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[IXATA.COM LOGO]
Information Statement Pursuant to (S)14(f) and Rule 14f-1
Of the Securities Exchange Act of 1934
This information statement relates to the election of new directors to the
Board of The IXATA Group, Inc. by the investors in a proposed private offering
of IXATA's preferred stock. Although you are not required to take any action in
connection with the election of these directors, we urge you to read this
information statement carefully.
This information statement is being mailed on November 9, 2000 to our
stockholders of record at the close of business on November 6, 2000 pursuant to
the requirements of (S)14(f) of the Exchange Act. On November 6, 2000, there
were 13,791,680 shares of our common stock outstanding. Each share is entitled
to one vote.
No vote or other action of our stockholders is required in connection with
this information statement. We are not asking for a proxy and request that you
not send us a proxy.
The Proposed Financing by NextGen
On September 8, 2000, we entered into a letter of intent with NextGen Capital,
L.L.C. for an equity investment by NextGen in IXATA. NextGen is a Virginia-
based firm that manages two venture capital funds specializing in high-
technology and internet-related investments. In the proposed financing we
intend to issue shares of a newly-authorized series of convertible preferred
stock. NextGen has agreed to purchase approximately 785,000 shares of preferred
stock upon the completion of the initial financing for an aggregate
consideration of $1.0 million, a portion of which will be the cancellation of
existing indebtedness to NextGen. Upon the completion of agreed upon
milestones, NextGen will purchase an additional 500,000 shares for $500,000.
Certain other investors, including Michael W. Wynne, a member of NextGen's
executive committee, are expected to purchase up to an additional 250,000 shares
in the initial financing for $250,000.
Each share of the newly-issued preferred stock will be convertible at any time
into common stock, initially at a conversion ratio of ten-to-one. The
conversion ratio will be subject to customary adjustments for certain stock
splits, dividends, mergers and similar events, and will also be adjusted if
IXATA issues stock for less than the conversion price of the preferred
(initially 10 cents a share), subject to limited exceptions. The holders of the
preferred stock and holders of common stock will vote together as a single class
on all matters presented for the vote of our stockholders. Each preferred
stockholder may cast a number of votes equal to the number of shares of common
stock issuable upon conversion of his or her preferred stock. For every share
of preferred stock purchased,
8989 Rio San Diego Drive Suite 160 San Diego, CA 92108
Phone (800) 473-6748 www.ixata.com
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each investor will also receive a warrant to purchase an additional share of
preferred stock for $1.00 per share, subject to the adjustments described above
for conversion of the preferred stock. The warrants will have a term of three
years.
We publicly announced the proposed financing on September 12, 2000.
Completion of the financing is subject to customary terms and conditions,
including the satisfactory completion by NextGen of its due diligence, a
restructuring of our current debt and the execution of investment documents,
including a stock purchase agreement. We intend to sign the stock purchase
agreement and complete the financing on or about November 20, 2000.
Right to Elect Directors
The holders of the newly-issued preferred stock will have the right to
elect a majority of the Board of Directors. Our present Board consists of Fred
Gluckman, Michael M. Grand, Paul D. Hatch, Andrew H. Kent, Paul B. Silverman and
Robert A. Steiner. As a condition to completing the financing by NextGen, four
of our current Board members will resign as directors at the time the
transaction is closed. We currently anticipate that Messrs. Hatch, Kent,
Silverman and Steiner will step down and that Messrs. Gluckman and Grand will
remain on the Board. NextGen has indicated to us that it will elect Zimri C.
Putney, Michael W. Wynne and Edward C. Groark to the Board upon issuance of the
preferred stock.
We expect to complete the proposed financing with NextGen on or about
November 20, 2000 and that Messrs. Putney, Wynne and Groark will become members
of our Board of Directors at that time. However, if the financing is not
completed, we do not intend to add these new directors or modify the structure
of our current Board. We cannot guaranty that the financing will be completed as
expected or at all.
Change in Control
As discussed above, we intend to issue approximately 1.0 million shares of
our preferred stock to NextGen and other investors in the initial financing.
