Document:

Exhibit 4.3

                            PALOMAR ENTERPRISES, INC.
                        2003 QUALIFIED STOCK OPTION PLAN
                         EFFECTIVE AS OF JANUARY 1, 2003

1. Purposes of the Plan.

     The purposes of this Plan are:

     (1) to attract and retain the best  available  personnel  for  positions of
substantial responsibility,

     (2) to provide  additional  incentive to certain Employees and Consultants,
and

     (3) to promote the success of the Company's business.

     All Options granted under the Plan shall be statutory Stock Options.

2. Definitions.

     As used herein, the following definitions shall apply:

     (a)  "Administrator"  means the Board or any of its  Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.

     (b) "Applicable Laws" means the requirements relating to the administration
of stock option plans under U.S. state corporate  laws,  U.S.  federal and state
securities  laws, the Code, any stock exchange or quotation  system on which the
Common Stock is listed or quoted and the applicable  laws of any foreign country
or jurisdiction where Options are, or will be, granted under the Plan.

     (c) "Board" means the Board of Directors of the Company.

     (d) "Code" means the Internal Revenue Code of 1986, as amended.

     (e)  "Committee"  means a committee of Directors  appointed by the Board in
accordance with Section 4 of the Plan.

     (f) "Common Stock" means the common stock of the Company.

     (g) "Company" means Energy River Corporation, a Nevada corporation.

     (h)  "Consultant"  means any person,  including an advisor,  engaged by the
Company or a Parent or Subsidiary to render services to such entity.

     (i) "Disability" means total and permanent disability as defined in Section
22(e)(3) of the Code.

                           Palomar Enterprises, Inc.
                        2003 Qualified Stock Option Plan

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     (j)  "Employee"  means any person  employed by the Company or any Parent or
Subsidiary of the Company.  A Service Provider shall not cease to be an Employee
in the  case of (i)  any  leave  of  absence  approved  by the  Company  or (ii)
transfers between  locations of the Company or between the Company,  its Parent,
any Subsidiary, or any successor.

     (k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     (l) "Fair Market  Value" means,  as of any date,  the value of Common Stock
determined as follows:

         (i) If the Common Stock is listed on any established  stock exchange or
a national  market system,  including  without  limitation  the Nasdaq  National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for such stock (or the closing bid, if no
sales  were  reported)  as quoted  on such  exchange  or  system  for the day of
determination,  as reported in The Wall Street  Journal or such other  source as
the Administrator deems reliable;

         (ii) If the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported,  the Fair Market Value of a Share of
Common Stock shall be the mean between the high bid and low asked prices for the
Common Stock on the day of determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable; or

         (iii) In the absence of an established market for the Common Stock, the
Fair Market Value shall be determined in good faith by the Administrator.

     (m)  "Incentive  Stock  Option"  means an Option  intended to qualify as an
incentive  stock  option  within the  meaning of Section 422 of the Code and the
regulations promulgated thereunder.

     (n) "Nonstatutory  Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.

     (o)  "Notice of Grant"  means a written  or  electronic  notice  evidencing
certain terms and conditions of an individual  Option grant. The Notice of Grant
is part of the Option Agreement.

     (p)  "Officer"  means a person who is an officer of the Company  within the
meaning  of  Section  16 of the  Exchange  Act and  the  rules  and  regulations
promulgated thereunder.

     (q) "Option" means a statutory Stock Option granted pursuant to the Plan.

     (r)  "Option  Agreement"  means an  agreement  between  the  Company and an
Optionee  evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

                           Palomar Enterprises, Inc.
                        2003 Qualified Stock Option Plan

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     (s) "Option Exchange Program" means a program whereby  outstanding  Options
are surrendered in exchange for Options with a lower exercise price.

     (t) "Optioned Stock" means the Common Stock subject to an Option.

     (u) "Optionee" means the holder of an outstanding  Option granted under the
Plan.

     (v)  "Parent"  means  a  "parent  corporation,"  whether  now or  hereafter
existing, as defined in Section 424(e) of the Code.

     (w) "Plan" means this Energy River  Corporation 2002 Qualified Stock Option
Plan.

