-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CBeBVYjw0a7DQBKrEaRFNOXUnN2M2/1hAkwLdJLG+lVAqOsn6vPTMq20bUodRvAj TGBOjH3cS2jqwBDhaP3O9Q== /in/edgar/work/0000910680-00-000858/0000910680-00-000858.txt : 20001121 0000910680-00-000858.hdr.sgml : 20001121 ACCESSION NUMBER: 0000910680-00-000858 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20001117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ION NETWORKS INC CENTRAL INDEX KEY: 0000754813 STANDARD INDUSTRIAL CLASSIFICATION: [3577 ] IRS NUMBER: 222413505 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-50246 FILM NUMBER: 772838 BUSINESS ADDRESS: STREET 1: 1551 S WASHINGTON AVE CITY: PISCATAWAY STATE: NJ ZIP: 08854 BUSINESS PHONE: 2014944440 MAIL ADDRESS: STREET 1: 1551 S WASHINGTON AVE CITY: PISCATAWAY STATE: NJ ZIP: 08854 FORMER COMPANY: FORMER CONFORMED NAME: MICROFRAME INC DATE OF NAME CHANGE: 19920703 S-3 1 0001.txt REGISTRATION STATEMENT ON FORM S-3 As filed with the Securities and Exchange Commission on November 17, 2000 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 REGISTRATION STATEMENT ON FORM S-3 UNDER THE SECURITIES ACT OF 1933 ---------------- ION NETWORKS, INC. (Exact name of registrant as specified in its charter) Delaware 22-2413505 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1551 South Washington Avenue Piscataway, New Jersey 08854 (732) 529-0100 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Ronald C. Sacks, Chief Executive Officer and Interim Principal Financial Officer Ion Networks, Inc. 1551 South Washington Avenue Piscataway, New Jersey 08854 (Name and address of agent for service) (732) 529-0100 (Telephone number, including area code, of agent for service) with a copy to: James Alterbaum, Esq. Parker Chapin LLP The Chrysler Building 405 Lexington Avenue New York, New York 10174 (212) 704-6000 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to time after this Registration Statement becomes effective, as determined by market conditions. |_| If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. |X| If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. |_| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If this Form is a post-effective amendment filed pursuant to rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.
CALCULATION OF REGISTRATION FEE - ---------------------------------------------------------------------------------------------------------------------- Title of each class of Amount to be Proposed Maximum Proposed Maximum Amount of securities to be registered Aggregate Price Aggregate offering Registration Fee registered per share(1) price(1) - ---------------------------------------------------------------------------------------------------------------------- Common Stock, $.001 par value per share............... 2,857,142 $1.1719 $3,348,284.71 $837.07 - ----------------------------------------------------------------------------------------------------------------------
1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c); based on the average of the high ask and low bid prices for the Common Stock as reported on the Nasdaq Stock Market on November 16, 2000. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. ------------------------------------------ PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED NOVEMBER 17, 2000 ION NETWORKS, INC. 2,857,142 SHARES OF COMMON STOCK -------------------------------- o The shares of our common stock offered by this prospectus are being sold by the selling stockholders. o We will not receive any proceeds from the sale of these shares. o On November 16, 2000, the closing price of our common stock on the Nasdaq National Market was $1.125. o Our executive offices are located at Washington Plaza, 1551 South Washington Avenue, Piscataway, New Jersey 08854, our telephone number is (732) 529-0100 and our website is at "www.ion-networks.com." ------------------------------------------------------------------------------- NASDAQ National Market symbol for our Common Stock: "IONN" ------------------------------------------------------------------------------- THE SECURITIES OFFERED BY THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS. -------------------------------------------------- NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------------------------------------------- THE DATE OF THIS PROSPECTUS IS NOVEMBER 17, 2000 TABLE OF CONTENTS
Risk Factors.....................................................................................................3 Where You Can Find More Information About Us.....................................................................9 Incorporation of Certain Documents by Reference..................................................................9 Forward-Looking Statements......................................................................................11 Use of Proceeds.................................................................................................11 Dividend Policy.................................................................................................11 Selling Stockholders ...........................................................................................12 Plan of Distribution ...........................................................................................15 Description of Securities.......................................................................................17 Indemnification for Securities Act Liabilities..................................................................19 Legal Matters...................................................................................................19 Experts ........................................................................................................19
-2- RISK FACTORS BEFORE YOU BUY SHARES OF OUR COMMON STOCK, YOU SHOULD BE AWARE THAT THERE ARE VARIOUS RISKS ASSOCIATED WITH SUCH PURCHASE, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS, TOGETHER WITH ALL OF THE OTHER INFORMATION IN THIS PROSPECTUS, AND THE DOCUMENTS WE HAVE INCORPORATED BY REFERENCE IN THE SECTION "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR COMMON STOCK. RISKS ASSOCIATED WITH OUR BUSINESS WE ARE VULNERABLE TO TECHNOLOGICAL CHANGES The markets we serve experience rapid technological change, changing customer requirements, frequent new product introductions and evolving industry standards that may render existing products and services obsolete. As a result, more advanced products produced by our competitors could erode our position in our existing markets or other markets that we may enter. It is difficult to estimate the life cycles of our products and services. Our future success will depend, in part, upon our ability to enhance existing products and services and to develop new products and services on a timely basis. In addition, our products and services must keep pace with technological developments and we must address increasingly sophisticated customer needs. We might experience difficulties that could delay or prevent the successful development, introduction and marketing of new products and services. New products and services and enhancements might not meet the requirements of the marketplace and achieve market acceptance. If these things happen, they would materially and negatively affect our cash flows, financial condition and results of operations. WE CANNOT BE CERTAIN ABOUT OUR PRODUCT DEVELOPMENT Our products are currently being used by a small number of customers and there can be no assurance that the products will prove to be sufficiently reliable in widespread commercial use. It is common for hardware and software as complex and sophisticated as that incorporated in our products to experience errors or "bugs" both during development and subsequent to commercial introduction. We cannot assure you that all the potential problems will be identified, that any bugs that are located can be corrected on a timely basis or at all, or that additional errors will not be located in existing or future products at a later time or when usage increases. Any such errors could delay the commercial introduction or use of existing or new products and require modifications in systems that have already been installed. Remedying such errors has been and may continue to be costly and time consuming. Delays in debugging or modifying our products could materially and adversely affect our competitive position with respect to existing and new technologies and products offered by our competitors. -3- THERE IS POTENTIAL FOR FLUCTUATION IN OUR QUARTERLY AND ANNUAL OPERATING RESULTS In the past, we experienced fluctuations in our quarterly and annual operating results and we anticipate that such fluctuations will continue. In addition, we have incurred significant losses and negative cash flows from operations. We expect that these trends will continue in the foreseeable future. Our quarterly and annual operating results may vary significantly depending on a number of factors, including: o the timing of the introduction or acceptance of new products and services; o changes in the mix of products and services provided; o long sales cycles; o changes in regulations affecting our business; o amount of research and development expenditures necessary for new product development and innovation; o changes in our operating expenses; o uneven