SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
CONTINUCARE CORPORATION
(Name of Issuer)
COMMON STOCK, $.0001 PAR VALUE
(Title of Class of Securities)
212172100
(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)
SEPTEMBER 1, 1998
(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(e), (f) or (3), check the following box [ ].
*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).
(Continued on following page(s))
Page 1 of 35
Exhibit Index on Page 9
<PAGE>
CUSIP No. 212172100 13D Page 2 of 35 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
PHILLIP FROST, M.D.
- --------------------------------------------------------------------------------
2 Check the appropriate Box if a Member of a Group (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PS
- --------------------------------------------------------------------------------
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 2,045,533
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,045,533
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,045,533
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.842%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
CUSIP No. 212172100 13D Page 3 of 35 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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*
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
NEVADA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFI- ----------------------------------------------------
CIALLY 8 SHARED VOTING POWER
OWNED BY 2,045,533
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,045,533
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,045,533
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.842%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
<PAGE>
CUSIP No. 212172100 13D Page 4 of 35 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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 2,045,533
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,045,533
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,045,533
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.842%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE>
Item 1. SECURITY AND ISSUER.
This is Amendment No. 2 to the original Schedule 13D previously filed
by Phillip Frost, M.D., Frost-Nevada, Limited Partnership (the "Partnership")
and Frost-Nevada Corporation (collectively, the "Reporting Persons") with
respect to the Common Stock, $.0001 par value (the "Shares") of Continucare
Corporation (f/k/a Zanart Entertainment Incorporated) (the "Issuer"). The
principal executive offices of the Issuer are located at 100 S.E. 2nd Street,
36th Floor, Miami, Florida, 33131.
Item 2. IDENTITY AND BACKGROUND.
Item 2 is amended in its entirety and restated as follows:
This Schedule 13D is being filed by 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. David H. Moskowitz is the sole
director and the sole officer of Frost-Nevada Corporation. David H. Moskowitz's
present principal occupation is as an attorney with the law firm of David H.
Moskowitz & Associates. Mr. Moskowitz's principal business address is 1890 Rose
Cottage Lane, Malvern, Pennsylvania, 19355.
To the best knowledge of each of the Reporting Persons, neither such
Reporting Person nor Mr. Moskowitz 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. Moskowitz is a
citizen of the United States.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is amended and supplemented as follows:
The aggregate purchase price of Shares of the Issuer purchased by the
Partnership and Phillip Frost, M.D. reported in this Schedule 13D, was $787,500
and $2,222,108,
Page 5 of 35
<PAGE>
respectively. The source of funds used by the Partnership and Dr. Frost in
making these purchases was working capital of the Partnership and personal funds
of Dr Frost. No portion of the consideration used by the Partnership or Dr.
Frost in making the purchases described above was borrowed or otherwise obtained
for the purpose of acquiring, holding, trading or voting the Shares.
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. 2,045,533 ** 14.842%
Frost-Nevada Corporation 2,045,533** 14.842%
Frost-Nevada, Limited 2,045,533** 14.842%
Partnership
- ----------------------------
* Based on 13,781,283 Shares outstanding as of May 15, 1998 as reported
on the Issuer's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998, and assuming the conversion by Dr. Frost of stock
options to purchase 50,000 Shares exercisable in the next six months.
** 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 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, 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.
Item 6 is amended and supplemented as follows:
Page 6 of 35
<PAGE>
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. These warrants were exercised at a reduced price of $3.15 by the
Partnership on January 28, 1998 and the Shares were subsequently re-registered
and transferred to Phillip Frost, M.D. on January 28, 1998.
On July 31, 1997, the Issuer granted Dr. Frost options to purchase
100,000 Shares at $5.125 per share which expire on July 31, 2007.
The descriptions of the warrants and stock options contained herein are
not intended to be complete and are qualified in their entirety by reference to
the warrant and stock option agreements attached hereto as Exhibits 6 and 7
incorporated herein by reference.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Joint Filing Agreement.
2. Description of Transactions in the Issuer's Shares by Phillip
Frost, M.D.
3. Description of Transactions in the Issuer's Shares by Frost-Nevada
Limited Partnership.
4. Power of Attorney granted to Phillip Frost, M.D. by David
Moskowitz.
5. Third 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.
6. Non-Qualified Stock Option Agreement dated July 31, 1997, between
Continucare Corporation and Phillip Frost, M.D.
7. Warrant to Purchase Common Stock of Zanart Entertainment
Incorporated issued February 9, 1994 (previously filed).
Page 7 of 35
<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
Amendment is true, complete and correct.
