Re: Kaptor Financial Inc., Insignia Trading Inc., Ontario Limited (the Kaptor Group )

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1 August 29, 2014 Dear Sir or Madam: Re: Kaptor Financial Inc., Insignia Trading Inc., Ontario Limited (the Kaptor Group ) On August 19, 2014, Crowe Soberman Inc. was appointed the Trustee of the Kaptor Group pursuant to the order of Justice McEwen (the Bankruptcy Order ). As you may know, certain individuals (the Applicants ) have been pursuing a claim in the name and for the benefit of the Kaptor Group against its former accountants, officers and directors and others (the Proceeding ). A copy of the Statement of Claim in the Proceeding can be obtained at The Applicants and certain others have funded all of the costs of the Proceeding to date even though the benefits, if any, derived from the Proceeding were to be shared among all of the Kaptor Group creditors. The Applicants advised the Trustee that they remain committed to funding this Proceeding, however they are not prepared to do so without contribution from other creditors who will stand to benefit from any recovery. Accordingly, the Applicants brought a motion to court to address the manner in which the funding of the Proceeding will occur. On August 19, 2014 Justice McEwen issued an order (the Section 38 Order ) pursuant to which the Trustee assigned all of its right, title and interest in the subject matter of the Proceeding to Applicants and such other creditors (like yourself) who choose to may join with them in the Proceeding. A copy of the Section 38 Order is attached. Any benefits, including proceeds, resulting from the Proceedings shall remain subject to the Prior Charges as defined and described in the Section 38 Order and below. In the interest of fairness, all of the Applicants gave up their rights as secured creditors in order to rank pari passu and to share in any benefits pro rata with all

2 other creditors. Unfortunately, Eric Inspektor and Lynette Inspektor ( The Inspektors ) are the only investor creditors who refused to release their security (if valid). The Inspektors also resisted the motion on the basis that they should rank ahead of, and not pari passu with, all other creditors and should benefit from any recovery to the full extent of their debt (if any) prior to any other creditors recovering their lost money. Despite The Inspektors position, in order to proceed in recovering funds for creditors through this Proceeding as quickly and efficiently as possible, we obtained the order without prejudice to the rights and remedies of The Inspektors and TD Bank. Those creditors who choose to join in the Proceeding will be responsible for its funding and, subject to the determination of the rights and priority of The Inspektors and TD Bank, will be entitled to share any benefits from the Proceeding amongst themselves, on a pro rata basis, up the maximum amount of such creditor s claim. If you wish to join in this Proceeding, you must complete and return this form by mail, fax or to Paliare Roland: Attention Sarita Sanasie (at the address set out in Schedule B ) within twenty-one (21) calendar days from the date of this letter. After the expiry of this deadline, Paliare Roland will notify you by within 10 days of your required initial contribution. You will have fourteen (14) days from the date that Paliare Roland s you to send your share of the funds to Paliare Roland Rosenberg Rothstein LLP, In Trust, failing which you will be excluded from participating in the benefits, if any, derived from the Proceeding. A hypothetical illustration of one s funding requirement and recovery is attached at Schedule A to this letter. In the event of any subsequent capital call, you will be notified by of the amount of your pro rata contribution. You will then have fourteen (14) days from the date the is sent to send your share of the funds, failing which you will be excluded from participating in the benefits, if any, derived from the Proceeding.

3 The cheque or wire for your contribution should be sent to Paliare Roland Rosenberg Rothstein LLP, in Trust Attention: Sarita Sanasie. The address and wire instructions are attached at Schedule B to this letter. The Litigation Committee (comprised of Steven Uster and Eric Grossman) has determined that the total initial funding requirement will be $500,000. This determination was based on the estimated fees and costs of the litigation as well as the prospect that the Applicants and any other participating creditors may be required to post security for the costs of certain of the defendants in this action. Persons who have contributed funds towards the Proceeding to date can deduct those amounts from the total amount that they would otherwise be required to contribute. For purposes of calculating the amount owed to fund the litigation, each participating creditor will self report the amount of principal owed to it by the Kaptor Group which may and shall also include any of the silo or related companies identified in note 1 below. As confirmed in the Section 38 Order, this process will not be determinative of the standing of any person as a creditor or the amount owed to any person. Rather, the Trustee will be solely responsible (with the assistance and direction of the Court, as may be required) for carrying out a claims process to determine the ultimate amount of a participant s debt provided that the amount that a participant reports on the form shall be the maximum amount that may be proven ultimately. The distribution of funds will not begin until the Trustee has completed the claims process. We draw your attention to the Section 38 Order which provides that any creditor who fails to join in the Proceeding or thereafter make the required contribution(s) within the time limits set out in the Section 38 Order shall be thereafter excluded from participating in the benefits, if any, derived from the Proceeding. If money is recovered in the Proceeding, the money recovered will be applied first to pay all fees and disbursements owing and outstanding to the Receiver and its counsel in accordance with the Receiver s Charge; second, to pay all fees and disbursements owing and outstanding to the Trustee and its counsel in accordance

