Document:

nilam_8k-ex1002.htm

    EXHIBIT 10.2

     

    
      

      

      

      SUMMARY
REPORT ON THE

      

      

      QUINCHIA PROPERTY

      

      Department
of Risaralda, Colombia

      

      

      Mineral
Contracts

      Exploration License
18567  

      Exploration License
22159  

      Concession Contract No.
22270

      

      

      

      

      

      

      Prepared
by

      Caribbean
Copper & Gold Corporation

      Cobre y
Oro de Colombia SA

      

      

      

      

      

      

      

      February,
2008

      

      
        
          
          

        

        
           

          
            

          

        

        
          
          

        

      

       

      TABLE
OF CONTENTS

      

      1.
SUMMARY

      

      2.
INTRODUCTION AND TERMS OF REFERENCE

      2.1
TERMS OF REFERENCE

      2.2
SOURCES OF INFORMATION AND RELIANCE ON OTHER EXPERTS

      

      3.
GEOGRAPHIC SETTING

      3.1
PROPERTY LOCATION AND DESCRIPTION

      3.2
MINERAL TENURE

      3.3
ACCESS, INFRASTRUCTURE AND LOCAL RESOURCES

      3.4
PHYSIOGRAPHY AND CLIMATE

      

      4.
HISTORY

      

      5.
GEOLOGICAL SETTING

      5.1
REGIONAL GEOLOGY

      5.2
PROPERTY GEOLOGY

      

      6.
DEPOSIT TYPE

      

      7.
MINERALIZATION

      

      8.
QUINCHIA EXPLORATION AND RESULTS: 2005 to 2007

      

      9.
DRILLING

      9.1  DOS
QUEBRADAS DRILL RESULTS

      9.2  MANDEVAL
DRILL RESULTS

      

      10.
SAMPLING METHOD AND APPROACH

      

      11.
SAMPLE PREPARATION, ANALYSES AND SECURITY

      

      12.
DATA VERIFICATION

      

      13.
ADJACENT PROPERTIES

      

      14.
MINERAL PROCESSING & METALLURGICAL TESTING

      

      15.
MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

      15.1
PRELIMINARY MINERAL RESOURCE – DOS QUEBRADAS

      

      16.
OTHER RELEVANT DATA AND INFORMATION

      

      17.
INTERPRETATION AND CONCLUSIONS

      

      18.
RECOMMENDATIONS

      

      
        
          
          

        

        
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      1. SUMMARY

      

      This
technical report on the Quinchia Property is intended to provide an assessment
of the economic potential of the Quinchia property through a description of its
geologic characteristics and prior exploration results.

      

      The
Quinchia Gold Project is located within the Municipality of Quinchia, Department
of Risaralda, Republic of Colombia, approximately 190 kilometers WNW of the
Colombian capital of Bogotá and 55 kilometers to the north of Pereira, the
regional capital of the Department of Risaralda

      

      The
Project is located in the southern edge of a newly identified Au (Cu) porphyry
sub-belt of the Middle Cauca.  The basement in the Middle Cauca region
is form by basaltic oceanic rocks; this basement is covered by Oligocene
continental basin sedimentary rocks of the Amaga Formation that in turn is
covered by the 6 to 9 My volcano-sedimentary Combia Formation.  Quartz
diorite stocks, interpreted as co-genetic with Combia are genetically associated
with the known mineralization that varies in style from Au (Cu) porphyries to Au
(Au-Cu-Zn) intermediate sulfidation systems.

      

      The
Quinchia project is composed by at least three mineralized centers associated
with quartz diorite complexes with possible ages varying between 6 to 9 My and
represent typical Au (Cu) porphyry systems.  These quartz diorite
centers are part of the evolution of the volcano-sedimentary Combia
Formation.

      

      Between
January and November 2006, AngloGold Ashanti’s Colombian
subsidiary,  Sociedad Kedahda SA (now AngloGold Ashanti de Colombia
SA), drilled 4701.17m in 18 holes in the Quinchia District. The Drilling focused
on three porphyry gold targets named Dos Quebradas, Mandeval, and La
Cumbre.

      

      Eight
core drill holes were drilled on the Dos Quebradas target and a preliminary
resources estimation was carried out using the information from the drill
holes.

      

      Seven
core drill holes were drilled on the La Cumbre porphyry target proving that the
porphyry style mineralization covers an area of at least 400 x 500 m, with
possible extensions of the porphyry target that remain untested. Average gold
grades from the surface samples and drill holes from La Cumbre target is 0.745
ppm.  More drilling is needed to have a good estimation of the mineral
potential of the La Cumbre target.

      

      Three
drill holes were drilled at the Mandeval target with gold grades varying between
0.2 and 0.4 ppm, which is very similar to the results of outcrops
samples.  Kedahda concluded that there is no mineral potential in the
Mandeval target.

      

      The Juan
Tapado area is a known large gold stream sediment anomaly toward the north of
Dos Quebradas that have not been evaluated yet.

       

      
        
          
          

        

        
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      Diamond
drilling and initial economic evaluation was focused on Dos Quebradas, La
Cumbre. Anglo determined that the Dos Quebradas target has an overall potential
of 2 million ounces at 0.7 ppm Au cut off.  This target is located in
a somewhat incised valley. There are theoretically two sub-targets with >1 g
Au/t potential: a) Don Miguel Ladino sector and b) Don Albercio Ladino sector.
The Don Miguel Ladino sector is related to +3ppm Au surface sample results and
the open +1.4 ppm Au intersection at the bottom of borehole DQ-DD-3, plus
mineralized basalt blocks in borehole DQ-DD-2. The theoretical ore potential
would be a body of approximately 100m x 100m x 200m depth x 2.5 x 1.5 g Au/t or
approximately 200.000 oz at 1.5 ppm Au. The Don Albercio Ladino sector is more
difficult to envisage as the +1g Au/t intersection in DQ-DD-5 does not reach
surface. Any operation will suffer from increased stripping, internal waste and
the Mandeval creek.

      

      The La
Cumbre prospect has very favorable topography for open pit mining and heap leach
operation. High gold values in early diorite present good spatial correlation
with hydrothermal biotite and fine-grained chalcopyrite. Gold was progressively
leached by the overprinting of intermediate argillic alteration. Though there
are isolated assay results >1 ppm Au, the expected average gold grade for
large volumes of the mineralized system is around 0.7 ppm, and there is
potential for small areas with > 1 ppm Au. The identified target cover and
area of approximately 400m x 400m that is open to the south.

      

      Drilling
proved that the Mandeval target has gold grades < 0. 4 ppm and is no consider
an exploration target anymore.

      

      A large
stream sediment anomaly remain untested in the northern part of the Quinchia
project; Phase II follow up work in the district should be advanced according to
agreements with indigenous population, and the municipality of
Quinchia.

       

      
        
          
          

        

        
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      2.
INTRODUCTION AND TERMS OF REFERENCE

      

      2.1 TERMS OF REFERENCE

      

      This
technical report on the Quinchia Property was prepared by Caribbean Copper &
Gold Corporation. It is intended to provide an assessment of the economic
potential of the Quinchia property through a description of its geologic
characteristics and prior exploration results.  This report was
completed to comply with the norms and standards set out in National Instrument
43-101 of the Canadian Securities Administrators.

      

      2.2 SOURCES OF INFORMATION AND
RELIANCE ON OTHER EXPERTS 

      

      This
technical report is based upon published and unpublished data, primarily from
geological reports as described in the sections herein entitled History and
References.  Some of these reports were written prior to the
implementation of the standards relating to National Instrument
43-101.

      

      The
authors relied upon mineral tenure representations by AngloGold Ashanti Ltd. and
its Colombian affiliates, and by Cobre y Oro de Colombia SA, who attest to the
validity of the mineral exploitation and exploration contracts.  This
report assumes good standing of the joint venture agreement between AngloGold
Ashanti Ltd.’s Colombian affiliate Sociedad Kedahda S.A. and Cobre y Oro de
Colombia SA.

      

      3. GEOGRAPHIC SETTING

      

      3.1 PROPERTY LOCATION AND DESCRIPTION

      

      The
Quinchia property consists of 1,408 hectares of mineral exploitation contracts
granted by the Colombian Ministry of Mines to the individuals Silvia Rios Estela
Martinez and Juan Uribe David Hurtado.

      

      Geographically,
the mineral contracts are located within the Municipality of Quinchia,
Department of Risaralda, Republic of Colombia, some 190 kilometers WNW of the
Colombian capital of Bogotá or alternatively, some 55 kilometers to the north of
Pereira, the regional capital of the Department of Risaralda (FIGURE
3.1).

       

      
        
          
          

        

        
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      3.2
MINERAL TENURE

      

      The
Quinchia property primarily consists of three granted mineral contracts (two
exploration licenses and one concession contract), totaling 1,408
hectares,  flanked by other mineral tenements controlled primarily by
Cobre y Oro and by B2Gold.  The entire area of the claims is located
within an approximate 10,000 hectare area of interest, which defines the
Quinchia property for the purposes of the Agreement between Kedahda and Cobre y
Oro.

      

      The main
Quinchia project area, where recent exploration and drilling was focused, is
covered by three claim blocks totaling 1,408 hectares. The location and details
regarding the claim blocks are outlined in TABLE 3.1 and are shown in FIGURE
3.2.

      

      TABLE 3.1: MINERAL CONTRACTS,
QUINCHIA PROPERTY 

      

      
        	
                CONTRACT NUMBER
      

              	
                SIZE HECTARES
      

              	
                REGISTERED
      TITLE HOLDER

              	
                CONTRACT
      STATUS

              
	 
      	 
      	 
      	 
      
	
                18567

              	
                869.79

              	
                URIBE
      HURTADO JUAN DAVID; RIOS MARTINEZ SILVIA STELLA

              	
                Current

              
	
                22159

              	
                250.60

              	
                URIBE
      HURTADO JUAN DAVID; RIOS MARTINEZ SILVIA STELLA

              	
                Current

              
	
                22270

              	
                288.46

              	
                URIBE HURTADO JUAN DAVID; RIOS
      MARTINEZ SILVIA STELLA

              	
                Current

              

      

      

      The
tenement information outlined in TABLE 3.1 is confirmed with the Colombian
authorities as of February, 2008.  Claim status as presented herein
however, may evolve as applications are approved or as contracts are signed by
the Colombian government.  Updated tenement may be verified with the
government, and historical (not regularly updated) information can be seen
online via the Colombian government’s mineral tenement website at:
www.ingeominas.gov.co. This website is in Spanish. The procedure for mineral
title verification is as follows:

      

      • Go to
homepage: www.ingeominas.gov.co

      • Go to:
“Nuevo CMC”, located on the upper left of the homepage

      • Go to:
“Consultas de Expediente”

      • Under
“Clasificacion” enter “Titulo” or “Solicitud”

      • Enter
number from CONTRACT NUMBER in TABLE 3.1, where solicited in “Codigo de
Expediente”

      • Press
“Buscar” (Search) at bottom of page.

      • In the
case that “Titulo” does not produce a positive result, repeat search using
“Solicitud”.

       

      
 

      
        
          
          

        

        
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      Figure
3-2   Claim Map – Quinchia Property

      

      

      

      The area
of the three known porphyry systems of the Quinchia project is covered by
tenements owned by Kedahda/Cobre y Oro and by Juan David Uribe (optioned to
Kedahda/Cobre y Oro ).  The northern part of the project (Juan Tapado
area) is mainly covered by tenements of Cobre y Oro and by a Special Mining
Reserve owned by the municipality of Quinchia (Fig. 3-2).  The
municipality has expressed their interest to negotiate the area of the special
mining reserve.

      

      In the
map above of the Quinchia project with Tenements:  3rd party type 1
are tenements optioned to Cobre y Oro, 3rd party type 2 are tenements not
optioned to Cobre y Oro; and the Municipality Especial Area can be optioned for
exploration.

      

      3.3
ACCESS, INFRASTRUCTURE AND LOCAL RESOURCES

      

      Access
and infrastructure surrounding the Quinchia project is good.  The area
is surrounded by gravel roads which connect a dense rural farm population to
various nearby 10,000+ person population centres, including the towns of
Quinchia, Riosucio and Anserma (FIGURE 3.3). Various mid-sized cities, including
Manizales, Pereira and Armenia are located within a two-hour drive of the
project area, and full services are available from any of these
centers.

       

      
        
          
          

        

        
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      Access to
the Quinchia property is accomplished overland.  The project is
located about five kilometers (30 minutes) SSE, along gravel-topped roads, from
the town of Quinchia, Risaralda. Based upon a Colombian entry point, access to
the Quinchia project may be achieved along the following routes:

      

      Travelling
overland along well maintained paved highways from Medellin, via the towns of
Caldas, Versailles, Santa Barbara, La Pintada, Marmato,  and Riosucio
to the town of Quinchia (approximately 3 hours, depending upon traffic
conditions); or

       

      Traveling
by air from Bogota to Manizales, and then overland along well maintained roads
through the town of Anserma to the town of Quinchia (approximately 2 hours,
depending upon traffic conditions); and,

      

      Traveling
overland along maintained gravel roads from Quinchia to the Quinchia project
area (approximately 30 minutes).  The use of a four-wheel-drive
vehicle on the gravel road section is recommended but usually not
essential.  Gravel roads afford direct access to the exploration areas
of Los Cumbres and Dos Quebradas.

       

      

      
 

      
        
           

        

        
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      Economically,
the Municipality of Quinchia and the Quinchia area may be characterized as
rustic and rural.  Agricultural activities dominated by coffee and
mixed-crop farming are principal sources of sustenance and
income.  Small-scale, artisanal gold mining is important in various
areas such as Miraflores, El Chuscal and Quinchia.

      

      Sociedad
Kedahda S.A. secured a surface access agreement with the local property owners
in the areas of planned exploration and drilling.  Additional surface
rights may be necessary for the establishment of additional exploration and for
a potential commercial mining project.

      

      Water,
power and labour are readily available at the project site.  Local
labour is not trained in modern exploration and mining technique, indicating the
need to provide training and import qualified personnel.  All
requirements (personnel, equipment, contractors) for project exploration and
development can be acquired\contracted out of Quinchia, Anserma or
Riosucio.  Heavy equipment and diamond drills can be contracted out of
Manizales, Medellín, or Bogotá.

