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As filed with the Securities and Exchange Commission on November 16, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
--------------------
FAXSAV INCORPORATED
(Exact name of Registrant as specified in its Charter)
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DELAWARE 11-3025769
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
399 THORNALL STREET, EDISON, NEW JERSEY 08837
(732) 906-2000
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
--------------------
THOMAS F. MURAWSKI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FAXSAV INCORPORATED
399 THORNALL STREET
EDISON, NEW JERSEY 08837
(732) 906-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
--------------------
COPIES TO:
RICHARD R. PLUMRIDGE, ESQ.
BRIAN B. MARGOLIS, ESQ.
BROBECK, PHLEGER & HARRISON LLP
1633 BROADWAY, 47TH FLOOR
NEW YORK, NEW YORK 10019
(212) 581-1600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable on or after this Registration Statement is declared effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
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. /X/
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. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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TITLE OF SHARES TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM
REGISTERED AMOUNT TO BE REGISTERED AGGREGATE PRICE PER UNIT(1) AGGREGATE OFFERING PRICE(2) AMOUNT OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01
par value............ 375,000 Shares $3.375 $1,265,625.00 $352
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</TABLE>
(1) Based on the average high and low trading prices of the Common Stock, as
reported on the Nasdaq National Market, on November 9, 1998.
(2) Estimated pursuant to Rule 457(c) solely for the purpose of computing the
registration fee.
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 SECTION 8(a), MAY
DETERMINE.
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<PAGE>
PROSPECTUS
375,000 SHARES
FAXSAV INCORPORATED
COMMON STOCK
----------------
This Prospectus relates to the public offering, which is not being
underwritten, of up to 375,000 shares (the "Shares") of Common Stock of FaxSav
Incorporated ("FaxSav") by AudioFAX IP LLC (AudioFAX") See "Selling
Stockholder."
AudioFAX may offer all or any portion of the Shares in one or more
transactions on the Nasdaq National Market, or in private, negotiated
transactions at whatever prices are current when particular sales take place or
at other prices to which they agree. AudioFAX will pay any brokerage fees or
commissions relating to the sales by them. See "Plan of Distribution." The
registration of the Shares does not necessarily mean that AudioFAX will sell any
of the Shares.
We will not receive any of the proceeds of sales by AudioFAX. We are
paying the costs of preparing and filing the Registration Statement of which
this Prospectus is a part.
Our Common Stock is traded on the Nasdaq National Market under the symbol
"FAXX." On November 13, 1998, the last reported sales price of our Common Stock
on the Nasdaq National Market was $3.75 per share.
----------------
THE SHARES OF COMMON STOCK OF FAXSAV OFFERED OR SOLD UNDER THIS PROSPECTUS
INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION; NOR HAVE THESE
ORGANIZATIONS DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
We have not authorized any person to give you any supplemental information
or make any representations for us. You should not rely upon any information
about us that is not contained in this Prospectus or in our public reports filed
with the Commission and incorporated into this Prospectus. Information
contained in this Prospectus or in our public reports may become outdated. You
should not assume that the information in this Prospectus is accurate or
complete as of any date other than the date on the front of this Prospectus.
This Prospectus shall not be considered an offer to sell or a solicitation of an
offer to buy the Shares to any person or by anyone in any jurisdiction in which
such offer or solicitation would be illegal.
The date of this Prospectus is November 16, 1998
<PAGE>
TABLE OF CONTENTS
Page
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AVAILABLE INFORMATION........................................................ 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE............................ 2
FORWARD-LOOKING INFORMATION.................................................. 3
THE COMPANY.................................................................. 3
RISK FACTORS................................................................. 4
USE OF PROCEEDS.............................................................. 11
SELLING STOCKHOLDER.......................................................... 12
PLAN OF DISTRIBUTION......................................................... 13
LEGAL MATTERS................................................................ 14
EXPERTS...................................................................... 14
AVAILABLE INFORMATION
This Prospectus is part of a Registration Statement (the "Registration
Statement") on Form S-3 under the Securities Act of 1933, as amended (the
"Securities Act") which we have filed with the Securities and Exchange
Commission (the "Commission"). As permitted by the rules and regulations of the
Commission, we have not included in this Prospectus certain information that can
be found in the Registration Statement, including certain exhibits and
schedules. Statements made in this Prospectus regarding the contents of any
contract, agreement or other document are not necessarily complete. For any
contract, agreement or other document filed as an exhibit to the Registration
Statement, you should refer to the exhibit for a more complete description.
Copies of the Registration Statement and its exhibits are on file at the offices
of the Commission and may be obtained upon payment of the prescribed fee or may
be examined without charge at the public reference facilities of the Commission
described below.
We file reports, proxy and information statements and other information
with the Commission, as required by the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). You may read, or for a fee obtain a copy, of
such reports, proxy and information statements and other information at the
Commission's Public Reference Section, Room 1024, 450 Fifth Street, N.W.,
Washington D.C. 20549, as well as at the Commission's Regional Offices at Seven
World Trade Center, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may also obtain
these materials from the Commission's Internet site on the world wide web at
http://www.sec.gov. Our Common Stock is traded on the Nasdaq National Market,
and therefore, you may read any material that we file at the Nasdaq National
Market's offices located in Washington, D.C.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We have filed the following documents with the Commission and we are
incorporating those documents by reference in this Prospectus:
(1) Our Annual Report on Form 10-K for the fiscal year ended December 31,
1997 (the "1997 Form 10-K");
(2) Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998;
(3) Our Proxy Statement in connection with our Annual Meeting of the
Stockholders held on May 28, 1998; and
(4) Our Current Report on Form 8-K filed on September 23, 1998.
All reports and other documents that we file pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus, for so
long as the Shares are being offered pursuant to this Prospectus, are to be
incorporated by reference into this Prospectus. The reports and other documents
incorporated by reference are considered part of this Prospectus, and the
reports and other documents we file later with the Commission will automatically
update and supercede the information contained in this Prospectus.
We will provide free of charge to each person to whom this Prospectus is
delivered, upon written or oral request by such person, a copy of any or all of
the in information incorporated by reference in this Prospectus but not
delivered with this Prospectus (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into such document).
Requests for such documents should be submitted in writing to Mr. Peter S.
Macaluso, Vice President and Chief Financial Officer, FaxSav Incorporated, 399
Thornall Street, Edison, New Jersey 08837.
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FORWARD-LOOKING INFORMATION
This Prospectus includes "forward-looking statements" regarding future
events or our future performance within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. All statements other than
statements of historical facts included in this Prospectus or incorporated
herein by reference regarding our financial position and business strategy may
constitute forward-looking statements. Although we believe that the
expectations reflected in such forward-looking statements are reasonable, we can
not guarantee that such expectations will prove to be correct. Important
factors that could cause actual results to differ materially from our
expectations ("cautionary statements") are listed in this Prospectus, and they
include the forward-looking statements under "risk factors." All subsequent
written and oral forward-looking statements attributable to us or persons acting
on our behalf are expressly qualified in their entirety by the cautionary
statements.
THE COMPANY
FaxSav was incorporated in Delaware in November 1989 under the name
Digitran Corporation and changed its name to FaxSav Incorporated in February
1996. Our executive offices are located at 399 Thornall Street, Edison, New
Jersey 08837, and our telephone number is (732) 906-2000.