revenue streams; and o general economic conditions. We cannot assure you that our levels of profitability will not vary significantly among quarterly periods or that in future quarterly periods our results of operations will not be below prior results or the expectations of public market analysts and investors. If this occurs, the price of our common stock could significantly decrease. WE MAY NEED TO RAISE MORE MONEY IN THE FUTURE Our business plan and growth strategy are very dependent on our working capital position which has been strained due to the nature of our business coupled with the recent expansion of our infrastructure. We require large outlays of capital for research and product development far in advance of the revenues earned as a result of sales of our newly developed products. Future new product revenues are a critical component in determining our financial strength, market share and market perception, and longevity. To the extent that expected revenue assumptions are not achieved, we will have to raise additional equity or debt financing and/or curtail certain current expenditures contained in our current operating plans. There can be no assurance that the additional financing will be available to us on acceptable terms or at all. If we are not able to secure additional financing on terms we consider acceptable to us, our business may be negatively impacted and we will not be able to execute on our business and growth strategies. These factors are more particularly described in the liquidity discussion of Management's Discussion and Analysis section of our Form 10-QSB for the fiscal quarter ended September 30, 2000, which is incorporated herein by reference. -4- WE CANNOT BE CERTAIN THAT OUR PRODUCTS IN DEVELOPMENT WILL EVER BECOME COMMERCIALLY VIABLE We have a variety of products that are in the research and development stage, including certain incomplete products that we purchased from SolCom Systems Limited when we acquired SolCom in March 1999. These products have not yet been introduced into the marketplace and therefore do not contribute to our revenue. We incurred a charge against earnings of $488,295 in the quarter ended September 30, 2000 relating to a decision to abandon development of certain products and technologies acquired from SolCom. If, as a result of the uncertainties surrounding the successful completion of the balance of these projects, we are unable to produce commercially viable products, the anticipated future revenue attributable to the expected sales and profits from such products will not be realized. This could have a significant negative effect on our future financial condition, results of operations and cash flows, including the possibility that similar charges against earnings may be incurred in the future. WE HAVE SIGNIFICANT COMPETITION We are subject to significant competition from different sources for our different products and services. We can not assure you that the market will continue to accept our hardware and software technology or that we will be able to compete successfully in the future. We believe that the main factors affecting competition in the network management business are: o the products' ability to meet various network management and security requirements; o the products' ability to conform to the network and/or computer systems; o the products' ability to avoid becoming technologically outdated; o the willingness and the ability of distributors to provide support customization, training and installation; and o the price. Although we believe that our present products and services are competitive, we compete with a number of large computer, electronics and telecommunications manufacturers which have financial, research and development, marketing and technical resources far greater than ours. Our competitors include Net Scout Inc., Bay Networks Inc., Shomiti Systems Inc., Visual Networks, Inc., Concord Communications, Inc., Applied Innovation, Aprisma, Micromuse, Riversoft and SMARTS. Such companies may succeed in producing and distributing competitive products more effectively than we can produce and distribute our products, and may also develop new products which compete effectively with our products. WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY RIGHTS, PERMITTING COMPETITORS TO DUPLICATE OUR PRODUCTS AND SERVICES We hold no patents on any of our technology. Although we do license some of our technology from third parties, we do not consider any of these licenses to be material to our operations. We have made a consistent effort to minimize the ability of competitors to duplicate our software technology utilized in our products. However, there remains the possibility of duplication of our products, and competing products have already been introduced. Any such duplication by our competitors could negatively impact on our business and operations. -5- WE RELY ON SEVERAL KEY CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR BUSINESS Our business is dependent to a great extent on several key customer relationships, including Rhythms NetConnections, Lucent Technologies, KPN-Telecom BV, Hewlett-Packard, AT&T, Crown Castle International, Siemens USA and MCI WorldCom. Our sales to these customers represented approximately 56% of our revenue for the fiscal year 2000. We also have significant "original equipment manufacturer" relationships which accounted for approximately 32% of our revenues for fiscal year 2000. The loss of and slow-down of orderning by any of these customers would likely significantly decrease our revenues and future prospects. WE DEPEND UPON KEY MEMBERS OF OUR EMPLOYEES AND MANAGEMENT Our business is greatly dependent on the efforts of our executive officers and key employees, and on our ability to attract key personnel. Our success depends in large part on the continued services of our key management, sales, engineering, research and development and operational personnel and on our ability to continue to attract, motivate and retain highly qualified employees and independent contractors in those areas. Competition for such personnel is intense and we cannot assure you that we will successfully attract, motivate and retain key personnel. The inability to hire and retain qualified personnel or the loss of the services of key personnel could have a material adverse effect upon our business, financial condition and results of operations. Currently, we do not maintain "key man" insurance policies with respect to any of our employees. WE MAY HAVE DIFFICULTY COMPLYING WITH GOVERNMENT REGULATION Due to the sophistication of the technology employed in our devices, export of our products is subject to governmental regulation. As required by law or demanded by customer contract, we routinely obtain approval of our products by Underwriters' Laboratories. Additionally, because many of our products interface with telecommunications networks, our products are subject to several key Federal Communications Commission ("FCC") rules and thus FCC approval is necessary as well. Part 68 of the FCC rules contains the majority of the technical requirements with which telephone systems must comply to qualify for FCC registration for interconnection to the public telephone network. Part 68 registration represents a determination by the FCC that telecommunication equipment interfacing with the public telephone network complies with certain interference parameters and we intend to apply for FCC Part 68 registration for all of our new products. Part 15 of the FCC rules requires equipment classified as containing a Class A computing device to meet certain radio and television interference requirements, especially as such requirements relate to operations of such equipment in a residential area. Certain of our products are subject to Part 15. The European Community is developing a similar set of requirements for its members and we have begun the process of compliance for Europe. -6- THERE ARE LIMITATIONS ON THE LIABILITY OF OUR DIRECTORS AND OFFICERS Our Certificate of Incorporation, as amended, and our Bylaws contain provisions limiting the liability of our directors for monetary damages to the fullest extent permissible under Delaware law. This is intended to eliminate the personal liability of a director for monetary damages on an action brought by or in our right for breach of a director's duties to us or to our stockholders except in certain limited circumstances. In addition, our Certificate of Incorporation, as amended, and our Bylaws contain provisions requiring us to indemnify our directors, officers, employees and agents serving at our request, against expenses, judgments (including derivative actions), fines and amounts paid in settlement. This indemnification is limited to actions taken in good faith in the reasonable belief that the conduct was lawful and in or not opposed to our best interests. The Certificate of Incorporation and the Bylaws provide for the indemnification of directors and officers in connection with civil, criminal, administrative or investigative proceedings when acting in their capacities as agents for us. These provisions may reduce the likelihood of derivative litigation against directors and executive officers and may discourage or deter stockholders or management from suing directors or executive officers for breaches of their fiduciary