CUSIP No. 81371G 10 S 13D Page 1 of 19 Pages
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
SCHEDULE 13D*
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
The IXATA Group, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
------------------------------------------------------------------------------
81371G 10 S
(CUSIP Number)
Zimri C. Putney
12701 Fair Lakes Circle, Suite 690, Fairfax, VA 22033 (703) 803-0544
(Name, address and telephone number of person
authorized to receive notices and communications)
October 13, 2000
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7 for
other parties to whom copies are to be sent.
(Continued on following pages)
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*The remainder of this cover page shall be filled out for a Reporting
Person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not
be deemed to be "filed" for purposes of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes)
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CUSIP No. 81371G 10 S 13D Page 2 of 19 Pages
________________________________________________________________________________
(1) NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS.
OF ABOVE PERSONS (ENTITIES ONLY)
NextGen Fund II, L.L.C.
________________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [ ]
(b) [X]
________________________________________________________________________________
(3) SEC USE ONLY
________________________________________________________________________________
(4) SOURCE OF FUNDS **
NOT APPLICABLE
________________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
________________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
________________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
-0-
SHARES _____________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
900,000
OWNED BY _____________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
-0-
REPORTING _____________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
900,000
_____________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
900,000
________________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
________________________________________________________________________________
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CUSIP No. 81371G 10 S 13D Page 3 of 19 Pages
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
5.98%
________________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
OO
________________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
________________________________________________________________________________
________________________________________________________________________________
(1) NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS.
OF ABOVE PERSONS (ENTITIES ONLY)
NextGen SBS Fund II, L.L.C.
________________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [ ]
(b) [X]
________________________________________________________________________________
(3) SEC USE ONLY
________________________________________________________________________________
(4) SOURCE OF FUNDS **
NOT APPLICABLE
___________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
________________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
________________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
-0-
SHARES _____________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
600,000
OWNED BY _____________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
-0-
REPORTING _____________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER
600,000
_____________________________________________________
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CUSIP No. 81371G 10 S 13D Page 4 of 19 Pages
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
600,000
________________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
________________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
4.07%
________________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
OO
________________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
________________________________________________________________________________
(1) NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS.
OF ABOVE PERSONS (ENTITIES ONLY)
Zimri C. Putney
________________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [ ]
(b) [X]
________________________________________________________________________________
(3) SEC USE ONLY
________________________________________________________________________________
(4) SOURCE OF FUNDS **
NOT APPLICABLE
____________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
________________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
USA
________________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER
-0-
SHARES _____________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER
1,500,000
OWNED BY _____________________________________________________
EACH (9) SOLE DISPOSITIVE POWER
-0-
REPORTING _____________________________________________________
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CUSIP No. 81371G 10 S 13D Page 5 of 19 Pages
PERSON WITH (10) SHARED DISPOSITIVE POWER
1,500,000
________________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON
1,500,000
________________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
________________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
9.59%
________________________________________________________________________________
(14) TYPE OF REPORTING PERSON **
IN
________________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
________________________________________________________________________________
Item 1. Security and Issuer.
This statement relates to the Common Stock (the "Common Stock") of The
IXATA Group, Inc., a Delaware corporation (the "Company"), and shares of Common
Stock issuable upon exercise of Warrants issued by the Company (the "Warrants").
The Company's principal executive offices are located at 8989 Rio San Diego
Drive, San Diego, California 92108.
Item 2. Identity and Background.
(a) This statement is filed by:
(i) NextGen Fund II, L.L.C., a Virginia limited liability
company ("NG"), with respect to the Warrants directly
owned by it;
(ii) NextGen SBS Fund II, L.L.C., a Virginia limited
liability company ("NGSBS"), with respect to the
Warrants directly owned by it; and
(iii) Zimri C. Putney ("Mr. Putney"), who is managing
director of the managing member of NG and NGSBS, with
respect to the Warrants directly owned by NG and
NGSBS.
The foregoing persons are hereinafter sometimes collectively referred
to as the Reporting Persons".