These newly-issued shares will represent approximately 40% of our outstanding
voting stock. In combination with the resignation of four of our current
directors and the addition of three newly-appointed directors, we will undergo a
change in control upon completion of the financing.
Additional Information
This information statement does not include a full description of NextGen,
the stock purchase agreement, the terms of the preferred stock and related
transactions. Within 15 days of our signing the stock purchase agreement and
completing the financing, we intend to file a Current Report on Form 8-K with
the Securities and Exchange Commission more fully describing the financing and
including the stock purchase agreement and related documents as exhibits.
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New Directors
Biographical information about the individuals to be appointed to our Board
of Directors in connection with the preferred stock financing is included below.
This information was provided to us by NextGen.
Zimri C. Putney, age 58, to serve as a director of IXATA. Mr. Putney has
been the Managing Director and Chief Executive Officer of NextGen Capital,
L.L.C. since December 1997. He has over thirty years of experience as a venture
capitalist, investor, executive and scientist in technology companies. As co-
founder, President and Chief Executive Officer of the management consulting firm
Putney & Eckstein, Inc., he assisted technology CEOs in areas of business and
marketing strategy, quality management and operations from 1993 to December
1997. For Solarex Corporation, the world's leading photovoltaic company, he
headed research and development and marketing in over 70 countries before and
after its acquisition by Amoco. For nearly ten years he served as an award-
winning scientist, investor and technology manager for IBM. Mr. Putney earned a
B.S. degree in Physics from Syracuse University and an Sc.M. from Brown
University.
Michael W. Wynne, age 56, to serve as a director of IXATA. Since October
1999 Mr. Wynne has served as Chairman of Extended Reach Logistics, an internet
start-up aspiring to sell spare and repair kits to the military worldwide. He
has spent most of his career in the world of defense, both in the Air Force and
industry, working with aircraft (F-16), main battle tanks (M1A2), and space
launch vehicles (Atlas and Centaur). He was Senior Vice President of General
Dynamics from March 1997 to October 1999, where his role was in international
development and strategy. Prior to that he spent three years with Lockheed
Martin Corporation as Vice President, Space Launch Systems, before that division
was sold to Martin Marietta.
Edward C. Groark, age 55, to serve as a director of IXATA. Since June 1999,
Mr. Groark has provided independent consulting services to a variety of small
technology based startups. Prior to that he was President of Riverbend Group,
Inc., a consulting and integration group focused on networking personal
computers for corporate computing that he founded in 1983. In the early '90s, he
was instrumental in building Riverbend Group into a consortium of 30 similar
companies across North America called USConnect. USConnect assisted customers in
developing first generation enterprise wide-area networks, corporate e-mail and
groupware and web applications. In 1997, IKON Office Solutions acquired
USConnect and Mr. Groark served as IKON's Division President for the Technology
Services Division until June 1999.
If the financing is completed, the individuals listed above will serve as
the directors of IXATA in addition to Mr. Gluckman and Mr. Grand.
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Present Directors and Executive Officers of IXATA
The following table lists our present directors and executive officers, their
age, position and year of election or appointment.
<TABLE>
<CAPTION>
Date of Election
Name Age Position or Appointment
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fred Gluckman 51 Executive Vice President -- Technology and 1999
Automation,
IXATA.COM and Director
Michael M. Grand 61 Director 1997
Paul D. Hatch 48 Director 1999
Andrew H. Kent 36 Vice President, Chief Financial Officer and Director 1999
Paul B. Silverman 56 Chief Executive Officer, President and Chairman 1998
Robert A. Steiner 46 President, IXATA Virtual Purchasing Solutions and 1999
Director
</TABLE>
Our executive officers serve at the discretion of the Board. Board members
are elected for annual terms, or until their successors are duly qualified and
elected. The Board of Directors has no standing audit, nomination, compensation
or other committees.
Meetings of the Board of Directors
The Board of Directors met once and acted by written consent ten times in
1999. During 1999, all members of the Board of Directors participated in each
Board meeting.
Business Experience
Fred Gluckman is Executive Vice President -- Technology and Automation of
IXATA's IXATA.COM subsidiary and was appointed a director of IXATA July 1, 1999.