duties, even though such an action, if successful, might otherwise benefit us and our stockholders. MANAGEMENT MAY CHANGE OUR STRATEGIC DIRECTION Our management is in the process of performing an evaluation of our strategic direction. This evaluation includes an assessment of our business plan and other alternatives in an effort to stabilize our operating performance. Our plans, when completed and if approved by our Board of Directors, may result in the impairment of certain of our assets including inventory, capitalized software, and other purchased intangibles, as well as a reduction in costs. The amount of assets on the balance sheet as of September 30, 2000 that may be impaired upon completion and approval of the plans approximate $925,000. As the plans mature and are approved, additional assets may be determined to be impaired, which may require future adjustment and future recognition of loss in our statement of operations. -7- RISKS ASSOCIATED WITH OUR SECURITIES WE DO NOT ANTICIPATE THE PAYMENT OF DIVIDENDS We have never declared or paid cash dividends on our common stock. We currently anticipate that we will retain all available funds for use in the operation of our business. Thus, we do not anticipate paying any cash dividends on our common stock in the foreseeable future. THERE IS POTENTIAL FOR FLUCTUATION IN THE MARKET PRICE OF OUR SECURITIES Because of the nature of the industry in which we operate, the market price of our securities has been, and can be expected to continue to be, highly volatile. Factors such as announcements by us or others of technological innovations, new commercial products, regulatory approvals or proprietary rights developments, and competitive developments all may have a significant impact on our future business prospects and market price of our securities. SHARES THAT ARE ELIGIBLE FOR SALE IN THE FUTURE MAY AFFECT THE MARKET PRICE OF OUR COMMON STOCK As of November 8, 2000, an aggregate of 4,634,722 of the outstanding shares of our common stock are "restricted securities" as that term is defined in Rule 144 under the federal securities laws. These restricted shares may be sold pursuant only to an effective registration statement under the securities laws or in compliance with the exemption provisions of Rule 144 or other securities law provisions. Rule 144 permits sales of restricted securities by any person (whether or not an affiliate) after one year, at which time sales can be made subject to the Rule's existing volume and other limitations. Rule 144 also permits sales of restricted securities by non-affiliates without adhering to Rule 144's existing volume or other limitations after two years. In general, an "affiliate" is a person with the power to manage and direct our policies. The SEC has stated that generally, executive officers and directors of an entity are deemed affiliates of the entity. In addition, 1,304,449 shares are issuable pursuant to currently exercisable options, and 386,250 shares are issuable pursuant to currently exercisable warrants, which may be exercised for shares that may be restricted or registered, further adding to the number of outstanding shares. Future sales of substantial amounts of shares in the public market, or the perception that such sales could occur, could negatively affect the price of our common stock. -8- WHERE YOU CAN FIND MORE INFORMATION ABOUT US We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public over the Internet at the SEC's Website at "http://www.sec.gov." We have filed with the SEC a registration statement on Form S-3 to register the shares being offered. This Prospectus is part of that registration statement and, as permitted by the SEC's rules, does not contain all the information included in the registration statement. For further information with respect to us and our common stock, you should refer to the registration statement and to the exhibits and schedules filed as part of that registration statement, as well as the documents we have incorporated by reference which are discussed below. You can review and copy the registration statement, its exhibits and schedules, as well as the documents we have incorporated by reference, at the public reference facilities maintained by the SEC as described above. The registration statement, including its exhibits and schedules, are also available on the SEC's web site. This Prospectus may contain summaries of contracts or other documents. Because they are summaries, they will not contain all of the information that may be important to you. If you would like complete information about a contract or other document, you should read the copy filed as an exhibit to the registration statement. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The SEC allows us to "incorporate by reference" the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this Prospectus, and information that we file later with the SEC will automatically update or supersede this information. We incorporate by reference the documents listed below and any future filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934: o Annual Report on Form 10-KSB for the year ended March 31, 2000; o Proxy Statement on Schedule 14A filed on October 23, 2000; o Quarterly Report on Form 10-QSB for the quarter ended June 30, 2000; o Quarterly Report on Form 10-QSB for the quarter ended September 30, 2000; o Current Report on Form 8-K dated (date of earliest event reported) June 29, 2000 (as filed on June 29, 2000); and o The description of our Common Stock contained in the Registration Statement on Form 8-A filed with the SEC on January 23, 1985. You may request a copy of these filings, at no cost, by writing or telephoning us at Washington Plaza, 1551 South Washington Avenue, Piscataway, New Jersey 08854, telephone (732) 529-0100. Attention: Mr. Ronald C. Sacks, Chief Executive Officer and Interim Principal Financial Officer. -9- ------------------------------ This Prospectus contains certain forward-looking statements which involve substantial risks and uncertainties. These forward-looking statements can generally be identified because the context of the statement includes words such as "may," "will," "expect," "anticipate," "intend," "estimate," "continue," "believe," or other similar words. Similarly, statements that describe our future plans, objectives and goals are also forward-looking statements. Our factual results, performance or achievements could differ materially from those expressed or implied in these forward-looking statements as a result of certain factors, including those listed in "Risk Factors" and elsewhere in this Prospectus. WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY SHARES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF NOVEMBER 17, 2000. ------------------------- -10- FORWARD - LOOKING STATEMENTS In this prospectus, we make statements about our future financial condition, results of operations and business. These are based on estimates and assumptions made from information currently available to us. Although we believe these estimates and assumptions are reasonable, they are uncertain. These forward-looking statements can generally be identified because the context of the statement includes words such as may, will, expect, anticipate, intend, estimate, continue, believe or other similar words. Similarly, statements that describe our future expectations, objectives and goals or contain projections of our future results of operations or financial condition are also forward-looking statements. Our future results, performance or achievements could differ materially from those expressed or implied in these forward-looking statements, including those listed under the heading "Risk Factors" and other cautionary statements in this prospectus. Unless otherwise required by applicable securities laws, we assume no obligation to update any such forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. USE OF PROCEEDS We will not receive any of the proceeds from the sale of our Common Stock registered by the Registration Statement, of which this Prospectus is a part. All such proceeds will be paid to the Selling Stockholders specified under the heading, "Selling Stockholders." DIVIDEND POLICY We have never declared or paid cash dividends on our Common Stock. We currently anticipate that we will retain all available funds for use in the operation of our business. As such, we do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. -11- SELLING STOCKHOLDERS This Prospectus covers the resale by the Selling Stockholders of up to 2,857,142 shares (the "Shares") of common stock, par value $.001 per share, of the Company (the "Common Stock"). The Shares were issued by the Company pursuant to transactions consummated in August 2000. For more details regarding such transactions, see "Description of Securities -- The Transactions" and "Description of Securities -- Common Stock". The following table lists certain information regarding the Selling Stockholders' ownership of shares of Common Stock as of November 8, 2000, and as adjusted to reflect the sale of the Shares. Information concerning the Selling Stockholders may change from time to time. The information in the table concerning the Selling Stockholders who may offer Shares hereunder from time to time is based on information provided to us by such stockholders.