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RISK FACTORS
INVESTING IN THE SHARES OF COMMON STOCK INVOLVES RISKS AND YOU SHOULD NOT
INVEST UNLESS YOU CAN AFFORD TO LOSE THE ENTIRE AMOUNT OF YOUR INVESTMENT. YOU
SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER INFORMATION IN THIS
PROSPECTUS BEFORE PURCHASING ANY SHARES OF COMMON STOCK .
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT
From our inception in 1989 through the nine month period ended September
30, 1998, we have experienced significant operating losses. We incurred
operating losses of $4.1 million, $7.5 million and $7.1 million during the years
ended December 31, 1995, 1996 and 1997, respectively, and $6.0 million during
the nine months ended September 30, 1998. We currently anticipate that we will
have additional operating losses as we attempt to expand our business and we may
not have positive operating income in the future. As of September 30, 1998, we
had an accumulated deficit of $38.1 million.
Since inception, we have incurred substantial costs to develop and enhance
our technology and to create, introduce and enhance our service and product
offerings. We intend to continue these efforts and, in addition, to increase
our marketing spending. We recently announced a new marketing campaign which
will involve significant expenditures by us, including the hiring of an outside
advertising agency. There can be no assurance that our new marketing campaign
will be successful or that it will result in any increase in revenues.
We generated net operating loss ("NOL") carryforwards for income tax
purposes of approximately $30.0 million through December 31, 1997. These NOL
carryforwards have been recorded as a deferred tax asset of approximately $9.5
million. Based upon our history of operating losses and other presently known
factors, management has determined that it is more likely than not that we will
be unable to generate sufficient taxable income prior to the expiration of these
NOL carryforwards in order to receive the benefit of them and has accordingly
reduced our deferred tax assets to zero with a full valuation allowance.
INTENSE COMPETITION
The market for facsimile transmission services is intensely competitive and
the industry is characterized by low barriers to entry. We expect that
competition will intensify in the future. We believe that our ability to compete
successfully will depend upon a number of factors, including market presence;
the capacity, reliability and security of our network infrastructure; the
pricing policies of our competitors and suppliers; the timing of introductions
of new services and service enhancements by us and our competitors; and industry
and general economic trends.
Our current and future competitors generally fall into the following
groups: (i) telecommunication companies, such as AT&T, MCI WorldCom, Sprint and
the regional Bell operating companies, and telecommunications resellers; (ii)
Internet service providers, such as Uunet Technologies, Inc., a subsidiary of
MCI WorldCom, Inc., and NETCOM On-Line Communications Services, Inc., (iii)
on-line services providers, such as Microsoft Corporation and America Online,
Inc. and (iv) direct fax delivery competitors, including Xpedite Systems, Inc.
and UNIFI Communications, Inc. Many of these competitors have greater market
presence, engineering and marketing capabilities, and financial, technological
and personnel resources than we do. As a result, they may be able to develop and
expand their communications and network infrastructures more quickly, adapt more
swiftly to new or emerging technologies and changes in customer requirements,
take advantage of acquisition and other opportunities more readily, and devote
greater resources to the marketing and sale of their products and services than
we can. Further, the foundation of our telephony network infrastructure consists
of the right to use the telecommunications lines of several of the
above-mentioned long distance carriers, including MCI WorldCom. There can be no
assurance that these companies will not discontinue or otherwise change their
relationships with us in a manner that would have a material adverse effect upon
our business, financial condition and results of operations. In addition,
current and potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their services to address the needs of our current and prospective customers.
Accordingly, it is possible that new competitors or alliances among competitors
may emerge and rapidly acquire significant market share. In addition to direct
competitors, many of our larger potential customers may seek to internally
fulfill their fax communication needs through the deployment of their own
computerized fax communications systems or network infrastructures for
intra-company faxing. Increased competition is likely to
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result in price reductions and could result in reduced gross margins and erosion
of our market share, any of which would have a material adverse effect on our
business, financial condition and results of operations. There can be no
assurance that we will be able to compete successfully against current or future
competitors or that competitive pressures will not have a material adverse
effect on our business, financial condition and results of operations.
On August 7, 1997, the Federal Communications Commission (the "FCC") issued
new rules which may significantly reduce the cost of international calls
originating in the United States. The five-year phase-in period began on January
1, 1998. To the extent that these new regulations are implemented and result in
reductions in the cost of international calls originating in the United States,
we will face increased competition for our international fax services which may
have a material adverse effect on our business, financial condition or results
of operations.
POSSIBLE DELISTING FROM NASDAQ
Our Common Stock is currently traded on the Nasdaq National Market
("Nasdaq"). In order to continue to trade on Nasdaq, Nasdaq generally requires,
among other things, that we maintain at least $4.0 million in net tangible
assets. In the past, we have not been in compliance with this requirement. We
believe that we are currently in compliance with Nasdaq's requirements.
However, if in the future we are unable to satisfy Nasdaq's requirements, our
securities may be delisted from Nasdaq. There can be no assurance that our
Common Stock will not be delisted, which would materially affect your ability to
buy or sell shares of our Common Stock.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING; DILUTION
We believe that our current cash and cash equivalents will be sufficient to
meet our presently anticipated cash needs for working capital and our capital
expenditure requirements through September 30, 1999. However, our cash
requirements may vary materially from those now planned as a result of
unforeseen changes that could consume a significant portion of our available
resources before such time. To the extent that funds expected to be generated
from our operations are insufficient to meet current or planned operating
requirements or to maintain a Nasdaq listing, we will seek to obtain additional
funds through bank facilities, equity or debt financing, collaborative or other
arrangements with corporate partners and others and from other sources. See "--
Possible Delisting from Nasdaq." Additional funding may not be available when
needed or on terms acceptable to us, which could have a material adverse effect
on our business, financial condition and results of operations. If adequate
funds are not available, we may be required to delay or to eliminate certain
expenditures or to license to third parties the rights to commercialize
technologies that we would otherwise seek to develop ourselves. In addition, in
the event that we obtain any additional funding, such financings may have a
dilutive effect on the holders of our securities.
LIMITED PROTECTION OF INTELLECTUAL PROPERTY RIGHTS; RISK OF THIRD PARTY CLAIMS
OF INFRINGEMENT
Our success is dependent upon our proprietary technology. We rely primarily
on a combination of contract, copyright and trademark law, trade secrets,
confidentiality agreements and contractual provisions to protect our proprietary
rights. We were granted a patent related to our faxSAV Connector and have a
patent application pending for our "e-mail Stamps" security technology
incorporated into our faxMailer service. There can be no assurance that a patent
will issue from such application or that present or future patents will provide
sufficient protection to our present or future technologies, services and
processes. In addition, there can be no assurance that others will not
independently develop substantially equivalent proprietary information or obtain
access to our know-how. Despite our efforts to protect our proprietary rights,
unauthorized parties may attempt to copy aspects of our services or to obtain
and use information that we regard as proprietary. In addition, the laws of some
foreign countries do not protect our proprietary rights to the same extent as do
the laws of the United States. There can be no assurance that the steps taken by
us to protect our proprietary rights will be adequate or that our competitors
will not independently develop technologies that are substantially equivalent or
superior to our technologies.