     (x) "Section 16(b)" means Section 16(b) of the Exchange Act.

     (y) "Service Provider" means an Employee or Consultant.

     (z) "Share"  means a share of the Common  Stock,  as adjusted in accordance
with Section 12 of the Plan.

     (aa)  "Subsidiary"  means  a  "subsidiary  corporation",   whether  now  or
hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan.

     Subject to the provisions of Section 12 of the Plan, the maximum  aggregate
number  of  Shares  which  may be  optioned  and sold  under  the Plan  shall be
1,500,000.

     If an Option expires or becomes unexercisable without having been exercised
in  full,  or  is  surrendered  pursuant  to an  Option  Exchange  Program,  the
unpurchased  Shares which were subject thereto shall become available for future
grant or sale  under  the Plan  (unless  the  Plan  has  terminated);  provided,
however,  that Shares that have actually been issued under the Plan shall not be
returned  to the Plan and shall not become  available  for  future  distribution
under the Plan.

4. Administration of the Plan.

     (a)  Procedure.  The Plan shall be  administered  by (A) the Board or (B) a
Committee, which committee shall be constituted to satisfy Applicable Laws.

     (b) Powers of the Administrator. Subject to the provisions of the Plan, and
in the case of a  Committee,  subject to the  specific  duties  delegated by the
Board to such  Committee,  the  Administrator  shall have the authority,  in its
discretion:

         (i) to determine the Fair Market Value;

         (ii) to select the  Service  Providers  to whom  Options may be granted
hereunder;

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                        2003 Qualified Stock Option Plan

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         (iii) to  determine  the number of shares of Common Stock to be covered
by each Option granted hereunder;

         (iv) to approve forms of agreement for use under the Plan;

         (v) to determine the terms and conditions,  not  inconsistent  with the
terms of the Plan, of any Option  granted  hereunder.  Such terms and conditions
include,  but are not limited  to, the  exercise  price,  the time or times when
Options  may be  exercised  (which may be based on  performance  criteria),  any
vesting acceleration or waiver of forfeiture  restrictions,  and any restriction
or  limitation  regarding  any  Option or the  shares of Common  Stock  relating
thereto,  based in each case on such factors as the  Administrator,  in its sole
discretion, shall determine;

         (vi) to reduce the  exercise  price of any  Option to the then  current
Fair Market Value if the Fair Market  Value of the Common Stock  covered by such
Option shall have declined since the date the Option was granted;

         (vii) to institute an Option Exchange Program;

         (viii) to  construe  and  interpret  the  terms of the Plan and  awards
granted pursuant to the Plan;

         (ix) to prescribe,  amend and rescind rules and regulations relating to
the Plan, including rules and regulations relating to sub-plans  established for
the purpose of qualifying for preferred tax treatment under foreign tax laws;

         (x) to modify or amend each  Option  (subject  to Section  14(c) of the
Plan),  including  the  discretionary  authority to extend the  post-termination
exercisability  period of Options  longer than is otherwise  provided for in the
Plan;

         (xi) to allow  Optionees  to satisfy  withholding  tax  obligations  by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option  that  number of Shares  having a Fair  Market  Value  equal to the
amount  required  to be  withheld.  The Fair  Market  Value of the  Shares to be
withheld  shall be  determined on the date that the amount of tax to be withheld
is to be  determined.  All elections by an Optionee to have Shares  withheld for
this  purpose  shall  be made in such  form and  under  such  conditions  as the
Administrator may deem necessary or advisable;

         (xii) to  authorize  any person to execute on behalf of the Company any
instrument  required to effect the grant of an Option previously  granted by the
Administrator;

         (xiii) to make all other  determinations  deemed necessary or advisable
for administering the Plan.

     (c) Effect of  Administrator's  Decision.  The  Administrator's  decisions,
determinations and  interpretations  shall be final and binding on all Optionees
and any other holders of Options.

                           Palomar Enterprises, Inc.
                        2003 Qualified Stock Option Plan

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5. Eligibility.

