EXHIBIT A
INVESTMENT LETTER AGREEMENT
THIS INVESTMENT LETTER AGREEMENT, dated as of the 30th day of May, 2002
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 for the cancellation of $62,200 debt
and interest owed to General Lumber & Supply Co., Inc.
evidenced by a certain outstanding promissory note.
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.
622,000 restricted
Commerce Group Corp.
common shares By /s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
(Hereunto duly authorized)
Xxxxxx X. Xxxxxxxx, President
Consideration STOCKHOLDER:
Cancellation of $62,200 General Lumber & Supply Co., Inc.
debt and interest owed to
General Lumber & Supply Co., Inc. /s/ Xxxxxx Xxxxxxxx
evidenced by a certain outstanding _____________________________________
promissory note By: Xxxxxx Xxxxxxxx, President
Date: May 30, 2002
Address: 0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
I.D. No.: 00-000-0000
