BMO Capital Corporation Mezzanine Debt and Equity for Mid-Market Companies October 2008

1. BMO Capital CorporationMezzanine Debt and Equity for Mid-Market CompaniesOctober 2008 Eric K. Ehgoetz, CFAManaging Director

2. BMO Capital Corporation Who are we? BMO Capital is a well-established Canadian mid-market player: • Founded in 1996 with a national mandate and an exclusive focus on the mid-market (offices in Vancouver, Edmonton, Calgary, Toronto, and Montreal) • Committed evergreen fund of $400 million - currently $220+ million invested in 43 companies • Closed over 150 transaction and deployed nearly $500 million since inception • Investments include both Mezzanine/Subordinated Debt and Equity Our client approach brings unparalleled service: • Lower execution risk via working relationships with other BMO partners that we can introduce to you (senior debt, asset based lending, M&A, etc.) • Welcome opportunities to work with a client’s existing financial partners – no need to change established relationships

3. Mezzanine and Equity CharacteristicsWhat does an “average” BMOCC deal look like? Mezzanine Debt • Typically $2 to $15 million financing • Term typically up to 7 years • Secured by a second charge and subordinated to senior lender • Repayment is flexible, tied to cash flow and risk return of the instrument – today, typically a single bullet amount due at maturity • Pricing made up of a mix of (some or all) current interest, deferred interest, fees and equity participation where appropriate Equity • Ownership positions up to 49% (not controlling) • Exit mechanics are structured for maturity in 5 to 7 years

4. MBO/MBI Acquisition Owner looking to leverage (pre or post) transaction Typical Mezzanine/Equity OpportunityTransformational events often need junior capital … Owner 55+ looking for liquidity options, diversifying net worth, dividend or equity strip Succession Shareholder Take-Out Removing dissenting shareholder(s) or those with different focus. Management wants to acquire part/all ownership of a subsidiary/entire company (mgmt can be from inside/outside) Working capital needs that cannot be funded by senior debt Growth History of growth by acquisitions or contemplating first Recapitalization

5. Mezzanine and Equity InvestmentsWhere do they fit in the Capital Structure? Equity • Minority • Control Typical Balance Sheet BMO Capital Corporation • Senior Debt • Operating Line • Senior Term Loan • Cashflow Loan Traditional: up to 3x EBITDA Expected Return: <10% Secured • Mezzanine Debt • Straight sub debt • Sub with upside kicker • Convertible sub debt Secured – but - subordinated security Typically low asset coverage Typical: up to 1 - 1.5x more Cumulative: 3.0 - 4.0x EBITDA Expected Return: 15% - 20% Owner dilution Expected Return: >20%

6. Typical Company ProfileWhat type of Company are we looking for? Yes No Manufacturing, Industrial, Distribution and Services Industry Consumer retail, fashion related, resource extraction, real estate Established $10-15MM+ Early stage: R&D, starting-up operations, ramping-up sales, emerging profits Revenues Stable, sustainable or fast growth EBITDA minimum $2 - $3MM Profitability Losses, Turnarounds (some exceptions), R&D companies

7. StructureWhat we are looking for at a micro level • Depth and breadth of management – number one issue • Experience through a downcycle • Vision & strong understanding of the competitive landscape • Strong reporting & accounting controls and forecasting capabilities • History of operating in leveraged environment • Substantial sponsor/management investment – must have “skin in the game” • Ability to withstand margin compression – pricing flexibility or a cost reduction focus • Strong working capital and good operating flexibility • Established “brand name” operation – i.e., industry leadership • Cash flow predictability, sustainability, and quality – especially at the end of a long cycle

8. The Business The Opportunity The Challenges Corporate travel management and business meetings Company had 7 shareholders from past mergers Complex management and no consensus on future direction To grow the business further, 2 partners wanted to buy-out 5 and re-invest in growth: organic and acquisitions Limited senior debt borrowing capacity – receivables only Funding gap – both at senior and mezzanine level Alternative funding: lose control to an equity fund Case Study: Project BlueSkiesThe Business Case

9. $4,000,000 $1,500,000 Common Shares August 2006 Subordinated Debt August 2006 Solution - Buyout of PartnersVision 2000 Travel Group Full Junior Capital Solution Management Buy-Out of 5 of 7 business partners – One stop shop BMO Capital solution, no outside source of equity. &

10. The Business The Opportunity The Challenges Assisted Living Facility Established and proven acquisition team looking to acquire an existing operation Proven track record of creating value in acquired businesses Acquirer sought additional equity capital to complete the acquisition without losing control Limits to traditional mortgage funding sources Case Study: Project RetirementThe Business Case

11. Solution - Equity InvestmentAgeCare Health Services has been acquired by $2,300,000 $17,325,000 Financed by Mortgage Equity and September 2007

12. Ontario Based Food Manufacturer Western Canadian Automotive Group $8,500,000 $10,000,000 $8,360,000 $2,300,000 $9,000,000 $12,900,000 Acquisition Financing Second Lien Loan Acquisition Financing Subordinated Debt & Equity Acquisition Financing Equity Leveraged Recapitalization Equity & Subordinated Debt Acquisition & Growth Capital Subordinated Debt Recapitalization Financing of Bellshire Limited and Van Wyck Packaging with Mid Oaks Investments LLC Subordinated Debt & Equity BC Based Holding Company January 2008 March 2008 September 2007 December 2007 November 2007 July 2007 $5,000,000 $4,850,000 $5,500,000 Acquisition Financing Subordinated Debt Acquisition Financing Mezzanine Debt & Debenture $5,000,000 Management Buyout Subordinated Debenture & Equity $10,000,000 $8,000,000 Recapitalization Financing Subordinated Debenture Recapitalization Financing Subordinated Debt & Equity Acquisition Financing Subordinated Debenture April 2007 October & September 2006 May 2007 May 2007 June 2007 August 2006 Alberta Based Manufacturing Company Western Canadian Based Distribution Company $10,000,000 $5,540,000 $8,000,000 $3,000,000 $5,000,000 $10,000,000 $6,000,000 $4,000,000 $3,000,000 $4,750,000 $3,000,000 $10,000,000 $15,000,000 $7,500,000 $10,000,000 $3,000,000 $2,000,000 Special Purpose Financing Subordinated Debenture Acquisition Financing Subordinated Debenture Leveraged Recapitalization Subordinated Debenture Acquisition Financing Subordinated Debenture & equity Acquisition Financing Subordinated Debenture Acquisition Financing Subordinated Debenture Acquisition Financing Subordinated Debenture Growth Capital Subordinated Debenture Acquisition Financing Subordinated Debenture & equity Management Buyout Subordinated Debenture & Equity Acquisition Financing Subordinated Debenture Acquisition Financing Subordinated Debt Growth Capital Subordinated Term Loan Acquisition Financing Subordinated Debenture Acquisition Financing Subordinated Debenture Recapitalization Subordinated Debenture Capital for Growth Subordinated Debt May 2007 April 2007 October 2006 June & October 2005 March 2006 April 2006 June 2006 August 2004 September 2006 October 2005 July 2005 June 2005 & February 2006 June 2006 October 2006 July 2007 June 2007 July 2007 $3,400,000 Acquisition Financing Subordinated Debenture Healthcare Company May 2006 Recent Deals September 2007

13. Contact Information Eric K. Ehgoetz, CFA Managing Director BMO Capital Corporation Toronto 416-643-4388 eric.ehgoetz@bmo.com