EXHIBIT 4.2

                            PALOMAR ENTERPRISES, INC.
       NON-EMPLOYEE DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN FOR THE
                                    YEAR 2004

     1. INTRODUCTION. This Plan shall be known as the "Palomar Enterprises, Inc.
Non-Employee  Directors and Consultants  Retainer Stock Plan for the Year 2004,"
and is  hereinafter  referred to as the "Plan." The purposes of this Plan are to
enable Palomar  Enterprises,  Inc., a Nevada  corporation  (the  "Company"),  to
promote the  interests of the Company and its  stockholders  by  attracting  and
retaining  non-employee  Directors and  Consultants  capable of  furthering  the
future  success of the Company and by aligning  their  economic  interests  more
closely with those of the Company's  stockholders,  by paying their  retainer or
fees in the form of shares of the Company's  common stock,  par value $0.001 per
share (the "Common Stock").

     2.  DEFINITIONS.  The  following  terms shall have the  meanings  set forth
below:

     "Board" means the Board of Directors of the Company.

     "Change of Control" has the meaning set forth in Paragraph 12(d) hereof.

     "Code" means the Internal  Revenue Code of 1986, as amended,  and the rules
and regulations  thereunder.  References to any provision of the Code or rule or
regulation  thereunder  shall be deemed to  include  any  amended  or  successor
provision, rule or regulation.

     "Committee"  means the committee that  administers this Plan, as more fully
defined in Paragraph 13 hereof.

     "Common Stock" has the meaning set forth in Paragraph 1 hereof.

     "Company" has the meaning set forth in Paragraph 1 hereof.

     "Deferral Election" has the meaning set forth in Paragraph 6 hereof.

     "Deferred  Stock  Account"  means a bookkeeping  account  maintained by the
Company for a Participant  representing the Participant's interest in the shares
credited to such Deferred Stock Account pursuant to Paragraph 7 hereof.

     "Delivery Date" has the meaning set forth in Paragraph 6 hereof.

     "Director" means an individual who is a member of the Board of Directors of
the Company.

     "Dividend  Equivalent" for a given dividend or other  distribution  means a
number of shares of the  Common  Stock  having a Fair  Market  Value,  as of the
record date for such dividend or distribution, equal to the amount of cash, plus
the Fair  Market  Value on the date of  distribution  of any  property,  that is
distributed  with  respect to one share of the  Common  Stock  pursuant  to such
dividend  or  distribution;  such  Fair  Market  Value to be  determined  by the
Committee in good faith.

     "Effective Date" has the meaning set forth in Paragraph 3 hereof.

     "Exchange Act" has the meaning set forth in Paragraph 12(d) hereof.

     "Fair Market Value" means the mean between the highest and lowest  reported
sales prices of the Common Stock on the New York Stock  Exchange  Composite Tape
or, if not listed on such exchange, on any other national securities exchange on
which the Common  Stock is listed or on The Nasdaq Stock  Market,  or, if not so
listed on any other  national  securities  exchange or The Nasdaq Stock  Market,
then the  average  of the bid price of the  Common  Stock  during  the last five

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trading days on the OTC Bulletin  Board  immediately  preceding the last trading
day  prior to the date with  respect  to which  the Fair  Market  Value is to be
determined.  If the  Common  Stock is not then  publicly  traded,  then the Fair
Market  Value of the Common  Stock  shall be the book value of the  Company  per
share as determined on the last day of March,  June,  September,  or December in
any year  closest  to the date  when the  determination  is to be made.  For the
purpose of determining book value  hereunder,  book value shall be determined by
adding as of the  applicable  date called for herein the capital,  surplus,  and
undivided  profits  of the  Company,  and after  having  deducted  any  reserves
theretofore  established;  the sum of these items shall be divided by the number
of shares of the Common Stock outstanding as of said date, and the quotient thus
obtained shall represent the book value of each share of the Common Stock of the
Company.

     "Participant" has the meaning set forth in Paragraph 4 hereof.