     Options may be granted only to Service  Providers  who are not, at the time
of grant,  "directors"  within  the  meaning  of the rules of The  Nasdaq  Stock
Market, unless such directors then are also Employees of the Company;  provided,
however, that no Options may be granted to "officers" of the Company (within the
meaning of the rules of The Nasdaq Stock  Market) if,  immediately  after giving
effect  to the  grant  of  such  Options  to an  officer  or  officers,  (i) the
percentage  of  then  outstanding   options  granted  to  officers  exceeds  the
percentage of then outstanding options granted to Employees who are not officers
of the  Company or (ii) the  percentage  of options  granted to all  current and
former  officers  since  adoption of the Plan exceeds the  percentage of Options
granted to all current and former  Employees who are not officers of the Company
since the adoption of the Plan.

6. Limitations.

     (a) Each Option shall be designated in the Option  Agreement as a statutory
Stock Option.

     (b) Neither the Plan nor any Option shall confer upon an Optionee any right
with respect to continuing the  Optionee's  relationship  as a Service  Provider
with the Company,  nor shall they interfere in any way with the Optionee's right
or the  Company's  right to terminate  such  relationship  at any time,  with or
without cause.

7. Term of Plan.

     Subject to  Section 18 of the Plan,  the Plan  shall  become  effective  on
November  6,  2002.  It shall  continue  in effect  for a term of ten (10) years
unless terminated earlier under Section 14 of the Plan.

8. Term of Option.

     The term of each Option shall be stated in the Option Agreement.

9. Option Exercise Price and Consideration.

     (a)  Exercise  Price.  The per share  exercise  price for the  Shares to be
issued   pursuant  to  exercise  of  an  Option  shall  be   determined  by  the
Administrator.

     (b) Waiting  Period and Exercise  Dates.  At the time an Option is granted,
the Administrator  shall fix the period within which the Option may be exercised
and shall determine any conditions that must be satisfied  before the Option may
be exercised.

     (c) Form of Consideration. The Administrator shall determine the acceptable
form of consideration for exercising an Option, including the method of payment.
Such consideration may consist entirely of:

         (i) cash;

         (ii) check;

         (iii) promissory note;

                           Palomar Enterprises, Inc.
                        2003 Qualified Stock Option Plan

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         (iv)  other  Shares  which  (A) in the  case of  Shares  acquired  upon
exercise of an option,  have been owned by the Optionee for more than six months
on the  date of  surrender,  and (B)  have a Fair  Market  Value  on the date of
surrender  equal to the aggregate  exercise price of the Shares as to which said
Option shall be exercised;

         (v)  consideration  received by the Company  under a cashless  exercise
program implemented by the Company in connection with the Plan;

         (vi)  a  reduction  in  the  amount  of any  Company  liability  to the
Optionee,  including any liability attributable to the Optionee's  participation
in any Company-sponsored deferred compensation program or arrangement;

         (vii) any combination of the foregoing methods of payment; or

         (viii) such other  consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws.

10. Exercise of Option.

     (a) Procedure for Exercise;  Rights as a  Stockholder.  Any Option  granted
hereunder  shall be  exercisable  according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Unless the Administrator provides otherwise, vesting of
Options granted hereunder shall be tolled during any unpaid leave of absence. An
Option may not be exercised for a fraction of a Share.

     An Option shall be deemed exercised when the Company receives:  (i) written
or electronic  notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is  exercised.  Full payment may consist of any
consideration  and  method  of  payment  authorized  by  the  Administrator  and
permitted by the Option  Agreement and the Plan.  Shares issued upon exercise of
an Option  shall be issued in the name of the  Optionee  or, if requested by the
Optionee,  in the name of the Optionee  and his or her spouse.  Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a  stockholder  shall exist with respect to the
Optioned Stock,  notwithstanding  the exercise of the Option.  The Company shall
issue  (or  cause to be  issued)  such  Shares  promptly  after  the  Option  is
exercised.  No  adjustment  will be made for a dividend or other right for which
the record date is prior to the date the Shares are  issued,  except as provided
in Section 12 of the Plan.

     Exercising  an Option in any  manner  shall  decrease  the number of Shares
thereafter  available,  both for  purposes  of the Plan and for sale  under  the
Option, by the number of Shares as to which the Option is exercised.

