SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _____)*
ZANART ENTERTAINMENT INCORPORATED
(Name of Issuer)
COMMON STOCK, $.0001 PAR VALUE
(Title of Class of Securities)
989004-403
(Cusip Number)
RICHARD C. PFENNIGER, JR., 4400 BISCAYNE BOULEVARD, MIAMI, FL 33137
(305) 575-6000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
------------------------------------
(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 the Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [X].
Check the following box if a fee is being paid with the statement [ ] (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
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 filed out for a reporting person's
initial 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).
(Continued on following page(s))
Page 1 of 39
Exhibit Index on Page 10
<PAGE>
CUSIP NO. 989004-403 13D PAGE 2 OF 39 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PHILLIP FROST, M.D.
SS# ###-##-####
- --------------------------------------------------------------------------------
2 Check the appropriate Box if a Member of a Group (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFI- ------------------------------------------------------------
CIALLY 8 SHARED VOTING POWER
OWNED BY 533,333
EACH ------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
533,333
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
533,333
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.92%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 989004-403 13D PAGE 3 OF 39 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FROST-NEVADA, LIMITED PARTNERSHIP
IRS I.D. #59-2749083
- --------------------------------------------------------------------------------
2 Check the appropriate Box if a Member of a Group (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEVADA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFI- ------------------------------------------------------------
CIALLY 8 SHARED VOTING POWER
OWNED BY 533,333
EACH ------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
533,333
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
533,333
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.92%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 989004-403 13D PAGE 4 OF 39 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FROST-NEVADA CORPORATION
IRS I.D. #59-2749057
- --------------------------------------------------------------------------------
2 Check the appropriate Box if a Member of a Group (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEVADA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFI- ------------------------------------------------------------
CIALLY 8 SHARED VOTING POWER
OWNED BY 533,333
EACH ------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
533,333
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
533,333
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.92%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE>
Item 1. SECURITY AND ISSUER
This Schedule 13D relates to the Common Stock, $.0001 par value (the
"Shares") of Zanart Entertainment Incorporated (the "Issuer"). The principal
executive offices of the Issuer are located at 7641 Burnet Avenue, Van Nuys,
California, 91405.
Item 2. IDENTITY AND BACKGROUND.
This Schedule 13D is being filed by Phillip Frost, M.D.,
Frost-Nevada, Limited Partnership (the "Partnership"), and Frost-Nevada
Corporation (collectively, the "Reporting Persons"). Information regarding each
of the Reporting Persons is set forth below.
Dr. Frost's present principal occupation is as Chairman of the Board
of Directors and Chief Executive Officer of IVAX Corporation, a Florida
corporation, which through its subsidiaries is engaged primarily in the
research, development, manufacturing, marketing and distribution of health care
products. Dr. Frost's principal business address is 4400 Biscayne Boulevard,
Miami, Florida 33137.
The Partnership is a limited partnership organized and existing
under the laws of the State of Nevada with its principal office and business
address located at 3500 Lakeside Court, Suite 200, Reno, Nevada 89509. The
principal business of the Partnership is the investment in marketable
securities, precious metals and commodities and real estate located in Nevada.
Frost-Nevada Corporation is the sole general partner, and Dr. Frost is the sole
limited partner, of the Partnership.
Frost-Nevada Corporation is a corporation organized and existing
under the laws of the State of Nevada with its principal office and business
address located at 3500 Lakeside Court, Suite 200, Reno, Nevada 89509. The
principal business of Frost-Nevada Corporation is acting as the general partner
of the Partnership. Dr. Frost is the sole shareholder, a director and an officer
of Frost-Nevada Corporation. Neil Flanzraich is a director and an officer of
Frost-Nevada Corporation. Neil Flanzraich's present principal occupation is as
an attorney with the law firm of Heller, Ehrman, White & McAuliffe. Mr.
Flanzraich's principal business address is 525 University Avenue, Palo Alto,
California 94301-1900.
To the best knowledge of each of the Reporting Persons, neither such
Reporting Person nor Mr. Flanzraich has been convicted in any criminal
proceeding (excluding traffic violations and similar misdemeanors), or was a
party to any civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activity
subject to, federal or state securities laws or finding any violation with
respect to such laws during the last five years. Each of Dr. Frost and Mr.
Flanzraich is a citizen of the United States.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The aggregate purchase price of Shares of the Issuer purchased by
the Partnership reported in this Schedule 13D, was $100,050. The source of funds
used by the Partnership in making these purchases was working capital of the
Partnership. No portion of the consideration used by the Partnership in making
the purchases described above was borrowed or otherwise obtained for the purpose
of acquiring, holding, trading or voting the Shares.
Page 5 of 39
<PAGE>
Item 4. PURPOSE OF TRANSACTION.
The Shares were acquired by one or more of the Reporting Persons as
an investment. The Reporting Persons intend to monitor their investment in the
Shares on a continuing basis. The Reporting Persons may acquire additional
Shares (subject to availability of Shares of prices deemed favorable) in the
open market, in privately negotiated transactions, by tender offer or otherwise.
Alternatively, the Reporting Persons reserve the right to dispose of some or all
of their Shares in the open market or in privately negotiated transactions or
otherwise depending upon the course of actions that the Reporting Persons or the
Issuer pursue, market conditions and other factors.
On August 9, 1996, the Issuer entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Continucare Corporation ("Continucare").
Pursuant to the Merger Agreement, a wholly-owned subsidiary of the Issuer will
merge with and into Continucare (the "Merger") and each issued and outstanding
share of Continucare Common Stock (which, as a condition to closing, will not
exceed 8,300,000 shares) will be converted into the right to receive one Share
of the Issuer. Thereafter, the present shareholders of Continucare will own a
majority of the issued and outstanding Shares of the Issuer and will, therefore,
be able to control the election of the Board of Directors of the Issuer. The
present business of the Issuer will be sold or discontinued within three months
after the effective date of the Merger. Immediately upon the effectiveness of
the Merger, the present members of the Board of Directors will be required to
resign and will be replaced by seven directors to be appointed by Continucare.
Pursuant to the Merger Agreement, Dr. Frost will become the Vice
Chairman of the Board of Directors of the Issuer after the effectiveness of the
Merger. Additionally, the Partnership is the record owner of 1,000,000 shares of
Continucare Common Stock, representing approximately 12% of Continucare's issued
and outstanding capital stock. Upon the effectiveness of the Merger, the
Partnership will beneficially own 1,533,333 Shares of the Issuer, representing
approximately 13.38% of the Issuer's outstanding Shares after the effectiveness
of the Merger.
The consummation of the Merger is subject to various conditions as
set forth in the Merger Agreement.
The foregoing description of the Merger Agreement is not intended to
be complete and is qualified in its entirety by reference to the Merger
Agreement attached hereto as Exhibit 5 and incorporated herein by reference.
Although the foregoing represents the range of activities presently
contemplated by the Reporting Persons with respect to the Shares, it should be
noted that the possible activities of the Reporting Persons are subject to
change at any time. Except as otherwise stated herein, none of the Reporting
Persons have any present plans or proposals which relate to or would result in
any of the actions described in subparagraphs (a) through (j) of Item 4 of
Schedule 13D.
Page 6 of 39
<PAGE>
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is amended in its entirety and restated as follows:
AMOUNT OF SHARES PERCENTAGE
NAME BENEFICIALLY OWNED OF CLASS*
---- ------------------ ----------
Phillip Frost, M.D. 533,333 ** 16.92%
Frost-Nevada Corporation 533,333 ** 16.92%
Frost-Nevada, Limited 533,333 ** 16.92%
Partnership
- ----------------------------
* Based on 3,152,983 Shares consisting of 2,902,983 Shares outstanding as of
August 22, 1996, as reported on the Issuer's Schedule 14C Information
Statement, dated August 27, 1996, and assumes the conversion by the
Partnership of warrants to purchase 250,000 Shares. The number of Shares
and warrants noted here have been restated to reflect the effects of a
1-for-2 reverse stock split effected by the Issuer on December 31, 1994.