      

      3.4 PHYSIOGRAPHY AND CLIMATE

      

      The
Quinchia property is located overlooking the Cauca River valley, along the
eastern margin of Colombia’s physiographic Western Cordillera (FIGURE
3.1).  The topographic expression of the region is steep and,
characterized by high-relief, vegetated mountains and steeply incised active
drainages. Elevations are highly variable ranging from ca. 800 metres above sea
level along the Cauca River valley to the east, to ca. 2,800 metres over some of
the peaks surrounding the Quinchia area.  The elevation at the
Quinchia project area ranges from about 1,000 to 1,500 metres above sea
level.  Topography is moderate to steep.

      

      Climatically,
the region is tropical to sub-tropical, with daytime temperatures throughout the
year averaging in the 20 to 24 degree Celsius range. The climate is humid, being
somewhat more so during punctuated rainy seasons (March to May; September to
December).  Rainfall ranges between 900 and 3,000 millimeters per
year.  Natural vegetation is dominated by lush, low-growth Andean
forest, mostly preserved along the course and headwaters of the natural
drainages and over to peaks of higher elevation hills.  Approximately
70% of the area including and surrounding the Quinchia project has been cleared
for agricultural purposes, including primarily commercial coffee production and
subsidence food crops such as plantain, beans, bananas and manioc.

      

      

      4. HISTORY 

      

      The
Quinchia property forms part of a Pre-Colombian to modern-day artisanal gold
mining district which extends from Anserma in the south to Riosucio in the
north. (FIGURE 4.1). Production on an artisanal level has been more or less
continuous throughout the region through to modern times, but with respect to
the present property boundaries, it is not possible to quantify with any
certainty the amount of gold extracted from the mines surrounding Quinchia to
date.  According to Rodriguez et al. (2000),

       

      
        
           

        

        
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      artisanal
gold production was most significant in the general area in the
1950’s.  Interest was renewed in the area in the late 1970’s (likely
due to the increase in world gold price) and culminated in the 1980’s in the
Miraflores area with the formation of the artisanal mining cooperative
“Asociacion de Mineros de Miraflores”. Activity has been relatively consistent
since this time, ebbing and flowing with fluctuations in the gold
price.

      

      With
respect to modern exploration and development in the vicinity of Quinchia, the
mines at Miraflores have drawn the attention of various foreign-financed
exploration companies since the mid 1990’s, when Canadian junior companies such
as Gran Colombia Resources Inc. and Sur American Gold Inc. reviewed the property
and staked claims in the surrounding area (TVX, 1997). Data from these reviews
are not available. The most serious foreign-company review of the prospect was
undertaken in 1997 by T.V.X. Mineria de Colombia, a subsidiary of the then
Canadian mid-tier gold producer T.V.X. Gold Inc (T.V.X).  The social
situation in the area during the 1990’s did not lend itself to a secure
exploration environment and no at-depth exploration was completed by
T.V.X.  In 2000, the Colombian government’s geological division,
INGEOMINAS, recognizing the apparent mineral potential of the prospect, with the
permission of the Asociacion de Mineros de Miraflores, undertook a series of
technical studies in the vicinity of Quinchia, which included geological
mapping, geochemical and geophysical studies, and  resource
calculations not compliant with National Instrument 43-101.

      

      In 2005,
Sociedad Kedahda S.A. entered into an agreement with the holders of the mineral
concessions (Juan David Uribe Hurtado and Silvia Stella Rios Martinez), and
exploration by Sociedad Kedahda S.A. had been ongoing through 2006, when the
decision to farm-out the project was made.

      

      In
November 2007, Cobre y Oro de Colombia S.A. entered into an agreement with
Sociedad Kedahda S.A. to obtain all rights to the Quinchia
Project.  Under the agreement, Cobre y Oro assumed the obligations and
rights contained underlying Option Contract in place between Kedahda and the
holders of three mineral concessions (Juan David Uribe Hurtado and Silvia Stella
Rios Martinez).

      

      5. GEOLOGICAL
SETTING

       

      5.1 REGIONAL
GEOLOGY

      

      The
Quinchia project is located in the southern edge of a newly identified Au (Cu)
porphyry sub-belt of the Middle Cauca.  The basement in the Middle
Cauca region is form by basaltic oceanic rocks; this basement is covered by
Oligocene continental basin sedimentary rocks of the Amaga Formation that in
turn is covered by the 6 to 9 My volcano-sedimentary Combia
Formation.  Quartz diorite stocks, interpreted as co-genetic with
Combia are genetically associated with the known mineralization that varies in
style from Au (Cu) porphyries to Au (Au-Cu-Zn) intermediate sulfidation
systems.  The western and eastern limits of the Middle Cauca sub-belt
are marked by the regional faults of Cauca and Romeral
respectively.  The geology of the block located toward the west the
Middle Cauca is composed by a Precambrian gneiss, Paleozoic schist, Triassic
clastic rocks, and Cretaceous andesite.  The geology of the block
located toward the west is composed by volcano- sedimentary lithologies with
oceanic floor affinity intruded by middle Miocene intermediate
stocks.

       

      
        
           

        

        
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      The
Quinchia property is located along the eastern margin of Colombia’s
physiographic Western Cordillera.  According to Cediel and Cáceres
(2000) and Cediel et al. (2003), the region is underlain by a highly complex
basement known as the Romeral terrane, which may be characterized as a tectonic
mélange (FIGURE 5.1).  The basement took form as middle-upper
Mesozoic-aged volcanic and sedimentary oceanic rocks collided with and were
accreted to the northern Andean paleo-continental margin, beginning in the early
Cretaceous.  The resulting suture is known as the Romeral fault system
and mélange can be traced for over 1,000 kilometers along the northern
Andes.  The original Romeral fault system is generally north-striking
and dextral transcurrent in nature whilst the Romeral melange contains
mega-scale blocks and fragments of the oceanic allochthon and crustal slivers of
autochthonous Paleozoic metamorphic rocks which formed the paleo-continental
margin.  The structure of the Romeral system has been modified by
various post-Romeral tectonic events.  Following accretion, the
Romeral terrane and mélange was unconformably overlain in the late Oligocene –
early Miocene by autochthonous silici-clastic sedimentary sequences of the Amaga
Formation, including basal conglomerates, quartz sandstones, siltstones, shales
and coals. In the middle - late Miocene both the Romeral mélange and the Amaga
Formation were overlain by mafic and intermediate volcanic rocks (flows and
pyroclastics) of the Combia Formation, associated with at least one middle-late
Miocene volcanic arc emplaced into the Romeral terrane basement during this time
period. Also associated with late arc formation was the syntectonic emplacement
of a series intrusives, including poly-phase hypabyssal stocks, dykes and sills
of dioritic, granodioritic and monzonitic composition.  These
intrusives cut all of the above mentioned stratigraphic units. K-Ar whole rock
dates for the intrusive rocks range from 8 to 6 Ma (Cediel et al.,
2003).  The Combia Formation and accompanying hypabyssal intrusive
rocks are well represented along an ca. 100 kilometer by 20 kilometer N-S
trending belt extending from Anserma in the south to Jerico, Fredonia and
Titiribi, located to the north of the Quinchia project (FIGURE
5.2).

      

      Following
the early accretionary events, the region was compressionally deformed in the
early - middle Miocene and again in the middle – late Miocene, in both cases by
additional tectonic accretionary events taking place to the west along the
active Pacific margin. The structural architecture of the Romeral fault and
mélange system is essentially that of a 10+ kilometer wide series of N-S
striking, vertically dipping dextral transcurrent faults.  Virtually
all lithologic contacts within the Romeral basement are structural,
characterized by abundant shearing, mylonitization and the formation of
clay-rich fault gouge.  Structural reactivation during the Miocene
resulted in orthogonal compression accompanied by mostly west-directed (back)
thrusting and high-angle reverse fault development in the basement
rocks.  The Amaga Formation was deformed into generally open, upright
folds with tilting and near isoclinal folding being associated with generally
localized west-vergent thrusting. The Combia Formation records tilting and open
folding and both the Amaga and Combia Formations exhibit moderate to strong
diapiric doming where affected by the emplacement of the mid-late Miocene
intrusive suite.  N-S, NE, NW and E-W-striking conjugate shearing and
dilational fracturing affects all of the above geologic units.  Some
of these elements can be observed as structural lineaments traversing the
region, visible on Digital Elevation Model (DEM) images, such as form the base
of Figure 5.2.

       

      
        
           

        

        
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      5.2  PROPERTY
GEOLOGY

      

      The
bedrock geology of the Quinchia property and surrounding area is shown in Figure
5.4, and is discussed below under two headings: Lithology and
Structure.  It is important to note that the Quinchia property is
essentially 100% vegetated by native Andean forest, dense secondary scrub
growth, agricultural crops and\or grassy cattle pastureland, making detailed
geologic mapping difficult.  Natural outcrop is sparse and is limited
to road cuts and road-side quarries, mule and walking paths and steeply incised
active drainages.  In addition, tropical to semi-tropical oxidation
and weathering at surface masks original bedrock texture and mineralogy in many
outcrops.

      

      LITHOLOGY:

      

      The
Quinchia property and surrounding area is underlain by four principal rock
units. These include 1) a basement complex consisting of mafic and ultramafic
oceanic volcanic rocks and granitoid intrusive

       

      
        
           

        

        
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      rocks
belonging to the Romeral terrane, 2) stratified clastic sedimentary rocks of the
Amaga Formation, 3) bas-andesitic through felsic volcanic and pyroclastic rocks
of the Combia Formation and 4) dioritic to monzonitic hypabyssal porphyritic
intrusive rocks. Each of these units is described in detail as
follows.

      

      1)  Romeral
Terrane: Romeral terrane rocks form a tectonically disrupted basement complex at
Quinchia, and the Quinchia breccia and mineralization is entirely developed
within Romeral terrane rocks. Fresh outcrops are relatively
rare.  Where observed, they form isolated fine-grained packages of
mafic oceanic igneous rocks, including basalt, diabase and micro-gabbro, locally
interstratified with fine-grained pelagic sediments.  The mafic
igneous rocks are dark grey altering to dark green in color.  They are
macroscopically aphanitic and mineralogically dominated by labradoritic
plagioclase and clinopyroxene (augite), both of which occasionally form isolated
phenocrysts in a compact groundmass. Bedding features are difficult to ascertain
in outcrop due to tectonic disruption, weathering and poor exposure, although
pillow structures and auto-brecciation are occasionally observed, as are
amygdules containing zeolites, epidote and chlorite.  In most
instances the basalts, diabases and micro-gabbros can only be distinguished in
thin section, due to their fine-grained to microcrystalline nature. In proximity
to hypabyssal porphyritic rocks, the basement mafic lithologies are variably
exhibit hornfels, fractured, veined and hydrothermally altered.

      

      Development
of hornfels results in a compact recrystallization of the mafic wallrock.
Intrusion-induced fracturing \ veining occurs in dense stockworks with quartz
and magnetite as the filling phases, accompanied by the formation of secondary
(hydrothermal) biotite, and resulting in a potassic alteration assemblage (A-
and M-veining + biotite) directly linked to porphyry-style mineralization in the
hypabyssal intrusions.  These assemblages are commonly overprinted by
late propylitic alteration, dominated by chlorite and epidote which introduces a
greenish coloration to the Romeral lithologies.  Chemical analyses
indicate that Romeral basement rocks are tholeiitic in composition and appear to
represent slivers of oceanic crust and aseismic oceanic ridges. The Romeral
assemblage has not been directly dated at Quinchia, but based upon regional
correlations is considered to be broadly lower Cretaceous in age, and to have
accreted to the continental margin in the Aptian – Albian.

      

      Forming
part of the Romeral basement and outcropping in the southern part of the
Quinchia district is the Irra stock.  This calc-alkaline,
granodioritic to monzonitic and locally syenitic intrusive has been mapped over
an ca. 32 square kilometer area.  It is coarse grained and
holocrystalline, light grey to pink in color and is dominated by andesine and
orthoclase +\- quartz with augite and biotite forming the mafic phases. It has
been dated at ca. 97 +\- 10 Ma (K-Ar, biotite). Contacts between the Irra stock
and the Romeral basement are not well exposed and where present are structurally
modified. It is not clear whether the Irra stock was emplaced in Romeral
basement before, during or after Romeral accretion to the continental
margin.

       

      2)  Amaga
Formation: The conglomerates, sandstones and siltstones of the Amaga Formation
outcrop along road cuts to the SE.  The formation was unconformably
deposited upon Romeral terrane basement rocks. Based upon pollen analyses, it
ranges from upper Oligocene to lower Miocene in age. The Amaga Formation is
dominated by greyish-green to cream colored sandstones which form well
stratified thickly to moderately bedded packages containing intercalations of
conglomerate and

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

       

      siltstone.
The sandstones occur in coarse- to medium-grained, moderately to poorly sorted
beds up to six metres thick. In composition they range from quartz arenite to
clay-rich wacke. The conglomerates form thin to moderate interbeds within the
sandstones.  They are generally matrix supported, with sub-rounded
quartz pebbles ranging from one to five centimeters in diameter.  The
siltstones form larger interbeds within the sandstones and may locally dominate
on the outcrop scale, forming laminated beds not exceeding ten metres
thick.  Organic partings are commonly observed. The Amaga Formation is
considered to be of continental origin, having been deposited in transtensional
(pull-apart) basins along the middle Cauca, in response to transpression and
uplift generated by post-Romeral tectonism along the Pacific margin to the west.
Structurally – morphologically, the Amaga Formation forms elongate NNE-SSW
trending ridges, and structural measurements on bedding indicate moderate to
steep dips to the west, suggesting east-vergent folding and possibly thrust
fault imbrication. The formation is locally intruded by the hypabyssal porphyry
suite, in the vicinity of which it is domed, highly fractured and contains
abundant disseminated hydrothermal pyrite and illite +\- sericite.