Shares of Shares of Common Stock Owned Common after Offering (1) Stock Owned Shares of ------------------------- Name of Selling Prior to Common Stock Stockholder Offering to be Sold Number Percent of Class - --------------------------- -------- ---------- ------ ---------------- Special Situations Private Equity Fund, L.P. 315,566 315,000 566 * Special Situations Fund III, L.P. (2) 345,850 345,000 850 * Special Situations Cayman Fund, L.P. 122,217 120,000 2,217 * Special Situations Technology Fund, L.P. 90,653 89,565 1,088 * City of Milford Pension & Retirement Fund 216,000 166,000 50,000 * NFIB Corporate Account 93,000 43,000 50,000 * Norwalk Employees' Pension Plan 131,000 131,000 0 * Public Employee Retirement System of Idaho 714,000 314,000 400,000 2.2 City of Stamford Firemen's Pension Fund 128,000 78,000 50,000 *
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Shares of Shares of Common Stock Owned Common after Offering (1) Stock Owned Shares of ------------------------- Name of Selling Prior to Common Stock Stockholder Offering to be Sold Number Percent of Class - --------------------------- -------- ---------- ------ ---------------- The Jenifer Altman Foundation 43,000 43,000 0 * Dean Witter Foundation 87,000 87,000 0 * Roanoke College 91,000 66,000 25,000 * Butler Family LLC 26,000 26,000 0 * David Zesiger 14,000 14,000 0 * The Ferris Hamilton Family Trust 35,000 35,000 0 * Mary Ann S. Hamilton Trust for Self 43,000 43,000 0 * HBL Charitable Unitrust 17,000 17,000 0 * Andrew Heiskell 66,000 66,000 0 * Jeanne L. Morency 17,000 17,000 0 * Peter Looram 17,000 17,000 0 * Mary C. Anderson 26,000 26,000 0 * Murray Capital, LLC 30,000 30,000 0 * William M. and Miriam F. Meehan Foundation, Inc. 26,000 26,000 0 * Domenic J. Mizio 70,000 70,000 0 * Morgan Trust Co. of the Bahamas Ltd. as Trustee U/A/D 11/30/93 111,000 91,000 20,000 * Susan Uris Halpern 43,000 43,000 0 * William B. Lazar 22,000 22,000 0 * Wells Family LLC 138,000 78,000 60,000 *
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Shares of Shares of Common Stock Owned Common after Offering (1) Stock Owned Shares of ------------------------- Name of Selling Prior to Common Stock Stockholder Offering to be Sold Number Percent of Class - --------------------------- -------- ---------- ------ ---------------- Harold & Grace Willens JTWROS 17,000 17,000 0 * Albert L. Zesiger 117,000 87,000 30,000 * Barrie Ramsay Zesiger 62,630 42,630 20,000 * Wolfson Investment Partners LP 58,500 43,500 15,000 * 21st Century Digital Industries, Fund, L.P. 248,447 248,447 0 * Total 3,581,863 2,857,142 724,721 4.0 - ---------------------
* Represents less than one (1%) percent of the issued and outstanding Common Stock. (1) Assumes that all of the Shares are sold and no other shares of Common Stock are sold by the Selling Stockholders during the offering period. (2) Special Situations Fund III, L.P. has been granted the right to nominate a director to the Board of Directors, such right to continue until November 1, 2002, so long as Special Situations Fund III, L.P., together with its affiliated funds, own at least two (2%) percent of the Company's total outstanding and issued Common Stock. -14- PLAN OF DISTRIBUTION The Selling Stockholders may offer their shares of Common Stock at various times in one or more of the following transactions: o on any U.S. securities exchange on which the Common Stock may be listed at the time of such sale; o in the over-the-counter market; o in transactions other than on such exchanges or in the over-the-counter market; o in connection with short sales; or o in a combination of any of the above transactions. The Selling Stockholders may offer their shares of Common Stock at prevailing market prices at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices. The Selling Stockholders may also sell the shares under Rule 144 instead of under this prospectus, if Rule 144 is available for those sales. The Selling Stockholders may use broker-dealers to sell their shares of Common Stock. If this happens, broker-dealers will either receive discounts or commissions from the Selling Stockholder, or they will receive commissions from purchasers of shares of Common Stock for whom they acted as agents. Such brokers may act as dealers by purchasing any and all of the Shares covered by this Prospectus either as agents for others or as principals for their own accounts and reselling such securities pursuant to this Prospectus. The transactions in the shares covered by this prospectus may be effected by one or more of the following methods: o ordinary brokerage transactions and transactions in which the broker solicits purchasers; o purchases by a broker or dealer as principal, and the resale by that broker or dealer for its account under this prospectus, including resale to another broker or dealer; o block trades in which the broker or dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal in order to facilitate the transaction; or o negotiated transactions between the Selling Stockholders and purchasers without a broker or dealer. The Selling Stockholders and any broker-dealers or other persons acting on the behalf of parties that participate in the distribution of the shares may be deemed to be underwriters. As such, any commissions or profits they receive on the resale of the shares may be deemed to be underwriting discounts and commissions under the Securities Act. -15- As of the date of this Prospectus, the Company is not aware of any agreement, arrangement or understanding between any broker or dealer and any of the Selling Stockholders with respect to the offer or sale of Shares pursuant to this Prospectus. In the stock purchase agreement we executed with the Selling Stockholders, we agreed to indemnify and hold harmless the Selling Stockholders against liabilities under the Securities Act, which may be based upon, among other things, any untrue statement or alleged untrue statement of a material fact or any omission or alleged omission of a material fact, unless made or omitted in reliance upon written information provided to us by the Selling Stockholders. We have agreed to bear the expenses incident to the registration of the shares, other than selling discounts and commissions. The Selling Stockholders are selling all of the shares covered by this Prospectus for their own account. Accordingly, the Company will not receive any proceeds from the resale of these shares. We agreed in the stock purchase agreement to use our best efforts to keep the registration statement of which this prospectus is a part effective until the earliest of: o two years from the effective date of the registration statement; or o the date the Selling Stockholders may sell all the shares under the provisions of Rule 144 without limitations or delay. -16- DESCRIPTION OF SECURITIES GENERAL The total amount of authorized capital stock of the Company consists of 50,000,000 shares of common stock, par value $.001 per share (the "Common Stock"), and 1,000,000 shares of preferred stock, par value $.001 per share (the "Preferred Stock"). As of November 8, 2000, there were 18,133,435 shares of Common Stock issued and outstanding and no shares of Preferred Stock issued and outstanding. COMMON STOCK Holders of shares of Common Stock are entitled to one vote per share on all matters that are submitted to the stockholders for their approval and have no cumulative voting rights. The holders of the Common Stock are entitled to receive dividends, if any, as may be declared by the Board of Directors from funds legally available from time to time for this purpose. Upon liquidation or dissolution of the Company, the remainder of the Company's assets will be distributed ratably among the holders of Common Stock, after the payment of all liabilities and payment on any preferential amounts to which the holders of any Preferred Stock may be entitled. All of the outstanding shares of Common Stock are fully-paid and non-assessable. PREFERRED STOCK The Company's Preferred Stock may be issued from time to time by the Company's Board of Directors without the approval of the Company's stockholders. The Board of Directors is authorized to issue these shares in different classes and series and, with respect to each class or series, to determine the dividend rights, the redemption provisions, conversion provisions, liquidation preferences and other rights and preferences not in conflict with the Company's Certificate of Incorporation or with Delaware law. THE TRANSACTION Pursuant to a stock purchase agreement dated as of August 11, 2000, the Selling Stockholders purchased an aggregate of 2,857,142 shares of Common Stock for an aggregate consideration of $5,000,000. TRANSFER AGENT AND WARRANT AGENT American Stock Transfer & Trust Company, New York, New York is the transfer agent and registrar for the Common Stock. DELAWARE TAKEOVER STATUTE AND CERTAIN CHARTER PROVISIONS The Company is subject to Section 203 of the Delaware General Corporation Law which, subject to certain exceptions, prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date that -17- such stockholder became an interested stockholder, unless: (i) prior to such date, the Board of Directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (x) by persons who are directors and also officers and (y) by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or (iii) on or subsequent to such date, the business combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder. -18- INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Section 145 of the Delaware General Corporation Law provides, in general, that a corporation incorporated under the laws of the State of Delaware, such as the Company, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses. The Certificate of Incorporation, as amended, provides that the liability of the Company's directors shall be limited to the fullest extent permitted by the Delaware General Corporation Law. In addition, the Certificate of Incorporation provides that the Company shall indemnify directors, officers, employees and agents of the Company acting in such capacity to the fullest extent permitted by such law. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. LEGAL MATTERS The validity of the securities being offered hereby was passed upon by Parker Chapin LLP, New York, New York. EXPERTS The consolidated financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-KSB of Ion Networks, Inc for the year ended March 31, 2000, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. -19-
- ------------------------------------------------------ ------------------------ WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON ANY ION NETWORKS, INC. UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY SHARES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF NOVEMBER 17, 2000. 2,857,142 SHARES OF COMMON STOCK TABLE OF CONTENTS Page ---- Risk Factors........................................3 Where You Can Find More Information About Us........9 Incorporation of Certain Documents by Reference.....9 Forward-Looking Statements.........................11 Use of Proceeds....................................11 Dividend Policy....................................11 Selling Stockholders ..............................12 Description of Securities..........................15 PROSPECTUS Plan of Distribution ..............................17 Indemnification for Securities Act Liabilities.....19 Legal Matters......................................19 Experts............................................19 November 17, 2000 - ------------------------------------------------------ ------------------------
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets for the various expenses payable by us in connection with the offering of our Common Stock being registered hereby. All amounts shown are estimates. Filing fee for registration statement...............$ 837.07 Legal fees and expenses.............................$ 25,000.00 Accounting fees and expenses........................$ 2,500.00 Miscellaneous expenses..............................$ 662.93 ------------- Total......................................$ 29,000.00 ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 ("Section 145") of the General Corporation Law of the State of Delaware ("DGCL") provides, in general, that a corporation incorporated under the laws of the State of Delaware, such as the Company, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses. Article Tenth of the Company's Certificate of Incorporation, as amended, provides that the Company shall indemnify all persons whom the Company shall have the power to indemnify under Section 145 to the fullest extent permitted by such Section 145. In addition, Article Ninth of the Company's Certificate of Incorporation provides, in general, that the liability of the directors of the Company shall be limited to the fullest extent permitted by the DGCL. The DGCL generally permits the limitation of a director's liability, except for liability (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or II-1 omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL (which provides that, under certain circumstances, directors may be jointly and severally liable for willful or negligent violations of the DGCL's provisions regarding the payment of dividends or stock repurchases or redemptions), or (iv) for any transaction from which the director derived an improper personal benefit. II-2 ITEM 16. EXHIBITS.