** These Shares are owned of record by one or more of such Reporting Persons.
As the sole limited partner of the Partnership and the sole shareholder, a
director and an officer of Frost-Nevada Corporation, the general partner
of the Partnership, Dr. Frost may be deemed a beneficial owner of the
Shares. Record ownership of the Shares may be transferred from time to
time among any or all of Dr. Frost, the Partnership and Frost-Nevada
Corporation. Accordingly, solely for purposes of reporting beneficial
ownership of the Shares pursuant to section 13(d) under the Securities
Exchange Act of 1934, as amended, each of Dr. Frost, the Partnership and
Frost-Nevada Corporation will be deemed to be the beneficial owner of
Shares held by any of them.
Except as described herein under Items 4 and 6, none of the
Reporting Persons has engaged in any transaction involving Shares of the Issuer
during the past sixty days.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Except as described herein, none of the Reporting Persons is
currently a party to any contract, arrangement, understanding or relationship
with any person with respect to any securities of the Issuer.
On February 9, 1994, the Issuer granted the Partnership warrants to
purchase 250,000 shares at $4.00 per Share as adjusted to reflect a 1-for-2
reverse stock split effected by the Issuer on December 31, 1994, which expire on
February 8, 1999. These warrants were issued to the Partnership in connection
with a $500,000 loan made by the Partnership to the Issuer. The loan was repaid
in May 1995.
On August 9, 1996, the Issuer entered into the Merger Agreement
pursuant to which a subsidiary of the Issuer will merge with and into
Continucare. Pursuant to the Merger Agreement, Dr. Frost will, upon the
effectiveness of the Merger, become the Vice Chairman of the Board of Directors
of the Issuer and the Partnership will acquire additional shares of the Issuer
by virtue of the conversion of its shares in Continucare into Shares of the
Issuer.
Page 7 of 39
<PAGE>
Pursuant to the Merger Agreement, the Issuer has also agreed to
file, after the effective date of the Merger, a Registration Statement on Form
S-3 or other appropriate form providing for the sale (i) by the holders of
Shares of the Issuer received upon the exercise of all outstanding options and
warrants to acquire Shares of the Issuer (including the warrants currently held
by the Partnership) and (ii) by the shareholders of Continucare of the 8,300,000
Shares of the Issuer to be received in connection with, and as consideration
for, the Merger (including the 1,000,000 Shares to be received by the
Partnership in the Merger).
See the description of the Merger provided in Item 4 above and the
copy of the Merger Agreement attached hereto as Exhibit 5.
The descriptions of the warrants contained herein is not intended to
be complete and is qualified in its entirety by reference to the warrant
agreement attached hereto as Exhibit 4 and incorporated herein by reference.
Item 7. MATERIAL TO BE FILED AS EXHIBITS
1. Joint Filing Agreement.
2. Power of Attorney granted to Phillip Frost, M.D. by Neil
Flanzraich.
3. Second Amended and Restated Agreement of Frost-Nevada, Limited
Partnership, Frost-Nevada Corporation and Phillip Frost, M.D.
filed pursuant to Rule 13d-l(f)(l)(iii) of the Securities and
Exchange Commission.
4. Warrant to Purchase Common Stock of Zanart Entertainment
Incorporated (f/k/a Zanart Publishing Incorporated) issued
February 9, 1994.
5. Agreement and Plan of Merger, dated August 9, 1996, by and
among Continucare Corporation, Zanart Entertainment
Incorporated and Zanart Subsidiary, Inc. (incorporated by
reference to Zanart Entertainment Incorporated's Current
Report on Form 8-K, dated August 9, 1996).
Page 8 of 39
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned certify that the information set forth in this
Statement is true, complete and correct.
/s/ PHILLIP FROST, M.D.
--------------------------------------
Date: September 6, 1996 Phillip Frost, M.D.
FROST-NEVADA, LIMITED
PARTNERSHIP
*
--------------------------------------
Date: September 6, 1996 Neil Flanzraich
President of Frost-Nevada Corporation,
General Partner
FROST-NEVADA CORPORATION
*
--------------------------------------
Date: September 6, 1996 Neil Flanzraich
President
*By /s/ PHILLIP FROST, M.D.
- --------------------------------------
Phillip Frost, M.D.
(Attorney-in-fact pursuant
to Power of Attorney)
Page 9 of 39
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
1 Joint Filing Agreement.
2 Power of Attorney granted to Phillip Frost, M.D. by Neil Flanzraich.
3 Second Amended and Restated Agreement of Frost-Nevada, Limited
Partnership, Frost-Nevada Corporation and Phillip Frost, M.D. filed
pursuant to Rule 13d-l(f)(l)(iii) of the Securities and Exchange
Commission.
4 Warrant to Purchase Common Stock of Zanart Entertainment
Incorporated (f/k/a Zanart Publishing Incorporated issued February
9, 1994.
5 Agreement and Plan of Merger, dated August 9, 1996, by and among
Continucare Corporation, Zanart Entertainment Incorporated and
Zanart Subsidiary, Inc. (incorporated by reference to Zanart
Entertainment Incorporated's Current Report on Form 8-K, dated
August 9, 1996).
Page 10 of 39
EXHIBIT 1
The undersigned hereby agree that this Amendment to the Schedule 13D filed
by us with respect to the Common Stock of Zanart Entertainment Incorporated is
filed on behalf of each of us.
/s/ PHILLIP FROST, M.D.
-------------------------------------
Date: September 6, 1996 Phillip Frost, M.D.
FROST-NEVADA, LIMITED
PARTNERSHIP
*
-------------------------------------
Date: September 6, 1996 Neil Flanzraich
President of Frost-Nevada Corporation,
General Partner
FROST-NEVADA CORPORATION
*
-------------------------------------
Date: September 6, 1996 Neil Flanzraich
President
*By/s/ PHILLIP FROST, M.D.
---------------------------------
Phillip Frost, M.D.
(Attorney-in-fact pursuant
to Power of Attorney)
Page 11 of 39
EXHIBIT 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, in his capacity as
President of Frost-Nevada Corporation, a Nevada corporation (the "Corporation"),
does hereby make, constitute and appoint PHILLIP FROST, M.D. his true and lawful
attorney-in-fact, for him and in his name, place and stead, for the sole and
limited purpose of signing any and all statements or reports pursuant to the
Securities Exchange Act of 1934, and any amendments thereto, on behalf of the
Corporation, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent 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 the undersigned might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 24th day of May, 1996.
/s/ NEIL FLANZRAICH
-------------------------------------
NEIL FLANZRAICH, President
Page 12 of 39
EXHIBIT 3
SECOND
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
FROST-NEVADA LIMITED PARTNERSHIP
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP (the "Agreement") is made and entered into as of the 28th day of
December, 1995, by and among FROST-NEVADA CORPORATION, a Nevada corporation, as
the general partner (the "General Partner") and PHILLIP FROST, as the limited
partner (the "Limited Partner").
W I T N E S S E T H:
WHEREAS, on December 30, 1986, the General Partner executed a
Certificate of Limited Partnership forming a limited partnership known as
"FROST-NEVADA LIMITED PARTNERSHIP" (the "Partnership"), under the Nevada Uniform
Limited Partnership Act (the "Act") as in effect at that time in the State of
Nevada, which Certificate of Limited Partnership was filed in the Public Records
of the Secretary of State of Nevada on December 30, 1986; and
WHEREAS, the General Partner and Limited Partner have
previously executed a First Amended and Restated Certificate of Limited
Partnership of FROST-NEVADA LIMITED PARTNERSHIP on February 16, 1987 and a
certificate thereof was filed m the Public Records of the Secretary of State of
Nevada on March 16, 1989;
WHEREAS, the General Partner and the Limited Partner have
executed this Second Amended and Restated Agreement of Limited Partnership of
FROST-NEVADA LIMITED PARTNERSHIP as of December 28, 1995; and
WHEREAS, this Agreement, dated as of December 27, 1995, is
made and entered into by and between the General Partner and the Limited Partner
for the purpose of setting forth the rights, obligations, and duties of the
General Partner and the Limited Partner.
NOW, THEREFORE, the parties hereto hereby agree that the
Partnership shall be governed and operated pursuant to the terms of this
Agreement of Limited Partnership as hereinafter set forth.
<PAGE>
ARTICLE I
NAME, TERM, PRINCIPAL ADDRESS AND REGISTERED AGENT
1.1 NAME. The name of the Partnership is the FROST-NEVADA
LIMITED PARTNERSHIP.