      

      3)  Combia
Formation: Widespread throughout the Quinchia district. In the district, it is
dominated by two main units 1) a lower sequence of massive, compact magnetic
flow rocks and agglomeratic pyroclastics of bas-andesitic composition, and 2) an
upper finer-to-medium grained, interbedded tuffaceous and agglomeratic
pyroclastic unit of more felsic (intermediate) composition.  The true
thickness and stratigraphic age relationships between these units have not been
clearly determined.  The lower unit is of dark gray-green in color and
contains primary mafic phases including hornblende and magnetite.  The
upper unit is volumetrically dominant and is composed of mixed coarse- to
fine-grained crystal, lithic, ash and lapilli tuffs.  Lithic fragments
comprise up to 40% of the coarse grained pyroclastic rocks, and include
fragments of basalt, bas-andesite and hypabyssal
porphyry.  Geochemical whole rock analyses indicate that the lower
Combia unit is of tholeiitic, basaltic to bas-andesitic composition and has been
interpreted to have formed in a back-arc setting. The upper unit is of
calc-alkaline volcanic arc affinity.  As with the Romeral suite, in
proximity to hypabyssal porphyritic rocks, the Combia Formation is variably
fractured, veined and hydrothermally altered.  Intrusion-induced
fracturing \ veining occurs in dense stockworks with quartz and magnetite in a
potassic alteration assemblage (A- and M-veining + biotite) directly linked to
porphyry-style mineralization.  These assemblages are overprinted by
late propylitic alteration. The Combia Formation has not been accurately
dated.  The lower unit is considered to range from about 14 to 11 Ma
in age.  Both lower and upper units have clearly been intruded by the
hypabyssal porphyry suite which has been dated at ca. 8 to 6 Ma (see
below).

      4)  Hypabyssal
Porphyry Suite:  The suite is both volumetrically and
metallogenetically significant in the Quinchia district. The porphyry suite
manifests in various sub-tabular intrusive centres in the Quinchia (Dos
Quebradas, La Cumbre, Mandeval) and Irra (Chuscal) areas. In detail it is
comprised of multiple phases of hypabyssal porphyry which range in composition
from diorite to quartz diorite.  The porphyries are light grey to
greenish-grey in color, and texturally range from sparsely populated to
crowded.  Plagioclase is a ubiquitous phenocryst, followed by biotite,
hornblende and augite, with quartz occurring as bipyramidal eyes up to 8
millimeters in section in the more felsic porphyry pulses.  A fine
grained biotite micro-diorite body is observed within the suite and in some
areas it appears

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      
 

      transitional
to sparsely populated plagioclase porphyry.  The Quinchia district
porphyry suite forms the southern extension of an arc of porphyritic rocks which
extends from Anserma – Quinchia to Titiribi in the north.  At various
locations these porphyries have been dated and generally return ages ranging
from 9 to 6 Ma. An unpublished whole rock (K-Ar, biotite) date produced from the
Dos Quebradas porphyry by Sociedad Kedahda S.A. returned 8.1 +\- 1
Ma.

      

      Coincident
with the hypabyssal porphyry suite at Quinchia, a series of porphyry-style Au-Cu
occurrences are observed (Sillitoe, 2000; Sillitoe, 2006).  These
mineralized alteration centres are hosted within a kilometer-scale propylitic
(chlorite-epidote-carbonate-quartz-pyrite) halo which intensifies inwards to a
series of Au (+\-Cu) mineralized centres with alteration types which range from
calcic-potassic (A-veining, calcic amphibole, disseminated magnetite and
magnetite veining, K-spar +\- biotite) to intensely fractured \ stockwork
“phyllic” (or "D-type" with sericite-illite-pyrite) and “intermediate argillic”
(with sericite-chlorite-clay (illite-smectite)).  The emplacement of
the porphyry and the resulting concomitant hydrothermal alteration, affects all
of the lithologic units in the Quinchia district.  As outlined in
section 6, Deposit Type, below, the gold occurrences of the Quinchia district,
including those contained within the Quinchia property, are linked to the
emplacement and cooling history of the hypabyssal porphyry suite.

      

      STRUCTURAL
GEOLOGY:

      At the
regional scale the most prominent structural control in the Quinchia district is
the generally N-S striking, subvertical basement architecture of the Romeral
fault system, as reflected in DEM-observed structural lineaments and in the N-S
trend of the general Middle Cauca porphyry belt.  Structural
reactivation during various post-Romeral events is also recorded, and principal
and secondary faults at the Quinchia property scale strike WNW – ESE and
NE-SW.

      

      6.  DEPOSIT
TYPE

      

      The Dos
Quebradas-Mandeval-La Cumbre porphyry gold targets are associated with three
Miocene intrusive centers in a NS trend that extends approximately 3km and at
elevations between 1600m and 1950m. (Figure 6-1)  The intrusive
centers are composed by dikes and stocks separated in three groups as early,
intra-mineral,  late intra-mineral and post-mineral dioritic phases
emplaced in intermediate to felsic volcanic rocks of the Miocene Combia Fm. and
in Cretaceous basalts. The highest gold and/or copper grades occur in the early
diorite phases characterized by potassic (mainly biotite with subordinated Kfds)
and potassic-calcic alteration that is characterized by the addition of traces
of amphibole and garnet to the potassic assemblage. Significant amount of A (B)
veinlets, and >3% hydrothermal magnetite is common in these early phases.
Gold grades are lower in the Intra-mineral phases; they still have potassic
alteration with lower density of A-B veins compared with the early intrusive
phases. Sulfide contents in early and intramineral phases are normally lower
than 1% but up to 3 % and include py, cpy, mo, and bn. Late intra-mineral
intrusive phases present moderate to strong

       

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

      
 

      intermediate
argillic alteration with an average sulfide content of 3 to 5 % composed mainly
by pyrite and traces of molybdenite and chalcopyrite.  The late
intra-mineral phases are devoid of potassic alteration and A-B
veins.  Post-mineral dikes only present argillic alteration
(kaolinite) with subordinated chlorite and epidote.

      

      

      

      

      

      7.
MINERALIZATION

      

      The Dos
Quebradas-Mandeval-La Cumbre porphyry gold targets are described as
follows:

       

      The Dos
Quebradas target covers an area of approximately 700 x 700m.  The
mineralized target occurs in the somewhat incised Dos Quebradas
valley.

      

      Mandeval
is a small target of 300 x 300m.

      

      La Cumbre
target covers an area of 800m x >1km and is open to the south. Gold in these
targets occurs in altered dioritic intrusions and in the diorite-basalt contact
zones.

      

      Gold and
copper grades in basaltic wallrock follow potassic biotite and potassic-calcic
(biotite-actinolite) alteration.  A-veinlet density reaches up to
>50 veinlets per meter. All mining activity in the area follows
cm-fault-gauge-pyrite zones along faults in tuffaceous volcanic rocks with
strong intermediate argillic alteration. Gold occurs with the fault gouge that
contains fine grained pyrite. Examples of these small miners operations are the
Mandeval and the La Cumbre adits; there is no economic potential associated with
style of mineralization.

       

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

      
 

      GEOCHEMISTRY

      

      The
distribution of seven elements and correlation matrix of all drill holes is
presented in Tables 7-1 and 7-2.

      

      Table 7-1. Quinchia project
percentiles for seven elements, all data from the 18 holes.

      
        	 
      	
                Au(ppb)

              	
                Ag(ppm)

              	
                As(ppm)

              	
                Cu(ppm)

              	
                Mo(ppm)

              	
                Pb(ppm)

              	
                Zn(ppm)

              
	
                Population

              	
                2,343

              	
                2,343

              	
                2,343

              	
                2,343

              	
                2,343

              	
                2,343

              	
                2,343

              
	
                Max
      Value

              	
                3,930

              	
                23.90

              	
                576.0

              	
                4,020.0

              	
                377.00

              	
                2,300.0

              	
                6,490

              
	
                Min
      Value

              	
                3

              	
                0.05

              	
                0.5

              	
                2.4

              	
                0.20

              	
                1.1

              	
                3

              
	
                Percentile
      98th

              	
                1,362

              	
                4.48

              	
                96.4

              	
                1,960.8

              	
                139.08

              	
                114.4

              	
                586

              
	
                Percentile
      95th

              	
                1,010

              	
                2.95

              	
                69.3

              	
                1,649.5

              	
                99.09

              	
                71.6

              	
                391

              
	
                Percentile
      90th

              	
                789

              	
                2.32

              	
                50.1

              	
                1,420.0

              	
                74.68

              	
                50.3

              	
                300

              
	
                Percentile
      85th

              	
                669

              	
                2.05

              	
                39.2

              	
                1,268.5

              	
                60.70

              	
                41.6

              	
                264

              
	
                Percentile
      80th

              	
                587

              	
                1.80

              	
                34.6

              	
                1,155.0

              	
                50.00

              	
                35.1

              	
                231

              
	
                Percentile
      70th

              	
                467

              	
                1.54

              	
                26.3

              	
                972.0

              	
                38.60

              	
                27.6

              	
                189

              
	
                Percentile
      60th

              	
                372

              	
                1.32

              	
                21.0

              	
                822.0

              	
                30.90

              	
                22.2

              	
                160

              
	
                Percentile
      50th

              	
                295

              	
                1.12

              	
                16.6

              	
                687.0

              	
                25.40

              	
                18.2

              	
                139

              
	
                Median

              	
                295

              	
                1.12

              	
                16.6

              	
                687.0

              	
                25.40

              	
                18.2

              	
                139

              
	
                Average

              	
                380

              	
                1.34

              	
                23.5

              	
                725.2

              	
                34.22

              	
                29.7

              	
                178

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Table 7-2.
         CORRELATION MATRIX

              
	 
      	
                Au

              	
                Ag

              	
                As

              	
                Cu

              	
                Mo

              	
                Pb

              	
                Zn

              
	
                Au

              	
                1

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                Ag

              	
                0.32

              	
                1

              	 
      	 
      	 
      	 
      	 
      
	
                As

              	
                -0.11

              	
                0.30

              	
                1

              	 
      	 
      	 
      	 
      
	
                Cu

              	
                0.72

              	
                0.47

              	
                -0.06

              	
                1

              	 
      	 
      	 
      
	
                Mo

              	
                0.43

              	
                0.12

              	
                -0.13

              	
                0.39

              	
                1

              	 
      	 
      
	
                Pb

              	
                -0.01

              	
                0.40

              	
                0.40

              	
                0.01

              	
                -0.02

              	
                1

              	 
      
	
                Zn

              	
                -0.01

              	
                0.42

              	
                0.36

              	
                0.11

              	
                -0.02

              	
                0.82

              	
                1

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      

      

      

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

      

       

      Porphyry
gold targets of Quinchia display typical features described by Sillitoe (2000)
for Au-Cu porphyry systems and in particular similar to the porphyry systems of
the Maricunga sub-belt in Chile.  Ore zones of the Quinchia targets
(minimum 10m grading >500ppb Au, maximum 10m internal waste <300ppb Au)
plot in the “Au-Cu field” in Sillitoe’s Cu-Au diagram for gold-rich porphyry
deposits (Fig. 7-1)

      

      

      

      

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

       

      8. QUINCHIA EXPLORATION AND RESULTS:
2005 to 2007 

      

      National
Instrument 43-101 compliant exploration has been completed at Quinchia by
Sociedad Kedahda S.A..  These activities included target
identification and first round diamond drilling.

      

      All
recent exploration work at Quinchia to date has been carried out by Sociedad
Kedahda S.A. technical personnel.  All data was collected under the
supervision of professional senior-level geologists utilizing generally accepted
international exploration standards and the resulting information is believed to
be highly reliable.  The details of each work phase are outlined
below.

      

      

       

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

      The
Quinchia Au-Cu porphyry district was conceptually identified within Sociedad
Kedahda S.A’s regional target generation program.  The well known
Miraflores mine area was considered part of the Quinchia district, but not
necessarily a priority target for Sociedad Kedahda S.A.

       

      In March,
2005 Kedahda initiated a work program in two phases, 1) target identification by
surface and underground mapping and sampling; and 2) diamond drill
testing.

       

      Pre-drilling
target identification exercises completed by Sociedad Kedahda S.A. around and at
Quinchia included:

       

        
          	
                  ·  

                	
                  stream
      sediment, 1:10,000 mapping and reconnaissance sampling between Dos
      Quebradas – La Cumbre,

                

        

        
          	
                  ·  

                	
                  1:1000
      scale topography, soil sampling at Dos Quebradas and La
      Cumbre,

                

        

        
          	
                  ·  

                	
                  1:2500
      mapping at Dos Quebradas - La Cumbre – Manzanares -
    Matecaña,

                

        

        
          	
                  ·  

                	
                  4701.17m
      of diamond drilling,

                

        

        
          	
                  ·  

                	
                  conceptual
      metallurgical test work at SGS Lakefields in Chile,
  and

                

        

        
          	
                  ·  

                	
                  preliminary
      resource estimation of the Dos Quebradas
target.

                

        

      

      

      

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

      

      Both Dos
Quebradas and La Cumbre were covered by B-horizon soil sampling. The grid at Dos
Quebradas was 100m x 25m. The grid at La Cumbre was 200 x 50m. At Dos Quebradas,
samples with >100ppb Au values match with the overall outline of the drill
target. The outline of the mineralized zone at La Cumbre by the soil sample is
less clear with variable gold values within the anomalous area maybe due to the
effect of the intermediate argillic overprint.

      

      

      

      Dos
Quebradas was originally indicated by surface channel sampling in saprolitic
diorite (>3g  Au/t over at least 50m); the results of these samples
are presented in Table8-1.

       

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

       

      Table 8-1.  Channel
rock samples that originally indicated the presence of the Dos Quebradas Target.
West – East channel line; the last three samples are in basaltic
rocks.