(b) The address of the principal business and principal office of each
of the Reporting Persons is 12701 Fair Lakes Circle, Suite 690, Fairfax,
Virginia 22033.
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CUSIP No. 81371G 10 S 13D Page 6 of 19 Pages
(c) The principal business of each of NG and NGSBS is serving as a
private investment fund. Mr. Putney is managing director of the managing member
of each of NG and NGSBS.
(d) None of the Reporting Persons has, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) None of the Reporting Persons has, during the last five years, been
a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and, as a result of such proceeding, was, or is subject to, a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or State securities laws or finding
any violation with respect to such laws.
(f) Each of NG and NGSBS is a Virginia limited liability company. Mr.
Putney is a United States citizen.
Item 3. Source and Amount of Funds and Other Consideration.
On October 13, 2000, the Company issued to NG and NGSBS Warrants to
purchase 900,000 shares and 600,000 shares, respectively, of the Common Stock of
the Company. The Company issued the Warrants to NG and NGSBS in consideration of
the execution and delivery by NG and NGSBS of guaranties of a loan to the
Company from Branch Banking & Trust Co. in the original principal amount of
$100,000. The Warrants are exercisable at a price of $.03 per share and expire
on October 13, 2001. A form of the Warrant is attached hereto as Exhibit 1.
Item 4. Purpose of the Transaction.
The purpose of the acquisition of the Warrants by the Reporting Persons
was for investment and to provide short-term financing for the Company. The
Reporting Persons reserve the right to acquire, or cause to be acquired,
additional securities of the Company, to dispose of, or cause to be disposed of,
such securities at any time or to formulate other purposes, plans or proposals
regarding the Company or any of its securities, to the extent deemed advisable
in light of general investment and trading policies of the Reporting Persons,
market conditions or other factors.
Item 5. Interest in Securities of the Issuer.
(a) Each of NG and Mr. Putney may be deemed the beneficial owner of
900,000 shares of Common Stock by virtue of NG's ownership of its
Warrant. The 900,000 shares of Common Stock comprise
approximately 5.98% of the total number of shares of Common Stock
outstanding based on the Company's representation in its Form
10-QSB for the period ended June 30, 2000 that it has 14,146,289
shares of Common Stock outstanding and its reservation of 900,000
shares of Common Stock for issuance upon exercise of the Warrant.
Mr. Putney
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CUSIP No. 81371G 10 S 13D Page 7 of 19 Pages
disclaims beneficial ownership of such shares. Each of NGSBS and
Mr. Putney may be deemed the beneficial owner of 600,000 shares
of Common Stock by virtue of NGSBS's ownership of its Warrant.
The 600,000 shares of Common Stock comprise approximately 4.07%
of the total number of shares of Common Stock outstanding based
on the Company's representation in its Form 10-QSB for the period
ended June 30, 2000 that it has 14,146,289 shares of Common Stock
outstanding and its reservation of 600,000 shares of Common Stock
for issuance upon exercise of the Warrant. Mr. Putney disclaims
beneficial ownership of such shares.
(b) Mr. Putney may be deemed to have sole voting and disposition
power of the 1,500,000 shares of Common Stock issuable upon
exercise of the exercise of the Warrants in his capacity as
managing director of the managing member of each of NG and NGSBS.
(c) Except as described herein, none of the Reporting Persons has
effected any transaction in the Common Stock during the past 60
days.
(d) The members of NG have the right to participate in the receipt of
dividends from, or proceeds from the sale of, any Common Stock
issued to NG in accordance with their membership interests in NG.
The members of NGSBS have the right to participate in the receipt
of dividends from, or proceeds from the sale of, any Common Stock
issued to NGSBS in accordance with their membership interests in
NGSBS.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
The Warrants issued to NG and NGSBS, respectively, are exercisable for
900,000 shares and 600,000 shares of Common Stock of the Company at a price of
$.03 per share. The Warrants expire on October 13, 2001.
