ORBIT GAR ANT DRILLING INC NOTES TO THE CONSOLID A TED FINANCIAL ST A TEMENTS Continued Amounts as at March 31 2008 and for the nine and three months ended March 31 2008 and for the six and three months ended March 31 2007 are unaudited 18 SUB SEQUENT EVENTS Continued A further 7494994 offered shares are being sold by certain shareholders of the company at the offering price of 400 per off ered share for a gross proceeds to the existing shareholders of 300 million The underwriters will receive a remuneration equal to 6 of the gross proceeds of the issue An additional fee of 216000 will be paid to one of the Underwriters proportionately by the company and certain shareholders The underwriters will also be granted an overallotment option to purchase from the selling shareholders an aggregate of up to 2250000 additional offered shares exercisable for a period of 30 days following the closing of the offering On closing of the offering the company intends to use a part of the net proceeds from the offering to repay debt in the amount of 219 million the advances from shareholders in the amount of 965632 and the total contingent consideration of 2250000 related to the purchase price of Orbit discussed in Note 3 c Option plan P rior to the closing of this offering the company will establish the new option plan which is intended to aid in attracting retaining and motivating the companys officers employees directors and consultants The new option plan will be prepared in accordance with TSXs policies on listed company securitybased compensation arrangements P ersons eligible to be granted options under th e new option plan are any director officer or employee of the company or of any subsidiary a corporation controlled by any such person or a family trust of which at least one trustee is any such person and all of the beneficiaries of which are such person and his or her spouse or children The aggregate number of common shares which may be issued from treasury under the new option plan or reserved for issuance upon the exercise of options under the new option plan shall not exceed 10 of the issued and outstanding common shares after giving effect to this offering including any common shares issued following the exercise of the overallotment option less th e number of options issued under the prior option plan The number of common shares which may be reserved for issuance pursuant to options granted under the new option plan together with common shares reserved for issuance from treasury under any other employeerelated plan of the company or options for services granted by the company to any one person shall not exceed 5 of the then aggregate issued and outstanding common shares W ithout the approval of the companys shareholders which approval excludes the votes cast by insiders no option will be granted under the new option plan if the grant would result in the number of common shares reserved for issuance pursuant to the new option plan and any other share compensation arrangement exceeding 10 of outstanding common shares the number of common shares issuable to insiders under the new option plan and any other compensation arrangement at any time exceeding 10 of outstanding common shares or the number of common shares issued to insiders under the new option plan and any other compensation arrangement within any one year period exceeding 10 of outstanding common shares The Board of Directors through the recommendation of the compensation and corporate governance committee will administer the new option plan and will determine among other things optionees vesting periods exercise price and other attributes of the options in each case pursuant to the new option plan applicable securities legislation and the rules of the TSX The exercise price for any option may not be less than the fair market value the closing price of the common shares on the TSX on the last trading day on which common shares traded prior to such day or the average of the closing bid and ask prices over the last five tradin g days if no trades occurred over that period of the common shares at the time of the grant of the option Options may be exercised during expires during a blackout period or within nine business days following the expiration of a blackout period the expirat ion of the option will be automatically extended to the tenth business day following the expiration of the blackout period Unless otherwise determined by the Board of Directors options will vest at a rate of 20 per annum commencing 12 months after the date of grant In connection with a transaction that if completed would result in a change of control under the new o ption plan the Board of Directors may declare either that all options are then exercisable or that all or some of the options may be exercised only within 30 days and not thereafter Under the new option plan a change of control is generally defined as an acquisition by an offeror of a majority of the voting rights attaching to the common shares the completion of a merger or simi lar transaction whereby the shareholders of the company hold less than 50 of the voting securities of the resulting entity or the sale of all or substantially all of the companys assets If an option holder ceases to be a director officer or employee of the company or one of its subsidiaries all unvested option s held by him or her will terminate all options whether vested or unvested will terminate if the option holder resigns or is termina ted for just cause V ested options will terminate on the earlier of the expiry date of the option or 30 days after the subject event of termination which period will be extended to one year if the event of termination is death or termination not for cause Optio ns are not transferable except that on the death of an option holder options may be exercised by a legal representative or by a pe rson who acquires the option by bequest or inheritance F26