There can be no assurance that other third parties will not assert
infringement claims against us in the future. Patents have been granted
recently on fundamental technologies in the communications and desktop software
areas, and patents may issue which relate to fundamental technologies
incorporated in our services. As patent applications in the United States are
not publicly disclosed until the patent issues, applications may have been filed
which, if issued as patents, could relate to our services. We could incur
substantial costs and diversion of management resources with respect to the
defense of any claims that we have infringed upon the proprietary rights of
others, which costs and diversion could have a material adverse effect on our
business, financial condition and results of
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operations. Furthermore, parties making such claims could secure a judgment
awarding substantial damages, as well as injunctive or other equitable relief,
which could effectively block our ability to license and sell our services in
the United States or abroad. Any such judgment could have a material adverse
effect on our business, financial condition and results of operations. In the
event a claim relating to proprietary technology or information is asserted
against us, we may seek licenses to such intellectual property. There can be no
assurance, however, that licenses could be obtained on terms acceptable to us,
or at all. The failure to obtain any necessary licenses or other rights could
have a material adverse effect on our business, financial condition and results
of operations.
QUARTERLY FLUCTUATIONS; POSSIBLE VOLATILITY OF STOCK PRICE
We may experience significant quarter to quarter fluctuations in our
results of operations, which may result in volatility in the price of our Common
Stock. Quarterly results of operations may fluctuate as a result of a variety of
factors, including demand for our services, the introduction of new services and
service enhancements by us or our competitors, market acceptance of new
services, the mix of revenues between Internet-based versus telephony-based
deliveries, the timing of significant marketing programs, the number and timing
of the hiring of additional personnel, competitive conditions in the industry
and general economic conditions. Our revenues are difficult to forecast.
Shortfalls in revenues may adversely and disproportionately affect our results
of operations because a high percentage of our operating expenses are relatively
fixed, and planned expenditures, such as the anticipated expansion of our
Internet infrastructure, are based primarily on sales forecasts. In addition,
the stock market in general has experienced extreme price and volume
fluctuations, which have affected the market price of securities of many
companies in the telecommunications and technology industries and which may have
been unrelated to the operating performance of such companies. These market
fluctuations may adversely affect the market price of our Common Stock.
Accordingly, we believe that period to period comparisons of results of
operations are not necessarily meaningful and should not be relied upon as an
indication of future results of operations. There can be no assurance that we
will be profitable in any future quarter. Due to the foregoing factors, it is
likely that in one or more future quarters our operating results will be below
the expectations of public market analysts and investors. Such an event would
have a material adverse effect on the price of our Common Stock.
DEPENDENCE ON NETWORK INFRASTRUCTURE; NO ASSURANCE OF ADDITIONAL
INTERNET-CAPABLE NODE DEPLOYMENT
Our future success will depend in part upon the capacity, reliability and
security of our network infrastructure and in part upon our ability to expand
the deployment of an international network of Internet-capable facsimile nodes.
We must continue to expand and adapt our network infrastructure as the number of
customers and the volume of traffic they wish to transmit increases. The
expansion and adaptation of our network infrastructure will require substantial
financial, operational and management resources. There can be no assurance that
we will be able to expand or adapt our network infrastructure to meet any
additional demand on a timely basis, at a commercially reasonable cost, or at
all. In addition, there can be no assurance that we will be able to deploy
additional contemplated Internet-capable facsimile nodes on a timely basis, at a
commercially reasonable cost, or at all. Any failure to expand our network
infrastructure on a timely basis, to adapt it to changing customer requirements
or evolving industry standards or to complete the development of the
contemplated Internet-capable facsimile node infrastructure on a timely basis
would have a material adverse effect on our business, financial condition and
results of operations. Further, there can be no assurance that we will be able
to satisfy the regulatory requirements in each of the countries currently
targeted for node deployment, which may prevent us from installing
Internet-capable facsimile nodes in such countries and may have a material
adverse effect on our business, operating results and financial condition.
DEPENDENCE ON THE INTERNET AS A LOW-COST FACSIMILE TRANSMISSION MEDIUM; NO
ASSURANCE OF INCREASED MARKET ACCEPTANCE
We believe that our future success will depend in part upon our ability to
significantly expand our base of Internet-capable nodes and route more of our
customers' traffic through the Internet. Our success is therefore largely
dependent upon the viability of the Internet as a medium for the transmission of
documents. There can be no assurance that document transmission over the
Internet will continue to be reliable or that Internet capacity constraints will
not develop which inhibit efficient document transmission. We access the
Internet from our Internet-capable nodes by dedicated connection to third party
internet service providers. We pay fixed monthly fees for such Internet access,
regardless of our usage or the volume of our customers' traffic. There can be no
assurance that the
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current pricing structure for access to and use of the Internet will not change
unfavorably. If material capacity constraints develop on the Internet or the
current Internet pricing structure changes unfavorably, our business, financial
condition and results of operations would be materially and adversely affected.
In addition, our future success is dependent upon the increased acceptance by
potential customers of the Internet as the preferred medium for transmission of
documents. There can be no assurance that such market acceptance shall continue
to increase. Lack of increased market acceptance would materially and adversely
affect our business, financial condition and results of operations.
NO ASSURANCE OF SUCCESSFUL MANAGEMENT OF GROWTH
We have rapidly and significantly expanded our operations and anticipate
that significant expansion will continue to be required in order to address
potential market opportunities. There can be no assurance that such expansion
will be successfully completed or that it will generate sufficient revenues to
cover our expenses. Our inability to promptly address and respond to these
circumstances could have a material adverse effect on our business, financial
condition and results of operations.
RAPID INDUSTRY CHANGE
The telecommunications industry in general, and the facsimile transmission
business in particular, are characterized by rapid and continuous technological
change. Future technological advances in the telecommunications industry may
result in the availability of new services or products that could compete with
the facsimile transmission services we provide or reduce the cost of existing
products or services, any of which could enable our existing or potential
customers to fulfill their fax communications needs more cost efficiently. There
can be no assurance that we will be successful in developing and introducing new
services that meet changing customer needs and respond to technological changes
or evolving industry standards in a timely manner, if at all, or that services
or technologies developed by others will not render our services noncompetitive.
Our inability to respond to changing market conditions, technological
developments, evolving industry standards or changing customer requirements, or
the development of competing technology or products that render our services
noncompetitive would have a material adverse effect on our business, financial
condition and results of operations.
RISK OF SYSTEM FAILURE; SECURITY RISKS
Our operations are dependent on our ability to protect our network from
interruption by damage from fire, earthquake, power loss, telecommunications
failure, unauthorized entry, computer viruses or other events beyond our
control. Most of our current computer hardware and switching equipment,
including our processing equipment, is currently located at three sites. There
can be no assurance that our existing and planned precautions of backup systems,
regular data backups and other procedures will be adequate to prevent
significant damage, system failure or data loss. Despite the implementation of
security measures, our infrastructure may also be vulnerable to computer
viruses, hackers or similar disruptive problems caused by our customers or other
Internet users. Persistent problems continue to affect public and private data
networks, including computer break-ins and the misappropriation of confidential
information. Such computer break-ins and other disruptions may jeopardize the
security of information stored in and transmitted through the computer systems
of the individuals, businesses and financial institutions utilizing our
services. This may result in significant liability to us and also may deter
potential customers from using our services. Any damage, failure or security
breach that causes interruptions or data loss in our operations or in the
computer systems of our customers could have a material adverse effect on our
business, financial condition and results of operations.