1.2 TERM. The term of the Partnership will continue in full force and
effect until December 31, 2055, unless sooner terminated in accordance with the
Act (as such term is defined herein) or provisions of this Agreement.
1.3 PRINCIPAL PLACE OF BUSINESS. The office and principal place of
business of the Partnership shall be maintained at 3500 Lakeside Court Reno,
Washoe County, Nevada 89509. The General Partner may from time to time change
such office and principal place of business and in such event the General
Partner shall notify the other Partners, in writing, at least ten (10) days
prior to the effective date of any such change. The General Partner may
establish additional places of business of the Partnership when and where
required by the Partnership's business.
1.4 ADDRESSES. The address of each Partner is as follows:
GENERAL PARTNER:
Frost-Nevada Corporation
3500 Lakeside Court
Reno, Nevada 89509
LIMITED PARTNER:
Phillip Frost, M.D.
8800 N.W. 36th Street
Miami, Florida 33178
A Partner may change its address by written notice to the Partnership and each
of the other Partners.
1.5 REGISTERED OFFICE AND REGISTERED AGENT. The location of the
Registered Office of the Partnership shall be at 3500 Lakeside Court, Reno,
Nevada 89509 and the name of the Registered Agent of the Partnership at such
office shall be Walther, Key, Maupin, Oats, Cox, Klaich & Legoy. Said Registered
Agent shall keep and maintain at such address the records of the Partnership
required to be kept and maintained at such address by the Act.
- 2 -
<PAGE>
ARTICLE II
BUSINESS OF THE PARTNERSHIP
2.1 PURPOSE. The purpose of the Partnership is to invest in all types
of (i) securities, including without limitation, stocks, bonds, limited
partnership interests and option contracts for the purchase or sale of
securities or any group or index of securities, (ii) precious metals, including
without limitation, contracts for the future delivery of precious metals and
option contracts for the purchase or sale of precious metals or futures
contracts on precious metals; (iii) commodities, including without limitation,
contracts for the future delivery of commodities and option contracts for the
purchase or sale of commodities or future contracts on commodities, and (iv)
real property on the State of Nevada through the acquisition, holding,
construction, development, operation, improvement, leasing, sale or other
dealings in real property.
2.2 POWERS. Incident to its purpose, the Partnership is authorized to
purchase, invest, hold, mortgage, pledge, sell, lease, manage, construct,
renovate, operate, improve, alter, transfer, joint venture or otherwise convey
and encumber all or any portion of the Partnership properties and exercise all
other rights, powers and privileges and other incidences of ownership with
respect thereto at any time and from time to time, to borrow or raise moneys
without limitations and to do all other things necessary or appropriate to carry
out the foregoing purpose.
ARTICLE III
CERTAIN DEFINITIONS
3.1 ACT. The Revised Nevada Uniform Limited Partnership
Act, as from time to time amended.
3.2 ADJUSTED CAPITAL CONTRIBUTION. The amount contributed
to the capital of the Partnership by a Partner as provided in
Article IV.
3.3 AFFILIATE. Any person or entity that directly or indirectly
controls, is controlled by or is under common control with any other person or
entity. For this purpose, the term "control" shall mean the direct or indirect
ownership of twenty-five (25 %) or more of the beneficial interests or voting
power of any entity or the spouse, lineal ascendants, lineal descendants and the
brothers and sisters of a Person, as applicable.
3.4 AUTHORIZED EXPENSES. Expenses that: (a) are specifically consented
to in writing by the Limited Partner; (b) are authorized as part of an operating
budget that is consented to in writing by the Limited Partner; or (c) do not,
when aggregated with all other Partnership expenses that are not authorized by
parts (a) or (b) above, total more than $2,500 in a single calendar year.
- 3 -
<PAGE>
3.5 AVAILABLE CASH. All cash of the Partnership resulting from normal
business operations (as distinguished from Extraordinary Events or the sale of
all or substantially all of the Partnership's property and/or the dissolution of
the Partnership), including, without limitation, dividend income, rental income,
and any other income derived from the Partnership property which the General
Partner, in its sole and absolute discretion, determines is available for
distribution to the Partners after payment of all Partnership cash expenditures,
including but not limited to, real and personal property taxes, use taxes,
principal and interest payments then due on all loans, (including any mortgages
encumbering the Partnership's property), expenses incident to the construction
and rental of the Partnership property, insurance, present maintenance,
including, but not limited to management fees, brokerage fees, or other fees
incurred by the Partnership, capital improvements, accounting and legal fees,
and other costs and expenses of the Partnership, and the setting aside of any
amounts which the General Partner may determine, in its discretion, to be
necessary as a reserve for operating expenses, capital improvements and
contingencies.
3.6 CAPITAL ACCOUNT. The account established and maintained by
the Partnership for each Partner, as set forth in Section 4.6 hereof.
3.7 CAPITAL CONTRIBUTION. The amount of money and the initial
fair market value of any property (other than money) contributed to the
Partnership by a Partner with respect to the Partnership Interest held by such
Partner.
3.8 CERTIFICATE. The certificate of limited partnership filed
with the Secretary of State of the State of Nevada, as the same may be amended
from time to time.
3.9 CODE. The Internal Revenue Code of 1986, as same may
be amended from time to time.
3.10 EXTRAORDINARY EVENT. Any financing, refinancing, insurance
award (other than for substantially complete destruction of all or substantially
all of the Partnership's property) and sale of Partnership assets (but less than
all or substantially all of such assets), which in accordance with generally
accepted accounting principles are attributable to capital but which do not
result in a dissolution of the Partnership.
3.11 ORIGINAL CAPITAL CONTRIBUTION. The amount contributedto the
capital of the Partnership by a Partner as provided in Article IV.
3.12 PARTNERS. Collectively, the Limited Partner and the General
Partner.
3.13 PARTNERSHIP. FROST-NEVADA LIMITED PARTNERSHIP, a Nevada
limited partnership.
3.14 PARTNERSHIP INTEREST. The entire ownership interest
of a Partner in the Partnership at the relevant time, including the right of
such Partner to any and all benefits to which a Partner
-4-
<PAGE>
may be entitled as provided in this Agreement, together with the obligations of
such Partner to comply with all the terms and provisions of this Agreement. A
Partnership Interest does not include any rights or obligations that a Partner
may have for providing services or goods for which it is separately compensated
as a Person who is not a Partner.
3.15 PERSON. Any individual, corporation, trust, partnership or
other form of association.
3.16 PROFITS AND LOSSES. The Partnership's income or loss, as the case
may be, for each fiscal year of the Partnership determined in accordance with
Code Section 703(a) (including all items of income, gain, deduction or loss that
are required to be separately stated). The Partnership's Profits and Losses
shall also include: (i) income of the Partnership which is exempt from tax; and
(ii) the excess of the deductions for depletion over the basis of the property
subject to depletion. Similarly, the Partnership's Losses shall include
expenditures for the Partnership which are not deductible in computing its
taxable income and are not properly chargeable to a capital account.
Notwithstanding anything to the contrary in this Agreement, Profits and Losses
shall not include allocations under Code Section 704(c) (which are set forth at
Section 4.10 hereof or Regulatory Allocations).
3.17 REGULATORY ALLOCATIONS. The allocations set forth at
Sections 4.10, 4.11, 4.12, 4.13 and 4.15.
3.18 SERVICE. Internal Revenue Service.
3.19 SUBSTITUTED LIMITED PARTNER. A person who has acquired a
Partnership Interest from a Limited Partner and who has been
admitted to the Partnership as a Limited Partner pursuant to Article
VI.
ARTICLE IV
CONTRIBUTIONS TO CAPITAL; DISTRIBUTIONS; ALLOCATIONS
4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS.
4.1.1 CAPITAL CONTRIBUTIONS OF THE GENERAL
PARTNER. The General Partner has contributed $1,085,690.23 in
marketable securities to the Partnership.
4.1.2 CAPITAL CONTRIBUTIONS OF THE LIMITED
PARTNER. The Limited Partner has contributed the assets set forth at
Exhibit 4.1.2.