The Company and NextGen Capital, L.L.C., which is the managing member
of NG and NGSBS, have signed a term sheet describing a proposed additional
investment in the Company by NG and NGSBS in two tranches of an aggregate of
$1.25 million to purchase shares of Series D Convertible Preferred Stock of the
Company at a price of $1.00 per share. Each share of Series D Convertible
Preferred Stock would be convertible into 10 shares of Common Stock. Under the
term sheet, NG and NGSBS would have the right to elect a majority of the
Company's Board of Directors. The term sheet is not a binding agreement and no
definitive agreements concerning such investment or the terms thereof have been
reached.
In June 2000, NG and NGSBS advanced an aggregate of $250,000 to the
Company in connection with an offering of Series C Convertible Preferred Stock
by the Company. The Company has not yet issued these shares; NG and NGSBS are
currently discussing the terms under which such shares will be issued.
In August 2000, NG and NGSBS loaned an aggregate of $250,000 to the
Company. The loans are evidenced by convertible notes which bear interest at the
rate of 10% per annum and are due and payable on November 24, 2000. Principal
and interest under the convertible notes is convertible at the option of the
holder into capital stock of the Company at the price such shares are issued to
investors.
Item 7. Materials to be Filed as Exhibits.
There is filed herewith the following Exhibit:
Exhibit 1 - Form of Warrant issued to each of NG and NGSBS by the
Company.
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CUSIP No. 81371G 10 S 13D Page 8 of 19 Pages
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
DATED: October 20, 2000
NEXTGEN FUND II, L.L.C. NEXTGEN SBS FUND II, L.L.C.
By: NextGen Capital, L.L.C. By: NextGen Capital, L.L.C.
Managing Member Managing Member
By: /s/ Zimri C. Putney By: /s/ Zimri C. Putney
------------------- -------------------
Zimri C. Putney Zimri C. Putney
Managing Director Managing Director
ZIMRI C. PUTNEY
/s/ Zimri C. Putney
-------------------
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CUSIP No. 81371G 10 S 13D Page 9 of 19 Pages
EXHIBIT 1
NEITHER THIS WARRANT ("WARRANT") NOR THE SECURITIES ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS ("BLUE SKY
LAWS"). THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF, AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS REGISTERED UNDER THE SECURITIES ACT AND BLUE SKY LAWS OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
WARRANT
THIS WARRANT ("Warrant"), dated as of October 13, 2000, is issued by
The IXATA Group, Inc., a Delaware corporation (the "Company"), to
_______________________, a Virginia limited liability company (together with any
other registered holder of this Warrant, the "Holder").
In consideration of the mutual covenants, agreements, representations
and warranties herein contained and of other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, it is hereby agreed
as follows:
1. EXERCISE OF THE WARRANT.
(a) Number of Warrant Shares Obtainable. Subject to such
adjustment as may be required from time to time by Section 5 hereof, the number
of shares of the common stock, par value $0.001 per share ("Common Stock"), of
the Company that the Holder shall be entitled to receive upon exercise of this
Warrant shall be __________ shares (the "Warrant Shares").
(b) Exercise by the Holder. Upon the terms and subject to the
conditions set forth in this Warrant, the Holder shall have the right, which may
be exercised in whole or in part for a period commencing on the date of this
Warrant (the "Holder Exercise Date"), and terminating one year thereafter, to
receive from the Company the number of fully paid and nonassessable Warrant
Shares that the Holder may at the time be entitled to receive on exercise of
this Warrant; provided that such exercise does not cause a violation of any
applicable law or regulation.
