SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
PAN AM CORPORATION
------------------
(Name of Issuer)
COMMON STOCK, $.0001 PAR VALUE
-----------------------------------------
(Title of Class of Securities)
697758100
----------------
(Cusip Number)
RICHARD C. PFENNIGER, JR., 4400 BISCAYNE BOULEVARD, MIAMI, FL 33137
(305) 575-6000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
SEPTEMBER 23, 1996
----------------------------------------------
(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 [ ].
Check the following box if a fee is being paid with the statement [X] (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 48
Exhibit Index on Page 10
<PAGE>
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CUSIP NO. 697758100 13D PAGE 2 OF 48 PAGES
- -------------------------------------- -----------------------------
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1 NAME OF REPORTING
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PHILLIP FROST, M.D.
SS# ###-##-####
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2 Check the appropriate Box if a Member of a Group (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFI- --------------------------------------------------------------
CIALLY 8 SHARED VOTING POWER
OWNED BY 1,164,387
EACH --------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,164,387
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,164,387
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.4%
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14 TYPE OF REPORTING PERSON
IN
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<PAGE>
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CUSIP NO. 697758100 13D PAGE 3 OF 48 PAGES
- -------------------------------------- -----------------------------
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1 NAME OF REPORTING
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FROST-NEVADA, LIMITED PARTNERSHIP
IRS I.D. #59-2749083
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2 Check the appropriate Box if a Member of a Group (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEVADA
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFI- --------------------------------------------------------------
CIALLY 8 SHARED VOTING POWER
OWNED BY 1,164,387
EACH --------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,164,387
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,164,387
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.4%
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14 TYPE OF REPORTING PERSON
PN
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<PAGE>
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CUSIP NO. 697758100 13D PAGE 4 OF 48 PAGES
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1 NAME OF REPORTING
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FROST-NEVADA CORPORATION
IRS I.D. #59-274-9057
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2 Check the appropriate Box if a Member of a Group (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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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 1,164,387
EACH --------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,164,387
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,164,387
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.4%
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14 TYPE OF REPORTING PERSON
CO
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<PAGE>
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CUSIP NO. 697758100 13D PAGE 5 OF 48 PAGES
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1 NAME OF REPORTING
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FROST-PAN INVESTMENT CORP.
IRS I.D. #65-0654306
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2 Check the appropriate Box if a Member of a Group (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
FLORIDA
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFI- --------------------------------------------------------------
CIALLY 8 SHARED VOTING POWER
OWNED BY 1,164,387
EACH --------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,164,387
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,164,387
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.4%
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14 TYPE OF REPORTING PERSON
CO
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<PAGE>
Item 1. SECURITY AND ISSUER.
This filing by Phillip Frost, M.D., Frost-Nevada, Limited Partnership
(the "Partnership"), Frost-Nevada Corporation and Frost-Pan Investment Corp.
(collectively, the "Reporting Persons"), relates to Common Stock, $.0001 par
value (the "Shares") of Pan Am Corporation (the "Issuer"). The principal
executive offices of the Issuer are located at 9300 N.W. 36th Street, Miami,
Florida, 33178. Information regarding each of the Reporting Persons is set forth
below.
Item 2. IDENTITY AND BACKGROUND.
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.
Frost-Pan Investment Corp. is a corporation organized and existing
under the laws of the State of Florida with its principal office and business
located at 4400 Biscayne Boulevard, Miami, Florida, 33137. The principal
business of the Frost-Pan Investment Corp. is the investment in marketable
securities. Dr. Frost is the sole shareholder and officer of Frost-Pan
Investment Corp.
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. Dr. Frost and Mr. Flanzraich
are citizens 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 and Frost-Pan Investment Corp. reported in this filing, including
the payment of commissions, was $74,147.50 and $2,999,999.58, respectively. The
source of funds used in making these
Page 6 of 48
<PAGE>
purchases was working capital of the Partnership and Frost-Pan Investment Corp.
No portion of the consideration used by the Reporting Persons in making the
purchases described above was borrowed or otherwise obtained for the purpose of
acquiring, holding, trading or voting the Shares.
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. 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.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
AMOUNT OF SHARES PERCENTAGE
NAME BENEFICIALLY OWNED CLASS*
---- ------------------ ----------
Phillip Frost, M.D. 1,164,387** 10.4%
Frost-Nevada Corporation 1,164,387** 10.4%
Frost-Nevada, Limited 1,164,387** 10.4%
Partnership
Frost-Pan Investment Corp. 1,164,387** 10.4%
- ----------------------------
* Based on 11,197,012 Shares consisting of 10,920,191 Shares outstanding as
October 31, 1996, as reported on the Issuer's Quarterly Report on Form
10-Q for the Period ended September 30, 1996 and assumes the exercise by
Phillip Frost, M.D. of options to purchase 276,821 Shares.
