EXHIBIT 99.2



COMMERCE GROUP CORP.

6001 NORTH 91ST ST.

MILWAUKEE, WI 53225-1795

414-462-5310

FAX  414-462-5312

E-MAIL  info@commercgroupcorp.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 14, 2007



Mr. Edward L. Machulak

903 West Green Tree Road

River Hills, Wisconsin  53217



Dear Mr. Machulak:



At today's Commerce Group Corp. (Commerce) Directors' meeting, the

Directors were informed about the annual confirmation, disclosure and

status letter that you requested from Commerce, its subsidiaries, its

affiliates, and the Joint Venture, and to establish and confirm the

amount due and the collateral pledged along with any other Commerce

obligations or agreements made to Edward L. Machulak (ELM and/or Lender)

as an individual and not as a Director or Officer of Commerce or its

subsidiaries or as the authorized designee of the Joint Venture as of

Commerce's fiscal year ended March 31, 2007.  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 with Commerce, which is as follows:



1.   Promissory Notes and Other Obligations



a.  An open-ended, secured, on-demand promissory note (Note) dated

October 1, 1989 in which all of the prior promissory notes were

consolidated into this single Note amounted to $490,217.19 as of

that date.  All future advances and interest, not paid, are

added to this Note, and payments to ELM reduce the amount owed.

This Note, together with cash and other advances and interest as

of March 31, 2007, amounts to $11,372,961.98.  Commerce has

renewed this promissory note as of March 31, 2007 and a copy is

attached (Exhibit A).  A schedule including all of the

transactions pertaining to the activities relating to this Note

during the fiscal year ended March 31, 2007 is also attached

(Exhibit A-1).  This Note bears interest, payable monthly, at

the rate of 2% over the prime rate established from time to time

by the First National Bank of Chicago, Chicago, Illinois, (then

Bank One; now the prime rate published in the Wall Street

Journal), but not less than 16% per annum.



<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 2 of 15 Pages



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 ELM, and it will

deduct any payments or credits made by Commerce to the current

open-ended, secured, on-demand, outstanding promissory note(s)

issued or obligations owed to ELM and Commerce will provide an

annual accounting and confirmation letter.



On May 9, 2005, Commerce's Directors authorized its Officers to

issue renewed annual note(s) (Exhibit B of the May 9, 2005

confirmation letter) so that the Lender will have a current

substituted dated debt instrument.  The Directors acknowledged

that the issuance of note(s) for each transaction are too

cumbersome and are not practicable to manage.  Also, the length

of time involved and the number of transactions make it

impractical to devote the time and effort to issue a note for

each transaction.  However, beginning with this fiscal year

which ended March 31, 2007, the Directors are including the

following as Lender(s):  John E. Machulak and Susan R.

Robertson, husband and wife (M&R), the Machulak, Robertson &

Sodos, S.C. Law Firm (Law Firm), Circular Marketing, Inc. (CMI)

and Edward A. Machulak as an individual (EAM).  Therefore, the

Directors have unanimously agreed to continue to embrace this

resolution, which was adopted on May 9, 2005:



WHEREAS, in the past 20 years or more the following

parties: General Lumber & Supply Co., Inc. (GLSCO); Edward L.

Machulak  as an individual and not as a Director or Officer of

Commerce (ELM); the Edward L. Machulak Rollover Individual

Retirement Account (ELM RIRA), the Sylvia Machulak Rollover

Individual Retirement Account (SM RIRA), and Sylvia Machulak, as

a consultant and as an individual (SM), hereafter collectively

and individually identified as the Lender(s), have accounted for

advancing cash funds, earning accrued interest, and for

appropriate credit which was reconciled to the open-ended,

secured, on-demand notes(s); and



WHEREAS, the Directors desire to minimize the record

keeping in these transactions without jeopardizing, diminishing,

altering, changing or losing any rights that the Lenders have by

changing the procedures in handling the recording of any

notes(s) issued or to be issued; and



WHEREAS, in order to provide an easier accounting facility

by renewing the notes(s) on an annual basis to coincide with the

Company's fiscal year (which presently ends on March 31) and to

incorporate said renewed note(s) with the annual confirmation

agreement(s); and



<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 3 of 15 Pages





WHEREAS, prior to the change to issue substituted renewed

note(s), the initial promissory note(s) were considered to be

open-ended, secured, on-demand and the additions and deductions

were recognized by separate accounting records; therefore, be it



RESOLVED, That the Directors authorize and empower the

Officers to substitute and issue renewed consolidated

promissory note(s) at the end of each fiscal year beginning

with the Company's fiscal year ended March 31, 2005 to the

following: General Lumber & Supply Co., Inc. (GLSCO);

