Ontario, Canada
(State or Other Jurisdiction of Incorporation)
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001-15204
(Commission File Number)
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Not Applicable
(IRS Employer Identification No.)
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Exhibit Number
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Exhibit Description
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Press Release, dated September 5, 2018
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Offer Letter, dated September 5, 2018, between the Company and John T. Fitzgerald
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Severance Agreement, dated September 5, 2018, between the Company and John T. Fitzgerald
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Restricted Stock Agreement, dated September 5, 2018, between the Company and John T. Fitzgerald
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Form of Indemnification Agreement for Directors and Officers
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Separation Agreement and Release, dated September 5, 2018, between Kingsway America Inc. and Larry G. Swets, Jr.
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Senior Advisor Agreement, dated September 5, 2018, between Kingsway America Inc. and Larry G. Swets, Jr.
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Amended and Restated Restricted Stock Agreement, dated September 5, 2018, between the Company and Larry G. Swets, Jr.
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Membership Interest Purchase Agreement, dated September 5, 2018, between 1347 Capital LLC and IGI Partners, LLC
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KINGSWAY FINANCIAL SERVICES INC.
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September 10, 2018
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By:
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/s/ William A. Hickey, Jr.
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William A. Hickey, Jr.
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Executive Vice President and
Chief Financial Officer
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BETWEEN:
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KINGSWAY FINANCIAL SERVICES INC.,
incorporated pursuant to the laws of the Province of Ontario |
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(hereinafter called the
“Corporation”
)
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OF THE FIRST PART
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- and -
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John Taylor M. Fitzgerald
(hereinafter called the “Participant” ) |
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OF THE SECOND PART
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1.
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In this Agreement and in any amendments hereto, (a) words and phrases as used herein shall have the same meaning as used in the Plan, and (b) the following terms shall have the following meanings respectively:
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2.
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Subject to the terms and conditions hereinafter set out and those of the Plan, the Corporation hereby grants to the Participant as of the date set forth above (the “
Date of Grant
”) 500,000 shares of Restricted Stock (the “
Restricted Shares
”). The Participant acknowledges and agrees that the Original RSU Grant shall be terminated and of no force or effect as of the execution and delivery of this Agreement.
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3.
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The Restricted Shares shall become fully vested, and the Restriction Period shall lapse, as of March 28, 2024 if the Participant remains in continuous employment with the Corporation through such anniversary.
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4.
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If the Participant’s employment with the Corporation terminates prior to March 28, 2024 for any reason other than Cause, (including for, but not limited to, the following reasons: (i) the Participant’s death; (ii) a termination by the Corporation due to the Participant’s Disability; (iii) the Constructive Termination of Participant’s employment; or (iv) the Constructive Resignation of the Participant) a prorated number of the Restricted Shares shall become vested, based on the number of full months of employment completed between
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5.
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All of the Restricted Shares held by the Participant shall be forfeited in the event the Participant’s employment with the Corporation terminates prior to March 28, 2024 by the Corporation for Cause.
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6.
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During the Restriction Period, the Restricted Shares shall be held by a custodian in book entry form with restrictions on such shares duly noted or, alternatively, a certificate or certificates representing the Restricted Shares shall be registered in the Participant’s name and may bear a legend, in addition to any legend which may be required pursuant to the Plan, indicating that the ownership of the Common Shares represented by such certificate is subject to the restrictions, terms and conditions of the Plan and this Agreement. All such certificates shall be deposited with the Corporation, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate, which would permit transfer to the Corporation for cancellation all or a portion of the Restricted Shares in the event they are forfeited in whole or in part. Upon termination of the Restriction Period, subject to the Corporation’s right to require payment of any taxes in accordance with the Plan, the restrictions shall be removed from the requisite number of any Common Shares that are held in book entry form, and all certificates evidencing ownership of the requisite number of Common Shares shall be delivered to the Participant.
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7.
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The Participant shall have all rights as a shareholder of the Corporation, including, but not limited to, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Shares; provided, however, that (i) the Participant shall not be permitted to vote the Restricted Shares until they have vested and (ii) any distribution with respect to Common Shares shall be deposited with the Corporation and shall be subject to the same restrictions as the Common Shares with respect to which such distribution was made.
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8.
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Notwithstanding anything herein to the contrary, the underlying Common Shares may not be sold in the United States unless a Registration Statement on Form S-8 under the United States Securities Act of 1933 is in effect with respect to the Plan and the Common Shares issuable in connection with awards under the Plan.
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9.