/s/ Phillip Frost, M.D.
Date: September 16, 1998 -------------------------------------------
Phillip Frost, M.D.
FROST-NEVADA, LIMITED PARTNERSHIP
*
Date: September 16, 1998 ---------------------------------------
David H. Moskowitz
President of Frost-Nevada Corporation,
General Partner
FROST-NEVADA CORPORATION
*
Date: September 16, 1998 ---------------------------------------
David H. Moskowitz
President
*By/s/ Phillip Frost, M.D.
------------------------------
Phillip Frost, M.D.
(Attorney-in-fact pursuant
to Power of Attorney)
Page 8 of 35
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
1 Joint Filing Agreement 10
2 Description of Transactions in the Issuer's Shares 11
by Phillip Frost, M.D.
3 Description of Transactions in the Issuer's Shares 12
by Frost Nevada Limited Partnership
4 Power of Attorney granted to Phillip Frost, M.D. 13
by David Moskowitz
5 Third Amended and Restated Agreement of Frost-Nevada, 14
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
6 Non-Qualified Stock Option Agreement dated July 31, 1997, 34
between Continucare Corporation and Phillip Frost, M.D.
Page 9 of 35
EXHIBIT 1
The undersigned hereby agree that this Amendment to the Schedule 13D
filed by us with respect to the Common Stock of Continucare Corporation is filed
on behalf of each of us.
/s/ Phillip Frost, M.D.
Date: September 16, 1998 -------------------------------------------
Phillip Frost, M.D.
FROST-NEVADA, LIMITED PARTNERSHIP
*
Date: September 16, 1998 ---------------------------------------
David H. Moskowitz
President of Frost-Nevada Corporation,
General Partner
FROST-NEVADA CORPORATION
*
Date: September 16, 1998 ---------------------------------------
David H. Moskowitz
President
*By/s/ Phillip Frost, M.D.
------------------------------
Phillip Frost, M.D.
(Attorney-in-fact pursuant
to Power of Attorney)
EXHIBIT 2
Set forth below is a summary of the acquisitions of beneficial
ownership in the Shares of the Issuer by Phillip Frost, M.D. effected from
October 4, 1996 through the date of this Amendment No. 2.
NUMBER OF SHARES PRICE PER TYPE OF
DATE ACQUIRED SHARE TRANSACTION
- ---- -------- ----- -----------
03/31/97 7,500 $5.875 Open Market Transaction
04/01/97 2,500 $5.875 Open Market Transaction
01/09/98 285,000 $3.15 Private Transaction
01/28/98 250,000 N/A Transfer from Frost-
Nevada Limited
Partnership
02/25/98 3,300 $4.9375 Open Market Transaction
02/26/98 2,500 $4.9375 Open Market Transaction
02/27/98 4,200 $4.9375 Open Market Transaction
06/29/98 6,500 $4.8433 Open Market Transaction
06/30/98 1,200 $4.75 Open Market Transaction
07/02/98 1,800 $4.75 Open Market Transaction
07/16/98 2,700 $4.625 Open Market Transaction
07/16/98 2,000 $4.6875 Open Market Transaction
07/21/98 3,000 $4.625 Open Market Transaction
07/22/98 3,000 $4.625 Open Market Transaction
07/23/98 7,000 $4.393 Open Market Transaction
07/24/98 3,000 $4.375 Open Market Transaction
07/27/98 4,000 $4.1875 Open Market Transaction
07/28/98 5,000 $4.0625 Open Market Transaction
07/28/98 6,000 $3.7813 Open Market Transaction
07/29/98 4,300 $3.9375 Open Market Transaction
07/29/98 8,000 $4.000 Open Market Transaction
08/03/98 200 $3.9375 Open Market Transaction
08/05/98 3,500 $3.5625 Open Market Transaction
08/26/98 1,000 $3.75 Open Market Transaction
09/01/98 300,000 $2.9375 Open Market Transaction
09/04/98 10,000 $3.00 Open Market Transaction
09/04/98 10,000 $2.9375 Open Market Transaction
EXHIBIT 3
Set forth below is a summary of acquisitions and dispositions of
beneficial ownership in the Shares of the Issuer by Frost-Nevada, Limited
Partnership effected from October 4, 1996 through the date of this Amendment
No. 2.
NUMBER OF SHARES PRICE PER TYPE OF
DATE ACQUIRED DISPOSED SHARE TRANSACTION
- ---- -------- -------- ----- -----------
6/20/97 150,000 N/A Gift
1/28/98 250,000 $3.15 Exercise of Warrants
1/28/98 250,000 N/A Transfer to Phillip
Frost, M.D.