Edward L. Machulak  as an individual and not as a Director

or Officer of Commerce (ELM); the Edward L.  Machulak

Rollover Individual Retirement Account (ELM RIRA), the

Sylvia Machulak Rollover Individual Retirement Account (SM

RIRA), and Sylvia Machulak, as a consultant and as an

individual (SM), hereafter collectively and individually

identified as the Lender(s); and



BE IT FURTHER RESOLVED, That the Officers of the

Company are authorized and empowered to assure the

Lender(s) that by substituting and consolidating the

existing note(s) and issuing the renewed note(s) on the

last day of the Company's fiscal year beginning with March

31, 2005 with the understanding that the intention is that

the Lender(s) will not jeopardize, lose, diminish, risk,

alter or change any rights, including the pledge of

collateral, that are inherent with the initial note(s) by

the issuance of annual renewed open-ended, secured,

on-demand promissory note(s); and



BE IT FURTHER RESOLVED, That the Directors acknowledge

that the only purpose of the change and substitution to

issue annual renewed notes(s) is for the convenience,

reduced accounting and reducing the paperwork involved; and



BE IT FURTHER RESOVED, That the Officers are

authorized and empowered to perform any act that they deem

necessary to accommodate the purpose of issuing annual

renewed note(s).



As of March 31, 2007, the following parties are collectively and

individually identified as the Lender(s): General Lumber & Supply

Co., Inc. (GLSCO); Edward L. Machulak  as an individual and not as a

Director or Officer of Commerce (ELM); the Edward L. Machulak

Rollover Individual Retirement Account (ELM RIRA), the Sylvia

Machulak Rollover Individual Retirement Account (SM RIRA), Sylvia

Machulak, as a consultant and as an individual (SM), John E.

Machulak and Susan R. Robertson, husband and







<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 4 of 15 Pages





wife (M&R), the Machulak, Robertson & Sodos, S.C. Law Firm (Law

Firm), Circular Marketing, Inc. (CMI) and Edward A. Machulak as an

individual (EAM).



b.   Salaries, vacation pay



In addition to the promissory note, Commerce owes ELM the

following for accrued salaries and vacation:



Period               Years  Annual Salary    Total

------               -----  -------------    -----

April 1, 1981 - March 31, 1992   11.00      67,740    $  745,140

April 1, 1992 - Sept. 30, 1996    4.50    $114,750       516,375

Oct. 1, 1996 - March 31, 2007    10.50    $165,000     1,732,500

-----                ----------

Balance                        26.00                $2,994,015



Vacation Pay              Months     Payment

------------              ------     -------

April 1981 - March 31, 2007         26    $ 13,750       357,500

----------

Total Due                                           $3,351,515



At Commerce's Annual Board of Directors' Meeting held on

October 19, 2001, the Directors adopted a resolution to

compensate ELM for vacation pay based on one month for each

year of service beginning on April 1, 1981, and also the

following resolution, which in part states:



"BE IT FURTHER RESOLVED, That the Directors agreed that on

the day the compensation will be paid to Edward L. Machulak, an

adjustment will be made to compensate him for the loss of the

dollar purchasing value caused by inflation and other economic

factors;"



c.   ELM Bonus agreement



On February 16, 1987, by a Consent Resolution of all of the

Directors, ELM was awarded as a bonus compensation, the

following:  for a period of 20 years, commencing the first day

of the month following the month in which Commerce begins to

produce gold from its El Salvadoran gold mining operations,

Commerce will pay annually to ELM, 2% of the pre-tax profits

earned from these operations.  Reference is made to Exhibit 11

included in the April 9, 1990 confirmation letter.