                           Palomar Enterprises, Inc.
                        2003 Qualified Stock Option Plan

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     (b)  Termination  of  Relationship  as a Service  Provider.  If an Optionee
ceases  to be a  Service  Provider,  other  than  upon the  Optionee's  death or
Disability,  the Optionee  may exercise his or her Option  within such period of
time as is  specified  in the Option  Agreement to the extent that the Option is
vested on the date of termination  (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option  Agreement,  the Option shall remain  exercisable
for three (3) months  following the Optionee's  termination.  If, on the date of
termination,  the  Optionee  is not vested as to his or her entire  Option,  the
Shares  covered by the unvested  portion of the Option shall revert to the Plan.
If, after  termination,  the Optionee does not exercise his or her Option within
the time specified by the  Administrator,  the Option shall  terminate,  and the
Shares covered by such Option shall revert to the Plan.

     (c) Disability of Optionee.  If an Optionee ceases to be a Service Provider
as a result of the Optionee's  Disability,  the Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement to the
extent the Option is vested on the date of  termination  (but in no event  later
than  the  expiration  of the term of such  Option  as set  forth in the  Option
Agreement).  In the absence of a  specified  time in the Option  Agreement,  the
Option shall remain  exercisable for twelve (12) months following the Optionee's
termination.  If, on the date of  termination,  the Optionee is not vested as to
his or her entire  Option,  the Shares  covered by the  unvested  portion of the
Option shall revert to the Plan.  If, after  termination,  the Optionee does not
exercise his or her Option within the time  specified  herein,  the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

     (d) Death of Optionee.  If an Optionee dies while a Service  Provider,  the
Option may be exercised within such period of time as is specified in the Option
Agreement  (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant),  by the  Optionee's  estate or by a person
who  acquires the right to exercise  the Option by bequest or  inheritance,  but
only to the  extent  that the  Option is  vested  on the date of  death.  In the
absence of a specified  time in the Option  Agreement,  the Option  shall remain
exercisable for twelve (12) months  following the Optionee's  death.  If, at the
time of death,  the Optionee is not vested as to his or her entire  Option,  the
Shares covered by the unvested portion of the Option shall immediately revert to
the Plan.  The Option may be exercised by the executor or  administrator  of the
Optionee's estate or, if none, by the person(s)  entitled to exercise the Option
under the Optionee's will or the laws of descent or distribution.  If the Option
is not  so  exercised  within  the  time  specified  herein,  the  Option  shall
terminate, and the Shares covered by such Option shall revert to the Plan.

     (e) Buyout  Provisions.  The Administrator may at any time offer to buy out
for a payment in cash or Shares an Option previously granted based on such terms
and  conditions as the  Administrator  shall  establish and  communicate  to the
Optionee at the time that such offer is made.

                           Palomar Enterprises, Inc.
                        2003 Qualified Stock Option Plan

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11. Non-Transferability of Options.

     Unless  determined  otherwise  by the  Administrator,  an Option may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other  than  by  will  or by the  laws of  descent  or  distribution  and may be
exercised,  during the lifetime of the Optionee,  only by the  Optionee.  If the
Administrator  makes an Option  transferable,  such Option  shall  contain  such
additional terms and conditions, as the Administrator deems appropriate.

12.  Adjustments Upon Changes in  Capitalization,  Dissolution,  Merger or Asset
     Sale.

     (a)  Changes  in  Capitalization.  Subject  to any  required  action by the
stockholders  of the Company,  the number of shares of Common  Stock  covered by
each  outstanding  Option,  and the number of shares of Common  Stock which have
been  authorized for issuance under the Plan but as to which no Options have yet
been  granted  or which  have been  returned  to the Plan upon  cancellation  or
expiration of an Option,  as well as the price per share of Common Stock covered
by each such  outstanding  Option,  shall be  proportionately  adjusted  for any
increase or decrease in the number of issued  Shares of Common  Stock  resulting
from a  stock  split,  reverse  stock  split,  stock  dividend,  combination  or
reclassification  of the Common Stock,  or any other increase or decrease in the
number  of  issued  shares  of  Common  Stock   effected   without   receipt  of
consideration  by  the  Company;  provided,  however,  that  conversion  of  any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of  consideration."  Such adjustment shall be made by the Board,
whose  determination  in that respect  shall be final,  binding and  conclusive.
Except as  expressly  provided  herein,  no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

