<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _______)
Procyon Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $0.01 Par Value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
742806300
---------------------------------
(CUSIP Number)
Thomas J. Egan, Jr., Esq., 815 Connecticut Avenue, N.W., Washington, D.C.
20006-4078, (202) 452-7000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
March 31, 2000
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
CUSIP No. 742806300 Page 2 of 9
<TABLE>
<S> <C>
============================================================================================
1 Name of Reporting Person:
RMS Limited Partnership Crystal Diamond, Inc. Roy M. Speer
88-0224372 88-0223159 ###-##-####
- --------------------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------------------
4 Source of Funds
WC
- --------------------------------------------------------------------------------------------
5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------------------
6 Citizenship or Place of Organization
RMS Limited Partnership Nevada limited partnership
Crystal Diamond, Inc. Nevada corporation
Roy M. Speer individual citizen of the United States
- --------------------------------------------------------------------------------------------
7 Sole Voting Power
0
- --------------------------------------------------------------------------------------------
8 Shared Voting Power
1,600,000
- --------------------------------------------------------------------------------------------
9 Sole Dispositive Power
0
- --------------------------------------------------------------------------------------------
10 Shared Dispositive Power
1,600,000
- --------------------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,600,000
- --------------------------------------------------------------------------------------------
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)
21.6 percent
- --------------------------------------------------------------------------------------------
14 Type of Reporting Person
RMS Limited Partnership PN
Crystal Diamond, Inc. CO
Roy M. Speer IN
- --------------------------------------------------------------------------------------------
</TABLE>
SEE INSTRUCTIONS BEFORE FILLING OUT
<PAGE> 3
CUSIP No. 742806300 Page 3 of 9
Item 1. SECURITY AND ISSUER
This Schedule relates to the common stock, par value $.01 per share (the
"Common Stock"), of Procyon Corporation, a Colorado corporation (the "Company"),
which has its principal executive offices at 1150 Cleveland Street, Suite 410,
Clearwater, Florida 33755.
The descriptions of certain agreements and documents contained in this
Schedule 13D are qualified in their entirety by reference to the complete texts
of such agreements and documents filed as Exhibits hereto and incorporated
herein by reference.
Item 2. IDENTITY AND BACKGROUND
This Schedule 13D is being filed by RMS Limited Partnership, a Nevada
limited partnership ("RMS"), Crystal Diamond, Inc., a Nevada corporation
("Crystal Diamond"), and Roy M. Speer ("Speer").
RMS is engaged primarily in the warehousing and real estate businesses.
RMS's principal business and office addresses are 50 West Liberty St., Suite
650, Reno, Nevada 89501.
Crystal Diamond is the general partner of RMS. Crystal Diamond
is engaged primarily in the warehousing and real estate businesses. Crystal
Diamond's principal business and office addresses are 50 West Liberty St., Suite
650, Reno, Nevada 89501.
The name, citizenship, business address and present principal occupation
or employment and the name, principal business and address of any corporation or
other organization in which such employment is conducted of (i) each of the
executive officers and directors of Crystal Diamond, (ii) each person
controlling Crystal Diamond, and (iii) the executive officers and directors of
any person controlling Crystal Diamond (except Mr. Speer, for whom such
information is provided below) are set forth in Schedule 1 attached hereto and
incorporated herein by reference.
Roy M. Speer is the sole stockholder and a director of Crystal Diamond
and is a limited partner of RMS. Mr. Speer's business address is
2535 Success Dr., Odessa, Florida 33556. Mr. Speer is a United States
citizen.
As a result of the relationships described above in this Item 2, Crystal
Diamond and Mr. Speer may be deemed to beneficially own the Common Stock held of
record or beneficially owned by RMS.
During the last five years, neither RMS, Crystal Diamond, Mr. Speer, nor,
to the best of Crystal Diamond's knowledge, any executive officer, director or
controlling person of Crystal Diamond has (i) been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such law.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
RMS purchased 1,600,000 shares of Common Stock of the Company pursuant to
that certain Subscription Agreement ("Agreement") dated March 31, 2000 by and
between the Company and RMS for an aggregate consideration of $1,000,000. RMS
used its working capital to purchase the Common Stock of the Company.
Item 4. PURPOSE OF TRANSACTION
RMS entered into the Agreement to purchase the Common Stock with the
purpose of acquiring a substantial equity interest in the Company. In the
Agreement, RMS warrants, among other things, that they are entering into the
<PAGE> 4
CUSIP No. 742806300 Page 4 of 9
Agreement for investment purposes only, not with a view to, or for, resale,
distribution or fractionalization of the Common Stock.