The Holder shall effect exercises by surrendering this Warrant
and the form of exercise notice in the form attached hereto as Exhibit A
(collectively, the "Holder Exercise Notice"), in the manner set forth in Section
8 hereof, and by paying $0.03 per Warrant Share being purchased in cash or by
certified check (the "Exercise Price"). Holder may also choose to exercise this
Warrant without paying the Exercise Price in cash or by certified check, and the
Holder will then be entitled to receive the number of Warrant Shares that this
Warrant entitles the Holder to purchase less the number of shares of Common
Stock having a "Fair Market Value" (as defined below) on the business day
immediately preceding the "Exercise Date" (as
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CUSIP No. 81371G 10 S 13D Page 10 of 19 Pages
defined below) equal to the aggregate Exercise Price. "Fair Market Value" shall
be (i) if the Common Stock is listed or admitted for trading on any United
States National Securities Exchange, is quoted on the National Association of
Securities Dealers Automated Quotations System, or if actual transactions are
otherwise reported on a consolidated transaction reporting system, the last
reported sale price of Common Stock on the applicable date on the exchange or
quotation or reporting system, or (ii) if clause (i) is inapplicable, as
determined by the Board of Directors of the Company, in its good faith
discretion. Each Holder Exercise Notice shall specify the date on which such
exercise is to be effected (the "Holder Exercise Date"). Subject to Section 1(d)
hereof, each Holder Exercise Notice, once given, shall be irrevocable. If less
than the total number of Warrant Shares is being purchased by exercise of this
Warrant, then the Company shall promptly deliver to the Holder a new Warrant for
the remaining Warrant Shares that have not been so purchased. Each Holder
Exercise Notice is sometimes referred to herein as an "Exercise Notice," and
each Holder Exercise Date is sometimes referred to herein as an "Exercise Date."
(c) Deliveries by the Company. Not later than five Business
Days (for purposes hereof, any day on which banks in New York are open for
business) after the receipt by the Company of the Exercise Notice, the Company
will deliver to the Holder a certificate or certificates which shall contain
restrictive legends and trading restrictions (as required by law) representing
the number of Warrant Shares being acquired upon the exercise of this Warrant;
provided, however, that the Company shall not be obligated to issue certificates
evidencing the Warrant Shares issuable upon exercise of this Warrant until this
Warrant is delivered to the Company. In the case of an exercise pursuant to a
Holder Exercise Notice, if such certificate or certificates are not delivered by
the date required under this Section 2(c), then the Holder shall be entitled by
written notice to the Company at any time on or before its receipt of such
certificate or certificates thereafter, to rescind such exercise, in which event
the Company shall immediately return the Holder Exercise Notice.
(d) Cancellation; Inspection Rights. When surrendered upon
exercise of this Warrant, this Warrant shall be cancelled and disposed of by the
Company in accordance with applicable law. The Company shall keep copies of this
Warrant and any notices given or received hereunder available for inspection by
the Holder during normal business hours at its office.
(e) Transfer Restrictions. This Warrant has been issued
subject to certain investment representations of the original Holder set forth
in Section 10 hereof and may be transferred only if such transfer is, in the
reasonable opinion of the Company, in compliance with or exempt from the
registration requirements of the Securities Act and Blue Sky Laws and the terms
and conditions set forth in this Warrant. This Warrant may not be transferred
except in compliance with the Securities Act and Blue Sky Laws. Prior to due
presentment to the Company for transfer of this Warrant, the Company and any
agent of the Company may treat the person in whose name this Warrant is duly
registered on the records of the Company regarding registration and transfers of
the Warrants (the "Warrant Register") as the owner hereof for all purposes, and
neither the Company nor any such agent shall be affected by notice to the
contrary.
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CUSIP No. 81371G 10 S 13D Page 11 of 19 Pages
This Warrant shall be transferable or assignable only through an appropriate
entry in the Warrant Register.
(f) Covenant of the Holder. The Holder and any subsequent
transferee pursuant to the terms of this Warrant covenant not to exercise this
Warrant except in compliance with the terms of this Warrant.
2. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares in a name other than that of
the Holder, and the Company shall not be required to issue or deliver the
certificates for Warrant Shares unless or until the person or persons requesting
the issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been
paid. The Holder shall be responsible for all other tax liability that may arise
as a result of holding or transferring this Warrant or receiving the Warrant
Shares under this Warrant.
3. REPLACEMENT OF WARRANT. In case this Warrant shall be mutilated,
lost, stolen or destroyed, the Company may in its discretion issue in exchange
and substitution for and upon cancellation of such mutilated Warrant, or in lieu
of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant and indemnity, if
requested, reasonably satisfactory to it. Applicants for a substitute Warrant
also shall comply with such other reasonable regulations and pay such other
reasonable charges as the Company may prescribe.