     (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee as soon
as  practicable  prior to the effective date of such proposed  transaction.  The
Administrator in its discretion may provide for an Optionee to have the right to
exercise his or her Option until ten (10) days prior to such  transaction  as to
all of the Optioned  Stock  covered  thereby,  including  Shares as to which the
Option would not otherwise be exercisable.  In addition,  the  Administrator may
provide that any Company  repurchase  option  applicable to any Shares purchased
upon  exercise of an Option  shall  lapse as to all such  Shares,  provided  the
proposed  dissolution or  liquidation  takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised, an Option will
terminate immediately prior to the consummation of such proposed action.

     (c) Merger or Asset Sale.  In the event of a merger of the Company  with or
into another corporation,  or the sale of substantially all of the assets of the
Company,  each  outstanding  Option shall be assumed or an equivalent  option or
right substituted by the successor  corporation or a Parent or Subsidiary of the
successor  corporation.  In the event that the successor  corporation refuses to

                           Palomar Enterprises, Inc.
                        2003 Qualified Stock Option Plan

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assume or substitute  for the Option,  the Optionee shall fully vest in and have
the right to  exercise  the Option as to all of the  Optioned  Stock,  including
Shares as to which it would not otherwise be vested or exercisable. If an Option
becomes fully vested and  exercisable in lieu of assumption or  substitution  in
the event of a merger or sale of  assets,  the  Administrator  shall  notify the
Optionee in writing or electronically  that the Option shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice,  and
the Option shall terminate upon the expiration of such period.  For the purposes
of this  paragraph,  the Option shall be  considered  assumed if,  following the
merger or sale of assets,  the option or right  confers the right to purchase or
receive,  for each Share of  Optioned  Stock  subject to the Option  immediately
prior to the merger or sale of assets,  the consideration  (whether stock, cash,
or other  securities  or  property)  received in the merger or sale of assets by
holders  of  Common  Stock  for each  Share  held on the  effective  date of the
transaction (and if holders were offered a choice of consideration,  the type of
consideration  chosen by the holders of a majority of the  outstanding  Shares);
provided,  however, that if such consideration received in the merger or sale of
assets is not solely  common stock of the successor  corporation  or its Parent,
the Administrator  may, with the consent of the successor  corporation,  provide
for the  consideration to be received upon the exercise of the Option,  for each
Share of Optioned Stock subject to the Option,  to be solely common stock of the
successor  corporation or its Parent equal in fair market value to the per share
consideration  received  by  holders  of Common  Stock in the  merger or sale of
assets.

13. Date of Grant.

     The date of grant of an Option  shall  be,  for all  purposes,  the date on
which the Administrator  makes the  determination  granting such Option, or such
other  later  date  as  is  determined  by  the  Administrator.  Notice  of  the
determination  shall be provided to each Optionee within a reasonable time after
the date of such grant.

14. Amendment and Termination of the Plan.

     (a)  Amendment  and  Termination.  The Board may at any time amend,  alter,
suspend or terminate the Plan.

     (b) Stockholder Approval.  The Company shall obtain stockholder approval of
any Plan  amendment  to the  extent  necessary  and  desirable  to  comply  with
Applicable Laws.

     (c)  Effect  of  Amendment  or  Termination.   No  amendment,   alteration,
suspension or  termination  of the Plan shall impair the rights of any Optionee,
unless mutually  agreed  otherwise  between the Optionee and the  Administrator,
which  agreement  must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers  granted to it hereunder  with respect to Options  granted  under the
Plan prior to the date of such termination.

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                        2003 Qualified Stock Option Plan

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15. Conditions Upon Issuance of Shares.

     (a) Legal  Compliance.  Shares shall not be issued pursuant to the exercise
of an Option unless the exercise of such Option and the issuance and delivery of
such Shares shall comply with  Applicable  Laws and shall be further  subject to
the approval of counsel for the Company with respect to such compliance.