      
        	
                 

                Sample

              	
                 

                AU50_PPB

              	
                 

                AG_PPM

              	
                 

                AS_PPM

              	
                 

                CU_PPM

              	
                 

                MO_PPM

              	
                 

                PB_PPM

              	
                 

                ZN_PPM

              
	
                2019866

              	
                1355

              	
                0.3

              	
                10

              	
                295

              	
                102

              	
                19

              	
                22

              
	
                2019865

              	
                1535

              	
                0.2

              	
                11

              	
                233

              	
                187

              	
                14

              	
                14

              
	
                2019864

              	
                2020

              	
                0.4

              	
                9

              	
                384

              	
                79

              	
                23

              	
                12

              
	
                2019863

              	
                5080

              	
                0.7

              	
                4

              	
                308

              	
                53

              	
                26

              	
                25

              
	
                2019862

              	
                4880

              	
                0.5

              	
                11

              	
                363

              	
                19

              	
                40

              	
                13

              
	
                2019861

              	
                3130

              	
                0.7

              	
                8

              	
                189

              	
                50

              	
                34

              	
                17

              
	
                2019860

              	
                3930

              	
                0.4

              	
                11

              	
                275

              	
                114

              	
                60

              	
                21

              
	
                2019858

              	
                4550

              	
                0.8

              	
                3

              	
                286

              	
                18

              	
                47

              	
                48

              
	
                2019859

              	
                7760

              	
                0.9

              	
                3

              	
                218

              	
                19

              	
                49

              	
                33

              
	
                2019857

              	
                5690

              	
                1.2

              	
                15

              	
                230

              	
                190

              	
                55

              	
                74

              
	
                2019856

              	
                3410

              	
                1.8

              	
                10

              	
                156

              	
                62

              	
                46

              	
                96

              
	
                2019855

              	
                5280

              	
                1.6

              	
                27

              	
                139

              	
                101

              	
                46

              	
                55

              
	
                2019847

              	
                4210

              	
                1.0

              	
                10

              	
                180

              	
                204

              	
                60

              	
                63

              
	
                2019848

              	
                2820

              	
                0.5

              	
                62

              	
                330

              	
                70

              	
                90

              	
                16

              
	
                2019849

              	
                604

              	
                0.3

              	
                79

              	
                356

              	
                149

              	
                51

              	
                39

              
	
                2019850

              	
                2130

              	
                0.8

              	
                7

              	
                522

              	
                293

              	
                37

              	
                69

              
	
                2019851

              	
                340

              	
                1.7

              	
                56

              	
                1140

              	
                88

              	
                43

              	
                108

              
	
                2019852

              	
                220

              	
                2.7

              	
                17

              	
                1195

              	
                28

              	
                32

              	
                135

              
	
                2019854

              	
                259

              	
                1.5

              	
                19

              	
                1115

              	
                16

              	
                34

              	
                193

              

      

      

      

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

      

       

      9. DRILLING 

      

      Between
January and November 2006 AGA drilled 4701.17m in 18 holes in the Quinchia
District. The Drilling focused on three porphyry gold targets named Dos
Quebradas, Mandeval, and La Cumbre. (Figure 9-1)

      

      Eight
core drill holes were drilled on the Dos Quebradas target and a preliminary
resources estimation was carried out using the information from the drill holes
indicating 937,905 ounces of Au with and average gold grade of 1.155 ppm at 0.75
ppm cut off.

      

      Seven
core drill holes were drilled on the La Cumbre porphyry target proving that the
porphyry style mineralization covers an area of at least 400 x 500 m, with
possible extensions of the porphyry target that remain untested. Average gold
grades from the surface samples and drill holes from La Cumbre target is 0.745
ppm.  More drilling is needed to have a good estimation of the mineral
potential of the La Cumbre target.

      

      Three
drill holes were drilled at the Mandeval target with gold grades varying between
0.2 and 0.4 ppm, which is very similar to the results of outcrops samples. There
is no mineral potential in the Mandeval target.

      

      The Juan
Tapado area is a known large gold stream sediment anomaly toward the north of
Dos Quebradas that have not been evaluated yet.

       

      

      
 

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

      

      
        	
                 

                DDH

              	
                 

                Zone

              	
                 

                EOH
      (m)

              	
                 

                Summary
      of results

              
	
                DQ-DD-1

              	
                Dos
      Quebr.

              	
                23.37

              	
                Lost
      Hole

              
	
                DQ-DD-2

              	
                Dos
      Quebr.

              	
                318.00

              	
                110m
      @ 0.685 ppm Au - 831 ppm Cu

              
	
                DQ-DD-3

              	
                Dos
      Quebr.

              	
                269.50

              	
                90m
      @ 0.628 ppm Au - 708 ppm Cu, 39.5m @ 1.67 ppm Au - 1746 ppm
    Cu

              
	
                DQ-DD-4

              	
                Dos
      Quebr.

              	
                170.55

              	
                68m
      @ 0.521 ppm Au - 690 ppm Cu

              
	
                DQ-DD-5

              	
                Dos
      Quebr.

              	
                261.60

              	
                48m
      @ 0.642 ppm Au - 1297 ppm Cu, 84m @ 0.765 ppm Au - 789 ppm
    Cu

              
	
                DQ-DD-6

              	
                Dos
      Quebr.

              	
                250.75

              	
                76.8m
      @ 0.712 ppm Au - 1192 ppm Cu,  awaiting
  results

              
	
                DQ-DD-7

              	
                La
      Cumbre

              	
                265.30

              	
                100m
      @ 0.568 ppm Au - 768 ppm Cu, 53m @ 0.606 ppm Au - 1286 ppm
    Cu

              
	
                DQ-DD-8

              	
                La
      Cumbre

              	
                282.65

              	
                276.65m
      @ 0.746 ppm Au - 1425 ppm Cu

              
	
                DQ-DD-9

              	
                La
      Cumbre

              	
                245.00

              	
                -

              
	
                DQ-DD-10

              	
                La
      Cumbre

              	
                249.00

              	
                -

              
	
                DQ-DD-11

              	
                Dos
      Quebr.

              	
                259.30

              	
                -

              
	
                DQ-DD-12

              	
                Mandeval

              	
                250.00

              	
                -

              
	
                DQ-DD-13

              	
                Mandeval

              	
                250.35

              	
                18m
      @ 0.522 ppm Au - 1726 ppm Cu

              
	
                DQ-DD-14

              	
                Mandeval

              	
                261.50

              	
                -

              
	
                DQ-DD-15

              	
                La
      Cumbre

              	
                108.50

              	
                102.5m
      @ 0.677 ppm Au - 1102 ppm Cu

              
	
                DQ-DD-16

              	
                La
      Cumbre

              	
                193.10

              	
                42m
      @ 0.508 ppm Au - 580 ppm Cu

              
	
                DQ-DD-17

              	
                Dos
      Quebr.

              	
                492.70

              	
                60m
      @ 0.627 ppm Au - 1077 ppm Cu, 72m @ 0.686 ppm Au - 1177 ppm
    Cu

              
	
                DQ-DD-18

              	
                La
      Cumbre

              	
                550.00

              	
                126m
      @ 0.53ppm Au - 1217 ppm Cu, 112m @ 0.689 ppm Au - 1296 ppm
    Cu

              
	
                TOTAL
      (m)

              	 
      	
                6114.27

              	 
      

      

      ____________________

      Table 9-1:  summary
of best intercepts in drill holes drilled in the Quinchia project.

      

      9.1  DOS
QUEBRADAS DRILL RESULTS

       

      The best
mineralized area at Dos Quebradas occurs along the eastern contact of the
qz-diorite dike complex and the basaltic volcanic host rock. The highest gold
values are associated with high density of A-B veins, potassic (mainly
biotitic), and calcic-potassic altered basalts affecting igneous breccias,
qz-diorite, and basalts. The western contact of the diorite complex is only
weakly altered and mineralized with dominant intermediate argillic and
propylitic alteration.

      

      The
diorite-basalt contact zone on the eastern side is about 150m wide as shown in
section DQ-DD-4_5_6_17 (Fig.9-3). This contact zone has a high density of quartz
veins (A-veinlets, 50-100 veinlets per meter); alteration is dominantly
chloritic with minor patches of biotitic and calcic-potassic assemblages. The
contact zone is sub-vertical with narrow dykes, truncated quartz veinlets, and
contact-igneous breccias with fragments of diorite and basalt. The highest gold
grades occur in the narrower section at the end of borehole DQ-DD-3 with 1.6 ppm
gold over 40m. Mineralization is open to depth; the hole was abandoned in
mineralization due technical problems on the drill rig. The continuation and
limits of the eastern contact zone to the south is delineated by borehole
DQ-DD-11, the northern limit is open and interpreted at no more than 150 m from
borehole DQ-DD-05 and by the soil anomaly. The approximate north-south extent of
the eastern contact zone is 600m.

       

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

      
 

      A
potassium k-feldspar altered core zone has only been intersected in borehole
DQ-DD-5, but in general biotite appears to dominate over K-feldspar on the
potassic zone. Zones with K-feldspar flooding coincides with a zone of amphibole
veining, with minor garnet and quartz-garnet, and A-veinlet density of about 50
veinlets/meter. Pyrite is low where potassic alteration dominates, chalcopyrite
and bornite are present in quartz veinlets, fractures and
disseminated.

      

      Table 9-2: Dos Quebradas Ore
zones.

      
        	
                 

                DDH

              	
                 

                From
      (m)

              	
                 

                To
      (m)

              	
                 

                Orezone
      (m)

              	
                 

                Comp
      Au (ppb)

              	
                 

                Comp
      Cu (ppm)

              
	
                13.03.DD2

              	
                158

              	
                226

              	
                68

              	
                621

              	
                748

              
	
                13.03.DD2

              	
                232

              	
                268

              	
                36

              	
                895

              	
                1076

              
	
                13.03.DD3

              	
                140

              	
                230

              	
                90

              	
                628

              	
                708

              
	
                13.03.DD3

              	
                230

              	
                269.5

              	
                39.5

              	
                1670

              	
                1746

              
	
                13.03.DD4

              	
                76

              	
                126

              	
                50

              	
                554

              	
                702

              
	
                13.03.DD4

              	
                134

              	
                144

              	
                10

              	
                539

              	
                665

              
	
                13.03.DD5

              	
                0

              	
                48

              	
                48

              	
                642

              	
                1297

              
	
                13.03.DD5

              	
                120

              	
                130

              	
                10

              	
                664

              	
                771

              
	
                13.03.DD5

              	
                140

              	
                156

              	
                16

              	
                540

              	
                663

              
	
                13.03.DD5

              	
                156

              	
                204

              	
                48

              	
                972

              	
                936

              
	
                13.03.DD6

              	
                0

              	
                226

              	
                226

              	
                728

              	
                1098

              
	
                13.03.DD17

              	
                126

              	
                186

              	
                60

              	
                627

              	
                1077

              
	
                13.03.DD17

              	
                198

              	
                224

              	
                26

              	
                532

              	
                1033

              
	
                13.03.DD17

              	
                236

              	
                248

              	
                12

              	
                510

              	
                954

              
	
                13.03.DD17

              	
                288

              	
                360

              	
                72

              	
                686

              	
                990

              
	
                13.03.DD17

              	
                370

              	
                380

              	
                10

              	
                552

              	
                1177

              
	 
      	 
      	 
      	 
      	 
      	 
      
	
                Minimum
      10m grading >500ppb Au

              	 
      	 
      	 
      
	
                Maximum
      10m internal waste (<300ppb Au)

              	 
      	 
      

      

      

      

      

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

      

      

      
        
           

        

        
          29

          
            

          

        

        
           

        

      

       

      

      9.2  MANDEVAL
DRILL RESULTS

      

      The
Mandeval stock is composed of early medium grained qz-diorite. Exposures and
boulders of massive banded silica occur in the Mandeval creek. These are thought
to be form by the coalescence of A veins.  Basalts with intense quartz
veins and partially biotite-altered form the northern contact of the Mandeval
qz-dioritic stock; the southern contact is with rhyodacitic tuffs of the Miocene
Combia Formation. The Mandeval sector is dominated by a strong intermediate
argillic overprint, which affects significant portions of the early diorite and
rhyodacitic tuffs.  With minor sections of the intrusive characterized
by chlorite-overprint with subordinate hydrothermal biotite. There is a tunnel
of illegal miners in Mandeval that follows an illite-sericite altered fracture
zone in diorite that ends in illite-altered tuff.

      

      The
intensely quartz-veined contact zone with patchy biotite (amphibole, garnet)
alteration was cut in boreholes DQ-DD-12 and 14 without observing elevated gold
values. Gold values from outcrops and drill holes are mostly between 0.2 and 0.4
ppm and no more mineral potential is interpreted for the Mandeval
target.

       

      
        
           

        

        
          30

          
            

          

        

        
           

        

      

      

      

      

      
        
           

        

        
          31

          
            

          

        

        
           

        

      

      

      

                 

      

      9.2  LA
CUMBRE DRILL RESULTS

      

      La Cumbre
is located on the highest ground of the prospect area; stripping ratios
theoretically are very low.

      

      The
qz-diorite stock in La Cumbre is about 700 m in diameter, and is mostly form by
an early diorite intrusive phase with fine grained porphyritic texture, locally
carrying clasts of an older porphyritic intrusive rock. About 75% of the stock
carries remnant hydrothermal biotite, locally hydrothermal garnet, and A-B
veinlets. The sulfide present is mainly pyrite with traces and up to 0.7 %
chalcopyrite.

      

      Early
gold-bearing hydrothermal biotite alteration was overprinted by intermediate
argillic alteration, which significantly affects more than 50% of the stock. The
illite-pyrite alteration clearly lower the gold values indicating hypogene
leaching of metals by this late alteration event. This advanced argillic
alteration also affects the felsic-intermediate tuffaceous volcanic rocks, which
is the dominant lithology on the high ground and partially surrounds the La
Cumbre stock.

      

      The early
biotite-altered diorite was intruded in the south by intramineral diorite with
weak to moderate chlorite-epidote-magnetite alteration and significantly less
(or no) quartz veining. The exposure has been mapped for >0.5km and continues
beyond the Manzanares – Matecaña mapping limit.  The La Cumbre
informal miner workings follow narrow N-S structures developed in strongly
intermediate argillic altered felsic-intermediate tuffaceous rocks.

       

      
        
           

        

        
          32

          
            

          

        

        
           

        

      

      

      

      

      
        
           

        

        
          33

          
            

          

        

        
           

        

      

      

      

      

       

      
        
           

        

        
          34

          
            

          

        

        
           

        

      

      10.
SAMPLING METHOD AND APPROACH

      

      Based
upon sampling method and target materials, two types of samples have been
collected within the property;

      

      1) Chip
and channel rock samples of in situ or near in situ materials, from outcrop and
within mine workings, across and peripheral to zones of observed alteration \
mineralization.

       

      2)
Samples collected from diamond drill core.

      

      Sampling
method and approach are described for each of these sample types.

      

      Chip and
channel rock samples of in situ materials were collected with a geological pick
\ hammer and chisel or metal spatula.   Due to the fine
fracture-controlled and “disseminated” nature of mineralization many samples
were collected as “scatter-chips” or continuous panels over areas of generally
greater than one square metre. Various more selective chip and linear channel
samples were collected over isolated mineralized structures.

      

      Grab
samples were collected in areas of poorly exposed “rubble-crop”.  In
the case of in situ sampling (panels, channels), three to five kilograms of
material were generally allowed to fall upon a clean plastic sheet spread in
front of the outcrop.  The entire sample was described by a
supervising geologist, and sealed in numbered plastic bags containing laboratory
sample tags.

      

      Upon
return to the camp, samples were inventoried, packed into sacks and shipped to
SGS Laboratories (Barranquilla) or ALS Chemex Laboratories (Bogotá) for drying
and preparation. Information regarding the location and nature of all chip and
channel samples collected by Sociedad Kedahda S.A. is available on
site.