4. RESERVATION OF WARRANT SHARES. The Company will at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock or its authorized and issued Common Stock
held in its treasury, for the purpose of enabling it to satisfy any obligation
to issue Warrant Shares upon exercise of this Warrant, the maximum number of
Warrant Shares (as adjusted from time to time pursuant to Section 5 hereof)
which may then be deliverable upon the exercise of this Warrant.
5. ADJUSTMENT TO THE NUMBER OF WARRANT SHARES ISSUABLE. The number of
Warrant Shares issuable upon the exercise of this Warrant is subject to
adjustment from time to time as set forth in this Section 5.
(a) If the Company, at any time while this Warrant is outstanding,
(i) shall pay a stock dividend or otherwise make a distribution or distributions
on shares of its Common Stock payable in shares of its capital stock (whether
payable in shares of its Common Stock or of capital stock of any class), (ii)
subdivide outstanding shares of Common Stock into a larger number of shares,
(iii) combine outstanding shares of Common Stock into a smaller number of
shares, or (iv) issue by reclassification of shares of Common Stock any shares
of capital stock of the Company,
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CUSIP No. 81371G 10 S 13D Page 12 of 19 Pages
the Exercise Price (as defined in Section 3(b) of the Subscription Agreement)
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section 5(a) shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.
(b) If the Company, at any time while this Warrant is outstanding,
shall issue rights or warrants to all holders of Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share less than
the Exercise Price at the record date mentioned below, then the Exercise Price
designated in Section 1(a) hereof shall be multiplied by a fraction, of which
the denominator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding on the
date of issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such Exercise Price. Such adjustment shall be made whenever such rights or
warrants are issued, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such rights or
warrants. However, upon the expiration of any right or warrant to purchase
Common Stock the issuance of which resulted in an adjustment in the Exercise
Price designated in Section 1(a) hereof pursuant to this Section 5(b), if any
such right or warrant shall expire and shall not have been exercised, the
Exercise Price designated in Section 5(a) hereof shall immediately upon such
expiration be recomputed and effective immediately upon such expiration be
increased to the price which it would have been (but reflecting any other
adjustments in the Exercise Price made pursuant to the provisions of this
Section 5 after the issuance of such rights or warrants) had the adjustment of
the Exercise Price made upon the issuance of such rights or warrants been made
on the basis of offering for subscription or purchase only that number of shares
of Common Stock actually purchased upon the exercise of such rights or warrants
actually exercised.
(c) If the Company, at any time while this Warrant is outstanding,
shall distribute to all holders of Common Stock (and not to the Holder)
evidences of its indebtedness or assets or rights or warrants to subscribe for
or purchase any security (excluding those referred to in Section 5(b) hereof),
then in each such case the Exercise Price for which the Warrant Shares shall be
purchased shall be determined by multiplying the Exercise Price in effect
immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which the denominator
shall be the Exercise Price determined as of the record date mentioned above,
and of which the numerator shall be the Exercise Price on such record date less
the then fair market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one outstanding share of
Common Stock as determined by the Board of Directors of the Company (the "Board
of Directors") in good faith; provided, however that in the event of a
distribution exceeding 10% of the net assets of the Company, such fair market
value shall be determined by a nationally recognized or major
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CUSIP No. 81371G 10 S 13D Page 13 of 19 Pages
regional investment banking firm or firm of independent certified public
accountants of recognized standing (which may be the firm that regularly
examines the financial statements of the Company) (an "Appraiser") selected in
good faith by the holders of a majority of the Warrants that are then
outstanding; and further provided, however, that the Company, after receipt of
the determination by such Appraiser shall have the right to select an additional
Appraiser, in which case the fair market value shall be equal to the average of
the determinations by each such Appraiser. In either case the adjustments shall
be described in a statement provided to the Holder and all other holders of
Warrants of the portion of assets or evidences of indebtedness so distributed or
such subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall become
effective immediately after the record date mentioned above.