** These Shares are owned of record by one or more of such Reporting Persons.
As the sole limited partner of the Partnership, the sole shareholder, a
director and an officer of Frost-Nevada Corporation, the general partner
of the Partnership, and the sole shareholder, director and officer of
Frost-Pan Investment Corp., 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, Frost-Nevada
Corporation and Frost-Pan Investment Corp. 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, Frost-Nevada Corporation and Frost-Pan
Investment Corp. will be deemed to be the beneficial owner of Shares held
by any of them.
Page 7 of 48
<PAGE>
The Partnership shares the power to vote or dispose of the Shares
beneficially owned by it with Frost-Nevada Corporation and Dr. Frost.
Frost-Nevada Corporation, in its capacity as the general partner of the
Partnership, has the power to vote or direct the vote of these Shares or to
dispose or direct the disposition of these Shares for the Partnership.
Frost-Nevada Corporation will be deemed the beneficial owner of the Shares owned
by the Partnership by virtue of this relationship to the Partnership. Dr. Frost,
in his capacity as the sole shareholder, a director and an officer of
Frost-Nevada Corporation, the general partner of the Partnership, will be deemed
the beneficial owner of all Shares owned by the Partnership by virtue of his
power to vote or direct the vote of the Shares or to dispose or direct the
disposition of the Shares owned by the Partnership. Dr. Frost, in his capacity
as the sole shareholder, director and officer of Frost-Pan Investment Corp. will
be deemed the beneficial owner of all Shares owned by Frost-Pan Investment Corp.
by virtue of his power to vote or direct the vote of the Shares or to dispose or
direct the disposition of the Shares owned by Frost-Pan Investment Corp.
Item 6 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Except as described herein, none of the Reporting Persons is a party
to any contract, arrangement, understanding or relationship with any person with
respect to any securities of the Issuer.
On March 8, 1996, the Issuer granted Dr. Frost options to purchase
276,821 Shares at $1.00 per share which expire on September 22, 2005. The Issuer
also granted Dr. Frost options to purchase 20,000 shares at $5.00 per share
which vest in equal portions over three years commencing on April 24, 1997 and
expiring on April 23, 2006.
The descriptions of the Stock Option Agreements contained herein is
not intended to be complete and is qualified in its entirety by reference to
these Agreements which are 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 Frost-Nevada,
Limited Partnership.
3. Description of transactions in the Issuer's Shares by Frost-Pan
Investment Corp.
4. Power of Attorney granted to Phillip Frost, M.D. by Neil Flanzraich.
5. 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.
6. Stock Option Agreement, dated March 8, 1996, between Pan Am
Corporation and Phillip Frost, M.D.
7. Stock Option Agreement, dated April 24, 1996, between Pan Am
Corporation and Phillip Frost, M.D.
Page 8 of 48
<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: ___________, 1996 Phillip Frost, M.D.
FROST-NEVADA, LIMITED
PARTNERSHIP
*
--------------------------------------
Date: ___________, 1996 Neil Flanzraich
President of Frost-Nevada Corporation,
General Partner
FROST-NEVADA CORPORATION
*
--------------------------------------
Date: __________, 1996 Neil Flanzraich
President
Date: __________, 1996 FROST-PAN INVESTMENT CORP.
/s/ PHILLIP FROST, M.D.
--------------------------------------
Phillip Frost, M.D., President
*By/s/ PHILLIP FROST, M.D
------------------------------
Phillip Frost, M.D.
(Attorney-in-fact pursuant
to Power of Attorney)
Page 9 of 48
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
- ------------------- ----
1 Joint Filing Agreement. 11
2 Description of transactions in the Issuer's Shares 12
by Frost-Nevada, Limited Partnership.
3 Description of transactions in the Issuer's Shares 13
by Frost-Pan Investment Corp.
4 Power of Attorney granted to Phillip Frost, M.D. 14
by Neil Flanzraich.
5 Second Amended and Restated Agreement of 15
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 Stock Option Agreement, dated March 8, 1996, 34
between Pan Am Corporation and Phillip Frost, M.D.
7 Stock Option Agreement, dated April 24, 1996, 46
between Pan Am Corporation and Phillip Frost, M.D.
Page 10 of 48
EXHIBIT 1
The undersigned hereby agree that this Schedule 13D filed by us with
respect to the Common Stock of Pan Am Corporation is filed on behalf of each of
us.
/s/ PHILLIP FROST, M.D.
--------------------------------------
Date: _________, 1996 Phillip Frost, M.D.
FROST-NEVADA, LIMITED
PARTNERSHIP
*
--------------------------------------
Date: _________, 1996 Neil Flanzraich
President of Frost-Nevada Corporation,
General Partner
FROST-NEVADA CORPORATION
*
--------------------------------------
Date: _________, 1996 Neil Flanzraich
President
Date: __________, 1996
FROST-PAN INVESTMENT CORP.