      

      Samples
collected from diamond drill core were collected after the core was boxed,
measured, had the recovery per drilled interval calculated, and was logged for
geological, mineralogical and alteration features by a supervising
geologist.  Due to the disseminated nature of the mineralization,
Sociedad Kedahda. S.A. decided to sample core at consistent two meter intervals
throughout.  Core for individual holes was measured and two meter
samples intervals were laid out along its entire length.  The core was
cut using a diamond core saw and ca. 50% of the core for each interval was
randomly selected and sealed into number plastic sample bags. Samples were later
inventoried and shipped to ALS Chemex Laboratories (Bogotá) for drying and
preparation and ALS Chemex Laboratories in Lima, Peru, for
analysis.

      

      Based
upon the observations regarding the strength and style of alteration \
mineralization at the Quinchia project and the QA \ QC procedures and check
sampling programs utilized by Sociedad Kedahda S.A., sample results obtained by
these companies appear to be reliable and accurate. Surface sampling procedures
are considered justified and adequate, and show good repeatability based upon
check sampling.

       

      
 

      
        
           

        

        
          35

          
            

          

        

        
           

        

      

      11. SAMPLE PREPARATION, ANALYSES AND
SECURITY 

      

      As part
of its sample quality control system Sociedad Kedahda S.A.  applied
the same sample management that AngloGold Ashanti Ltd. utilizes on a global
level in all its early phase (“greenfields”) exploration
programs.  This includes recording each individual sample on a
uniquely numbered sample card, and, upon analysis of a sample series, inserting
sample duplicates, sample standards and sample blanks.

       

      The
general “rule-of-thumb” for all sampling, is that for every series of 25 samples
of any type collected; one sample is duplicated, and one commercially purchased
standard and one proven blank, are inserted (thus a 25 sample batch consists of
22 original samples, one duplicate, one standard and one blank). Sample
duplication is carried out by sampling as precisely as possible over a
previously sampled area, using the same technique for sample collection and
collecting a similar sample volume. Commercial sample standards used by Sociedad
Kedahda S.A. were purchased for the international standards companies Geostats
and Rock Labs.  Eight separate standards ranging from 10 to 3,000 ppb
Au are used, and are thought to be highly reliable in their advertised gold
contents. For blanks, Sociedad Kedahda S.A. uses a clean, fine-grained
quartz-arenite sandstone, available in large volume from rock quarries near
Bogotá.  Thousands of analyses of this sandstone have shown it to be
completely barren of gold with very low values other economic metals. Sample
standards and blanks are bagged, numbered and inserted in the field such that
they arrive at the lab packaged with the other original samples.

      

      In
addition to the above checks, two additional laboratory checks are automatically
completed by the ALS Chemex laboratory at the request of Sociedad Kedahda
S.A.  First, for every 20 to 25 samples prepared at the preparation
lab, one is automatically duplicated by taking a new cut from the stored coarse
reject material.  Second, at the analytical laboratory, again, for
every 20 to 25 samples analyzed, one is automatically duplicated by taking a new
aliquot from the pulverized reject material.  All of the analyses from
the sample duplicates are reported to Sociedad Kedahda S.A.

      

      We are of
the opinion that an adequate methodology was maintained with respect to sample
collection, preparation, analyses and security.

      

      12. DATA VERIFICATION

      

      Upon
receipt of assay information, review of analytical data and statistical analysis
of all duplicate, standard and blank information is carried out on a per-batch
(lab order) basis by Sociedad Kedahda S.A.’s in-house Geochemical Database
Administrator (a professional geologist) in Bogotá.  A linear
correlation control curve is plotted from duplicate data to observe natural
variability in gold contents.  A similar plot is used to compare
standards analyses to their published gold content value.  Blanks
analyses are inspected for any possible contamination. This information is then
passed on to the individual project geologists for review and
verification.  We are of the opinion that an
adequate  methodology was maintained with respect to  data
verification, although no additional verification was performed by the
authors.

       

      
        
           

        

        
          36

          
            

          

        

        
           

        

      

      
 

      13.
ADJACENT PROPERTIES

      

      The
Miraflores property is located within the Quinchia Au-Cu porphyry district,
which contains various known mineralized centres.  Sociedad Kedahda
S.A. and B2GOLD Corp.,  and other third party mineral title holders,
hold mineral concessions within the Quinchia district.  Technical
information regarding specific present exploration at Miraflores and results or
mineralization styles within the district, other than the historical presented
herein, has not been sought after, nor has it been utilized by the author during
the writing of the present report.

      

      The
author acknowledges that mineralization, if encountered on the adjacent
properties, is not necessarily indicative of, or physically associated with the
mineralization on the Quinchia property, and an attempt has been made to clearly
indicate that any mineralization styles discussed herein are site specific
within the confines of the Quinchia property.

      

      14. MINERAL PROCESSING &
METALLURGICAL TESTING 

      

      SGS
LAKEFIELD METALLURGICAL STUDIES

      Preliminary
metallurgical data have been obtained from bottle roll test on 1kg samples.
These samples were composites of rejects of -2mm crushed diamond drill
core.

       

      The
metallurgical sample was ground to >75% -200 mesh.

       

      At the
time of submitting the samples only drill core from Dos Quebradas was
available.

       

      DQ-DD-3:
256 – 258m: 1.80 ppm Au, 84% recovery after 24 hours

       

      DQ-DD-2:
244 – 254m: 1.30 ppm Au, 72% recovery after 24 hours

       

      DQ-DD-5:
162 – 172m: 1.56 ppm Au, 79% recovery after 24 hours

      

      No
metallurgical samples from La Cumbre are available.

      

      

      
        
           

        

        
          37

          
            

          

        

        
           

        

      

      

      15.
MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

      

      

      Preliminary
resource modeling was performed by Kedahda at Dos Quebradas and La Cumbre
utilizing Datamine software.  This modeling has not been reviewed in
detail by the authors, and as such is presented as background information but
not 43-101 reporting compliant, although there is reason to believe that the
resources at Dos Quebradas would be classified as inferred resource given the
level of support for the resource estimation.

      

      

      15.1  PRELIMINARY
MINERAL RESOURCE – DOS QUEBRADAS

      

      Preliminary
model results indicate 96.3 million tonnes of inferred resource grading 0.69
grams per tonne, containing 2.136 million ounces of gold at a 0.30 gram per
tonne cutoff.   These results have not been validated by the
authors and as such are not reportable under NI43-101.

      

      

       

      

      
        
           

        

        
          38

          
            

          

        

        
           

        

      

      

      

       

      
 

      
        
           

        

        
          39

          
            

          

        

        
           

        

      

      

      15.2
PRELIMINARY MINERAL RESOURCE – LA CUMBRE Preliminary model results for La Cumbre
indicate 118.3 million tonnes of mineralized material grading 0.58 grams per
tonne, containing 2.191million ounces of gold at a 0.30 gram per tonne
cutoff.   These results are based upon limited information and as
such would likely not be classified as a resource without further
exploration.  Further, the results have not been validated by the
authors and as such are not reportable under NI43-101.  Table
15-2. La
Cumbre mineral resources preliminary model (Datamine - Inverse distance to
square):

      

      

      

      

       

      
        
           

        

        
          40

          
            

          

        

        
           

        

      

      16.
OTHER RELEVANT DATA AND INFORMATION

      

      The
Quinchia property is located in Colombia, and therefore carries certain
political and country risk beyond that found in other South American
jurisdictions. Colombia is host to a disperse and long-running insurgency that
at times in the recent past has manifested itself in widespread civil conflicts.
Company management has warranted to the author that they employ a comprehensive
corporate security program to ensure the safety of all personnel and project
sites. This program includes the use of highly trained and experienced internal
security personnel working in cooperation with military and civil
organizations.  Independent international risk assessors provide
external advice and audit services on a regular basis.

      

      

      17.
INTERPRETATION AND CONCLUSIONS

      

      The
Quinchia property is located within the historically important and present-day
artisanal mining district of Quinchia, Risaralda,
Colombia.  District-scale mineralization at Quinchia is related to
high-level hypabyssal Au (Cu) porphyry bodies.  The district includes
the Quinchia breccia, a significant gold-silver rich, magmatic-hydrothermal
breccia body whose genesis is intimately related to the evolution of the
porphyry mineralization occurring in the Quinchia district.

      

      In
conclusion, limited diamond drilling and metallurgical test work at Quinchia by
Sociedad Kedahda S.A. has been successful at delineating a potentially
significant low-grade large-tonnage Au-Ag deposit at Quinchia which is
potentially amenable to bulk-tonnage mining and mineral extraction techniques.
Quinchia is considered a property of merit.

      

      Past work
completed to date indicates the property warrants further resource definition
via diamond drilling, and continued metallurgical test work, in order to verify
the feasibility of economically recovering gold from the important low-grade
(0.3 to 1 ppm Au) resource the property has to offer.  In the event
that both diamond drilling and metallurgical test work provide positive results,
additional drilling of the project can be recommended.  A program to
carry out additional drilling and metallurgical test work is outlined in section
18, Recommendations

      

       

      
        
           

        

        
          41

          
            

          

        

        
           

        

      

      18.
RECOMMENDATIONS

      

      Based on
the favorable exploration and metallurgical results to date, the Quinchia
property is of sufficient merit to warrant further exploration.

      

      Phase II
work has been proposed to follow up -80# stream sediment anomalies located
toward the north of the Dos Quebradas area, the Juan Tapado-Alacranes
area.  In this sector a vein system was drilled by Minera Esperanza in
1995; drill data is not available.  Most of the unexplored anomalies
are on indigenous ground. Negotiations should continue, and agreements
signed.

      

      In order
to further evaluate the mineral and economic potential of the Quinchia property,
a stage-three exploration diamond drilling program totaling 7,500 metres and
additional metallurgical tests is recommended.  This program will
follow-up on positive results obtained in the Sociedad Kedahda S.A. diamond
drill programs.

      

      Upon
favorable results from stage three, a stage-four program that involves
completing a feasibility study is recommended.

      

      

      42incentiveplan.htm

    BIOSANTE
PHARMACEUTICALS, INC.

    2008
STOCK INCENTIVE PLAN

    

    1. Purpose of
Plan.

     

    The
purpose of the BioSante Pharmaceuticals, Inc. 2008 Stock Incentive Plan (the
“Plan”) is to advance the interests of BioSante Pharmaceuticals, Inc.
(the “Company”) and its stockholders by enabling the Company and its
Subsidiaries to attract and retain qualified persons to perform services for the
Company and its Subsidiaries by providing an incentive to such individuals
through opportunities for equity participation in the Company, and by rewarding
such individuals who contribute to the achievement of the Company’s economic
objectives.

    

    2. Definitions.

     

    The
following terms will have the meanings set forth below, unless the context
clearly otherwise requires:

    

    2.1 “Board” means the
Board of Directors of the Company.

     

    2.2 “Broker Exercise
Notice” means a written notice pursuant to which a Participant, upon
exercise of an Option, irrevocably instructs a broker or dealer to sell a
sufficient number of shares or loan a sufficient amount of money to pay all or a
portion of the exercise price of the Option and/or any related withholding tax
obligations and remit such sums to the Company and directs the Company to
deliver stock certificates to be issued upon such exercise directly to such
broker or dealer or their nominee.

     

    2.3 “Cause” means “cause”
as defined in any employment or other agreement or policy applicable to the
Participant, or if no such agreement or policy exists, will mean (i) dishonesty,
fraud, misrepresentation, embezzlement or deliberate injury or attempted injury,
in each case related to the Company or any Subsidiary, (ii) any unlawful or
criminal activity of a serious nature, (iii) any intentional and deliberate
breach of a duty or duties that, individually or in the aggregate, are material
in relation to the Participant’s overall duties, or (iv) any material breach of
any employment, service, confidentiality, non-compete or non-solicitation
agreement entered into with the Company or any Subsidiary.

     

    2.4 “Change in Control”
means an event described in Section 14.1 of the Plan; provided, however, if
under an Incentive Award that is subject to Section 409A of the Code is
triggered by a Change in Control, the term Change in Control will mean a change
in the ownership or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company, as such term is defined in
Section 409A of the Code.

     

    2.5 “Code” means the
Internal Revenue Code of 1986, as amended (including, when the context requires,
all regulations, interpretations and rulings issued thereunder).

     

    2.6 “Committee” means the
group of individuals administering the Plan, as provided in Section 3 of the
Plan.

     

    2.7 “Common Stock” means
the common stock of the Company, par value $0.0001 per share, or the number and
kind of shares of stock or other securities into which such Common Stock may be
changed in accordance with Section 4.3 of the Plan.

     

    2.8 “Disability” means the
disability of the Participant such as would entitle the Participant to receive
disability income benefits pursuant to the long-term disability plan of the
Company or Subsidiary then covering the Participant or, if no such plan exists
or is applicable to the Participant, the permanent and total disability of the
Participant within the meaning of Section 22(e)(3) of the Code; provided,
however, if distribution of an Incentive Award subject to Section 409A of the
Code is triggered by an Eligible Recipient’s Disability, such term will mean
that the Eligible Recipient is disabled as defined by Section 409A of the Code
and the regulations and rulings issued thereunder.

     

    2.9 “Eligible Recipients”
means (a) for the purposes of granting Incentive Stock Options, all employees
(including, without limitation, officers and directors who are also employees)
of the Company or any Subsidiary and (b) for the purposes of granting
Non-Statutory Stock Options and other Incentive Awards, all employees
(including, without limitation, officers and directors who are also employees)
of the Company or any Subsidiary and any non-employee directors, consultants,
advisors and independent contractors of the Company or any
Subsidiary

     

    2.10 “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

     

    2.11 “Fair Market Value”
means, with respect to the Common Stock, as of any date: (i) the closing sale
price of the Common Stock at the end of the regular trading session, as reported
by The NASDAQ Stock Market, The New York Stock Exchange, The American Stock
Exchange or any national exchange on which the Common Stock is then listed or
quoted (or, if no shares were traded on such date, as of the next preceding date
on which there was such a trade); or (ii) if the Common Stock is not so listed,
admitted to unlisted trading privileges, or reported on any national exchange
or, the closing sale price as of such date at the end of the regular trading
session, as reported by OTC Bulletin Board or the Pink Sheets LLC, or other
comparable service (or, if no shares were traded or quoted on such date, as of
the next preceding date on which there was such a trade or quote); or (iii) if
the Common Stock is not so listed or reported, such price as the Committee
determines in good faith, and consistent with the definition of “fair market
value” under Section 409A of the Code.