     "Payment  Time"  means  the time  when a Stock  Retainer  is  payable  to a
Participant  pursuant to Paragraph 5 hereof (without regard to the effect of any
Deferral Election).

     "Stock Retainer" has the meaning set forth in Paragraph 5 hereof.

     "Third Anniversary" has the meaning set forth in Paragraph 6 hereof.

     3. EFFECTIVE DATE OF THE PLAN. This Plan was adopted by the Board effective
February 10, 2004 (the "Effective Date").

     4.  ELIGIBILITY.  Each  individual  who is a Director or  Consultant on the
Effective  Date and  each  individual  who  becomes  a  Director  or  Consultant
thereafter   during  the  term  of  this  Plan,  shall  be  a  participant  (the
"Participant")  in this Plan, in each case during such period as such individual
remains a Director or Consultant and is not an employee of the Company or any of
its  subsidiaries.  Each credit of shares of the Common  Stock  pursuant to this
Plan shall be evidenced by a written agreement duly executed and delivered by or
on behalf of the Company and a Participant,  if such an agreement is required by
the Company to assure compliance with all applicable laws and regulations.

     5.  GRANTS OF  SHARES.  Commencing  on the  Effective  Date,  the amount of
compensation for service to directors or consultants  shall be payable in shares
of the Common Stock (the "Stock  Retainer")  pursuant to this Plan at the deemed
issuance price of $0.014 per Share.

     6. DEFERRAL  OPTION.  From and after the Effective  Date, a Participant may
make an election (a "Deferral Election") on an annual basis to defer delivery of
the Stock Retainer specifying which one of the following ways the Stock Retainer
is to be delivered (a) on the date which is three years after the Effective Date
for which it was originally payable (the "Third  Anniversary"),  (b) on the date
upon which the Participant  ceases to be a Director or Consultant for any reason
(the "Departure  Date") or (c) in five equal annual  installments  commencing on
the Departure  Date (the "Third  Anniversary"  and  "Departure  Date" each being
referred to herein as a "Delivery Date"). Such Deferral Election shall remain in
effect for each  Subsequent  Year unless  changed,  provided  that, any Deferral
Election  with  respect to a  particular  Year may not be changed  less than six
months prior to the beginning of such Year, and provided,  further, that no more
than one Deferral Election or change thereof may be made in any Year.

     Any Deferral Election and any change or revocation thereof shall be made by
delivering  written  notice  thereof to the  Committee  no later than six months
prior to the beginning of the Year in which it is to be effected; provided that,
with respect to the Year beginning on the Effective Date, any Deferral  Election
or  revocation  thereof must be delivered no later than the close of business on
the 30th day after the Effective Date.

     7. DEFERRED  STOCK  ACCOUNTS.  The Company shall  maintain a Deferred Stock
Account  for each  Participant  who makes a Deferral  Election to which shall be
credited,  as of the applicable Payment Time, the number of shares of the Common
Stock  payable  pursuant to the Stock  Retainer to which the  Deferral  Election
relates.  So long as any amounts in such  Deferred  Stock  Account have not been
delivered to the  Participant  under  Paragraph 8 hereof,  each  Deferred  Stock
Account  shall be credited as of the payment date for any dividend paid or other
distribution  made with respect to the Common Stock,  with a number of shares of

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the Common  Stock equal to (a) the number of shares of the Common Stock shown in
such Deferred Stock Account on the record date for such dividend or distribution
multiplied by (b) the Dividend Equivalent for such dividend or distribution.

