EXHIBIT 99.4

                              COMMERCE GROUP CORP.
                               6001 NORTH 91ST ST.
                            MILWAUKEE, WI 53225-1795
                         414-462-5310 . FAX 414-462-5312
                        E-MAIL info@commercegroupcorp.com
                        WEBSITE www.commercegroupcorp.com

AND/OR COMMERCE/SANSEB JOINT VENTURE (Joint Venture)
AND/OR HOMESPAN REALTY CO., INC. (Homespan)
AND/OR ECOMM GROUP INC. (Ecomm)
AND/OR SAN LUIS ESTATES, INC. (SLE)
AND/OR SAN SEBASTIAN GOLD MINES, INC. (Sanseb)
AND/OR UNIVERSAL DEVELOPERS, INC. (UDI)
ALL LOCATED AT THE SAME ADDRESS


May 10, 2004



Mrs. Sylvia Machulak as an
Individual and for her Rollover
Individual Retirement Account
903 West Green Tree Road
River Hills, Wisconsin  53217

Dear Mrs. Machulak:

At today's Commerce Group Corp.  (Commerce)  Directors'  meeting,  the Directors
were informed about the confirmation, disclosure and status letter you requested
from Commerce and its affiliates to establish and confirm the amount due and the
collateral pledged along with any other Commerce  obligations or agreements made
to the  Sylvia  Machulak  Rollover  Retirement  Account  (SM RIRA) and to Sylvia
Machulak as an  individual/consultant  (SM), both referred to as Lenders,  as of
Commerce's fiscal year ended March 31, 2004.  Today,  Commerce's  Directors,  by
unanimous consent, approved,  ratified and confirmed the contents of this letter
and  authorized  me to submit  its  understanding  of your  status,  which is as
follows:

1.   Promissory Notes and Other Obligations

     A series of open-ended, secured, on-demand promissory notes (Notes) are due
     to the SM RIRA.  Their combined amount is $503,580.95 as of March 31, 2004.
     These  Notes bear  interest,  payable  monthly,  at the rate of 3% over the
     prime  rate  established  from time to time by the First  National  Bank of
     Chicago, Chicago, Illinois, (now Bank One), but not less than 16% per annum
     (Schedule  of  Principal  and  Interest as of March 31,  2004,  Exhibit A).
     Commerce is no longer  issuing  monthly  Notes for the payment of interest,
     etc.,  but  pursuant  to our  understanding,  Commerce  is  augmenting  all
     additions  and advances  made by the SM RIRA and SM, and it will deduct any
     payments or credits  made by Commerce to the current  open-ended,  secured,
     on-demand,  outstanding  Notes issued or obligations owed to the SM RIRA or
     SM.

<PAGE>

Mrs. Sylvia Machulak
Sylvia Machulak
Rollover Individual Retirement Account
May 10, 2004
Page 2 of 8 Pages


2.   Consulting Fees Due to Sylvia Machulak as an Individual (SM)

     As of September 30, 2000, a sum of $201,600 (72 months at $2,800 per month)
     is  due to SM for  consulting  services  rendered  pursuant  to a  Director
     resolution  adopted on October 20, 2000. The Directors further  acknowledge
     the  continuance of SM's services at a sum of $3,000 per month beginning on
     October 1,  2000,  and  continuing  until  such time as  terminated  by the
     Directors or the President. Therefore, the amount due to SM as of March 31,
     2004, is $327,600 (72 months at $2,800 and 42 months at $3,000).  Reference
     is made to Exhibit B included in the April 5, 1996 confirmation letter.

3.   Transactions other than Notes Entered into or Confirmed During the
     Fiscal Year with SM or the SM RIRA, Commerce, and its Subsidiaries

     There were no known non-routine  transactions during this fiscal year ended
     March 31, 2004.