(d) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property as the shares of the Common Stock
into which this Warrant could have been converted immediately prior to such
reclassification, consolidation, merger, sale, transfer or share exchange would
have been entitled at the aggregate Exercise Price and the Exercise Price per
share shall be appropriately adjusted. The terms of any such consolidation,
merger, sale, transfer or share exchange shall include such terms so as to
continue to give to the Holder the right to receive the securities or property
set forth in this Section 5(d) upon any exercise following such consolidation,
merger, sale, transfer or share exchange. This provision shall similarly apply
to successive reclassifications, consolidations, mergers, sales, transfers or
share exchanges.
(e) If:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to all holders of
the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of
any rights; or
(iv) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the
Common Stock of the Company (other than a subdivision or
combination of the outstanding shares of Common Stock),
any consolidation or
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CUSIP No. 81371G 10 S 13D Page 14 of 19 Pages
merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or
property; or
(v) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding-up of the affairs of
the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of exercise of this Warrant, and shall cause to be mailed to the
Holder in accordance with Section 8 hereof, at least 30 days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding-up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding-up; provided, however, that the failure to
mail such notice or any defect therein or in the mailing thereof shall not
affect the validity of the corporate action required to be specified in such
notice.
(f) If at any time conditions shall arise by reason of action
taken by the Company which are not adequately covered by the other provisions
hereof and which might materially and adversely affect the rights of the Holder
(different than or distinguished from the effect generally on rights of holders
of any class of the Company's capital stock) or if at any time any such
conditions are expected to arise by reason of any action contemplated by the
Company, then the Company shall, at least 30 days prior to the effective date of
such action, mail a written notice to the Holder briefly describing the action
contemplated and the material adverse effects of such action on the rights of
the Holder and an Appraiser selected by the holders of a majority in number of
the outstanding Warrants shall give its opinion as to the adjustment, if any
(not inconsistent with the standards established in this Section 5), of the
Exercise Price (including, if necessary, any adjustment as to the securities
into which this Warrant may thereafter be exercisable) and any distribution
which is or would be required to preserve without diluting the rights of the
holders of the Warrants; provided, however, that the Company, after receipt of
the determination by such Appraiser, shall have the right to select an
additional Appraiser, in which case the adjustment shall be equal to the average
of the adjustments recommended by each such Appraiser. The Board of Directors
shall make the adjustment recommended upon the receipt of such opinion or
opinions or the taking of any such action contemplated, as the case may be;
provided, however, that no such adjustment of the Exercise Price shall be made
which in the opinion of the Appraiser(s) giving the aforesaid opinion or
opinions would result in an increase of the Exercise Price to more than the
Exercise Price then in effect.
<PAGE>
CUSIP No. 81371G 10 S 13D Page 15 of 19 Pages
(g) In any case in which this Section 5 shall require that an
adjustment be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event (i) issuing to the
Holder, if this Warrant is exercised after such record date, the Warrant Shares
and other capital stock of the Company, if any, issuable upon such exercise over
and above the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price prior to
adjustment and (ii) paying to the Holder any amount in cash in lieu of a
fractional share pursuant to Section 6 hereof, provided, however, that the
Company shall deliver to the Holder a due bill or other appropriate instrument
evidencing the Holder's right to receive such additional Warrant Shares, other
capital stock and/or cash upon the occurrence of the event requiring such
adjustment.
(h) Whenever the Exercise Price of this Warrant is adjusted as
herein provided, the number of shares purchasable upon exercise of this Warrant
shall be adjusted by multiplying the number of shares purchasable immediately
prior to such adjustment by a fraction, the numerator of which shall be the
Exercise Price upon the exercise of this Warrant immediately prior to such
adjustment, and the denominator of which shall be the Exercise Price immediately
after such adjustment.
(i) Any determination that the Company or the Board of
Directors must make pursuant to this Section 5 shall be conclusive if made in
good faith.