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The Participant understands that the Participant is solely responsible for all tax consequences to the Participant in connection with this award. The Participant represents that the Participant has consulted with any tax consultants the Participant deems advisable in connection with the award and that the Participant is not relying on the Corporation for any tax advice. By accepting this Agreement, the Participant acknowledges his or her understanding that the Participant may file with the Internal Revenue Service an election pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “
Code
”) (a “
Section 83(b) Election
”), not later than 30 days after the Date of Grant, to include in the Participant’s gross income the Fair Market Value of the unvested Common Shares subject to the award as of such date. Before filing a Section 83(b) Election with the Internal Revenue
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10.
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Nothing in the Plan or herein confers upon the Participant any right to continue in the employ of the Corporation or any Subsidiary or affect in any way the right of the Corporation or any Subsidiary to terminate his employment at any time; nor shall anything in the Plan or herein be deemed or construed to constitute an agreement, or an expression of intent, on the part of the Corporation or any Subsidiary to extend the employment of the Participant beyond the time which he or she would normally be retired pursuant to the provisions of any present or future retirement plan of the Corporation or any Subsidiary or beyond the time at which he or she would otherwise be retired pursuant to the provisions of any contract of employment with the Corporation or Subsidiary.
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11.
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Time shall be of the essence of this Agreement.
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12.
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The Restricted Shares granted hereby are personal to the Participant and, subject to the provisions of the Plan, are non-assignable.
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13.
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This Agreement shall inure to the benefit of and be binding upon the Corporation, its successors and assigns, and the Participant and his legal personal representatives. This Agreement shall not be assignable by the Participant or his legal personal representatives.
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14.
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This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario. The provisions of this Restricted Stock Agreement shall be interpreted in a manner not inconsistent with the provisions of the Plan.
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JOHN TAYLOR M. FITZGERALD
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)
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)
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Witness
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)
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)
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)
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KINGSWAY FINANCIAL SERVICES INC.
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)
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)
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)
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Per:
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Name:
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Title:
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1.
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Definitions:
In addition to the other defined words and phrases contained in this Agreement, as used in this Agreement, the following terms have the following meanings, respectively:
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(a)
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"
Agreement
" means this Indemnification Agreement, as amended, supplemented or restated from time to time;
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(b)
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“
Covered Claims
” means all civil, criminal, quasi-criminal, administrative, investigative or other claims, suits, actions, applications, hearings or proceedings of any nature or kind in which the Director and/or Officer has been named as party or is required by law to participate because of his or her association with the Corporation or Other Entity, or in which the Director and/or Officer participates either at the request of the Corporation or Other Entity or based on his or her reasonable belief that he or she may be subsequently named in that proceeding, and also includes any and all proceedings that relate to, arise from or are based upon the Director and/or Officer’s service in an Indemnified Capacity, so long as:
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(i)
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the Director and/or Officer acted honestly and in good faith with a view to the best interests of the Corporation and/or Other Entity, as the case may be; and
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(ii)
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in the case of a criminal, quasi-criminal or administrative action, proceeding or hearing that is enforced by a monetary penalty, the Director and/or Officer
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(c)
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“
Determination
” means a determination, acting reasonably and in good faith based on the facts known at the time, made by:
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(i)
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a majority vote of a quorum of disinterested directors; or
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(ii)
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independent legal counsel in a written opinion prepared at the request of a majority of a quorum of disinterested directors;
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(d)
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“
Determined
” shall have a correlative meaning to Determination;
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(e)
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“
Excluded Claim
” means any civil, criminal, quasi-criminal, administrative, investigative or other claim, suit, action, application, hearing or proceeding of any nature or kind:
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(i)
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initiated by the Director and/or Officer against the Corporation or Other Entity, unless it is brought to establish or enforce any right under this Agreement;
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(ii)
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initiated by the Director and/or Officer against any director or officer (or an individual holding a similar capacity) of the Corporation or Other Entity unless the Corporation or Other Entity, as the case may be, has joined in or consented to the initiation of such proceeding;
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(iii)
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initiated by the Director and/or Officer against any other corporation, partnership, trust, joint venture, unincorporated entity or person, unless it is a counterclaim;
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(iv)
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involving the payment or reimbursement for Losses or Expenses to the Director and/or Officer by the Corporation not permitted by applicable law; or
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(v)
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which is not a Covered Claim (including any failure by the Director and/or Officer to meet the Standards of Conduct);
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(f)
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“
Expenses
” means any and all fees, charges, disbursements and expenses which may be reasonably incurred by the Director and/or Officer in connection with or as a result of the investigation and defence of a Covered Claim, including, without limitation, legal fees and disbursements, costs of investigative, judicial or administrative proceedings or appeals and, subject to the terms of this Agreement, all such fees, charges, disbursements and expenses which the Director and/or Officer may reasonably incur in any proceedings to enforce rights under this Agreement;
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(g)
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“
Indemnified Capacity
” has the meaning set out in the recitals to this Agreement;
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(h)
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“
Losses
” means all judgements, damages, fines, penalties, liabilities, settlement amounts or any other expense which the Director and/or Officer may incur or become liable to pay as a result of any Covered Claim, whether incurred alone or jointly with others, and includes Expenses;
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(i)
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“
Other Entity
” means each subsidiary of the Corporation and each of the respective committees or bodies of such subsidiary, in each case, for whom the Director and/or Officer has agreed to serve in an Indemnified Capacity at the request of the Corporation; and
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(j)
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“
Standards of Conduct
” has the meaning set out at subsection 1(b) herein.