EXHIBIT 4
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 1st day of June, 1998.
/s/ David H. Moskowitz
-----------------------------
David H. Moskowitz, President
EXHIBIT 5
THIRD
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
FROST-NEVADA LIMITED PARTNERSHIP
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (the
"Agreement") is made and entered into as of the day of December, 1997, 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; and
WHEREAS, the General Partner and Limited Partner have previously
executed a Second Amended and Restated Certificate of Limited Partnership of
FROST-NEVADA LIMITED PARTNERSHIP on December 28, 1995 and a certificate thereof
was filed m the Public Records of the Secretary of State of Nevada on ________,
199_;
WHEREAS, the General Partner and the Limited Partner have executed this
Third Amended and Restated Agreement of Limited Partnership of FROST-NEVADA
LIMITED PARTNERSHIP as of December __, 1997; and
WHEREAS, this Agreement, dated as of December _, 1997, 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.
<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 as are set forth or provided for in
the annual budget prepared by the General Partner prior to the beginning of the
fiscal year, and such emergency expenditures as the General Partner shall deem
necessary on behalf of the Partnership.
3.5 AVAILABLE CASH. All cash of the Partnership resulting from normal
business
<PAGE>
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 4.5 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 contributed to 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 may be entitled as provided in this
Agreement, together with the obligations of such Partner to comply
<PAGE>
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 4.9 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 as expressly provided for
in this Agreement or upon the dissolution and liquidation of the Partnership, a
Partner shall have no right to receive any distribution without the consent of
the General Partner, and in such circumstances. Under circumstances requiring a
distribution to a Partner, no Partner shall have the right to receive property
other than cash except as may be expressly provided herein.
<PAGE>
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. ss.
1.704-l(b)(2)(iv). Except as otherwise provided in Treas. Reg. ss.
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. ss. 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. ss. 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. ss. 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. ss. 1.704-l(b)(2)(iv)(n)(4) (as it may be amended
or supplemented from time to time), as it relates to
distributions other than in liquidation of a Partner's
Interest in the Partnership.
<PAGE>
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:
(d) next, to the Partners in proportion to their positive
capital account balances until such Capital Account balances have been
reduced to zero; and
<PAGE>
(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 ss.
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. ss.1.704-l(b)(2)
(iv)(f)(4) and Treas. Reg. ss. 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. ss. 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.
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
<PAGE>
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 4.6 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. ss.ss. 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. ss.ss.
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(d)(5) and 1.7041(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 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. ss.ss. 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,
<PAGE>
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
IV have been made, as if Section 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, provided that such
authority shall not be delegated to any person resident in the State of Florida.
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;
(b) change or reorganize the Partnership into any other legal form;
(c) sell, exchange, encumber, assign, pledge, or otherwise transfer
or grant a
<PAGE>
security interest in all or substantially 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 that do not qualify as Authorized
Expenses;
(f) settle a material lawsuit or any other material dispute
(including, but not limited to, a dispute concerning the income tax
liabilities associated with income and loss reported by the
Partnership);
(g) set aside a reserve in excess of $25,000;
(h) confess a judgment against the Partnership;
(i) amend this Agreement except as provided for in Section 4.14;
(j) require additional Capital Contributions from one or more of
the Partners; or
(k) 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.
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
<PAGE>
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 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;
<PAGE>
(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.
6.2 TRANSFER OF A LIMITED PARTNER'S INTEREST; SUBSTITUTED LIMTED
PARTNER. Neither the General Partner nor the Limited Partner shall transfer,
sell, encumber, assign or otherwise dispose (a "Transfer") of any portion of its
Partnership Interest without (a) the written consent of all other partners,
which may be withheld for any reason, and (b) the Transferee shall have agreed
in writing to assume all of the obligations of the transferor, to the extent of
the Partnership Interest transferred, and, if requested, the General Partner
shall have received an opinion of counsel satisfactory to it that such transfer
or disposition would not:
(i) result in a violation of the Securities Act of 1933, as
amended, or of any applicable state securities laws; or
<PAGE>
(ii) result in a termination of the Partnership for federal or
state income tax purposes or result in the Partnership being taxed as a
corporation for federal income tax purposes.