     

    2.12 “Incentive Award”
means an Option, Stock Appreciation Right, Restricted Stock Award, Stock Unit
Award, Performance Award or Stock Bonus granted to an Eligible Recipient
pursuant to the Plan.

     

    2.13 “Incentive Stock
Option” means a right to purchase shares of Common Stock granted to an
Eligible Recipient pursuant to Section 6 of the Plan that qualifies as an
“incentive stock option” within the meaning of Section 422 of the
Code.

     

    2.14 “Non-Statutory Stock
Option” means a right to purchase shares of Common Stock granted to an
Eligible Recipient pursuant to Section 6 of the Plan that does not qualify as an
Incentive Stock Option.

     

    2.15 “Option” means an
Incentive Stock Option or a Non-Statutory Stock Option.

     

    2.16 “Participant” means an
Eligible Recipient who receives one or more Incentive Awards under the
Plan.

     

    2.17 “Performance Award”
means a right granted to an Eligible Recipient pursuant to Section 10 of the
Plan to receive an amount of cash, a number of shares of Common Stock, or a
combination of both, contingent upon achievement of specified performance
objectives during a specified period.  A Performance Award is also
commonly referred to as a “performance unit.”

     

    2.18 “Previously Acquired
Shares” means shares of Common Stock that are already owned by the
Participant or, with respect to any Incentive Award, that are to be issued to
the Participant upon the grant, exercise or vesting of such Incentive
Award.

     

    2.19 “Restricted Stock
Award” means an award of shares of Common Stock granted to an Eligible
Recipient pursuant to Section 8 of the Plan that are subject to restrictions on
transferability and/or a risk of forfeiture.

     

    2.20 “Retirement” means
termination of employment or service at age 55 or older and completion of at
least ten years of continuous service.

     

    2.21 “Securities Act” means
the Securities Act of 1933, as amended.

     

    2.22 “Stock Appreciation
Right” means a right granted to an Eligible Recipient pursuant to Section
7 of the Plan to receive a payment from the Company, in the form of shares of
Common Stock, cash or a combination of both, equal to the difference between the
Fair Market Value of one or more shares of Common Stock and a specified exercise
price of such shares.

     

    2.23 “Stock Bonus” means an
award of shares of Common Stock granted to an Eligible Recipient pursuant to
Section 11 of the Plan.

     

    2.24  “Stock Unit Award”
means a right granted to an Eligible Recipient pursuant to Section 9 of the Plan
to receive the Fair Market Value of one or more shares of Common Stock, payable
in cash, shares of Common Stock, or a combination of both, the payment,
issuance, retention and/or vesting of which is subject to the satisfaction of
specified conditions, which may include achievement of specified performance
objectives.  A Stock Unit Award when payable in shares of Common Stock
is also commonly referred to as a “restricted stock unit.”

     

    2.25 “Subsidiary” means any
entity that is directly or indirectly controlled by the Company or any entity in
which the Company has a significant equity interest, as determined by the
Committee, provided the Company has a “controlling interest” in the Subsidiary
as defined in Treas. Reg. Sec. 1.409A-1(b)(5)(iii)(E)(1).

     

    2.26 “Tax Date” means the
date any withholding tax obligation arises under the Code for a Participant with
respect to an Incentive Award.

     

    3. Plan
Administration.

     

    3.1 The
Committee.  The Plan will be administered by the Board or by a
committee of the Board.  So long as the Company has a class of its
equity securities registered under Section 12 of the Exchange Act, any committee
administering the Plan will consist solely of two or more members of the Board
who are “non-employee directors” within the meaning of Rule 16b-3 under the
Exchange Act and who are “independent” as required by the listing standards of
The NASDAQ Stock Market (or other applicable exchange or market on which the
Company’s Common Stock may be traded or quoted).  Such a committee, if
established, will act by majority approval of the members (but may also take
action by the written consent of all of the members of such committee), and a
majority of the members of such a committee will constitute a
quorum.   As used in the Plan, “Committee” will refer to the
Board or to such a committee, if established.  To the extent
consistent with applicable corporate law of the Company’s jurisdiction of
incorporation, the Committee may delegate to any officers of the Company the
duties, power and authority of the Committee under the Plan pursuant to such
conditions or limitations as the Committee may establish; provided, however,
that only the Committee may exercise such duties, power and authority with
respect to Eligible Recipients who are subject to Section 16 of the Exchange
Act.  The Committee may exercise its duties, power and authority under
the Plan in its sole and absolute discretion without the consent of any
Participant or other party, unless the Plan specifically provides
otherwise.  Each determination, interpretation or other action made or
taken by the Committee pursuant to the provisions of the Plan will be final,
conclusive and binding for all purposes and on all persons, and no member of the
Committee will be liable for any action or determination made in good faith with
respect to the Plan or any Incentive Award granted under the Plan.

     

    3.2 Authority of the
Committee.

     

    (a) In
accordance with and subject to the provisions of the Plan, the Committee will
have the authority to determine all provisions of Incentive Awards as the
Committee may deem necessary or desirable and as consistent with the terms of
the Plan, including, without limitation, the following:  (i) the
Eligible Recipients to be selected as Participants; (ii) the nature and extent
of the Incentive Awards to be made to each Participant (including the number of
shares of Common Stock to be subject to each Incentive Award, any exercise
price, the manner in which Incentive Awards will vest or become exercisable and
whether Incentive Awards will be granted in tandem with other Incentive Awards)
and the form of written agreement, if any, evidencing such Incentive Award;
(iii) the time or times when Incentive Awards will be granted; (iv) the duration
of each Incentive Award; and (v) the restrictions and other conditions to which
the payment or vesting of Incentive Awards may be subject.  In
addition, the Committee will have the authority under the Plan in its sole
discretion to pay the economic value of any Incentive Award in the form of cash,
Common Stock or any combination of both.

     

    (b) Subject
to Section 3.2(d) of the Plan, the Committee will have the authority under the
Plan to amend or modify the terms of any outstanding Incentive Award in any
manner, including, without limitation, the authority to modify the number of
shares or other terms and conditions of an Incentive Award, extend the term of
an Incentive Award, accelerate the exercisability or vesting or otherwise
terminate any restrictions relating to an Incentive Award, accept the surrender
of any outstanding Incentive Award or, to the extent not previously exercised or
vested, authorize the grant of new Incentive Awards in substitution for
surrendered Incentive Awards; provided, however that the amended or modified
terms are permitted by the Plan as then in effect and that any Participant
adversely affected by such amended or modified terms has consented to such
amendment or modification.

     

    (c) In the
event of (i) any reorganization, merger, consolidation, recapitalization,
liquidation, reclassification, stock dividend, stock split, combination of
shares, rights offering, extraordinary dividend or divestiture (including a
spin-off) or any other similar change in corporate structure or shares; (ii) any
purchase, acquisition, sale, disposition or write-down of a significant amount
of assets or a significant business; (iii) any change in accounting principles
or practices, tax laws or other such laws or provisions affecting reported
results; (iv) any uninsured catastrophic losses or extraordinary non-recurring
items as described in Accounting Principles Board Opinion No. 30 or in
management’s discussion and analysis of financial performance appearing in the
Company’s annual report to stockholders for the applicable year; or (v) any
other similar change, in each case with respect to the Company or any other
entity whose performance is relevant to the grant or vesting of an Incentive
Award, the Committee (or, if the Company is not the surviving corporation in any
such transaction, the board of directors of the surviving corporation) may,
without the consent of any affected Participant, amend or modify the vesting
criteria (including any performance objectives) of any outstanding Incentive
Award that is based in whole or in part on the financial performance of the
Company (or any Subsidiary or division or other subunit thereof) or such other
entity so as equitably to reflect such event, with the desired result that the
criteria for evaluating such financial performance of the Company or such other
entity will be substantially the same (in the sole discretion of the Committee
or the board of directors of the surviving corporation) following such event as
prior to such event; provided, however, that the amended or modified terms are
permitted by the Plan as then in effect, including the limitations in Section
3.2(a) and 3.2(b).

     

    (d) Notwithstanding
any other provision of this Plan other than Section 4.3, the Committee may not,
without prior approval of the Company’s stockholders, seek to effect any
re-pricing of any previously granted, “underwater” Option or Stock Appreciation
Right by:  (i) amending or modifying the terms of the Option or Stock
Appreciation Right to lower the exercise price; (ii) canceling the underwater
Option or Stock Appreciation Right and granting either (A) replacement Options
or Stock Appreciation Rights having a lower exercise price; (B) Restricted Stock
Awards; or (C) Stock Unit Awards, Performance Awards or Stock Bonuses in
exchange; or (iii) repurchasing the underwater Options or Stock Appreciation
Rights and granting new Incentive Awards under this Plan.  For
purposes of this Section 3.2(d), Options and Stock Appreciation Rights will be
deemed to be “underwater” at any time when the Fair Market Value of the Common
Stock is less than the exercise price of the Option or Stock Appreciation
Right.

     

    (e) In
addition to the authority of the Committee under Section 3.2(b) of the Plan and
notwithstanding any other provision of the Plan, the Committee may, in its sole
discretion, amend the terms of the Plan or Incentive Awards with respect to
Participants resident outside of the United States or employed by a non-U.S.
Subsidiary in order to comply with local legal requirements, to otherwise
protect the Company’s or Subsidiary’s interests, or to meet objectives of the
Plan, and may, where appropriate, establish one or more sub-plans (including the
adoption of any required rules and regulations) for the purposes of qualifying
for preferred tax treatment under foreign tax laws.  The Committee
shall have no authority, however, to take action pursuant to this Section 3.2(e)
of the Plan: (i) to reserve shares or grant Incentive Awards in excess of the
limitations provided in Section 4.1 of the Plan; (ii) to effect any re-pricing
in violation of Section 3.2(d) of the Plan; (iii) to grant Options or Stock
Appreciation Rights having an exercise price in violation of Section 6.2 or 7.2
of the Plan, as the case may be; or (iv) for which stockholder approval would
then be required pursuant to Section 422 of the Code or the rules of The NASDAQ
Stock Market (or other applicable exchange or market on which the Company’s
Common Stock may be traded or quoted).

     

    4. Shares Available for
Issuance.

     

    4.1 Maximum Number of Shares
Available; Certain Restrictions on Awards.  Subject to
adjustment as provided in Section 4.3 of the Plan, the maximum number of shares
of Common Stock that will be available for issuance under the Plan will be the
sum of:

     

    (a) 2,000,000;

     

    (b) the
number of shares issued or Incentive Awards granted under the Plan in connection
with the settlement, assumption or substitution of outstanding awards or
obligations to grant future awards as a condition of the Company and/or any
Subsidiary(ies) acquiring, merging or consolidating with another entity;
and

     

    (c) the
number of shares that are unallocated and available for grant under a stock plan
assumed by the Company or any Subsidiary(ies) in connection with the merger,
consolidation, or acquisition of another entity by the Company and/or any of its
Subsidiaries, based on the applicable exchange ratio and other transaction
terms, but only to the extent that such shares may be utilized by the Company or
its Subsidiaries following the transaction pursuant to the rules and regulations
of The NASDAQ Stock Market (or other applicable exchange or market on which the
Company’s Common Stock may be traded or quoted).

     

    The
shares available for issuance under the Plan may, at the election of the
Committee, be either treasury shares or shares authorized but unissued, and, if
treasury shares are used, all references in the Plan to the issuance of shares
will, for corporate law purposes, be deemed to mean the transfer of shares from
treasury.

     

    Notwithstanding
any other provisions of the Plan to the contrary, (i) no more than 2,000,000
shares of Common Stock may be issued pursuant to the exercise of Incentive Stock
Options granted under the Plan; and (ii) no more than 250,000 shares of Common
Stock may be issued or issuable under the Plan in connection with the grant of
Incentive Awards, other than Options or Stock Appreciation
Rights.  All of the foregoing share limits are subject, in each case,
to adjustment as provided in Section 4.3 of the Plan.  Incentive Stock
Options issued as a result of the Company’s assumption or substitution of like
awards issued by any acquired, merged or consolidated entity pursuant to
applicable provisions of the Code will not count towards the limit in clause
(i).

     

    4.2 Accounting for Incentive
Awards.  Shares of Common Stock that are issued under the Plan
or that are potentially issuable pursuant to outstanding Incentive Awards will
be applied to reduce the maximum number of shares of Common Stock remaining
available for issuance under the Plan.  All shares so subtracted from
the amount available under the Plan with respect to an Incentive Award that
lapses, expires, is forfeited (including issued shares forfeited under a
Restricted Stock Award) or for any reason is terminated unexercised or unvested
or is settled or paid in cash or any form other than shares of Common Stock will
automatically again become available for issuance under the Plan; provided,
however, that (i) any shares which would have been issued upon any exercise of
an Option but for the fact that the exercise price was paid by a “net exercise”
pursuant to Section 6.4(b) of the Plan or the tender or attestation as to
ownership of Previously Acquired Shares pursuant to Section 6.4(a) of the Plan
will not again become available for issuance under the Plan; (ii) shares covered
by a Stock Appreciation Right, to the extent exercised, will not again become
available for issuance under the Plan; and (iii) shares withheld by the Company
to satisfy any tax withholding obligation will not again become available for
issuance under the Plan.

     

    4.3 Adjustments to Shares and
Incentive Awards.  In the event of any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock dividend,
stock split, combination of shares, rights offering, divestiture or
extraordinary dividend (including a spin-off) or any other similar change in the
corporate structure or shares of the Company, the Committee (or, if the Company
is not the surviving corporation in any such transaction, the board of directors
of the surviving corporation) will make appropriate adjustment (which
determination will be conclusive) as to the number and kind of securities or
other property (including cash) available for issuance or payment under the Plan
and, in order to prevent dilution or enlargement of the rights of Participants,
(a) the number and kind of securities or other property (including cash) subject
to outstanding Incentive Awards, and (b) the exercise price of outstanding
Options and Stock Appreciation Rights.

     

    5. Participation.

     

    Participants
in the Plan will be those Eligible Recipients who, in the judgment of the
Committee, have contributed, are contributing or are expected to contribute to
the achievement of economic objectives of the Company or its
Subsidiaries.  Eligible Recipients may be granted from time to time
one or more Incentive Awards, singly or in combination or in tandem with other
Incentive Awards, as may be determined by the Committee in its sole
discretion.  Incentive Awards will be deemed to be granted as of the
date specified in the grant resolution of the Committee, which date will be the
date of any related agreement with the Participant.

