-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vl1jvZinheNmJ9b76+jYQgV5Am+mfiZGRFJFEF89SBPJ491vxFG7bsurUuPT7aPQ 5jtQaAJS5gv6vYESosRd1A== 0000950170-96-000754.txt : 19960910 0000950170-96-000754.hdr.sgml : 19960910 ACCESSION NUMBER: 0000950170-96-000754 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19960906 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ZANART ENTERTAINMENT INC CENTRAL INDEX KEY: 0000803352 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 592716063 STATE OF INCORPORATION: FL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-46829 FILM NUMBER: 96626995 BUSINESS ADDRESS: STREET 1: 7641 BURENT AVE CITY: VAN NUYS STATE: CA ZIP: 91405 BUSINESS PHONE: 8189049797 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FROST PHILLIP MD ET AL CENTRAL INDEX KEY: 0000898860 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 4400 BISCAYNE BLVD CITY: MIAMI STATE: FL ZIP: 33137-3227 BUSINESS PHONE: 3055756001 MAIL ADDRESS: STREET 1: 4400 BISCAYNE BLVD CITY: MIAMI STATE: FL ZIP: 33137-3227 SC 13D 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. _____)* ZANART ENTERTAINMENT INCORPORATED (Name of Issuer) COMMON STOCK, $.0001 PAR VALUE (Title of Class of Securities) 989004-403 (Cusip Number) RICHARD C. PFENNIGER, JR., 4400 BISCAYNE BOULEVARD, MIAMI, FL 33137 (305) 575-6000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) ------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of the Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [X]. Check the following box if a fee is being paid with the statement [ ] (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filed out for a reporting person's initial on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). (Continued on following page(s)) Page 1 of 39 Exhibit Index on Page 10 CUSIP NO. 989004-403 13D PAGE 2 OF 39 PAGES - -------------------------------------------------------------------------------- 1 NAME OF REPORTING S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON PHILLIP FROST, M.D. SS# ###-##-#### - -------------------------------------------------------------------------------- 2 Check the appropriate Box if a Member of a Group (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFI- ------------------------------------------------------------ CIALLY 8 SHARED VOTING POWER OWNED BY 533,333 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 533,333 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 533,333 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.92% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- CUSIP NO. 989004-403 13D PAGE 3 OF 39 PAGES - -------------------------------------------------------------------------------- 1 NAME OF REPORTING S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON FROST-NEVADA, LIMITED PARTNERSHIP IRS I.D. #59-2749083 - -------------------------------------------------------------------------------- 2 Check the appropriate Box if a Member of a Group (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEVADA - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFI- ------------------------------------------------------------ CIALLY 8 SHARED VOTING POWER OWNED BY 533,333 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 533,333 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 533,333 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.92% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- CUSIP NO. 989004-403 13D PAGE 4 OF 39 PAGES - -------------------------------------------------------------------------------- 1 NAME OF REPORTING S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON FROST-NEVADA CORPORATION IRS I.D. #59-2749057 - -------------------------------------------------------------------------------- 2 Check the appropriate Box if a Member of a Group (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* 00 - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEVADA - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFI- ------------------------------------------------------------ CIALLY 8 SHARED VOTING POWER OWNED BY 533,333 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 WITH ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 533,333 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 533,333 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.92% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- Item 1. SECURITY AND ISSUER This Schedule 13D relates to the Common Stock, $.0001 par value (the "Shares") of Zanart Entertainment Incorporated (the "Issuer"). The principal executive offices of the Issuer are located at 7641 Burnet Avenue, Van Nuys, California, 91405. Item 2. IDENTITY AND BACKGROUND. This Schedule 13D is being filed by Phillip Frost, M.D., Frost-Nevada, Limited Partnership (the "Partnership"), and Frost-Nevada Corporation (collectively, the "Reporting Persons"). Information regarding each of the Reporting Persons is set forth below. Dr. Frost's present principal occupation is as Chairman of the Board of Directors and Chief Executive Officer of IVAX Corporation, a Florida corporation, which through its subsidiaries is engaged primarily in the research, development, manufacturing, marketing and distribution of health care products. Dr. Frost's principal business address is 4400 Biscayne Boulevard, Miami, Florida 