     8. DELIVERY OF SHARES.

     (a) The  shares  of the  Common  Stock in a  Participant's  Deferred  Stock
Account  with respect to any Stock  Retainer  for which a Deferral  Election has
been made (together with dividends  attributable to such shares credited to such
Deferred Stock  Account) shall be delivered in accordance  with this Paragraph 8
as soon as practicable  after the applicable  Delivery Date. Except with respect
to a Deferral  Election  pursuant  to  Paragraph  6 hereof,  or other  agreement
between the parties,  such shares shall be delivered at one time; provided that,
if the number of shares so delivered  includes a fractional  share,  such number
shall be rounded to the nearest whole number of shares.  If the  Participant has
in effect a Deferral Election  pursuant to Paragraph 6 hereof,  then such shares
shall be delivered in five equal annual  installments  (together  with dividends
attributable to such shares  credited to such Deferred Stock Account),  with the
first such installment  being delivered on the first anniversary of the Delivery
Date;  provided  that,  if in order to equalize  such  installments,  fractional
shares  would have to be  delivered,  such  installments  shall be  adjusted  by
rounding  to the nearest  whole  share.  If any such shares are to be  delivered
after the  Participant  has died or become  legally  incompetent,  they shall be
delivered to the Participant's estate or legal guardian,  as the case may be, in
accordance  with the foregoing;  provided that, if the  Participant  dies with a
Deferral Election pursuant to Paragraph 6 hereof in effect,  the Committee shall
deliver  all  remaining   undelivered   shares  to  the   Participant's   estate
immediately.  References to a Participant  in this Plan shall be deemed to refer
to the Participant's estate or legal guardian, where appropriate.

     (b) The Company may, but shall not be required to,  create a grantor  trust
or utilize an existing  grantor trust (in either case,  "Trust") to assist it in
accumulating  the shares of the Common Stock  needed to fulfill its  obligations
under this Paragraph 8. However,  Participants shall have no beneficial or other
interest in the Trust and the assets  thereof,  and their rights under this Plan
shall be as general  creditors of the Company,  unaffected  by the  existence or
nonexistence  of the  Trust,  except  that  deliveries  of  Stock  Retainers  to
Participants  from the  Trust  shall,  to the  extent  thereof,  be  treated  as
satisfying the Company's obligations under this Paragraph 8.

     9. SHARE CERTIFICATES; VOTING AND OTHER RIGHTS. The certificates for shares
delivered to a Participant  pursuant to Paragraph 8 above shall be issued in the
name of the  Participant,  and from and  after  the  date of such  issuance  the
Participant shall be entitled to all rights of a stockholder with respect to the
Common Stock for all such shares issued in his name, including the right to vote
the  shares,   and  the  Participant  shall  receive  all  dividends  and  other
distributions paid or made with respect thereto.

     10. GENERAL RESTRICTIONS.

     (a)  Notwithstanding  any other  provision of this Plan or agreements  made
pursuant  thereto,  the  Company  shall not be  required to issue or deliver any
certificate or certificates for shares of the Common Stock under this Plan prior
to fulfillment of all of the following conditions:

         (i) Listing or approval for listing upon official notice of issuance of
such  shares on the New York Stock  Exchange,  Inc.,  or such  other  securities
exchange as may at the time be a market for the Common Stock;

         (ii) Any  registration or other  qualification of such shares under any
state or federal law or  regulation,  or the  maintaining  in effect of any such
registration or other  qualification  which the Committee shall, upon the advice
of counsel, deem necessary or advisable; and

         (iii) Obtaining any other consent,  approval,  or permit from any state
or federal  governmental  agency which the Committee shall,  after receiving the
advice of counsel, determine to be necessary or advisable.

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     (b) Nothing  contained in this Plan shall prevent the Company from adopting
other or additional compensation arrangements for the Participants.

     11. SHARES AVAILABLE.  Subject to Paragraph 12 below, the maximum number of
shares of the Common Stock which may in the aggregate be paid as Stock Retainers
pursuant to this Plan is  40,000,000.  Shares of the Common Stock issuable under
this Plan may be taken from  treasury  shares of the Company or purchased on the
open market.

     In the event that any  Outstanding  Stock  Retainer under this plan for any
reason  expires or is  terminated,  the shares of common stock  allocable to the
unexercised  portion of the Stock Retainer shall be available for issuance under
the Palomar Enterprises, Inc. Employee Stock Incentive Plan for the Year 2004.