Mr. Gluckman is a co-founder of IXATA.COM. Since 1994, Mr. Gluckman was co-
founder and Chief Executive Officer of Tel.n.Form, Inc., a privately-held
provider of automated sales lead and related information to auto dealerships and
financial institutions. Through Mr. Gluckman's many joint ventures, Mr.
Gluckman has gained a reputation as one of the leading experts in the use of
automation to eliminate costly, redundant business processes. Born in Israel
and raised in Canada, Mr. Gluckman holds a Bachelor of Science degree from
McGill University.
Michael M. Grand has been a director of IXATA since its inception. Mr.
Grand is an attorney practicing in the areas of commercial and real estate law.
He is a member of the Michigan bar. Mr. Grand is the President and sole
shareholder of Parthenon Holdings, L.L.C., a holding company and shareholder of
Montpilier Holdings, Inc., a holding company and a significant stockholder of
IXATA.
Paul D. Hatch was appointed as a member of our Board of Directors on July
1, 1999. Mr. Hatch is currently Senior Vice President at Edelman Public
Relations Worldwide where he directs the firm's state and local programs
practice. Mr. Hatch has more than 25 years experience in political campaigns,
public affairs and communications. Mr. Hatch's background includes serving as
the Executive Director of the Republican Governors' Association (RGA), working
closely with the nation's 32 Republican governors and their staffs. Mr. Hatch
also served as the deputy political
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director of the Republican National Committee (RNC). Mr. Hatch has represented
Anderson Consulting, Laidlaw, IMG, US West Communications, Texaco, 3M, the
National Education Association, Microsoft, CSX Transportation Co., Northwest
Airlines, and other Fortune 500 clients. Mr. Hatch currently provides support
services to the RGA, the RNC, as well as Republican Leadership in the U.S. House
of Representatives. He is presently a consultant to The Cassidy Companies, the
largest public affairs lobbying firm in the country. Prior to joining the RGA,
Mr. Hatch resided in Salt Lake City and served as a special assistant Attorney
General. Mr. Hatch studied Finance and Economics at University of Utah and
obtained a Juris Doctor Degree from the University's College of Law in 1978.
Andrew H. Kent joined the management team as Director, Business Development
effective November 1, 1998. In that position, Mr. Kent reported to the Chief
Executive Officer and played a key role in reshaping our overall business
strategy to pursue new e-commerce and Internet-related business opportunities.
On June 30, 1999, Mr. Kent was appointed Vice President and Chief Financial
Officer, reporting to the Chief Executive Officer. Mr. Kent was also elected to
serve on our Board of Directors on June 30, 1999. From November 1997 to October
1998, Mr. Kent was Director, Business Development, of SCIES, Inc., a global
Internet telephone systems and services company. From 1994 to 1997, Mr. Kent
was a senior consultant with JMS North America, Inc. (formerly James Martin
Strategy, Inc.), an international management consulting and engineering company.
Paul B. Silverman became Chief Executive Officer of IXATA in November 1998
and a director and Chairman in December 1998. From January 1997 to October 1998,
Mr. Silverman was Chairman of the Board and Chief Executive Officer of SCIES,
Inc., a global Internet telephone systems and services company. From 1990 to
1996, Mr. Silverman was Chief Executive Officer of JMS North America, Inc.
(formerly James Martin Strategy, Inc.), an international management consulting
and engineering company. Previously, Mr. Silverman held senior management
consulting positions with Coopers & Lybrand and Booz Allen and Hamilton. Mr.
Silverman's background also includes more than 20 years experience in senior
engineering, marketing and international business development positions with
major information industry firms including Satellite Business Systems (a
division of IBM), GTE, Xerox and RCA Global Communications, Inc.
