Form 5.07

2010 TruNo. 340722

Supreme Court of Nova Scotia

Between:

Ruth Elaine Osborne and Pamela Ruth Osborne and Joseph Wilfred Doucet

Applicants

and

John Alexander Allen and Keybase Financial Group Inc.

Respondents

Notice of Application In Court: Amended February 7, 2011Further Amended September 6, 2011Further Amended October 3, 2011Further Amended April13, 2012

Brought pursuant to the Class Proceedings Act, S N S 2007, c2S’

To John Alexander Allen via personal service

To: Keybase Financial Group Inc. via service upon its Counsel of Record, Brian K. Awad,Robert Brush and Bruce O’Toole

The Applicants request an order against you

The Applicants, on their own behalves and on behalf of each and every Class Member, apply tothe Court for an order:

1. Certifying this Application as a class proceeding, pursuant to the Class Proceedings Act,S.NS. 2007. c.28.

2 As against the Respondent Keybase Financial Group Inc., an order for special andgeneral compensatory damages, account, disgorgement of profits earned, punitivedamages. prejudgment interest and costs.

3. As against the Respondent Kevbase Financial Group Inc.. an order for a declaration thatit is vicariously liable for the actions of and resulting damages caused by the RespondentJohn Alexander Allen to the Applicants and the Class Members.

1058614 V2

4. As against the Respondents John Alexander Allen and Keybase Financial Group Inc., a

tracing order of all monies paid by the Applicants and the Class Members to John

Alexander Allen, or borrowed by John Alexander Allen on their behalf.

The Applicants started this Application by tiling this Notice on the date certified by the

Prothonotary.

Grounds for the Order

The Applicants, on their own behalves and on behalf of each and every Class Member, apply for

the Order on the following grounds:

1. The Applicant, Ruth Elaine Osborne, is a resident of Stewiacke, Nova Scotia and is a 70-

year-old retiree.

2. The Applicant, Pamela Ruth Osborne, is a resident of Stewiacke, Nova Scotia as is a 43-

year-old Nova Scotia Provincial Government Employee.

2A. The Applicant, Joseph Wilfred Doucet, is a resident of Truro, Nova Scotia and is a 71-

year-old retiree.

3. The Applicants also bring the present proceeding on behalf of all others who have

similarly suffered from the Respondents’ actions (‘the Class Members”) pursuant to the

Class Proceedings Act, S.N.S. 2007, c.28.

4. The Respondent. John Alexander Allen (Allen”). is an individual who formerly

practiced as an investment advisor in Nova Scotia.

5. The Respondent, Keybase Financial Group Inc. (“Keybase”) is an extra-provincial

corporation bearing Nova Scotia Registry of Joint Stocks Registry Identification number

3075817 and has its registered office at Markham, Ontario. Keybase carries on business

in Nova Scotia as a financial and investment services provider.

5A. The Respondents were, at all material times, members of the Mutual Fund Dealers

Association and also registered with the Nova Scotia Securities Commission and subject

to the Securities Act, R.S.N.S. 1989, c.4l8 and the Regulations made pursuant to that Act.

6. The Respondent Allen was employed as an investment advisor with Keybase from March

29. 2007 to August 28. 2007.

7. Keybase terminated the employment relationship with Allen on August 28. 2007 with

cause, stated to be a breach of fiduciary duty by Allen.

8. The Applicants Ruth Elaine Osborne, Pamela Ruth Osborne and Joseph Wilfred Doucet,

and the Class Members. were in contractual and fiduciary relationships with Allen while

he was employed with the Respondent Kebase. Allen acted as the financial advisor to

the Applicants and the Class Members and undertook the following duties: provided

1058614 V2

financial and investment advice, applied for loans and invested the proceeds on theirbehalves, and other corollary duties.

9. The Applicants and the Class Members relied upon Allen and trusted him to act in theirbest interests.

10. Allen acted fraudulentl’, negligently and breached the fiduciary duties that he owedto the Applicants and Class Members by the following acts and omissions:

a) He ignored, or misunderstood, the answers given on the Applicants and ClassMembers’ Know Your Client forms when placing them in investments;

b) He falsified the Applicants’ and Class Members’ Know Your Client forms bydeliberately, or alternatively, carelessly placing incorrect information in them;

c) He failed to place the Applicants and Class Members in risk appropriate investmentsto earn greater commissions for himself and greater profits for the RespondentKeybase;

d) He involved them in investment structures and schemes that were beyond their risktolerance to earn greater commissions for himself and greater profits for theRespondent Keybase;

e) tie placed them in “leveraged investment schemes” without explaining to them whatleveraged investments are and without explaining the risks associated with suchschemes. including being placed into ‘Margin Call” to earn greater commissions forhimself and greater profits for the Respondent Keybase;