     (b)  Investment  Representations.  As a  condition  to the  exercise  of an
Option,  the Company may require the person  exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company,  such a representation  is
required.

16. Inability to Obtain Authority.

     The inability of the Company to obtain  authority from any regulatory  body
having  jurisdiction,  which authority is deemed by the Company's  counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the  Company of any  liability  in respect of the  failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

17. Reservation of Shares.

     The Company,  during the term of this Plan,  will at all times  reserve and
keep  available  such  number of Shares as shall be  sufficient  to satisfy  the
requirements of the Plan.

18. Stockholder Approval.

     The Plan  shall not be  subject  to  approval  by the  stockholders  of the
Company.

                           Palomar Enterprises, Inc.
                        2003 Qualified Stock Option Plan

                                       10Exhibit 4(b)

FELIX JARA CADOT
NOTARY PUBLIC

                                                 [Illegible stamp and signature]

Record No. 13.814-2000

                                    AGREEMENT

                            INVERSIONES RANQUIL S.A.

                                       AND

                         LQ INVERSIONES FINANCIERAS S.A.

                                       AND

                            BANCO DEL ESTADO DE CHILE

IN SANTIAGO DE CHILE, on December 20, 2000, the parties individualized
hereinbelow have appeared in my presence, FELIX JARA CADOT, Notary Public, head
of the 41st Notary Public's Office in Santiago, domiciled at # 1170 Huerfanos
Street, suite 12, District of Santiago:

INVERSIONES RANQUIL S.A., Tax Id No. 96.657.700-2, hereinafter also designated
"the debtor", hereby represented by Mr. LUIS FERNANDO ANTUNEZ BORIES, a Chilean
citizen, married, civil industrial engineer, National Id. Card No. 6.926.972-9
and by Mr. ALESSANDRO BIZZARRI CARVALLO, a Chilean citizen, married, lawyer,
National Id. Card No. 7.012.089-5, all the aforementioned domiciled at # 20
Enrique Foster Sur Street, floor 14, District of Las Condes; LQ INVERSIONES
FINANCIERAS S.A., Tax Id. No. 96.929.880-5, hereinafter also designated "the
Grantor", hereby represented by Mr. LUIS FERNANDO ANTUNEZ BORIES, a Chilean
citizen, married, civil industrial engineer, National Id. Card No. 6.926.972-9,
both of them domiciled at # 20 Enrique Foster Sur, floor 14, District of Las
Condes; QUINENCO S.A., Tax Id No. 91.705.000-7, hereby represented by Mr.
FRANCISCO PEREZ MACKENNA, a Chilean citizen, married, commercial engineer,
National Id. Card No. 6.525.286-4, both of them domiciled at # 20 Enrique Foster
Sur Street, floor 14, District of Las Condes; and BANCO DEL ESTADO DE CHILE, an
autonomous state-owned company, hereinafter also designated "the Bank", hereby
represented by Mr. VICTOR CODDOU BRAGA, a Chilean citizen, married, commercial
engineer, National Id. Card No. 7.706.983-6, both of them domiciled at # 1111
Libertador Bernardo O'Higgins Avenue, District of Santiago, all the appearing
parties of legal age,

<PAGE>

who have hereby evidenced their identities by means of the Id. Cards
individualized hereinabove and have represented as follows:

ONE: Banco del Estado has granted a loan amounting to 720,000 Unidades de
Fomento(1) to INVERSIONES RANQUIL S.A., which has been documented by means of a
Promissory Note No. 743382, executed by Debtor on the date specified in the
preamble hereof, for the amount referred to hereinabove. QUINENCO S.A., on its
part, undertook as guarantor and joint and several debtor of the aforesaid note.