4.2 WITHDRAWAL AND RETURN OF CAPITAL. Except upon the dissolution and
liquidation of the Partnership, a Partner shall have no right to withdraw any of
its Capital Contributions without the consent of the General Partner. Under
circumstances requiring a return of a
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Partner's Capital Contributions, no Partner shall have the right to receive
property other than cash except as may be specifically provided herein.
4.3 ADDITIONAL CAPITAL CONTRIBUTIONS. The Partnership may
accept additional Capital Contributions to the extent that such contributions
are authorized by the General Partner and are in accordance with the
requirements of Section 5.3 hereof.
4.4 LOANS TO THE PARTNERSHIP. The Partners may make loans to the
Partnership from time to time, as authorized by the General Partner (subject to
the requirements of Section 5.3 hereof), in excess of their contributions to the
capital of the Partnership, and any such loans shall not be treated as a
contribution to the capital of the Partnership for any purposes hereunder, nor
shall any such loans entitle such Partner to any increase in his share of the
profits, losses or distributions of the Partnership. The amount of any such loan
shall be an obligation of the Partnership to such Partner and shall bear
interest at a rate agreed to by the General Partner. Any such loan shall be
repaid prior to any distributions being made to the Partners pursuant to
Sections 4.8.2 and 9.3 hereof.
4.5 CAPITAL ACCOUNTS. A separate Capital Account shall be determined
and maintained for each Partner in accordance with the rules of Treas. Reg.
/section/ 1.704-l(b)(2)(iv). Except as otherwise provided in Treas. Reg.
/section/ 1.704-l(b)(2)(iv), each Partner's Capital Account shall initially
consist of such Partner's Capital Contribution and shall be further credited
with each Partner's additional Capital Contributions and allocable share of the
Partnership's income, as determined in Section 4.6 below, and shall be debited
by all distributions made by the Partnership to a Partner together with each
such Partner's allocable share of the Partnership's losses, as determined in
Section 4.6 below. In the event that the Partnership, in conformity with the
above Regulations, has property on its books at a value ("book value") greater
than or less than its adjusted tax basis, the Partners' Capital Accounts shall
be adjusted to reflect only allocations to them of depreciation, amortization
and gain or loss as computed for book purposes (and not for tax purposes) with
respect to such property. In such event, items of book depreciation,
amortization and gain or loss shall be calculated in conformity with the rules
of Treas. Reg. /section/ 1.704-l(b)(2)(iv)(g). For purposes of calculating a
Partner's Capital Account, the following adjustments shall be included as
Profits and Losses:
(a) any and all adjustments made to Capital Accounts
pursuant to Treas. Reg. /section/ 1.704-l(b)(2)(iv)
(f) (optional revaluation of Capital Accounts), as it
may be amended or supplemented from time to time;
(b) any and all adjustments made to Capital Accounts
pursuant to Treas. Reg. /section/ 1.704-l(b)(2)(iv)
(e) (adjustment resulting from property
distribution), as it may be amended or supplemented
from time to time; and
(c) any and all adjustments made to Capital Accounts
pursuant to Treas. Reg. /section/ 1.704-l(b)(2)(iv)
(n)(4) (as it may be amended or supplemented from
time
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to time), as it relates to distributions other
than in liquidation of a Partner's Interest in the
Partnership.
4.6 ALLOCATION OF INCOME AND LOSSES.
All items of Profits and Losses incurred by the Partnership
shall be allocated to the Partners as follows:
General Partner 1 %
Limited Partner 99 %
4.7 PRINCIPLES OF ALLOCATION. It is the intention of the Partners
that the allocations of Profits and Losses hereunder have substantial economic
effect in accordance with the tests therefor set forth in the Treasury
Regulations under Section 704(b) of the Internal Revenue Code. Accordingly,
allocations not specifically provided for in this Agreement shall be made in
such a manner as shall conform to the allocation rules and principles as set
forth in such Regulations as in effect from time to time, and the Capital
Accounts of the Partners shall be maintained in accordance with the provisions
hereof construed and interpreted in the light of such Regulations.
4.8 DISTRIBUTIONS.
4.8.1 Available Cash shall be distributed periodically, as
determined by the General Partner in its sole discretion, to the Partners as
follows:
General Partner 1 %
Limited Partner 99%
4.8.2 Net Proceeds from an Extraordinary Event which are
not reinvested in other real property shall, to the extent determined by the
General Partner as being available for distribution, be distributed as
expeditiously as possible, in the following order of priority:
(a) first, to the payment of any unpaid
principal and interest on any third-party financing then
due;
(b) next, to the prepayment of any unpaid
principal and interest on any third-party financing, if and
to the extent determined by the General Partner;
(c) next, to the repayment of any loans made by
the Partners to the Partnership pursuant to Section 4.4 hereof, in
proportion to the total amount of principal and interest payable to
each such Partner, such distributions being treated first as in payment
of accrued interest on such loans and next as in payment of principal
of such loans:
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(d) next, to the Partners in proportion to their
positive capital account balances until such Capital Account balances
have been reduced to zero; and
(e) the balance, if any, as follows:
General Partner 1 %
Limited Partner 99 %
4.8.3 Distributions in connection with the sale
of all or substantially all of the Partnership's property and/or the dissolution
and winding up of the Partnership shall be made in accordance with Section 9.3
of this Agreement.
4.8.4 The Partnership, with the Partners' mutual consent, may
make additional distributions of Partnership property.
4.9 ALLOCATIONS OF CERTAIN TAX ITEMS. If the fair market value of any
Partnership property differs from its adjusted basis as of the day it is
contributed to the Partnership, then items of income, gain, loss, deductions and
credit related to such property for tax purposes shall be allocated between the
Partners so as to take into account the variation between the adjusted basis of
the property for tax purposes and its fair market value in the manner provided
for under Code Section 704(c). Except as may be otherwise required by Code
/section/ 704(c), depreciation, amortization and gain or loss, as computed for
tax purposes with respect to Partnership property which has a book value greater
or less than its adjusted tax basis, shall be allocated among the Partners in a
manner that takes into account the variation between the adjusted tax basis and
the book value of such property, in the same manner as variations between the
adjusted tax basis and fair market value of property contributed to the
Partnership are taken into account in determining the Partners' share of tax
items under Code ss. 704(c), as required by Treas. Reg. /section/1.704-l(b)(2)
(iv)(f)(4) and Treas. Reg. /section/ 1.704-l(b)(4)(i). In complying with the
requirements of Code ss. 704(c), the General Partner is authorized to utilize
any method permitted by the Treasury Regulations under Code ss. 704(c).
Allocations pursuant to this Section 4.9 are solely for purposes of complying
with federal, state and local tax requirements, and shall not affect, or in any
way be taken into account, in computing any Partner's share of income, gain,
loss, deduction or credit.
4.10 MINIMUM GAIN CHARGEBACK. Notwithstanding any other provision of
this Article IV, if there is a net decrease in partnership minimum gain (as such
term is defined in Treas. Reg. /section/ 1.704-2(f)) during any Partnership
fiscal year, a Partner shall be specially allocated items of Partnership income
and gain for such year (and, if necessary, subsequent years) in an amount equal
to its share of the net decrease in the minimum gain. The items to be so
allocated shall be determined in accordance with Section 1.704-2(f) of the
Treasury Regulations. This Section 4.10 is intended to comply with the minimum
gain chargeback requirement in such Section of the Treasury Regulations and
shall be interpreted consistently therewith.
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4.11 PARTNER NONRECOURSE DEDUCTIONS. Any partner nonrecourse deductions
for any fiscal year or other period shall be allocated to the Partner who bears
the risk of loss with respect to the loan to which such partner nonrecourse
deduction is attributable in accordance with Regulations Section 1.704-2(i), if
such sections of the Regulations become applicable to the Partnership. Partner
nonrecourse debt minimum gain shall be charged back to the Partners in
accordance with Regulations Section 1.704-2(i)(4).