33137. The Partnership is a limited partnership organized and existing under the laws of the State of Nevada with its principal office and business address located at 3500 Lakeside Court, Suite 200, Reno, Nevada 89509. The principal business of the Partnership is the investment in marketable securities, precious metals and commodities and real estate located in Nevada. Frost-Nevada Corporation is the sole general partner, and Dr. Frost is the sole limited partner, of the Partnership. Frost-Nevada Corporation is a corporation organized and existing under the laws of the State of Nevada with its principal office and business address located at 3500 Lakeside Court, Suite 200, Reno, Nevada 89509. The principal business of Frost-Nevada Corporation is acting as the general partner of the Partnership. Dr. Frost is the sole shareholder, a director and an officer of Frost-Nevada Corporation. Neil Flanzraich is a director and an officer of Frost-Nevada Corporation. Neil Flanzraich's present principal occupation is as an attorney with the law firm of Heller, Ehrman, White & McAuliffe. Mr. Flanzraich's principal business address is 525 University Avenue, Palo Alto, California 94301-1900. To the best knowledge of each of the Reporting Persons, neither such Reporting Person nor Mr. Flanzraich has been convicted in any criminal proceeding (excluding traffic violations and similar misdemeanors), or was a party to any civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was subject to a judgment, decree or final order enjoining future violations of, or prohibiting activity subject to, federal or state securities laws or finding any violation with respect to such laws during the last five years. Each of Dr. Frost and Mr. Flanzraich is a citizen of the United States. Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The aggregate purchase price of Shares of the Issuer purchased by the Partnership reported in this Schedule 13D, was $100,050. The source of funds used by the Partnership in making these purchases was working capital of the Partnership. No portion of the consideration used by the Partnership in making the purchases described above was borrowed or otherwise obtained for the purpose of acquiring, holding, trading or voting the Shares. Page 5 of 39 Item 4. PURPOSE OF TRANSACTION. The Shares were acquired by one or more of the Reporting Persons as an investment. The Reporting Persons intend to monitor their investment in the Shares on a continuing basis. The Reporting Persons may acquire additional Shares (subject to availability of Shares of prices deemed favorable) in the open market, in privately negotiated transactions, by tender offer or otherwise. Alternatively, the Reporting Persons reserve the right to dispose of some or all of their Shares in the open market or in privately negotiated transactions or otherwise depending upon the course of actions that the Reporting Persons or the Issuer pursue, market conditions and other factors. On August 9, 1996, the Issuer entered into an Agreement and Plan of Merger (the "Merger Agreement") with Continucare Corporation ("Continucare"). Pursuant to the Merger Agreement, a wholly-owned subsidiary of the Issuer will merge with and into Continucare (the "Merger") and each issued and outstanding share of Continucare Common Stock (which, as a condition to closing, will not exceed 8,300,000 shares) will be converted into the right to receive one Share of the Issuer. Thereafter, the present shareholders of Continucare will own a majority of the issued and outstanding Shares of the Issuer and will, therefore, be able to control the election of the Board of Directors of the Issuer. The present business of the Issuer will be sold or discontinued within three months after the effective date of the Merger. Immediately upon the effectiveness of the Merger, the present members of the Board of Directors will be required to resign and will be replaced by seven directors to be appointed by Continucare. Pursuant to the Merger Agreement, Dr. Frost will become the Vice Chairman of the Board of Directors of the Issuer after the effectiveness of the Merger. Additionally, the Partnership is the record owner of 1,000,000 shares of Continucare Common Stock, representing approximately 12% of Continucare's issued and outstanding capital stock. Upon the effectiveness of the Merger, the Partnership will beneficially own 1,533,333 Shares of the Issuer, representing approximately 13.38% of the Issuer's outstanding Shares after the effectiveness of the Merger. The consummation of the Merger is subject to various conditions as set forth in the Merger Agreement. The foregoing description of the Merger Agreement is not intended to be complete and is qualified in its entirety by reference to the Merger Agreement attached hereto as Exhibit 5 and incorporated herein by reference. Although the foregoing represents the range of activities presently contemplated by the Reporting Persons with respect to the Shares, it should be noted that the possible activities of the Reporting Persons are subject to change at any time. Except as otherwise stated herein, none of the Reporting Persons have any present plans or proposals which relate to or would result in any of the actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. Page 