<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 5 of 15 Pages





d.   Share loans



To infuse funds into Commerce, Commerce from time to time

borrowed ELM's free trading common shares of Commerce and ELM

sold these shares as designee for Commerce's benefit with

Commerce receiving all of the proceeds.  For these share loans,

Commerce has agreed to pay ELM interest at the rate of prime

plus 3%, payable monthly with payment by issuing Commerce's

restricted common shares based on these borrowed shares.

Interest is also due and payable monthly with Commerce's

restricted common shares for the shares pledged by ELM as

collateral to others, all for the Company's best interest and

benefit.  All share loans and interest are to be paid annually

on or before March 31 of each of Commerce's fiscal years.  An

accounting of the Commerce common shares due and/or paid to ELM

as of March 31, 2007, pursuant to a series of

Director-approved, open-ended, on-demand loan and promissory

note agreements by and between Commerce and ELM dated April 1,

1990, May 17, 1989, October 14, 1988 and June 20, 1988, and for

certain continuous loans and/or pledges of ELM's securities

that have taken place and continued to occur during the fiscal

year ended March 31, 2007 is as follows:



1.  Share loans                                           None

2.  Interest shares due on shares pledged

to banks for an open line of credit                   None

3.  Interest shares due on shares sold for

the benefit of Commerce                               None

Total Commerce restricted common shares

paid and issued for the fiscal period

ended March 31, 2007 to ELM                           None



e.   Open ended loan agreements



Reference is made to four Director-approved, open-ended loan

agreements dated June 20, 1988, October 14, 1988, May 17, 1989

(Exhibits B, C and D of the April 12, 1993, confirmation

letter) and April 1, 1990 (Exhibit 2 of the April 9, 1990

confirmation letter).



f.   Misanse share ownership disclosure



On October 23, 1993, in order to comply with the El Salvador

Government's minimum capital requirements, the shareholders of

Mineral San Sebastian S.A. de C.V. (Misanse) voted to increase

Misanse's capitalization from 119,500 colones to 260,000

colones.  This was accomplished via a shareholders' rights

offering on the basis of purchasing one share for each share

owned with the rights expiring on December 10, 1993.  According

to Misanse's by-laws, the



<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 6 of 15





rights not exercised would be offered proportionately to the

shareholders who did exercise their rights.



In addition to the rights offering, the Misanse shareholders

authorized the sale of 210 additional common shares to the

following:  ten shares to each of the four officers/directors

(40 shares), five shares to each of the remaining six directors

(30 shares), three shares to each of the ten supplemental

directors (30 shares), (the President and the Secretary of the

Company, who are directors of Misanse, had the right and they

purchased ten and three shares respectively), and 110 shares

were sold  to the Company over and above the amount of shares

it was entitled to by the rights offering so that it would

retain its 52% ownership after the issuance of the shares under

the rights offering.  When the Company obtained the concession

in 1987, it agreed with the El Salvador Ministry of Economy's

office not to increase its 52% ownership of Misanse.

Therefore, after the rights offering, the Company owned

approximately 52%.



On the closing date of December 10, 1993 of this rights

offering, there were 264 shares that were not subscribed and

purchased.  The Company would have been entitled to purchase

137 shares (264 x 52%).  However, the Company had been

prohibited to purchase these shares as it would have exceeded

its 52% ownership of Misanse shares.  The 137 shares were

acquired by ELM with prior approval of Commerce's directors.

He acquired an additional four shares by virtue of his

proportionate ownership in the remaining unsold shares.  A

Misanse Director-approved drawing was held to sell the

unsubscribed shares.  In order to close the sales, 52 shares

were purchased by ELM which he agreed in writing to hold these

shares in escrow for a period of one year for the purpose of

providing certain named El Salvador Misanse shareholders time

to obtain funds to purchase these shares at his cost.  None

were purchased by the Misanse shareholders.



During June 1995, ELM personally purchased an additional 264

Misanse common shares from a Misanse shareholder in an

arms-length transaction.  Therefore ELM presently owns a total

of 467 Misanse common shares or approximately 17.96% of the

total 2,600 Misanse common shares issued and outstanding.