/s/ PHILLIP FROST, M.D
--------------------------------------
Phillip Frost, M.D., President
*By/s/ PHILLIP FROST, M.D.
------------------------------
Phillip Frost, M.D.
(Attorney-in-fact pursuant
to Power of Attorney)
Page 11 of 48
EXHIBIT 2
Set forth below is a summary of acquisitions of beneficial ownership in the
Shares of the Issuer by Frost-Nevada, Limited Partnership through the date of
this filing.
NUMBER OF SHARES PRICE PER TYPE OF
DATE ACQUIRED DISPOSED SHARE TRANSACTION
- ---- -------- -------- --------- -----------
11/30/93 25,000 .20 Private Placement
4/8/94 10,000 6.00 Open Market Transaction
10/27/95 2,500 3.625 Open Market Transaction
Page 12 of 48
EXHIBIT 3
Set forth below is a summary of acquisitions of beneficial ownership in
the Shares of the Issuer by Frost-Pan Investment Corp. through the date of this
filing.
NUMBER OF SHARES PRICE PER TYPE OF
DATE ACQUIRED SHARE TRANSACTION
- ---- ---------------- --------- -----------
3/8/96 566,780 3.5287 Private Placement
4/5/96 283,286 3.53 Private Placement
Page 13 of 48
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 24th day of May, 1996.
/s/ NEIL FLANZRAICH
--------------------------
NEIL FLANZRAICH, President
Page 14 of 48
EXHIBIT 5
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.
15 of 48
<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.
16 of 48
<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.
17 of 48
<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
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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.
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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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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.
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EXHIBIT 6
THIS OPTION AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS OPTION HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED
OR OTHERWISE DISPOSED OF, UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF THE
SECURITIES ACT OR AN OPINION OF COUNSEL IS OBTAINED STATING THAT SUCH
DISPOSITION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
NO. FR-1
NON-QUALIFIED
OPTION TO
PURCHASE
276,821 SHARES
OF COMMON STOCK
NON-QUALIFIED STOCK OPTION TO PURCHASE
COMMON STOCK
OF
PAN AMERICAN WORLD AIRWAYS, INC.
This certifies that, for value received, Phillip Frost, M.D., or his heirs
or assigns (collectively, the "Holder"), is entitled to purchase from Pan
American World Airways, Inc., a Florida corporation (the "Company"), subject to
the terms and conditions set forth below, at any time on or after 9:00 A.M.,
Eastern time, on the Exercise Date (as defined below) of this Option, and before
5:00 P.M., Eastern time, on the Expiration Date (as defined below), the number
of fully paid and nonassessable shares of Common Stock, $.0001 par value, of the
Company ("Common Stock") stated above at the Purchase Price (as defined below).
The Purchase Price and the number of shares purchasable hereunder are subject to
adjustment as provided below. This Option is issued to the Holder in
consideration for services to be provided by the Holder to the Company.
ARTICLE I
DEFINITIONS
SECTION 1.1.
(1) The term "Business Day" as used in this Option means a day other
than a Saturday, Sunday or other day on which national banking associations
whose principal offices are located in the State of Florida are authorized by
law to remain closed.
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(2) The term "Contribution Agreement" as used in this Option shall
mean that certain Contribution Agreement, dated as of March 8, 1996, by and
among the Company, PANF, Inc., a Florida corporation, Pan Am Alliance, Inc., a
Florida corporation, Pan Am World Services, Inc., a Florida corporation, Frost
Pan Investment Corp., a Florida corporation, and EAL Asset Holding, Inc., a
Florida corporation.
(3) The term "Exercise Date" as used in this Option means the
effective date of the Merger (as such term is defined in the Contribution
Agreement). In the event the Merger is not successfully consummated as
contemplated in the Merger Agreement (as defined in the Contribution Agreement),
this Option shall be cancelled and shall become null and void on such date.
(4) The term "Expiration Date" as used in this Option means the date
of expiration of the nine year period immediately after the Exercise Date (as
defined in Section 2.1 hereof), or, if that day is not a Business Day, as
defined above, at or before 5:00 P.M., New York City time, on the next following
Business Day.
(5) The term "Option" as used in this Option means this Option and
Options of like tenor to purchase up to 276,821 Option Shares issued on even
date of this Option.
(6) The term "Option Shares" as used in this Option means the shares
of Common Stock or other securities issuable upon exercise of the Options.
(7) The term "Purchase Price" as used in this Option means $1.00 per
share, subject to adjustment pursuant to Article III hereof.
ARTICLE II
DURATION AND EXERCISE OF OPTION
SECTION 2.1. This Option may be exercised at any time after 9:00 A.M.,
Eastern time on the Exercise Date, and before 5:00 P.M., Eastern time, on the
Expiration Date.