6 of 39 Item 5. INTEREST IN SECURITIES OF THE ISSUER. Item 5 is amended in its entirety and restated as follows: AMOUNT OF SHARES PERCENTAGE NAME BENEFICIALLY OWNED OF CLASS* ---- ------------------ ---------- Phillip Frost, M.D. 533,333 ** 16.92% Frost-Nevada Corporation 533,333 ** 16.92% Frost-Nevada, Limited 533,333 ** 16.92% Partnership - ---------------------------- * Based on 3,152,983 Shares consisting of 2,902,983 Shares outstanding as of August 22, 1996, as reported on the Issuer's Schedule 14C Information Statement, dated August 27, 1996, and assumes the conversion by the Partnership of warrants to purchase 250,000 Shares. The number of Shares and warrants noted here have been restated to reflect the effects of a 1-for-2 reverse stock split effected by the Issuer on December 31, 1994. ** These Shares are owned of record by one or more of such Reporting Persons. As the sole limited partner of the Partnership and the sole shareholder, a director and an officer of Frost-Nevada Corporation, the general partner of the Partnership, Dr. Frost may be deemed a beneficial owner of the Shares. Record ownership of the Shares may be transferred from time to time among any or all of Dr. Frost, the Partnership and Frost-Nevada Corporation. Accordingly, solely for purposes of reporting beneficial ownership of the Shares pursuant to section 13(d) under the Securities Exchange Act of 1934, as amended, each of Dr. Frost, the Partnership and Frost-Nevada Corporation will be deemed to be the beneficial owner of Shares held by any of them. Except as described herein under Items 4 and 6, none of the Reporting Persons has engaged in any transaction involving Shares of the Issuer during the past sixty days. Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Except as described herein, none of the Reporting Persons is currently a party to any contract, arrangement, understanding or relationship with any person with respect to any securities of the Issuer. On February 9, 1994, the Issuer granted the Partnership warrants to purchase 250,000 shares at $4.00 per Share as adjusted to reflect a 1-for-2 reverse stock split effected by the Issuer on December 31, 1994, which expire on February 8, 1999. These warrants were issued to the Partnership in connection with a $500,000 loan made by the Partnership to the Issuer. The loan was repaid in May 1995. On August 9, 1996, the Issuer entered into the Merger Agreement pursuant to which a subsidiary of the Issuer will merge with and into Continucare. Pursuant to the Merger Agreement, Dr. Frost will, upon the effectiveness of the Merger, become the Vice Chairman of the Board of Directors of the Issuer and the Partnership will acquire additional shares of the Issuer by virtue of the conversion of its shares in Continucare into Shares of the Issuer. Page 7 of 39 Pursuant to the Merger Agreement, the Issuer has also agreed to file, after the effective date of the Merger, a Registration Statement on Form S-3 or other appropriate form providing for the sale (i) by the holders of Shares of the Issuer received upon the exercise of all outstanding options and warrants to acquire Shares of the Issuer (including the warrants currently held by the Partnership) and (ii) by the shareholders of Continucare of the 8,300,000 Shares of the Issuer to be received in connection with, and as consideration for, the Merger (including the 1,000,000 Shares to be received by the Partnership in the Merger). See the description of the Merger provided in Item 4 above and the copy of the Merger Agreement attached hereto as Exhibit 5. The descriptions of the warrants contained herein is not intended to be complete and is qualified in its entirety by reference to the warrant agreement attached hereto as Exhibit 4 and incorporated herein by reference. Item 7. MATERIAL TO BE FILED AS EXHIBITS 1. Joint Filing Agreement. 2. Power of Attorney granted to Phillip Frost, M.D. by Neil Flanzraich. 3. Second Amended and Restated Agreement of Frost-Nevada, Limited Partnership, Frost-Nevada Corporation and Phillip Frost, M.D. filed pursuant to Rule 13d-l(f)(l)(iii) of the Securities and Exchange Commission. 4. Warrant to Purchase Common Stock of Zanart Entertainment Incorporated (f/k/a Zanart Publishing Incorporated) issued February 9, 1994. 5. Agreement and Plan of Merger, dated August 9, 1996, by and among Continucare Corporation, Zanart Entertainment Incorporated and Zanart Subsidiary, Inc. (incorporated by reference to Zanart Entertainment Incorporated's Current Report on Form 8-K, dated August 9, 1996). Page 8 of 39 SIGNATURES After reasonable inquiry and to the best of the undersigned's knowledge and belief, the undersigned certify that the information set forth in this Statement is true, complete and correct. /s/ PHILLIP FROST, M.D. -------------------------------------- Date: September 6, 1996 Phillip Frost, M.D. FROST-NEVADA, LIMITED PARTNERSHIP * -------------------------------------- Date: September 6, 1996 Neil Flanzraich President of Frost-Nevada Corporation, General Partner FROST-NEVADA CORPORATION * -------------------------------------- Date: September 6, 1996 Neil Flanzraich President *By /s/ PHILLIP FROST, M.D. - -------------------------------------- Phillip Frost, M.D. (Attorney-in-fact pursuant to Power of Attorney) Page 9 of 39 EXHIBIT INDEX EXHIBIT DESCRIPTION PAGE - ------- ----------- ---- 1 Joint Filing Agreement. 