Number Description of Exhibit - ------ ---------------------- 4.1 Stock Purchase Agreement by and among the Company and the Selling Stockholders among the Companyand the Selling Stockholders dated as of August 11, 2000. 5.1 Opinion of Parker Chapin LLP 23.1 Consent of PricewaterhouseCoopers LLP. 23.2 Consent of Parker Chapin LLP (included in Exhibit 5.1 hereto). 24.1 Power of Attorney (included on Signature Page hereto).
- --------------------- ITEM 17. UNDERTAKINGS. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report II-3 pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 15 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Piscataway, State of New Jersey, on the 17th day of November, 2000. ION NETWORKS, INC. By: /s/ Ronald C. Sacks ---------------------------------------- Ronald C. Sacks, Chief Executive Officer and Interim Principal Financial Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Ronald C. Sacks and Stephen M. Deixler and each of them with power of substitution, as his attorney-in-fact, in all capacities, to sign any amendments to this registration statement (including post-effective amendments) and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-facts or their substitutes may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on the 17th day of November, 2000.
Signature Title --------- ----- /s/ Ronald C. Sacks Chief Executive Officer - -------------------------------------------------- and Interim Principal Financial Officer Ronald C. Sacks /s/ Stephen M. Deixler Chairman of the Board of Directors - -------------------------------------------------- Stephen M. Deixler /s/ Alexander C. Stark Director - -------------------------------------------------- Alexander C. Stark Director - -------------------------------------------------- Martin Ritchie Director - -------------------------------------------------- Alan Hardie /s/ Baruch Halpern Director - -------------------------------------------------- Baruch Halpern
EX-4.1 2 0002.txt STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT dated as of August 11, 2000 by and between ION NETWORKS, INC., a Delaware corporation having its principal offices at 1551 S. Washington Avenue, Piscataway, New Jersey 08854 (the "Company"), and each of the parties set forth on the schedule (the "Schedule") attached hereto (collectively, the "Buyers"). W I T N E S S E T H: -------------------- WHEREAS, the Company desires to issue and sell to the Buyers shares of common stock, par value $.001 per share, of the Company (the "Common Stock"); and WHEREAS, the Buyers desire to purchase Two Million Eight Hundred Fifty Seven Thousand One Hundred and Fourty Two (2,857,142) shares of Common Stock (the "Shares") in accordance with the allocation set forth in the Schedule. NOW THEREFORE, in consideration of the promises and mutual covenants, agreements, representations and warranties herein contained, the parties hereto agree as follows: 1. Sale and Purchase of Shares. Subject to the terms and conditions of this Agreement, the Company hereby sells, assigns, transfers and delivers to the Buyers, and each of the Buyers hereby purchases from the Company, for and in consideration of the Purchase Price (as hereinafter defined), the Shares in accordance with the allocation set forth on the Schedule. The obligation of each Buyer is limited to the obligation to purchase the number of shares set forth next to such Buyer's name on the Schedule. 2. Purchase Price and Payment. 2.1. Subject to the terms and conditions of this Agreement, the purchase price to be paid by the Buyers to the Company for and in consideration of the sale to the Buyers of the Shares is an amount equal to $5,000,000 (the "Purchase Price"). 2.2. The Purchase Price shall be paid by the Buyers to the Company at the Closing (as hereinafter defined) by wire transfer of immediately available funds to an account designated by the Company to the Buyers. 3. Closing. 3.1. The sale and purchase of the Shares shall take place at the offices of the Company within five (5) business days from the date hereof or on such other date or at such other location as the parties hereto shall mutually agree upon (hereinafter referred to as the "Closing" or the "Closing Date"). 3.2. At the Closing, the Company shall: (a) sell, transfer, assign and deliver to the Buyers the Shares; (b) deliver to each of Zesiger Capital Group LLC (as representative of each of the Buyers for whom it holds power of attorney), Mr. David Greenhouse (as representative of each of the Special Situation Funds listed in the Schedule) (together with Zesiger Capital Group LLC, the "Representatives"), and 21st Century Digital Industries Fund, L.P. ("21st Century") (i) copies of the certificate of incorporation, as amended, and the by-laws of the Company, each as certified by a duly authorized officer of the Company, (ii) resolutions or minutes of the board of directors of the Company authorizing this Agreement and the transactions contemplated hereby, as certified by a duly authorized officer of the Company, (iii) a certificate of good standing of the Company from the Secretary of State of the State of Delaware bearing a recent date thereof and (iv) certificates representing the Shares in the respective names of the Buyers (or their respective nominees as indicated on the Schedule) and (v) a certificate of the Company executed by a duly authorized officer of the Company, dated as of the Closing Date, certifying that the representations and warranties made by the Company in Section 6 hereof are true and correct as of the Closing Date, and (vi) an opinion of Parker Chapin LLP, counsel to the Company, addressed to the Buyers with respect to the valid existence and good standing of the Company, the due authorization, execution and delivery of this Agreement and the issuance and sale of the Shares, and that the Shares, upon issuance and sale to the Buyers, are duly authorized, validly issued, fully paid and nonassessable. 4. Registration of Shares. 4.1. The Company shall use its best efforts to (i) file a registration statement (the "Registration Statement"), within sixty (60) days of the Closing Date, on Form S-3 or other applicable form, registering for resale the Shares and (ii) cause the Registration Statement to be declared effective under the Securities Act of 1933, as amended (the "Act") as soon thereafter as reasonably practicable. The Company promptly shall provide Buyers with such copies of the final Prospectus contained in the Registration Statement after it becomes effective as they shall reasonably request. In addition, the Company shall (a) use its best efforts to keep the Registration Statement effective for a period ending on the earlier of (x) two (2) years from its effective date or (y) when all such Shares can be sold without limitation or delay under Rule 144 and (b) file all reports and forms required to be filed by it under the Securities Exchange Act of 1934, as amended ("Reports") on a timely basis so long as Buyers own any Shares and shall provide the Representatives and 21st Century copies thereof when filed. 4.2. Notwithstanding anything contained herein to the contrary, the Company shall be entitled to postpone the filing of the Registration Statement otherwise required to be prepared and filed by it in accordance with Section 4.1 or, in the event the Registration Statement has been declared effective, without suspending such effectiveness, instruct the Buyers promptly in writing (or any subsequent holders thereof) not to sell or distribute any Shares (a "Delay") as long as the reason for non-disclosure continues, if the Company would be required to disclose in the Registration Statement the existence of any fact relating to a material business situation, transaction or negotiation, or would be required to disclose information that the Company has not otherwise made public, in each case, that the Company reasonably determines is in the best interests of the Company not to disclose at such time, and unless and until the holders furnish to the Company in writing information that may be required to prepare the disclosure required by Items 507 and 508 of Regulation S-B promulgated under the Act, with respect to such Buyer's Shares being sold under the Registration Statement provided that, with respect to Delays because of information related to the Company (rather than disclosure required to be provided by the holders), the Company shall only be entitled to a maximum of three (3) Delays, each Delay not to exceed a period of thirty (30) days; and further provided, that no period of Delay shall commence within 60 days of a previous Delay. 