4.   Collateral Pledged

     The collateral specifically pledged to the SM RIRA or as otherwise noted is
     as follows:

     a.  A Collateral Pledge Agreement executed by Commerce on December 31, 1981
         granted to the SM RIRA by Commerce  pledging  48,645 SLE common shares,
         par value $0.50 a share,  Certificate  No. 25, dated December 31, 1981,
         together with a letter agreement dated December 31, 1981.  Reference is
         made to Exhibit 4 in the April 9, 1990 confirmation letter.

     b.  Acknowledgement of previously recorded collateral provided to
         the Lenders

         Historical information - San Sebastian Gold Mine Concession

         General Lumber & Supply Co., Inc. (GLSCO), Edward L. Machulak (ELM), as
         an  individual  and not as a Director or Officer of Commerce the Edward
         L. Machulak Rollover  Individual  Retirement Account (ELM RIRA) and the
         SM RIRA collectively and individually identified as the Lender(s), have
         been assigned on October 19, 1987, all of the rights,  titles,  claims,
         remedies and interest in the Joint Venture,  and to the mine concession
         granted by the Government of El Salvador to Mineral San Sebastian, S.A.
         de C.V.  (Misanse) on July 23, 1987, and  thereafter  from time to time
         amended, and which

<PAGE>

Mrs. Sylvia Machulak
Sylvia Machulak
Rollover Individual Retirement Account
May 10, 2004
Page 3 of 8 Pages


         Misanse then assigned to the Joint Venture on September 22, 1987.  This
         collateral  specifically  includes all of the San  Sebastian  Gold Mine
         (SSGM) precious metal ore reserves. Commerce and the Joint Venture have
         the  right to  assign  this and any  subsequent  concession  agreement.
         Reference  is made to  Exhibit  4(a)  included  in the  April  9,  1990
         confirmation letter.

         The following  collateral has been  previously  assigned to the Lenders
         pursuant to resolutions adopted by the Directors:

         (1) Commerce/Sanseb Joint Venture (Joint Venture)

             Both Commerce and San Sebastian Gold Mines, Inc. have
             assigned all of the rights, title, claims, remedies and
             interest that each has in the Joint Venture to the Lenders.
             Reference is made to Historical information - San Sebastian
             Gold Mine Concession.

         (2) New SSGM Exploration  Concession/License  (New SSGM)  approximately
             40.7694 square kilometers (10,070 acres)

             On October 20, 2002,  the Company  applied for the New SSGM,  which
             covers an area of 42 square  kilometers and includes  approximately
             1.2306 square  kilometers  of the Renewed SSGM.  The New SSGM is in
             the  jurisdiction  of  the  City  of  Santa  Rosa  de  Lima  in the
             Department of La Union and in the Nueva  Esparta in the  Department
             of Morazan,  Republic of El Salvador,  Central America. On February
             24, 2003,  the El Salvador  Department  of  Hydrocarbons  and Mines
             (DHM) issued the New SSGM for a period of four years  starting from
             the date following the  notification of this  resolution  which was
             received  on March 3, 2003.  The New SSGM may be  extended  for two
             two-year  periods,  or for a total of eight years.  Besides the San
             Sebastian Gold Mine, three other formerly operative gold and silver
             mines  known as the La Lola Mine,  the Santa  Lucia  Mine,  and the
             Tabanco Mine are  included in the New SSGM and are being  explored.
             The Company has complied as required by filing its annual  activity
             report and it paid the annual surface tax. This concession had been
             assigned collectively to all of the Lenders named herein on May 12,
             2003  and  the   assignment  was  included  in  the  May  12,  2003
             confirmation agreement as Exhibit B.