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2.
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Indemnification:
The Corporation shall indemnify and hold the Director and/or Officer harmless against any and all Losses and Expenses which the Director and/or Officer may reasonably suffer or be required to pay as a result of any Covered Claim subject, in each case, to the provisions of this Agreement and the following:
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(a)
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unless a court or other authority of competent jurisdiction has expressly so ruled in respect of the Director and/or Officer, the determination of any Covered Claim by judgment, order, settlement or conviction shall not of itself create a presumption either that the Director and/or Officer did not adhere to the Standards of Conduct in the circumstances relating to the Covered Claim or that the Director and/or Officer is not entitled to indemnity under this Agreement; and
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(b)
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in respect of an action by or on behalf of the Corporation to procure judgement in its favour to which the Director and/or Officer is made a party by reason of having served in an Indemnified Capacity, the Corporation shall make application for approval of the court having jurisdiction to furnish indemnity and make advances as needed by the Director and/or Officer, provided that the Director and/or Officer adhered to the Standards of Conduct.
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3.
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Excluded Coverage:
The Corporation shall have no obligation to indemnify and hold the Director and/or Officer harmless against any Losses or Expenses which have been Determined to constitute an Excluded Claim.
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4.
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Indemnification Procedures:
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(a)
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Promptly after receipt by the Director and/or Officer of notice of the commencement, or the threat of commencement, of a Covered Claim or potential Covered Claim (a “
Commencement Notice
”), the Director and/or Officer shall, if indemnification with respect thereto may be sought from the Corporation under this Agreement, notify the Corporation in writing in respect thereof and provide to the Corporation concurrently therewith copies of any demand letter, Statement of Claim, indictment or other claim document. If the Corporation becomes aware of any Covered Claim
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(b)
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If, at the time of the receipt or delivery of a Commencement Notice, the Corporation has applicable directors’ and officers’ liability insurance in effect, the Corporation shall give prompt notice of the commencement, or the threat of commencement, of such Covered Claim or potential Covered Claim to its insurers in accordance with the procedures set forth in the respective policies in favour of the Director and/or Officer. The Corporation shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Director and/or Officer, all Losses and Expenses payable as a result of such Covered Claim or potential Covered Claim in accordance with the terms of such policies.
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(c)
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To the extent the Corporation does not, at the time of the commencement of or the threat of commencement of a Covered Claim or potential Covered Claim, have applicable directors’ and officers’ liability insurance in effect, or if a Determination is made that any Expenses arising out of such Covered Claim or potential Covered Claim will not be payable under the directors’ and officers’ liability insurance then in effect, the Corporation shall be obligated to pay from time to time the Expenses of any such action, suit or proceeding in advance of the final disposition thereof; and the Corporation shall be entitled, at its expense and in a timely manner, to assume the defence of such Covered Claim or potential Covered Claim with counsel satisfactory to the Director and/or Officer, acting reasonably, upon the delivery to the Director and/or Officer of written notice of its election so to do (a “
Defence Notice
”). After the Director and/or Officer is in receipt of a Defence Notice, the Corporation will not be liable to the Director and/or Officer under this Agreement for any Expenses subsequently incurred by the Director and/or Officer in connection with any such Covered Claim or potential Covered Claim and the Corporation will keep the Director and/or Officer informed on a timely basis regarding all material steps and developments, provided that the Director and/or Officer shall have the right to employ its own counsel in any such Covered Claim or potential Covered Claim, but the fees and expenses of such counsel incurred after receipt of the Defence Notice shall be at the Director and/or Officer’s expense, provided however that if:
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(i)
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the employment of counsel by the Director and/or Officer has been previously authorized by the Corporation;
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(ii)
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the Director and/or Officer shall have reasonably concluded that there may be a conflict of interest between the Corporation and the Director and/or Officer in the conduct of any such defence; or
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(iii)
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the Corporation does not in a timely manner employ counsel to assume the defence of such Covered Claim or potential Covered Claim or undertake such legal steps as may from time to time be needed to properly defend the
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(d)