     12. ADJUSTMENTS; CHANGE OF CONTROL.

     (a) In the event  that there is, at any time  after the Board  adopts  this
Plan, any change in corporate capitalization, such as a stock split, combination
of shares,  exchange  of shares,  warrants or rights  offering  to purchase  the
Common  Stock at a price  below  its Fair  Market  Value,  reclassification,  or
recapitalization, or a corporate transaction, such as any merger, consolidation,
separation,  including  a  spin-off,  stock  dividend,  or  other  extraordinary
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization  comes within the definition of such term in Section 368
of the Code) or any partial or complete  liquidation of the Company (each of the
foregoing a  "Transaction"),  in each case other than any such Transaction which
constitutes  a Change of Control  (as defined  below),  (i) the  Deferred  Stock
Accounts  shall be credited with the amount and kind of shares or other property
which would have been received by a holder of the number of shares of the Common
Stock held in such  Deferred  Stock  Account had such shares of the Common Stock
been  outstanding  as of the  effectiveness  of any such  Transaction,  (ii) the
number and kind of shares or other property  subject to this Plan shall likewise
be appropriately  adjusted to reflect the effectiveness of any such Transaction,
and (iii) the Committee shall appropriately adjust any other relevant provisions
of this Plan and any such  modification  by the  Committee  shall be binding and
conclusive on all persons.

     (b) If the  shares of the  Common  Stock  credited  to the  Deferred  Stock
Accounts  are  converted  pursuant  to  Paragraph  12(a)  into  another  form of
property,  references  in this Plan to the Common  Stock shall be deemed,  where
appropriate,  to  refer  to  such  other  form  of  property,  with  such  other
modifications as may be required for this Plan to operate in accordance with its
purposes.  Without  limiting the  generality  of the  foregoing,  references  to
delivery of certificates for shares of the Common Stock shall be deemed to refer
to delivery of cash and the incidents of ownership of any other property held in
the Deferred Stock Accounts.

     (c) In lieu of the adjustment contemplated by Paragraph 12(a), in the event
of a Change of Control,  the following  shall occur on the date of the Change of
Control (i) the shares of the Common Stock held in each  Participant's  Deferred
Stock Account shall be deemed to be issued and  outstanding  as of the Change of
Control;  (ii) the Company shall forthwith deliver to each Participant who has a
Deferred  Stock  Account  all of the  shares  of the  Common  Stock or any other
property held in such Participant's  Deferred Stock Account; and (iii) this Plan
shall be terminated.

     (d) For  purposes  of this Plan,  Change of  Control  shall mean any of the
following events:

         (i) The  acquisition  by any  individual,  entity or group  (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities  Exchange Act of 1934,
as amended (the "Exchange  Act")) (a "Person") of beneficial  ownership  (within
the meaning of Rule 13d-3  promulgated  under the Exchange Act) of 20 percent or
more of  either  (1) the then  outstanding  shares  of the  Common  Stock of the
Company (the  "Outstanding  Company Common  Stock"),  or (2) the combined voting
power of then  outstanding  voting  securities  of the Company  entitled to vote
generally  in  the  election  of  directors  (the  "Outstanding  Company  Voting
Securities");  provided,  however,  that the  following  acquisitions  shall not
constitute  a Change of Control (A) any  acquisition  directly  from the Company
(excluding an  acquisition  by virtue of the exercise of a conversion  privilege
unless the security  being so converted  was itself  acquired  directly from the
Company),  (B)  any  acquisition  by the  Company,  (C) any  acquisition  by any
employee  benefit plan (or related trust) sponsored or maintained by the Company
or any  corporation  controlled  by the  Company or (D) any  acquisition  by any
corporation pursuant to a reorganization, merger or consolidation, if, following

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such  reorganization,  merger or  consolidation,  the  conditions  described  in
clauses  (A),  (B) and  (C) of  paragraph  (iii)  of this  Paragraph  12(d)  are
satisfied; or

