-----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, KdKg8SgQ0RxB/U48NrwM/c5TzLWfvjPAyxBk7OJiisB8PR12ZZHwG6u3A4tyZEBP Ql0oda2kHcmtwXpCYAf8bQ== 0000912057-00-053961.txt : 20001219 0000912057-00-053961.hdr.sgml : 20001219 ACCESSION NUMBER: 0000912057-00-053961 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20001218 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MOBILE AMERICA CORP CENTRAL INDEX KEY: 0000067199 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 591218935 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-08080 FILM NUMBER: 791153 BUSINESS ADDRESS: STREET 1: 10475 FORTUNE PARKWAY STREET 2: SUITE 110 CITY: JACKSONVILLE STATE: FL ZIP: 32256 BUSINESS PHONE: 9043636339 MAIL ADDRESS: STREET 1: 10475 FORTUNE PARKWAY STREET 2: SUITE 110 CITY: JACKSONVILLE STATE: FL ZIP: 32256 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SMITH R LEE CENTRAL INDEX KEY: 0000922891 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1200 RIVERPLACE BLVD STREET 2: SUITE 902 CITY: JACKSONVILLE STATE: FL ZIP: 32207 BUSINESS PHONE: 9042600105 MAIL ADDRESS: STREET 1: 1200 RIVERPLACE BLVD STREET 2: SUITE 902 CITY: JACKSONVILLE STATE: FL ZIP: 32207 SC 13D 1 a2032992zsc13d.txt SC 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 2) FORTUNE FINANCIAL, INC. (Name of Issuer) COMMON STOCK, PAR VALUE $.025 PER SHARE (Title of Class of Securities) 607235504 (CUSIP Number) James L. Main, Esq. Holland & Knight LLP 50 North Laura Street, Suite 3900 Jacksonville, Florida 32202 (904) 798-7319 ----------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) NOVEMBER 15, 2000 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box / /. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 7 pages)
- ------------------------------------------------------ ----------------------------------------- CUSIP No. 607235504 Page 2 of 8 --------- - ------------------------------------------------------ ----------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Names of Reporting Person: 1 R. Lee Smith ------------ I.R.S. Identification No. of Above Person (entity only) - -------------------------------------------------------------------------------------------------------------------- 2 Check the Appropriate Box if a Member of a Group* (a) / / (b) /x/ - -------------------------------------------------------------------------------------------------------------------- SEC use only 3 - -------------------------------------------------------------------------------------------------------------------- Source of Funds* 4 PF - -------------------------------------------------------------------------------------------------------------------- Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) 5 - -------------------------------------------------------------------------------------------------------------------- Citizenship or Place of Organization 6 United States Citizen - -------------------------------------------------------------------------------------------------------------------- Sole voting power 7 1,453,232 --------------------------------------------------------------------------------------- Number of shares Shared voting power beneficially 8 -0- owned by each --------------------------------------------------------------------------------------- Reporting person with Sole dispositive power 9 1,453,232 --------------------------------------------------------------------------------------- Shared dispositive power 10 -0- - -------------------------------------------------------------------------------------------------------------------- Aggregate Amount Beneficially Owned by Each Reporting Person 11 1,453,232 - -------------------------------------------------------------------------------------------------------------------- Check box if the Aggregate Amount in Row (11) Excludes Certain Shares* / / /x/ 12 - -------------------------------------------------------------------------------------------------------------------- Percent of Class Represented by Amount in Row (11) 13 17.9% - -------------------------------------------------------------------------------------------------------------------- Type of Reporting Person* 14 IN - -------------------------------------------------------------------------------------------------------------------- - SEE INSTRUCTIONS BEFORE FILLING OUT!
- ------------------------------------------------------ ----------------------------------------- CUSIP No. 607235504 Page 3 of 8 --------- - ------------------------------------------------------ ----------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Names of Reporting Person: 1 Allan J. McCorkle ----------------- I.R.S. Identification No. of Above Person (entity only) - -------------------------------------------------------------------------------------------------------------------- 2 Check the Appropriate Box if a Member of a Group* (a) / / (b) /x/ - -------------------------------------------------------------------------------------------------------------------- SEC use only 3 - -------------------------------------------------------------------------------------------------------------------- Source of Funds* 4 Not Applicable - -------------------------------------------------------------------------------------------------------------------- Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) 5 - -------------------------------------------------------------------------------------------------------------------- Citizenship or Place of Organization 6 United States Citizen - -------------------------------------------------------------------------------------------------------------------- Sole voting power 7 -0- --------------------------------------------------------------------------------------- Number of shares Shared voting power beneficially 8 2,872,110 owned by each --------------------------------------------------------------------------------------- Reporting person with Sole dispositive power 9 -0- --------------------------------------------------------------------------------------- Shared dispositive power 10 2,872,110 - -------------------------------------------------------------------------------------------------------------------- Aggregate Amount Beneficially Owned by Each Reporting Person 11 2,872,110 - -------------------------------------------------------------------------------------------------------------------- Check box if the Aggregate Amount in Row (11) Excludes Certain Shares* /x/ 12 - -------------------------------------------------------------------------------------------------------------------- Percent of Class Represented by Amount in Row (11) / / 13 38.5% - -------------------------------------------------------------------------------------------------------------------- Type of Reporting Person* 14 IN - -------------------------------------------------------------------------------------------------------------------- SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------------------------- ---------------------------------------- CUSIP No. 607235504 Page 4 of 8 --------- - ----------------------------- ---------------------------------------- This Amendment No. 2 amends the Statement on Schedule 13D filed by R. Lee Smith and Allan J. McCorkle relating to the common stock, $.025 par value, of Fortune Financial, Inc., a Florida corporation. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Item No. 3 of this Schedule 13D is hereby amended by adding the following paragraph: "The amount of funds used in the acquisition of the Warrant and the Note (each as defined below) to which this Amendment No. 2 relates is $800,000 derived from Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051), a retirement account for Mr. Smith's benefit." ITEM 4. PURPOSE OF TRANSACTION. Item No. 4 of this Schedule 13D is hereby amended by adding the following paragraphs: "As of November 15, 2000, Mr. Smith and another investor entered into a certain Securities Purchase Agreement (the "Securities Purchase Agreement") with the Issuer. Pursuant to the Securities Purchase Agreement, as of that date Mr. Smith acquired in exchange for $800,000 in cash (i) the Issuer's 9% Convertible Note (the "Note") and (ii) the Issuer's Warrant for 330,579 shares of Common Stock with an initial exercise price of $2.42 per share, subject to adjustment in certain events (the "Warrant"). The Note is convertible (on a dollar for dollar basis, subject to adjustment in certain events) at the option of the holder into shares of a to-be-created class of the Issuer's preferred stock (the "Preferred Stock"), which in turn is contemplated to be convertible into shares of the Issuer's Common Stock at an initial conversion price of $2.42 per share, subject to adjustment in certain events. "In connection with the Securities Purchase Agreement, Mr. Smith and the other investor entered into a letter agreement (the "Letter Agreement") with the Issuer that permits Mr. Smith and the other investor, in the event that the Issuer fails to complete by December 31, 2000 an issuance of equity securities on substantially the terms being discussed by the Issuer with a third party, to acquire up to an additional $13 million of Notes and Warrants on the substantially the same terms as those relating to the acquisition of the Note and the Warrant pursuant to the Securities Purchase Agreement - ----------------------------- ---------------------------------------- CUSIP No. 607235504 Page 5 of 8 --------- - ----------------------------- ---------------------------------------- or on such other terms and conditions as may be agreed upon at the time. Also in connection with the Securities Purchase Agreement, certain shareholders (including McCorkle) of the Issuer agreed, among other things, to vote their shares (constituting a majority of the shares of Common Stock outstanding) in favor of the transactions described above, provided that the Issuer's Board of Directors shall have received with respect to such transactions a fairness opinion or opinions satisfactory to the Board in its sole discretion. The acquisition by Mr. Smith of the Note and the Warrant was approved by the disinterested members of the Issuer's Board of Directors and was the subject of a fairness opinion issued contemporaneously with the transactions reported hereby. Mr. Smith may be requested to sell a portion of the Note and the Warrant to certain insiders of the Issuer and has indicated a willingness to do so." ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. Item No. 5 of this Schedule 13D is hereby amended by adding the following paragraphs: "Mr. Smith may be deemed to beneficially own 1,453,232 shares, or approximately 17.9%, of the outstanding Common Stock, through his direct ownership of 754,824 shares and of presently exercisable stock option for 37,250 shares and through the ownership by a retirement account for his benefit of the Note and the Warrant, each of which are presently convertible into or exercisable for 330,579 shares. "The following table lists the transactions Mr. McCorkle has effected in the securities of the Issuer since September 1, 2000:
----------------------------------------------------------------------- Date Price Per Share No. of Shares Transaction ----------------------------------------------------------------------- 09/11/00 $2.75 2,000 Sale ----------------------------------------------------------------------- 09/13/00 $2.75 10,000 Sale ----------------------------------------------------------------------- 09/28/00 $2.75 100 Sale ----------------------------------------------------------------------- 11/18/00 $2.00 8,250 Gift -----------------------------------------------------------------------
Mr. Smith has effected no other transactions in the securities of the Issuer in the last sixty days, except as disclosed in Item 4 hereof." - ----------------------------- ---------------------------------------- CUSIP No. 607235504 Page 6 of 8 --------- - ----------------------------- ---------------------------------------- ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Item No. 6 of this Schedule 13D is hereby amended by adding the following paragraphs: "The Reporting Persons have entered into a Joint Filing Agreement, a copy of which is filed as Exhibit 1 hereto and is incorporated by reference, regarding the filing of this Schedule and future amendments hereto. "In addition to the Securities Purchase Agreement, the Note, the Warrant, the Letter Agreement, and the Shareholders' Agreement (each of which is described in Item 4 hereof), in connection with the Securities Purchase Agreement Mr. Smith and the other investor entered into a Registration Rights Agreement dated November 15, 2000 with respect to certain demand and piggyback registration rights under the Securities Act of 1933, as amended, with respect to shares of Common Stock acquirable under the Securities Purchase Agreement. Except as described in this Schedule 13D, neither Mr. Smith nor Mr. McCorkle has any other contracts, arrangements, understandings or relationships with any persons with respect to any securities of the Company." ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1 Joint Filing Agreement, dated December 14, 2000, between Smith and McCorkle Exhibit 2 Promissory Note, dated November 15, 2000, of the Issuer to Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051) Exhibit 3 Warrant, dated November 15, 2000 issued by the Issuer to Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051) Exhibit 4 Letter Agreement, dated November 15, 2000, between the Issuer, Hawkeye, Inc., and Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051) Exhibit 5 Registration Rights Agreement, dated November 14, 2000, between the Issuer, Hawkeye, Inc., and Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051)
- ----------------------------- ---------------------------------------- CUSIP No. 607235504 Page 7 of 8 --------- - ----------------------------- ---------------------------------------- Exhibit 6 Shareholders' Agreement, dated November 15, 2000, between the shareholders of the Issuer, Hawkeye, Inc., and Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051) Exhibit 7 Securities Purchase Agreement, dated November 15, 2000, between the Issuer, Hawkeye, Inc., and Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051)
- ----------------------------- ---------------------------------------- CUSIP No. 607235504 Page 8 of 8 --------- - ----------------------------- ---------------------------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: December 14, 2000 /s/ R. Lee Smith -------------------------------- R. Lee Smith /s/ Allan J. McCorkle -------------------------------- Allan J. McCorkle
The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statement, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name of and any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001). - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ EXHIBIT LIST Exhibit 1 Joint Filing Agreement, dated December 14, 2000, between Smith and McCorkle Exhibit 2 Promissory Note, dated November 15, 2000, of the Issuer to Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051) Exhibit 3 Warrant, dated November 15, 2000 issued by the Issuer to Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051) Exhibit 4 Letter Agreement, dated November 15, 2000, between the Issuer, Hawkeye, Inc., and Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051)* Exhibit 5 Registration Rights Agreement, dated November 14, 2000, between the Issuer, Hawkeye, Inc., and Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051)* Exhibit 6 Shareholders' Agreement, dated November 15, 2000, between the shareholders of the Issuer, Hawkeye, Inc., and Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051)* Exhibit 7 Securities Purchase Agreement, dated November 15, 2000, between the Issuer, Hawkeye, Inc., and Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051)*