<PAGE>

Mrs. Sylvia Machulak
Sylvia Machulak
Rollover Individual Retirement Account
May 10, 2004
Page 4 of 8 Pages


         (3) Lease agreement by and between Mineral San Sebastian
             Sociedad Anomina de Capital Variable (Misanse) and Commerce
             dated January 14, 2003

             The term of this  lease  agreement  coincides  with the term of the
             Renewed  San  Sebastian  Gold  Mine  Exploitation   Concession  and
             consists of 1,470 acres owned by Misanse.  This lease agreement has
             been  assigned to all of the Lenders  named  herein on May 12, 2003
             and the  assignment  was included in the May 12, 2003  confirmation
             agreement as Exhibit B.

     c.  Acknowledgment of collateral provided during the current fiscal
         year March 31, 2004

         Commerce's  Directors  have on May 10,  2004  authorized  and  directed
         Commerce's  Officers  to  assign  all of the  rights,  titles,  claims,
         remedies and interest it has to GLSCO,  ELM, the ELM RIRA,  the SM RIRA
         and SM,  collectively  and  individually  referred  to as  Lenders,  as
         collateral for all of the outstanding loans and obligations as of March
         31, 2004, including all future advances of any kind as follows:

         (1) Renewed San  Sebastian  Gold Mine  Exploitation  Concession/License
             (Renewed  SSGM)  -  approximately  1.2306  square  kilometers  (304
             acres),  Department  of La  Union,  El  Salvador,  Central  America
             (pledged and assigned as collateral on May 10, 2004)

             On  September  6, 2002,  at a meeting  held with the El  Salvadoran
             Minister  of  Economy  and the DHM,  it was  agreed  to  submit  an
             application  for  the  Renewed  SSGM  for a  30-year  term  and  to
             simultaneously  cancel the concession obtained on July 23, 1987. On
             September 26, 2002, the Company filed this application. On February
             28, 2003  (received  March 3, 2003) the DHM admitted to the receipt
             of the application and the Company proceeded to file public notices
             as required by Article 40 of the El  Salvadoran  Mining Law and its
             Reform (MLIR). On April 16, 2003, the Company's El Salvadoran legal
             counsel filed with the DHM notice that it believed that it complied
             with  the  requirements  of  Article  40,  and that  there  were no
             objections;  and  requested  that the DHM make  its  inspection  as
             required by MLIR Article 42. The Company then provided a bond which
             was required by the DHM to protect third parties against any damage
             caused from the mining operations,  and it simultaneously  paid the
             annual  surface  tax. On August 29, 2003 the Office of the Ministry
             of Economy

<PAGE>

Mrs. Sylvia Machulak
Sylvia Machulak
Rollover Individual Retirement Account
May 10, 2004
Page 5 of 8 Pages


             formally  presented the Company with the  twenty-year  Renewed SSGM
             which was dated  August 18, 2003.  This  Renewed SSGM  replaces the
             collateral that the same parties held with the previous concession.
             A copy of the  assignment  dated May 10, 2004,  is attached to this
             document  (Exhibit B) and the Renewed SSGM agreement is attached to
             it and referred to as Exhibit 1.

         (2) San Cristobal Mill and Plant (SCMP) three-year lease by and between
             Commerce and Corporacion  Salvadorena de Inversiones (Corsain),  an
             El Salvadoran  governmental  agency,  executed on Monday, April 26,
             2004,  retroactive  to November 13,  2003.  Pledged and assigned as
             collateral on May 10, 2004.

             The renewed three-year SCMP lease for the property located near the
             City of El Divisadero  was finalized and executed on Monday,  April
             26, 2004,  and is  retroactive  to November 13, 2003.  This May 10,
             2004 assignment is included in Exhibit B and the lease agreement is
             attached to it and referred to as Exhibit 2.