The Agreement provides RMS with registration rights whereby the Company
shall, upon written request, effect shelf registration of the Common Stock
unless an exemption exists that would provide RMS the right to dispose of all of
their shares. Within certain limitations for frequency and the form of
registration, the Company shall use reasonable efforts to keep the registration
continuously effective until RMS has sold their shares either under the
registration or under Rule 144(k). Similarly, if the Company effects
registration on its own accord for any of its equity securities, RMS shall have
the right to request registration of their additional shares. This right is
limited if an exemption for such registration exists or if such additional share
registration would cause a reduction in the estimated market value of the
registered shares of more than one-third their value. The Agreement also gives
RMS the right to join in the registration of shares in anticipation of an
underwritten public offering.
The foregoing description of certain provisions of the Agreement does not
purport to be complete and is qualified by reference to the Agreement, the form
of which appears as Exhibit 99.1 attached hereto and incorporated herein by
reference.
Other than as described above, neither RMS, Crystal Diamond, Mr. Speer,
nor, to the best of Crystal Diamond's knowledge, any executive officer, director
or controlling person of Crystal Diamond has any present plans or proposals
which relate to or would result in: (1) the acquisition by any person of
additional securities of the Company, or the disposition of securities of the
Company; (2) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
(3) a sale or transfer of a material amount of the assets of the Company or of
any of its subsidiaries; (4) any material change in the capitalization or
dividend policy of the Company; (5) any other material change in the Company's
business or corporate structure; (6) changes to the Company's charter, bylaws or
instruments corresponding thereto or other actions which may impede the
acquisition of control of the Company by any person; (7) causing a class of
securities of the Company to be delisted from a national securities exchange or
to cease to be authorized to be quoted in any inter-dealer quotation system of a
registered national securities association; (8) a class of equity securities of
the Company to become eligible for termination of registration pursuant to
Section 12(g)(4) of the Act; or (9) any action similar to any of those
enumerated above.
Notwithstanding any of the foregoing, RMS, Crystal Diamond and Mr. Speer
reserve the right to purchase additional securities of the Company, dispose of
all or a portion of its holdings of securities of the Company, or change its
intentions with respect to any of the matters referred to in this Item 4. Any
such decision will depend; however, on numerous factors, including, without
limitation, the market price of the common stock, the terms and conditions
related to their purchase and sale, the prospects and profitability of the
Company, other business and investment alternatives of RMS, Crystal Diamond and
Mr. Speer, and general economic and market conditions.
Item 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the date hereof, RMS owns of record 1,600,000 shares of
Common Stock. As a result of the relationships described in Item 2 above,
Crystal Diamond and Mr. Speer may also be deemed for securities law purposes to
beneficially own 1,600,000 shares of Common Stock each.
Based on the Company's Quarterly Report on Form 10-QSB for the period
ended December 31, 1999, the Company has 7,413,655 shares of Common Stock
outstanding after giving effect to the issuance of 1,600,000 shares of Common
Stock pursuant to the Agreement. RMS, therefore, is the beneficial owner of
21.6% the outstanding Common Stock of the Company. In addition, the Company has
787,283 shares Series A Preferred Stock (the "Preferred Stock") outstanding all
of which Preferred Stock is convertible into Common Stock. If all of the
Preferred Stock were converted into Common Stock, RMS beneficial ownership of
the Company's Common Stock would be reduced to 19.5%. None of RMS, Crystal
Diamond, or Speer has the power either directly or indirectly to cause the
conversion of the Preferred Stock into Common Stock.
<PAGE> 5
CUSIP No. 742806300 Page 5 of 9
(b) See cover page.
(c) Neither RMS, Crystal Diamond, Mr. Speer, nor, to the best of
Crystal Diamond's knowledge, any executive officer, director or controlling
person of Crystal Diamond has effected any transaction in shares of the Common
Stock during the past 60 days (nor has there been a previous Schedule 13D
filing).
(d) Not applicable.
(e) Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
All contracts, arrangements, understandings or relationships with respect
to the securities of the Company between RMS, Crystal Diamond or Mr. Speer and
any other person are described in Item 4 above, which is incorporated herein by
reference, and in the Agreement which is attached hereto as Exhibits 99.1, which
is incorporated herein by reference.
Item 7. MATERIAL TO BE FILED AS EXHIBITS
99.1 Subscription Agreement, dated March 31, 2000, between RMS Limited
Partnership and Procyon Corporation is attached hereto as Exhibit 99.1.
<PAGE> 6
CUSIP No. 742806300 Page 6 of 9
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 10, 2000 RMS LIMITED PARTNERSHIP,
a Nevada limited partnership
/s/ C. Thomas Burton, Jr.
-------------------------------------
By: C. Thomas Burton, Jr.
President of Crystal Diamond, Inc.