2 Power of Attorney granted to Phillip Frost, M.D. by Neil Flanzraich. 3 Second Amended and Restated Agreement of Frost-Nevada, Limited Partnership, Frost-Nevada Corporation and Phillip Frost, M.D. filed pursuant to Rule 13d-l(f)(l)(iii) of the Securities and Exchange Commission. 4 Warrant to Purchase Common Stock of Zanart Entertainment Incorporated (f/k/a Zanart Publishing Incorporated issued February 9, 1994. 5 Agreement and Plan of Merger, dated August 9, 1996, by and among Continucare Corporation, Zanart Entertainment Incorporated and Zanart Subsidiary, Inc. (incorporated by reference to Zanart Entertainment Incorporated's Current Report on Form 8-K, dated August 9, 1996). Page 10 of 39 EX-1 2 EXHIBIT 1 The undersigned hereby agree that this Amendment to the Schedule 13D filed by us with respect to the Common Stock of Zanart Entertainment Incorporated is filed on behalf of each of us. /s/ PHILLIP FROST, M.D. ------------------------------------- Date: September 6, 1996 Phillip Frost, M.D. FROST-NEVADA, LIMITED PARTNERSHIP * ------------------------------------- Date: September 6, 1996 Neil Flanzraich President of Frost-Nevada Corporation, General Partner FROST-NEVADA CORPORATION * ------------------------------------- Date: September 6, 1996 Neil Flanzraich President *By/s/ PHILLIP FROST, M.D. --------------------------------- Phillip Frost, M.D. (Attorney-in-fact pursuant to Power of Attorney) Page 11 of 39 EX-2 3 EXHIBIT 2 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned, in his capacity as President of Frost-Nevada Corporation, a Nevada corporation (the "Corporation"), does hereby make, constitute and appoint PHILLIP FROST, M.D. his true and lawful attorney-in-fact, for him and in his name, place and stead, for the sole and limited purpose of signing any and all statements or reports pursuant to the Securities Exchange Act of 1934, and any amendments thereto, on behalf of the Corporation, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 24th day of May, 1996. /s/ NEIL FLANZRAICH ------------------------------------- NEIL FLANZRAICH, President Page 12 of 39 EX-3 4 EXHIBIT 3 SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF FROST-NEVADA LIMITED PARTNERSHIP THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement") is made and entered into as of the 28th day of December, 1995, by and among FROST-NEVADA CORPORATION, a Nevada corporation, as the general partner (the "General Partner") and PHILLIP FROST, as the limited partner (the "Limited Partner"). W I T N E S S E T H: WHEREAS, on December 30, 1986, the General Partner executed a Certificate of Limited Partnership forming a limited partnership known as "FROST-NEVADA LIMITED PARTNERSHIP" (the "Partnership"), under the Nevada Uniform Limited Partnership Act (the "Act") as in effect at that time in the State of Nevada, which Certificate of Limited Partnership was filed in the Public Records of the Secretary of State of Nevada on December 30, 1986; and WHEREAS, the General Partner and Limited Partner have previously executed a First Amended and Restated Certificate of Limited Partnership of FROST-NEVADA LIMITED PARTNERSHIP on February 16, 1987 and a certificate thereof was filed m the Public Records of the Secretary of State of Nevada on March 16, 1989; WHEREAS, the General Partner and the Limited Partner have executed this Second Amended and Restated Agreement of Limited Partnership of FROST-NEVADA LIMITED PARTNERSHIP as of December 28, 1995; and WHEREAS, this Agreement, dated as of December 27, 1995, is made and entered into by and between the General Partner and the Limited Partner for the purpose of setting forth the rights, obligations, and duties of the General Partner and the Limited Partner. NOW, THEREFORE, the parties hereto hereby agree that the Partnership shall be governed and operated pursuant to the terms of this Agreement of Limited Partnership as hereinafter set forth. ARTICLE I NAME, TERM, PRINCIPAL ADDRESS AND REGISTERED AGENT 1.1 NAME. The name of the Partnership is the FROST-NEVADA LIMITED PARTNERSHIP. 1.2 TERM. The term of the Partnership will continue in full force and effect until December 31, 2055, unless sooner terminated in accordance with the Act (as such term is defined herein) or provisions of this Agreement. 1.3 PRINCIPAL PLACE OF BUSINESS. The office and principal place of business of the Partnership shall be maintained at 3500 Lakeside Court Reno, Washoe County, Nevada 89509. The General Partner may from time to time change such office and principal place of business and in such event the General Partner shall notify the other Partners, in writing, at least ten (10) days prior to the effective date of any such change. The General Partner may establish additional places of business of the Partnership when and where required by the Partnership's business. 1.4 ADDRESSES. The address of each Partner is as follows: GENERAL PARTNER: Frost-Nevada Corporation 3500 Lakeside Court Reno, Nevada 89509 LIMITED PARTNER: Phillip Frost, M.D. 8800 N.W. 36th Street Miami, Florida 33178 A Partner may change its address by written notice to the Partnership and each of the other Partners. 