5.   Cross Pledge Collateral Agreement

     GLSCO,  ELM, the ELM RIRA, the SM RIRA and SM individually  are entitled to
     specific  collateral  that  has  been  pledged  to  them by  Commerce,  its
     subsidiaries,  affiliates and the Joint Venture.  Upon default by Commerce,
     or its  subsidiaries or affiliates or the Joint Venture,  then GLSCO,  ELM,
     the ELM RIRA,  the SM RIRA and SM have the first right to the proceeds from
     the  specific   collateral   pledged  to  each  of  them.   Commerce,   its
     subsidiaries, affiliates and the Joint Venture, also have cross-pledged the
     collateral  without  diminishing  the  rights  of the  specific  collateral
     pledged to each of the following: GLSCO, ELM, the ELM RIRA, the SM RIRA and
     SM. The  purpose  and the intent of the cross  pledge of  collateral  is to
     assure  GLSCO,  ELM,  the ELM RIRA,  the SM RIRA and SM,  that each of them
     would be paid in full; thus, any excess  collateral that would be available
     is for the purpose of satisfying any debts and  obligations  due to each of
     the named  parties.  The formula to be used (after  deducting  the payments
     made  from the  specific  collateral)  is to total  all of the debts due to
     GLSCO, ELM, the ELM RIRA, the SM RIRA and SM, and then to divide this total
     debt into each individual debt to establish each individual's percentage of
     the  outstanding  debt due. This  percentage then will be multiplied by the
     total of the excess  collateral to determine the amount of proceeds derived
     from the excess collateral and then the amount due to each of them would be
     distributed accordingly.

<PAGE>

Mrs. Sylvia Machulak
Sylvia Machulak
Rollover Individual Retirement Account
May 10, 2004
Page 6 of 8 Pages


6.   Cancellation of Inter-Company Debts Upon Default

     Since certain of the collateral  specifically  or  collectively  pledged to
     GLSCO,  ELM, the ELM RIRA,  the SM RIRA and SM consists of the common stock
     of  Homespan,  Ecomm,  Sanseb,  SLE,  Misanse,  UDI and the interest in the
     ownership  of the Joint  Venture,  Commerce  agreed,  upon  default  of the
     payment  of  principal  or  interest  to any of  the  individual  Lender(s)
     mentioned herein, that it will automatically cancel any inter-company debts
     owed to Commerce by any of its  wholly-owned  subsidiaries or affiliates or
     the  Joint  Venture  at such  time as any of the  stock  or  Joint  Venture
     ownership is transferred  to the collateral  holders as a result of default
     of any promissory note.

7.   Guarantors

     This agreement  further confirms that Commerce and all of the following are
     guarantors  to the  obligations  due to SM and to the loans  made by the SM
     RIRA to Commerce: Joint Venture, Homespan, Ecomm, SLE, Sanseb and UDI. They
     jointly and severally  guarantee payment of the note(s) that they caused to
     be  issued  and  also  agree  that  these  note(s)  may be  accelerated  in
     accordance  with the  provisions  contained  in the  agreement  and/or  any
     collateral or mortgages  securing these notes. Also,  Commerce,  all of its
     subsidiaries  and the Joint Venture agree to the cross pledge of collateral
     for the benefit of GLSCO, ELM, the ELM RIRA, the SM RIRA, and SM. Reference
     is made to Exhibit 5 included in the April 9, 1990 confirmation letter.

8.   Re-Execution Agreement(s)

     In the event the SM RIRA and/or SM deems that it is  necessary or advisable
     for the SM RIRA  and/or  SM to have  Commerce  re-execute  any  document(s)
     entered  into,  including,  but not  limited to the  promissory  note(s) or
     collateral   agreement(s),   Commerce  will  re-execute  such   document(s)
     reasonably  required by the SM RIRA and/or SM.  Commerce also  acknowledges
     that  Commerce  may be liable to pay  certain  costs  related to any of the
     transactions  entered  into with the SM RIRA  and/or SM. If at a later date
     the SM RIRA and/or SM determines that an error has been made in the payment
     of such  costs to the SM RIRA  and/or  SM,  then the SM RIRA  and/or SM may
     demand  payment  and  Commerce  does  hereby  agree  to make  such  payment
     forthwith.  All requests for  corrections  of any errors and/or  payment of
     costs shall be complied  with by Commerce  within  seven (7) days of the SM
     RIRA's and/or SM's written request.  The failure of Commerce to comply with
     Commerce's  obligation(s)  hereunder  shall  constitute a default and shall
     entitle the SM RIRA and/or SM to the