Robert A. Steiner is President of our Virtual Purchasing Solutions division
and was appointed a director of IXATA on July 1, 1999. Mr. Steiner is a co-
founder of IXATA.COM. From 1991 to 1994, Mr. Steiner was founder and Managing
Partner of Smith, Steiner & Thomas, one of the largest travel management
consulting companies in the world. Mr. Steiner's background also includes
serving as Manager, Corporate Procurement for Northrop Corporation, and a
Contracting Officer within the United States Air Force. Mr. Steiner holds a BA
in Economics from the University of California, and an MBA from Pepperdine
University.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who own more than 10% of our common stock,
to file with the Securities and Exchange Commission the initial reports of
ownership and reports of changes in ownership of the common stock. Officers,
directors and greater than 10% stockholders are required by SEC regulation to
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furnish us with copies of all (S) 16(a) forms they file. Paul B. Silverman and
Andrew H. Kent each failed to timely file a Form 3 upon being appointed to the
Board of Directors but subsequently made the required filing. Paul D. Hatch,
Robert A. Steiner, Fred Gluckman, and The Andreoli Family Trust each failed to
timely file Forms 3 but subsequently made the required filings. Based solely on
filings received by us, we are not aware of any other delinquent (S) 16(a)
filings in 1999.
Executive Compensation and Other Information
Summary Compensation Table
The following table summarizes the compensation paid by IXATA to our executive
officers with respect to the calendar years ended December 31, 1999 and 1998.
These executive officers are the only executive officers whose total annual
salary exceeded $100,000 in 1999.
<TABLE>
<CAPTION>
Long-Term
Fiscal Compensation All Other
Name Year Salary Option Awards Compensation
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul B. Silverman 1999 $152,033 (1) 300,000 $ --
1998 23,080 (2) 150,000 (3) 84,991 (4)
Andrew H. Kent 1999 $113,165 (5) 115,000 (3) $ --
1998 18,464 (6) -- 20,995 (7)
Robert A. Steiner 1999 $ 99,000 (8) 50,000 $ --
1998 -- -- --
Fred Gluckman 1999 $101,077 (9) 50,000 $ --
1998 -- -- --
</TABLE>
------------
(1) $101,726 of this amount was earned by Mr. Silverman in 1999, but payment
has been deferred.
(2) $23,080 of this amount was earned by Mr. Silverman in 1998, but payment
has been deferred.
(3) Includes 50,000 options granted under IXATA's Director Stock Option Plan.
(4) The listed amount was paid to Mr. Silverman and SCIES, Inc. for consulting
services provided to IXATA in 1998 before Mr. Silverman joined IXATA. Mr.
Silverman was Chief Executive Officer of SCIES and owned 40% of SCIES. Of
this amount, $11,535 for consulting services was earned by Mr. Silverman
in 1998, but payment has been deferred.
(5) $69,704 of this amount was earned by Mr. Kent in 1999, but payment has
been deferred.
(6) $18,464 of this amount was earned by Mr. Kent in 1998, but payment has
been deferred.
(7) The listed amount was paid to Mr. Kent for consulting services provided to
IXATA in 1998 before he joined IXATA.
(8) $3,000 of this amount was earned by Mr. Steiner in 1999, but payment has
been deferred.
(9) $90,000 of this amount was earned by Mr. Gluckman in 1999, but payment has
been deferred.
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Option Grants in 1999
The following table summarizes information concerning options granted during
1999 to Messrs. Silverman, Kent, Steiner and Gluckman:
<TABLE>
<CAPTION>
Shares of
Common Stock Percent of Total
Underlying Options Granted to Exercise Expiration
Name Options Employees in 1999 Price Per Share Date
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul B. Silverman 300,000 53.1% $ 0.16 1/1/09
Andrew H. Kent 20,000 20.4% $0.125 4/23/09
50,000 * $ 1.28 6/30/09
20,000 $ 0.10 7/1/09
25,000 $ 1.56 7/1/09
Robert A. Steiner 50,000 8.8% $ 1.69 7/1/09
Fred Gluckman 50,000 8.8% $ 1.69 7/1/09
-----------
</TABLE>
* These options were granted under our 1997 Directors Stock Option Plan.
Option Exercises in 1999 and Values at 1999 Year-End
The following table summarizes information with respect to the unexercised
options held by Messrs. Silverman, Kent, Steiner and Gluckman as of December 31,
1999. Also reported are values of "in-the-money" options, that is, the amount
by which the exercise price of the option is exceeded by the last sale price of
the common stock on December 31, 1999.