He obtained loans from various lending institutions without the knowledge andconsent of the Applicants and the Class Members thus making them liable to thoselending institutions for the loans and associated interest and service charges;

g) He fraudulently inappropriately procured loans from various lending institutions forsome of the Applicants and the Class Members by various improper means,including: placing false information in the loan applications, creating falsedocumentation to substantiate the security criteria for the loans and forging theirsignatures to them. The false information that Allen placed in the loan applicationsincluded inflated income statements and inflated net worth statements based onexaggerated and/or non-existent assets; ad

h) He breached the legislative provisions applicable to him including: the Securities Act,RSNS. 1989. c418 at section 44A(2) as well as Regulations 30(1). 3 1(1), 3 1(3) and3 l(4); and,

investments “would pay for themselves”, that they “would not have to make loanpayments” and other similar statements designed to build their trust in him and

1058614 2

convince them to enter the investment schemes. The Applicants and Class Membersrelied upon these statements.

11. Keybase acted negligently and breached the fiduciary duties that it owed to theApplicants and Class Members by the following acts and omissions:

a. Keybase failed to adequately educate, train, supervise and assist Allen in handling theaccounts of the Applicants and the Class Members;

b. Keybase failed to establish, implement and maintain a two-tier compliancestructure to supervise client account activity, in that it failed to maintain and ensurecompliance with policies and procedures requiring branch managers to supervisetrading activity at the branch office level as required pursuant to Rule 2.5 of theMutual Fund Dealers Association Rules;

c. Once the acts and omissions of Allen became known to Keybase during thesummer of 2007, Keybase failed to notify the Applicants and the ClassMembers of the riskiness of their investments and continued to maintain theimproper investments on behalf of the Applicants and Class Members to theirdetriment and to the benefit of Keybase;

d. It allowed the acts and omissions of the Respondent Allen to become aninstitutionalized practice for the benefit of Keybase; and,

e. It breached the legislative provisions applicable to him including: the Securities Act,R.S.N.S. 1989, c.4l8 at section 44A(2) as well as Regulations 30(1), 3 1(1), 3 1(3) and31(4).

12. The Respondents Allen and Keybase profited from the Actions of Allen by earningcommissions and profit on the investments purchased by the Applicants and ClassMembers.

13. The Applicants and the Class Members have suffered the loss of significant amounts ofmoney as a result of the losses sustained to the risky investments made on their behalvesby the Respondents Allen and Keybase.

14. The Applicants and the Class Members have been exposed to the risk of being placedinto “Margin Call” and in some cases have been subjected to legal action as a result.

15. The Applicants have suffered general non-pecuniary damages as a result of the actions ofthe Applicants, including: mental anguish.

16. The Applicants and the Class Members plead and rely upon the following causes ofaction as against the Respondents Allen and Kevhase: breach of fiduciary duty, breach ofcontract negligenc and negligent nisrepresentati++

l7.uoithetoofre1ientreresentationasaainsttheResondentA11en,

1058614 2

Witnesses for Applicant

The Applicant expects to file affidavits from the following witnesses, dealing with the followingsubjects:

Name ofwitness Subject

Ruth Elaine Osborne All issues related to Liability and Damages

Pamela Ruth Osborne All issues related to Liability and Damages

Joseph Wilfred Doucet All issues related to Liability and Damages

Each of the Class Members once identified All issues related to Liability and Damages

Forensic Accountant— TBI* Quantification of Damages and Tracing

Forensic Graphologist — TBI Handwriting Analysis

Investment Advisor — TBI Standard of Care

Banking Compliance Officer — TBI Standard of Care

* TBI To Be Identified

Motion for date and directions

At 9:30 a.m. on September 6, 2011, the Applicants appeared before a Judge at the Court House,I Church Street, Truro, Nova Scotia and made a Motion for an Order giving directions includinga time and date for the hearing of it. The judge granted the Consent Order as presented by theParties.

Affidavit on Motion for Directions

The Applicants filed the affidavit of Robert [1. Pineo, sworn on December 7, 2010, as evidenceon the Motion for Directions. A copy of the affidavit was delivered to you with this Notice.