<PAGE>

Mrs. Sylvia Machulak
Sylvia Machulak
Rollover Individual Retirement Account
May 10, 2004
Page 7 of 8 Pages


     remedies  available  for default  under any  provisions  of the  agreements
     including,  but not limited to the promissory note(s) and/or the collateral
     pledge agreement(s) and/or any other Commerce obligation(s).

9.   Omissions

     Commerce  believes that it has included all of its obligations,  monies due
     and has listed all of the collateral due to the SM RIRA and/or SM, however,
     since  these  transactions  have taken  place over a long period of time in
     which  changes could have taken place,  it is possible  that  inadvertently
     some item(s),  particularly  collateral,  could have been omitted.  If that
     should prove to be a fact,  then  Commerce,  the Joint  Venture,  Homespan,
     Ecomm,  SLE, Sanseb,  and UDI agree that those omissions of collateral,  if
     any,  are  meant to be  included  as  collateral  under  this  confirmation
     agreement.

If you are in agreement with the contents of this letter,  please sign below and
return one copy to Commerce.

Very truly yours,

COMMERCE GROUP CORP.

/s/ Edward A. Machulak

Edward A. Machulak
Secretary

<PAGE>

Mrs. Sylvia Machulak
Sylvia Machulak
Rollover Individual Retirement Account
May 10, 2004
Page 8 of 8 Pages


The contents of this letter are agreed by the following:

COMMERCE/SANSEB JOINT VENTURE           HOMESPAN REALTY COMPANY, INC.
as Guarantor (Joint Venture)            as Guarantor (Homespan)

/s/ Edward L. Machulak                  /s/ Edward L. Machulak
-----------------------------           ---------------------------
By:  Edward L. Machulak,                By:  Edward L. Machulak,
     Auth. Designee                          President


ECOMM GROUP INC.                        SAN LUIS ESTATES, INC.
as Guarantor (Ecomm)                    as Guarantor (SLE)

/s/ Edward A. Machulak                  /s/ Edward L. Machulak
-----------------------------           ---------------------------
By:  Edward A. Machulak,                By:  Edward L. Machulak,
     President                               President


SAN SEBASTIAN GOLD MINES, INC.          UNIVERSAL DEVELOPERS, INC.
as Guarantor (Sanseb)                   as Guarantor (UDI)

/s/ Edward L. Machulak                  /s/ Edward L. Machulak
------------------------------          ---------------------------
By:  Edward L. Machulak,                By: Edward L. Machulak,
     President                              President


Accepted by:                            Accepted by:

/s/ Sylvia Machulak                     /s/ Sylvia Machulak
-----------------------------------     --------------------------------
Sylvia Machulak Rollover Individual     Sylvia Machulak as an individual
Retirement Account                      Date:  May 10, 2004
Date:  May 10, 2004


<PAGE>

                            EXHIBIT A TO EXHIBIT 99.4
            (Schedule of Principal and Interest as of March 31, 2004
             has been purposely omitted as it only reflects
            the calculations of the principal and interest.)