SECTION 2.2. (a) The Holder may exercise this Option in whole or in part
by surrender of this Option, with the Subscription Form (attached hereto) duly
executed, to the Company at its corporate office in Miami, Florida, together
with the applicable Purchase Price of each share of Common Stock being purchased
in lawful money of the United States, or by certified check or official bank
check payable in United States dollars to the order of the Company, subject to
compliance with all the other conditions set forth in this Option.
(b) Upon receipt of this Option with the Subscription Form duly
executed and accompanied by payment of the aggregate Purchase Price for the
shares of Common Stock for
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which this Option is being exercised, the Company shall cause to be issued
certificates for the total number of whole shares (as provided in Section 3.2)
of Common Stock for which this Option is being exercised in such denominations
as are required for delivery to the Holder, and the Company will promptly
deliver those certificates to the Holder.
(c) If the Holder exercises this Option with respect to fewer than
all the shares of Common Stock that may be purchased by exercise of this Option,
the Company will execute a new Option for the balance of the shares of Common
Stock that may be purchased by exercise of this Option and deliver that new
Option to the Holder.
(d) The Company covenants and agrees that it will pay when due any
and all taxes which may be payable in respect of the issue of this Option, or
the issue of any Option Shares upon the exercise of this Option other than
income or similar taxes of any kind imposed upon the Holder of this Option. The
Company will not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issuance or delivery of this Option or
of Option Shares in a name other than that of the Holder at the time of
surrender, and until the payment of any such tax, the Company will not be
required to transfer this Option or issue the Option Shares which are subject to
the tax.
ARTICLE III
ADJUSTMENT OF PURCHASE PRICE, NUMBER
OF SHARES OR NUMBER OF OPTIONS
SECTION 3.1. The Purchase Price, the number and type of securities
issuable on exercise of this Option and the number of Options outstanding are
subject to adjustment from time to time as follows:
(a) If the Company issues any shares of its Common Stock as a
dividend on its Common Stock, the Purchase Price then in effect will be
proportionately reduced at the opening of business on the day following the date
fixed for the determination of shareholders entitled to receive the dividend or
other distribution. For example, if the Company distributes one share of Common
Stock as a dividend on each outstanding share of Common Stock, the Purchase
Price would be reduced by 50%. If the Company issues as a dividend on its Common
Stock any securities which are convertible into, or exchangeable for, shares of
its Common Stock, such dividend will be treated as a dividend of the Common
Stock into which the securities may be converted, or for which they may be
exchanged, and the Purchase Price shall be proportionately reduced.
(b) If the outstanding shares of Common Stock are subdivided into a
greater number of shares of Common Stock, then the Purchase Price will be
proportionately reduced at the opening of business on the day following the day
when the subdivision becomes effective, and if the outstanding shares of the
Common Stock are combined into a smaller number of
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shares of Common Stock, the Purchase Price will be proportionately increased at
the opening of business on the day following the day when the combination
becomes effective.
(c) If by reason of a merger, consolidation, reclassification or
similar corporate event, the holders of the Common Stock receive securities or
assets other than Common Stock, upon exercise of this Option after that
corporate event, the Holder of this Option will be entitled to receive the
securities or assets the Holder would have received if the Holder had exercised
this Option immediately before the first such corporate event and not disposed
of the securities or assets received as a result of that or any subsequent
corporate event.
SECTION 3.2. Upon each adjustment of the applicable Purchase Price
pursuant to Section 3.1 hereof, this Option will after the adjustment evidence
the right to purchase, at the adjusted Purchase Price, the number of shares
(calculated to the nearest hundredth) obtained by (i) multiplying the number of
shares issuable on exercise of this Option immediately prior to the adjustment
by the Purchase Price in effect immediately prior to the adjustment and (ii)
dividing the resulting product by the Purchase Price in effect immediately after
the adjustment. However, the Company will not be required to issue a fractional
share or to make any payment in lieu of issuing a fractional share.
SECTION 3.3. Whenever the Purchase Price or the number of shares or type
of securities issuable on exercise of this Option is adjusted as provided in
this Article III, the Company will compute the adjusted Purchase Price and the
adjusted number of Option Shares and will prepare a certificate signed by its
President or any Vice President, and by its Treasurer or Secretary setting forth
the adjusted Purchase Price and the adjusted number of Option Shares and showing
in reasonable detail the facts upon which the adjustments were based and mail a
copy of that certificate to the Holder.