    

    6. Options.

     

    6.1 Grant.  An
Eligible Recipient may be granted one or more Options under the Plan, and such
Options will be subject to such terms and conditions, consistent with the other
provisions of the Plan, as may be determined by the Committee in its sole
discretion.  The Committee may designate whether an Option is to be
considered an Incentive Stock Option or a Non-Statutory Stock
Option.  To the extent that any Incentive Stock Option (or portion
thereof) granted under the Plan ceases for any reason to qualify as an
“incentive stock option” for purposes of Section 422 of the Code, such Incentive
Stock Option (or portion thereof) will continue to be outstanding for purposes
of the Plan but will thereafter be deemed to be a Non-Statutory Stock
Option.

     

    6.2 Exercise
Price.  The per share price to be paid by a Participant upon
exercise of an Option will be determined by the Committee in its discretion at
the time of the Option grant, provided that such price will not be less than
100% of the Fair Market Value of one share of Common Stock on the date of grant
(or 110% of the Fair Market Value of one share of Common Stock on the date of
grant of an Incentive Stock Option if, at the time the Incentive Stock Option is
granted, the Participant owns, directly or indirectly, more than 10% of the
total combined voting power of all classes of stock of the Company or any parent
or subsidiary corporation of the Company).   Notwithstanding the
foregoing, to the extent that Options are granted under the Plan as a result of
the Company’s assumption or substitution of options issued by any acquired,
merged or consolidated entity, the exercise price for such Options shall be the
price determined by the Committee pursuant to the conversion terms applicable to
the transaction.

     

    6.3 Exercisability and
Duration.  An Option will become exercisable at such times and
in such installments and upon such terms and conditions as may be determined by
the Committee in its sole discretion at the time of grant (including without
limitation (i) the achievement of one or more specified performance objectives;
and/or that (ii) the Participant remain in the continuous employ or service of
the Company or a Subsidiary for a certain period); provided, however, that no
Option may be exercisable after ten (10) years from its date of grant (five
years from its date of grant in the case of an Incentive Stock Option if, at the
time the Incentive Stock Option is granted, the Participant owns, directly or
indirectly, more than 10% of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation of the
Company).

     

    6.4 Payment of Exercise
Price.

     

    (a) The total
purchase price of the shares to be purchased upon exercise of an Option will be
paid entirely in cash (including check, bank draft or money order); provided,
however, that the Committee, in its sole discretion and upon terms and
conditions established by the Committee, may allow such payments to be made, in
whole or in part, by (i) tender of a Broker Exercise Notice; (ii) by tender, or
attestation as to ownership, of Previously Acquired Shares that are acceptable
to the Committee; (iii) by a “net exercise” of the Option (as further described
in paragraph (b), below);  or  (iv) by a combination of such
methods.

     

    (b) In the
case of a “net exercise” of an Option, the Company will not require a payment of
the exercise price of the Option from the Participant but will reduce the number
of shares of Common Stock issued upon the exercise by the largest number of
whole shares that has a Fair Market Value on the exercise date that does not
exceed the aggregate exercise price for the shares exercised under this method.
Shares of Common Stock will no longer be outstanding under an Option (and will
therefore not thereafter be exercisable) following the exercise of such Option
to the extent of (i) shares used to pay the exercise price of an Option under
the “net exercise,” (ii) shares actually delivered to the Participant as a
result of such exercise and (iii) any shares withheld for purposes of tax
withholding pursuant to Section 13.1 of the Plan.

     

    (c) Previously
Acquired Shares tendered or covered by an attestation as payment of an Option
exercise price will be valued at their Fair Market Value on the exercise
date.

     

    6.5 Manner of
Exercise.  An Option may be exercised by a Participant in whole
or in part from time to time, subject to the conditions contained in the Plan
and in the agreement evidencing such Option, by delivery in person, by facsimile
or electronic transmission or through the mail of written notice of exercise to
the Company at its principal executive office in Lincolnshire, Illinois and by
paying in full the total exercise price for the shares of Common Stock to be
purchased in accordance with Section 6.4 of the Plan.

     

    7. Stock Appreciation
Rights.

     

    7.1 Grant.  An
Eligible Recipient may be granted one or more Stock Appreciation Rights under
the Plan, and such Stock Appreciation Rights will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion.  The Committee
will have the sole discretion to determine the form in which payment of the
economic value of Stock Appreciation Rights will be made to a Participant (i.e.,
cash, shares of Common Stock or any combination thereof) or to consent to or
disapprove the election by a Participant of the form of such
payment.

     

    7.2 Exercise
Price.  The exercise price of a Stock Appreciation Right will
be determined by the Committee, in its discretion, at the date of grant but may
not be less than 100% of the Fair Market Value of one share of Common Stock on
the date of grant.  Notwithstanding the foregoing, to the extent that
Stock Appreciation Rights are granted under the Plan as a result of the
Company’s assumption or substitution of stock appreciation rights issued by any
acquired, merged or consolidated entity, the exercise price for such Stock
Appreciation Rights shall be the price determined by the Committee pursuant to
the conversion terms applicable to the transaction.

     

    7.3 Exercisability and
Duration.  A Stock Appreciation Right will become exercisable
at such time and in such installments as may be determined by the Committee in
its sole discretion at the time of grant; provided, however, that no Stock
Appreciation Right may be exercisable after ten (10) years from its date of
grant.  A Stock Appreciation Right will be exercised by giving notice
in the same manner as for Options, as set forth in Section 6.5 of the
Plan.

     

    7.4 Grants in Tandem with
Options.  Stock Appreciation Rights may be granted alone or in
addition to other Incentive Awards, or in tandem with an Option, at the time of
grant of the Option.  A Stock Appreciation Right granted in tandem
with an Option shall cover the same number of shares of Common Stock as covered
by the Option (or such lesser number as the Committee may determine), shall be
exercisable at such time or times and only to the extent that the related Option
is exercisable, have the same term as the Option and shall have an exercise
price equal to the exercise price for the Option.  Upon the exercise
of a Stock Appreciation Right granted in tandem with an Option, the Option shall
be canceled automatically to the extent of the number of shares covered by such
exercise; conversely, upon exercise of an Option having a related Stock
Appreciation Right, the Stock Appreciation Right shall be canceled automatically
to the extent of the number of shares covered by the Option
exercise.

     

    8. Restricted Stock
Awards.

     

    8.1 Grant.  An
Eligible Recipient may be granted one or more Restricted Stock Awards under the
Plan, and such Restricted Stock Awards will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion.  The Committee may
impose such restrictions or conditions, not inconsistent with the provisions of
the Plan, to the vesting of such Restricted Stock Awards as it deems
appropriate, including, without limitation, (i) the achievement of one or more
specified performance objectives; and/or that (ii) the Participant remain in the
continuous employ or service of the Company or a Subsidiary for a certain
period.

     

    8.2 Rights as a Stockholder;
Transferability.  Except as provided in Sections 8.1, 8.3, 8.4
and 15.3 of the Plan, a Participant will have all voting, dividend, liquidation
and other rights with respect to shares of Common Stock issued to the
Participant as a Restricted Stock Award under this Section 8 upon the
Participant becoming the holder of record of such shares as if such Participant
were a holder of record of shares of unrestricted Common Stock.

     

    8.3 Dividends and
Distributions.  Unless the Committee determines otherwise in
its sole discretion (either in the agreement evidencing the Restricted Stock
Award at the time of grant or at any time after the grant of the Restricted
Stock Award), any dividends or distributions (other than regular quarterly cash
dividends) paid with respect to shares of Common Stock subject to the unvested
portion of a Restricted Stock Award will be subject to the same restrictions as
the shares to which such dividends or distributions relate.  The
Committee will determine in its sole discretion whether any interest will be
paid on such dividends or distributions.

     

    8.4 Enforcement of
Restrictions.  To enforce the restrictions referred to in this
Section 8, the Committee may place a legend on the stock certificates referring
to such restrictions and may require the Participant, until the restrictions
have lapsed, to keep the stock certificates, together with duly endorsed stock
powers, in the custody of the Company or its transfer agent, or to maintain
evidence of stock ownership, together with duly endorsed stock powers, in a
certificateless book-entry stock account with the Company’s transfer
agent.

     

    9. Stock Unit
Awards.

     

    An
Eligible Recipient may be granted one or more Stock Unit Awards under the
Plan, and such Stock Unit Awards will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion.  The Committee may
impose such restrictions or conditions, not inconsistent with the provisions of
the Plan, to the payment, issuance, retention and/or vesting of such
Stock Unit Awards as it deems appropriate, including, without limitation,
(i) the achievement of one or more specified performance objectives; and/or that
(ii) the Participant remain in the continuous employ or service of the Company
or a Subsidiary for a certain period.

     

    10. Performance
Awards.

     

    An
Eligible Recipient may be granted one or more Performance Awards under the Plan,
and such Performance Awards will be subject to such terms and conditions, if
any, consistent with the other provisions of the Plan, as may be determined by
the Committee in its sole discretion, including, but not limited to, the
achievement of one or more specified performance objectives.

    

    11. Stock
Bonuses.

     

    An
Eligible Recipient may be granted one or more Stock Bonuses under the Plan, and
such Stock Bonuses will be subject to such terms and conditions, if any,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion, including, but not limited to, the
achievement of one or more specified performance objectives.

    

    12. Effect of Termination of
Employment or Other Service.  The following provisions shall
apply upon termination of a Participant’s employment or other service with the
Company and all Subsidiaries, except to the extent that the Committee provides
otherwise in an agreement evidencing an Incentive Award at the time of grant or
determines pursuant to Section 12.3 of the Plan.

     

    12.1 Termination Due to Death,
Disability or Retirement.  In the event a Participant’s
employment or other service with the Company and all Subsidiaries is terminated
by reason of death, Disability or Retirement:

     

    (a) All
outstanding Options and Stock Appreciation Rights then held by the Participant
will, to the extent exercisable as of such termination, remain exercisable in
full for a period of one year after such termination (but in no event after the
expiration date of any such Option or Stock Appreciation
Right).  Options and Stock Appreciation Rights not exercisable as of
such termination will be forfeited and terminate.

     

    (b) All
Restricted Stock Awards then held by the Participant that have not vested as of
such termination will be terminated and forfeited; and

     

    (c) All
outstanding but unpaid Stock Unit Awards, Performance Awards and Stock Bonuses
then held by the Participant will be terminated and forfeited.

     

    12.2 Termination for Reasons
Other than Death, Disability or Retirement. Subject to Section 12.4 of
the Plan, in the event a Participant’s employment or other service is terminated
with the Company and all Subsidiaries for any reason other than death,
Disability or Retirement, or a Participant is in the employ or service of a
Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company (unless
the Participant continues in the employ or service of the Company or another
Subsidiary):

     

    (a) All
outstanding Options and Stock Appreciation Rights then held by the Participant
will, to the extent exercisable as of such termination, remain exercisable in
full for a period of three months after such termination (but in no event after
the expiration date of any such Option or Stock Appreciation
Right).  Options and Stock Appreciation Rights not exercisable as of
such termination will be forfeited and terminate;

     

    (b) All
Restricted Stock Awards then held by the Participant that have not vested as of
such termination will be terminated and forfeited; and

     

    (c) All
outstanding but unpaid Stock Unit Awards, Performance Awards and Stock Bonuses
then held by the Participant will be terminated and forfeited.

     

    12.3 Modification of Rights Upon
Termination.  Notwithstanding the other provisions of this
Section 12, upon a Participant’s termination of employment or other service with
the Company and all Subsidiaries, the Committee may, in its sole discretion
(which may be exercised at any time on or after the date of grant, including
following such termination), except as provided in clause (ii), below, cause
Options or Stock Appreciation Rights (or any part thereof) then held by such
Participant to terminate, become or continue to become exercisable and/or remain
exercisable following such termination of employment or service, and Restricted
Stock Awards, Stock Unit Awards, Performance Awards or Stock Bonuses then held
by such Participant to terminate, vest or become free of restrictions and
conditions to payment, as the case may be, following such termination of
employment or service, in each case in the manner determined by the Committee;
provided, however, that any such action adversely affecting any outstanding
Incentive Award will not be effective without the consent of the affected
Participant (subject to the right of the Committee to take whatever action it
deems appropriate under Sections 3.2(c), 4.3 and 14 of the Plan).

     

    12.4 Effects of Actions
Constituting Cause.  Notwithstanding anything in the Plan to
the contrary, in the event that a Participant is determined by the Committee,
acting in its sole discretion, to have committed any action which would
constitute Cause as defined in Section 2.3 of the Plan, irrespective of whether
such action or the Committee’s determination occurs before or after termination
of such Participant’s employment with the Company or any Subsidiary, all rights
of the Participant under the Plan and any agreements evidencing an Incentive
Award then held by the Participant shall terminate and be forfeited without
notice of any kind.  The Company may defer the exercise of any Option,
the vesting of any Restricted Stock Award or the payment of any Stock Unit
Award, Performance Award or Stock Bonus for a period of up to forty-five (45)
days in order for the Committee to make any determination as to the existence of
Cause.

     

    12.5 Determination of Termination
of Employment or Other Service.

     

    (a) The
change in a Participant’s status from that of an employee of the Company or any
Subsidiary to that of a non-employee consultant, director or advisor of the
Company or any Subsidiary will, for purposes of the Plan, be deemed to result in
a termination of such Participant’s employment with the Company and its
Subsidiaries, unless the Committee otherwise determines in its sole
discretion.

     

    (b) The
change in a Participant’s status from that of a non-employee consultant,
director or advisor of the Company or any Subsidiary to that of an employee of
the Company or any Subsidiary will not, for purposes of the Plan, be deemed to
result in a termination of such Participant’s service as a non-employee
consultant, director or advisor with the Company and its Subsidiaries, and such
Participant will thereafter be deemed to be an employee of the Company or its
Subsidiaries until such Participant’s employment is terminated, in which event
such Participant will be governed by the provisions of this Plan relating to
termination of employment or service (subject to paragraph (a),
above).

     

    (c) Unless
the Committee otherwise determines in its sole discretion, a Participant’s
employment or other service will, for purposes of the Plan, be deemed to have
terminated on the date recorded on the personnel or other records of the Company
or the Subsidiary for which the Participant provides employment or other
service, as determined by the Committee in its sole discretion based upon such
records.

     

    (d) Notwithstanding
the foregoing, if payment of an Incentive Award that is subject to Section 409A
of the Code is triggered by a termination of a Participant’s employment or other
service, such termination must also constitute a “separation from service”
within the meaning of Section 409A of the Code, and any change in employment
status that constitutes a “separation from service” under Section 409A of the
Code shall be treated as a termination of employment or service, as the case may
be.