DEPENDENCE UPON SUPPLIERS; SOLE AND LIMITED SOURCES OF SUPPLY
We rely on third parties to supply key components of our network
infrastructure, including long distance telecommunications services and
telecommunications node equipment, many of which are available only from sole or
limited sources. MCI WorldCom is our primary provider of long distance
telecommunications services. We have from time-to-time experienced partial
interruptions of service from our telecommunications carriers which have
temporarily prevented customers in limited geographical areas from reaching the
FaxSav network. There can be no assurance that we will not experience partial or
complete service interruptions in the future. There can be no assurance that MCI
WorldCom and our other telecommunications providers will continue to provide
long distance
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services to us at attractive rates, or at all, or that we will be able to obtain
such services in the future from these or other long distance providers on the
scale and within the time frames required by us. Any failure to obtain such
services on a timely basis at an affordable cost, or any significant delays or
interruptions of service from such carriers, would have a material adverse
effect on our business, financial condition and results of operations.
All of the faxboards used in our telecommunications nodes are supplied by
Brooktrout Technology, Inc. ("Brooktrout"). We purchase Brooktrout faxboards on
a non-exclusive basis pursuant to purchase orders placed from time-to-time,
carry a limited inventory of faxboards and have no guaranteed supply arrangement
with Brooktrout. In addition to faxboards, many of the routers, switches and
other hardware components used in our network infrastructure are supplied by
sole or limited sources on a non-exclusive, purchase order basis. There can be
no assurance that Brooktrout or our other suppliers will not enter into
exclusive arrangements with our competitors, or cease selling these components
to us at commercially reasonable prices, or at all. The anticipated expansion of
our network infrastructure is expected to place a significant demand on our
suppliers, some of which have limited resources and production capacity. In
addition, certain of our suppliers, in turn, rely on sole or limited sources of
supply for components included in their products. Should our suppliers fail to
adjust to meet such increasing demand, they may be unable to continue to supply
components and products in the quantities and quality and at the times required
by us, or at all. Our inability to obtain sufficient quantities of sole or
limited source components or to develop alternative sources if required could
result in delays and increased costs in the expansion of our network
infrastructure or in our inability to properly maintain the existing network
infrastructure, which would have a material adverse effect on our business,
financial condition and results of operations.
RISK OF SOFTWARE DEFECTS OR DEVELOPMENT DELAYS
Software-based services and equipment, such as our faxSAV for Internet
suite of services and the faxSAV Connector, may contain undetected errors or
failures when introduced or when new versions are released. There can be no
assurance that, despite testing by us and by current and potential customers,
errors will not be found in such software or other releases after commencement
of commercial shipments, or that we will not experience development delays,
resulting in delays in the shipment of software and a loss of or delay in market
acceptance, any of which could have a material adverse effect on our business,
financial condition and results of operations.
DEPENDENCE ON KEY PERSONNEL
Our future performance depends in significant part upon the continued
service of our key technical, sales and senior management personnel, none of
whom is bound by an employment agreement. Competition for such personnel is
intense, and there can be no assurance that we can retain our key technical,
sales and managerial employees or that we can attract, assimilate or retain
other highly qualified technical, sales and managerial personnel in the future.
RELIANCE ON INTERNATIONAL STRATEGIC ALLIANCES; RISKS ASSOCIATED WITH
INTERNATIONAL OPERATIONS
We have established and intend to expand an international customer base by
forming strategic sales and marketing alliances with foreign Internet service
providers, telecommunications companies and resellers. There can be no assurance
that we will be able to establish additional strategic alliances or to maintain
such strategic alliances. Our success in expanding our international customer
base depends not only on the formation of additional strategic alliances but
also on the success of these partners and their ability to market our services.
The failure to maintain such strategic alliances or the failure of these
partners to successfully develop and sustain a market for our services will have
a material adverse effect on our ability to expand our international customer
base, which could have a material adverse effect on our business, financial
condition and results of operations.
In 1997, we derived approximately $2.3 million, or 13.2% of our total
revenues, from customers outside of the United States. We expect that such
revenues will represent an increasing percentage of our total revenues in the
future. Risks inherent in our international business activities generally
include foreign currency exchange risk, unexpected changes in regulatory
requirements, tariffs and other trade barriers, costs of localizing products for
foreign countries, lack of acceptance of localized products in foreign markets,
longer accounts receivable payment cycles, difficulties in managing
international operations, potentially adverse tax consequences, and the burdens
of complying with a wide variety of foreign laws. There can be no assurance
that such factors will not have a material
8
<PAGE>
adverse effect on our future international revenues and, consequently, on our
business, financial condition and results of operations.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, in less than fourteen months, computer systems
and/or software used by many companies may need to be upgraded to comply with
such "Year 2000" requirements or risk system failure or miscalculations causing
disruptions of normal business activities.
STATE OF READINESS. We have conducted a study of the Year 2000 readiness of our
information technology ("IT") systems, including our computing and networking
systems, and our non-IT systems. Our study consisted of (i) contacting
third-party vendors and licensors of material hardware, software and services
that are both directly and indirectly related to the delivery of the our faxSAV
for internet suite of services and the faxSAV Connector; (ii) contacting vendors
of material non-IT systems; (iii) assessment of repair or replacement
requirements; and (iv) repair or replacement. We intend to conduct a test our
IT systems to verify the results of our study prior to the Year 2000. We have
been informed by many of our vendors of material hardware and software
components of our IT systems that the products that we use are currently Year
2000 compliant. The computing systems that provide application layer services
(i.e., FaxSav customer services) within the FaxSav network are based upon some
variant of the Unix operating system, which adequately represents dates beyond
the year 2000. Many of the computing systems that support the internal
operations of our business have the similar capacity to represent dates beyond
the Year 2000. In addition, for all of our internal accounting applications, we
have purchased new accounting system software that the manufacturer specifies as
Year 2000 compliant. We will require vendors of our other material hardware and
software components of our IT systems to provide assurances of their Year 2000
compliance, and we plan to complete this process during the first half of 1999.
We will also seek assurances of Year 2000 compliance from providers of our
material non-IT systems.
COSTS. To date, the we have not incurred any material expenditures in
connection with identifying or evaluating Year 2000 compliance issues. Most of
our expenses have related to, and are expected to continue to relate to, the
operating costs associated with time spent by employees in the evaluation
process and Year 2000 compliance matters generally. Our expected costs to
implement the new accounting software mentioned above is approximately $.2
million.
RISKS. We are not currently aware of any Year 2000 compliance problems relating
to the faxSAV for internet suite of services, the faxSAV Connector or our other
IT or non-IT systems that would have a material adverse effect on our business,
financial condition and results of operations, without taking into account our
efforts to avoid or fix such problems. There can be no assurance that our
software contains all necessary date code changes or that all problems can be
identified by our study and subsequent testing. Compliance with Year 2000
requirements may disrupt our ability to continue to developing and marketing
facsimile transmission products and services. The failure to adequately address
Year 2000 compliance issues in our products, services, and in our IT and non-IT
systems could result in claims of mismanagement, misrepresentation or breach of
contract and related litigation, which could be costly and time-consuming to
defend.
