company" -- The Company and any present or future parent and/or
subsidiary corporation of the Company while such corporation is a parent or
subsidiary of the Company. For purposes of this Option Agreement, a parent
corporation and a subsidiary corporation shall be as defined in Sections 424(e)
and 424(f) of the Code.

"Participating Company Group" -- At any point in time all corporations
collectively which are then a Participating Company.

"Service" -- Optionee's employment or service with the Participating Company
Group in the capacity of an employee, director or consultant. Optionee's Service
shall not be deemed to have terminated merely because of a change in the
capacity in which Optionee renders Service or a change in the member of the
Participating Company Group for which Optionee renders Service, provided there
is no interruption or termination of Optionee's Service. Optionee's Service
shall be deemed to have terminated either upon an actual termination of Service
or upon the corporation for which Optionee renders Service ceasing to be a
member of the Participating

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Company Group. Subject to the foregoing, the Company, in its sole discretion,
shall determine whether Optionee's Service has terminated and the effective date
of such termination.

"Special Exercise Termination Date" - The date occurring eighteen (18) months
following the later of (i) the date on which the Optionee's service as Chief
Executive Officer and President of the Company terminated, or (ii) the date on
which the Option is fully vested; provided, however, that such date shall in no
event be later than the Option Term Date.

"Termination Without Cause"--Termination of the Optionee's Service by the
Company other than "for cause" (as defined in Subparagraph 5(a) of the
Employment Agreement), or the Optionee's resignation for "Good Reason" (as
defined in Subparagraph 5(d) of the Employment Agreement).

"Termination Without Cause Following Change in Control"-- Termination of the
Optionee's Service by the Company other than "for cause" (as defined in
Subparagraph 5(a) of the Employment Agreement) or the Optionee's resignation for
"Good Reason" (as defined in Subparagraph 5(d) of the Employment Agreement)
during the period commencing thirty (30) days prior to the date of the Company's
first public announcement that the Company has entered into an agreement that
would result in a Change in Control and ending one year following such Change in
Control.

       2. Status of the Option. The Option is intended to be a nonqualified
stock option and shall not be treated as an incentive stock option as described
in Section 422 of the Code.

       3. Administration. All questions of interpretation concerning this Option
Agreement shall be determined by the Board of Directors of the Company (the
"Board") and/or by a duly appointed committee of the Board having such powers as
shall be specified by the Board. Any subsequent references herein to the Board
shall also mean the committee if such committee has been appointed. All
determinations by the Board shall be final and binding upon all persons having
an interest in the Option. Any officer of a Participating Company shall have the
authority to act on behalf of the Company with respect to any matter, right,
obligation, or election which is the responsibility of or which is allocated to
the Company herein, provided the officer has apparent authority with respect to
such matter, right, obligation, or election.

       4. Exercise of the Option.

              (a) Right to Exercise. Except as provided in paragraph 4(f) below,
the Option shall first become exercisable on the Initial Exercise Date. The
Option shall be exercisable on and after the Initial Exercise Date and prior to
the termination of the Option in the amount equal to the Number of Option Shares
multiplied by the Vested Ratio as set forth in paragraph 1 above, less the
number of shares previously acquired upon exercise of the Option. In no event
shall the Option be exercisable for more shares than the Number of Option
Shares.

              (b) Method of Exercise. The Option shall be exercisable by written
notice to the Company which shall state the election to exercise the Option, the
number of shares for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the

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provisions of this Option Agreement. Such written notice shall be signed by the
Optionee and shall be delivered in person, by certified or registered mail,
return receipt requested, or by facsimile transmission to the Chief Financial
Officer of the Company, or other authorized representative of the Participating
Company Group, prior to the termination of the Option as set forth in paragraph
6 below, accompanied by full payment of the exercise price for the number of
shares being purchased.