1.5 REGISTERED OFFICE AND REGISTERED AGENT. The location of the Registered Office of the Partnership shall be at 3500 Lakeside Court, Reno, Nevada 89509 and the name of the Registered Agent of the Partnership at such office shall be Walther, Key, Maupin, Oats, Cox, Klaich & Legoy. Said Registered Agent shall keep and maintain at such address the records of the Partnership required to be kept and maintained at such address by the Act. - 2 - ARTICLE II BUSINESS OF THE PARTNERSHIP 2.1 PURPOSE. The purpose of the Partnership is to invest in all types of (i) securities, including without limitation, stocks, bonds, limited partnership interests and option contracts for the purchase or sale of securities or any group or index of securities, (ii) precious metals, including without limitation, contracts for the future delivery of precious metals and option contracts for the purchase or sale of precious metals or futures contracts on precious metals; (iii) commodities, including without limitation, contracts for the future delivery of commodities and option contracts for the purchase or sale of commodities or future contracts on commodities, and (iv) real property on the State of Nevada through the acquisition, holding, construction, development, operation, improvement, leasing, sale or other dealings in real property. 2.2 POWERS. Incident to its purpose, the Partnership is authorized to purchase, invest, hold, mortgage, pledge, sell, lease, manage, construct, renovate, operate, improve, alter, transfer, joint venture or otherwise convey and encumber all or any portion of the Partnership properties and exercise all other rights, powers and privileges and other incidences of ownership with respect thereto at any time and from time to time, to borrow or raise moneys without limitations and to do all other things necessary or appropriate to carry out the foregoing purpose. ARTICLE III CERTAIN DEFINITIONS 3.1 ACT. The Revised Nevada Uniform Limited Partnership Act, as from time to time amended. 3.2 ADJUSTED CAPITAL CONTRIBUTION. The amount contributed to the capital of the Partnership by a Partner as provided in Article IV. 3.3 AFFILIATE. Any person or entity that directly or indirectly controls, is controlled by or is under common control with any other person or entity. For this purpose, the term "control" shall mean the direct or indirect ownership of twenty-five (25 %) or more of the beneficial interests or voting power of any entity or the spouse, lineal ascendants, lineal descendants and the brothers and sisters of a Person, as applicable. 3.4 AUTHORIZED EXPENSES. Expenses that: (a) are specifically consented to in writing by the Limited Partner; (b) are authorized as part of an operating budget that is consented to in writing by the Limited Partner; or (c) do not, when aggregated with all other Partnership expenses that are not authorized by parts (a) or (b) above, total more than $2,500 in a single calendar year. - 3 - 3.5 AVAILABLE CASH. All cash of the Partnership resulting from normal business operations (as distinguished from Extraordinary Events or the sale of all or substantially all of the Partnership's property and/or the dissolution of the Partnership), including, without limitation, dividend income, rental income, and any other income derived from the Partnership property which the General Partner, in its sole and absolute discretion, determines is available for distribution to the Partners after payment of all Partnership cash expenditures, including but not limited to, real and personal property taxes, use taxes, principal and interest payments then due on all loans, (including any mortgages encumbering the Partnership's property), expenses incident to the construction and rental of the Partnership property, insurance, present maintenance, including, but not limited to management fees, brokerage fees, or other fees incurred by the Partnership, capital improvements, accounting and legal fees, and other costs and expenses of the Partnership, and the setting aside of any amounts which the General Partner may determine, in its discretion, to be necessary as a reserve for operating expenses, capital improvements and contingencies. 3.6 CAPITAL ACCOUNT. The account established and maintained by the Partnership for each Partner, as set forth in Section 4.6 hereof. 3.7 CAPITAL CONTRIBUTION. The amount of money and the initial fair market value of any property (other than money) contributed to the Partnership by a Partner with respect to the Partnership Interest held by such Partner. 3.8 CERTIFICATE. The certificate of limited partnership filed with the Secretary of State of the State of Nevada, as the same may be amended from time to time. 3.9 CODE. The Internal Revenue Code of 1986, as same may be amended from time to time. 3.10 EXTRAORDINARY EVENT. Any financing, refinancing, insurance award (other than for substantially complete destruction of all or substantially all of the Partnership's property) and sale of Partnership assets (but less than all or substantially all of such assets), which in accordance with generally accepted accounting principles are attributable to capital but which do not result in a dissolution of the Partnership. 3.11 ORIGINAL CAPITAL CONTRIBUTION. The amount contributedto the capital of the Partnership by a Partner as provided in Article IV. 3.12 PARTNERS. Collectively, the Limited Partner and the General Partner. 