SECTION 3.4. If at any time when this Option is outstanding the Company:
(a) declares a dividend (or authorizes any other distribution) on its
Common Stock payable otherwise than in cash out of its undistributed net
income;
(b) authorizes the granting to the holders of its Common Stock of
rights to subscribe for or purchase any shares of its capital stock or
assets;
(c) authorizes a reclassification, split or combination of the Common
Stock, or a consolidation or merger to which the Company is a party or a
sale or transfer of all or substantially all the assets of the Company; or
(d) authorizes a voluntary or involuntary dissolution, liquidation or
winding up of the Company;
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the Company will mail written notice of such action to the Holder at least 20
days prior to the record date, or other date, for determining the shareholders
entitled to receive the dividend, distribution or rights, or the securities or
other property deliverable as a result of such action.
SECTION 3.5. The form of this Option need not be changed because of any
change in the Purchase Price or in the number of Option Shares, and Options
issued after that change may continue to describe the Purchase Price and the
number of Option Shares which were described in this Option as initially issued.
SECTION 3.6. Before taking any action which would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the Common
Stock, the Company will take all corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock at the adjusted
Purchase Price.
ARTICLE IV
OTHER PROVISIONS RELATING TO
RIGHTS OF OPTION HOLDER
SECTION 4.1. If this Option is duly exercised, the Holder will for all
purposes be deemed to become the holder of record of the Option Shares as to
which this Option is exercised on, and the certificate for such shares will be
dated the date this Option is surrendered for exercise and the Purchase Price
paid in accordance with section 2.2, except that if that date is not a Business
Day, the Holder will be deemed to become the record holder of the Option Shares
on, and the certificate will be dated the next succeeding Business Day. The
Holder will not be entitled to any rights as a holder of the Option Shares,
including the right to vote and to receive dividends, until the Holder becomes
or is deemed to become the holder of such shares pursuant to the terms hereof.
SECTION 4.2. (a) The Company covenants and agrees that it will at all
times reserve and keep available for the exercise of this Option a sufficient
number of authorized but unissued shares of Common Stock to permit the exercise
in full of this Option.
(b) Prior to the issuance of any shares of Common Stock upon exercise
of this Option, the Company shall use its reasonable best efforts to cause those
shares to be authorized for listing, to the extent not previously authorized for
listing, on any securities exchange or trading system upon which the Common
Stock is then listed.
(c) The Company covenants that all shares of Common Stock issued upon
exercise of this Option and against payment of the Purchase Price will be
validly issued, fully paid and nonassessable.
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SECTION 4.3. Notices to the Holder relating to this Option will be
effective on the earlier of actual receipt or the third business day after
mailing by first class mail (which shall be certified or registered, return
receipt requested), postage prepaid, addressed to the Option Holder at the
address shown on the books of the Company.
ARTICLE V
TREATMENT OF OPTION HOLDER
SECTION 5.1. Prior to presentation of this Option for registration of
transfer, the Company may treat the Holder for all purposes as the owner of this
Option and the Company will not be affected by any notice to the contrary.
ARTICLE VI
COMBINATION, EXCHANGE AND TRANSFER OF OPTIONS
SECTION 6.1. Any transfer permitted under this Option will be made by
surrender of this Option to the Company at its principal office with the Form of
Assignment duly executed and funds sufficient to pay any transfer tax. In such
event the Company will, without charge, execute and deliver a new Option to and
in the name of the assignee named in the instrument of assignment and this
Option will promptly be canceled, and if the assignor does not transfer all of
its Options hereunder, the Company will execute and deliver a new Option to and
in the name of the assignor representing the remaining Options held by the
assignor.
SECTION 6.2. This Option may be divided or combined with other Options
which carry the same rights upon presentation of them at the principal office of
the Company together with a written notice signed by the Holder, specifying the
names and denominations in which new Options are to be issued.
SECTION 6.3. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Option,
and, in the case of loss, theft or destruction, of reasonably satisfactory
indemnification, or, in the case of mutilation, upon surrender of the mutilated
Option, the Company will execute and deliver a new Option bearing the same terms
and date as the lost, stolen or destroyed Option, which will thereupon become
void.