4.12 QUALIFIED INCOME OFFSET. In the event the Limited
Partner unexpectedly receives any adjustments, allocations, or distributions
described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations, items of Partnership income
and gain shall be specially allocated to each such Partner in an amount and
manner sufficient to eliminate, to the extent required by the Regulations, the
adjusted capital account deficit (as such term is used in Section 1.704-2(fl of
the Treasury Regulations) of the Limited Partner as quickly as possible,
provided that an allocation pursuant to this Section 4.12 shall be made only if
and to the extent that the Limited Partner would have an adjusted capital
account deficit after all other allocations provided for in this Article IV have
been tentatively made as if this Section 4.12 were not in the Agreement. This
Section 4.12 is intended to constitute a "qualified income offset" within the
meaning of Section 1.704-1(b)(2)(ii)(d)(3) of the Treasury Regulations, and is
to be interpreted, to the extent possible, to comply with the requirements of
such Regulation as it may be amended or supplemented from time to time.
4.13 LOSS LIMITATION. The Losses allocated to the Limited Partner
pursuant to Section 4.7 hereof shall not exceed the maximum amount of Losses
that can be so allocated without causing the Limited Partner to have a deficit
Capital Account at the end of any Fiscal Year after: (a) increasing a Limited
Partner's Capital Account by amounts that he is obligated to restore pursuant to
this Agreement or is deemed obligated to restore pursuant to the penultimate
sentences of Treas. Reg. /section/ 1.704-2(g)(1) and 1.704-2(i)(5), as they may
be amended or supplemented from time to time; and (b) decreasing a Limited
Partner's Capital Account by the items described in Treas. Reg. /section/
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(d)(5) and 1.704- 1(b)(2)(d)(6), as it may
be amended or supplemented from time to time (an "Adjusted Deficit Capital
Account"). All Losses in excess of the limitations set forth in this Section
4.13 shall be allocated to the General Partner.
4.14 FUTURE AMENDMENTS; REVALUATION OF PARTNERSHIP PROPERTY. The
General Partner will have complete discretion to amend the provisions of this
Agreement if such amendment would not have a material adverse effect on the
Partners and if, in the opinion of counsel for the Partnership, such amendment
is advisable for purposes of complying with Section 1.704-1 and 1.704-2 of the
Treasury Regulations (as it may be amended or supplemented from time to time).
The General Partner may, in its sole and absolute discretion, revise the
Partners' Capital Accounts to reflect a revaluation of the Partnership property,
provided that the revaluation adheres to the requirements of Section
1.704-1(b)(2)(iv)(fl of the Treasury Regulations.
4.15 GROSS INCOME ALLOCATION. In the event the Limited Partner has a
deficit Capital Account at the end of any Partnership fiscal year which is in
excess of the sum of (i) the amount
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the Limited Partner is obligated to restore pursuant to any provision of this
Agreement, and (ii) the amount the Limited Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Treas. Reg. /section/
1.704-2(g)(1) and 1.704-2(i)(5), the Limited Partner shall be specially
allocated items of Partnership income and gain in the amount of such excess as
quickly as possible, provided that an allocation pursuant to this Section 4.15
shall be made only if and to the extent that the Limited Partner would have a
deficit Capital Account in excess of such sum after all other allocations
provided for in this Article 4 have been made, as if Article 4.12 hereof and
this Section 4.15 were not in the Agreement.
4.16 CURATIVE ALLOCATIONS. In the event that income, loss or items
thereof are allocated to one or more Partners pursuant to Sections 4.10, 4.11,
4.12, 4.13, and 4.15, above, subsequent income and loss first will be allocated
(subject to the provisions of Sections 4.10, 4.11, 4.12, 4.13, and 4.15) to the
Partners in a manner designed to result in each Partner having a Capital Account
balance equal to what it would have been if the original allocation of income or
loss pursuant to Sections 4.10, 4.11, 4.12, 4.13, and 4.15 had not occurred.
ARTICLE V
MANAGEMENT OF THE PARTNERSHIP
5.1 RIGHTS AND DUTIES OF THE GENERAL PARTNER. Except as otherwise
provided herein, the General Partner shall have full, exclusive and complete
authority and discretion in the management and control of the business of the
Partnership and shall make all decisions affecting the business of the
Partnership. Further, the General Partner shall have all of the rights and
powers of a general partner as provided in the Act and as otherwise provided by
law or this Agreement, and any action taken by the General Partner shall
constitute the act of and serve to bind the Partnership. The General Partner
shall manage and control the affairs of the Partnership to the best of its
ability and shall use its best efforts to carry out the business of the
Partnership as set forth in Article II.
5.2 PARTNERSHIP CHECKS. Any check or checks to be made or issued by the
Partnership (with respect to any transaction or series of related transactions)
shall require the signature of a person who is designated as an authorized
signatory by the General Partner. Notwithstanding the foregoing, the General
Partner may delegate its check signing authority to any other person and the
exercise of the authority granted pursuant to such delegation shall constitute
the act of the General Partner who delegated such authority.
5.3 LIMITATIONS ON POWERS OF GENERAL PARTNER.Notwithstanding the
generality of Section 5.1 hereof, the General Partner shall not be empowered,
without the written consent of the Limited Partner, to:
(a) do any act in contravention of this Agreement;
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(b) change or reorganize the Partnership into any
other legal form;
(c) sell, exchange, encumber, assign, pledge, or
otherwise transfer or grant a security interest in any or
all of the assets of the Partnership;
(d) incur, renew, extend, refinance, pay, or
otherwise discharge indebtedness of the Partnership, other
than in the ordinary course of the Partnership's business
hereof;
(e) pay or incur expenses (including) that do not
qualify as Authorized Expenses;
(f) settle a lawsuit or any other dispute (including,
but not limited to, a dispute concerning the income tax
liabilities associated with income and loss reported by the
Partnership);
(g) enter into an insurance policy;
(h) agree to lease a rental space;
(i) set aside a reserve;
(j) confess a judgment against the Partnership;
(k) amend this Agreement except as provided for in
Section 4.14;
(1) require additional Capital Contributions from one
or more of the Partners; or
(m) offer additional Partnership Interests.
5.4 ROLE OF LIMITED PARTNER. The Limited Partner shall not participate
in or have any control over the Partnership business or shall have any authority
or right to act for or bind the Partnership. The Limited Partner hereby consents
to the exercise by the General Partner of the powers conferred upon it by this
Agreement.
5.5 DUTIES AND OBLIGATIONS OF GENERAL PARTNER.
5.5.1 As more fully set forth in Section 5.1
hereof, the General Partner shall take all actions which may be necessary or
appropriate for the continuation of the Partnership's valid existence as a
limited partnership under the laws of the State of Nevada and to enable the
Partnership to conduct the business in which it is engaged.
5.5.2 The General Partner shall devote such time to the
Partnership as may be sufficient for the proper performance of its duties
hereunder.
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5.6 PARTNERSHIP AGREEMENTS WITH AFFILIATES OF GENERAL PARTNER. The
General Partner may utilize the services of Affiliates, as designated by the
General Partner. Affiliates of the General Partner may be engaged to perform
services, including but not limited to, the following: investment advice,
renovation, marketing, acquisition of insurance, obtaining of financing,
recordkeeping, participation at shareholder meetings, data processing,
procurement of licenses, services ordinarily performed by independent
contractors, and other administrative activities. The validity of any
transaction, agreement or payment involving the Partnership and any Affiliate of
the General Partner otherwise permitted by the terms of this Agreement shall not
be affected by reason of the relationship between the General Partner and such
Affiliate or the approval of said transaction, agreement or payment by the
General Partner.
5.7 PAYMENT OF EXPENSES. All expenses of the Partnership shall be paid
by the Partnership. In the event the Partnership expenses are not billed
directly to and paid by the Partnership, it shall reimburse the General Partner
or pay their respective Affiliates for such expenses, including but not limited
to: (a) organizational costs, including, legal and accounting fees; (b) the
actual cost to the General Partner of goods, services and materials used for or
by the Partnership; and (c) all other direct expenses actually incurred by the
General Partner or their respective Affiliates for or on behalf of the
Partnership.