- -------- * Incorporated by reference to the corresponding exhibit to the statement on Schedule 13D filed on November 28, 2000 by Arthur L. Cahoon and Hawkeye, Inc. EX-1 2 a2032992zex-1.txt EXHIBIT 1 - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ EXHIBIT 1 JOINT FILING AGREEMENT In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, the undersigned hereby acknowledge and agree that the Statements on Schedule 13D (the "Statements") with respect to the common stock, par value $.025 per share, of Fortune Financial, Inc., to which this Agreement is attached as Exhibit 1, were filed on behalf of each of the undersigned and that all subsequent amendments to such Statements shall be filed on behalf of each of the undersigned without the necessity of filing additional joint filing agreements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning it or him contained herein, but shall not be responsible for the completeness and accuracy of the information concerning the other entities or persons, except to the extent that he or it knows or has reason to believe that such information is inaccurate. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned hereby execute this Agreement this 14 day of December, 2000. /s/ R. Lee Smith ------------------------------- R. Lee Smith /s/ Allan J. McCorkle ------------------------------- Allan J. McCorkle
EX-2 3 a2032992zex-2.txt EXHIBIT 2 - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ EXHIBIT 2 PROMISSORY NOTE PRINCIPAL AMOUNT: $800,000 DATE OF NOTE: November 15, 2000 PLACE OF EXECUTION: Jacksonville, Florida This Promissory Note (this "Note") is between FORTUNE FINANCIAL, INC., a Florida Corporation ("Borrower"), and Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051) ("Lender"). The parties hereto agree as follows: 1. LOAN. (a) PROMISE TO PAY. Borrower promises to pay to the order of Lender or his assigns, with an address at c/o R. Lee Smith, 1200 Riverplace Blvd., Suite 902, Jacksonville, FL 32207, the principal amount of Eight Hundred Thousand and no/100 Dollars ($800,000.00), together with interest on the unpaid principal balance from the date hereof, until paid in full. (b) PAYMENT. Borrower will repay the Note in twenty (20) principal payments of $40,000.00 each. Borrower's first principal payment is due January 1, 2001, and all subsequent principal payments are due on the same day of each month thereafter. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest at the rate of nine percent (9.00%) per annum due as of each payment date. Borrower's first interest payment is due December 1, 2000, and all subsequent interest payments are due on the same day of each month thereafter and at maturity. Interest on this Note is computed on a 365/360 simple interest basis; by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing. (c) DISCRETIONARY PREPAYMENT. On five (5) days' prior written notice to the Lender, Borrower may pay all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the existing payment schedule, but will reduce the principal balance due. (d) MANDATORY PREPAYMENT. In the event that Borrower closes the sale of its wholly-owned subsidiary, Fortune Life Insurance Company, pursuant to that certain Stock Purchase Agreement dated July 25, 2000 by and between Fortune Life Investment Company and Fortune Financial, Inc., Borrower will simultaneously - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ with the closing of such transaction pay to Lender a principal payment in the amount of $300,000.00. Payments under preceding sentence of this Section 1(d) will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the existing payment schedule, but will reduce the principal balance due. In the event Borrower closes the sale of its wholly-owned subsidiary Pegasus Insurance Company, or in the event that Borrower closes a transaction or transactions for the investment in Borrower of at least $13,000,000 prior to the second anniversary of the date of this Note, such as the Preferred Stock Purchase Agreement dated as of November 14, 2000 by and between Borrower and The Crown Group, Inc., Borrower will, in addition to any payment made pursuant to the preceding sentence of this Section 1(d), simultaneously with the closing of such transaction pay to Lender in a single payment the entire outstanding principal amount and all accrued but unpaid interest and all other sums owing hereunder. (e) DEFAULT RATE. Upon the occurrence of an "Event of Default" (as defined below) or if Borrower shall fail to receive at least $13,000,000 in cash proceeds on or before December 31, 2000 from the issuance of its equity securities after the date hereof, the unpaid principal (and accrued but unpaid interest) of the Note shall bear interest at a rate of fourteen percent (14%) per annum ("Default Rate"); provided, however, that the Default Rate shall not apply during any period during which an Event of Default does not exist and Borrower shall have secured this Note with a perfected valid security interest in the collateral currently securing the SouthTrust Loan (as defined in the Securities Purchase Agreement). 2. BORROWER'S COVENANTS. Until full payment and performance of the Note, unless Lender otherwise consents in writing: (a) WAIVERS BY BORROWER. Borrower waives notice of the creation, advance, increase, existence, extension or renewal of, and of any indulgence with respect to, the Note; waives presentment, demand, notice of dishonor, and protest; and waives notice of the amount of the Note outstanding at any time, notice of any Event of Default and all other notices respecting the Note. (b) TAXES. Borrower agrees to indemnify and hold Lender harmless against liability for the payment of documentary stamp tax (including interest and penalties) (if applicable), that may be determined to be payable with respect to the Note. 3. DEFAULT; REMEDIES. (a) EVENT OF DEFAULT. An event of default ("Event of Default") shall occur if (a) Borrower fails to timely and properly pay any amount due hereunder when due, (b) Borrower fails to observe, keep or perform any other term, covenant, agreement - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ or condition in this Note or the Securities Purchase Agreement (as hereinafter defined) or any document, agreement or instrument contemplated to be entered into or issued and delivered pursuant thereto and does not cure such failure within ten (10) days after written notice from Lender to Borrower of such failure; (c) any representation or warranty of the Borrower contained in the Securities Purchase Agreement shall have been untrue in any material respect when made, (d) Borrower or any subsidiary of the Borrower makes an assignment for the benefit of creditors, or any proceeding is commenced either by Borrower or against Borrower under any bankruptcy or insolvency laws; (e) an event that with the giving of notice or the passing of time would constitute an Event of Default occurs after the date hereof under any indebtedness for borrowed money of the Borrower or any subsidiary of the Borrower or any agreement in connection with that certain Credit Agreement (for a $12,000,000 line of credit) dated October 24, 1995 by and between Borrower (f/k/a Mobile America Corporation) and SouthTrust Bank (successor to SouthTrust Bank of Alabama, National Association) as in effect on the date hereof without giving effect to any future amendments, consents or waivers, (e) there shall have been rendered against the Borrower or any of its subsidiaries final judgments, individually or in the aggregate, in an amount of $1,000,000 or more by a court or courts