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The Director and/or Officer and his or her advisors may, with the consent of the Corporation’s chairperson or board of directors (which consent shall not be unreasonably withheld or delayed), review during regular business hours all documents, records and other information under the Corporation’s control with respect to the Corporation or any Other Entity in which the Director and/or Officer has served in an Indemnified Capacity and which may be reasonably necessary in order for the Director and/or Officer to defend himself or herself against any Covered Claim or potential Covered Claim, provided that the Director and/or Officer and his or her advisors shall maintain all such information in the strictest confidence except to the extent necessary for his or her defence in the Covered Claim or potential Covered Claim. At any time after there has been a change of control of the Corporation, or a receiver or trustee in bankruptcy has been appointed in respect of the Corporation, the Director and/or Officer and his or her advisors shall be entitled to review the information referred to in this subsection 4(d), subject to the conditions set out herein, whether or not the Corporation’s new chairperson or board of directors or the receiver or trustee in bankruptcy has provided the consent referred to herein. The Director and/or Officer’s right to review documents shall not apply where the claim or proceeding is initiated by the Corporation or by any of its subsidiaries.
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(e)
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All payments on account of the Corporation’s indemnification obligations under this Agreement shall be made within sixty (60) days of the Director and/or Officer’s written request therefore (which written request shall be accompanied by applicable supporting documentation), unless a Determination is made that the claims giving rise to the Director and/or Officer’s request are Excluded Claims or otherwise not payable under this Agreement, provided that, subject to the provisions of this Agreement and any statutory requirement that court approval be obtained for the indemnification of any Expenses, all payments on account of the Corporation’s obligations under subsection 4(c) of this Agreement prior to the final disposition of any Covered Claim or potential Covered Claim shall be made within twenty (20) days of the Director and/or Officer’s written request therefore (which written request shall be accompanied by applicable supporting documentation) and such obligation shall not be subject to any such Determination, but shall be subject to subsection 4(c) of this Agreement.
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(f)
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The Director and/or Officer agrees that he or she will reimburse the Corporation for all Losses and Expenses paid or reimbursed by the Corporation in connection with any action, suit or proceeding against the Director and/or Officer in the event and only to the extent that a determination shall have been made by a court in a final adjudication, from which all rights of appeal have expired, that the Director and/or
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5.
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Settlement:
The Corporation shall have no obligation to indemnify the Director and/or Officer under this Agreement for any amounts paid in settlement of any Covered Claim effected without the Corporation’s prior written consent. The Corporation shall not conclude a settlement of any Covered Claim on the Director and/or Officer behalf without the Director and/or Officer’s prior written consent. Neither the Corporation nor the Director and/or Officer shall unreasonably withhold or delay their consent to any proposed settlement of a Covered Claim. If the Director and/or Officer refuses to consent to the terms of a proposed settlement the Corporation may require the Director and/or Officer, at his or her own expense, to assume defence of the Covered Claim. In such a case, any amount recovered by the claimant in excess of the amount for which settlement could have otherwise been achieved shall not be recoverable under this Agreement. An Director and/or Officer shall at all times have the right, at his or her own expense, to negotiate and conclude settlement of a Covered Claim made against the Director and/or Officer.
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6.
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Rights Not Exclusive:
This Agreement shall not operate to abridge or exclude any other rights, in law or in equity, to which the Director and/or Officer may be entitled by operation of law or under any statute, by-law, agreement, vote of securityholders or of disinterested directors or otherwise, both as to action in an Indemnified Capacity and as to action in any other capacity by holding such office, and shall continue after the Director and/or Officer ceases to serve the Corporation in an Indemnified Capacity.
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7.
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Enforcement:
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(a)
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The Director and/or Officer’s rights to indemnification shall be enforceable by the Director and/or Officer notwithstanding any adverse Determination. In any such action or proceeding, if a prior adverse Determination has been made, the burden of proving that indemnification is required under this Agreement shall be on the Director and/or Officer. The Corporation shall have the burden of proving that indemnification is not required under this Agreement if no prior adverse Determination shall have been made.
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(b)
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In the event that any action or proceeding is instituted by the Director and/or Officer under this Agreement to enforce or interpret any of the terms of this Agreement, the Director and/or Officer shall be entitled to be paid all court, arbitration or mediation costs and expenses, including reasonable legal fees and disbursements, incurred by the Director and/or Officer with respect to such action or proceeding, unless the court, arbitrator or mediator determines that each of the material assertions made by the Director and/or Officer as a basis for such action or proceeding were not made in good faith or were frivolous.
