EXHIBIT 99.3



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 30, 2008





Mrs. Sylvia Machulak, Widow,

on behalf of Edward L. Machulak, deceased

for the Edward L. Machulak 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 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 the Edward L. Machulak Rollover

Individual Retirement Account (ELM RIRA and/or Lender) as of Commerce's

fiscal year ended March 31, 2008.  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



The total amount of all of the open-ended, secured, on-demand

promissory notes (Notes), together with interest due to the ELM

RIRA, amounts to $1,429,871.18 as of March 31, 2008.  Commerce has

renewed this promissory note as of March 31, 2008, 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, 2008 is also attached (Exhibit A-1).  These

Notes, since April 1, 1994, bear interest, payable monthly, at the

rate of 4% 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.  Commerce is no longer issuing monthly

Notes for the payment of interest, etc., but







<PAGE>





Mrs. Sylvia Machulak, Widow,

on behalf of Edward L. Machulak, deceased

for the Edward L. Machulak Rollover

Individual Retirement Account

May 30, 2008

Page 2 of 11 Pages





pursuant to our understanding, Commerce is augmenting all

additions and advances

made by the ELM RIRA, 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 ELM RIRA 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 the 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>



Mrs. Sylvia Machulak, Widow,

on behalf of Edward L. Machulak, deceased

for the Edward L. Machulak Rollover

Individual Retirement Account

May 30, 2008

Page 3 of 11 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).



<PAGE>



Mrs. Sylvia Machulak, Widow,

on behalf of Edward L. Machulak, deceased

for the Edward L. Machulak Rollover

Individual Retirement Account

May 30, 2008

Page 4 of 11 Pages





As of March 31, 2008, 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 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).



2.   Other Agreements and Transactions



a.  On August 14, 2000, Commerce's Directors authorized Commerce's

Officers to negotiate a sale of its non-income producing assets,

in this case, precious stones and jewelry, to the ELM RIRA at

Commerce's book value in exchange for a reduction of debt owed

by Commerce to the ELM RIRA.   The ELM RIRA agreed to this

purchase.  The book value of the precious stones and jewelry is

$132,447.77 as of March 31, 2008.



b.  On March 28, 2007, the ELM RIRA purchased from Commerce 750,000

of Commerce's restricted common shares, $.10 par value, at a

unit price of $.10 a share, for a total of $75,000.  The share

price was established by using the same formula used by the

Directors and others who purchased common shares on the same

date.  The average close bid price for the period beginning

December 1, 2006 through February 10, 2007 was used.  The

payment for these shares was made by reducing the outstanding

promissory note balance due to the ELM RIRA by Commerce.



3.   Acknowledgement of previously recorded collateral provided to the

Lenders



a.  Historical information - San Sebastian Gold Mine Concession



GLSCO, ELM, the ELM RIRA, the 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





<PAGE>



Mrs. Sylvia Machulak, Widow,

on behalf of Edward L. Machulak, deceased

for the Edward L. Machulak Rollover

Individual Retirement Account

May 30, 2008

Page 5 of 11 Pages





reserves.  Commerce and the Joint Venture have the right to

assign this and any subsequent concession agreement. Reference

is made to Exhibit 2 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)

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.







<PAGE>



Mrs. Sylvia Machulak, Widow,

on behalf of Edward L. Machulak, deceased

for the Edward L. Machulak Rollover

Individual Retirement Account

May 30, 2008

Page 6 of 11 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.



(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,

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 t ax.  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 No. 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.





<PAGE>





Mrs. Sylvia Machulak, Widow,

on behalf of Edward L. Machulak, deceased

for the Edward L. Machulak Rollover

Individual Retirement Account

May 30, 2008

Page 7 of 11 Pages





(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.  This lease agreement is in the process of being

renewed.



On March 25, 2008 a nineteen-month lease retroactive to

November 12, 2006 was executed by and between Corsain and

Commerce.  The lease was renewed on June 12, 2008 for a

six-month period to expire on December 11, 2008.  Reference

is made to Exhibit 10.16 of Commerce's Form 10-K for its

fiscal year ended March 31, 2008 for a copy of this lease.



(6)  Nueva Esparta Exploration Concession/License (Nueva

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

No.  271



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 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





<PAGE>



Mrs. Sylvia Machulak, Widow,

on behalf of Edward L. Machulak, deceased

for the Edward L. Machulak Rollover

Individual Retirement Account

May 30, 2008

Page 8 of 11 Pages





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 March 31, 2008



Commerce's Directors have on May 30, 2008 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, 2008, including all future

advances of any kind.