In addition, there can be no assurance that governmental agencies, utility
companies, Internet access companies, third-party service providers and others
outside of our control will be Year 2000 compliant. The failure by such
entities to be Year 2000 compliant could result in a systemic failure beyond our
control, such as a prolonged Internet, telecommunications or electrical failure,
which could also prevent us from delivering services to our customers, which
could have a material adverse effect on our business, financial condition and
results of operations.
CONTINGENCY PLAN. As discussed above, we intend to conduct a further tests
of our Year 2000 compliance to confirm the results of our study, and have not
yet developed any contingency plans. The results of our tests and the responses
received from third-party vendors and service providers will be taken into
account in determining the nature and extent of any contingency plans.
9
<PAGE>
GOVERNMENT REGULATION
We are subject to regulation by various state public service and public
utility commissions and by various international regulatory authorities. We are
licensed by the FCC as an authorized telecommunications company and our
classified as a "non-dominant interexchange carrier." Generally, the FCC has
chosen not to exercise its statutory power to closely regulate the charges or
practices of non-dominant carriers. Nevertheless, the FCC acts upon complaints
against such carriers for failure to comply with statutory obligations or with
the FCC's rules, regulations and policies. The FCC also has the power to impose
more stringent regulatory requirements on us and to change our regulatory
classification. There can be no assurance that the FCC will not change our
regulatory classification or otherwise subject us to more burdensome regulatory
requirements.
In connection with the deployment of Internet-capable nodes in countries
throughout the world, we are required to satisfy a variety of foreign regulatory
requirements. We intend to explore and seek to comply with these requirements on
a country-by-country basis as the deployment of Internet-capable facsimile nodes
continues. There can be no assurance that we will be able to satisfy the
regulatory requirements in each of the countries currently targeted for node
deployment, and the failure to satisfy such requirements may prevent us from
installing Internet-capable facsimile nodes in such countries. The failure to
deploy a number of such nodes could have a material adverse effect on our
business, operating results and financial condition.
Our nodes and FAXLAUNCHER service utilize encryption technology in
connection with the routing of customer documents through the Internet. The
export of such encryption technology is regulated by the United States
government. We have the authority to export such encryption technology except to
Cuba, Iran, Iraq, Libya, North Korea and Rwanda. Nevertheless, there can be no
assurance that such authority will not be revoked or modified at any time for
any particular jurisdiction or in general. In addition, there can be no
assurance that such export controls, either in their current form or as may be
subsequently enacted, will not limit our ability to distribute our services
outside of the United States or electronically. While we take precautions
against unlawful exportation of our software, the global nature of the Internet
makes it virtually impossible to effectively control the distribution of our
services. Moreover, future Federal or state legislation or regulation may
further limit levels of encryption or authentication technology. Any such export
restrictions, the unlawful exportation of our services, or new legislation or
regulation could have a material adverse effect on our business, financial
condition and results of operations.
SHARES ELIGIBLE FOR FUTURE SALE; EFFECT ON ABILITY TO RAISE CAPITAL
The market price of our Common Stock could drop as a result of sales of
substantial amounts of Common Stock in the public market following this
Offering, or the perception that such sales could occur. In addition to the
Shares being sold pursuant to this Registration Statement, another Registration
Statement is in effect covering the sale of up to 2,000,000 Shares of our Common
Stock. Such a price drop may make it more difficult for us to raise the capital
necessary to fund our future operations by selling Common Stock. As of November
6, 1998, without taking into account shares of Common Stock issued upon exercise
of stock options, warrants or other rights to acquire Common Stock after such
date, we had outstanding 13,153,892 shares of Common Stock. The Shares and
substantially all of the shares of Common Stock already outstanding will be
freely tradeable in the public market without restriction under the Securities
Act, except that any shares held by our "affiliates", as such term is defined
in Rule 144(a) under the Securities Act ("Affiliates"), may generally only be
sold in compliance with the applicable provisions of Rule 144 of the Securities
Act. In general, under Rule 144 an Affiliate is entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1% of
the then outstanding shares of our Common Stock (approximately 131,539 shares)
or the average weekly trading volume in our Common Stock on Nasdaq during the
four calendar weeks preceding the date on which notice of such sale was filed
under Rule 144. Sales under Rule 144 are also subject to certain provisions
relating to the manner and notice of sale and the availability of current public
information about us. Additional shares of Common Stock, including shares
issuable upon exercise of options, warrants and other rights to acquire Common
Stock, will also become eligible for sale in the public market from time to time
in the future. Furthermore, certain holders of Common Stock have the right to
cause us to register their shares under the Securities Act in the future. We are
required to bear the expenses of all such required registrations (except
underwriting discounts and commissions). We are required to use our best
efforts to effect such registrations, subject to certain conditions and
limitations.
10
<PAGE>
ANTITAKEOVER CONSIDERATIONS
Our Sixth Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") authorizes the Board of Directors to issue,
without stockholder approval, up to 1,000,000 shares of Preferred Stock with
voting, conversion and other rights and preferences that could adversely affect
the voting power or other rights of the holders of Common Stock. The
Certificate of Incorporation also provides for staggered terms for the members
of the Board of Directors. In addition, we will be subject to the provisions of
Section 203 of the Delaware General Corporation Law, which will generally
prohibit us from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. The foregoing and other
provisions of the Certificate of Incorporation and our By-laws, as amended (the
"By-laws") and the application of Section 203 of the Delaware General
Corporation Law could have the effect of deterring certain takeovers or delaying
or preventing certain changes in our control or management, including
transactions in which stockholders might otherwise receive a premium for their
shares over then current market prices.
NO DIVIDENDS
We have never paid any cash dividends on our Common Stock and do not intend
to pay any cash dividends in the foreseeable future.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Shares. All proceeds
will be received by AudioFAX. See "Selling Stockholders."
11
<PAGE>
SELLING STOCKHOLDER
The following table sets forth the number of shares of Common Stock
beneficially owned by AudioFAX as of November 13, 1998. AudioFAX may offer
from time to time the Shares registered in the Registration Statement of which
this Prospectus is a part. See "Plan of Distribution."
<TABLE>
<CAPTION>
Beneficial Ownership
After Offering*
----------------------
Number of Shares Number of Shares
Beneficially Owned Registered Number
Name of Selling Stockholder Prior to Offering for Sale Hereby of Shares Percent
- -------------------------------- ------------------ ---------------- --------- -------
<S> <C> <C> <C> <C>
AudioFAX IP LLC1. 375,000 375,000 0 0.0%
------- ------- - ----
TOTAL 375,000 375,000 0 0.0%
======= ======= = ====
</TABLE>
* Assumes that all of the Shares have been sold
1 Includes 100,000 shares held for the benefit of AudioFAX pursuant to an
escrow agreement (the "Escrow Agreement"), all or some of which may be
distributed to AudioFAX under certain conditions . See "Plan of Distribution."
Effective September 22, 1998, we settled outstanding litigation with
AudioFAX. As part of the settlement, we received from AudioFAX a fully paid-up
license to certain patents relating to store-and-forward technologies. Of the
Shares being offered hereby, 275,000 were issued to directly to AudioFAX as a
licensing fee and 100,000 are being held in escrow for the benefit of AudioFAX.
Some or all of the 100,000 Shares held in escrow (along with certain additional
other shares which are not covered by this Registration Statement or a certain
amount of cash, at FaxSav's option) may be transferred as an additional license
fee to AudioFAX. Such transfers depend on whether the market value of the
275,000 Shares issued to AudioFAX is less than $1.0 million as of one hundred
and eighty days from the effective date of this Registration Statement.