General Partner of RMS Limited
Partnership
<PAGE> 7
CUSIP No. 742806300 Page 7 of 9
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
April 10, 2000 CRYSTAL DIAMOND, INC.,
a Nevada corporation
/s/ C. Thomas Burton, Jr.
----------------------------------
By: C. Thomas Burton, Jr.
Its: President
<PAGE> 8
CUSIP No. 742806300 Page 8 of 9
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
April 10, 2000 /s/ Roy M. Speer
-----------------
Roy M. Speer
<PAGE> 9
CUSIP No. 742806300 Page 9 of 9
Schedule 1
DIRECTORS, EXECUTIVE OFFICERS AND CONTROLLING PERSONS
OF CRYSTAL DIAMOND, INC. ("CRYSTAL DIAMOND")
<TABLE>
<CAPTION>
Name and Title* Occupation and Employer
- --------------- -----------------------
<S> <C>
Richard W. Baker Certified Public Accountant
Director, Treasurer
and Secretary Richard W. Baker, P.A.
2535 Success Dr.
Odessa, Florida 33556
C. Thomas Burton, Jr. Attorney-at-Law
President
Burton, Bartlett & Glogovac
50 West Liberty St., Suite 650,
Reno, Nevada 89501
</TABLE>
* All such persons are United States citizens.
<PAGE> 1
EXHIBIT 99.1
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made and entered into
as of the 31st day of March, 2000 by and among Procyon Corporation, a Colorado
corporation (the "Company"), with its principal office at 1150 Cleveland Street,
Suite 410, Clearwater, Florida and RMS Limited Partnership, a Nevada limited
partnership ("Subscriber"), with its principal office at 50 West Liberty Street,
Suite 650, Reno, Nevada 89501.
WITNESSETH
WHEREAS the Company desires to sell to the Subscriber and the Subscriber
desires to purchase from the Company 1,600,000 shares (the "Shares") of common
stock, par value $.01 per share ("Common Stock"), all on the terms and subject
to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and in further
consideration of the mutual covenants, promises and agreements hereinafter set
forth, it has been and IT IS HEREBY AGREED AS FOLLOWS:
ARTICLE I
PURCHASE OF SECURITIES
1.1 Subscription. The Subscriber, intending to be legally bound, hereby
irrevocably subscribes for and agrees to purchase the Shares.
1.2 Purchase Price. The Company agrees to issue and sell to the
Subscriber the Shares for a purchase price of one million dollars ($1,000,000)
(the "Purchase Price"). Payment for the Shares shall be made by wire transfer or
check payable to and delivered to the Company or, if by wire transfer in
accordance with the instructions of the Company, together with an executed copy
of this Agreement and any other documents required to be executed under this
Agreement.
ARTICLE II
CLOSING
2.1 Closing of Subscription. The closing of the purchase and sale of the
Shares (the "Closing") shall take place at the offices of the Company on such
date as is mutually agreed to by the Company and the Subscriber. At the Closing,
the Company shall deliver to the Subscriber certificates for the Shares, duly
registered in the Subscriber's name against payment in full by the Subscriber of
the aggregate Purchase Price.
<PAGE> 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Investor Representations and Warranties. The Subscriber hereby
acknowledges, represents and warrants to the Company as follows:
(a) The Subscriber is acquiring the Shares for its own account
as principal, not as a nominee or agent, for investment purposes only, and not
with a view to, or for, resale, distribution or fractionalization thereof in
whole or in part and no other person has a direct or indirect beneficial
interest in the Shares. Further, the Subscriber does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person with respect to any of the
Shares for which it is subscribing.
(b) The Subscriber has full power and authority to enter into
this Agreement, the execution and delivery of this Agreement has been duly
authorized, if applicable, and this Agreement constitutes a valid and legally
binding obligation of the Subscriber.
(c) The Subscriber acknowledges its understanding that the
offering and sale of the Shares is intended to be exempt from registration under
the Securities Act of 1933, as amended (the "Securities Act"), by virtue of
Section 4(2) of the Securities Act and the provisions of Regulation D
promulgated thereunder ("Regulation D"). In furtherance thereof, the Subscriber
represents and warrants to, and agrees with, the Company and its affiliates as
follows:
(i) The Subscriber realizes that the basis for the
exemption may not be present if, notwithstanding any representations
and/or warranties to the contrary herein contained, the Subscriber has in
mind merely acquiring the Shares for a fixed or determinable period in
the future, or for a market rise, or for sale if the market does not
rise;
(ii) The Subscriber has the financial ability to bear the
economic risk of its investment, has adequate means for providing for its
current needs and personal contingencies and has no need for liquidity
with respect to its investment in the Company; and
(iii) The Subscriber has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits
and risks of an investment in the Shares. If other than an individual,
the Subscriber also represents it has not been organized for the purpose
of acquiring the Shares.