     

    12.6 Breach of Employment,
Consulting, Confidentiality or Non-Compete
Agreements.  Notwithstanding anything in the Plan to the
contrary and in addition to the rights of the Committee under Section 12.4 of
the Plan, in the event that a Participant materially breaches the terms of any
employment, consulting, confidentiality or non-compete agreement entered into
with the Company or any Subsidiary (including an employment, consulting,
confidentiality or non-compete agreement made in connection with the grant of an
Incentive Award), whether such breach occurs before or after termination of such
Participant’s employment or other service with the Company or any Subsidiary,
the Committee in its sole discretion may require the Participant to surrender
shares of Common Stock received, and to disgorge any profits (however defined by
the Committee), made or realized by the Participant in connection with any
Incentive Awards or any shares issued upon the exercise or vesting of any
Incentive Awards.

     

    13. Payment of Withholding
Taxes.

     

    13.1 General
Rules.  The Company is entitled to (a) withhold and deduct from
future wages of the Participant (or from other amounts that may be due and owing
to the Participant from the Company or a Subsidiary), or make other arrangements
for the collection of, all amounts the Company reasonably determines are
necessary to satisfy any and all federal, foreign, state and local withholding
and employment-related tax requirements attributable to an Incentive Award,
including, without limitation, the grant, exercise or vesting of, or payment of
dividends with respect to, an Incentive Award or a disqualifying disposition of
stock received upon exercise of an Incentive Stock Option; (b) withhold cash
paid or payable or shares of Common Stock from the shares issued or otherwise
issuable to the Participant in connection with an Incentive Award; or (c)
require the Participant promptly to remit the amount of such withholding to the
Company before taking any action, including issuing any shares of Common Stock,
with respect to an Incentive Award.  Shares of Common Stock issued or
otherwise issuable to the Participant in connection with an Incentive Award that
gives rise to the tax withholding obligation that are withheld for purposes of
satisfying the Participant’s withholding or employment-related tax obligation
will be valued at their Fair Market Value on the Tax Date.

     

    13.2 Special
Rules.  The Committee may, in its sole discretion and upon
terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or
employment-related tax obligation described in Section 13.1 of the Plan by
electing to tender, or by attestation as to ownership of, Previously Acquired
Shares, by delivery of a Broker Exercise Notice or a combination of such
methods.  For purposes of satisfying a Participant’s withholding or
employment-related tax obligation, Previously Acquired Shares tendered or
covered by an attestation will be valued at their Fair Market Value on the Tax
Date.

     

    14. Change in
Control.

     

    14.1 A “Change in Control”
shall be deemed to have occurred if the event set forth in any one of the
following paragraphs shall have occurred:

     

    (a) the sale,
lease, exchange or other transfer, directly or indirectly, of substantially all
of the assets of the Company (in one transaction or in a series of related
transactions) to a person or entity that is not controlled by the
Company;

     

    (b) the
approval by the stockholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company;

     

    (c) any
person becomes after the effective date of the Plan the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of (A)
20% or more, but not 50% or more, of the combined voting power of the Company’s
outstanding securities ordinarily having the right to vote at elections of
directors, unless the transaction resulting in such ownership has been approved
in advance by the Continuity Directors, or (B) 50% or more of the combined
voting power of the Company’s outstanding securities ordinarily having the right
to vote at elections of directors (regardless of any approval by the Continuity
Directors);

     

    (d) a merger
or consolidation to which the Company is a party if the stockholders of the
Company immediately prior to effective date of such merger or consolidation have
“beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act),
immediately following the effective date of such merger or consolidation, of
securities of the surviving corporation representing (A) more than 50%, but less
than 80%, of the combined voting power of the surviving corporation’s then
outstanding securities ordinarily having the right to vote at elections of
directors, unless such merger or consolidation has been approved in advance by
the Continuity Directors (as defined below), or (B) 50% or less of the
combined voting power of the surviving corporation’s then outstanding securities
ordinarily having the right to vote at elections of directors (regardless of any
approval by the Continuity Directors);

     

    (e) the
Continuity Directors cease for any reason to constitute at least a majority of
the Board; or

     

    (f) any other
change in control of the Company of a nature that would be required to be
reported pursuant to Section 13 or 15(d) of the Exchange Act, whether or not the
Company is then subject to such reporting requirements.

     

    For
purposes of this Section 14, “Continuity Directors”
of the Company will mean any individuals who are members of the Board on the
Effective Date and any individual who subsequently becomes a member of the Board
whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the Continuity Directors (either by
specific vote or by approval of the Company’s proxy statement in which such
individual is named as a nominee for director without objection to such
nomination).

     

    14.2 Acceleration of
Vesting.  Without limiting the authority of the Committee under
Sections 3.2 and 4.3 of the Plan, if a Change in Control of the Company occurs,
then, unless otherwise provided by the Committee in its sole discretion either
in the agreement evidencing an Incentive Award at the time of grant or at any
time after the grant of an Incentive Award: (a) all Options and Stock
Appreciation Rights will become immediately exercisable in full and will remain
exercisable in accordance with their terms; (b) all Restricted Stock Awards will
become immediately fully vested and non-forfeitable; and (c) any conditions to
the payment of Stock Unit Awards, Performance Awards and Stock Bonuses will
lapse.

     

    14.3 Cash
Payment.  If a Change in Control of the Company occurs, then
the Committee, if approved by the Committee in its sole discretion either in an
agreement evidencing an Incentive Award at the time of grant or at any time
after the grant of an Incentive Award, and without the consent of any
Participant affected thereby, may determine that: (i) some or all Participants
holding outstanding Options will receive, with respect to some or all of the
shares of Common Stock subject to such Options, as of the effective date of any
such Change in Control of the Company, cash in an amount equal to the excess of
the Fair Market Value of such shares immediately prior to the effective date of
such Change in Control of the Company over the exercise price per share of such
Options (or, in the event that there is no excess, that such Options will be
terminated); and (ii) some or all Participants holding Performance Awards will
receive, with respect to some or all of the shares of Common Stock subject to
such Performance Awards, as of the effective date of any such Change in Control
of the Company, cash in an amount equal the Fair Market Value of such shares
immediately prior to the effective date of such Change in Control.

     

    15. Rights of Eligible
Recipients and Participants; Transferability.

     

    15.1 Employment or
Service.  Nothing in the Plan will interfere with or limit in
any way the right of the Company or any Subsidiary to terminate the employment
or service of any Eligible Recipient or Participant at any time, nor confer upon
any Eligible Recipient or Participant any right to continue in the employ or
service of the Company or any Subsidiary.

     

    15.2 Rights as a Stockholder;
Dividends.  As a holder of Incentive Awards (other than
Restricted Stock Awards), a Participant will have no rights as a stockholder
unless and until such Incentive Awards are exercised for, or paid in the form
of, shares of Common Stock and the Participant becomes the holder of record of
such shares.  Except as otherwise provided in the Plan or otherwise
provided by the Committee, no adjustment will be made in the amount of cash
payable or in the number of shares of Common Stock issuable under Incentive
Awards denominated in or based on the value of shares of Common Stock as a
result of cash dividends or distributions paid to holders of Common Stock prior
to the payment of, or issuance of shares of Common Stock under, such Incentive
Awards.

     

    15.3 Restrictions on
Transfer.

     

    (a) Except
pursuant to testamentary will or the laws of descent and distribution or as
otherwise expressly permitted by subsections (b) and (c) below, no right or
interest of any Participant in an Incentive Award prior to the exercise (in the
case of Options) or vesting or issuance (in the case of Restricted Stock Awards
and Performance Awards) of such Incentive Award will be assignable or
transferable, or subjected to any lien, during the lifetime of the Participant,
either voluntarily or involuntarily, directly or indirectly, by operation of law
or otherwise.

     

    (b) A
Participant will be entitled to designate a beneficiary to receive an Incentive
Award upon such Participant’s death, and in the event of such Participant’s
death, payment of any amounts due under the Plan will be made to, and exercise
of any Options or Stock Appreciation Rights (to the extent permitted pursuant to
Section 12 of the Plan) may be made by, such beneficiary.  If a
deceased Participant has failed to designate a beneficiary, or if a beneficiary
designated by the Participant fails to survive the Participant, payment of any
amounts due under the Plan will be made to, and exercise of any Options or Stock
Appreciation Rights (to the extent permitted pursuant to Section 12 of the Plan)
may be made by, the Participant’s legal representatives, heirs and
legatees.  If a deceased Participant has designated a beneficiary and
such beneficiary survives the Participant but dies before complete payment of
all amounts due under the Plan or exercise of all exercisable Options or Stock
Appreciation Rights, then such payments will be made to, and the exercise of
such Options or Stock Appreciation Rights may be made by, the legal
representatives, heirs and legatees of the beneficiary.

     

    (c) Upon a
Participant’s request, the Committee may, in its sole discretion, permit a
transfer of all or a portion of a Non-Statutory Stock Option, other than for
value, to such Participant’s child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
any person sharing such Participant’s household (other than a tenant or
employee), a trust in which any of the foregoing have more than fifty percent of
the beneficial interests, a foundation in which any of the foregoing (or the
Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than fifty percent of the voting
interests.  Any permitted transferee will remain subject to all the
terms and conditions applicable to the Participant prior to the
transfer.  A permitted transfer may be conditioned upon such
requirements as the Committee may, in its sole discretion, determine, including,
but not limited to execution and/or delivery of appropriate acknowledgements,
opinion of counsel, or other documents by the transferee.

     

    15.4 Non-Exclusivity of the
Plan.  Nothing contained in the Plan is intended to modify or
rescind any previously approved compensation plans or programs of the Company or
create any limitations on the power or authority of the Board to adopt such
additional or other compensation arrangements as the Board may deem necessary or
desirable.

     

    16. Securities Law and Other
Restrictions.

     

    Notwithstanding
any other provision of the Plan or any agreements entered into pursuant to the
Plan, the Company will not be required to issue any shares of Common Stock under
this Plan, and a Participant may not sell, assign, transfer or otherwise dispose
of shares of Common Stock issued pursuant to Incentive Awards granted under the
Plan, unless (a) there is in effect with respect to such shares a registration
statement under the Securities Act and any applicable securities laws of a state
or foreign jurisdiction or an exemption from such registration under the
Securities Act and applicable state or foreign securities laws, and (b) there
has been obtained any other consent, approval or permit from any other U.S. or
foreign regulatory body which the Committee, in its sole discretion, deems
necessary or advisable.  The Company may condition such issuance, sale
or transfer upon the receipt of any representations or agreements from the
parties involved, and the placement of any legends on certificates representing
shares of Common Stock, as may be deemed necessary or advisable by the Company
in order to comply with such securities law or other restrictions.

    

    17. Compliance with Section
409A.

     

    It is
intended that the Plan and all Incentive Awards hereunder be administered in a
manner that will comply with the requirements of Section 409A of the Code, or
the requirements of an exception to Section 409A of the Code.  The
Committee is authorized to adopt rules or regulations deemed necessary or
appropriate to qualify for an exception from or to comply with the requirements
of Section 409A of the Code (including any transition or grandfather rules
relating thereto).  Notwithstanding anything in this Section 17 to the
contrary, with respect to any Incentive Award subject to Section 409A of the
Code, no amendment to or payment under such Incentive Award will be made unless
and only to the extent permitted under Section 409A of the Code.

     

    18. Plan Amendment, Modification
and Termination.

     

    The Board
may suspend or terminate the Plan or any portion thereof at any
time.  In addition to the authority of the Committee to amend the Plan
under Section 3.2(e) of the Plan, the Board may amend the Plan from time to time
in such respects as the Board may deem advisable in order that Incentive Awards
under the Plan will conform to any change in applicable laws or regulations or
in any other respect the Board may deem to be in the best interests of the
Company; provided, however, that no such amendments to the Plan will be
effective without approval of the Company’s stockholders if: (i) stockholder
approval of the amendment is then required pursuant to Section 422 of the Code
or the rules of The NASDAQ Stock Market (or other applicable exchange or market
on which the Company’s Common Stock may be traded or quoted); or (ii) such
amendment seeks to increase the number of shares authorized for issuance
hereunder (other than by virtue of an adjustment under Section 4.3 of the Plan)
or to modify Section 3.2(d) of the Plan.  No termination, suspension
or amendment of the Plan may adversely affect any outstanding Incentive Award
without the consent of the affected Participant; provided, however, that this
sentence will not impair the right of the Committee to take whatever action it
deems appropriate under Sections 3.2(c), 4.3 and 14 of the Plan.

    

    19. Effective Date and Duration
of the Plan.

     

    The Plan
will be effective as of June 12, 2008, or such later date on
which the Plan is initially approved by the Company’s stockholders (the
“Effective Date”).  The Plan will terminate at midnight on the day
before the tenth (10th) anniversary of the Effective Date, and may be terminated
prior to such time by Board action.  No Incentive Award will be
granted after termination of the Plan.  Incentive Awards outstanding
upon termination of the Plan may continue to be exercised, earned or become free
of restrictions, according to their terms.

    

    20. Miscellaneous.

     

    20.1 Fractional
Shares.  No fractional shares of Common Stock will be issued or
delivered under the Plan or any Award. The Committee will determine whether
cash, other Awards or other property will be issued or paid.

     

    20.2 Governing
Law.  Except to the extent expressly provided herein or in
connection with other matters of corporate governance and authority (all of
which shall be governed by the laws of the Company’s jurisdiction of
incorporation), the validity, construction, interpretation, administration and
effect of the Plan and any rules, regulations and actions relating to the Plan
will be governed by and construed exclusively in accordance with the laws of the
State of Illinois, notwithstanding the conflicts of laws principles of any
jurisdictions.

     

    20.3 Successors and
Assigns.  The Plan will be binding upon and inure to the
benefit of the successors and permitted assigns of the Company and the
Participants.

     

    20.4 Construction.  Wherever
possible, each provision of the Plan and any agreement evidencing an Incentive
Award granted under the Plan will be interpreted so that it is valid under the
applicable law.  If any provision of the Plan or any agreement
evidencing an Incentive Award granted under the Plan is to any extent invalid
under the applicable law, that provision will still be effective to the extent
it remains valid.  The remainder of the Plan and the Incentive Award
agreement also will continue to be valid, and the entire Plan and Incentive
Award agreement will continue to be valid in other jurisdictions.

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