Additionally we agreed to pay costs of preparing and filing the Registration
Statement of which this Prospectus is a part.
We have agreed to prepare and file such amendments and supplements to the
Registration Statement as may be necessary to keep this Registration Statement
effective until the earlier of: (a) two years from the effective date of this
Registration Statement; or (b) the date on which all of the Shares (not
including those Shares which are not transferred to AudioFAX pursuant to the
Escrow Agreement) have been sold pursuant to the terms of this Prospectus.
12
<PAGE>
PLAN OF DISTRIBUTION
Of the 375,000 Shares being registered pursuant to this Registration
Statement, 275,000 Shares may be sold upon the effective date of this
Registration Statement. However, for a period of one hundred and eighty days
from the effective date of this Registration Statement, AudioFAX has agreed not
to sell more than the greater of (a) 40,000 Shares, or (b) the number of Shares
equal to ten percent (10%) of the prior weeks' total trading volume of our
Common Stock on Nasdaq. Additionally during such period, AudioFAX has agreed to
sell their shares only through nationally recognized broker-dealers registered
with the National Association of Securities Dealers, Inc. The remaining 100,000
Shares are being held in escrow for the benefit of AudioFAX. After one hundred
and eighty days following the effective date of this Registration Statement,
some or all of the 100,000 Shares being held in escrow (along with certain
additional other shares which are not covered by this Registration Statement or
a certain amount of cash, at FaxSav's option) may be transferred as an
additional license fee to AudioFAX. Such transfers depend on whether the market
value of the 275,000 issued to AudioFAX is less than $1.0 million as of one
hundred and eighty days from the effective date of this Registration Statement.
Should the 100,000 Shares be released from escrow and transferred to AudioFAX,
they will then be eligible for sale pursuant to this Registration Statement.
AudioFAX may offer and sell the Shares from time to time in transactions on
Nasdaq, in negotiated transactions, or a combination of such methods of sale, at
fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at negotiated prices.
AudioFAX may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from AudioFAX and/or the purchasers of the
Shares for whom such broker-dealers may act as agents or to whom they sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions). AudioFAX may transfer their Shares
under certain circumstances to other persons who may, in turn, resell Shares in
the manner described above. In addition, AudioFAX may pledge or make gifts of
their Shares and such Shares may also be sold by the pledgees or transferees.
At the time a particular offer of Shares is made, to the extent required, a
Prospectus Supplement will be distributed which will set forth the number of
Shares being offered and the terms of the offering including the name or names
of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the Shares purchased from AudioFAX, any discounts, commissions
and other items constituting compensation from AudioFAX and any discounts,
commissions or concessions allowed or reallowed or paid to dealers.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with by us and AudioFAX.
From and after September 21, 1999 AudioFAX may also transfer their Shares
pursuant to Rule 144, whether or not the Registration Statement, of which this
Prospectus forms a part, is effective at the time of any such transfer.
AudioFAX and any broker-dealers, agents or underwriters that participate
with AudioFAX in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit on the resale of the Selling
Stockholder Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. We have agreed to indemnify
AudioFAX and their affiliates against certain liabilities, including liabilities
under the Securities Act. AudioFAX have agreed to indemnify us and our
affiliates against certain liabilities, including liabilities under the
Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to our Common Stock for a period of two
business days prior to the commencement of such distribution. In addition and
without limiting the foregoing, each Selling Stockholder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M, which provisions may
limit the timing of purchases and sales of shares of our Common Stock by
AudioFAX.
We are paying the costs of preparing and filing the Registration Statement
of which this Prospectus is a part.
13
<PAGE>
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for us by
Brobeck, Phleger & Harrison LLP, New York, New York.
EXPERTS
The balance sheets as of December 31, 1997 and 1996 and the statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1997, incorporated by reference in this
Prospectus, have been incorporated herein, in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
14
<PAGE>
375,000 SHARES
FAXSAV INCORPORATED
COMMON STOCK
PROSPECTUS
November 16, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an estimate of the expenses to be incurred
by FaxSav Incorporated in connection with the issuance and distribution of the
securities being registered hereby. All such expenses will be borne by FaxSav
Incorporated:
<TABLE>
<CAPTION>
Amount to
Be Paid
-----------
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . $ 352
Legal Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . 10,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . 5,000
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,648
-------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Act"). Article IX of the Registrant's Sixth Amended and
Restated Certificate of Incorporation provides for indemnification of its
directors and officers and permissible indemnification of employees and other
agents to the maximum extent permitted by the Delaware General Corporation Law.
FaxSav Incorporated has purchased liability insurance on behalf of its
directors and officers for liabilities arising out of their capacities as such.
ITEM 16. EXHIBITS
The following is a list of Exhibits filed as part of the Registration
Statement:
3.1 Registrant's Sixth Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.3 to the Registrant's
Registration Statement on Form S-1, Registration No. 333-09613
("Registrant's Registration Statement")).
3.2 By-laws of the Registrant (incorporated by reference to Exhibits 3.4 and
3.5 to the Registrant's Registration Statement).
4.1 Specimen certificate for shares of the Registrant's Common Stock
(incorporated herein by reference to Exhibit 4.1 to the Registrant's
Registration Statement).
4.2 Provisions of the Articles of Incorporation and By-laws of the
Registrant defining rights of holders of Common Stock of the Registrant
(incorporated herein by reference to Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5
to the Registrant's Registration Statement).
5.1 Opinion of Brobeck, Phleger & Harrison LLP.*
10.1 Rights Agreement, dated September 17, 1998, between the Registrant and
AudioFAX IP LLC.*
23.1 Consent of Brobeck, Phleger & Harrison LLP (included in the opinion
filed as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP, independent accountants.*
24.1 Power of Attorney (included with signature page).
- ------------------------------
* Filed herewith.
ITEM 17. UNDERTAKINGS
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 in Item 14 above, or
II-1
<PAGE>
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 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.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities offered hereby, 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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(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 the undertakings set forth in paragraphs (i) and (ii)
above do not apply if 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 Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
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 pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement 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.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus 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.
II-2
<PAGE>
SIGNATURES
KNOW ALL MEN BY THESE PRESENTS, that each person or entity whose signature
appears below constitutes and appoints Thomas F. Murawski and Peter S. Macaluso,
and each of them, its true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for it and in its name, place and
stead, in any and all capacities, to sign any and all amendments, including any
post-effective amendments, to this Registration Statement on Form S-3, or any
registration statement relating to the offering to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as it might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 City of Edison, State of New Jersey, on November 16, 1998.
FAXSAV INCORPORATED
By: /s/ Thomas F. Murawski
------------------------------------------------
Thomas F. Murawski, Chairman of the Board of
Directors, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on November 16, 1998.
Signature Title
/s/ Thomas F. Murawski
- ------------------------------
Thomas F. Murawski Chairman of the Board of Directors, President
and Chief Executive Officer (principal
executive officer)
/s/ Peter S. Macaluso
- ------------------------------
Peter S. Macaluso Vice President and Chief Financial Officer
(principal financial and accounting officer)
/s/ Jeffrey M. Drazan
- ------------------------------
Jeffrey M. Drazan Director
/s/ Peter A. Howley
- ------------------------------
Peter A. Howley Director
/s/ Robert Labant
- ------------------------------
Robert Labant Director
II-3
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION PAGE
- ------- ----------- ----
3.1 Registrant's Sixth Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.3 to the Registrant's
Registration Statement on Form S-1, Registration No. 333- 09613
("Registrant's Registration Statement" .