         (ii)  Individuals  who, as of the date hereof,  constitute the Board of
the Company (as of the date hereof,  "Incumbent  Board") cease for any reason to
constitute  at  least a  majority  of the  Board;  provided,  however,  that any
individual becoming a director subsequent to the date hereof whose election,  or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then  comprising the Incumbent  Board shall
be considered as though such  individual  were a member of the Incumbent  Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such  terms are used in Rule  14a-11 of  Regulation  14A  promulgated  under the
Exchange Act) or other actual or threatened  solicitation of proxies or consents
by or on behalf of a Person other than the Board; or

         (iii) Approval by the stockholders of the Company of a  reorganization,
merger,  binding  share  exchange  or  consolidation,   unless,  following  such
reorganization, merger, binding share exchange or consolidation (A) more than 60
percent  of,  respectively,  then  outstanding  shares  of  common  stock of the
corporation resulting from such reorganization,  merger,  binding share exchange
or  consolidation  and the  combined  voting  power of then  outstanding  voting
securities  of such  corporation  entitled to vote  generally in the election of
directors  is  then  beneficially  owned,  directly  or  indirectly,  by  all or
substantially  all of the  individuals  and  entities  who were  the  beneficial
owners,  respectively,  of the Outstanding  Company Common Stock and Outstanding
Company Voting  Securities  immediately  prior to such  reorganization,  merger,
binding share exchange or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger, binding share
exchange  or  consolidation,   of  the  Outstanding  Company  Common  Stock  and
Outstanding  Company  Voting  Securities,  as the  case  may be,  (B) no  Person
(excluding  the  Company,  any employee  benefit plan (or related  trust) of the
Company or such corporation resulting from such reorganization,  merger, binding
share exchange or consolidation and any Person beneficially owning,  immediately
prior to such reorganization,  merger,  binding share exchange or consolidation,
directly or  indirectly,  20 percent or more of the  Outstanding  Company Common
Stock or Outstanding Company Voting Securities, as the case may be) beneficially
owns,  directly  or  indirectly,  20  percent  or more  of,  respectively,  then
outstanding  shares  of  common  stock of the  corporation  resulting  from such
reorganization,  merger, binding share exchange or consolidation or the combined
voting power of then outstanding voting securities of such corporation  entitled
to vote  generally in the election of directors,  and (C) at least a majority of
the members of the board of directors  of the  corporation  resulting  from such
reorganization,  merger, binding share exchange or consolidation were members of
the  Incumbent  Board  at the time of the  execution  of the  initial  agreement
providing  for  such   reorganization,   merger,   binding  share   exchange  or
consolidation; or

         (iv)  Approval  by the  stockholders  of the  Company of (1) a complete
liquidation or dissolution of the Company,  or (2) the sale or other disposition
of all or  substantially  all of the  assets  of the  Company,  other  than to a
corporation, with respect to which following such sale or other disposition, (A)
more than 60 percent of,  respectively,  then outstanding shares of common stock
of such  corporation  and the combined voting power of then  outstanding  voting
securities  of such  corporation  entitled to vote  generally in the election of
directors  is  then  beneficially  owned,  directly  or  indirectly,  by  all or
substantially  all of the  individuals  and  entities  who were  the  beneficial
owners,  respectively,  of the Outstanding  Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership,  immediately prior to such
sale  or  other  disposition,  of  the  Outstanding  Company  Common  Stock  and
Outstanding  Company  Voting  Securities,  as the  case  may be,  (B) no  Person
(excluding  the Company and any employee  benefit plan (or related trust) of the
Company or such  corporation  and any Person  beneficially  owning,  immediately
prior to such sale or other disposition,  directly or indirectly,  20 percent or
more of the  Outstanding  Company  Common Stock or  Outstanding  Company  Voting
Securities,  as the case may be) beneficially owns,  directly or indirectly,  20
percent or more of,  respectively,  then  outstanding  shares of common stock of
such  corporation  and the  combined  voting  power of then  outstanding  voting
securities  of such  corporation  entitled to vote  generally in the election of
directors,  and (C) at least a majority of the members of the board of directors
of such  corporation  were  members  of the  Incumbent  Board at the time of the
execution  of the initial  agreement or action of the Board  providing  for such
sale or other disposition of assets of the Company.