<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 7 of 15 Pages





2.   Collateral Pledged



The collateral specifically pledged to ELM or as otherwise noted is

as follows:



a.   A Collateral Pledge Agreement dated October 14, 1981 granted to

ELM by Commerce pledging the following collateral:  2,002,037

shares of Sanseb common stock, par value $0.10 per share and

1,346 shares of Mineral San Sebastian, S.A. de C.V. common

stock, par value one hundred colones ($11.43) per share.  The

shares pledged are as follows:  the 618 shares originally owned

by Commerce, and the 618 shares plus 110 shares purchased from

the October 23, 1993 Misanse rights offering.  Reference is

made to Exhibit 4 included in the April 9, 1990 confirmation

letter.



b.   A Collateral Pledge Agreement dated February 24, 1983, by

Commerce, SLE and UDI collectively and individually, pledging

the following collateral:



300 shares of no par value common shares of Homespan (formerly

known as Trade Realty Co., Inc.), Certificate No. 7 dated

January 21, 1974, being 100% of its issued and outstanding

shares.  Homespan and Commerce agree that no additional shares

of Homespan will be issued as long as there are any obligations

due to ELM; 1,800 shares of no par value (UDI) capital stock

Certificate No. 17 dated September 15, 1972, representing 100%

of the shares issued and outstanding.  UDI and Commerce agree

that no additional shares of UDI will be issued as long as

there are any outstanding obligations due to ELM.  Reference is

made to Exhibit 5 included in the April 9, 1990 confirmation

letter.



c.   Collateral Pledge Agreement dated July 13, 1983 granted to

General Lumber & Supply Co., Inc. (GLSCO) and ELM by Commerce,

SLE, and Ecomm, individually and collectively, pledging the

following collateral:



One voting membership certificate of San Luis Valley Irrigation

Well Owners, Inc., Membership Certificate No. 871, dated

November 27, 1979; Certificate No. 312, Membership No. 871,

consisting of .001447 units of Augmentation Plan Number One of

San Luis Valley Irrigation Well Owners, Inc. dated February 8,

1980;



100 common shares of $0.10 par value, Piccadilly (now Ecomm),

Certificate No. 1, dated July 23, 1974.  Ecomm and Commerce

agree that no additional shares of Ecomm will be issued as long

as there are any outstanding obligations due to ELM. Reference

is made to Exhibit 6 included in the April 9, 1990 confirmation

letter.





<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 8 of 15 Pages





d.   A Deed of Trust dated November 3, 1983 by and between Homespan,

as party of the first part, and Ronald K. Carpenter, Esq.

(Trustee), as party of the second part, for the benefit of ELM

and GLSCO, as party of the third part.  The Deed of Trust is in

favor of ELM and GLSCO and is open-ended to secure the

promissory note(s) due to ELM and GLSCO and to further secure

any future obligations that Commerce or Homespan may incur from

them.  This Deed of Trust is issued to Ronald K. Carpenter,

Esq., Trustee for the benefit of ELM and GLSCO and is a first

lien on the 331-acre Standing Rock  Campground located in

Camdenton, Missouri.  The Deed of Trust was recorded on

November 5, 1984 in Camden County, Missouri at 1:24 p.m. in

Book 122, Page 200.  Reference is made to Exhibit 7 included in

the April 9, 1990 confirmation letter.  On August 14, 2000,

with the Directors' approval, this property, via an agreement,

was conveyed to GLSCO in consideration of the cancellation of

$1,249,050 of debt owed to GLSCO and for other consideration

contained in the said agreement.



e.   Commerce/Sanseb Joint Venture (Joint Venture)



Commerce and Sanseb agree that ELM (the other Lenders were

included later) has as collateral, the assignment and pledge of

all of their rights, titles, claims, remedies, and interest

whatsoever in the Joint Venture which was formed on September

22, 1987.  In the event of default, whatever interest Commerce

and Sanseb have in the Joint Venture will be transferred to ELM

and it will include whatever assets are owned by the Joint

Venture, including, but not limited to the precious metal ore

reserves.  Reference is made to Exhibit C included in the April

8, 1991 confirmation letter.