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ARTICLE VII
REGISTRATION UNDER THE SECURITIES ACT OF 1933
SECTION 7.1. (a) If, at any time prior to the Expiration Date, the Company
shall file a registration statement with the Securities and Exchange Commission
(the "Commission") for the sale on behalf of the Company of the Company's equity
securities while this Option or the Option Shares are outstanding, the Company
shall give the Holder at least 20 days prior written notice of the filing of
such registration statement. If requested by the Holder in writing within 20
days after receipt of any such notice, the Company shall cause to be included
all or, at Holder's option, any portion of the Option Shares and/or other
securities then issuable upon exercise of the Options (collectively, the
"Registrable Securities") designated in the Holder's request, in the
registration statement, and will use its best efforts through its officers,
directors, auditors, and counsel to cause such registration statement to become
effective as promptly as practicable, provided, however, that:
(i) the Company shall not be required to include any of the Registrable
Securities if, by reason of such inclusion, the Company shall be required to
prepare and file a registration statement on a form promulgated by the
Commission different from that which the Company otherwise would use;
(ii) if any managing underwriter is purchasing or arranging for the sale
of the securities then being offered by the Company under such registration
statement, then such Holder (i) shall agree to have the Registrable Securities
being so registered sold to or by such managing underwriter on terms
substantially equivalent to the terms upon which the Company is selling the
securities so registered, (ii) if such managing underwriter so requests, the
Holder shall delay the sale of such securities for a period of up to twelve (12)
months, commencing with the effective date of such registration statement, and
(iii) shall complete and execute all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of the applicable underwriting arrangements;
(iii) if in the written opinion of the Company's managing underwriter, if
any, for the offering contemplated by such registration statement, the inclusion
of all or a portion of the Registrable Securities requested to be registered,
when added to the securities being registered by the Company or any selling
shareholder, will exceed the maximum amount of the Company's securities which
can be marketed (A) without adversely affecting the offering price of the
Company's securities, or (B) without otherwise materially adversely affecting
the entire offering, then the Company may exclude from such offering all or a
pro rata portion of the Registrable Securities requested to be registered by the
Holder as required by the managing underwriter, based on the relative numbers of
securities owned by all selling shareholders (including the Holder), or all the
Registrable Securities requested to be registered by the Holder if the managing
underwriter excludes from such offering all securities requested to be
registered by all selling shareholders;
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(iv) in the event all or a portion of the Holder's Registrable Securities
are not registered pursuant to this Section 7.1(a), the Holder shall retain any
remaining registration rights for its Registrable Securities (to the extent not
registered) as set forth in Sections 7.1(a) and 7.1(b) hereof.
(b) If, at any time prior to the Expiration Date, provided the
Company is then subject to the reporting requirements of Sections 13 and 15 (d)
of the Securities Exchange Act of 1934, as amended, the Company shall receive a
written request from Holders of not less than fifty percent (50%) of the
aggregate number of Options and/or Registrable Securities then outstanding to
register the sale of all or part of the Registrable Securities, the Company
shall, as promptly as practicable, prepare and file with the Commission a
registration statement sufficient to permit the public offering and sale of the
Registrable Securities through the facilities of all appropriate securities
exchanges upon which the Common Stock may then be listed and the
over-the-counter market, and will use its best efforts through its officers,
directors, auditors and counsel to cause such registration statement to become
effective as promptly as practicable; PROVIDED, HOWEVER, that the Company shall
be obligated to file no more than one such registration statement; and PROVIDED
FURTHER, that such registration may be extended or delayed by the Company for a
period of up to ninety (90) days if, upon the advice of counsel at the time such
registration is required to be filed, or at the time the Company is required to
exercise its best efforts to cause such registration statement to become
effective, such delay is advisable and in the best interests of the Company
because of the existence of non-public material information, or to allow the
Company to complete any pending audit of its financial statements; and PROVIDED
FURTHER, that the Company shall not be obligated to file a registration
statement pursuant to this Section after a minimum of 50% of the Registrable
Securities have been offered the right to participate in a Company initiated
registration statement pursuant to Section 7.1(a) hereof.
(c) In the event of a registration pursuant to the provisions of this
Section 7.1, the Company shall use its best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such reasonable number of jurisdictions as the
Holder may reasonably request; PROVIDED, HOWEVER, that the Company shall not be
required to qualify to do business in any state by reason of this Section 7.1 in
which it is not otherwise required to qualify to do business.
(d) The Company shall keep effective any registration or
qualification contemplated by this Section 7.1 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document, and communication for such period of
time as shall be required to permit the Holders to complete the offer and sale
of the Registrable Securities covered thereby. The Company shall in no event be
required to keep any such registration or qualification in effect for a period
in excess of nine months from the date on which the Holder is first free to sell
the Registrable Securities; PROVIDED, HOWEVER, that, if the Company is required
to keep any such registration or qualification in effect with respect to
securities other than the Registrable Securities beyond such period, the Company
shall keep such registration or qualification in effect as it relates to the
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Registrable Securities for so long as such registration or qualification remains
or is required to remain in effect in respect of such other securities.
(e) The Holder of Registrable Securities being so registered agrees
to pay all applicable underwriting discounts and commissions, brokerage
commissions and transfer taxes and fees with respect to the Registrable
Securities owned by the Holder being registered and the costs of the Holder's
counsel and/or accountants. The Company will pay all other costs and expenses in
connection with a registration statement to be filed pursuant to this Section
7.1 hereof including, without limitation, the fees and expenses of counsel for
the Company, the fees and expenses of the Company's accountants and all other
costs and expenses incident to the preparation, printing and filing under the
Securities Act of any such registration statement, each prospectus and all
amendments and supplements thereto, the costs incurred in connection with the
qualification of such securities for sale in such reasonable number of states
the Holder has designated, including fees and disbursements of counsel for the
Company, and the costs of supplying a reasonable number of copies of the
registration statement, each preliminary prospectus, final prospectus and any
supplements or amendments thereto to the Holder.