3.13 PARTNERSHIP. FROST-NEVADA LIMITED PARTNERSHIP, a Nevada limited partnership. 3.14 PARTNERSHIP INTEREST. The entire ownership interest of a Partner in the Partnership at the relevant time, including the right of such Partner to any and all benefits to which a Partner -4- 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 -5- 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 -6- 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: - 7 - (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. - 8 - 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 -9- 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; -10- (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. - 11 - 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 -12- 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. -13- 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. -14- 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 -15- 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. -16- ARTICLE X BOOKS AND RECORDS; REPORTS 10.1 BOOKS AND RECORDS. The General Partner shall keep adequate books and records at one or more of its places of business, setting forth a true and accurate account of all business transactions arising out of and in connection with the conduct of the Partnership. Partners or their designated representatives shall have the right, at any reasonable time, to have access to and inspect and copy the contents of said books or records. 10.2 ANNUAL REPORTS. The Partners shall be furnished annually by the Partnership with an unaudited financial statement for the year then ended. Upon request by any Partner, the Partnership shall furnish an audited financial statements, with such costs being borne by the Partnership. ARTICLE XI POWER OF ATTORNEY 11.1 POWER OF ATTORNEY. In order to facilitate amendments of this Agreement which require the signatures of the Partners, or a proposed additional or substituted partner, and the preparation and signing of any other documentation in connection with the Partnership including the Certificate of Limited Partnership or any amendments thereto or cancellation thereof, each Partner by his or his signature hereto irrevocably makes, constitutes and appoints the General Partner, and each person who shall hereafter become a General Partner, his true and lawful attorney in his name, place and stead, with the power from time to time to make, execute, swear to, acknowledge, verify, deliver, file, record and publish: (a) any certificates or other instruments which may be required to be filed by the Partnership under the laws of the State of Nevada or of any other state or jurisdiction in which the Partnership shall transact business or in which the General Partner shall deem it advisable to file; (b) all documents, certificates or other instruments which may be required or deemed desirable by the General Partner to effectuate the provisions of any part of this Agreement and to continue the Partnership under the laws of the State of Nevada and of any state or jurisdiction in which it shall do business; and (c) all documents, certificates or other instruments which may be required to effectuate the dissolution and termination of the Partnership or the organization of any new limited partnership occurring by reason of the withdrawal, dissolution, death, bankruptcy, or adjudication of incompetency of the General Partner. -17- 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. -18- 12.6 WAIVER OF PARTITION. The Partners hereby waive any right of partition as to the Partnership's property or any right to take any other action which otherwise might be available to them for the purpose of severing their relationship in connection with Partnership property. 12.7 HEADINGS. The headings, titles and subtitles used in this Agreement are for ease of reference only and shall not control or affect the meaning or construction of any provision hereof. 12.8 AMENDMENTS. This Agreement may be amended by the General Partner as permitted by Section 4.14 hereof and, to the extent necessary, the General Partner shall file or cause to be filed without any additional consent of the Limited Partner any amendment to the Certificate. 12.9 ENTIRE AGREEMENT. This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof. This Agreement replaces and supersedes all previous agreements and amendments entered into by the parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the 27th day of December, 1995. GENERAL PARTNER: Attest: FROST-NEVADA CORPORATION, a Nevada Corporation By: /s/ NEIL FLANZRAICH - ----------------------------- ------------------------- Neil Flanzraich, President [Corporate Seal] LIMITED PARTNER: Witness: By: /s/ PHILLIP FROST, M.D. /s/ ILLIGIBLE ----------------------------- - ------------------------------- PHILLIP FROST, M.D. -19- EX-4 5 EXHIBIT 4 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE LAWS OF ANY OTHER JURISDICTION AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN ANY MANNER WITHOUT (1) REGISTRATION UNDER THE ACT AND THE LAWS OF ANY APPLICABLE JURISDICTION, OR (2) AN OPINION OF COUNSEL IN FORM AND SUBSTANCE ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED. Void after 5:00 p.m. Miami Time, on February 8, 1999 Warrant to Purchase 500,000 Shares