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at December 31, 1999 at December 31, 1999
acquired on Value -----------------------------------------------------------
Name excerise Realized Exercisable Unexercisable Exercisable Unexercisable
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Paul B. Silverman -- -- 250,000 200,000 $ 272,500 $ 218,000
Andrew H. Kent -- -- 40,000 75,000 $ 45,500 $ --
Robert A. Steiner -- -- -- 50,000 $ -- $ --
Fred Gluckman -- -- -- 50,000 $ -- $ --
</TABLE>
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Long-Term Incentive and Pension Plans
During 1999, we adopted a 401(k) retirement savings plan for our employees
which allows each eligible employee to voluntarily make pre-tax salary
contributions up to 15% of their compensation. We match 25% of the employee's
contributions up to 4% (1% of gross compensation).
Compensation of Directors
Members of the Board of Directors are not compensated for their services as
directors. IXATA's 1997 Directors' Option Plan provides for the automatic
"formula" grant to each director of an option to purchase 50,000 shares of our
common stock, on the date of his or her initial election to the Board of
Directors.
Employment Contracts
We executed an employment agreement with Mr. Silverman on November 1, 1998
to serve as Chief Executive Officer. Mr. Silverman's salary compensation is
$150,000, increasing to $180,000 per year after we secure minimum new funding of
$750,000. Mr. Silverman also received options to acquire 100,000 shares of our
common stock upon execution of the employment agreement, and additional options
for 300,000 shares directly linked to our ability to meet specified market
capitalization targets and financial milestones. On December 11, 1998, Mr.
Silverman was appointed a director of IXATA and granted options to purchase
50,000 shares of common stock under the Directors' Option Plan. Mr. Silverman
was granted the salary increase to $180,000 on November of 1999 when we secured
over $750,000 in new funding. In addition, at the end of 1999, Mr. Silverman's
options to acquire 100,000 shares have vested based on our meeting performance
goals. On February 9, 2000, we met an additional performance goal, resulting in
Mr. Silverman's options for an additional 100,000 shares having vested. Mr.
Silverman's employment agreement has been extended through December 31, 2000.
Under the terms of the extended agreement, Mr. Silverman's annual salary will
increase to $200,000. Subject to securing a minimum new funding of $3.0 million,
Mr. Silverman's annual salary increases to $225,000. In addition, Mr. Silverman
received options to acquire 100,000 shares of our common stock upon securing a
minimum new funding of $3.0 million.
We executed an employment agreement with Mr. Kent effective June 30, 1999
to serve as Chief Financial Officer. Mr. Kent's salary compensation was
$120,000. Mr. Kent also received options to acquire 20,000 shares of our common
stock upon execution of the employment agreement, and additional options for
25,000 shares directly linked to our ability to meet specified market
capitalization targets and financial milestones. On June 30, 1999, Mr. Kent was
appointed a director of IXATA and granted options to purchase 50,000 shares of
common stock under the Directors' Option Plan. Mr. Kent's employment agreement
has been extended through December 31, 2000. Under the terms of the extended
agreement, Mr. Kent's annual salary will increase to $150,000. In addition, Mr.
Kent received options to acquire 100,000 shares of our common stock upon
securing a minimum new funding of $3.0 million.
We executed an employment agreement with Mr. Steiner on April 17, 2000. Mr.
Steiner's salary compensation is $160,000, increasing to $200,000 per year in
January 2001. We also agreed to issue Mr. Steiner options to acquire 150,000
shares of our common stock contingent upon continued
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employment, and additional options for 400,000 shares directly linked to our
ability to meet specified market capitalization targets and financial
milestones. On July 1, 1999, Mr. Steiner was appointed a director of IXATA and
granted options to purchase 50,000 shares of common stock.
Stock Ownership of Management and Significant Stockholders
The following table sets forth, as of November 6, 2000, information
regarding the beneficial ownership of our common stock by each stockholder know
by us to be the beneficial owner of more than 5% of the outstanding shares of
our common stock, each director and executive officer, and all our directors and
executive officers as a group.