4.3. Each of the Buyers shall (i) reasonably cooperate with the Company in connection with the preparation and filing of the Registration Statement and execute and deliver any agreements or instruments reasonably requested by the Company or its counsel in connection therewith and (ii) upon discovery that, or upon the happening of any event as a result of which, the Registration Statement (or any prospectus included therein), as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, in the light of the circumstances under which they were made (as determined by the Company or its counsel in its sole discretion), forthwith discontinue its disposition of Shares pursuant to the Registration Statement, until such time as the Buyers (or any holders) have received a supplemented or amended prospectus from the Company relating thereto. The Company agrees to use its best efforts to prepare any necessary amendments or supplements to the Registration Statement as soon as reasonably practicable after the same becomes necessary and to provide to the Representatives and/or Buyers quantities of such amendments or supplements reasonably sufficient for the distribution thereof. 4.4. The Company shall indemnify and hold harmless each of the Buyers, the Representatives and their respective officers, directors, employees, members, agents, affiliates and control persons (each of the foregoing, a "Buyer Indemnitee") who is or may be a party or is or may be threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of or arising from any actual or alleged misrepresentation or misstatement of facts or omission to represent or state any fact or omission to state a fact necessary to make the facts stated under the circumstances not materially misleading, in the Registration Statement or any amendment or supplement thereto or to the prospectus incorporated therein from and against any claim, losses, liabilities, costs and expenses (including attorney's fees, judgments, fines and amounts paid in settlement) ("Loss") actually and reasonably incurred by any such Buyer Indemnitee in connection with such claim, action, suit or proceeding or the defense thereof, except to the extent such Loss is the direct result of a misstatement or omission for which such Buyer Indemnitee is liable to the Company under Section 5.10; provided, however, that the indemnification contained in this Section 4.4 with respect to any preliminary prospectus shall not inure to the benefit of any Buyer Indemnitee -3- on account of any such Loss arising from the sale of the Shares by such Buyer Indemnitee to any person if a copy of the definitive prospectus shall not have been delivered or sent to such person within the time required by the Act and the regulations thereunder, and an untrue statement or alleged untrue statement or omission or alleged omission of a material fact contained in such preliminary prospectus was corrected in the definitive prospectus. 5. Representations and Warranties of the Buyers. Each of the Buyers represents, warrants and covenants to the Company as to himself, herself or itself, as follows: 5.1. The decision to purchase the Shares and the execution and delivery of this Agreement by each of the Buyers, the performance by the Buyers of their respective obligations hereunder and the consummation by the Buyers of the transactions contemplated hereby have been duly authorized and no other proceedings on the part of the Buyers are necessary. The person(s) executing this Agreement on behalf of the Buyers have all right, power and authority to execute and deliver this Agreement on behalf of the Buyers. This Agreement has been duly executed and delivered by the Buyers and, assuming the due authorization, execution and delivery hereof by the Company, will constitute the legal, valid and binding obligations of each of the Buyers, enforceable against each of the Buyers in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and the availability of equitable remedies. 5.2. The execution and delivery of this Agreement and the agreements and documents contemplated hereby by the Buyers and the consummation of the transactions contemplated hereby do not and will not (a) with or without the giving of notice or the passage of time or both, violate, conflict with, result in the breach or termination of, constitute a default under, or result in the right to accelerate or loss of rights under or the creation of any lien, encumbrance or charge upon any assets or property of any of the Buyers, pursuant to the terms or provisions of any contract, agreement, commitment, indenture, mortgage, deed of trust, pledge, security agreement, note, lease, license, covenant, understanding or other instrument or obligation to which any of the Buyers is a party or by which any of the Buyers' properties or assets may be bound or affected, or (b) violate any order, writ, injunction, judgment or decree of any court, administrative agency or governmental body binding upon any of the Buyers. 5.3. Each of the Buyers is aware of what constitutes an Accredited Investor as that term is defined under Regulation D promulgated under the Act (an "Accredited Investor"), and under the laws, if any, of each state governing the Buyers, and each of the Buyers is an Accredited Investor for purposes of Regulation D and the laws, if any, of the state governing the Buyers. Each of the Buyers is able to bear the economic risks of this investment and, consequently, without limiting the generality of the foregoing, is able to hold the Shares for an indefinite period of time and has a sufficient net worth to sustain a loss of its entire investment in the Company in the event such loss should occur. -4- 5.4. Each of the Buyers acknowledges that it is a sophisticated investor, has such knowledge and experience in financial and business matters in general and, when applicable, through its investment adviser or the Representatives, has full familiarity with the current business and future business prospects of the Company and the financial and other affairs of the Company and acknowledges that it has had access to and has received sufficient written and oral information about the Company, including any and all such information requested by the Buyers and including copies of all of the publicly available information prepared by the Company in order to make an informed decision as to the acquisition of the Shares by the Buyers, including without limitation, the Annual Report of the Company on Form 10-KSB for the fiscal year ended March 31, 2000. In addition, each of the Buyers acknowledges that it has had access to the officers, directors and employees of the Company to discuss the business, affairs and prospects of the Company and has had the opportunity to obtain additional information necessary to evaluate the merits and the risks of engaging in the transactions contemplated by this Agreement. Each of the Buyers, either alone or, when applicable, through its investment adviser or the Representatives, has reached an independent decision with respect to the advisability of the sale of the Shares and, in arriving at its decision, has considered both the value of the Shares as well as the present condition and future prospects of the Company. 5.5. Each of the Buyers is acquiring the Shares for its own account for investment and not with a view to or for resale in connection with any distribution of the Shares. It has not offered or sold any portion of the Shares and has no present intention of dividing the Shares with others or of selling, distributing or otherwise disposing of any portion of the Shares either currently or after the passage of a fixed or determinable period of time or upon the occurrence or non-occurrence of any predetermined event or circumstance. 