THIS PROMISSORY  NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933.
IT MAY NOT BE OFFERED OR  TRANSFERRED BY SALE,  ASSIGNMENT,  PLEDGE OR OTHERWISE
UNLESS  (I)  A  REGISTRATION  STATEMENT  FOR  SUCH  PROMISSORY  NOTE  UNDER  THE
SECURITIES  ACT OF 1933 IS IN  EFFECT  OR (II)  PAYEE  (AS  DEFINED  BELOW)  HAS
RECEIVED AN OPINION OF COUNSEL,  WHICH OPINION IS  SATISFACTORY TO THE PAYEE, TO
THE EFFECT THAT SUCH  REGISTRATION  IS NOT REQUIRED  UNDER THE SECURITIES ACT OF
1933.

                                 PROMISSORY NOTE

Principal: $163,000.00                                           Piscataway, NJ
                                                                October 5, 2000

                  FOR VALUE RECEIVED,  Stephen B. Gray, an individual  currently
residing at 9 Pavilica Road, Stockton,  NJ 08559 (the "Maker"),  hereby promises
to pay to ION NETWORKS, INC., a Delaware corporation currently having an address
at 1551 South Washington Avenue, Piscataway, New Jersey 08854 (the "Payee"), the
aggregate sum of One Hundred  Sixty-Three  Thousand Dollars  ($163,000.00)  (the
"Principal  Amount"),  without  interest,  all upon the terms and provisions set
forth  in this  promissory  note (as the  same  may be  supplemented,  modified,
amended,  restated or replaced from time to time in the manner provided  herein,
this "Note").  Payments  shall be made at the address set forth above or at such
other place as may be designated from time to time in writing by the Payee.

          1. Payment of  Principal.  The  Principal  Amount shall be paid by the
Maker to the Payee in installments of at least $20,000 each, with the first such
installment payment due on the last to occur of (a) November 1, 2000, or (b) the
tenth  Business  Day  following  the date of the earnings  press  release by the
Company for the quarter ended  September 30, 2000,  the second such  installment
payment due on December  11,  2000,  the third such  installment  payment due on
January 11, 2001, the fourth such  installment  payment due on February 9, 2001,
the  fifth  such  installment  payment  due on March  9,  2001,  and the  entire
remaining balance due in a single payment on or before the earliest to occur of:
(i) March 31, 2001;  or, (ii) the  occurrence of an Event of Default (as defined
below);  or (iii) such  earlier date as may be  otherwise  provided  herein (the
earliest such applicable date being referred to herein as the "Maturity Date").

          2.  Prepayment.   The  Maker  shall  have  the  right  to  prepay  the
outstanding  Principal  Amount of this Note, in whole at any time, or in part at
any time and from time to time, without penalty or premium.

          3. Security. This Maker's obligations under this Note: (i) are subject
to and supported by certain  agreements  made by the Maker under the  Separation
and Forebearance  Agreement  between the Maker and the Payee dated as of October
5,  2000  (as the same  may be  supplemented,  modified,  amended,  restated  or
replaced  from time to time in the  manner  provided  therein,  the  "Separation
Agreement"),  (ii) are assured by the guaranty of Kathleen D. Gray,  the Maker's
wife (the "Guarantor"),  pursuant to her Guaranty Agreement with the Payee dated
as of  October  5,  2000 (as the same may be  supplemented,  modified,  amended,
restated  or  replaced  from time to time in the manner  provided  therein,  the
"Guaranty"),  and (iii) are secured by the Mortgage on the property located at 9
Pavilica Road, Stockton, New Jersey 08559, from the Maker and the Guarantor,  as
mortgagors,  to the Payee,  as  mortgagees,  dated as of October 5, 2000 (as the
same may be supplemented,  modified,  amended, restated or replaced from time to
time in the manner  provided  therein,  the  "Mortgage"),  which  Mortgage  also
secures the  obligations of the Guarantor  under her Guaranty.  The Guaranty and
Mortgage  also support the  Promissory  Note issued by the Maker to the Payee on
June 27, 2000, as amended by a first amendment dated as of the date hereof,

                                      -1-
<PAGE>

in the amount of Seven Hundred and Fifty  Thousand  ($750,000)  Dollars (as so
amended, and as the same may be supplemented,  modified,  amended,  restated or
replaced from time to time in the manner provided therein the "$750,000 Note").

          4. Events of Default.  An "Event of Default"  shall be deemed to occur
hereunder (i) upon the commencement of any proceedings by the Maker, or with the
consent  or  non-objection  of  Maker,  under  any  law  or  statute  concerning
bankruptcy,  arrangement  of debt,  insolvency or  readjustment  of debt, or the
commencement of any such  proceedings  without the consent of the Maker and such
proceedings  shall continue  undischarged  for a period of sixty (60) days; (ii)
the  failure  to pay any amount  under  this Note when due;  (iii) any "Event of
Default" under (and as defined in) the $750,000 Note, (iv) any breach or default
by Maker or the Guarantor  under the Separation  Agreement,  the Guaranty or the
Mortgage, , or (v) upon the death or disability of Maker or Guarantor.