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     13. ADMINISTRATION; AMENDMENT AND TERMINATION.

         (a) This Plan shall be  administered  by a committee  consisting of two
members who shall be the current  directors  of the Company or senior  executive
officers or other directors who are not Participants as may be designated by the
Chief Executive  Officer (the  "Committee"),  which shall have full authority to
construe and  interpret  this Plan,  to  establish,  amend and rescind rules and
regulations  relating  to this Plan,  and to take all such  actions and make all
such  determinations  in connection  with this Plan as it may deem  necessary or
desirable.

         (b) The Board may from time to time make such  amendments to this Plan,
including to preserve or come within any exemption from liability  under Section
16(b) of the Exchange Act, as it may deem proper and in the best interest of the
Company without further approval of the Company's  stockholders,  provided that,
to the extent  required under Nevada law or to qualify  transactions  under this
Plan for  exemption  under Rule 16b-3  promulgated  under the  Exchange  Act, no
amendment  to this  Plan  shall  be  adopted  without  further  approval  of the
Company's  stockholders  and,  provided,  further,  that  if and  to the  extent
required for this Plan to comply with Rule 16b-3  promulgated under the Exchange
Act,  no  amendment  to this Plan  shall be made more than once in any six month
period that would change the amount, price or timing of the grants of the Common
Stock  hereunder  other than to comport with  changes in the Code,  the Employee
Retirement  Income  Security  Act  of  1974,  as  amended,  or  the  regulations
thereunder.  The  Board  may  terminate  this  Plan  at any  time by a vote of a
majority of the members thereof.

     14.  RESTRICTIONS  ON TRANSFER.  Each Stock Option  granted under this Plan
shall be transferable only by will or the laws of descent and  distribution.  No
interest  of any  Employee  under  this Plan  shall be  subject  to  attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or  equitable  process.  Each  Stock  Option  granted  under  this Plan shall be
exercisable  during  an  Employee's  lifetime  only  by the  Employee  or by the
Employee's legal representative.

     15. TERM OF PLAN. No shares of the Common Stock shall be issued, unless and
until the  Directors of the Company have  approved this Plan and all other legal
requirements  have  been  met.  This Plan was  adopted  by the  Board  effective
February 10, 2004, and shall expire on February 10, 2014.

     16.  APPROVAL.  This Plan must be approved by a majority of the outstanding
securities  entitled  to vote  within  12 months  before  or after  this Plan is
adopted or the date the  agreement is entered  into.  Any  securities  purchased
before security holder approval is obtained must be rescinded if security holder
approval is not obtained  within 12 months  before or after this Plan is adopted
or the  agreement  is  entered  into.  Such  securities  shall not be counted in
determining whether such approval is obtained.

     17.  GOVERNING  LAW.  This Plan and all actions taken  thereunder  shall be
governed by, and construed in accordance with, the laws of the State of Nevada.

     18.  INFORMATION TO SHAREHOLDERS.  The Company shall furnish to each of its
stockholders financial statements of the Company at least annually.

     19. MISCELLANEOUS.

          (a) Nothing in this Plan shall be deemed to create any  obligation  on
the part of the Board to nominate any Director for  reelection  by the Company's
stockholders or to limit the rights of the stockholders to remove any Director.

          (b) The Company shall have the right to require, prior to the issuance
or delivery  of any shares of the Common  Stock  pursuant  to this Plan,  that a
Participant make arrangements  satisfactory to the Committee for the withholding
of any taxes  required by law to be  withheld  with  respect to the  issuance or
delivery of such shares,  including,  without limitation,  by the withholding of
shares that would otherwise be so issued or delivered,  by withholding  from any
other payment due to the Participant, or by a cash payment to the Company by the
Participant.

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     IN WITNESS  WHEREOF,  this Plan has been executed  effective as of February
10, 2004.


                                           Palomar Enterprises, Inc.


                                           By /s/ Steven Bonenberger
                                             -------------------------------
                                             Steven Bonenberger, President

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