<TABLE>
<CAPTION>
Beneficial Ownership (1)
----------------------------------------------------------
Options/Warrants
Names and Address (2) Shares (3) Total Percentage (4)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NextGen Capital, L.L.C. (5) -- 1,500,000 1,500,000 9.8%
10807 Main Street, Suite 200
Fairfax, Virginia 22030
Andreoli Family Trust (6) 1,761,875 -- 1,761,875 12.8%
3131 Liberty Circle South
Las Vegas, NV 89121
Fred Gluckman (7) 1,761,875 50,000 1,811,875 13.1%
Robert A. Steiner 516,250 50,000 566,250 4.1%
Andrew H. Kent -- 90,000 90,000 0.6%
Paul B. Silverman 100,000 250,000 350,000 2.5%
Paul D. Hatch -- 50,000 50,000 0.4%
Michael M. Grand (8) 4,300,000 50,000 4,350,000 31.4%
All directors and executive officers 6,678,125 540,000 7,218,125 50.4%
as a group (6 individuals)
</TABLE>
------------
(1) Unless otherwise indicated, we believe that all persons named in the table
have sole investment and voting power over the shares of stock owned.
(2) Unless otherwise indicated, the address of each of the beneficial owners is
c/o The IXATA Group, Inc., 8989 Rio San Diego Drive, San Diego, California
92108.
(3) Options or warrants to purchase shares that are presently or will become
exercisable within 60 days.
(4) Each beneficial owners percentage ownership is determined by assuming that
options or warrants that are held by that person (but not held by any other
person) and which are exercisable within 60 days of November 6, 2000 have
been exercised.
(5) NextGen Capital, L.L.C. is the Managing Member of NextGen Fund II, L.L.C.,
which holds warrants to purchase 900,000 shares of IXATA, and NextGen SBS
Fund II, L.L.C., which holds warrants to purchase 600,000 shares.
(6) Vera Ellen Andreoli is sole trustee of the Andreoli Family Trust.
(7) Includes 1,761,875 shares held by the Gluckman Family Trust, of which Mr.
Gluckman is a trustee.
(8) Includes 4,300,000 shares held by Montpilier Holdings Inc., a Nevada
corporation. The sole stockholder of Montpilier is Parthenon Holdings LLC,
a Nevada limited liability company, of which Mr. Grand is the sole
stockholder.
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Voting Agreement
The investor group comprised of Michael M. Grand and Montpilier, Gluckman
Family Trust, Fred Gluckman, as Trustee of the Gluckman Family Trust, Andreoli
Family Trust, Vera Ellen Andreoli, as Trustee of the Andreoli Family Trust and
Robert A. Steiner, and certain other of our stockholders are parties to a voting
agreement, effective July 1, 1999, that provides that to the extent that any of
the members of this investor group or certain of our stockholders are the legal
or beneficial owner of any shares of our voting stock, they will vote those
shares:
. in favor of electing Michael M. Grand, Paul B. Silverman and Andrew H. Kent
(so long as each desires to serve) or their respective replacement appointed
by Mr. Grand to our Board of Directors; and
. in favor of electing Fred Gluckman, Robert A. Steiner and Paul D. Hatch (so
long as each desires to serve) or their respective replacement appointed by
vote or consent of a majority of the shares held by the parties to the voting
agreement to our Board of Directors.
The voting agreement will terminate on the first to occur of:
. the mutual written agreement of all of the parties to terminate the voting
agreement;
. the death or dissolution of the last of certain parties to the voting
agreement;
. the sale of 80% or more of our outstanding capital stock;
. certain parties to the voting agreement cease to collectively own at least
25% of our outstanding voting stock on a fully diluted basis; or
. the fifth anniversary of the voting agreement.
The voting agreement covers 8,577,500 shares of our common stock,
representing 62.2% of the outstanding shares of common stock on a fully diluted
basis. If the proposed transaction with NextGen is completed, the voting
agreement will be amended to reflect the revised Board structure.
Change in Control
On July 1, 1999, we acquired all the capital stock of IXATA, Inc., a
privately-held California corporation, from The Gluckman Family Trust, Andreoli
Family Trust, Robert A. Steiner and the other shareholders of IXATA, Inc. for
4.5 million shares of our newly-issued common stock. The original shareholders
of IXATA, Inc., after completion of the acquisition, were the owners of
approximately 41.8% of our outstanding shares. For purposes of federal
securities laws, this transaction, in combination with the voting agreement
described above, may constitute a change in control of The IXATA Group, Inc.