          5. Payment Upon Default. Without limiting any other rights or remedies
of the Payee in accordance with this Note or applicable law, in the event of the
occurrence of an Event of Default,  Payee,  at its election,  may accelerate and
demand immediate  payment of the Principal Amount and all other  obligations due
under this Note and Maker shall be liable for all such amounts. Payee shall also
be  entitled  to the  payment  of  interest  at the rate of 12% per annum on the
outstanding Principal Amount from and after the date of any Event of Default. In
addition,  the Maker  shall  pay or  reimburse  ON DEMAND  any and all costs and
expenses  incurred by the Payee,  whether directly or indirectly,  in connection
with  all  waivers,  releases,  satisfactions,   modifications,  amendments  and
consents, all payments made and actions taken in the name of or on behalf of the
Maker or the Guarantor,  and the  administration,  maintenance,  enforcement and
adjudication of this Note and the Payee's rights,  powers,  privileges and other
interests under this Note and applicable law, including (without limitation) the
disbursements, expenses and fees of counsel to the Payee.

          6. Waiver of  Presentment,  Etc.  Presentment  for payment,  notice of
dishonor,  protest,  notice of  protest,  notice of  acceptance  and all similar
notices  are  hereby  expressly  waived by the  Maker.  Any  waiver  or  consent
respecting  any term or provision of this  Agreement  shall be effective only in
the specific instance and for the specific purpose for which given and shall not
be deemed,  regardless of frequency given, to be a further or continuing  waiver
or  consent.  The  failure or delay of the Payee at any time or times to require
performance of, or to exercise its rights with respect to, any term or provision
of this Agreement in no manner shall affect the Payee's right at a later time to
enforce any such provision.  No notice to or demand on the Maker or Guarantor in
any case shall  entitle  such party to any other or further  notice or demand in
the same, similar or other circumstances. The acceptance by the Payee of (a) any
partial or late payment  shall not  constitute a  satisfaction  or waiver of the
full amount then due or the resulting Event of Default or (b) any payment during
the  continuance  of an Event of Default  shall not  constitute a waiver or cure
thereof;  and the Payee may accept or reject any such payment without  affecting
any of the Payee' rights, powers, privileges, remedies and other interests under
this Agreement and applicable law. All representations, warranties and covenants
of the Maker and all rights, powers, privileges, remedies and other interests of
the  Payee  hereunder  are  cumulative  and not  alternatives,  and  they are in
addition to and shall not limit (except as other-wise expressly provided herein)
any other right, power,  privilege,  remedy or other interest of the Payee under
this Agreement, any related document or applicable law.

          7.  Governing  Law.  This Note shall be governed by, and  construed in
accordance  with,  the  laws of the  State  of New  Jersey,  without  regard  to
principles  of  conflicts  or choice  of laws  thereof.  This Note  shall not be
interpreted or construed with any presumption against the Payee by virtue of the
Payee causing this Note to be drafted.

          8. Amendments. No amendment,  modification, or waiver of any provision
of this  Note nor  consent  to any  departure  by the Maker  therefrom  shall be
effective  unless the same  shall be in writing  and signed by the Payee and the
Maker.


                                      -2-
<PAGE>

          9.  Successors  And  Assigns.  This  Note  shall  not  be  negotiable,
transferable  or assignable  by the Maker  without the prior written  consent of
Payee.  This Note shall be binding  upon and shall  inure to the  benefit of the
Payee and its successors and assigns, if any, subject to the provisions hereof.

          10. Entire  Agreement.  This Note,  the $750,000  Note, the Separation
Agreement,  the Mortgage and the  Guaranty  contain the entire  agreement of the
parties and  supersede all other  representations,  warranties,  agreements  and
understandings, oral or otherwise, among the parties with respect to the matters
contained herein and therein.

          11. Waiver of the Right to Trial by Jury. The Maker hereby irrevocably
waives the right to trial by jury in any action,  suit,  claim,  counterclaim or
other  proceeding,  whether in  contract  or tort,  at law or in equity,  in any
manner connected with this Note or any transactions  contemplated hereunder. The
exclusive jurisdiction of any disputes arising hereunder shall be in the federal
or state courts of the State of New Jersey in Middlesex County.

          12.  Notices.  Any  notice,  request,  demand  or other  communication
permitted or required to be given hereunder  shall be in writing,  shall be sent
by one of the  following  means to the  addressee at the address set forth above
(or at such other  address  as shall be  designated  hereunder  by notice to the
other parties and persons receiving  copies,  effective upon actual receipt) and
shall be deemed  conclusively to have been given:  (a) on the first Business Day
(as hereinafter defined) following the day timely deposited with Federal Express
(or other equivalent  national overnight courier) or United States Express Mail,
with the cost of delivery  prepaid;  (b) on the fifth Business Day following the
day duly sent by certified or registered United States mail, postage prepaid and
return  receipt  requested;  or (c) when  otherwise  actually  delivered  to the
addressee.  Copies may be sent by regular  first-class mail, postage prepaid, to
such  person(s) as a party may direct from time to time by notice to the others,
but failure or delay in sending copies shall not affect the validity of any such
notice, request, demand or other communication so given to a party. For purposes
hereof,  "Business  Day"  shall  mean any day  during  which  banks are open for
business  in New York,  New York,  other than any  Saturday,  Sunday or a day on
which commercial banks in New York State are authorized or required to close.

IN  WITNESS  WHEREOF,  the Maker  has  executed  this Note as of the date  first
written above.

                                           MAKER:


                                    /s/ Stephen  B. Gray
                                   ----------------------------
                                        Stephen B. Gray

                                      -3-