of Common Stock WARRANT TO PURCHASE COMMON STOCK OF ZANART PUBLISHING INCORPORATED THIS IS TO CERTIFY that, for value received, Frost Nevada Limited Partnership, a Nevada limited partnership, or registered assigns ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from Zanart Publishing Incorporated, a Florida corporation ("Company"), 500,000 fully paid, validly issued and nonassessable shares of Common Stock, par value $.0001 per share, of the Company ("Common Stock") at a price of $2.00 per share at any time or from time to time during the period from February 9, 1994 to February 8, 1999, but not later than 5:00 p.m. Miami, Florida Time, on February 8, 1999. The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for each share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time, are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price." (a) EXERCISE OF WARRANT. Subject to the provisions of Section (j) hereof, this Warrant may be exercised in whole or in part at any time or from time to time on or after February 9, 1994 and until 5:00 p.m. Miami, Florida Time, on February 8, 1999 ("Expiration Date"); provided, however, that if either such day is a day on which banking institutions in the State of Florida are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise and upon payment as aforesaid of the Exercise Price, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be physically delivered to the Holder. (b) RESERVATION OF SHARES. The Company shall at all times reserve for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of the Warrant. (c) FRACTIONAL SHARES. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of a share, determined as follows: (1) If the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such exchange or listed for trading on the NASDAQ System, the current market value shall be the last reported sale price of the Common Stock on such exchange or system on the last business day prior to the date of exercise of this Warrant or is no such sale is made on such day, the average closing bid and asked prices for such day on such exchange or system; or (2) If the Common Stock is not so listed or admitted to unlisted trading privileges, the current market value shall be the mean of the last reported bid and asked price reported by the National Quotation Bureau, Inc. on the last business day prior to the date of the exercise of this Warrant; or (3) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current market value shall be an amount, not less than book value thereof as at the end of the most recent fiscal year of the Company ending prior to the date of the exercise of the Warrant, determined in such reasonable manner as may be prescribed by the Board of Directors of the Company. -2- (d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. This Warrant is not transferable (other than by will or pursuant to the laws of descent and distribution), and may not be sold, assigned or hypothecated, without the prior written consent of the Company. Subject to the provisions of Section (j), upon surrender of this Warrant to the Company at its principal office or at the office of its transfer agent; if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be cancelled. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof and thereof at the principal office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrant into and for which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner hereof for all purposes and shall not be affected by any notice to the contrary, until presentation hereof for registration and transfer. The Company may require payment of a sum sufficient to cover any tax that may be imposed in connection with any transfer, split up, combination or exchange of the Warrant (other than any such tax payable in respect of the issuance of Common Stock to the registered holder of the Warrant upon exercise). The holder of this Warrant, by his acceptance hereof, agrees that he will not (i) transfer this Warrant prior to delivery to the Company of an opinion of counsel that such transfer may be made under the Act or until registration of the Warrants under the Act has become effective; or (ii) transfer any Warrant prior to delivery to the Company of the opinion of such counsel that such transfer may be made under the Act or until registration of such Warrant under the Act has become effective. -3- (e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein. (f) ANTI-DILUTION. In the event that the outstanding shares of Common Stock are at any time increased or decreased in number, or changed into or exchanged for a different number or kind of shares or other security of the Company or of another corporation through reorganization, merger, consolidation, liquidation, recapitalization or, in the case of Common Stock, stock split, reverse split, combination of shares or stock dividends payable with respect to such Common Stock, appropriate adjustments shall be made in the number and kind of such securities then subject to this Warrant and in the exercise price of this Warrant, effective as of the date of such occurrence, so that the position of the Holder upon exercise of this Warrant shall be the same as it would have been had it been owned immediately prior to the occurrence of such event; provided, however, that