EXHIBIT 4.6

                              COMMERCE GROUP CORP.
                             A Wisconsin Corporation

                Two-Year Stock Option to Purchase
              70,000 Shares of Commerce Group Corp.
           Common Stock at a Price of $0.25 Per Share

     For  value  and  consideration  received  on this  2nd day of  July,  2001,
Commerce Group Corp. (Commerce), a Wisconsin Corporation, whose business address
is 6001 North 91st Street,  Milwaukee,  Wisconsin  53225,  grants a stock option
(stock option  agreement) to Lawrence E. Kau (Option  Holder),  whose address is
N2316 Mehring Road,  Jefferson,  Wisconsin 53549,  under the following terms and
conditions:

     1.  Issue.  Option  Holder  will have the right to  purchase  up to seventy
thousand  (70,000)  Commerce  common  shares,   ten  cents  ($0.10)  par  value,
hereinafter  referred  to as  "option  shares,"  at a price  (option  price)  of
twenty-five cents ($0.25) per share, payable in cash.

     Upon tender of the sum of U.S.  seventeen  thousand  five  hundred  dollars
($17,500.00),  Commerce  agrees to issue to Option  Holder,  a total of  seventy
thousand  (70,000)  Commerce validly issued  nonassessable and fully paid common
shares, ten cents ($0.10) par value.

     2.   Exercise Date.  Option Holder will have the right to
purchase the common shares at any time during a two (2) year
period of time, commencing from the date of this agreement and
expiring on July 2, 2003.

     3. Tender.  At any time the Option  Holder of this stock option  agreement,
pursuant to the  foregoing  terms and  conditions,  shall  exercise the right to
purchase these option shares,  the Option Holder of said stock option  agreement
shall  surrender  this stock option  agreement for said shares of option shares,
accompanied by proper  instruments of surrender,  to Commerce,  at its principal
office,  accompanied  by a written  notice to the effect that the Option  Holder
elects to exercise its stock option agreement,  and stating the name or names in
which the  certificate  or  certificates  for shares of option  shares  shall be
issued.  As  promptly as  practicable,  after the receipt of such notice and the
surrender of this stock option  agreement,  Commerce  shall issue and deliver to
Option  Holder or such other  holder of the stock  option  agreement,  or to the
written order of such holder,  a new certificate or certificates  for the number
of shares of option  shares  issuable  upon  surrendering  of this s tock option
agreement.  Such issuance of option shares shall be deemed to have been effected
on the date on which such notice  shall have been  received by Commerce and such
stock option agreement shall have been surrendered as hereinabove provided.  All
shares of option  shares  which may be issued upon  exercise of the stock option
agreement,   shall,   upon  issuance,   be  validly  issued,   fully  paid,  and
nonassessable by Commerce.

     4.   Partial Purchases.  Option Holder will not have the
right to purchase the option shares in blocks of not less than
the total amount of option shares provided under the stock
option agreement.

     5.   Notice of Change of Rights.  Commerce agrees to
notify Option Holder as follows:

          a.  When  Commerce  shall  declare  a  dividend  (or  make  any  other
     distribution) on its option shares,  payable  otherwise than in cash out of
     the consolidated  earnings surplus of Commerce,  its subsidiaries,  and the
     Commerce/Sanseb Joint Venture (Joint Venture); or

          b.   When Commerce shall authorize the granting to
     the holders of its common shares of rights to subscribe
     for or purchase any shares of capital stock of any class
     or any other rights; or

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          c. Of any reclassification of the common shares of Commerce other than
     a subdivision or a combination of its outstanding  shares of such stock, of
     any  consolidation  or  merger to which  Commerce  is a party and for which
     approval  of any  stockholders  of  Commerce  is required or of the sale or
     transfer  of  all  or  substantially  all  the  assets  of  Commerce,   its
     subsidiaries, and the Joint Venture; or

          d. Of the voluntary or involuntary dissolution, liquidation or winding
     up of  Commerce;  then  Commerce  shall  cause to be filed at the office of
     Commerce,  and shall cause to be mailed to the option holders of this stock
     option  agreement,  at their  addresses  as they shall  then  appear on the
     records of Commerce,  at least ten days prior to the record date  specified
     below, a notice stating:

               (1) the record date for such dividend, distribution or rights or,
          if a record is not to be taken,  the date as of which the  holders  of
          the  option  shares  of  record  to  be  entitled  to  such  dividend,
          distribution or rights are to be determined; or

               (2)  the  date on  which  such  reclassification,  consolidation,
          merger,  sale,  transfer,  dissolution,  liquidation  or winding up is
          expected to become effective,  and the date as of which it is expected
          that  holders  of the option  shares of record  shall be  entitled  to
          exchange   their  option  shares  for  securities  or  other  property
          deliverable upon such reclassification,  consolidation,  merger, sale,
          transfer, dissolution, liquidation or winding up.