f.   Uniform Commercial Code Filing - all other specific assets



ELM's interest with GLSCO in filing financing statements under

the Uniform Commercial Code by an assignment and pledge of all

corporate assets, such as but not limited to the property of

Commerce, Joint Venture, SLE, and Homespan, wherever located,

now owned or hereafter acquired is as follows:  all accounts,

all land contract receivables, contract rights, instruments and

chattel paper; all inventory, all jewelry and precious stones,

and all documents relating to inventory, including all goods

held for sale, lease or demonstration, to be furnished under

contracts of service, and raw materials, work in process and

materials and supplies used or consumed in the business of

Commerce, the Joint Venture, SLE, and Homespan; all office

furniture, fixtures and all other equipment; all general

intangibles, all stock and securities of any kind, and all

rights, titles and interest in the Commerce Group Corp./San

Sebastian Gold



<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 9 of 15 Pages





Mines, Inc. Joint Venture, and all additions and

accessions to, all spare and repair parts, special tools,

equipment and replacements for all returned or repossessed

goods the sale or lease of which gave rise to, and all proceeds

and products of the foregoing.  Reference is made to the

Wisconsin Department of Financial Institutions Uniform

Commercial Code filing, Exhibit 10, included in the April 9,

1990 confirmation letter, the renewed UCC-1 filing on December

23, 1996, Exhibit B, included in the April 14, 1997

confirmation letter, and the UCC-4 continuation filing on June

27, 2001 at 8:55 a.m., Filing #02078155 (Exhibit B of the May

13, 2002 confirmation letter). A UCC Financing Statement was

electronically filed with the Wisconsin Department of Financial

Institutions on January 5, 2007 (Filing #070000277016).



g.   Acknowledgement of previously recorded collateral provided to

the Lenders



Historical information - San Sebastian Gold Mine Concession



GLSCO, ELM, ELM RIRA, SM RIRA, and SM 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 Misanse then

assigned to the Joint Venture on September 22, 1987.  This

collateral specifically includes, but is not limited to, 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 9 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.





<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 10 of 15 Pages





(2) New SSGM Exploration Concession/License (New SSGM) -

approximately 40.7694 square kilometers (10,070 acres)

Government of El Salvador Resolution No. 27.



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.



(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.



(4) 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) Government of El Salvador

Agreement No. 591.



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,



<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 11 of 15 Pages





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 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.  On May 20, 2004

(delivered June 4, 2004) the Government of El Salvador,

under their Agreement Number 591, extended the exploitation

concession for a period of 30 years.  A copy of the

assignment dated May 10, 2004, is attached to the May 10,

2004 confirmation letter as Exhibit B and the Renewed SSGM

agreement is attached to Exhibit B and referred to as

Exhibit 1.



(5) 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 the

May 10, 2004 confirmation letter as Exhibit B and the lease

agreement is attached to Exhibit B and referred to as

Exhibit 2.



(6) Nueva Esparta Exploration Concession/License (Nueva

Esparta) - 45 square kilometers (11,115 acres) Resolution

No.  271; Pledged and assigned as collateral on May 9, 2005



On or about October 20, 2002, the Company filed an

application with the DHM for the Nueva Esparta Exploration

Concession/License which consists of 45 square kilometers

and is located north and adjacent to the New SSGM.  On May

25, 2004 the Government of El Salvador, under their

Resolution No. 271, issued the Nueva Esparta Exploration

Concession/License for a period of four years starting from

the date





<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 12 of 15 Pages



following the notification of this resolution which was

received on June 4, 2004.  This concession/license may be

extended for two two-year periods or for a total of eight

years.  This rectangular area is in the Departments of La

Union (east) and Morazan (west) and in the jurisdiction of

the City of Santa Rosa de Lima, El Salvador, Central

America.  Included in the Nueva Esparta are eight other

formerly operated gold and silver mines known as:  the

Banadero Mine, the Carrizal Mine, the Copetillo Mine, the

Grande Mine, the La Joya Mine, the Las Pinas Mine, the

Montemayor Mine, and the Oro Mine.  A copy of the

assignment dated May 9, 2005 was attached to the May 9,

2005 confirmation letter as Exhibit C and the Nueva Esparta

Exploration Concession was attached to Exhibit C and

referred to as Exhibit 1.