<PAGE>
                                    EXHIBIT B


                                   Assignment

     For and in  consideration  of the sum of One Dollar  ($1.00) and other good
and  valuable  consideration  such as, but not  limited to, the  continuance  of
extending  the  open-ended,  secured,  on-demand  promissory  note(s)  issued by
Commerce Group Corp.  (Commerce),  a Wisconsin corporation located at 6001 North
91st Street,  Milwaukee,  Wisconsin 53225, in hand paid, the receipt of which is
hereby  acknowledged,  Commerce does hereby sell, assign and transfer to General
Lumber & Supply Co., Inc., a Wisconsin  corporation,  Edward L. Machulak,  as an
individual and not as a Director or Officer of Commerce,  the Edward L. Machulak
Rollover Individual  Retirement Account, the Sylvia Machulak Rollover Individual
Retirement  Account,  and Sylvia  Machulak,  as an individual,  and their heirs,
successors  and  assigns,  all who reside in the County of  Milwaukee,  State of
Wisconsin,  United States of America,  individually and collectively referred to
as "Lenders," all of Commerce's rights, titles, claims, remedies, a nd interests
whatsoever in and to the Renewed San Sebastian Gold Mine Exploitation Concession
consisting  of 1.2306  kilometers  located on the Hacienda San Sebastian and San
Sebastian El Coyolar under the jurisdiction of Santa Rosa de Lima, Department of
La  Union,  Republic  of  El  Salvador,  Central  America,   identified  on  the
cartographic sheet number 2656-IV pursuant to Agreement No. 741 dated August 18,
2003  (delivered  on August 29,  2003)  granted by the El  Salvador  Minister of
Economy of the Republic of El Salvador,  Central  America for a period of twenty
years  commencing  from  the  date of  publication  in the El  Salvador  Federal
Register   (Diario   Oficial)   and  more  fully   described   in  the  attached
Spanish/English document made an integral part of this Assignment (Exhibit 1).

     In addition,  this  Assignment  includes all of Commerce's  rights,  title,
claims,  remedies  and  interests  whatsoever  of a three-year  lease  agreement
entered into on the 26th day of April,  2004,  retroactive to November 13, 2003,
by and between  Corporacion  Salvadorena de  Inversiones  (Corsain) and Commerce
Group Corp.,  more fully  described  in the  attached  copy of the lease made an
integral part of this Assignment (Exhibit 2).

     Said claims,  rights,  title and interest are pledged,  sold,  assigned and
transferred  to the Lenders as collateral  security for loans made and for loans
to be made by the Lenders to Commerce  and also as  collateral  security for any
and all  liabilities,  direct or  indirect,  absolute or  contingent,  due or to
become due, now existing or hereafter arising from Commerce to the Lenders.

     Commerce further acknowledged that Commerce's Directors unanimously adopted
this  Assignment by a resolution  on May 10, 2004,  and that the purpose of this
Assignment is to provide collateral to the above-described Lenders.

     This  Assignment  shall  extend  to the full  term  remaining  on the above
concession  and  license or lease and in any  amendments,  renewals,  changes or
extensions thereof.


     In Witness  Whereof,  Commerce  has caused  this  instrument  to be signed,
sealed and delivered by its proper officers  thereunto duly authorized this 10th
day of May 2004.

ATTEST:

COMMERCE GROUP CORP.                  COMMERCE GROUP CORP.

/s/ Edward L. Machulak                /s/ Edward A. Machulak
-----------------------------         -------------------------------
Edward L. Machulak, President         Edward A. Machulak, Secretary




State of Wisconsin  )
                    )  ss.
County of Milwaukee )

     On this 10th day of May, 2004,  before me,  personally  appeared  Edward L.
Machulak,  President and Edward A. Machulak,  Secretary of Commerce Group Corp.,
to me known to be the  persons  described  in, and who  executed  the  foregoing
instrument,  and acknowledged  that they executed the same as their free act and
deed.


                                      /s/ Sylvia Machulak
                                      -----------------------------------
                                      Sylvia Machulak
                                      Notary Public, Milwaukee County, WI
                                      My commission expires June 11, 2006


<PAGE>


[Note:  Exhibit 1 of Exhibit B is incorporated by reference to Exhibit
10.17 of the Company's S.E.C. Form 10-Q for the quarterly period ended
September 30, 2003 and Exhibit 2 of Exhibit B is incorporated by
reference to Exhibit 10.15 of the Company's S.E.C. Form 10-K for the
fiscal year ended March 31, 2004.]