2
<PAGE> 3
(d) The Subscriber is an "accredited investor," as that term is
defined in Rule 501 of Regulation D.
(e) The Subscriber will not sell or otherwise transfer the
Shares without registration under the Securities Act or an exemption therefrom
and the Subscriber fully understands and agrees that it must bear the economic
risk of its purchase because, among other reasons, the Shares have not been
registered under the Securities Act or under the Shares laws of any state and,
therefore, cannot be resold, pledged, assigned or otherwise disposed of unless
they are subsequently registered under the Securities Act and under the
applicable securities laws of such states or unless exemptions from such
registration requirements are available. In particular, the Subscriber is aware
that the Shares are "restricted securities," as such term is defined in Rule 144
promulgated under the Securities Act ("Rule 144"), and they may not be sold
pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The
Subscriber also understands that, except as otherwise provided herein, the
Company is under no obligation to register the Shares on its behalf or to assist
him in complying with any exemption from the registration requirements of the
Securities Act or applicable state securities laws. The Subscriber further
understands that sales or transfers of the Shares are further restricted by
state securities laws and the provisions of this Agreement.
(f) The Subscriber understands and agrees that the certificates
representing the Shares shall bear the following legend until (i) such
securities shall have been registered under the Securities Act and effectively
been disposed of in accordance with the registration statement; or (ii) in the
opinion of counsel for the Company such securities may be sold without
registration under the Securities Act as well as any applicable "Blue Sky" or
similar state securities laws:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER The Securities Act OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT
TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME
EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR (ii)
PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN
OPINION OF COUNSEL TO THE CORPORATION, OR OTHER COUNSEL REASONABLY
ACCEPTABLE TO THE CORPORATION, THAT THE PROPOSED DISPOSITION IS
CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL
AS ANY APPLICABLE "BLUE SKY" OR OTHER STATE SECURITIES LAW.
(g) The Subscriber, if an individual, is a citizen of the
United States, and is at least 21 years of age, or if a partnership, corporation
or trust, the members, shareholders or beneficiaries thereof are all citizens of
the United States and each is at least 21 years of age. The address set forth
below is the Subscriber's correct principal home address, or if the Subscriber
is other than an individual, the Subscriber's correct principal office and the
Subscriber has no present intention of changing such address.
3
<PAGE> 4
(h) The Subscriber understands that an investment in the Shares
is a speculative investment which involves a high degree of risk of loss of its
entire investment.
3.2 Company Representations and Warranties. The Company hereby
represents and warrants to the Subscriber as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has or
will have on or prior to Closing all requisite corporate power and authority (i)
to own and operate its properties and assets and to carry on its business as now
conducted; (ii) to execute and deliver this Agreement; (iii) to issue and sell
the Shares; and (iv) to carry out the provisions of this Agreement.
(b) All corporate action on the part of the Company, its
officers and directors necessary for the authorization, execution and delivery
of this Agreement, the performance of all obligations of the Company hereunder
at the Closing, and the authorization, issuance, sale, and delivery of the
Shares being sold hereunder has been taken or will be taken prior to the
Closing. This Agreement constitutes a valid and legally binding obligation of
the Company, enforceable in accordance with its terms except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, or as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
(c) The authorized capital stock of the Company consists of (i)
80,000,000 shares of Common Stock, of which 5,772,155 shares (including shares
held in treasury) are issued and outstanding as of the date hereof; and (ii)
4,000,000 shares of preferred stock, of which 787,283 have been designated
Series A Preferred Stock and are issued and outstanding and convertible at the
election of the holder thereof into Shares of Common Stock (subject to
adjustment pursuant to certain anti-dilution provisions).
(d) The Shares being purchased by the Subscriber hereunder,
when issued, sold and delivered in accordance with the terms of this Agreement
for the purchase price, will be duly and validly issued, fully paid,
non-assessable, not subject to any preemptive rights, and free and clear of all
liens, claims and encumbrances.
(e) To the best of the Company's knowledge, no consent,
approval, qualification, order or authorization of, or filing with, any local,
state, or federal governmental authority or any other party is required on the
part of the Company in connection with the Company's valid execution, delivery,
or performance of this Agreement, the offer, sale or issuance of the Shares,
except for filings that shall be made at or prior to Closing.
(f) Subject in part to the truth and accuracy of the Company's
representations and warranties set forth in this Agreement, the offer, sale and
issuance of the Shares, as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act of 1933, as amended ("Securities
Act"). Neither the Company nor any
4
<PAGE> 5
authorized agent acting on its behalf will take any action hereafter that would
cause the loss of such exemption.