5.8 INDEMNIFICATION OF THE GENERAL PARTNER. The General Partner and all
Affiliates of the General Partner and their respective shareholders, partners,
officers, directors and employees (hereinafter referred to individually as an
"Indemnitee") shall not be liable to the Partnership or any other Partner for
any loss incurred in connection with any action or inaction of an Indemnitee, if
such Indemnitee, in good faith, determined that such course of conduct was in
the best interest of the Partnership and did not constitute negligence of such
Indemnitee. An Indemnitee shall be indemnified and held harmless by the
Partnership against any and all losses, judgments, liabilities, expenses, costs
(including attorney's fees) actually and necessarily incurred by said Indemnitee
in connection with the defense of any suit or action (including, without
limitation, all costs of appeal) to which the Indemnitee is made a party by
reason of its position herein, to the fullest extent permitted under the
provisions of the Act or any other applicable statute. Nothing herein shall make
any Affiliate of the General Partner liable in any way for the acts, omissions,
obligations or liabilities of the General Partner.
5.9 TAX MATTERS PARTNER. If the Partnership is required by the Code or
the Treasury Regulations to have a Tax Matters Partner ("TMP"), the General
Partner shall serve as the TMP for the Partnership. The TMP agrees to act as a
liaison between the Partnership and the Service in connection with all
administrative and judicial proceedings involving tax controversies of the
Partnership, and agrees to assume all the rights and duties of a TMP as set
forth in the Code and the Regulations promulgated thereunder. These rights and
duties include, but are not limited to:
(a) the duty to notify and keep all other Partners informed of
all administrative and judicial proceedings, as required by Section
6223(g) of the Code, and to furnish to
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each Partner, who so requests in writing, a copy of each notice or other
communication received by the TMP from the Service;
(b) the right to settle any claims by the Service
against the Partnership;
(c) the right to initiate judicial proceedings
contesting adverse determinations by the Service against
the Partnership;
(d) the right to enter into an agreement to extend
the statute of limitations;
(e) the right to employ experienced tax counsel to
represent the Partnership in connection with any audit or investigation
of the Partnership by the Service, and in connection with all
subsequent administrative and judicial proceedings arising out of such
audit. The fees and expenses of such counsel shall be a Partnership
expense and shall be paid by the Partnership. Such counsel shall be
responsible for representing the Partnership; it shall be the
responsibility of the General Partner and of the Limited Partner, at
their expense, to employ tax counsel to represent their respective
separate interests; and
(f) arrange for the preparation and delivery of
Partnership information returns and Schedule K's to the
Partners.
The TMP shall be entitled to be reimbursed for all expenses incurred when acting
in its capacity as TMP.
5.10 PARTNERSHIP BASIS ELECTIONS. In the event of a distribution of
property by the Partnership within the meaning of Section 734 of the Code, or
the transfer of any interest in the Partnership within the meaning of Section
743 of the Code, the General Partner, in its sole and absolute discretion, may
cause the Partnership to elect to adjust the basis of its assets pursuant to
Section 754 of the Code. The Partners affected by this election, if made, shall
supply to the Partnership any information that may be required to make such
election.
ARTICLE VI
LIABILITY OF PARTNERS AND TRANSFERABILITY OF INTERESTS
6.1 LIMITED LIABILITY OF LIMITED PARTNER. Except as otherwise provided
in the Act or any other applicable law, the Limited Partner is not personally
liable for the expenses, liabilities or obligations of the Partnership beyond
the amount of his Capital Contribution.
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6.2 TRANSFER OF LIMITED PARTNER'S INTEREST.
The Limited Partner shall not transfer, sell, encumber, assign
or otherwise dispose (a "Transfer") of any portion of his Partnership Interest.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1 REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNER AND THE
PARTNERSHIP. The General Partner and the Partnership jointly and severally
represent and warrant to the Limited Partner that, as of the date hereof, the
Partnership is duly and validly organized as a limited partnership under the
laws of the State of Nevada with full power and authority to own and operate its
property and to conduct the business in which it engages and will be authorized
and qualified under the laws of all other jurisdictions in which such
authorization or qualification is necessary to protect the limited liability of
the Limited Partner, to enable it to engage in its business, and to engage in
the business of the Partnership.
ARTICLE VIII
ADMISSION AND WITHDRAWAL OF GENERAL PARTNER
8.1 ADMISSION. The General Partner may select and admit additional
general partner(s), provided that the Limited Partner agrees upon the additional
general partner(s) to be admitted. Unless it shall be provided otherwise upon
the admittance of said additional general partner(s), said additional general
partner(s) shall be deemed to have acquired a share of the general partner's
interest hereunder, such that the additional general partner(s) shall not be
entitled to share in the net income, net loss or distributions of the
Partnership otherwise allocable to the Limited Partner hereunder.
8.2 WITHDRAWAL. The General Partner may withdraw from the Partnership
provided that the withdrawing General Partner shall give to the Limited Partner
ninety (90) days' prior written notice and, if necessary under applicable
rulings and regulations for the Partnership to be treated for federal income tax
purposes as a partnership and not as an association taxable as a corporation,
shall propose a new general partner or general partners qualified and willing to
manage the Partnership's business and with the minimum net worth required. The
withdrawing General Partner shall be entitled to receive the fair market value
of its interest upon the date of its withdrawal.
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ARTICLE IX
TERMINATION OF THE PARTNERSHIP
9.1 DISSOLUTION. The Partnership shall be dissolved upon
the happening of any of the following events:
(a) The adjudication of bankruptcy, filing of a
petition pursuant to a chapter of the Federal Bankruptcy Act, the
withdrawal, dissolution, or cessation of business of the General
Partner, death of an individual General Partner, if any, or any other
"event of withdrawal of a general partner" as such term is defined in
the Act, unless:
(i) the remaining General Partner(s), if
any, elects to continue the business of the Partnership or if
the remaining General Partner(s) does not so elect or if there
is no remaining General Partner, within sixty (60) days after
such event, the Limited Partner elects a substitute General
Partner to continue the business of the Partnership and such
substitute General Partner agrees in writing to accept such
election; and
(ii) in the case of the withdrawal of a
General Partner, the applicable provisions of Article
VIII shall have been complied with.
(b) The sale or other disposition, not including
an exchange, of all or substantially all of the
Partnership's property;
(c) The Transfer by any Partner of part or all
of its Partnership Interest; or
(d) The unanimous written consent of the
Partners.
9.2 EFFECTIVENESS. Dissolution of the Partnership shall be effective on
December 31, 2055, or the day on which the event occurs giving rise to the
dissolution, but the Partnership shall not terminate until the Certificate shall
have been cancelled and the assets of the Partnership shall have been
distributed as provided in Section 9.3 below. Notwithstanding the dissolution of
the Partnership, prior to the termination of the Partnership, as aforesaid, the
business of the Partnership and the affairs of the Partners, as such, shall
continue to be governed by this Agreement.
9.3 LIQUIDATION. Upon dissolution of the Partnership, the General
Partner shall wind up the affairs of the Partnership, apply and distribute its
assets or the proceeds thereof as contemplated by this Agreement and cause the
cancellation of the Certificate. As soon as possible after the dissolution of
the Partnership, a full account of the assets and liabilities of the Partnership
shall be taken, and a statement shall be prepared by a certified public
accountant to
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be selected by the General Partner, setting forth the assets and liabilities of
the Partnership. A copy of such statement shall be furnished to each of the
Partners within thirty (30) days after such dissolution. Thereafter, the General
Partner shall, in its sole and absolute discretion, either liquidate the assets
as promptly as is consistent with obtaining in so far as possible the fair value
thereof or determine to distribute all or part of the assets in kind. Any
proceeds from liquidation, together with any assets which the General Partner
determines to distribute in kind shall be applied to the following order:
(a) first, to the payment of debts and liabilities of the
Partnership other than to Partners, to the expenses of liquidation, and
to the setting up of such reserves as may be deemed reasonably
necessary for any known contingent or unforeseen liabilities or
obligations of the Partnership arising out of or in connection with the
Partnership or its liquidation. Such reserves shall be held for the
purpose of disbursement in payment of any of the aforementioned
contingencies, and at the expiration of such period as the General
Partner shall deem advisable, the Partnership shall distribute the
balance remaining in the manner provided for herein;
(b) next, to the repayment of any debts and liabilities of the
Partnership to Partners not in respect of their Partnership Interests,
including, without limitation, unpaid expense accounts or advances made
to or for the benefit of the Partnership;
(c) next, to the Partners in proportion to their then
Capital Account balances until such Capital Account
balances have been reduced to zero; and
(d) the balance, if any, as follows:
General Partner 1 %
Limited Partner 99 %
9.4 GENERAL PARTNER CONTRIBUTIONS. Upon the liquidation of the General
Partner's interest in the Partnership, the General Partner will contribute to
the Partnership an amount equal to the deficit balance in its Capital Account
after taking into account all Capital Account adjustments for the Partnership's
taxable year during which such liquidation occurs. Except as provided for in the
previous sentence, no Partner shall be required to contribute funds to the
Partnership to restore its deficit capital account.