6. FRACTIONAL SHARES. The Company shall not be required to issue
fractional Warrant Shares on the exercise of this Warrant. The number of full
Warrant Shares which shall be issuable upon the exercise of this Warrant shall
be computed on the basis of the aggregate number of Warrant Shares purchasable
on exercise of this Warrant so presented. If any fraction of a Warrant Share
would, except for the provisions of this Section 6, be issuable on the exercise
of this Warrant, the Company may pay an amount in cash equal to the Exercise
Price multiplied by such fraction in lieu of such fractional shares.
7. WARRANT AGENT.
(a) The Company shall serve as warrant agent under this
Warrant. Upon 30 days' notice to the Holder, the Company and the Holder may
appoint a new warrant agent. Such new warrant agent shall be a corporation doing
business under the laws of the United States or any state thereof, in good
standing and having a combined capital and surplus of not less than U.S.
$50,000,000. The combined capital and surplus of any such new warrant agent
shall be deemed to be the combined capital and surplus as set forth in the most
recent annual report of its condition published by such warrant agent prior to
its appointment; provided that such reports are published at least annually
pursuant to law or to the requirements of a federal or state supervising or
examining authority. After acceptance in writing of such appointment by the new
warrant agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the warrant agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed the same shall be done at the expense of the Company and
shall be legally and validly executed and delivered by the Company.
<PAGE>
CUSIP No. 81371G 10 S 13D Page 16 of 19 Pages
(b) Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant shall be a party or any corporation to which the
Company or any new warrant agent transfers substantially all of its corporate
trust or shareholders services business shall be a successor warrant agent under
this Warrant without any further act; provided that such corporation (i) would
be eligible for appointment as successor to the warrant agent under the
provisions of this Section 7 or (ii) is a wholly-owned subsidiary of the warrant
agent. Any such successor warrant agent shall promptly cause notice of its
succession as warrant agent to be mailed (by first class mail, postage prepaid)
to the Holder at the Holder's last address as shown on the register maintained
by the warrant agent pursuant to this Warrant.
8. NOTICES. All notices or other communications hereunder shall be
given, and shall be deemed duly given and received if given, by facsimile and by
mail, postage prepaid: (i) if to the Company, addressed as follows: The IXATA
Group, Inc., 8989 Rio San Diego Drive, San Diego, California 92108, fax:
619-400-8877, Attn: Paul B. Silverman, Chief Executive Officer; or (ii) if to
the Holder, addressed to the Holder at the facsimile telephone number and
address of the Holder appearing on the Warrant Register or such other address or
facsimile number as the Holder may provide to the Company in accordance with
this Section 8. Any such notice shall be deemed given and effective upon the
earliest to occur of (i) receipt of such facsimile at the facsimile telephone
number specified in this Section 8, (ii) five (5) Business Days after deposit in
the United States mails or (iii) upon actual receipt by the party to whom such
notice is required to be given.
9. LEGEND ON WARRANT AND WARRANT SHARES. In addition to any other
legends required by any agreement or otherwise, the certificates representing
Warrant Shares shall be conspicuously endorsed in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IN
RELIANCE UPON THE HOLDER'S REPRESENTATION THAT SUCH
SECURITIES WERE BEING ACQUIRED FOR INVESTMENT AND NOT FOR
RESALE. NO TRANSFER OF SUCH SECURITIES MAY BE MADE ON THE
BOOKS OF THE ISSUER, UNLESS ACCOMPANIED BY AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER, THAT SUCH TRANSFER MAY
PROPERLY BE MADE WITHOUT REGISTRATION UNDER THE ACT OR
THAT SUCH SECURITIES HAVE BEEN SO REGISTERED UNDER A
REGISTRATION STATEMENT WHICH IS IN EFFECT AT THE DATE OF
SUCH TRANSFER.