(g) No representation or warranty of the Company contained in
this Agreement or any other such document furnished to the Subscriber by or on
behalf of the Company, including without limitation, the SEC Filings contains an
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein, in light of the circumstances in which
they were made, not misleading. The SEC Filings conformed in all material
respects as of the date each was filed with the SEC to the disclosure
requirements applicable to such filing.
(j) The foregoing representations, warranties and agreements
shall survive the execution of this Agreement.
ARTICLE IV
REGISTRATION RIGHTS
4.1 Requested Registration. Upon the written request of the Subscriber
that the Company effect a shelf registration under the Securities Act of shares
of Common Stock held by the Subscriber and specifying the intended method of
disposition thereof, the Company shall use its best efforts to effect such
registration under the Securities Act of the requested number of shares of
Common Stock (the "Requested Shares") to the extent required to permit the
disposition (in accordance with the intended methods as specified by the
Subscriber) of the Requested Shares pursuant to Rule 415; provided, however,
that (i) the Company shall not be required to effect any such registration at
any time when an exemption from registration is otherwise available to the
Subscriber affording the Subscriber the right to dispose of all of the shares of
Common Stock held by the Subscriber; (ii) the Company shall be required to
effect no more than one (1) registration(s) for the Subscriber in any twelve
month period (including any registration effected pursuant to Section 4.2
hereof); and (iii) the Company shall not be required to effect a registration
under this Section 4.1 if it does not qualify for use of Form S-3 (or any
successor form) for the registration of the Requested Shares. Any registration
requested pursuant to this Section 4.1 shall be effected by the filing of a
registration statement on Form S-3 (or any other form that includes
substantially the same information as would be required to be included in a
registration statement on such forms as presently constituted, other than a
registration statement relating to offers to employees pursuant to plans or of
securities to be issued in business combinations). The Company shall use its
reasonable efforts to keep such registration statement continuously effective
until the earlier of (i) such time as RMS shall have sold all of the Requested
Shares or (ii) all of the Shares may be sold pursuant to Rule 144(k).
5
<PAGE> 6
4.2 Company Registration.
(a) If the Company proposes to register any of its equity
securities under the Securities Act, whether or not for sale for its own account
or for the account of an affiliate or other person, in a manner that would
permit registration of shares of Common Stock for sale to the public under the
Securities Act on the same form proposed to be used in such registration (other
than a registration (i) on Form S-8 or S-4 or any successor or similar forms or
(ii) relating to securities of the Company issuable upon exercise of employee
stock options or in connection with any employee benefit or similar plan of the
Company or in connection with an acquisition by the Company of any company
involving the issuance of the Company's capital stock), it will give twenty (20)
days' prior written notice to the Subscriber of its intention to do so and, upon
the written request of the Subscriber made within ten (10) days after the
receipt of any such notice (which request shall specify the number of shares of
Common Stock intended to be disposed of by the Subscriber and the intended
method of disposition thereof), the Company shall use its best efforts to effect
the registration under the Securities Act of the number of shares of Common
Stock that the Company has been requested to register by the Subscriber (the
"Additional Shares"), to the extent required to permit the disposition (in
accordance with the intended methods as specified by the Subscriber) of the
Common Stock so to be registered; provided, however, that (i) the Company shall
not be required to effect any such registration at any time when an exemption
from registration is otherwise available to the Subscriber affording Subscriber
the right to dispose of all of the shares of Common Stock held by the
Subscriber; and (ii) the Company shall not be required to include in such
registration all of the Additional Shares requested by the Subscriber to be
included therein if the registration of such number of shares would cause the
market value of the number of shares to be registered by the Company on behalf
of holders of piggyback registration rights to exceed one-third of the estimated
market value of the Shares to be registered and sold by the Company and/or such
other holders which may have requested such registration pursuant to a right to
demand such registration; provided that to the extent permitted under its
contractual obligation to holders of registration rights, the Company shall
reduce the number of shares to be registered on behalf of holders of piggyback
rights on a pro rata basis in proportion to the total number of shares of Common
Stock (determined on a fully diluted basis assuming the conversion of any
convertible securities) held by each such shareholder which requests
registration of Additional Shares pursuant to piggyback rights granted by the
Company.
(b) If at any time after giving written notice to the
Subscriber of its intention to register any of the Company's equity securities
under the Securities Act (i) the Company in good faith shall determine not to
register such securities, the Company may, at its election, give written notice
of such determination to the Subscriber and, thereupon, shall be relieved of its
obligation to register such shares pursuant to this Section 4.2 in connection
with such registration, without prejudice, however, to any rights of the
Subscriber to request that such registration be effected as a registration under
Section 4.1, or (ii) the Company shall determine in good faith to delay the
registration of such securities, the Company shall be permitted to delay the
registration of such shares for the same period as the delay in registering the
Shares to be registered by the Company for its own account or for others; and
provided, further, that the Company shall not be required to include in any
registration pursuant to this Section 4.2
6
<PAGE> 7
any shares requested by the Subscriber to be included therein if the Board of
Directors of the Company shall have concluded, in good faith, that the inclusion
of the shares in the same offering as the Company's securities proposed to be
offered would have a material adverse effect upon the offering of such
securities of the Company, in which case the offering of the shares may be
delayed for a period of up to 90 days and shall then be effected pursuant to
Section 4.1 as if the Subscriber had requested such registration.