(7) Acknowledgment of collateral provided through May 14, 2007



Commerce's Directors have on May 14, 2007 authorized and

directed Commerce's Officers to assign all of the rights,

titles, claims, remedies and interest in all of its assets

that it has including any assets owned by the Joint

Venture, to GLSCO, ELM, the ELM RIRA, the SM RIRA, SM, and

from March 31, 2007 to include M&R, the Law Firm, CMI and

EAM, collectively and individually referred to as Lenders,

as additional collateral for all of the outstanding loans

and obligations as of March 31, 2007, including all future

advances of any kind.



3.   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, SM and from March 31, 2007 to include M&R, the

Law Firm, CMI and EAM, and then to divide this total debt into each

individual debt to establish each individual's percentage of the

outstanding debt





<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 13 of 15 Pages





due.  This percentage then will be multiplied by the total of the

excess collateral to determine the amount of proceeds each party

should receive from the excess collateral.  Then the amount due to

each of them would be distributed accordingly.



4.   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.



5.   Guarantors



This agreement further confirms that Commerce and all of the

following are guarantors to the obligations due to ELM and to the

loans made by ELM 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, SM, and from March

31, 2007 to include M&R, the Law Firm, CMI and EAM.  Reference is

made to Exhibit 12 included in the April 9, 1990 confirmation

letter.



6.   Re-Execution Agreement(s)



In the event ELM deems that it is necessary or advisable for him 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 ELM.  Commerce also acknowledges that Commerce may be

liable to pay certain costs related to any of the transactions

entered into with ELM.  If at a later date ELM determines that an

error has been made in the payment of such costs to him then he 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 ELM's written request.   The failure of Commerce to comply

with Commerce's obligation(s) hereunder shall constitute a default

and shall entitle ELM to the remedies available for default under

any provisions of the agreements including, but not limited to the





<PAGE>



Mr. Edward L. Machulak

May 14, 2007

Page 14 of 14 Pages





promissory note(s) and/or the collateral pledge agreement(s) and/or

any other Commerce obligation(s).



7.   Omissions



Commerce believes that it has included all of its obligations,

monies due and has listed all of the collateral due to ELM, 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.



8.   Real Estate Ownership Adjacent to San Sebastian Gold Mine, Inc. (SSGM)



Commerce acknowledges that ELM personally owns the real estate he

purchased in January of 1988 which is adjacent to and bordering the

north boundary line of the SSGM located in the Republic of El

Salvador, Central America, and that Comseb is performing certain

exploration and exploitation on this property.  These costs are to

be payable by an offset to the amounts due to ELM.  Commerce also

agrees to sell, assign and transfer at no cost to ELM, the

exploration concession rights included in the New SSGM Exploration

Concession/License rights granted by the GOES under Resolution No.

27 dated February 24, 2003 (delivered March 3, 2003) and the

exploitation rights granted by the GOES under Agreement No. 591

dated May 20, 2004 (delivered June 4, 2004) pertaining to this

parcel of land.  (Reference is made to Exhibit B, "Concesion de

Exploracio El Paraiso" - plat map that identifies the ELM (Macay)

"92.13 Hectareas," (more or less) in the April 13, 1998 confirmation

letter).





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>



Mr. Edward L. Machulak

May 14, 2007

Page 15 of 15 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, Auth. Designee   By:  Edward L. Machulak, 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, President        By:  Edward L. Machulak, 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, President        By:  Edward L. Machulak, President





Accepted by:



/s/ Edward L. Machulak

---------------------------------------

Edward L. Machulak, as an Individual and

not as a Director or Officer of any of the

Corporations mentioned in this letter.

Date:  May 14, 2007





<PAGE>





EXHIBIT A TO EXHIBIT 99.2



RENEWED PROMISSORY NOTE





Borrower: Commerce Group Corp.           Lender:  Edward L. Machulak

6001 North 91st Street                  903 West Green Tree Rd.

Milwaukee, WI  53225                    Milwaukee, WI  53217



Principal Amount:          $11,372,961.98

Initial Rate:              2.000% + prime rate, but not less than 16.000%

Date of Renewed Note:     March 31, 2007



PROMISE TO PAY.  COMMERCE GROUP CORP. ("Borrower") promises to pay to

EDWARD L. MACHULAK ("Lender"), or order, in lawful money of the United

States of America, the principal amount of Eleven Million Three Hundred

Seventy Two Thousand Nine Hundred Sixty One and 98/100 Dollars

($11,372,961.98), together with interest, paid monthly, on the unpaid

principal balance from March 31, 2007, until paid in full.