of competent jurisdiction, which shall remain undischarged for a period (during which execution thereof shall not be effectively stayed) of 15 days after the date on which any period for appeal has expired, (f) there shall have occurred a materially adverse change in the financial condition or results of operations of the Borrower and its subsidiaries taken as a whole, or (g) any insurance regulatory authority shall revoke or suspend the license of any of Borrower's insured subsidiaries or issue any order or decree of supervision, receivership, rehabilitation or liquidation with respect to any such subsidiary. (b) RIGHTS AND REMEDIES. If any Event of Default shall occur, then Lender may at Lender's option take any or all of the following remedies: i. ACCELERATION. Lender may declare the entire unpaid principal balance of the Note and all accrued unpaid interest, costs and fees to become immediately due and payable. Upon any Event of Default, or if the Note is not paid at final maturity, Lender, at its option, may add any unpaid accrued interest, costs and fees to principal and such sum will bear interest therefrom until paid at the Default Rate provided in this Note but in no event at an effective total interest rate on the Note greater than the rate permitted by applicable law. ii. COLLECTION OF DEBT. Borrower will pay Lender's costs and expenses of collection, which includes, subject to any limits under applicable law, Lender's reasonable attorneys' and paralegals' fees and Lender's legal expenses whether or not there is a lawsuit, including reasonable attorneys' and paralegals' fees and legal expenses for bankruptcy proceedings (including efforts to modify or - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. The foregoing remedies of Lender will be in addition to, and not a limitation upon, any rights and powers of Lender given by law or otherwise. 4. CONVERSION PRIVILEGE. (a) CONVERSION. Subject to and upon compliance with the provisions of this Section 4, the Lender shall have the right, at his option, at any time and from time to time prior to maturity, to convert all or any portion of the principal hereof, accrued and unpaid interest hereon and other amounts owing hereunder outstanding, into that number of fully paid and nonassessable shares of Stock (as defined in the Securities Purchase Agreement (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing the amount to be converted by the Conversion Price (as hereinafter defined) and by surrender of the Note, such surrender to be made in the manner provided in Section 4(b) hereof. "Conversion Price" means the initial conversion price of $75 per share, as adjusted in accordance with the provisions of 4(d) hereof. (b) MANNER OF EXERCISE OF CONVERSION PRIVILEGE. In order to exercise the conversion privilege, the Lender shall surrender this Note at the Borrower's principal executive office and shall give written notice to the Borrower at such office that the Lender elects to convert such Note or the portion thereof specified in said notice. Such notice shall also state the name or names, together with address or addresses, in which the certificate or certificates for shares of Stock which shall be issuable on such conversion shall be issued. As promptly as practicable after the surrender of this Note, as aforesaid, the Borrower shall issue and shall deliver at such office or agency to the Lender, or on his written order, a certificate or certificates for the number of full shares of Stock issuable upon the conversion of this Note or portion thereof in accordance with the provisions of this Section 4. In case of a partial conversion of this Note, the Borrower shall execute and deliver to or upon the order of the Lender of the Note so surrendered a Note or Notes in the principal amount equal to the unconverted portion of this Note. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which such Note shall have been surrendered and such notice received by the Borrower as aforesaid, and the person or persons in whose name or names any certificate or certificates for shares of Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of records of the shares represented thereby at such time and such conversions shall be at the Conversion Price in effect at such time, unless the stock transfer books of the Borrower shall be closed on that date, in which event such person or persons shall - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open. (c) FRACTIONAL SHARES. Fractional shares of Stock shall be issued upon conversion of this Note, as appropriate. (d) ADJUSTMENT OF THE CONVERSION PRICE. The Conversion Price shall be adjusted from time to time as follows: In case the Borrower shall hereafter (i) pay a dividend or make a distribution on its Stock in shares of Stock, (ii) subdivide its outstanding shares of Stock into a greater number of shares, (iii) combine its outstanding shares of Stock into a smaller number of shares or (iv) issue by reclassification of its Stock any shares of capital stock of the Borrower, the Conversion Price in effect immediately prior to such action shall be adjusted so that the Lender surrendering any part of this Note for conversion shall be entitled to receive the number of shares of Stock or other capital stock of the Borrower which he would have owned immediately following such action had this Note been so converted immediately prior thereto. An adjustment made pursuant to this subsection (a) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection (i), the Lender surrendering this Note for conversion shall become entitled to receive shares of two or more classes of capital stock (including shares of Common stock and other capital stock) of the Borrower, the Board of Directors (whose determination shall be conclusive and shall be described in a statement provided to the Lender) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock or shares of Stock and other capital stock. (e) THE BORROWER TO PROVIDE STOCK. The Borrower covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Stock for the purpose of effecting conversions of this Note, the full number of shares of Stock deliverable upon the conversion of this Note not theretofore converted. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value (if any) of the shares of Stock deliverable upon conversions of the Notes, the Borrower will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Borrower may validly and legally issue fully paid and nonassessable shares of Stock at such adjusted Conversion Price. Prior to the delivery of any other securities which the Borrower shall be obligated to deliver upon conversion of this Note, the Borrower will comply with all - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ Federal and State laws and regulations thereunder regarding the issuance of such securities or any approval of or consent to the delivery thereof by, any governmental authority. (f) TAXES ON CONVERSIONS. The Borrower will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Stock on conversions of this Note pursuant hereto; provided, however, that the Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Stock in a name other than that of the Lender and no such issue or delivery shall be made unless and until the Lender has paid to the Borrower the amount of any such tax or has established, to the satisfaction of the Borrower, that such tax has been paid. (g) COVENANT AS TO STOCK. The Borrower covenants that all shares of Stock which may be delivered upon conversions of this Note will upon delivery be duly and validly issued and fully paid and nonassessable, free of all liens and charges and not subject to any preemptive rights. (h) CONSOLIDATION OR MERGER. Notwithstanding any other provision herein to the contrary, in case of any consolidation or merger to which the Borrower is a party other than a merger or consolidation in which the Borrower is the continuing corporation, or in case of any sale or conveyance to another corporation of the property of the Borrower as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Borrower), there shall be no adjustment under this Section 4 but the Lender shall have the right thereafter to convert this Note into the kind and amount of securities, cash or other property which he would have owned or have been entitled to receive immediately after such consolidation, merger, statutory exchange, sale or conveyance had this Note been converted immediately prior to the effective date of such consolidation, merger, statutory exchange, sale or conveyance and in any case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this Section 4 with respect to the rights and interests thereafter of the Lender hereunder, to the end that the provisions set forth in this Section 4 shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock or other securities or property thereafter deliverable on the conversion of this Note. The above provisions of this subsection (h) shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances. 