(c) In the event that shares are requested to be included in
any registration initiated pursuant to this Section 4.2 that contemplates an
underwritten public offering, and if, in the good faith judgment of the managing
underwriter of such public offering, the inclusion of all of the shares
originally covered by a request for registration hereunder, together with the
number or amount of securities to be offered by the Company or other security
holders who hold registration rights, would materially interfere with the
successful marketing of such securities, then, such managing underwriter may
limit the number or amount of securities to be included in the registration such
that all holders of securities (including the Subscriber) who hold registration
rights and who have requested registration (collectively, "Security Holders")
shall participate in the underwritten public offering pro rata based upon the
total number or amount of securities held by each Security Holder (including the
number or amount of securities which each such holder may then be entitled to
receive upon the exercise of any option or warrant, or the exchange or
conversion of any security, held by such holder). If any such holder would thus
be entitled to include more securities than such holder requested to be
registered, the excess shall be allocated among other Security Holders pro rata
in a manner similar to that described in the previous sentence.
(d) If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Subscriber as a part of the written notice given pursuant to this
Section 4.2. In such event, the right to registration pursuant to this Section
4.2 shall be conditioned upon the Subscriber's participation in such
underwriting and the inclusion of the shares in the underwriting to the extent
provided herein. If such offering is to be effected through an underwritten
offering, the Subscriber shall (together with the Company and the other holders
(if any) distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. If the Subscriber disapproves of
the terms of any such underwriting, it may elect to withdraw therefrom by
written notice to the Company and the underwriter. Any shares excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
4.3 [Intentionally Omitted]
4.4 [Intentionally Omitted]
7
<PAGE> 8
4.5 Registration Procedures.
(a) If, whenever and to the extent that the Company is required
to use its best efforts to register shares of Common Stock pursuant to this
Article IV, the Company shall as promptly as practicable:
(i) Prepare and file with the SEC a registration
statement with respect to such shares, and cause such registration statement to
comply as to form and content in all material respects with the SEC's forms,
rules and regulations and use its reasonable best efforts to cause such
registration statement to become effective;
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement until such
time as all of such shares have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in such
registration statement;
(iii) Furnish to the Subscriber such number of conformed
copies of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits, except that the Company shall not
be obligated to furnish the Subscriber with more than three copies of such
exhibits), and such number of copies of the prospectus that is a part of such
registration statement (including each preliminary prospectus and any summary
prospectus), as the Subscriber may reasonably request in order to facilitate the
disposition of the Requested Shares or Additional Shares;
(iv) Use its best efforts to register or qualify the
Requested Shares or Additional Shares for sale under the Shares or blue sky laws
of such jurisdictions in the United States as the Subscriber shall reasonably
request in writing, and to keep such registration or qualification in effect for
so long as the period of distribution contemplated thereby, and do any and all
other acts and things which may be necessary or advisable to enable the
disposition in such jurisdictions of the Requested Shares or Additional Shares,
except that the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified, to subject itself to taxation in any such jurisdiction, or
to consent to general service of process in any such jurisdiction;
(v) Use its best efforts to furnish to Subscriber (i) an
opinion of counsel for the Company, dated the effective date of the registration
statement and (ii) a "comfort" letter addressed to the Subscriber signed by the
independent public accountants who have certified the Company's financial
statements included in the registration statement, covering substantially the
same matters with respect to the registration statement (and the prospectus
included therein) and, in the case of the accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuers' counsel and in accountants' letters delivered to
the underwriters in underwritten public
8
<PAGE> 9
offerings of securities; provided, however, that the Company shall not be
obligated to furnish such an accountants' letter except in connection with an
underwritten offering;
(vi) Notify the Subscriber, at any time when a prospectus
relating to a registration statement 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 any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and at the request
of the Subscriber prepare and furnish to the Subscriber a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such shares, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(vii) Use its best efforts to list the Requested Shares or
Additional Shares so registered on any securities exchange (including NASDAQ) on
which the Common Stock of the Company is then listed, if such shares are not
already so listed and if such listing is then permitted under the rules of such
exchange; and
(viii) Make available for inspection by the Subscriber, any
underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any the Subscriber,
underwriter, attorney, accountant or agent in connection with such registration
statement.