PAYMENT.  This is an open-ended, secured, on-demand payment, renewed

promissory note.  Interest is to be paid monthly.  The Lender, at its

discretion, can add the monthly interest due to the principal balance.

Unless otherwise agreed or required by applicable law, payments will be

applied first to any accrued unpaid interest; and then to principal.  The

annual interest rate for this Note is computed on a 365/360 basis; that

is, 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 and the

interest is payable monthly.  Borrower will pay Lender at Lender's

address shown above or at such other place as Lender may designate in

writing.



VARIABLE INTEREST RATE.  The interest rate on this Note is subject to

change from time to time based on changes in the prime rate as quoted in

the Wall Street Journal plus two percent, but not less than sixteen

percent per annum.  Borrower understands that Lender may make loans to

the Borrower based on other rates as well.  The prime rate as of this

date is 8.250% per annum.  The interest rate to be applied to the unpaid

principal balance of this Note will be at a rate of 2.000 percentage

points over the prime rate, but not less than 16.000% per annum.  NOTICE:

Under no circumstances will the interest rate on this Note be less than

16.000% per annum or more than the maximum rate allowed by applicable

law.



PREPAYMENT.  Borrower may pay without penalty 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 pay on demand, the entire amount due.  Rather, any payment will reduce

the principal balance due.  Borrower agrees not to send Lender payments

marked "paid in full," "without recourse," or similar language.  If

Borrower sends such a payment, Lender may accept it without losing any of

Lender's rights under this Note, and Borrower will remain obligated to

pay any further amount owed to Lender.



INTEREST AFTER DEFAULT.  Upon default, including failure to pay on

demand, Lender, at its option, may, if permitted under applicable law,

increase the variable interest rate on this Note to 6.000 percentage

points over the prime rate or over the 16.000% rate, whichever is higher.

The interest rate will not exceed the maximum rate permitted by

applicable law.



DEFAULT.  Each of the following shall constitute an event of default

("Event of Default") under this Note:



Payment Default.  Borrower fails to make any payment when demand is

made under this Note.



Other Defaults.  Borrower fails to comply with or to perform any

other term, obligation, covenant or condition contained in this Note

or in any of the related documents or to comply with or to perform

any term, obligation, covenant or condition contained in any other

agreement between Lender and Borrower.





<PAGE>



Default in Favor of Third Parties.  Borrower or any Grantor defaults

under any loan, extension of credit, security agreement, purchase or

sales agreement, or any other agreement, in favor of any other

creditor or person that may materially affect any of Borrower's

property or Borrower's ability to repay this Note or perform

Borrower's obligations under this Note or any of the related

documents.



False Statements.  Any warranty, representation or statement made or

furnished to Lender by Borrower or on Borrower's behalf under this

Note or the related documents is false or misleading in any material

respect, either now or at the time made or furnished or becomes

false or misleading at any time thereafter.



Insolvency.  The dissolution or termination of Borrower's existence

as a going business, the insolvency of Borrower, the appointment of

a receiver for any part of Borrower's property, any assignment for

the benefit of creditors, any type of creditor workout, or the

commencement of any proceeding under any bankruptcy or insolvency

laws by or against Borrower.



Creditor or Forfeiture Proceedings.  Commencement of foreclosure or

forfeiture proceedings, whether by judicial proceeding, self-help,

repossession or any other method, by any creditor of Borrower or by

any governmental agency against any collateral securing the loan.

However, this Event of Default shall not apply if there is a good

faith dispute by Borrower as to the validity or reasonableness of

the claim which is the basis of the creditor or forfeiture

proceeding and if Borrower gives Lender written notice of the

creditor or forfeiture proceeding and deposits with Lender monies or

a surety bond for the creditor or forfeiture proceeding, in an

amount determined by Lender, in its sole discretion, as being an

adequate reserve or bond for the dispute.