You may participate (changed to conform to the (‘lass Proceedings Act, supra)

You may file any affidavit for the Motion for Directions, no less than fifteen days after thisNotice is delivered to you or you are otherise notified of the Application.

1058b14 V2

You may file with the Court a Notice of Contest not less than 45 days following the CertificationMotion in accordance with section 4(6) of the Class Proceedings Act. supra. Filing the Notice ofContest entitles you to notice of further steps in the Application.

Possible final order against you

The Court may grant a final Order on the Application without further notice to you if you fail tofile a Notice of Contest, or if you or your counsel fail to appear at the time, date, and place forthe Motion for Directions.

Filing and delivering documents

Any documents you file with the Court must be filed at the office of the Prothonotary, 1 ChurchStreet, Truro, Nova Scotia (telephone number 902-893-5859).

When you file a document you must immediately deliver a copy of it to the Applicants and eachother party entitled to notice, unless the document is part of an ex pane motion, the parties agreedelivery is not required, or ajudge orders it is not required.

Contact information

The Applicants designate the following address: Robert H. Pineo, Patterson Law, 10 ChurchStreet, Truro, NS B2N 5B9.

Documents delivered to this address are considered received by the Applicants on delivery.Further contact information is available from the Prothonotary.

1058614 V2

Signature

Signed December 7, 2010.

Amended Notice signed February 7. 2011.

Further Amended Notice signed September 6, 2011.

Further Amended Notice signed October 3. 2011.

Further Amended Notice signed j, 2012.

Robert H. Pineo,Counsel to the Applicants andthe Class Members

Prothonotary’s certificate

I certify that this Notice of Application was filed with the Court on December 8, 2010.

I certify that this Amended Notice of Application was filed with the Court on February 7, 2011.

I certify that this Further Amended Notice of Application was filed with the Court on September

6,2011.

I certify that this Further Amended Notice of Application was filed with the Court on October 3,2011.

Apr II certify that this Further Amended Notice of Application was filed with the Court on.Mareh L2012.

Amendments Consent to/

Bruce OToole.Solicitor for the Respt.Keybase Financial Group Inc.

IProthonotary

105861$v2

Form 5.07

2010 TruNo. 340722

Supreme Court of Nova Scotia

Between:

Ruth Elaine Osborne and Pamela Ruth Osborne and Joseph Wilfred Doucet

Applicants

and

John Alexander Allen and Keybase Financial Group Inc.

Respondents

Notice of Application In Court: Amended February 7,2011Further Amended September 6, 2011Further Amended October 3, 2011Further Amended April , 2012

Brought pursuant to the Class Proceedings Act, S.N.S. 2007, c.28

To: John Alexander Allen via personal service

To: Keybase Financial Group Inc. via service upon its Counsel of Record, Brian K. Awad,Robert Brush and Bruce O’Toole

The Applicants request an order against you

The Applicants, on their own behalves and on behalf of each and every Class Member, apply tothe Court for an order:

1. Certifying this Application as a class proceeding. pursuant to the Class Proceedings Act.

S.NS. 2007, c28.

2. As against the Respondent Keybase Financial Group Inc.. an order for special andgeneral compensatory damages. account, disgorgement of profits earned, punitivedamages. prejudgment interest and costs.

3. As against the Respondent Keybase Financial Group mc,, an order for a declaration thatit is vicariously liable for the actions of and resulting damages caused by the RespondentJohn Alexander Allen to the Applicants and the Class Members.

toS614 \2

5. As against the Respondents John Alexander Allen and Keybase Financial Group Inc., atracing order of all monies paid by the Applicants and the Class Members to JohnAlexander Allen, or borrowed by John Alexander Allen on their behalf.

The Applicants started this Application by tiling this Notice on the date certified by theProthonotary.

Grounds for the Order

The Applicants, on their own behalves and on behalf of each and every Class Member, apply forthe Order on the following grounds:

1. The Applicant, Ruth Elaine Osborne, is a resident of Stewiacke, Nova Scotia and is a 70-year-old retiree.

2. The Applicant, Pamela Ruth Osborne, is a resident of Stewiacke, Nova Scotia as is a 43-year-old Nova Scotia Provincial Government Employee.

2A. The Applicant, Joseph Wilfred Doucet, is a resident of Truro, Nova Scotia and is a 71-year-old retiree.