5. MISCELLANEOUS. - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ (a) PARTIES BOUND. No right, power, privilege and immunity herein granted to Lender or of Borrower hereunder may in any way be assigned, transferred or sold, without the prior written consent of the other party except as otherwise provided herein. (b) WAIVER. No delay of Lender in exercising any power or right shall operate as a waiver thereof; nor shall any single or partial exercise of any power or right preclude other or further exercise thereof or the exercise of any other power or right. No waiver by Lender of any right hereunder or of any Event of Default by Borrower shall be binding unless in writing, and no failure by Lender to exercise any power or right hereunder or waiver of any default by Borrower shall operate as a waiver of any other or further exercise of such right or power or of any further Event of Default. Each right, power and remedy of Lender as provided for herein shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by Lender of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by Lender of any or all other such rights, powers or remedies. (c) MODIFICATIONS. No provision hereof shall be modified or limited except by a written agreement expressly referring hereto and to the provisions so modified or limited and signed by Borrower and Lender. (d) PARTIAL INVALIDITY. The unenforceability or invalidity of any provision of this Note shall not affect the enforceability or validity of any other provision herein. (e) APPLICABLE LAW. This Agreement shall be construed in accordance with the laws of the State of Florida, without application of principles of conflicts of laws. (f) ENTIRE AGREEMENT. This Note constitutes the entire understanding and agreement of the parties as to the matters set forth herein and supersedes all prior understandings and correspondence, oral or written, with respect to the subject matter hereof. (g) INTEREST. Borrower does not agree or intend to pay, and Lender does not agree or intend to contract for, charge, collect, take, reserve or receive (collectively referred to herein as "charge or collect"), any amount in the nature of interest or in the nature of a fee for this Note, which would in any way or event (including demand, prepayment, or acceleration) cause Lender to charge or collect more for the Note than the maximum Lender would be permitted to charge or collect by federal law or the law of the State of Florida (as applicable). Any such - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ excess interest or unauthorized fee shall, instead of anything stated to the contrary, be applied first to reduce the principal balance due under the Note. (h) SECURITIES PURCHASE AGREEMENT. This Note is issued pursuant to the terms of and is entitled to the benefits of that certain Securities Purchase Agreement dated the date hereof among the Company and the Lender, among others. PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE. BORROWER: FORTUNE FINANCIAL, INC. By: /s/ J. JOHN WORTMAN ---------------------------- J. John Wortman President and Chief Executive Officer
EX-3 4 a2032992zex-3.txt EXHIBIT 3 - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ EXHIBIT 3 WARRANT NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY JURISDICTION, AND MUST BE HELD INDEFINITELY UNLESS THEY ARE TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS, OR AFTER RECEIPT OF AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO FORTUNE FINANCIAL, INC., TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED AND THE TRANSFER DOES NOT VIOLATE ANY APPLICABLE SECURITIES LAW. WARRANT TO PURCHASE COMMON STOCK OF FORTUNE FINANCIAL, INC. FORTUNE FINANCIAL, INC., a Florida corporation (hereinafter called the "Company"), for value received hereby certifies that Mid-Ohio Securities Corp., FBO R. Lee Smith (Acct. 15051) or assigns ("Purchaser") has the right at any time, and from time to time, prior to December 23, 2003, as set forth in and subject to Section 2.1 hereof, to purchase 330,579 fully paid and non-assessable shares of Common Stock, $.025 par value, of the Company (hereinafter called "Common Stock") at the price set forth herein, all as provided herein and upon compliance with and subject to the conditions set forth herein. ARTICLE I TRANSFER Section 1.1. TRANSFER BOOKS. The Company shall maintain books for the transfer and registration of this Warrant. Section 1.2. TRANSFER. The Company, from time to time, shall register the transfer of this Warrant in the books to be maintained by the Company for that purpose upon surrender at the principal office of the Company of this Warrant properly endorsed or accompanied by appropriate instruments of transfer and written instructions for transfer. Upon any such transfer, a new Warrant shall be issued to the transferee and the - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ surrendered Warrant shall be canceled by the Company. The Company may require the payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any such transfer. Section 1.3. TRANSFER RESTRICTIONS. This Warrant, and except as set forth in any registration rights agreement between the Company and Purchaser, the Common Stock underlying this Warrant, will not be registered under the Securities Act of 1933, as amended (the "1933 Act"), or any securities act of any state or other jurisdiction, and is being issued in reliance on registration exemptions under such statutes for private offerings. This Warrant or any of the underlying shares of Common Stock may not be sold or otherwise transferred except in accordance with the 1933 Act and all other applicable securities laws, and prior to any transfer (other than pursuant to an effective registration statement under the 1933 Act and otherwise in compliance with applicable law) the holder must furnish to the Company a written opinion of counsel, in form and substance satisfactory to the Company, to the effect that registration under the 1933 Act is not required and that all requisite action has been taken under all applicable securities laws in connection with the proposed transfer. ARTICLE II NUMBER OF SHARES; WARRANT PRICE; DURATION; AND EXERCISE OF WARRANT Section 2.1. NUMBER OF SHARES; WARRANT PRICE; AND DURATION. This Warrant was issued pursuant to a Securities Purchase Agreement of even date herewith between the Company and Purchaser (the "Loan Agreement") and contemporaneously with the issuance of a Promissory Note in the amount of $800,000 (the "Note") issued pursuant to the Loan Agreement. This Warrant entitles the registered holder thereof, subject to the provisions hereof, to purchase from the Company at any time and from time to time (after receipt of approval of the