(f) In the event of a registration pursuant to the provisions of this
Section 7.1, the Company shall furnish to the Holder such reasonable number of
copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of copies
of each prospectus contained in such registration statement and each supplement
or amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Securities Act and the rules and regulations
thereunder, as the Holder may reasonably request to facilitate the disposition
of this Option and/or the Option Shares included in such registration.
(g) In the event of a registration pursuant to the provision of this
Section 7.1 in which there is no underwriter, the Company shall furnish the
Holder with an opinion of its counsel (reasonably acceptable to the Holder) to
the effect that (i) the registration statement has become effective under the
Securities Act and no order suspending the effectiveness of the registration
statement, preventing or suspending the use of the registration statement, any
preliminary prospectus, any final prospectus, or any amendment or supplement
thereto has been issued, nor has the Commission or any securities or blue sky
authority of any jurisdiction instituted or threatened to institute any
proceedings with respect to such an order, and (ii) the registration statement
and each prospectus forming a part thereof (including each preliminary
prospectus), and any amendment or supplement thereto, complies as to form with
the Securities Act and the rules and regulations thereunder. Such opinion shall
also state the jurisdictions in which the Registrable Securities have been
registered or qualified for sale pursuant to the provisions of Section 7.1(c).
(h) In the event of a registration pursuant to the provision of this
Section 7.1, the Company shall enter into a cross-indemnity agreement and a
contribution agreement, each in customary form, with each underwriter, if any,
to the extent required by the underwriter(s) and, if requested, enter into an
underwriting agreement containing conventional representations,
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warranties, allocation of expenses, and customary closing conditions, including
but not limited to, opinions of counsel and accountants' cold comfort letters,
with any underwriter who acquires the Registrable Securities.
(i) The Company agrees that after an initial public offering of its
securities (if any) and until the Registrable Securities have been sold under a
registration statement or pursuant to Rule 144 under the Securities Act, it
shall use its best efforts to keep current in filing all reports, statements and
other materials required to be filed with the Commission to permit holders of
this Option and/or the Option Shares to sell such securities under Rule 144.
ARTICLE VIII
OTHER MATTERS
SECTION 8.1. (a) This Option and any Option Shares may not be sold,
transferred, pledged, hypothecated or otherwise disposed of except as follows:
(i) by will or the laws of descent and distribution; or (ii) incident to a
decree of divorce.
(b) Unless the Option Shares have been registered under the
Securities Act, upon exercise of any of the Options and the issuance of any of
the Option Shares, all certificates representing Option Shares shall bear on the
face thereof substantially the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be sold, offered for sale, assigned, transferred or
otherwise disposed of, unless registered pursuant to the
provisions of that Act or unless an opinion of counsel to the
issuer is obtained stating that such disposition is in
compliance with an available exemption from such registration.
SECTION 8.2. All the covenants and provisions of this Option by or for the
benefit of the Company will bind and inure to the benefit of its successors and
assigns.
SECTION 8.3. All notices and other communications under this Option must
be in writing. Any notice or communication to the Company will be effective upon
the earlier of actual receipt or the third business day after mailing by
first-class mail (which shall be certified
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or registered, return receipt requested), postage prepaid, addressed (until
another address is designated by the Company) as follows:
Pan American World Airways, Inc.
9300 N.W. 36th Avenue
Miami, Florida 33128
Attention: Chairman of the Board
Any notice or demand authorized by this Option to be given or made by the
Company to the Holder must be given in accordance with Section 4.3.
SECTION 8.4. The validity, interpretation and performance of this Option
will be governed by the laws of the State of Florida.
SECTION 8.5. Nothing in this Option will give any person, corporation or
other entity other than the Company and the Holder(s) any right or claim under
this Option, and all agreements in this Option will be for the sole benefit of
the Company, the Holder(s) and their respective successors.
SECTION 8.6. The Article headings in this Option are for convenience only,
are not part of this Option and will not affect the interpretation of its terms.
IN WITNESS WHEREOF, this Option has been duly executed by the Company as
of the 8th day of March, 1996.
PAN AMERICAN WORLD AIRWAYS,
INC.
By: /s/ ILLEGIBLE
---------------------------
Name: /ILLEGIBLE/
Title: Chairman
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SUBSCRIPTION FORM
To be Executed By The Option Holder
To Exercise The Option In Whole Or In Part:
To: Pan American World Airways, Inc.