5.6. Each of the Buyers understands that the sale of the Shares has not been registered under the Act in reliance upon an exemption therefrom for non-public or limited offerings. Each of the Buyers understands that the Shares must be held indefinitely unless the sale or other transfer thereof is subsequently registered under the Act or an exemption from such registration is available at that time. 5.7. No Buyer (i) is a "broker-dealer" or an "affiliate" of a broker-dealer as such terms are defined under the Act or (ii) is acting in concert with any other Buyer in connection with the transactions contemplated hereby. 5.8. Any obligation or liability for taxes (state, federal or otherwise) incurred by any of the Buyers in connection with this Agreement or the transactions contemplated hereby shall be the responsibility of and be paid for by the Buyers. 5.9. Each of the Buyers acknowledges that it has been advised to consult with its own attorney regarding legal matters concerning the Company and to consult with its tax advisor regarding the tax consequences of acquiring the Shares. -5- 5.10. Each of the Buyers agrees to indemnify and hold harmless the Company and each officer, director, employee, agent or control person of the Company, who is or may be a party or is or may be threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, to the extent by reason of or arising from any misrepresentation or misstatement of material facts or omission to state material facts necessary to make the facts stated, under the circumstances, not materially misleading, made or omitted by such Buyer to the Company in a writing provided to the Company expressly for the purpose of inclusion in the Registration Statement or any amendment thereto, against losses, liabilities and expenses for which the Company, or any officer, director or control person of the Company has not otherwise been reimbursed (including attorneys' fees, judgments, fines and amounts paid in settlement) actually and reasonably incurred by the Company or such officer, director or control person in connection with such action, suit or proceeding. 5.11. The power of attorney executed and delivered to Zesiger Capital Group LLC by each of the Buyers it represents, a copy of which powers of attorney have been provided to the Company, is in full force and effect. 5.12. None of the Buyers has employed any broker or incurred any liability for any brokerage fees in connection with the transactions contemplated hereby. 5.13. Certificates for the Shares shall contain a restrictive legend substantially in the following form: THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION REQUIREMENTS. 6. Representations and Warranties of the Company. The Company represents and warrants to each of the Buyers as follows: -6- 6.1. The Company has the authority to execute and deliver this Agreement and perform all of its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement and the agreements and documents contemplated hereby are valid and legally binding obligations of the Company, enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and the availability of equitable remedies 6.2. The execution and delivery of this Agreement and the agreements and documents contemplated hereby by the Company and the consummation of the transactions contemplated hereby do not and will not (a) with or without the giving of notice or the passage of time or both, violate, conflict with, result in the breach or termination of, constitute a default under, or result in the right to accelerate or loss of rights under or the creation of any lien, encumbrance or charge upon any assets or property of the Company, pursuant to the terms or provisions of any contract, agreement, commitment, indenture, mortgage, deed of trust, pledge, security agreement, note, lease, license, covenant, understanding or other instrument or obligation to which the Company is a party or by which the Company's properties or assets may be bound or affected, or (b) violate any order, writ, injunction, judgment or decree of any court, administrative agency or governmental body binding upon the Company. 6.3. The Shares, when issued and delivered to the Buyers in accordance with the terms of this Agreement, shall be duly authorized, validly issued, fully-paid and nonassessable. 6.4. The authorized capital stock of the Company consists of 50,000,000 shares of Common Stock and 1,000,000 shares of preferred stock, par value $.001 per share ("Preferred Stock"). As of the date hereof, 15,198,416 shares of Common Stock and no shares of Preferred Stock were issued and outstanding. No shares of the Company's capital stock will be issued from the date hereof and until the Closing Date, except for shares issued pursuant to the exercise of options or warrants outstanding as of the date hereof, and the shares being issued pursuant to this agreement. The Company has not granted or issued any rights, options or warrants to acquire, or securities convertible into or exchangeable for any Common Stock or other capital stock of the Company or rights or agreements with respect to any thereof (all of the foregoing, collectively, the "Rights"), except for those Rights disclosed in the annual report on Form 10-KSB/A filed by the Company for the fiscal year ended March 31, 2000, and except for certain preemptive rights granted to certain investors pursuant to that certain Stock Purchase Agreement, dated May 10, 1993, between the Company and the investors identified therein. 6.5. The Company has timely filed all Reports within the last two (2) years, and to the Company's knowledge, all such Reports (i) were prepared substantially in accordance with the Act and the rules and regulations thereunder and (ii) did not, at the time they were filed, contain any untrue statement of a material fact or omit to state a material fact required to be -7- stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 6.6. Each of the Company's audited financial statements for the last two (2) fiscal years (including any notes thereto) and all unaudited financial statements delivered to the Buyers or the Representatives were prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout such periods and fairly present the financial position of the Company on the dates and for the periods referred to therein. 6.7. The Company presently intends to utilize the proceeds from the sale of the Shares contemplated by this Agreement for general corporate and working capital purposes. 6.8. No sales of Common Stock or other securities by the Company within the last six (6) months would require integration under the Act and Regulation D promulgated thereunder or would materially adversely affect the sale of the Shares or the timely effectiveness of the Registration Statement referred in Section 4.1. 7. Survival of Representations, Warranties, Covenants and Agreements. The parties covenant and agree that their respective representations, warranties, covenants and agreements contained in this Agreement shall survive the execution and delivery of this Agreement. 8. Notices. All notices and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered in person or sent by registered or certified mail, return receipt requested, postage prepaid, or delivered via facsimile to the parties hereto at the following addresses: If to the Company: Ion Networks, Inc. 1551 S. Washington Avenue Piscataway, New Jersey 08854 Attention: Mr. Stephen B. Gray Facsimile No.: (732) 529-0115 If to the Buyers: c/o Zesiger Capital Group LLC 320 Park Avenue New York, New York 10022 Attention: Mr. Albert Zesiger Facsimile No.: (212) 508-6399 c/o Special Situations Private Equity Fund, L.P. 153 East 53rd Street, 55th Floor New York, New York 10022 Attention: Mr. David Greenhouse -8- Facsimile No .: (212) 207-6515 c/o 21st Century Digital Industries Fund, L.P. 960 Pines Lake Drive West Wayne, New Jersey 07470 Attention: Mr. Richard Stewart Facsimile No.: (973) 839-2185 or to such other address as any party hereto shall have specified by notice in writing to the other party hereto. All such notices and communications shall be deemed to have been received on the date of delivery thereof or the fifth business day after the mailing thereof. 