<PAGE>
CUSIP No. 81371G 10 S 13D Page 17 of 19 Pages
10. REPRESENTATIONS AND WARRANTIES OF INVESTOR. _____________________
("Investor") understands that the sale of Warrant and the Warrant Shares is
intended to be exempt from registration under the Securities Act, by virtue of
Sections 3(b) and 4(2) of the Securities Act, and Blue Sky Laws, and Investor
represents and warrants that:
(a) Investor has been advised that neither the Warrant nor the Warrant
Shares have been registered under the Securities Act and, therefore, cannot be
resold unless they are registered under the Securities Act and Blue Sky Laws or
unless an exemption from registration is available and the certificates
representing the Warrant Shares will be legended accordingly. Investor is aware
that no market exists for the resale of the Warrant and that it may be required
to hold the Warrant Shares indefinitely. Investor is purchasing the Warrant and
the Warrant Shares for its own account for investment and not with a view to, or
for resale in connection with, the distribution thereof, and Investor has no
present intention of distributing or reselling the Warrant or the Warrant
Shares. Investor represents and warrants that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of such investment and is able to bear the economic risk of
such investment.
In making the above representation, Investor is aware that it must bear
the economic risk of such investment for an indefinite period of time since, in
the view of the Securities and Exchange Commission, the statutory basis for
exemption from registration under the Securities Act would not be present if
such present intention is to hold the Warrant Shares only for the long-term
capital gains period of the Internal Revenue Code of l986, as amended (the
"Code"), or for a deferred sale, or for any fixed period in the future.
(b) Investor has made a complete and thorough investigation of the
affairs and prospects of the Company and has had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on behalf of
the Company concerning this investment, and all such questions have been
answered to the full satisfaction of Investor.
(c) Investor acknowledges that the Company is issuing this Warrant in
reliance upon Investor's representations and warranties in this Warrant,
including, without limitation, those set forth in this Section.
(d) Investor is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D.
11. MISCELLANEOUS.
(a) This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
(b) Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company, the Holder and any registered
holder of Warrant Shares any legal or equitable right, remedy or cause under
this Warrant; but this Warrant shall be for the sole
<PAGE>
CUSIP No. 81371G 10 S 13D Page 18 of 19 Pages
and exclusive benefit of the Company, the Holder and any other registered holder
of Warrant Shares.
(c) This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware without
regard to the principles of conflicts of law thereof.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affecting or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
IN WITNESS WHEREOF, the parties have caused this Warrant to be duly
executed by their authorized officer as of the date first indicated above.
THE IXATA GROUP, INC. in its corporate
capacity and in its capacity as the
Warrant Agent hereunder
-----------------------------------------
By Paul B. Silverman, Chairman and CEO
-----------------------------------
By
Its
<PAGE>
CUSIP No. 81371G 10 S 13D Page 19 of 19 Pages
EXHIBIT A
THE IXATA GROUP, INC.
Notice of Exercise of Warrant at the Election of the Holder
-----------------------------------------------------------
The undersigned hereby irrevocably elects to exercise the Warrant
("Warrant") issued by The IXATA Group, Inc. (the "Company") to
__________________________ on October 13, 2000, into shares of common stock, par
value $0.001 per share, of the Company, according to the conditions hereof, as
of the date written below. All capitalized terms used herein without definition
shall have the meanings assigned to them in the Warrant. If Warrant Shares are
to be issued in the name of a person other than the Holder, then the Holder
shall pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as may be reasonably requested by the
Company in accordance with the Warrant. No fee will be charged to the Holder for
any exercise, except for such transfer taxes, if any.
The Holder represents and warrants that all offers and sales by the
Holder of the Warrant Shares issuable to the undersigned upon exercise of the
Warrant shall be made pursuant to registration of the Common Stock under the
Securities Act or pursuant to an exemption from registration under the
Securities Act.
___________________________________________________
Date to Effect Exercise
Cashless Exercise Yes[ ] No [ ]o
___________________________________________________
Aggregate Exercise Price
___________________________________________________
Number of Warrant Shares to be Issued
___________________________________________________
Signature of the Holder
___________________________________________________
Printed Name(exactly as it is to appear on the
Warrant Shares)
___________________________________________________
Address of the Holder