(b) Registration Expenses. The registration expenses incurred
in connection with any registration pursuant to this Article IV shall be paid in
full by the Company except that the Subscriber shall pay its own legal expenses
and all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of any Requested Shares or Additional Shares
owned by the Subscriber and sold pursuant to a registration statement effected
pursuant to this Article IV.
(c) Holdback Agreements. If any registration of Shares pursuant
to this Article IV shall be in connection with an underwritten public offering,
the Subscriber agrees not to effect any public sale or distribution, including
any sale under Rule 144 of any shares of Common Stock or any other security
convertible into or exchangeable or exercisable for any shares of Common Stock
(in each case, other than as part of such underwritten public offering) during
the ten (10) days prior to, and during the 90-day period (or such longer period
as any underwriter may reasonably request) beginning on, the effective date of
the related registration statement. The Company may impose stop-transfer
instructions with respect to the shares subject to the foregoing restrictions
during such period.
9
<PAGE> 10
(d) Term. Notwithstanding any other provision of this
Agreement, the respective covenants and agreements contained in this Section 4.5
shall continue until the date as of which Subscriber no longer owns any shares
of Common Stock. With respect to any registration made prior to the end of such
period, the covenants and agreements set forth in this Section 4.5 shall
continue in effect until all obligations hereunder with respect thereto are
fulfilled, and provided that the indemnification obligations contained in
subsections (e) and (f) shall survive for the period of the statute of
limitations with respect thereto.
(e) Indemnification. Each of the Subscriber and the Company
agree to indemnify the other in connection with any registration effected
pursuant to this Article IV as follows:
(i) To the extent permitted by law, the Company will
indemnify the Subscriber, its officers, directors, employees, subcontractors,
consultants, agents, legal counsel, and accountants and each underwriter, broker
or dealer, if any, of the Company's securities covered by such a registration
statement, and each person who controls the Subscriber or such underwriter,
broker or dealer within the meaning of Section 15 of the Securities Act, against
all expenses, claims, losses, damages, and liabilities (or actions, proceedings,
or settlements in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular, or other document (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 the
Company of the Securities Act, the Exchange Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification, or
compliance, and will reimburse the Subscriber and its officers, directors,
employees, subcontractors, consultants, agents, legal counsel, and accountants,
each such underwriter, broker or dealer, and each person who controls the
Subscriber or such underwriter, for any legal and other expenses reasonably
incurred in connection with investigating and defending or settling any such
claim, loss, damage, liability, or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability, or expense arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by or on behalf
of the Subscriber or such underwriter, broker or dealer and stated to be
specifically for use therein or any failure by the Subscriber or such
underwriter, broker or dealer to deliver a final prospectus or supplement or
amendment correcting earlier documents. It is agreed that the indemnity
agreement contained in this Article IV 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.
(ii) To the extent permitted by law, the Subscriber will
indemnify the Company, each of its officers, directors, partners, employees,
subcontractors, consultants, agents, legal counsel, and accountants and each
underwriter, if any, of the Company's securities covered by such a registration
statement, and each person who controls the Company
10
<PAGE> 11
or such underwriter within the meaning of Section 15 of the Securities Act,
against all expenses, claims, losses, damages, and liabilities (or actions,
proceedings, or settlements in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular, or other
document, 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 the Company, each of its officers, directors,
partners, employees, subcontractors, consultants, agents, legal counsel, and
accountants, each such underwriter, and each such control person, for any legal
and other expenses reasonably incurred in connection with investigating and
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, prospectus, offering circular, or other document in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Subscriber; provided, however, that the
Subscriber will be liable hereunder in any such case if and only to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in strict conformity with information pertaining to
the Subscriber, as such, furnished in writing to the Company by the Subscriber
stated to be specifically for use in such registration statement and prospectus;
provided, further, however, that the liability of the Subscriber hereunder shall
be limited to the proportion that the public offering price of the Requested
Shares or Additional Shares sold by the Subscriber under such registration
statement bears to the total public offering price of all securities sold
thereunder, but not in any event to exceed the proceeds received by the
Subscriber from the sale of the Requested Shares or Additional Shares covered by
such registration statement; and provided, further, however, that the
obligations of the Subscriber hereunder 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 Subscriber.
(iii) If the indemnification provided for in Section
4.5(e) is held by a court of competent jurisdiction to be unavailable to the
party seeking such indemnification (the "Indemnified Party") with respect to any
loss, liability, claim, damage, or expense referred to therein, then the party
which is required to provide indemnification pursuant to Section 4.5(e) (the
"Indemnifying Party") in lieu of indemnifying such Indemnified Party hereunder,
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 that resulted in such loss, liability, claim, damage, or
expense as well as any other relevant equitable considerations, provided,
however, that in any such case, (x) no such Indemnifying Party will be required
to contribute any amount in excess of the public offering price of all shares
offered by it pursuant to such registration statement; and (y) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation. 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
11
<PAGE> 12
Indemnified Party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.