              (c) Form of Payment of Exercise Price. Payment of the exercise
price for the number of shares for which the Option is being exercised shall be
made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of
shares of the Company's Common Stock owned by the Optionee and having a fair
market value not less than the exercise price, which either have been owned by
the Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company, (iii) by Immediate Sales Proceeds, as defined
below, or (iv) by any combination of the foregoing. Notwithstanding the
foregoing, the Option may not be exercised by tender to the Company of shares of
the Company's Common Stock to the extent such tender of stock would constitute a
violation of the provisions of any law, regulation and/or agreement restricting
the redemption of the Company's Common Stock. "Immediate Sales Proceeds" shall
mean the assignment in form acceptable to the Company of the proceeds of a sale
of some or all of the shares acquired upon the exercise of the Option pursuant
to a program and/or procedure approved by the Company (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System). The Company reserves, at any and all times, the right, in the Company's
sole and absolute discretion, to decline to approve any such program and/or
procedure.

              (d) Tax Withholding. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
hereby authorizes payroll withholding and otherwise agrees to make adequate
provision for foreign, federal and state tax withholding obligations of the
Participating Company Group, if any, which arise in connection with the Option,
including, without limitation, obligations arising upon (i) the exercise, in
whole or in part, of the Option, (ii) the transfer, in whole or in part, of any
shares acquired on exercise of the Option, (iii) the operation of any law or
regulation providing for the imputation of interest, or (iv) the lapsing of any
restriction with respect to any shares acquired on exercise of the Option. The
Optionee is cautioned that the Option is not exercisable unless the
Participating Company Group's withholding obligations are satisfied.
Accordingly, the Optionee may not be able to exercise the Option when desired
even though the Option is vested, and the Company shall have no obligation to
issue a certificate for such shares.

              (e) Certificate Registration. Except in the event the exercise
price is paid by Immediate Sales Proceeds, the certificate or certificates for
the shares as to which the Option is exercised shall be registered in the name
of the Optionee, or, if applicable, the heirs of the Optionee.

              (f) Restrictions on Grant of the Option and Issuance of Shares.
The grant of the Option and the issuance of the shares upon exercise of the
Option shall be subject to compliance with all applicable requirements of
foreign, federal or state law with respect to such securities. The Option may
not be exercised if the issuance of shares upon such exercise would

                                       4
<PAGE>   5

constitute a violation of any applicable federal or state securities laws or
other law or regulations. In addition, the Option may not be exercised unless
(i) a registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares issuable upon exercise of
the Option may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act. THE OPTIONEE IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISABLE UNLESS THE FOREGOING CONDITIONS
ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION
WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. Questions concerning this
restriction should be directed to the Chief Financial Officer of the Company. As
a condition to the exercise of the Option, the Company may require the Optionee
to satisfy any qualifications that may be necessary or appropriate to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.

              (g) Fractional Shares. The Company shall not be required to issue
fractional shares upon the exercise of the Option.

       5. Non-Transferability of the Option. The Option may be exercised during
the lifetime of the Optionee only by the Optionee and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution.

       6. Termination of the Option. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Term Date as defined
above, (b) the last date for exercising the Option following termination of
Service as described in paragraph 7 below, or (c) a Transfer of Control as
described in paragraph 8 below.

       7. Termination of Service.

              (a) Option Exercisability and Vesting. Except as provided in this
paragraph 7(a), the Option shall terminate and may not be exercised after
termination of the Optionee's Service with the Participating Company Group.

                     (i) Death or Disability. If the Optionee's Service with the
Participating Company Group terminates because of the death or Disability of the
Optionee, (1) the Option will continue to vest to the extent provided in
Subparagraph 4(b) of the Employment Agreement, and (2) the Option may be
exercised, to the extent unexercised and exercisable by the Optionee on the
proposed exercise date, by the Optionee (or the Optionee's legal representative)
at any time prior to the Special Exercise Termination Date. The Optionee's
Service shall be deemed to have terminated on account of death if the Optionee
dies within three (3) months after the Optionee's termination of Service.