9.5 GAIN OR LOSS FROM DISSOLUTION. The net gain or loss,
if any, resulting from such dissolution and termination shall be
allocable to the Partners as provided in Section 4.6 hereof.
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ARTICLE X
BOOKS AND RECORDS; REPORTS
10.1 BOOKS AND RECORDS. The General Partner shall keep adequate books
and records at one or more of its places of business, setting forth a true and
accurate account of all business transactions arising out of and in connection
with the conduct of the Partnership. Partners or their designated
representatives shall have the right, at any reasonable time, to have access to
and inspect and copy the contents of said books or records.
10.2 ANNUAL REPORTS. The Partners shall be furnished annually by the
Partnership with an unaudited financial statement for the year then ended. Upon
request by any Partner, the Partnership shall furnish an audited financial
statements, with such costs being borne by the Partnership.
ARTICLE XI
POWER OF ATTORNEY
11.1 POWER OF ATTORNEY. In order to facilitate amendments of this
Agreement which require the signatures of the Partners, or a proposed additional
or substituted partner, and the preparation and signing of any other
documentation in connection with the Partnership including the Certificate of
Limited Partnership or any amendments thereto or cancellation thereof, each
Partner by his or his signature hereto irrevocably makes, constitutes and
appoints the General Partner, and each person who shall hereafter become a
General Partner, his true and lawful attorney in his name, place and stead, with
the power from time to time to make, execute, swear to, acknowledge, verify,
deliver, file, record and publish:
(a) any certificates or other instruments which may be
required to be filed by the Partnership under the laws of the State of
Nevada or of any other state or jurisdiction in which the Partnership
shall transact business or in which the General Partner shall deem it
advisable to file;
(b) all documents, certificates or other instruments which may
be required or deemed desirable by the General Partner to effectuate
the provisions of any part of this Agreement and to continue the
Partnership under the laws of the State of Nevada and of any state or
jurisdiction in which it shall do business; and
(c) all documents, certificates or other instruments which may
be required to effectuate the dissolution and termination of the
Partnership or the organization of any new limited partnership
occurring by reason of the withdrawal, dissolution, death, bankruptcy,
or adjudication of incompetency of the General Partner.
-17-
<PAGE>
11.2 IRREVOCABILITY. The foregoing power of attorney is a special power
of attorney coupled with an interest in favor of the General Partner, and as
such shall be irrevocable, and shall survive the dissolution, death, bankruptcy
or adjudication of incompetency of a Partner.
11.3 EFFECT OF ASSIGNMENT. The foregoing power of attorney shall
survive the delivery of an assignment by any Partner of the whole or any portion
of his Partnership Interest, except that where an assignee of a Limited
Partner's interest has been approved as a Substituted Limited Partner, the
foregoing power of attorney of the assignor Limited Partner shall survive the
delivery of such assignment for the sole purpose of enabling the General Partner
to execute, swear to, acknowledge and file any and all instruments necessary to
effect such substitution.
ARTICLE XII
GENERAL PROVISIONS
12.1 NOTICES. Any notice, payment, demand or communication required or
permitted to be given by any provision of this Agreement shall be in writing and
delivered personally, sent by overnight courier or sent by registered or
certified mail, return receipt requested, to a party at the address specified in
Section 1.4 hereof. Any such notice shall be deemed to be given as of the date
of receipt or refusal of receipt to the party at its address. Any Partner may
from time to time specify a different address by notice to the Partnership.
12.2 JURISDICTION AND APPLICABLE LAW. Each party hereto and with regard
solely to matters arising out of, or in connection with, this Agreement hereby
designates the laws of the State of Nevada, both substantive and procedural,
without reference to the conflicts of the law provisions thereof, as the law
applicable hereto, and each voluntarily submits itself to the courts of the
State of Nevada as having jurisdiction over the subject matter hereof and the
parties hereto.
12.3 SURVIVAL OF RIGHTS. Except as otherwise provided, this Agreement
shall be binding upon and inure to the benefit of the Partners, their personal
representative, successors and assigns.
12.4 VALIDITY. In the event that any provision of this Agreement shall
be held to be invalid, the same shall not affect in any respect whatsoever the
validity of the remainder of this Agreement.
12.5 AGREEMENTS IN COUNTERPARTS. This Agreement may be executed in
several counterparts, and as executed shall constitute one Agreement, binding on
all the parties hereto, notwithstanding that all the parties are not signatory
to the original or to the same counterpart.
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<PAGE>
12.6 WAIVER OF PARTITION. The Partners hereby waive any
right of partition as to the Partnership's property or any right to take any
other action which otherwise might be available to them for the purpose of
severing their relationship in connection with Partnership property.
12.7 HEADINGS. The headings, titles and subtitles used in this
Agreement are for ease of reference only and shall not control or affect the
meaning or construction of any provision hereof.
12.8 AMENDMENTS. This Agreement may be amended by the
General Partner as permitted by Section 4.14 hereof and, to the extent
necessary, the General Partner shall file or cause to be filed without any
additional consent of the Limited Partner any amendment to the Certificate.
12.9 ENTIRE AGREEMENT. This Agreement sets forth the
entire understanding of the parties with respect to the subject
matter hereof. This Agreement replaces and supersedes all
previous agreements and amendments entered into by the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the 27th day of December, 1995.
GENERAL PARTNER:
Attest:
FROST-NEVADA CORPORATION, a Nevada
Corporation
By: /s/ NEIL FLANZRAICH
- ----------------------------- -------------------------
Neil Flanzraich, President
[Corporate Seal]
LIMITED PARTNER:
Witness:
By: /s/ PHILLIP FROST, M.D.
/s/ ILLIGIBLE -----------------------------
- ------------------------------- PHILLIP FROST, M.D.
-19-
EXHIBIT 4
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE LAWS OF ANY OTHER
JURISDICTION AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF IN ANY MANNER WITHOUT (1) REGISTRATION UNDER THE ACT AND
THE LAWS OF ANY APPLICABLE JURISDICTION, OR (2) AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED.
Void after 5:00 p.m. Miami Time, on February 8, 1999
Warrant to Purchase 500,000 Shares of Common Stock
WARRANT TO PURCHASE COMMON STOCK
OF
ZANART PUBLISHING INCORPORATED
THIS IS TO CERTIFY that, for value received, Frost Nevada Limited
Partnership, a Nevada limited partnership, or registered assigns ("Holder"), is
entitled to purchase, subject to the provisions of this Warrant, from Zanart
Publishing Incorporated, a Florida corporation ("Company"), 500,000 fully paid,
validly issued and nonassessable shares of Common Stock, par value $.0001 per
share, of the Company ("Common Stock") at a price of $2.00 per share at any time
or from time to time during the period from February 9, 1994 to February 8,
1999, but not later than 5:00 p.m. Miami, Florida Time, on February 8, 1999. The
number of shares of Common Stock to be received upon the exercise of this
Warrant and the price to be paid for each share of Common Stock may be adjusted
from time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares" and the exercise price of
a share of Common Stock in effect at any time and as adjusted from time to time
is hereinafter sometimes referred to as the "Exercise Price."
(a) EXERCISE OF WARRANT. Subject to the provisions of Section (j)
hereof, this Warrant may be exercised in whole or in part at any time or from
time to time on or after February 9, 1994 and until 5:00 p.m. Miami, Florida
Time, on February 8, 1999 ("Expiration Date"); provided, however, that if either
such day is a day on which banking institutions in the State of Florida are
authorized by law to close, then on the next succeeding day which shall not be
such a day, by presentation and surrender hereof to the Company at its principal
office, or at the office of its stock transfer agent, if any, with the Purchase
Form annexed hereto duly executed and accompanied by payment of the Exercise
Price for the number of Warrant Shares specified in such form. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance
<PAGE>
of the Warrant Shares purchasable thereunder. Upon receipt by the Company of
this Warrant at its office, or by the stock transfer agent of the Company at its
office, in proper form for exercise and upon payment as aforesaid of the
Exercise Price, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be physically delivered
to the Holder.