Company's shareholders if required by NASD rules) prior to December 31, 2003, 330,579 shares of Common Stock, subject to adjustment as provided in Article III hereof, for a price per share of Common Stock equal to $2.42 per share, less the Book Value Adjustment as hereinafter defined, and as further adjusted hereby from time to time, payable in full at the time of purchase. The Book Value Adjustment means the amount per outstanding share of Common Stock by which the book value of the Company's outstanding Common Stock is increased or reduced as a result of (a) the financial impact of any reinsurance arbitration proceeding pending on the date of this Warrant and (b) any increase or decrease in the Company's loss reserves for periods ending on or before September 30, 2000; in each case determined by the Company's independent public accountants on or before the completion of their audit of the Company's financial statements for the year ending December 31, 2001. The term "Warrant Price" as used herein refers to the foregoing price per share as adjusted hereby and in effect from time to time. - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ Section 2.2. EXERCISE. (A) This Warrant may be exercised, in whole or in part, by surrendering this Warrant, at the principal office of the Company, with the Election to Exercise form set forth at the end hereof duly executed, and by paying in full, the Warrant Price for each share of Common Stock as to which this Warrant is exercised and any applicable taxes, other than taxes that the Company is required to pay hereunder. Such payment may be (i) in cash or by cashier's or bank check, (ii) by surrender of the Note with an outstanding amount (principal and interest) equal to the exercise price or (iii) if the Common Stock is at the time traded on a national securities exchange or a Nasdaq market, by making a cashless exercise. Upon exercise by surrender of a Note, if the Purchaser does not elect to convert any portion of the outstanding interest, then the Company shall pay the accrued interest under such Note surrendered in cash within five (5) business days of such surrender and if the Purchaser surrenders only a portion of any Note, then the Company shall reissue a substitute Note for the amount not surrendered. Upon a cashless exercise, the Purchaser shall receive shares of Common Stock on a net basis such that, without the payment of any funds, the Purchaser shall surrender this Warrant in exchange for the number of shares of Common Stock equal to the product of (i) the number of shares of Common Stock as to which this Warrant is being exercised, multiplied by (ii) a fraction, the numerator of which is the aggregate Market Price of such Common Stock less the aggregate then applicable exercise price, and the denominator of which is such aggregate Market Price. In respect of such calculation, the term Market Price shall mean at any applicable date (i) the last reported sale price of the Common Stock, or, (ii) in case no such reported sale takes place on such day, the average of the last reported sales prices for the last three (3) trading days, in either case, as officially reported on the Nasdaq market or on such other principal national securities exchange on which the Common Stock is then listed or admitted to trading. (B) As soon as practicable after the exercise or partial exercise of this Warrant, the Company shall cause to be issued to or upon the order of the holder of this Warrant a certificate or certificates for the number of full shares of Common Stock to which he is entitled, registered in such name or names as may be directed by him, and, if applicable, a substitute Warrant for the number of shares not exercised. (C) Anything contained herein to the contrary notwithstanding, the Company shall not be required to issue any fraction of a share in connection with the exercise of this Warrant, but in any case where the holder hereof would, except for the provisions of this Section 2.2, be entitled under the terms of this Warrant to receive a fraction of a share upon the exercise hereof, the Company shall, upon the exercise of this Warrant and receipt of the Warrant Price, issue a certificate for the largest number of full shares of Common Stock then called for hereby and pay a sum in cash equal to the market value of such fraction of a share. (D) All shares of Common Stock issued upon the exercise of this Warrant shall be validly issued, fully paid and non-assessable, and the Company shall pay all taxes in respect of the issue thereof. The Company shall not be required, however, to pay any tax imposed in connection with any transfer involved in the issuance of a certificate for shares - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ of Common Stock or any other securities in any name other than that of the holder of this Warrant; and in such case the Company shall not be required to issue or deliver any such certificate until such tax shall have been paid. (E) Each person in whose name any such certificate for shares of Common Stock is issued shall for all purposes be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the purchase price and any applicable taxes was made, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open. ARTICLE III ADJUSTMENT OF SHARES OF COMMON STOCK PURCHASABLE AND WARRANT PRICE Section 3.1 SPECIAL DEFINITIONS. For purposes of this Article III, the following definitions shall apply: (A) "Option" shall mean any right, option or warrant to subscribe for, purchase or otherwise acquire shares of Common Stock or Convertible Securities. (B) "Original Issue Date" shall mean the date on which this Warrant is first issued. (C) "Convertible Securities" shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock. (D) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Section 3.2 hereof, deemed to be issued) by the Company after the Original Issue Date other than the shares of Common Stock issued upon the exercise of any of the issued options or other convertible securities described in the Loan Agreement ("Permitted Options"). (E) "Rights to Acquire Common Stock" (or "Rights") shall mean all rights whenever issued by the Company to acquire Common Stock by exercise of a warrant, option or similar call or conversion of any existing instruments, in either case for consideration fixed, in amount or by formula, as of the date of issuance other than Permitted Options. Section 3.2 ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK. If the Company at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or other Rights to Acquire Common Stock, then the - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ maximum number of shares of Common Stock (as set forth in the instrument relating thereto without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options, Rights or, in the case of Convertible Securities, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue, provided that Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 3.4 hereof) of such Additional Shares of Common Stock would be less than the Warrant Price on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued: (A) No further adjustment in the number of shares of Common Stock issuable upon exercise of the Warrant shall be made upon the subsequent issue of shares of Common Stock upon the exercise of such Rights or conversion or exchange of such Convertible Securities; (B) Upon the expiration or termination of any unexercised Option or Right prior to exercise of this Warrant, the number of shares of Common Stock issuable upon exercise of the Warrant shall be readjusted, and the Additional Shares of Common Stock deemed issued as the result of the original issue of such Option or Right shall not be deemed issued for the purposes of any subsequent adjustment of the number of shares of Common Stock issuable upon exercise of the Warrant; and (C) In the event of any change in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any Option, Right or Convertible Security, including, but not limited to, a change resulting from the anti-dilution provisions thereof, the number of shares of Common Stock issuable upon exercise of the Warrant shall forthwith be readjusted (but not downwards) to such number of shares of Common Stock issuable upon exercise of the Warrant as would have obtained had the adjustment that was made upon the issuance of such Option, Right or Convertible Security not exercised or converted prior to such change been made upon the basis of such change, but no further adjustment shall be made for the actual issuance of Common Stock upon the exercise or conversion of any such Option, Right or Convertible Security. Section 3.3. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES ISSUABLE UPON EXERCISE. Except in the case of shares issued as a stock dividend described in Section 3.6, issued upon a stock split or combination as described in Section 3.5, if the Company shall at any time after the Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 3.2 hereof) without consideration or for a consideration per share less than the Warrant Price on the date of and immediately prior to such issue, then and in such event, the Warrant Price of each Warrant shall be decreased, concurrently with such issue to an amount equal to the - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ consideration per share received by the Company for the Additional Shares of Common Stock so issued or deemed issued. If the Warrant Price shall be so reduced or if the Warrant Price is reduced as a result of a Book Value Adjustment, then the number of shares of Common Stock issuable upon exercise of this Warrant shall be increased as of such reduction to the product obtained by multiplying the number of shares of Common Stock originally issuable upon exercise of this Warrant by a fraction: - the numerator of which shall be the original Warrant Price, and - the denominator of which shall be the Warrant Price in effect immediately after the time of such issuance. Section 3.4. DETERMINATION OF CONSIDERATION. For purposes of this Article III, the consideration received by the Company for the issue of any Additional Shares of Common Stock shall be computed as follows: (A) Cash and Property: Such consideration shall: (1) insofar as it consists of cash, be computed at the aggregate of cash received by the Company; (2) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Company's Board of Directors; and (3) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (1) and (2) above, as determined in good faith by the Company's Board of Directors. (B) Options, Rights and Convertible Securities: The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Section 3.2 hereof relating to Options, Rights and Convertible Securities, shall be determined by dividing - the total amount, if any, received or receivable by the Company as consideration for the issue of such Options, Rights or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options, Rights or the conversion or exchange of such Convertible Securities, by - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ - the maximum number of shares of Common Stock as set forth in the instruments relating thereto (without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or Rights or the conversion or exchange of such Convertible Securities. Section 3.5. ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Company shall at any time or from time to time after the Original Issue Date effect a subdivision of the outstanding Common Stock, the number of shares of Common Stock issuable upon exercise of the Warrant immediately before that subdivision shall be proportionately increased. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the number of shares of Common Stock issuable upon exercise of the Warrant immediately before the combination shall be proportionately decreased. In the event of any such subdivision or combination, the Warrant Price shall be adjusted to equal: (i) the Warrant Price immediately prior to the occurrence of any such event, (ii) multiplied by a fraction, (A) the numerator of which is the number of shares of Common Stock outstanding immediately before such event and (B) the denominator of which is the number of shares of Common Stock outstanding immediately after the adjustment. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective. Section 3.6. ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue a dividend or other distribution payable in Additional Shares of Common Stock, then and in each such event (i) the Warrant Price shall be adjusted to equal: (i) the Warrant Price immediately prior to the occurrence of any such event, (ii) multiplied by a fraction, (A) the numerator of which is the number of shares of Common Stock outstanding immediately before such event and (B) the denominator of which is the number of shares of Common Stock outstanding immediately after the adjustment, and (ii) the number of shares of Common Stock issuable upon exercise of the Warrant shall be increased as of the time of such issuance, to the product obtained by multiplying the number of shares of Common Stock originally issuable upon exercise of the Warrant by a fraction: - the numerator of which shall be the original Warrant Price, and - the denominator of which shall be the Warrant Price in effect immediately after the time of such adjustment. Section 3.7. ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue a dividend or other distribution payable in securities of the Company other than shares of Common Stock, then and in each such event provision shall be made so that the Warrantholder shall receive upon exercise hereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Company that he would have received had this Warrant been exercised on the date of such event and had thereafter, during the period from the date of such event to and including the conversion - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ date, retained such securities receivable by them as aforesaid during such period given application to all adjustments called for during such period, under this Article III. Section 3.8. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE, OR SUBSTITUTION. If the Common Stock issuable upon the exercise of this Warrant shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, share exchange or sale of assets provided for below), then and in each such event the holder of this Warrant shall have the right thereafter to exercise this Warrant for the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which this Warrant might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein. Section 3.9. ADJUSTMENT FOR MERGER OR REORGANIZATION, ETC. In case of any consolidation, merger or share exchange of the Company with or into another corporation or the sale of all or substantially all of the assets of the Company to another corporation, then this Warrant shall thereafter be convertible into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Company deliverable upon exercise of this Warrant would have been entitled upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions in this Article III to the end that the provisions set forth in this Article III (including provisions with respect to changes in and other adjustments of the number of shares of Common Stock issuable upon exercise of the Warrant) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of this Warrant. Section 3.10. NO IMPAIRMENT. The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, share exchange, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Article III and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment. Section 3.11. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment or readjustment of the number of shares of Common Stock issuable upon exercise of this Warrant pursuant to this Article III, the Company and the Warrantholder shall promptly compute such adjustment or readjustment in accordance with the terms hereof and shall jointly prepare a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment or readjustment is based and shall file a copy of such certificate with its corporate records. The Company shall, upon the written request at any time of the holder of this Warrant, furnish or cause to be furnished to such holder a - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ similar certificate setting forth (1) such adjustments and readjustments, (2) the Warrant Price then in effect, and (3) the number of shares of Common Stock and the amount, if any, of other property which then would be received upon the exercise of this Warrant. Despite such adjustment or readjustment, the form of this Warrant need not be changed in order for the adjustments or readjustments to be valued in accordance with the provisions hereof, which shall control. Section 3.12. NOTICE OF RECORD DATE. In the event: (A) that the Company declares a dividend (or any other distribution) on its Common Stock; (B) that the Company subdivides or combines its outstanding shares of Common Stock; (C) of any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding shares of Common Stock or a stock dividend or stock distribution thereon), or of any consolidation, merger or share exchange of the Company into or with another corporation, or of the sale of all or substantially all of the assets of the Company; or (D) of the involuntary or voluntary dissolution, liquidation or winding up of the Company; then the Company shall cause to be filed at its principal office and shall cause to be mailed to the holders of this Warrant at its last address as shown on the records of the Company, at least 20 days prior to the record date specified in (A) below or 20 days before the date specified in (B) below, a notice stating (A) the record date of such dividend, distribution, subdivision or combination, or, if a record is not to be taken, the date as to which the holders of Common Stock of record to be entitled to such dividend, distribution, subdivision or combination are to be determined, or (B) the date on which such reclassification, consolidation, merger, share exchange, sale, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, dissolution or winding up. - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ ARTICLE IV OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF THIS WARRANT Section 4.1. NO RIGHTS AS SHAREHOLDER. This Warrant does not entitle the holder hereof to any of the rights of a shareholder of the Company. Section 4.2. LOST WARRANT, ETC.. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, upon receipt of a proper affidavit (and surrender of any mutilated Warrant Certificate) and bond of indemnity in form and amount and with corporate surety satisfactory to the Company in each instance protecting the Company, issue a new Warrant of like tenor and date. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant Certificate shall be at any time enforceable by anyone. Section 4.3. AUTHORIZED SHARES. The Company shall at all times have authorized for issuance upon exercise of this Warrant a number of shares of Common Stock sufficient to permit the exercise in full of this Warrant. ARTICLE V MISCELLANEOUS Section 5.1. TAXES AND CHARGES. The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company in respect of the issuance or delivery of shares of Common Stock upon the exercise of this Warrant, but the Company shall not be obligated to pay any transfer taxes in respect of this Warrant or such shares. Section 5.2. ASSIGNS. All the covenants and provisions of this Warrant by or for the benefit of the Company or the holder of this Warrant shall bind and inure to the benefit of their respective successors and assigns hereunder. Section 5.3. NOTICES. All notices, consents and other communications hereunder shall be in writing and shall be deemed to have been duly given, when delivered personally or three days after having been sent by certified mail return receipt requested, postage prepaid, or upon transmission by telex, telecopy, facsimile or similar electronic medium to the parties at the addresses set forth in the Agreement (or at such other address for a party as shall be specified by like notice). Section 5.4. GOVERNING LAW. The validity, interpretation and performance of this Warrant shall be governed by the laws of the State of Florida. Section 5.5. THIRD PARTIES. Nothing in this Warrant expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the holders of this Warrant any right, remedy or claim hereunder or by reason of any covenant, condition, stipulation, promise or agreement hereof, and all covenants, conditions, - ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ stipulations, promises and agreements in this Warrant shall be for the sole and exclusive benefit of the parties hereto and their successors and of the holders of this Warrant. Section 5.6. WARRANTHOLDERS. The Company may deem and treat the person in whose name this Warrant is registered as the absolute owner for all purposes whatever (notwithstanding any notation of ownership or other writing thereon made by anyone other than the Company) and the Company shall not be affected by any notice to the contrary. The terms "Warrantholder" and holder of this Warrant and all other similar terms used herein shall mean such person in whose name this Warrant is registered on the books of the Company. Section 5.7. HEADINGS. The Article and Section headings herein are for convenience only and are not a part of this Warrant and shall not affect the interpretation thereof. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its President and attested by its Secretary. Dated: November 15, 2000 FORTUNE FINANCIAL, INC., a Florida corporation By: /s/ J. JOHN WORTMAN ------------------------------------- President Attest:__________________________________ Secretary
- ------------------------------------------------------ CUSIP No. 607235504 - ------------------------------------------------------ ELECTION TO EXERCISE TO FORTUNE FINANCIAL, INC.: The undersigned hereby irrevocably elects to exercise the right of purchase represented by this Warrant for, and to purchase thereunder, shares of Common Stock, as provided for therein, and tenders herewith payment of the purchase price in full in the form of cash or a check or notes in the amount of $ . Pursuant to the terms of the attached Warrant, the undersigned hereby elects to make a Cashless Exercise as provided for in Section 2.2 of such Warrant with respect to _____ shares of Common Stock. Please issue a certificate or certificates for such shares of Common Stock and a replacement Warrant for any portion not exercised in the name of, and pay any cash for any fractional shares to: Name_________________________________ INSERT SOCIAL SECURITY OR (Please Print Name and Address) OTHER IDENTIFYING NUMBER _________________________ Signature____________________________ Address______________________________ NOTE: The above signature should correspond exactly with the name on the face of this Warrant or with the name of assignee appearing in the assignment form below.
ASSIGNMENT For value received, _________________________ hereby sells, assigns and transfers unto ____________________________ the within Warrant, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ___________________________ attorney, to transfer said Warrant on the books of the within-named Company, with full power of substitution in the premises. Dated: __________________________ NOTE: The above signature should correspond exactly with the name on the face of this Warrant -----END PRIVACY-ENHANCED MESSAGE-----