4 with the Bankruptcy Order; third, to pay or reimburse, as the case may be, the reasonable legal fees and disbursements incurred in connection with the Proceeding, plus HST in accordance with the Order of Justice Campbell dated September 7, 2012; and fourth, to pay the reasonable legal fees and costs, plus HST, of bringing the motion for the funding order (the foregoing being the Prior Charges ). The balance of the funds recovered will be divided among the creditors participating in the Proceedings pursuant to this letter of agreement on a pro rata basis, up to the maximum amount of each creditor s claim, subject to a determination of the rights of The Inspektors and TD Bank, which determination will be done at a later time. If surplus funds remain after payment of all such claims in full, that surplus will be remitted to the Trustee for the benefit of the other creditors. If you wish to join in this Proceeding, please return this executed and completed agreement to Paliare Roland, Attention: Sarita Sanasie by September 19, Yours very truly, The Litigation Committee

5 The undersigned creditor hereby agrees to join in the Proceeding and to be bound by the terms and conditions set out herein and in the enclosed Order relating to these proceedings., 2014 Name: Signature: (if corporation, by authorized signing authority) Address 2 : 2 : Phone 2 : Amount of Debt 3 : Currency of Debt 4 : 1. Kapcar Capital Corp., CarCap Inc., CarCap Portfolio 1 Corp., CarCap Portfolio Two Corp., CarCap Portfolio Five Corp., CarCap Portfolio Seven Corp., CarCap Portfolio 8 Corp., CarCap Portfolio 10 Corp., CarCap Portfolio 11 Corp., CarCap Portfolio 12 Corp., CarCap Portfolio 14 Corp., CarCap Portfolio 15 Corp., CarCap Portfolio 17 Corp., CarCap Portfolio 18 Corp., CarCap Portfolio 19 Corp., CarCap Rolling Fund 1 Corp., Ontario Corp., Ontario Limited, Car Equity Loans. 2. Each participant shall be responsible for ensuring that its contact information is up to date. If the information provided in this initial form changes, the participant must update the litigation committee with any new contact information. Neither the Trustee nor the Litigation Committee shall have any obligation to search for or locate any participant other than through the contact

6 information provided. 3. Total principal amount, excluding unpaid interest, of outstanding debentures, RRSP preferred shares, profit participation, promissory notes, cotenancy interests, or other forms of secured or unsecured debt but not including any common shares or other equity interests or accounting entries where fair consideration was not advanced in exchange for the debt. 4. For purposes of calculating your potential contribution, take the face value of any debt in non-canadian currency and record it as if it was Canadian currency. The Trustee will make final currency adjustments at the prevailing exchange rate at the time of any distribution. If you have multiple investments in difference currencies, please complete a separate form for each.

7 Schedule A Assume: i. a total of $100 million of debt participates i. an individual s self reported debt is $5 million (5% of the total participating debt amount) ii. initial capital call is $3 million iii. total net recovery (after payment of legal fees and costs) is $50 million Then: i. this individual must contribute 5% of the initial funding (or $150,000); and ii. this individual would be entitled to 5% of the net recovery after payment of fees (or $2.5 million).

8 Schedule B Addresses: Paliare Roland Rosenberg Rothstein LLP Attention: Sarita Sanasie 155 Wellington Street West, 35 th Floor Toronto, Ontario M5V 3H1 fax: sarita.sanasie@paliareroland.com Wire Instructions: TRUST ACCOUNT (CAD) Beneficiary: Paliare Roland Rosenberg Rothstein LLP (CAD) Bank: Scotiabank, Toronto Business Service Centre, 20 Queen Street West, Toronto, Ontario M5H 3R3 Account: Transit: Institute: 002 Swift Code: NOSCCATT ABA or IBAN: Doc v1