3. The Applicants also bring the present proceeding on behalf of all others who havesimilarly suffered from the Respondents’ actions (“the Class Members”) pursuant to theClass FroceedingsAct, S.N.S. 2007, c.28.

4. The Respondent, John Alexander Allen (“Allen”), is an individual who formerlypracticed as an investment advisor in Nova Scotia.

5, The Respondent, Keybase Financial Group Inc. (“Keybase”) is an extra-provincialcorporation bearing Nova Scotia Registry of Joint Stocks Registry Identification number3075817 and has its registered office at Markham, Ontario. Keybase carries on businessin Nova Scotia as a financial and investment services provider.

5A. The Respondents were, at all material times, members of the Mutual Fund DealersAssociation and also registered with the Nova Scotia Securities Commission and subjectto the Securities Act, R.S.N.S. 1989, c.4 18 and the Regulations made pursuant to that Act.

6. The Respondent Allen was employed as an investment advisor with Keybase from March29, 2007 to August 28. 2007.

7. Keybase terminated the employment relationship with Allen on August 28, 2007 withcause, stated to be a breach of fiduciary duty by Allen.

8. The Applicants Ruth Elaine Osborne, Pamela Ruth Osborne and Joseph Wilfred Doucet,and the Class Members, were in contractual and fiduciary relationships with Allen whilehe was employed with the Respondent Keybase. Allen acted as the financial advisor tothe Applicants and the Class Members and undertook the following duties: provided

1058614 V2

financial and investment advice, applied for loans and invested the proceeds on theirbehalves, and other corollary duties.

9. The Applicants and the Class Members relied upon Allen and trusted him to act in theirbest interests.

10. Allen acted negligently and also breached the fiduciary duties that he owed to theApplicants and Class Members by the following acts and omissions:

a. He ignored, or misunderstood, the answers given on the Applicants’ and ClassMembers’ Know Your Client forms when placing them in investments;

b. He falsified the Applicants’ and Class Members’ Know Your Client forms bydeliberately, or alternatively, carelessly placing incorrect information in them;

c. He failed to place the Applicants and Class Members in risk appropriate investmentsto earn greater commissions for himself and greater profits for the RespondentKeybase;

d. He involved them in investment structures and schemes that were beyond their risktolerance to earn greater commissions for himself and greater profits for theRespondent Keybase;

e. He placed them in leveraged investment schemes” without explaining to them whatleveraged investments are and without explaining the risks associated with suchschemes, including being placed into “Margin Call” to earn greater commissions forhimself and greater profits for the Respondent Keybase;

f. He obtained loans from various lending institutions without the knowledge andconsent of the Applicants and the Class Members thus making them liable to thoselending institutions for the loans and associated interest and service charges;

g. He inappropriately procured loans from various lending institutions for some of theApplicants and the Class Members by various improper means, including: placingfalse information in the loan applications, creating false documentation to substantiatethe security criteria for the loans and forging their signatures to them. The falseinformation that Allen placed in the loan applications included inflated incomestatements and inflated net worth statements based on exaggerated and/or nonexistent assets; a4

h. He breached the legislative provisions applicable to him including: the Securities Act,R.SN.S. 1989, c.418 at section 44A(2) as well as Regulations 30(1), 3 1(1), 3 1(3) and3 I (4); and,

i. He made statements to the Applicants and Class Members informing them that theinvestments “would pay for themselves”, that they “would not have to make loanpayments” and other similar statements designed to build their trust in him and

1058614 V2

convince them to enter the investment schemes. The Applicants and Class Membersrelied upon these statements.

11. Keybase acted negligently and breached the fiduciary duties that it owed to the

Applicants and Class Members by the following acts and omissions:

f. Keybase failed to adequately educate, train, supervise and assist Allen in handling theaccounts of the Applicants and the Class Members;

g. Keybase failed to establish, implement and maintain a two-tier compliancestructure to supervise client account activity, in that it failed to maintain and ensurecompliance with policies and procedures requiring branch managers to supervisetrading activity at the branch office level as required pursuant to Rule 2.5 of theMutual Fund Dealers Association Rules;

h. Once the acts and omissions of Allen became known to Keybase during thesummer of 2007. Keybase failed to notify the Applicants and the ClassMembers of the riskiness of their investments and continued to maintain theimproper investments on behalf of the Applicants and Class Members to theirdetriment and to the benefit of Keybase:

1. It allowed the acts and omissions of the Respondent Allen to become aninstitutionalized practice for the benefit of Keybase; and,

j. It breached the legislative provisions applicable to him including: the Securities Act,R.S.N.S. 1989. c.4l8 at section 44A(2) as well as Regulations 30(1), 3 1(1), 3 1(3) and3 1(4).