TWO: By means of a public deed granted at this Notary Public's Office on today's
date, LQ INVERSIONES FINANCIERAS S.A. undertakes the capacity of pledgor and
joint and several debtor of INVERSIONES RANQUIL S.A. so as to secure full and
timely compliance with the aforementioned note referred to under the foregoing
clause before Banco del Estado de Chile. By means of the same public deed, LQ
INVERSIONES FINANCIERAS S.A. granted a stock pledge - as per Law No. 4.287 - on
392,503,290 shares issued by BANCO DE A. EDWARDS, so as to secure compliance
with the obligations undertaken with the Bank as a result of the guarantee and
joint and several debt specified hereinabove. The parties intend that the pledge
serves as a surety for the aforementioned loan since, through the guarantee and
joint and several debt, such loan shall also account for an indirect debt for LQ
INVERSIONES FINANCIERAS S.A.

THREE: The appearing parties hereby agree that, for the aforementioned loan to
be properly secured, a ratio between the pledged stocks and the effective amount
of the loan amounting to 1.5 to 1 shall be kept. In other words, the total value
of pledged shares shall be equivalent to 1.5 times the amount of the loan.
Pledged shares value shall be deemed to be the lowest of: a) the average closing
price of issuer's stocks at the Santiago Stock Exchange corresponding to the
180-day period prior to the date on which price is determined and b) the average
closing price of shares at the Santiago Stock Exchange along the 30 days prior
to price determination. The aforesaid measurement shall be carried out on a
monthly basis, on the first working day of every month.

FOUR: Should the surety / debt ratio drop below the 1.25:1 level, Debtor and/or
Grantor shall, upon the Bank's discretion and within the 30-day term following
notification therefrom, grant a stock pledge on a higher number of shares issued
by BANCO DE A. EDWARDS or other stocks acceptable for the Bank, or Debtor and/or
Grantor shall make an advance payment of the loan so that the aforementioned
ratio regains the 1.5:1 level. On an alternative basis and within the same term,
Debtor and/or Grantor shall be entitled to make term deposits at the Bank as
accommodation endorsements, on a 1:1 surety / debt ratio basis, so that the
aforementioned ratio regains the required level. Should the aforementioned fail
to be achieved within the required term, Banco del Estado de Chile shall be
irrevocably entitled to transfer a portion or the entire amount of the pledged
shares and to allocate the product to paying the loan in advance, so that the
surety / debt ratio regains the 1.5:1 level. LQ INVERSIONES FINANCIERAS S.A. and
INVERSIONES RANQUIL S.A. hereby grant a special and irrevocable power of
attorney to Banco del Estado de Chile, on behalf of which its representative
hereby accepts the power to act accordingly.

----------
(1)   Unidad de Fomento - UF - a Chilean, non-physical indexed monetary unit.

                                       2
<PAGE>

FIVE: Should the surety / debt ratio rise above the 1.75 level along three
consecutive measurements, Debtor and/or Grantor shall require release of pledge
for as many shares as necessary for having such ratio regain the 1.5:1 level.

SIX. Should the stocks of BANCO DE A. EDWARDS be no longer able to be valued by
means of the mechanism referred to under clause three herein, the Bank shall be
entitled to require Debtor replacement thereof for by other shares deemed to be
satisfactory thereto and complying with the aforementioned requirement. The
replacement pledge shall be granted within a 30-working day term as of notice
from the Bank. In addition, Debtor shall be entitled to request replacement of
the pledged BANCO DE A. EDWARDS stocks for by shares corresponding to another
company, which the Bank considers acceptable or for term deposits as
accommodation endorsements, where the latter have a 1:1 surety / debt ratio.

SEVEN. INVERSIONES RANQUIL S.A. hereby undertakes before the Bank, on behalf of
which accepts its representative, to keep a debt ratio - measured as the
quotient resulting from the current liabilities divided by net worth - not
exceeding 3.5 times. Should Debtor exceed the aforementioned level, it shall
correct such situation within the following 45-day term.