(b) RESERVATION OF SHARES. The Company shall at all times reserve
for issuance and/or delivery upon exercise of this Warrant such number of shares
of its Common Stock as shall be required for issuance and delivery upon exercise
of the Warrant.
(c) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of a share, determined as follows:
(1) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange
or listed for trading on the NASDAQ System, the current market value
shall be the last reported sale price of the Common Stock on such
exchange or system on the last business day prior to the date of
exercise of this Warrant or is no such sale is made on such day, the
average closing bid and asked prices for such day on such exchange
or system; or
(2) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the current market value shall be the
mean of the last reported bid and asked price reported by the
National Quotation Bureau, Inc. on the last business day prior to
the date of the exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the current market value shall be an amount, not less than
book value thereof as at the end of the most recent fiscal year of
the Company ending prior to the date of the exercise of the Warrant,
determined in such reasonable manner as may be prescribed by the
Board of Directors of the Company.
-2-
<PAGE>
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant
is exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. This Warrant is not transferable (other than by
will or pursuant to the laws of descent and distribution), and may not be sold,
assigned or hypothecated, without the prior written consent of the Company.
Subject to the provisions of Section (j), upon surrender of this Warrant to the
Company at its principal office or at the office of its transfer agent; if any,
with the Assignment Form annexed hereto duly executed and funds sufficient to
pay any transfer tax, the Company shall, without charge, execute and deliver a
new Warrant in the name of the assignee named in such instrument of assignment
and this Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other warrants which carry the same rights upon presentation
hereof and thereof at the principal office of the Company or at the office of
its stock transfer agent, if any, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by the
Holder hereof. The term "Warrant" as used herein includes any Warrant into and
for which this Warrant may be divided or exchanged. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof for all
purposes and shall not be affected by any notice to the contrary, until
presentation hereof for registration and transfer. The Company may require
payment of a sum sufficient to cover any tax that may be imposed in connection
with any transfer, split up, combination or exchange of the Warrant (other than
any such tax payable in respect of the issuance of Common Stock to the
registered holder of the Warrant upon exercise). The holder of this Warrant, by
his acceptance hereof, agrees that he will not (i) transfer this Warrant prior
to delivery to the Company of an opinion of counsel that such transfer may be
made under the Act or until registration of the Warrants under the Act has
become effective; or (ii) transfer any Warrant prior to delivery to the Company
of the opinion of such counsel that such transfer may be made under the Act or
until registration of such Warrant under the Act has become effective.
-3-
<PAGE>
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
(f) ANTI-DILUTION. In the event that the outstanding shares of
Common Stock are at any time increased or decreased in number, or changed into
or exchanged for a different number or kind of shares or other security of the
Company or of another corporation through reorganization, merger, consolidation,
liquidation, recapitalization or, in the case of Common Stock, stock split,
reverse split, combination of shares or stock dividends payable with respect to
such Common Stock, appropriate adjustments shall be made in the number and kind
of such securities then subject to this Warrant and in the exercise price of
this Warrant, effective as of the date of such occurrence, so that the position
of the Holder upon exercise of this Warrant shall be the same as it would have
been had it been owned immediately prior to the occurrence of such event;
provided, however, that in no event shall two adjustments be made for the same
event. For example, if the Company declares a 2-for-1 stock dividend or stock
spilt, then the number of shares of Common Stock subject to this Warrant shall
be doubled and the per share exercise price of this Warrant shall be reduced by
50 percent. Such adjustments shall be made successively whenever any event
described by this Section (f) shall occur.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be
adjusted as required by the provisions of the foregoing Section, the Company
shall forthwith file in the custody of its Secretary or an Assistant Secretary
at its principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein provided,
setting forth in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of Common Stock, if
any, and such other facts as shall be necessary to show the reason for and the
manner of computing such adjustment. Each such officer's certificate shall be
made available at all reasonable times for inspection by the holder or any
holder of a Warrant executed and delivered pursuant to Section (a) and the
Company shall, forthwith after each such adjustment, mail a copy by certified
mail of such certificate to the Holder or any such holder.
(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall pay any dividend or make any distribution
upon the Common Stock; or (ii) if the Company shall offer to the holders of
Common Stock for subscription or purchase by them any share of any class or any
other rights; or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and
-4-
<PAGE>
assets of the Company to another corporation, or voluntary or involuntary
dissolution, liquidation or winding up of the Company shall be effected, then in
any such case, the Company shall cause to be mailed by certified mail to the
Holder, at least ten days prior to the date specified in (x) or (y) below, as
the case may be, a notice containing a brief description of the proposed action
and stating the date on which (x) a record is to be taken for the purpose of
such dividend, distribution or rights, or (y) such reclassification,
reorganization, consolidation, merger, conveyance, lease, dissolution,
liquidation or winding up is to take place and the date, if any is to be fixed,
as of which the holders of Common Stock or other securities shall receive cash
or other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in the case of any consolidation or merger of
the Company with or into another corporation (other than a merger with a
subsidiary, in which merger the Company is the continuing corporation and which
does not result in any reclassification, capital reorganization or other change
of outstanding shares of Common Stock of the class issuable upon exercise of
this Warrant) or in case of any sale, lease or conveyance to another corporation
of the property of the Company as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be made so that the
Holder shall have the right thereafter by exercising this Warrant at any time
prior to the expiration of the Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
which might have been purchased upon exercise of this Warrant immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Warrant. The foregoing provisions of this Section (i) shall similarly apply to
successive reclassifications, capital reorganizations and changes of the shares
of Common Stock and to successive consolidations, mergers, sales or conveyances.
In the event that in connection with any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional shares
of Common Stock shall be issued in exchange, conversion, substitution or
payment, in whole or in part, for a security of the Company other than Common
Stock, any such issue shall be treated as an issue of Common Stock covered by
the provisions of Section (f) hereof.
(j) TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933.
Subject to Section (d), this Warrant or the Warrant Shares or any
-5-
<PAGE>
other security issued or issuable upon exercise of this Warrant may not be sold
or otherwise disposed of except as follows:
(1) To a person who, in the opinion of the Company, is a
person to whom this Warrant or Warrant Shares may legally be
transferred without registration and without the delivery of a
current prospectus under the Act with respect and then only against
receipt of an agreement of such person to comply with the provisions
of this Section (j) with respect to any resale or other disposition
of such securities; or
(2) pursuant to an effective registration statement meeting
the requirements of the Act relating to such securities and the
offering thereof for such sale or disposition.
ZANART PUBLISHING INCORPORATED
By:
----------------------------
Thomas Zotos, President
[SEAL]
Dated:
Attest:
- ------------------------------
- -----------------
Secretary
-6-
<PAGE>
ELECTION TO PURCHASE
(To be signed only upon exercise of Warrant)
TO: Zanart Publishing Incorporated (the "Company")
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the right of purchase represented by such Warrant for, and to
purchase thereunder, ________________ shares of Common Stock, par value $.0001
per share, of the Company, and herewith makes payment of $__________ (number of
shares x $2.00) therefor, and requests that the certificates for such shares be
issued in the name of and be delivered to ______________________ whose address
is ______________________________ and if such shares shall not be all of the
shares purchasable hereunder, that a new Warrant of like tenor for the balance
of the shares purchasable hereunder be delivered to the undersigned.
Dated:_______________ FROST NEVADA LIMITED PARTNERSHIP
By:________________________________
Authorized Representative
<PAGE>
ASSIGNMENT
(To be signed only upon such assignment)
For value received, the undersigned hereby sells, assigns, and transfers
unto _________________________________________________________________________
______________________________________________________________________________
the right represented by the within Warrant to purchase from Zanart Publishing
Incorporated (the "Company") _____ shares of Common Stock, par value $.0001 per
share, of the Company, to which the within Warrant relates, and appoints
_____________________________ attorney to transfer such right on the books of
the Company with full power of substitution in the premises.
Dated:_______________ FROST NEVADA LIMITED PARTNERSHIP
By:________________________________
Authorized Representative