(iv) Notwithstanding the foregoing or Section 4.5(f)
below, to the extent that the provisions on indemnification contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) Indemnification Procedures. Each party entitled to
indemnification under Section 4.5(e) of this Agreement (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 (if the claim is made by a
third party) 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 any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be 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 indemnification obligations to
the extent such failure is not prejudicial. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of the
Indemnified Party, consent to entry of any judgment or enter into any settlement
that 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. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
ARTICLE V
MISCELLANEOUS
5.1 Indemnity. Without prejudicing any other remedy available to the
parties at law or in equity and except as set forth in Article IV hereof, the
parties hereby covenant, immediately upon demand therefor, to indemnify, defend,
and hold each other (and their respective subsidiary, affiliated, or parent
entities, officers, directors, stockholders, attorneys, employees, agents, and
representatives) harmless from and against any and all costs, losses, damages,
penalties, fines, or expenses (including without limitation reasonable
attorneys' fees, court costs, and associated expenses) suffered, imposed upon,
or incurred by them in any manner arising out of, relating to, or in connection
with the following:
(a) any representation or warranty of either of the parties set
forth herein being untrue or incorrect in any material respect or the failure of
either of the parties to materially observe or timely and fully perform any of
their respective obligations hereunder;
12
<PAGE> 13
(b) any material misrepresentation in or material omission from
any information provided by the parties to each other in connection with this
Agreement or the consummation of the transactions contemplated herein; and
(c) any expenses, claims, costs, or other liabilities or
obligations of any description whatsoever arising from or in any way connected
with any claim that may be brought against either party by a stockholder of that
party.
5.2 Modification. Neither this Agreement nor any provisions hereof
shall be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is
sought.
5.3 Notices.
(a) Any notice, demand or other communication which any party
hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (i) deposited, postage prepaid, in a United
States mail letter box, registered or certified mail, return receipt requested,
addressed to such address as may be given herein, or (ii) delivered personally
at such address.
(b) Addresses:
If to the Company to:
Procyon Corporation
1150 Cleveland Street
Suite 410
Clearwater, Florida
Facsimile: ______________
Attn: John Anderson
If to Subscriber to:
RMS Limited Partnership
50 West Liberty Street
Suite 650
Reno, Nevada 89501
Facsimile (775) 333-0412
Attn: C. Thomas Burton, Jr.
5.4 Counterparts. This Agreement may be executed through the use of
separate signature pages or in any number of counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on all
parties, notwithstanding that all parties are not signatories to the same
counterpart.
13
<PAGE> 14
5.5 Binding Effect. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and
assigns. If the Subscriber is more than one person, the obligation of the
Subscriber shall be joint and several and the agreements, representations,
warranties and acknowledgments herein contained shall be deemed to be made by
and be binding upon each such person and its heirs, executors, administrators
and successors
5.6 Entire Agreement. This instrument contains the entire agreement of
the parties and there are no representations, covenants or other agreements
except as stated or referred to herein.
5.7 Assignability. This Agreement is not transferable or assignable by
the Subscriber.
5.8 Governing Law; Jurisdiction and Choice of Forum. Notwithstanding
the place where this Agreement may be executed by any of the parties hereto, the
parties expressly agree that all the terms and provisions hereof shall be
construed in accordance with and governed by the laws of the State of Florida.
5.9 Pronouns. The use herein of the masculine pronouns "him" or "his"
or similar terms shall be deemed to include the feminine and neuter genders as
well and the use herein of the singular pronoun shall be deemed to include the
plural as well.
5.10 Severability. The holding of any provision of this Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Agreement, which shall remain in full force and
effect.
5.12 Waiver. It is agreed that a waiver by either party of a breach of
any provision of this Agreement shall not operate, or be construed, as a waiver
of any subsequent breach by that same party
5.13 Further Assurances. The parties agree to execute and deliver all
such further documents agreements and instruments and take such other and
further action as may be necessary or appropriate to carry out the purposes and
intent of this Agreement.
14
<PAGE> 15
IN WITNESS WHEREOF, the Company and the Subscriber have executed this
Agreement as of the date first written above.
RMS LIMITED PARTNERSHIP, PROCYON CORPORATION,
a Nevada limited partnership a Colorado Corporation
/s/ RICHARD W. BAKER /s/ JOHN C. ANDERSON
By: Richard W. Baker By: John C. Anderson
Its: Secretary and Treasurer of Its: CEO and President
Crystal Diamond, Inc., and and Director
General Partner of RMS
Limited Partnership
