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CUSIP No. 000000000
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EXHIBIT 9
January 12, 2001
Fortune Financial, Inc.
00000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
ATTN: J. Xxxx Xxxxxxx
ELECTION TO CONVERT
RE: Securities Purchase Agreement dated November 15, 2000 (the
"Purchase Agreement"), among Fortune Financial, Inc. (the
"Company"), Hawkeye, Inc. ("Hawkeye") and Mid-Ohio Securities
Corp., FBO R. Xxx Xxxxx (Acct. 15051) ("XXXXX", TOGETHER WITH
HAWKEYE BEING THE "PURCHASERS")
Gentlemen:
The Company and the Purchasers are parties to the Purchase Agreement.
Capitalized terms used herein that are not defined in this letter have the
meaning set forth in the Purchase Agreement.
Pursuant to the Purchase Agreement, among other things, the Purchasers
acquired two separate Notes in the original principal amounts of $1,200,000 and
$800,000. Certain Events of Default have occurred under the Notes and are
continuing, as follows: nonpayment of the payments of principal due on January
1, 2001 and interest due on December 1, 2000 and January 1, 2001 (collectively,
the "Defaults"). Crown and the Company are contemporaneously entering into a
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CUSIP No. 000000000
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Preferred Stock Purchase Agreement (the "Crown Agreement") pursuant to which
Crown is purchasing (the "Crown Purchase") $10,000,000 of Series A Preferred
Stock (the "Crown Preferred") and agreeing to purchase up to $5,000,000 of Crown
Preferred. The Purchasers have agreed to waive the Defaults and convert the
Notes into Crown Preferred pursuant to their conversion rights in the Notes as
set forth herein.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Purchasers as follows:
(a) PREAMBLE. The recitals set forth in the Preamble to this letter
agreement are true and correct.
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company set forth in the Crown Agreement are true and correct and are
incorporated herein by reference.
(c) AUTHORITY. The execution, delivery and performance of this letter
agreement by the Company has been duly and properly authorized and approved by
the Company; and the Company has the power and authority to execute and deliver
this letter agreement and perform its obligations hereunder.
2. WAIVER OF DEFAULTS. The Purchasers hereby waive the exercise of
their rights under the Notes with respect to the Defaults. Neither this letter
agreement nor any other document delivered in connection herewith shall be
deemed or construed to be a satisfaction, novation or release of any provision
of the Purchase Agreement, the Exhibits thereto or any other agreement or
document related thereto (collectively, the "Documents"), or, except as
expressly provided in this letter agreement, a waiver by either Purchaser of any
of the rights of such Purchaser under any of the Documents, or at law or in
equity, all of which Documents remain in full force and effect.
3. ELECTION TO CONVERT. The Purchasers hereby elect pursuant to the
Notes to convert the $2,000,000 principal balance of the Notes into Crown
Preferred. The Company and the Purchasers shall promptly conclude such
conversion by exchanging the original Notes for 26,666 shares of Crown
Preferred. The Company shall pay to Purchasers within five (5) days of the date
hereof all interest accrued under the Notes. The Purchasers and the Company
shall execute and deliver such other certificates and agreements and take such
further actions as counsel for the parties may reasonably request to conclude
the conversion of the Notes and issuance of the shares of Crown Preferred to the
Purchasers as provided herein.
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CUSIP No. 000000000
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4. FEES AND EXPENSES. The Company hereby acknowledges its obligation to
reimburse the Purchasers for their reasonable attorney's fees and expenses
related to the Purchase Agreement, this letter agreement and the transactions
contemplated thereby and hereby including, without limitation, its attorneys
fees incurred in connection with the advice obtained by them, the review of the
Crown transaction and the preparation of this letter agreement and hereby agrees
to so reimburse the Purchasers within 5 days of demand.
Please indicate your agreement with the foregoing as of the date of
this letter agreement by signing in the space provided below.
HAWKEYE, INC.
By \s\ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx, President
MID-OHIO SECURITIES CORP., FBO
R. XXX XXXXX (ACCT. 15051)
By \s\ R. XXX XXXXX
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R. Xxx Xxxxx
Agreed:
FORTUNE FINANCIAL, INC.
By \s\ XXXX XXXXXXX
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Xxxx Xxxxxxx, President