in no event shall two adjustments be made for the same event. For example, if the Company declares a 2-for-1 stock dividend or stock spilt, then the number of shares of Common Stock subject to this Warrant shall be doubled and the per share exercise price of this Warrant shall be reduced by 50 percent. Such adjustments shall be made successively whenever any event described by this Section (f) shall occur. (g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as required by the provisions of the foregoing Section, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer's certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer's certificate shall be made available at all reasonable times for inspection by the holder or any holder of a Warrant executed and delivered pursuant to Section (a) and the Company shall, forthwith after each such adjustment, mail a copy by certified mail of such certificate to the Holder or any such holder. (h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be outstanding, (i) if the Company shall pay any dividend or make any distribution upon the Common Stock; or (ii) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any share of any class or any other rights; or (iii) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and -4- assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least ten days prior to the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up. (i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in the case of any consolidation or merger of the Company with or into another corporation (other than a merger with a subsidiary, in which merger the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease or conveyance to another corporation of the property of the Company as an entirety, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the Holder shall have the right thereafter by exercising this Warrant at any time prior to the expiration of the Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section (i) shall similarly apply to successive reclassifications, capital reorganizations and changes of the shares of Common Stock and to successive consolidations, mergers, sales or conveyances. In the event that in connection with any such capital reorganization or reclassification, consolidation, merger, sale or conveyance, additional shares of Common Stock shall be issued in exchange, conversion, substitution or payment, in whole or in part, for a security of the Company other than Common Stock, any such issue shall be treated as an issue of Common Stock covered by the provisions of Section (f) hereof. (j) TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. Subject to Section (d), this Warrant or the Warrant Shares or any -5- other security issued or issuable upon exercise of this Warrant may not be sold or otherwise disposed of except as follows: (1) To a person who, in the opinion of the Company, is a person to whom this Warrant or Warrant Shares may legally be transferred without registration and without the delivery of a current prospectus under the Act with respect and then only against receipt of an agreement of such person to comply with the provisions of this Section (j) with respect to any resale or other disposition of such securities; or (2) pursuant to an effective registration statement meeting the requirements of the Act relating to such securities and the offering thereof for such sale or disposition. ZANART PUBLISHING INCORPORATED By: ---------------------------- Thomas Zotos, President [SEAL] Dated: Attest: - ------------------------------ - ----------------- Secretary -6- ELECTION TO PURCHASE (To be signed only upon exercise of Warrant) TO: Zanart Publishing Incorporated (the "Company") The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise the right of purchase represented by such Warrant for, and to purchase thereunder, ________________ shares of Common Stock, par value $.0001 per share, of the Company, and herewith makes payment of $__________ (number of shares x $2.00) therefor, and requests that the certificates for such shares be issued in the name of and be delivered to ______________________ whose address is ______________________________ and if such shares shall not be all of the shares purchasable hereunder, that a new Warrant of like tenor for the balance of the shares purchasable hereunder be delivered to the undersigned. Dated:_______________ FROST NEVADA LIMITED PARTNERSHIP By:________________________________ Authorized Representative ASSIGNMENT (To be signed only upon such assignment) For value received, the undersigned hereby sells, assigns, and transfers unto _________________________________________________________________________ ______________________________________________________________________________ the right represented by the within Warrant to purchase from Zanart Publishing Incorporated (the "Company") _____ shares of Common Stock, par value $.0001 per share, of the Company, to which the within Warrant relates, and appoints _____________________________ attorney to transfer such right on the books of the Company with full power of substitution in the premises. Dated:_______________ FROST NEVADA LIMITED PARTNERSHIP By:________________________________ Authorized Representative -----END PRIVACY-ENHANCED MESSAGE-----