9. Expenses. Each of the parties hereto shall pay the fees and expenses of its counsel, accountants and other experts and all other expenses incurred by such party incident to the negotiation, preparation and execution of this Agreement. 10. Miscellaneous. 10.1. Partial Invalidity. If it is found in a final judgment of a court of competent jurisdiction (not subject to a further appeal) that any term or provision of this Agreement is invalid or unenforceable, (a) the remaining terms and provisions of this Agreement shall be unimpaired and shall remain in full force and effect and (b) the invalid or unenforceable provision or term of this Agreement shall be enforced to the greatest extent enforceable. 10.2. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed via facsimile. 10.3. Successors and Assigns. The benefits of this Agreement shall inure to the parties hereto, their respective successors and assigns and to the indemnified parties hereunder and their successors and representatives, and the obligations and liabilities assumed in this Agreement by the parties hereto shall be binding upon their respective successors and assigns. 10.4. Governing Law. This Agreement and the legal relations between the parties hereto shall be governed by, and construed and enforced in accordance with, the laws of the State of New York without giving effect to principles of conflicts or choice of law thereof. 10.5. Headings. Headings of the Sections in this Agreement are for reference purposes only and shall not be deemed to have any substantive effect. 10.6. Entire Agreement; Amendments. This Agreement and any documents contemplated hereby contain, and are intended as, a complete statement of all the terms of the arrangements between the parties with respect to the matters provided for, and supersede any and -9- all prior agreements, arrangements and understandings between the parties with respect to the matters provided for herein. No alteration, waiver, amendment, change or supplement hereto shall be binding or effective unless the same is set forth in writing, signed by the parties hereto or a duly authorized representative thereof. IN WITNESS WHEREOF, the parties have hereunto executed this Agreement on the day and year first above written. ION NETWORKS, INC. By:/s/ Stephen B. Gray ----------------------- Name: Stephen B. Gray Title: President CITY OF MILFORD PENSION & RETIREMENT FUND, NFIB CORPORATE ACCOUNT, NORWALK EMPLOYEES' PENSION PLAN, PUBLIC EMPLOYEE RETIREMENT SYSTEM OF IDAHO, CITY OF STAMFORD FIREMEN'S PENSION FUND, THE JENIFER ALTMAN FOUNDATION, DEAN WITTER FOUNDATION, ROANOKE COLLEGE, BUTLER FAMILY LLC, DAVID ZESIGER, THE FERRIS HAMILTON FAMILY TRUST, MARY ANN S. HAMILTON TRUST FOR SELF, HBL CHARITABLE UNITRUST, ANDREW HEISKELL, JEANNE L. MORENCY, PETER LOORAM, MARY C. ANDERSON, MURRAY CAPITAL, LLC, WILLIAM M. AND MIRIAM F. MEEHAN FOUNDATION, INC., DOMENIC J. MIZIO, MORGAN TRUST CO. OF THE BAHAMAS LTD. AS TRUSTEE U/A/D 11/30/93, SUSAN URIS HALPERN, WILLIAM B. LAZAR, WELLS FAMILY LLC, HAROLD & GRACE WILLENS JTWROS, ALBERT L. ZESIGER, BARRIE RAMSAY ZESIGER, WOLFSON INVESTMENT PARTNERS LP By: Zesiger Capital Group LLC as agent and attorney-in-fact for each of the foregoing persons. By:/s/ Albert L. Zesiger ----------------------------------------- Name: Albert L. Zesiger Title: Principal /s/ Albert L. Zesiger ----------------------------------------- Albert L. Zesiger SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P. By:/s/ David Greenhouse ---------------------------------------- Name: Title: SPECIAL SITUATIONS FUND III, L.P. By:/s/ David Greenhouse ---------------------------------------- Name: Title: SPECIAL SITUATIONS CAYMAN FUND, L.P. By:/s/ David Greenhouse ---------------------------------------- Name: Title: -11- SPECIAL SITUATIONS TECHNOLOGY FUND, L.P. By:/s/ David Greenhouse ---------------------------------------- Name: Title: 21st CENTURY DIGITAL INDUSTRIES FUND, L.P. By:/s/ Richard B. Stewart, Jr. ---------------------------------------- Name: Richard B. Stewart, Jr. Title: Managing Partner -12- SCHEDULE --------
PURCHASER SHARE QTY TOTAL COST --------- --------- ---------- City of Milford Pension & Retirement Fund(1) 166,000 $290,500 NFIB Corporate Account(1) 43,000 $75,250 Norwalk Employees' Pension Plan(1) 131,000 $229,250 Public Employee Retirement System of Idaho(1) 314,000 $549,500 City of Stamford Firemen's Pension Fund(1) 78,000 $136,500 The Jenifer Altman Foundation(1) 43,000 $75,250 Dean Witter Foundation(1) 87,000 $152,250 Roanoke College(1) 66,000 $115,500 Butler Family LLC(1) 26,000 $45,500 David Zesiger(1) 14,000 $24,500 The Ferris Hamilton Family Trust(1) 35,000 $61,250 Mary Ann S. Hamilton Trust for Self(1) 43,000 $75,250 HBL Charitable Unitrust(1) 17,000 $29,750 Andrew Heiskell(1) 66,000 $115,500 Jeanne L. Morency(1) 17,000 $29,750 Peter Looram(1) 17,000 $29,750 Mary C. Anderson(1) 26,000 $45,500 Murray Capital, LLC(1) 30,000 $52,500 William M. and Miriam F. Meehan Foundation, Inc., (1) 26,000 $45,500 Domenic J. Mizio(1) 70,000 $122,500 Morgan Trust Co. of the Bahamas Ltd. as Trustee 91,000 $159,250 U/A/D 11/30/93(1) Susan Uris Halpern(1) 43,000 $75,250 William B. Lazar(1) 22,000 $38,500 Wells Family LLC(1) 78,000 $136,500 Harold & Grace Willens JTWROS(1) 17,000 $29,750 Albert L. Zesiger(1) 87,000 $152,250 Barrie Ramsay Zesiger(1) 42,630 $74,603 - ------------------------------ 1 Zesiger Capital Group, LLC as agent and attorney-in-fact.
Wolfson Investment Partners LP(1) 43,500 $76,125 Special Situations Private Equity Fund, L.P. 315,000 $551,250 Special Situations Fund III, L.P. 345,000 $603,750 Special Situations Cayman Fund, L.P. 120,000 $210,000 Special Situations Technology Fund, L.P. 89,565 $156,739 21ST Century Digital Industries Fund, L.P. 248,447 $434,783 TOTAL 2,857,142 $5,000,000
EX-5.1 3 0003.txt OPINION OF PARKER CHAPIN LLP [LETTERHEAD OF PARKER CHAPIN LLP] November 17, 2000 Ion Networks, Inc. 1551 S. Washington Avenue Piscataway, New Jersey 08854 Gentlemen: We have acted as counsel to Ion Networks, Inc. (the "Company") in connection with a Registration Statement on Form S-3 filed by the Company with the Securities and Exchange Commission (the "Registration Statement") relating to 2,857,142 shares (the "Shares") of the Company's common stock, par value $0.001 per share, all of which been issued by the Company. In connection with the foregoing, we have examined, among other things, the Registration Statement and originals or copies, satisfactory to us, of all such corporate records and of all such agreements, certificates and other documents as we have deemed relevant and necessary as a basis for the opinion hereinafter expressed. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with the original documents of all documents submitted to us as copies. As to any facts material to such opinion, we have, to the extent that relevant facts were not independently established by us, relied on certificates of public officials and certificates, oaths and declarations of officers or other representatives of the Company. Based upon the foregoing, we are of the opinion that the Shares have been duly authorized, validly issued, fully-paid and non-assessable. We hereby consent to the use of our name under the caption "Legal Matters" in the Prospectus constituting a part of the Registration Statement and to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933 (the "Act"), the rules and regulations of the Securities and Exchange Commission promulgated thereunder or Item 509 of Regulation S-K promulgated under the Act. Very truly yours, /s/ Parker Chapin LLP --------------------------------------- PARKER CHAPIN LLP EX-23.1 4 0004.txt CONSENT OF INDEPENDENT ACCOUNTANTS CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of ION Networks, Inc. ("ION") of our report dated June 8, 2000, except for Note 19, as to which the date is June 27, 2000, relating to the consolidated financial statements which appears in ION's Annual Report to shareholders on Form 10-KSB for the fiscal year ended March 31, 2000. We also consent to the reference to us under the heading "Experts" in such Registration Statement. /s/ PricewaterhouseCoopers LLP - -------------------------------- PricewaterhouseCoopers LLP Florham Park, New Jersey November 16, 2000 -----END PRIVACY-ENHANCED MESSAGE-----