12. The Respondents Allen and Keybase profited from the Actions of Allen by earningcommissions and profit on the investments purchased by the Applicants and ClassMembers.

13. The Applicants and the Class Members have suffered the loss of significant amounts ofmoney as a result of the losses sustained to the risky investments made on their behalves

by the Respondents Allen and Keybase.

14. The Applicants and the Class Members have been exposed to the risk of being placedinto “Margin Call” and in some cases have been subjected to legal action as a result.

15. The Applicants have suffered general non-pecuniary damages as a result of the actions ofthe Applicants, including: mental anguish.

16. The Applicants and the Class Members plead and rely upon the following causes ofaction as against the Respondents Allen and Keybase: breach of fiduciary duty, breach ofcontract and negligence.

17. The Applicants and the Class Members plead and rely upon the tort of negligentmisrepresentation as against the Respondent Allen.

C)58614 2

Witnesses for Applicant

The Applicant expects to file affidavits from the following witnesses, dealing with the following

subjects:

Name ofwitness Subject

Ruth Elaine Osborne All issues related to Liability and Damages

Pamela Ruth Osborne All issues related to Liability and Damages

Joseph Wilfred Doucet All issues related to Liability and Damages

Each of the Class Members once identified All issues related to Liability and Damages

Forensic Accountant — TBI4 Quantification of Damages and Tracing

Forensic Graphologist — TBI Handwriting Analysis

Investment Advisor — TBI Standard of Care

Banking Compliance Officer — TBI Standard of Care

* TB! = To Be Identified

Motion for date and directions

At 9:30 a.m. on September 6, 201 1. the Applicants appeared before a Judge at the Court House,

1 Church Street, Truro, Nova Scotia and made a Motion for an Order giving directions including

a time and date for the hearing of it. The judge granted the Consent Order as presented by the

Parties.

Affidavit on Motion for Directions

The Applicants filed the affidavit of Robert H. Pineo. sworn on December 7, 2010. as evidence

on the Motion for Directions. A copy of the affidavit was delivered to you with the Notice.

You may participate (changed to conform to the Class Proceedings Act, supra)

You may file any affidavit for the Motion for Directions, no less than fifteen days after thisNotice is delivered to you or you are otherwise notified of the Application.

lO8614

You may file with the Court a Notice of Contest not less than 45 days following the Certification

Motion in accordance with section 4(6> of the Class Proceedings Act, supra. Filing the Notice of

Contest entitles you to notice of further steps in the Application.

Possible final order against you

The Court may grant a final Order on the Application without further notice to you if you fail to

file a Notice of Contest, or if you or your counsel fail to appear at the time, date, and place for

the Motion for Directions.

Filing and delivering documents

Any documents you file with the Court must be filed at the office of the Prothonotary, I Church

Street, Truro. Nova Scotia (telephone number 902-893-5859).

When you file a document you must immediately deliver a copy of it to the Applicants and each

other party entitled to notice, unless the document is part of an exparte motion, the parties agree

delivery is not required, or a judge orders it is not required.

Contact information

The Applicants designate the following address: Robert 1-I. Pineo, Patterson Law, 10 Church

Street, Truro, NS 82N 5B9.

Documents delivered to this address are considered received by the Applicants on delivery.

Further contact information is available from the Prothonotary.

1os8(,14 V2

Signature

Signed December 7, 2010.

Amended Notice signed February 7, 2011.

Further Amended Notice signed September 6, 2011.

Further Amended Notice signed October 3. 2011.

ilpnlFurther Amended Notice signed 4iek (3, 2012.

Robert H. Pineo,Counsel to the Applicants andthe Class Members

Prothonotary’s certificate

I certify that this Notice of Application was filed with the Court on December 8. 2010.

I certify that this Amended Notice of Application was tiled with the Court on February 7, 2011.

I certify that this Further Amended Notice of Application was filed with the Court on September6,2011.

I certify that this Further Amended Notice of Application was filed with the Court on October 3,2011.

AprilI certify that this Further Amended Notice of Application was filed with the Court onMffrch (3,

2012.

Amendments Consent to/

Bruce O’Toole,Solicitor for the Respondent.Keybase Financial Group Inc.

.L 2jr*/Prolhonotarv

O58b14 2