                     (ii) Termination Without Cause. If the Optionee's Service
with the Participating Company Group terminates due to Termination Without
Cause, (1) the Option will continue to vest for two years from the date of
termination, and (2) the Option may be exercised,

                                       5
<PAGE>   6

to the extent unexercised and exercisable by the Optionee on the proposed
exercise date, by the Optionee at any time prior to the Special Exercise
Termination Date.

                     (iii) Termination Without Cause Following Change in
Control. Notwithstanding any provision of paragraphs 8 or 9 below to the
contrary, if the Optionee's Service with the Participating Company Group
terminates due to Termination Without Cause Following Change in Control, (1) any
unexercised portion of the Option shall become immediately exercisable and
vested in full as of the date of the Optionee's termination of Service, and (2)
the Option may be exercised, to the extent unexercised and exercisable by the
Optionee on the proposed exercise date, by the Optionee at any time prior to the
Special Exercise Termination Date.

                     (iv) Other Termination of Service. If the Optionee Service
with the Participating Company Group terminates for any reason except as set
forth in Sections 7(a)(i), (ii) or (iii) above, the Option, to the extent
unexercised and exercisable by the Optionee on the date on which the Optionee's
Service terminated, may be exercised by the Optionee within three (3) months
after the date on which the Optionee's Service terminates, but in any event no
later than the Option Term Date.

              (b) Exercise Prevented by Law. Except as provided in this
paragraph 7, the Option shall terminate and may not be exercised after the
Optionee's employment with the Participating Company Group terminates unless the
exercise of the Option in accordance with this paragraph 7 is prevented by the
provisions of paragraph 4(f) above. If the exercise of the Option is so
prevented, the Option shall remain exercisable until three (3) months after the
date the Optionee is notified by the Company that the Option is exercisable, but
in any event no later than the Option Term Date.

              (c) Optionee Subject to Section 16(b). Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth above would subject the Optionee to suit under Section 16(b) of the
Exchange Act, the Option shall remain exercisable until the earliest to occur of
(i) the tenth (10th) day following the date on which the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of employment, or (iii) the Option Term Date.

              (d) Leave of Absence. For purposes hereof, the Optionee's
employment with the Participating Company Group shall not be deemed to terminate
if the Optionee takes any military leave, sick leave, or other bona fide leave
of absence approved by the Company of ninety (90) days or less. In the event of
a leave in excess of ninety (90) days, the Optionee's employment shall be deemed
to terminate on the ninety-first (91st) day of the leave unless the Optionee's
right to reemployment with the Participating Company Group remains guaranteed by
statute or contract. Notwithstanding the foregoing, however, a leave of absence
shall be treated as employment for purposes of determining the Optionee's Vested
Ratio if and only if the leave of absence is designated by the Company as (or
required by law to be) a leave for which vesting credit is given.

       8. Ownership Change and Transfer of Control. For purposes hereof, the
"Control Company" shall mean the Participating Company whose stock is subject to
the Option. An

                                       6
<PAGE>   7

"Ownership Change" shall be deemed to have occurred in the event any of the
following occurs with respect to the Control Company:

              (a) the direct or indirect sale or exchange by the stockholders of
the Control Company of all or substantially all of the stock of the Control
Company;

              (b) a merger in which the Control Company is a party; or

              (c) the sale, exchange, or transfer (including, without
limitation, pursuant to a liquidation or dissolution) of all or substantially
all of the Control Company's assets (other than a sale, exchange, or transfer to
one (1) or more corporations where the stockholders of the Control Company
before such sale, exchange, or transfer retain, directly or indirectly, at least
a majority of the beneficial interest in the voting stock of the corporation(s)
to which the assets were transferred).

              A "Transfer of Control" shall mean either (i) a "Change in
Control" as defined in Subparagraph 5(c) of the Employment Agreement, or (ii) an
Ownership Change in which the stockholders of the Control Company before such
Ownership Change do not retain, directly or indirectly, at least a majority of
the beneficial interest in the voting stock of the Control Company after such
transaction or in which the Control Company is not the surviving corporation.