3.2 By-Laws of the Registrant (incorporated by reference to Exhibit 3.4
and 3.5 to the Registrant's Registration Statement . .
4.1 Specimen certificate for shares of the Registrant's Common Stock
(incorporated herein by reference to Exhibit 4.1 to the Registrant's
Registration Statement .
4.2 Provisions of the Articles of Incorporation and By-laws of the
Registrant defining rights of holders of Common Stock of the
Registrant (incorporated herein by reference to Exhibits 3.1., 3.2,
3.3, 3.4 and 3.5 to the Registrant's Registration Statement. . .
5.1 Opinion of Brobeck, Phleger & Harrison LLP .*
10.1 Rights Agreement, dated September 17, 1998, between the Registrant
and AudioFAX IP LLC . .*
23.1 Consent of Brobeck, Phleger & Harrison LLP (included in the opinion
filed as Exhibit 5.1 .
23.2 Consent of PricewaterhouseCoopers LLP, independent accountants . *
24.1 Power of Attorney (included with signature page. .
- --------------------
* Filed herewith.
II-4
<PAGE>
EXHIBIT 5.1
November 16, 1998
FaxSav Incorporated
399 Thornall Street
Edison, New Jersey 08837
Ladies and Gentlemen:
We have assisted in the preparation and filing by FaxSav Incorporated
(the "Company") of a Registration Statement on Form S-3 (the "Registration
Statement"), with the Securities and Exchange Commission, relating to the sale
of up to 375,000 shares (the "Shares") of Common Stock, $0.01 par value (the
"Common Stock"), of the Company. The Registration Statement relates to 375,000
Shares to be sold by AudioFAX IP LLC (the "Shares").
We have examined such records and documents and have made such
examination of laws as we considered necessary to form a basis for the opinion
set forth herein. In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, and
the conformity with the originals of all documents submitted to us as copies
thereof.
Based upon and subject to the foregoing, we are of the opinion that (a)
the 275,000 Shares eligible to be sold immediately upon the effective date of
the Registration Statement have been (i) duly authorized, and (ii) validly
issued and are fully paid and nonassessable; and (b) such of the remaining
100,000 Shares, upon their release and transfer from escrow to AudioFAX IP LLC
in accordance with the terms thereof will be (i) duly authorized, and
(ii) validly issued, fully paid and nonassessable.
We hereby consent to the use of our name in the Registration Statement
under the caption "Legal Matters" in the related Prospectus and consent to the
filing of this opinion as an exhibit thereto.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
----------------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 10.1
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (the "Agreement"), is entered into as of the 17th day of
September, 1998, by and between FaxSav Incorporated, a Delaware corporation
("FaxSav" or the "Company"), and AudioFAX IP LLC, a Georgia limited liability
company ("AudioFAX").
RECITALS:
A. FaxSav is issuing shares of its common stock (the "Common Stock") to
AudioFAX pursuant to that certain Patent License Agreement of even date herewith
(the "License Agreement") by and between FaxSav and AudioFAX.
B. FaxSav desires to grant certain registration and other rights
hereunder to AudioFAX under the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, the parties hereto hereby agree as
follows:
1. REGISTRATION RIGHTS.
1.1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of the effectiveness of such
registration statement.
(b) The term "Registrable Securities" means all of the
following to the extent the same have not been resold to the public: (i) all
shares of Common Stock of FaxSav issued or issuable upon the execution of the
License Agreement (including the Shares and to the extent issued to AudioFAX
pursuant to the terms of the License Agreement and related Escrow Agreement, any
(A) Escrow Shares, any (B) Additional Shares and any (C) Deficiency Shares (as
defined in the License Agreement) that may be issued pursuant to the License
Agreement); and (ii) all shares of Common Stock issued in respect of the stock
referred to in (i) above as a result of a stock split, stock dividend,
recapitalization or the like.
(c) The term "Holder" means AudioFAX.
(d) The term "SEC" means the Securities and Exchange
Commission.
(e) The term "Registration Expenses" shall mean all fees
and expenses of any kind and nature whatsoever reasonably incurred by FaxSav and
Holder in the registration
<PAGE>
contemplated by this Agreement, including, without limitation, all registration,
qualification and filing fees, printing expenses, fees and disbursements of
counsel for FaxSav, Blue Sky fees and expenses and reasonable fees and
disbursements of one counsel retained by Holder.
1.2. GENERAL. Upon the effectiveness of the registration statement
with respect to the Registrable Securities and continuing for a period of six
(6) months, Holder agrees not to sell an amount of Common Stock per week in
excess of the greater of (i) forty thousand (40,000) shares, or (ii) ten percent
(10%) of the prior weeks' total trading volume for FaxSav Common Stock (E.G.,
assuming a total of 500,000 shares of FaxSav Common Stock were traded or sold
the prior week, Holder would be permitted to sell 50,000 shares that particular
week).
1.3. EXPENSES OF REGISTRATION. All Registration Expenses shall be
borne by FaxSav.
1.4. REGISTRATION PROCEDURES. FaxSav shall:
(a) As soon as practicable, but in any event no later than
sixty (60) days following the date of this Agreement, prepare and file with the
SEC a registration statement on Form S-3 with respect to such Registrable
Securities and use its reasonable commercial efforts to cause such registration
statement to become effective as soon as reasonably practicable, and keep such
registration statement effective for a period of the shorter of (i) two (2)
years from the effective date of such registration statement or (ii) until the
Holder of such Registrable Securities completes the distribution of such
securities described in the registration statement relating thereto. If FaxSav
shall be required to issue to Holder any Deficiency Shares pursuant to the
License Agreement and such Deficiency Shares have not already been registered,
FaxSav shall, as soon as practicable, but in any event no later than thirty (30)
days following the date of ALF Concurrence, ALF Revision, or Resolution Date, as
appropriate, prepare and file a separate registration on Form S-3 with respect
to such Deficiency Shares and use its reasonable commercial efforts to cause
such registration statement to become effective as soon as reasonably
practicable, and keep such registration statement effective for the period
specified in the preceding sentence.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by the registration statement.
(c) Furnish to the Holder of such Registrable Securities
such numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holder, provided that FaxSav shall not be required in
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<PAGE>
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(e) Notify each Holder of Registrable Securities covered by
such registration statement at any time when the prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(f) Apply for qualification and use its best efforts to
qualify the Registrable Securities being registered for inclusion on the Nasdaq
Stock Market.
(g) Take any and all such other actions that may be
necessary and appropriate to fulfill the registration obligations of FaxSav
under the terms of this Agreement.
(h) The Company may suspend the effectiveness of a
registration statement required by this Paragraph 1.4 for a period of not more
than thirty (30) days if the Company is engaged in confidential negotiations or
other confidential business activities, disclosure of which (in the reasonable
opinion of outside counsel to the Company) would be required in such
registration statement and would not be required if such registration statement
were not filed, and the Board of Directors of the Company determines in good
faith that such disclosure would be materially detrimental to the Company and
its stockholders; provided, however, that the Company shall not utilize this
right more than twice in any twelve-month period. The period referred to in
Paragraph 1.4(a) during which the registration statement must be kept current
after its effective date shall be extended for an additional number of business
days equal to the number of business days during which the right to sell shares
was suspended pursuant to the preceding sentence.
