Amounts outstanding under the Existing Credit Agreement will be repaid with a portion of the proceeds of this Offering and with amounts drawn under the New Credit Agreement The Existing Credit Agreement provides for three credit facilities The first credit facility the Operating F acility which provides for a 70 million 364 day extendable revolving credit facility was available for working capital and other general corporate purposes The second facility the T erm F acility which provides for a 251 nonrevolving reducing fouryear term credit facility was made available in part to finance the acquisition of Orbit by Garant to repay previously existing credit facilities and to finance a dividend distribution to certain Selling Shareholders The third facility the Capital Expenditures F acility which provides for a 44 million revolving reducing fouryear term credit facility was available to finance up to 80 of the Companys capital expenditures as such term is defined in the Existing Credit Agreement As security for the Existing Credit Agreement the lender and agent has been granted a firstranking hypothec and general security agreement and mortgage over all the property of the Company a pledge and security agreement creating a firstranking security interest in respect of all shares held in the subsidiaries of Orbit Garant excluding Soudure R oyale as well as an assignment of the Companys interest in all insurance policies F urthermore separate guarantee agreements were executed by 4378792 Canada Inc and Orbit in favour of the lender for full and complete payments and performances of the obligations under the Existing Credit Agreement F rom January 31 2007 to March 31 2008 the Company incurred indebtedness under its Operating F acility to support the growth of the business and corresponding requirement for increased working capital and funds for new drills and supporting equipment As at March 31 2008 approximately 67 million was outstanding under these facilities Approximately 251 million was incurred under the T erm F acility in January 2007 to finance the acquisition of Orbit and the reorganization of Garant As at March 31 2008 the principal amount outstanding on this facility was 219 million In addition during December 2007 the Company borrowed 195 million under its Capital Expenditure F acility to reduce the amount drawn on the Operating F acility primarily related to new drills and supporting equipment purchased during the prior 10 months As at March 31 2008 the amount outstanding on the Capital Expenditure F acility was 18 million Orbit Garant has entered into a commitment letter with the two Schedule I banks as lenders the Banks providing for a new credit agreement the New Credit Agreement to be entered into on Closing The New Credit Agreement will provide for a 70 million 364 day revolving credit facility F acility A a 200 million nonrevolving reducing fouryear term credit facility F acility B and a 60 million nonrevolving reducing fouryear term facility F acility C The New Credit Agreement will provide that F acility A can be used for working capital and other current operating requirements The New Credit Agreement will provide that F acility B can be used to refinance the outstanding balance under the Existing Credit Agreement and to finance future acquisitions Under the terms of the New Credit Agreement Orbit Garant will be required to make prescribed quarterly repayments on F acility B The New Credit Agreement will provide that F acility C can be used to finance up to 80 of the Companys capital expenditures as such term is defined in the New Credit Agreement Under the terms of the New Credit Agreement Orbit Garant will be required to make prescribed quarterly repayments on F acility C Orbit Garants ability to draw down amounts under the New Credit Agreement will be subject to certain requirements including that it complies with certain financial covenants The facilities will be available in the form of prime rate loans bankers acceptances and LIBOR loans Borrowings under the New Credit Agreement will be at variable rates of interest The applicable margins for F acility A will vary from the applicable margins for F acilities B and C F or all three facilities the applicable margins vary according to the ratio of total debt to EBITD A As security for the New Credit Agreement the Bank will be granted a firstranking hypothec and general security agreement and mortgage over all the property of the Company F urthermore separate guarantee agreements will be executed by all of Orbit Garants subsidiaries other than XSpec in favour of the Bank for full and complete payments and performances of the obligations under the New Credit Agreement As at March 31 2008 the Company had approximately 30417072 outstanding indebtedness under the Existing Credit Agreement which will be repaid from a portion of the proceeds of this Offering and from approximately 9010376 drawn under F acility B of the New Credit Agreement 40