4.   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, including M&R, the Law

Firm, CMI and EAM.  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 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.





<PAGE>



Mrs. Sylvia Machulak, Widow,

on behalf of Edward L. Machulak, deceased

for the Edward L. Machulak Rollover

Individual Retirement Account

May 30, 2008

Page 9 of 11 Pages





5.   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, SM and from March 31, 2007

to include M&R, the Law Firm, CMI and EAM, 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.



6.   Guarantors



This agreement further confirms that Commerce and all of the

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

to the loans made by the ELM 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,

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

EAM.  Reference is made to Exhibit 3 included in the April 9, 1990

confirmation letter.



7.   Re-Execution Agreement(s)



In the event the ELM RIRA deems that it is necessary or advisable

for the ELM RIRA 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 ELM RIRA.  Commerce also acknowledges

that Commerce may be liable to pay certain costs related to any of

the transactions entered into with the ELM RIRA.  If at a later date

the ELM RIRA determines that an error has been made in the payment

of such costs to the ELM RIRA, then the ELM RIRA 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 ELM RIRA's

written request.  The failure of Commerce to comply with Commerce's

obligation(s) hereunder shall





<PAGE>



Mrs. Sylvia Machulak, Widow,

on behalf of Edward L. Machulak, deceased

for the Edward L. Machulak Rollover

Individual Retirement Account

May 30, 2008

Page 10 of 11 Pages





constitute a default and shall entitle the ELM RIRA

to the 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).



8.   Omissions



Commerce believes that it has included all of its obligations,

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

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/ Christine M. Wolski



Christine M. Wolski

Secretary





<PAGE>



Mrs. Sylvia Machulak, Widow,

on behalf of Edward L. Machulak, deceased

for the Edward L. Machulak Rollover

Individual Retirement Account

May 30, 2008

Page 11 of 11 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 A. Machulak                     /s/ Edward A. Machulak



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

By:  Edward A. Machulak, Auth. Designee    By:  Edward A. Machulak, President





ECOMM GROUP INC.                           SAN LUIS ESTATES, INC.

as Guarantor (Ecomm)                       as Guarantor (SLE)



/s/ Edward A. Machulak                     /s/ Edward A. Machulak



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

By:  Edward A. Machulak, President         By:  Edward A. Machulak, President





SAN SEBASTIAN GOLD MINES, INC.             UNIVERSAL DEVELOPERS, INC.

as Guarantor (Sanseb)                      as Guarantor (UDI)



/s/ Edward A. Machulak                     /s/ Edward A. Machulak



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

By:  Edward A. Machulak, President         By:  Edward A. Machulak, President





Accepted by:



/s/ Sylvia Machulak

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

Sylvia Machulak, Widow on behalf of

Edward L.  Machulak, deceased

For the Rollover Individual

Retirement Account

Date:  May 30, 2008





<PAGE>





EXHIBIT A TO EXHIBIT 99.3





RENEWED PROMISSORY NOTE





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

6001 North 91st Street                 903 West Green Tree Rd.

Milwaukee, WI  53225                   Milwaukee, WI  53217



Principal Amount:            $1,429,871.18

Initial Rate:                4.000% + prime rate, but not less than 16.000%

Date of Renewed Note:        March 31, 2008



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

EDWARD L.  MACHULAK ROLLOVER INDIVIDUAL RETIREMENT ACCOUNT ("Lender"), or

order, in lawful money of the United States of America, the principal

amount of One Million Four Hundred Twenty Nine Thousand Eight Hundred

Seventy One and 18/100 Dollars ($1,429,871.18), together with interest,

paid monthly, on the unpaid principal balance from March 31, 2008, 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 four 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 5.25% per annum.  The interest rate to be applied to the unpaid

principal balance of this Note will be at a rate of 4.000 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 A. Machulak

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

By:  Edward A. Machulak, President





/s/ Christine M. Wolski

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

By:  Christine M. Wolski, Secretary



<PAGE>





EXHIBIT A-1 TO EXHIBIT 99.3

(Schedule of all transactions pertaining to

the activities relating to Exhibit A to

Exhibit 99.3 for the fiscal year ending March 31, 2008

has been purposely omitted as it only reflects

the calculations of the principal and interest.)