The undersigned (__________________________________)
Please insert Social Security or other
identifying number of Holder
hereby irrevocably elects to exercise the right of purchase represented by the
within Option for, and to purchase thereunder, _____________________ shares of
Common Stock of Pan American World Airways, Inc. and tenders payment to the
order of Pan American World Airways, Inc. in the amount of $_________. The
undersigned requests that certificates for those shares of Common Stock be
issued as follows:
Name:___________________________________
Address:________________________________
Deliver to:_____________________________
Address:________________________________
and that, if the number of shares of Common Stock is not all the shares of
Common Stock purchasable by exercise of the Option, that a new Option for the
balance of the shares of Common Stock purchasable under the within Option be
registered in the name of, and delivered to, the undersigned at the address
stated below:
Address:________________________________
Date:___________________________________
Signature _____________________________
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EXHIBIT 7
PAN AM CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
(NON-EMPLOYEE DIRECTOR)
1. GRANT OF OPTION. In accordance with and subject to the terms and
conditions of (A) the Pan Am Corporation 1996 Stock Option Plan, as it may be
amended from time to time (the "PLAN"), a copy of which is attached hereto as
Exhibit A, and (B) this Nonqualified Stock Option Agreement (the "AGREEMENT"),
Pan Am Corporation, a Florida corporation (the "COMPANY"), grants to the
optionee identified on Schedule 1 attached hereto (the "OPTIONEE") a
nonqualified stock option (the "OPTION") to purchase the number of shares (the
"SHARES") of its Common Stock, $.0001 par value, set forth on Schedule 1, at the
option price set forth in Schedule 1.
2. ACCEPTANCE BY OPTIONEE. The exercise of the Option or any portion
thereof is conditioned upon acceptance by the Optionee of the terms and
conditions of this Agreement, as evidenced by his execution of Schedule 1 to
this Agreement and the delivery of an executed copy of Schedule 1 to the
Company.
3. VESTING OF OPTION. The Option shall become exercisable in accordance
with the vesting schedule set forth in Schedule 1.
4. EXPIRATION OF OPTION. The Option shall expire on the date set forth in
Schedule 1, and may not be exercised after such date.
5. PROCEDURE FOR EXERCISE. The Option may be exercised for the number of
Shares specified in a written notice delivered to the Company at least ten days
prior to the date on which purchase is requested, accompanied by full payment,
in the manner and subject to the terms and conditions set forth in the Plan.
Notwithstanding the foregoing, the Option may not be exercised as to less than
ten Shares at any time, or, if less than ten Shares, the number of Shares
subject to the Option. If any applicable law requires the Company to take any
action with respect to the Shares specified in such notice, or if any action
remains to be taken under the Articles of Incorporation or Bylaws of the Company
to effect due issuance of the Shares, then the Company shall take such action
and the day for delivery of such Shares shall be extended for the period
necessary to take such action. Neither the Optionee nor any other person
entitled to exercise the Option shall be, or have any rights or privileges of, a
shareholder of the Company in respect of any of the Shares issuable upon
exercise of the Option, unless and until the Shares are issued to the Optionee.
6. REPRESENTATIONS AS TO PURCHASE OF SHARES. As a condition of the
Company's obligation to issue Shares upon exercise of the Option, if requested
by the Company, the Optionee shall, concurrently with the delivery of the stock
certificate representing the Shares so purchased, give such written assurances
to the Company, in the form and substance that its counsel reasonably requests,
to the effect that the Optionee is acquiring the Shares for investment and
without any present intention of reselling or redistributing the same in
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violation of any applicable law. In the event that the Company elects to
register under the Securities Act of 1933 and any applicable state laws the
Shares which are the subject of the Option, the issuance of such Shares shall
not be subject to the restrictions contained in this paragraph 7.
7. COMPLIANCE WITH APPLICABLE LAW. The issuance of the Shares pursuant to
the exercise of this Option is subject to compliance with all applicable laws,
including without limitation laws governing withholding from employees and
nonresident aliens for income tax purposes.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
as of the Date of Grant set forth in Schedule 1.
PAN AM CORPORATION
By: /s/ JOHN J. OGILBY
--------------------------------------
John J. Ogilby, Jr., General Counsel
and Chief Financial Officer
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<PAGE>
SCHEDULE 1
NONQUALIFIED STOCK OPTION AGREEMENT
Name of Optionee: Phillip Frost, M.D.
Number of Shares: 20,000
Option Price Per Share: $5.00
Date of Grant: 4/24/96
Expiration Date: 4/23/06
Vesting Schedule: Options vest in equal portions over
three years commencing on 4/24/97.
The undersigned agrees to the terms and conditions of the Nonqualified
Stock Option Agreement of which this Schedule 1 is a part, and acknowledges
receipt of the prospectus relating to the Plan and of the Company's most recent
annual report to shareholders.
Date Accepted: 11/8/96 /s/ PHILLIP FROST
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Optionee
###-##-####
------------------------------------
Social Security Number
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