The assignee of the interest of the Limited Partner or any portion there of
shall become a Substitute Limited Partner if and only if the assignor gives the
assignee such right; the General Partner consents to such substitution in
writing, the granting or denying of which consent shall be in the absolute
discretion of the General Partner; the assignee pays to the Partnership all
costs and expenses incurred in connection with such substitution; and the
assignee executes and delivers to the General Partner such instruments as the
General Partner reasonably may require to effect such substitution and to
confirm the agreement of the assignee to be bound by all of the terms and
provisions of this Agreement.
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
WITHDRAWAL OF GENERAL PARTNER
8.1 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.
<PAGE>
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 or a
distribution, 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 be selected by the General Partner, setting forth the assets and
liabilities of the Partnership. A copy of such statement
<PAGE>
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.
<PAGE>
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.
<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.
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.
<PAGE>
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 _____ day of December, 1997.
GENERAL PARTNER:
Attest:
FROST-NEVADA CORPORATION, a Nevada corporation
- ----------------------------- By:
-------------------------------------------
Neil Flanzraich, President
[Corporate Seal]
LIMITED PARTNER:
Witness:
- ------------------------------ ----------------------------------------------
PHILLIP FROST, M.D.
<PAGE>
E X H I B I T S
[TO BE SUPPLIED]
EXHIBIT 6
CONTINUCARE CORPORATION
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
--------------------------------------
STOCK OPTION AGREEMENT
Grant of Option. As of the 31st day of July, 1997, Continucare
Corporation, a Florida corporation (the "Company"), hereby grants to Phillip
Frost, M.D., (the "Optionee") a non-qualified stock option (the "Option") to
acquire One Hundred Thousand (100,000) shares of Common Stock, $0.0001 par value
per share (the "Shares"), of the Company pursuant to the Company's Amended and
Restated 1995 Stock Option Plan (the "Plan"), which is incorporated herein for
all purposes. The Optionee hereby acknowledges receipt of the Plan and agrees to
be bound by all of the terms and conditions herein and therein.
Definitions. Capitalized terms used herein without definition shall
have the meanings as set forth in the Plan.
Exercise Price. The exercise price per share of the Shares subject to
this Option is $5.125
Exercise Schedule. The Option shall vest as follows: 50% on January 1,
1998; 25% on January 1, 1999; and, 25% on January 1, 2000, except as otherwise
provided in Section 8 of the Plan.
Termination of Option. This Option shall terminate, and in no event be
exercisable, after the expiration of 10 years from the date on which the Option
is granted. In addition, any unexercised portion of this Option shall
automatically and without notice terminate and become null and void as provided
in Section 9 of the Plan.
Section 83(b) Election. If as a result of exercising all or any part of
this Option, an Optionee receives Shares that are subject to a "substantial risk
of forfeiture" and are not "transferable" as those terms are defined for
purposes of Section 83(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), then such Optionee may elect under Section 83(b) of the Code to include
in the Optionee's gross income, for the Optionee's taxable year in which the
Shares are transferred to the Optionee, the excess of the Fair Market Value of
such Shares at the time of transfer (determined without regard to any
restriction other than one that by its terms will never lapse), over the amount
paid for the Shares. If the Optionee makes the Section 83(b) election described
above, the Optionee shall (i) make such election in a manner that the Board
determines in its reasonable judgment to be satisfactory, (ii) provide the
Company with a copy of such election, (iii) agree to promptly notify the Company
if any Internal Revenue Service or state tax agent, on audit or otherwise,
questions the validity or correctness of such election or of the amount of
income reportable on account of such election, and (iv) agree to such tax
withholding as the Board may reasonably require in its sole and absolute
discretion.
<PAGE>
Law Governing. This Agreement shall be governed in accordance with the
internal laws of the State of Florida.
Interpretation. The Optionee accepts this Option subject to all the
terms and provisions of the Plan and this Agreement. The undersigned Optionee
hereby accepts as binding, conclusive and final all decisions or interpretations
of the Board upon any questions arising under the Plan and this Agreement.
Notices. Any notice under this Agreement shall be in writing and shall
be deemed to have been duly given when delivered personally or when deposited in
the United States mail, registered, postage prepaid, and addressed, in the case
of the Company, to the Company's Secretary at 100 Southeast Second Street, 36th
Floor, Miami, Florida 33131, or if the Company should move its principal office,
to such principal office, and, in the case of the Optionee, to the Optionee's
last permanent address as shown on the Company's records, subject to the right
of either party to designate some other address at any time hereafter in a
notice satisfying the requirements of this Section.
COMPANY:
CONTINUCARE CORPORATION
---------------------------------
CHARLES M. FERNANDEZ
Chairman, President and
Chief Executive Officer
OPTIONEE:
----------------------------------
PHILLIP FROST, M.D.