              In the event of a Transfer of Control, the surviving, continuing,
successor or purchasing corporation or parent corporation thereof, as the case
may be (the "Acquiring Corporation"), shall either assume the Company's rights
and obligations under this Option Agreement or substitute for the Option a
substantially equivalent option for the Acquiring Corporation's stock. In the
event the Acquiring Corporation elects not to assume the Company's rights and
obligations under the Option Agreement or substitute for the Option in
connection with the Transfer of Control, any unexercised portion of the Option
shall become immediately exercisable and vested in full as of the date ten (10)
days prior to the date of the Transfer of Control. Any exercise of the Option
that was permissible solely by reason of this paragraph 8 shall be conditioned
upon the consummation of the Transfer of Control. The Option shall terminate
effective as of the date of the Transfer of Control to the extent that the
Option is neither assumed nor substituted for by the Acquiring Corporation in
connection with the Transfer of Control nor exercised as of the date of the
Transfer of Control.

       9. Effect of Change in Stock Subject to the Option. Appropriate
adjustments shall be made in the number, exercise price and class of shares of
stock subject to the Option in the event of a stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or like
change in the capital structure of the Company. In the event a majority of the
shares which are of the same class as the shares that are subject to the Option
are exchanged for, converted into, or otherwise become (whether or not pursuant
to an Ownership Change) shares of another corporation (the "New Shares"), the
Company may unilaterally amend the Option to provide that the Option is
exercisable for New Shares. In the event of any such amendment, the number of
shares and the exercise price shall be adjusted in a fair and equitable manner.

                                       7
<PAGE>   8

       10. Rights as a Stockholder or Employee. The Optionee shall have no
rights as a stockholder with respect to any shares covered by the Option until
the Option has been exercised pursuant to paragraph 4(b) above and the Company
has received full payment for the shares for which the Option has been
exercised. No adjustment shall be made for dividends or distributions or other
rights for which the record date is prior to the date of exercise and payment in
full, except as provided in paragraph 9 above. Nothing in the Option shall
confer upon the Optionee any right to continue in the employ of a Participating
Company or interfere in any way with any right of the Participating Company
Group to terminate the Optionee's employment at any time.

       11. Legends. The Company may at any time place legends referencing any
applicable federal, state and/or foreign securities law restrictions on all
certificates representing shares of stock subject to the provisions of this
Option Agreement. The Optionee shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to the Option in the possession of the Optionee in order to effectuate
the provisions of this Paragraph 11.

       12. Public Offering. The Optionee hereby agrees that in the event of any
underwritten public offering of stock, the Optionee shall not offer, sell,
contract to sell, pledge, hypothecate, grant any option to purchase or make any
short sale of, or otherwise dispose of any shares of stock of the Company or any
rights to acquire stock of the Company for such period of time from and after
the effective date of such registration statement as may be established by the
underwriter for such public offering; provided, however, that such period of
time shall not exceed one hundred eighty (180) days from the effective date of
the registration statement to be filed in connection with such public offering.
The foregoing limitation shall not apply to shares registered in such public
offering under the Securities Act.

       13. Binding Effect. This Option Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.

       14. Termination or Amendment. The Board, including any duly appointed
committee of the Board, may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such termination or amendment may adversely
affect the Option or any unexercised portion hereof without the consent of the
Optionee.

       15. Integrated Agreement. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Participating Company Group other than those as set forth
or provided for herein. To the extent contemplated herein, the provisions of
this Option Agreement shall survive any exercise of the Option and shall remain
in full force and effect.

       16. Applicable Law. This Option Agreement shall be governed by the laws
of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.

                                       8
<PAGE>   9

                                        GENERAL MAGIC, INC.

                                        By: /s/ Mary E. Doyle
                                           -------------------------------------
                                              Mary E. Doyle

                                        Title: General Counsel
                                              ----------------------------------

                                        Date:
                                             -----------------------------------

       The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement and hereby accepts the Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement.

Name: /s/ Kathleen M. Layton
     -------------------------------
     Kathleen M. Layton

Date: 7/31/01
     -------------------------------

                                       9

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