Certain Relationships and Related Transactions
On February 1, 1999, IXATA.COM and Tel.n.Form, Inc. entered into a
management and support agreement whereby Tel.n.Form agreed to provide selected
consulting services to support IXATA.COM's business development through December
31, 1999. The agreement also provided that IXATA.COM would reimburse Tel.n.Form
for use of certain shared expenses such as office space and computer facilities.
After completion of our acquisition of IXATA.COM on July 1, 1999, we continued
the Tel.n.Form agreement to minimize any potential disruption of IXATA.COM's
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operations and support the transition. For support services provided by
Tel.n.Form, we incur total costs of approximately $23,840 per month. We believe
costs incurred under the agreement are reasonable and no more than it would
incur under an agreement with an unaffiliated third party. The support services
agreement expired on December 31, 1999 and to minimize any disruption of
operations, we have continued selected support services on a month-by-month
basis consistent with the agreement. Since we have added additional IXATA.COM
management personnel, expanded the IXATA.COM staff and relocated our offices to
a new facility, we are now utilizing fewer of Tel.n.Form's services.
The majority owner of Tel.n.Form is the Gluckman Family Trust, which is a
significant stockholder of IXATA. See "Security Ownership of Certain
Beneficial Owners and Management." Fred Gluckman, who currently serves as
Executive Vice President -- Technology and Automation of IXATA.COM, and as a
director of IXATA, is the Chairman of the Board of Tel.n.Form. Mr. Gluckman
also serves as a trustee of the Gluckman Family Trust. Vera Ellen Andreoli is
the Trustee of the Andreoli Family Trust, which is a significant stockholder of
IXATA. See "Security Ownership of Certain Beneficial Owners and Management."
Mrs. Andreoli also provides consulting services to Tel.n.Form, and Mrs.
Andreoli's husband is a significant owner of Tel.n.Form and a Tel.n.Form
employee and provided selected consulting services to IXATA.COM under the
management services agreement.
Robert A. Steiner is President of our Virtual Purchasing Solutions division
and previously served as President of our IXATA.COM subsidiary. Mr. Steiner,
one of the co-founders of IXATA.COM, provided services to IXATA.COM under a
consulting contract entered into prior to IXATA purchasing the subsidiary. The
consulting contract was a renewable, one-year contract in an amount of $9,000
per month to be paid to Mr. Steiner. We entered into an a employment agreement
with Mr. Steiner in April of 2000 and the consulting agreement has been
canceled. See "Executive Compensation."
Fred Gluckman currently serves as Executive Vice President -- Technology
and Automation of IXATA.COM. Mr. Gluckman, one of the co-founders of IXATA.COM,
provides services to IXATA.COM under a consulting contract entered into prior to
our purchase of the subsidiary. We are currently negotiating an employment
contract with Mr. Gluckman. The consulting contract is a renewable, one year
contract in an amount of $10,000 per month to be paid to Mr. Gluckman. We expect
to finalize the employment agreement in the fourth quarter of 2000.
In May 2000, Dr. Margot Aiken, Mr. Gluckman's wife, advanced IXATA $65,000
for working capital needs.
NextGen Fund II, L.L.C. and NextGen SBS Fund II, L.L.C. have previously
provided financing to IXATA and plan to purchase shares of a newly-authorized
series of convertible preferred stock as described above. See "The Proposed
Financing by NextGen." NextGen Capital, L.L.C. is the Managing Member of both
NextGen funds. Each of the individuals to be appointed to IXATA's Board of
Directors in connection with the proposed preferred stock financing -- Zimri C.
Putney, Michael W. Wynne and Edward C. Groark -- are investors in one or more of
the NextGen funds. See "New Directors." In addition, Mr. Putney is the Managing
Director and Chief Executive Officer
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of NextGen Capital, and Mr. Wynne is a member of NextGen Fund II's Executive
Committee that has final decision making authority regarding investments of
NextGen Fund II and NextGen SBS Fund II.
__________
By Order of the Board of Directors,
Christopher J. Hubbert
November 9, 2000 Assistant Secretary
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