EXHIBIT B
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INVESTMENT LETTER AGREEMENT
THIS INVESTMENT LETTER AGREEMENT, dated as of the 24th day of June,
2003 by and between Commerce Group Corp. (Commerce), a Wisconsin
corporation, and General Lumber & Supply Co., Inc., the stockholder whose
name, address and number of shares acquired appears at the signature line
of this agreement ("Stockholder").
WITNESSETH:
WHEREAS, Stockholder wishes to acquire capital stock of Commerce
(the "Securities") in a transaction not involving a public offering as
that term is used in Section 4(2) of the Securities Act of 1933, as
amended, (the "Act").
WHEREAS, Commerce desires to prevent any further transfer of the
Securities in violation of the Act and to inform Stockholder as to the
circumstances under which Stockholder is required to take and hold the
Securities and the limitations upon their resale.
NOW, THEREFORE, in consideration of the mutual promises and
representations contained herein, it is agreed as follows:
1. [REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER]
Stockholder hereby represents and warrants to Commerce that now and
at all times after the Securities are issued and delivered to
Stockholder, that Stockholder is acquiring the Securities for investment
only and does not intend to sell, hypothecate, give or otherwise dispose
of the Securities or any interest therein, and acknowledges that this
representation and warranty constitutes the basis upon which Commerce is
induced to enter into and perform its obligations under this Investment
Letter Agreement.
2. [OBLIGATIONS OF STOCKHOLDER]
Stockholder agrees not to sell, hypothecate, give or otherwise
dispose of the securities or any interest therein, unless:
2.1. There is then in effect a registration statement under the Act
with respect to the Securities and the proposed disposition; or
2.2. The disposition is made in compliance with Rule 144 of the
Act; or
2.3. Counsel for Commerce is of the opinion that registration under
the Act or compliance with Rule 144 is not required in connection with
the proposed disposition.
3. [CONDITIONS PRECEDENT TO DISPOSITION UNDER RULE 144]
3.1. The representations and warranties of Stockholder in 1 above
shall have been accurate.
3.2. Commerce shall have received notice of Stockholder's intention
to dispose of the Securities thirty (30) days before the proposed
disposition.
3.3. Commerce shall have received an opinion of counsel for
Stockholder addressed to Commerce and dated the day of the disposition of
the Securities to the effect that such disposition is in compliance with
Rule 144. In giving this opinion, counsel may assume that the
requirements in paragraph "(c)" or thereafter amended of Rule 144
regarding the availability of public information have been met. 3.4.
Commerce shall have received an affidavit from Stockholder dated the day
of the disposition of the Securities to the effect:
3.4.1. Stockholder has been sole beneficial and legal owner of
the Securities for a period of at least two (2) years from the date
Stockholder received the Securities.
3.4.2. That the total amount of the Securities Stockholder
intends to dispose of does not exceed one percent (1%) of the then
outstanding securities of Commerce.
3.4.3. That the sale will be a broker's transaction as defined by
Rule 144(f) and (g).
3.4.4. That notice of the requirements of Rule 144(h) have been
met.
3.4.5. That Stockholder has a bona fide intention to sell the
Securities immediately upon Commerce's permission being granted.
4. [CONDITIONS PRECEDENT TO OTHER DISPOSITION THAN PROVIDED BY RULE
144]
4.1. It is understood that Stockholder may be permitted a
disposition of the Securities in a privately negotiated transaction not
involving an underwriter, broker, or a public offering.
4.2. It is agreed that in such a transaction, the transferee shall
be required to execute an Investment Letter Agreement restricting the
further disposition of the Securities.
5. [CERTAIN UNDERSTANDINGS, ETC.]
5.1. Other Agreements Superseded; Waiver of Modification, Etc.
This Investment Letter Agreement supersedes all prior agreements or
understandings written or oral relating to the resale of the Securities
herein. This Agreement shall inure to the benefit of and be binding on
the assigns and successors of the Stockholder.
5.2. Restrictive Legend
Stockholder understands that the following or similar legend giving
notice of the restrictions of the disposition of the Securities imposed
by this Investment Letter Agreement shall appear on the stock
certificate. "The shares represented by this certificate have been
acquired for investment and have not been registered under the Securities
Act of 1933 or the securities laws of any state. Except upon such
registration, such securities may not be sold, pledged, hypothecated or
otherwise transferred unless the transferor delivers to the corporation
an opinion of counsel satisfactory to the corporation, and its counsel
that registration is not required and such transfer will not be in
violation of the Securities Act of 1933, or any applicable state
securities laws or any rule or regulation thereunder."
5.3. Repurchase of Securities
Stockholder agrees to wait at least thirty (30) days before
repurchasing any Securities which have been sold pursuant to Rule 144.
5.4. Changes in Rule 144
Any amendments to or interpretations of Rule 144 which are adopted
after the execution of this Investment Letter Agreement which are more
liberal or more restrictive shall be given effect as modifications
hereof.
5.5. In consideration of the payment of $62,500, which is a partial
payment of debt owed to General Lumber & Supply Co., Inc. by Commerce,
and which is evidenced by certain outstanding promissory note(s).
IN WITNESS WHEREOF, Commerce and the Stockholder have executed this
Investment Letter Agreement as of the day and year first above written.
Number of Shares Commerce Group Corp.
250,000 restricted
Commerce Group Corp. /s/ Xxxxxx X. Xxxxxxxx
common shares By ___________________________________
(Hereunto duly authorized)
Xxxxxx X. Xxxxxxxx, President
Consideration STOCKHOLDER:
Cancellation of $62,500 General Lumber & Supply Co., Inc.
of debt owed to
General Lumber & Supply Co., Inc.
by Commerce, which is evidenced
by certain outstanding secured /s/ Xxxxxx Xxxxxxxx
open-ended, on-demand --------------------------------------
promissory note(s). By: Xxxxxx Xxxxxxxx, President
Date: June 24, 2003
Address: 0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
I.D. No.: 00-000-0000