1.5. INDEMNIFICATION.
(a) FaxSav will indemnify each Holder of Registrable
Securities, each of its officers, directors, members and partners, and each
person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which such registration, qualification or
compliance has been effected pursuant to this Agreement, against all claims,
losses, expenses, damages and liabilities (or actions in respect thereto),
including any of the foregoing incurred in settlement of any litigation or
proceeding, commenced or threatened arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus (including any related registration statement, notification or the
like) incident to any such registration, qualification or compliance, or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation by FaxSav of any rule or regulation promulgated under the
Securities Act or any state securities law applicable to FaxSav and relating to
action or inaction required of FaxSav in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, each of its
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<PAGE>
officers, directors, members and partners, and each person controlling such
Holder within the meaning of Section 15 of the Securities Act for any reasonable
legal and any other expenses incurred, and as they are incurred, in connection
with investigating, defending or settling any such claim, loss, damage,
liability or action; provided that FaxSav will not be liable in any such case to
the extent that any such claim, loss, damage or liability arises out of or is
based on any untrue statement or omission based upon and in conformity with
written information furnished to FaxSav by Holder specifically for use therein,
provided further, however, that the indemnity agreement contained in this
Paragraph 1.5 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld).
(b) Holder will indemnify FaxSav, each of its directors and
officers, each person who controls FaxSav within the meaning of Section 15 of
the Securities Act, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereto), including any of the foregoing
incurred in settlement of any litigation or proceedings, commenced or threatened
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, prospectus or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse FaxSav, each of its officers and directors and each person who
controls FaxSav within the meaning of Section 15 of the Securities Act for any
reasonable legal or any other expenses incurred, and as they are incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement or prospectus in reliance upon
and in conformity with written information furnished to FaxSav by such Holder
specifically for use therein; provided, however, the total amount for which any
Holder shall be liable under this subparagraph 1.5(b) shall not in any event
exceed the aggregate proceeds received by such Holder from the sale of
Registrable Securities held by such Holder in such registration.
(c) Each party entitled to indemnification under this
paragraph 1.5 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder, unless such failure resulted in
actual detriment to the Indemnifying Party. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.
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<PAGE>
1.6. CONTRIBUTION. If the indemnification provided for in
paragraph 1.5 is held by a court of competent jurisdiction to be unavailable to
an Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party thereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the statements or omissions which resulted
in such loss, liability, claim, damage or expense as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Notwithstanding any other provision of this Section 1.6
to the contrary no Indemnifying Party shall be required to contribute to the
amount paid or payable by any Indemnified Party with respect to any loss,
liability, claim, damage or expense in an amount in excess of the amount of
proceeds received by such Indemnifying Party in connection with such
registration, qualification or compliance.
1.7. INFORMATION BY HOLDER. The Holder of Registrable Securities
shall promptly furnish to FaxSav such information regarding such Holder and the
distribution proposed by such Holder as FaxSav may reasonably request in writing
and as shall be required in connection with any registration, qualification or
compliance referred to herein.
1.8. REPORTING REQUIREMENTS. FaxSav agrees at all times hereafter
to file with the SEC in a timely manner all reports and other documents required
of FaxSav under the Securities Act and the Securities Exchange Act of 1934, as
amended.
2. REPRESENTATIONS AND WARRANTIES OF HOLDER. The Holder represents and
warrants to FaxSav as of the date hereof as follows:
2.1. INVESTMENT REPRESENTATIONS.
(a) The Registrable Securities are being acquired for
Holder's own account and not with a view towards distribution in violation of
the Securities Act.
(b) Until the shares of Registrable Securities received by
the Holder become registered under this Agreement, the Holder understands that
such shares will not have been so registered under the Securities Act, that they
will be "restricted securities" as defined in Rule 144 promulgated under the
Securities Act and, therefore, that such shares cannot be resold except in
compliance with the Securities Act.
(c) Holder has had access to copies of FaxSav's Form 10-K
for the year ended December 31, 1997, FaxSav's Form 10-Q's for the quarters
ended March 31, 1998 and June 30, 1998, its Annual Report to Shareholders for
1997 and its proxy statement for the
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<PAGE>
1998 annual meeting of shareholders, each as filed with the SEC, and has been
given the opportunity to make such inquiries of FaxSav's officers and receive
answers concerning the terms and conditions of the offering and to obtain any
additional information which the issuer possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of
information furnished under paragraph (b)(2)(ii) of Rule 502 promulgated by the
Securities and Exchange Commission, and as Holder has deemed necessary and
appropriate in connection with the transactions contemplated by this Agreement.
Holder hereby acknowledges the receipt and adequacy of information from the
Company in full compliance with Rule 502(b)(2)(ii).
(d) The Holder has such knowledge and experience in
financial and business matters such that Holder is capable of evaluating the
merits and risks of the Registrable Securities.
(e) It is understood that the certificates evidencing the
Shares may bear one or all of the following legends:
(1) "These securities have not been registered under
the Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(2) Any legend required by applicable state securities
laws.
3. GENERAL.
3.1. GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of Georgia without respect to its conflict of
laws provisions.
3.2. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
3.3. ENTIRE AGREEMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof,
and this Agreement shall supersede and cancel all prior agreements between the
parties hereto with regard to the subject matter hereof.
3.4. NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by either first
class mail, postage prepaid, certified or registered mail, return receipt
requested, or overnight courier service addressed (a) if to FaxSav at FaxSav's
address as FaxSav shall have furnished to AudioFAX in writing with a copy to
Richard R. Plumridge, Esq., Brobeck, Phleger & Harrison LLP, 1633 Broadway, 47th
Floor, New York, New York 10019, or (b) if to AudioFAX, at such address as
AudioFAX shall have furnished to FaxSav in writing with a copy to William M.
Ragland, Jr.,
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<PAGE>
Esq., Powell, Goldstein, Frazer & Murphy LLP, 191 Peachtree Street, N.E.,
Sixteenth Floor, Atlanta, Georgia 30303.
3.5. SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to persons or circumstances shall be interpreted so as best to reasonably effect
the intent of the parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision which will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision.
3.6. TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
3.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereby have executed this Rights Agreement
on the date first above written.
FAXSAV:
FaxSav Incorporated,
a Delaware corporation
By: /s/ Peter S. Macaluso
----------------------
Name: Peter S. Macaluso
-----------------
Title: Vice President and CFO
----------------------
AUDIOFAX:
AudioFAX IP LLC,
a Georgia Limited Liability Company
By: /s/ Mark Bloomfield
-------------------
Mark Bloomfield
Managing Director
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EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement of FaxSav Incorporated (formerly Digitran Corporation, the "Company")
on Form S-3 of our report dated February 4, 1998, on our audits of the financial
statements and financial statement schedule of FaxSav Incorporated as of
December 31, 1997 and 1996 and for the years ended December 31, 1997, 1996 and
1995, which report is included in the Company's Annual Report on Form 10-K. We
also consent to the reference to our firm under the caption "Experts".
/s/ PricewaterhouseCoopers, LLP
----------------------------------------
PricewaterhouseCoopers, LLP
November 16, 1998
Florham Park, New Jersey