EIGHT: QUINENCO S.A., in turn, in its capacity of guarantor and joint and
several debtor of the note securing the loan referred to under clause one
herein, hereby undertakes as follows before Banco del Estado de Chile: a)
Keeping assets free from all and every encumbrances, collaterals, burdens,
restrictions or privileges for an amount equivalent to at least 1.3 times the
outstanding balance of all the unsecured debts held by Quinenco S.A. For these
purposes, both assets and debts shall be valued at book value; b) Keeping an
individual indebtedness level whereby the financial debt / total capital
formation ratio not exceeding 0.45 times. To this end, financial debt shall be
construed as the addition of lots 21,010; 21,015; 21,020; 21,025; 21,030;
21,060; 21,075; 22,010; 22,020; 22,030; 22,040 and 22,045 of Quinenco's
individual FECU. Total capital formation shall be construed as the addition of
individual net worth, plus financial debt; c) Keeping a minimum individual net
worth of at least UF 33 million. The aforementioned obligations, as well as that
provided in the clause hereinabove shall remain in full effect for as long as
the relevant loan remains unpaid.

NINE: Banco del Estado de Chile shall be entitled to require advance payment of
all and every pending obligations held by INVERSIONES RANQUIL S.A. therewith.
Further the Bank shall be entitled to demand the payment of the pledge,
guarantee and surety as specified under clauses one and two herein in any of the
following cases: a) In the event Debtor and/or Quinenco S.A. fail to fully and
timely comply with the obligations undertaken thereby by means of this
instrument; b) Should Quinenco's current major stockholders loose control of
such company.

TEN: Debtor shall be able to pay the loan referred to under clause one herein in
advance, with no fee being applicable thereto, provided that the following
requirements are complied with: a) Notifying the Bank in writing, at least 90
days in advance to the date on which it intends to make the relevant advance
payment; b) As of January 15, 2002, it shall be able to pay in advance as much
as 50 per cent of the owed principal. Said advance payment shall only be carried
out on any day between January 15 and January 31, 2002. Following such date,
payment shall only be performed on interest payment dates; c) As of January 15,
2003, Debtor shall be able to pay up to 100 per cent of owed principal. The
aforesaid

                                       3
<PAGE>

advance payment shall only be carried out on any day between January 15 and
January 31, 2003. Following such date, payment shall only be performed on
interest payment dates.

ELEVEN: For all the legal purposes stemming from this instrument, the appearing
parties hereby establish their domicile in the city and district of Santiago
and, consequently, shall subject to the jurisdiction of the Courts of Justice
located therein.

TWELVE: All and every expenses resulting from this deed shall be exclusively
born by Debtor.

The power of Mr. Luis Fernando Antunez Bories and Mr. Alessandro Bizzarri
Carvallo to act on behalf of INVERSIONES RANQUIL S.A. is evidenced by means of a
public deed dated December 13 and 15, 2000 granted at the Santiago Notary
Public's Office of Mr. Rene Benavente Cash. The power of Mr. Luis Fernando
Antunez Bories to act on behalf of LQ INVERSIONES FINANCIERAS S.A. is evidenced
by means of public deeds dated December 13 and December 15, 2000, both of them
granted at the Santiago Notary Public's Office of Mr. Rene Benavente Cash. The
power of Mr. Francisco Perez Mackenna to act on behalf of QUINENCO S.A. is
evidenced by means of a public deeds dated December 12, 2000, granted at the
Santiago Notary Public's Office of Mr. Rene Benavente Cash. The power of the
Bank's representative is evidenced by means of a public deed dated June 7, 1996,
granted at the Santiago Notary Public's Office of Mr. Pedro Reveco Hormazabal.

This agreement has been prepared by counsel URBANO MARIN LOYOLA. In witness
whereof, the parties sign this document having one single date and effect.
Counterparts are provided. Registered under Record No. 13.816.

In witness whereof I have hereunto affixed my hand and seal.

(Signature illegible)
LUIS FERNANDO ANTUNEZ BORIES
National Id. Card No. 6.926.972-9

(Signature illegible)
ALESSANDRO BIZZARRI CARVALLO
National Id. Card No. 7.012.089-5

(Signature illegible)
FRANCISCO PEREZ MACKENNA
National Id. Card No. 6.525.286-4

(Signature illegible)
VICTOR CODDOU BRAGA
National Id. Card No. 7.706.983-6
By proxy BANCO DEL ESTADO DE CHILE

                                       4
<PAGE>

(Signature and stamp illegible)

(Stamp: Banco del Estado de Chile - Group Head - Major Corporations; Signature
illegible).

                                       5

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