Events Affecting Guarantor.  Any of the preceding events occurs with

respect to any Guarantor of any of the indebtedness or any Guarantor

disputes the validity of, or liability under, any guaranty of the

indebtedness evidenced by this Note.



Adverse Change.  A material adverse change occurs in Borrower's

financial condition, or Lender believes the prospect of payment or

performance of this Note is impaired.



Insecurity.  Lender in good faith believes itself insecure.



LENDER'S RIGHTS.  Upon default or upon demand, the Lender may declare the

entire unpaid principal balance on this Note and all accrued unpaid

interest immediately due, and then Borrower will pay that amount.



COLLATERAL.  Borrower acknowledges this Note is secured by all security

agreements, guarantees, mortgages, and other security instruments

previously granted, contemporaneously granted, and granted in the future,

and it has the collateral and other rights all as contained in a certain

confirmation agreement dated May 10, 2004 between all parties contained

therein, and as subsequently amended and updated from time to time.



ATTORNEYS' FEES; EXPENSES.  Lender may hire or pay someone else to help

collect this Note if Borrower does not pay.  Borrower will pay Lender

that amount.  This includes, subject to any limits under applicable law,

Lender's attorneys' fees and Lender's legal expenses, whether or not

there is a lawsuit, including attorneys' fees, expenses for bankruptcy

proceedings (including efforts to modify or vacate any automatic stay or

injunction), and appeals.  If not prohibited by applicable law, Borrower

also will pay any court costs, in addition to all other sums provided by

law.



GOVERNING LAW.  This Note will be governed by, construed and enforced in

accordance with the laws of the State of Wisconsin.  This Note has been

accepted by Lender in the State of Wisconsin.



<PAGE>





OTHER LOAN AGREEMENTS.  If Borrower and Lender have either previously or

contemporaneously entered into a Loan or Confirmation Agreements, it is

agreed that this Note is subject to the terms and conditions of such Loan

or Confirmation Agreements.  For purpose of this provision, Loan or

Confirmation Agreements shall include, but not be limited to, a Business

Loan Agreement or any other Loan or Confirmation Agreements.



SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon

Borrower, and upon Borrower's successors and assigns, and shall inure to

the benefit of Lender and Lender's heirs, executors, administrators,

successors and assigns.



GENERAL PROVISIONS.  This Note benefits Lender and its successors and

assigns, and binds Borrower and Borrower's successors, assigns, and

representatives.  Lender may delay or forgo enforcing any of its rights

or remedies under this Note without losing them.  Borrower and any other

person or corporation who signs, guarantees or endorses this Note, to the

extent allowed by law, waive presentment, demand for payment, and notice

of dishonor.  Upon any change in the terms of this Note, and unless

otherwise expressly stated in writing, no party who signs this Note,

whether as maker, guarantor, accommodation maker or endorser, shall be

released from liability.  All such parties agree that Lender may renew or

extend (repeatedly and for any length of time) this loan or release any

party or guarantor or collateral; or impair, fail to realize upon or

perfect Lender's security interest in the collateral; and take any other

action deemed necessary by Lender without the consent of or notice to

anyone.  All such parties also agree that Lender may modify this loan

without the consent of or notice to anyone other than the party with whom

the modification is made.  The obligations under this Note are joint and

several.



PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE

PROVISIONS OF THIS NOTE, INCLUDING THE INTEREST RATE PROVISIONS.

BORROWER AGREES TO THE TERMS OF THE NOTE.



BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY

NOTE.



BORROWER:



COMMERCE GROUP CORP.





/s/ Edward L. Machulak

----------------------------------------------

By:  Edward L. Machulak, President





/s/ Edward A. Machulak

-----------------------------------------------------

By:  Edward A. Machulak, Vice President and Secretary







<PAGE>



EXHIBIT A-1 TO EXHIBIT 99.2



(Schedule of all transactions pertaining to

the activities relating to Exhibit A to

Exhibit 99.2 for the fiscal year ending March 31, 2007

has been purposely omitted as it only reflects

the calculations of the principal and interest.)