     6.  Procedures.  The  Board  of  Directors  of  Commerce,  or  a  committee
established  by it,  shall have the  right,  from time to time,  to adopt  other
specific  rules of  procedure  to carry out the full intent of this stock option
agreement, and to do all reasonable acts necessary therefore; provided that such
rules  and acts  shall not  violate  the  specific  terms of this  stock  option
agreement.

     7.  Dividends.  Until such time as the Option  Holder  purchases the option
shares  under this  stock  option  agreement,  the  Option  Holder  shall not be
entitled to receive such dividends and distributions as from time to time may be
declared by the Board of Directors of Commerce.

     8.   Voting.  The Option Holders of this stock option
agreement shall have no voting rights.

     9.   Notice.  The Option Holders of the stock option
agreement shall be entitled to any notice of shareholders'
meetings.

    10.  Reservation  of Common Stock.  Commerce  shall at all times reserve and
keep  available  out of its  authorized  but unissued  common  shares,  or shall
authorize  from time to time,  an increase in such shares if  required,  of such
number of its duly authorized  shares of common stock, as shall be sufficient to
effect the exercise of this stock option agreement.

    11. Registration. Option Holder, as owner of this stock option agreement, by
acceptance  thereof,  shall agree for itself and for all subsequent owners, that
before any  disposition is made of this stock option  agreement or of the option
shares,  Option Holder shall give written notice to Commerce  describing briefly
the manner of any such proposed  disposition.  No such disposition shall be made
unless and until (1)  Commerce  has advised  such owners that it has received an
opinion  from  its  legal  counsel  satisfactory  to it that  no  post-effective
amendment  to  Commerce's   registration  statement,  if  any,  filed  with  the
Securities and Exchange Commission (Commission) under the Securities Act of 1933
(Act) and no other  registration under said Act is required to such disposition,
or (2) such  post-effective  amendment or such other registration has been filed
by Commerce  and made  effective  by the  Commission,  provided,  however,  that
Commerce shall have no obligation to so file.

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    12.   Investment Letter Agreement.  The Option Holder
agrees at the time of exercising this option to execute an
investment letter agreement in such form as is attached to this
agreement and identified as Exhibit A.

    13.  Restriction on Certificates.  Each certificate for the option shares to
be issued  hereunder,  until  the  Option  Holder  has held  this  stock  option
agreement   for  a  period  of  two  years,   without  the  intent  of  selling,
transferring,  or disposing them,  shall bear a legend reading  substantially as
follows:

          "Neither  this stock option  agreement  nor the shares of common stock
          issuable  upon the  exercise of the stock option  agreement  have been
          registered  under the United States  Securities  Act of 1933;  and the
          common stock to be issued under the stock  option  agreement  has been
          acquired  for  investment  and  has  not  been  registered  under  the
          Securities Act of 1933 or the securities law of any state. Except upon
          such  registration,   such  securities  may  not  be  sold,   pledged,
          hypothecated or otherwise  transferred unless the transferor  delivers
          to  Commerce  Group  Corp.,  an  opinion of  counsel  satisfactory  to
          Commerce Group Corp., its counsel,  its transfer agent and its counsel
          that  registration  is not required and such  transfer  will not be in
          violation  of the  Securities  Act of  1933  or any  applicable  state
          securities laws or any rule of regulation thereunder."

    14.  Entire  Agreement.  This  agreement  is the entire,  final and complete
agreement  pertaining  to the  subject  matter  hereof,  and it  supersedes  and
replaces  all written  and oral  agreements  heretofore  made or existing by and
between the parties or their  representatives  insofar as this subject matter is
concerned.  Neither  party shall be bound by any  promises,  representations  or
agreements except as are herein expressly set forth.

    15.   Applicable Law.  This agreement is being delivered in
and shall be governed by and construed and enforced in
accordance with the laws of the State of Wisconsin, United
States.

    16.   Binding Effect.  This agreement shall be binding upon
and inure to the benefit of all parties and all parties and
their respective successors, heirs, assigns, and legal
representatives are subject to its terms.

    In Witness Whereof, Commerce has executed this stock option agreement on the
day and date first written above.

                              COMMERCE GROUP CORP.

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


This stock  option  agreement  is  accepted by Lawrence E. Kau on the 2nd day of
July, 2001.


/s/ Lawrence E. Kau
--------------------------------
Lawrence E. Kau