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8.
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Duration:
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(a)
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Notwithstanding the date of its execution and delivery, this Agreement shall be conclusively deemed to commence on the day upon which the Director and/or Officer first became or becomes a director, officer, trustee, manager and/or participating member of the Corporation and/or an Other Entity or first undertook or undertakes the responsibilities associated with an Indemnified Capacity.
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(b)
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The obligations of the Corporation under this Agreement shall continue after the Director and/or Officer ceases to serve in an Indemnified Capacity. Upon ceasing to so act, the Director and/or Officer shall continue to be entitled to all stipulated rights and indemnification hereunder.
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(c)
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The liability of the Corporation under this Agreement shall not be affected, discharged, impaired, mitigated or released by reason of the discharge or release of the Director and/or Officer in any bankruptcy, insolvency, receivership or other similar proceeding of creditors.
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9.
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Insurance:
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(a)
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The Corporation shall maintain in full force and effect a comprehensive program of liability insurance, including policies providing coverage for the liability exposures of directors and officers (the “
Policies
”). To the extent commercially feasible, the salient coverage features of the Policies to be maintained shall be substantially the same as those applicable under the Policies obtained by the Corporation and in effect on the date hereof.
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(b)
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If for any reason whatsoever the Director and/or Officer ceases to act in an Indemnified Capacity, the Corporation shall ensure that the liability insurance coverage available to the Director and/or Officer and his or her heirs and legal representatives is at all times substantially equivalent to the coverage maintained for the then current directors and officers. The Corporation shall maintain such continuing coverage for a minimum of six years following the Director and/or Officer ceasing to act in an Indemnified Capacity.
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(c)
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In the event that a Claim is brought in which the Director and/or Officer is named as party, the Corporation shall promptly pay the insurance deductible applicable under any responding Policies providing coverage to the Director and/or Officer.
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(d)
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If one or more of the Policies providing coverage on a “claims-made” basis is cancelled or is not renewed, the Corporation will promptly purchase the maximum degree of extended reporting period coverage available under such Policies unless:
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(i)
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replacement liability insurance has been obtained that does not contain a “retroactive date” so as to deprive the Director and/or Officer of coverage
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(ii)
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the Corporation is unable to fund the purchase of such extended coverage by reason of its insolvency or bankruptcy, in which case the Director and/or Officer shall be given reasonable notice regarding its inability to fund such purchase together with an identification of the additional premium that would be required to exercise the extended reporting period coverage option of the relevant Policies.
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(e)
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The Corporation shall promptly advise the Director and/or Officer if:
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(i)
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any Policy lapses, is cancelled, or undergoes any material adverse change in coverage; or
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(ii)
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any insurer informs the Corporation that all or part of a particular Covered Claim or potential Covered Claim is not covered by the Policies.
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10.
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Severability:
In the event that any provision of this Agreement is determined by a court to require the Corporation to do or to fail to do any act which is in violation of applicable law, such provision shall be limited or modified in its application to the minimum extent necessary to avoid a violation of law, and, as so limited or modified, such provision and the balance of this Agreement shall be enforceable in accordance with their terms.
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11.
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Choice of Law; Jurisdiction:
This Agreement shall be deemed to have been made in and shall be governed by and construed and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. The parties hereby agree that any claims, disputes or questions arising out of or in relation to this Agreement may be submitted to the jurisdiction of the courts of the Province of Ontario. Each of the parties hereto irrevocably attorns to the jurisdiction of the courts of the Province of Ontario.
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12.
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Subrogation:
In the event of any indemnification payment under this Agreement to or on behalf of the Director and/or Officer, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the Director and/or Officer, who shall execute all documents and take all actions reasonably requested by the Corporation to implement such right of subrogation.
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13.
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Successor and Assigns:
This Agreement shall be binding upon all successors and assigns of the Corporation (including any transferee of all or substantially all of its assets and any successor by merger or otherwise by operation of law), and shall be binding upon and enure to the benefit of the Director and/or Officer and his or her heirs, executors, administrators, legal personal representatives and estate.
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14.
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Amendment; Waiver:
No amendment, modification, termination or cancellation of this Agreement shall be effective unless made in writing signed by each of the parties hereto. No waiver of any provision of this Agreement shall constitute a waiver of any other provision
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15.
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Execution in Counterparts:
This Agreement may be executed in several counterparts, by original or facsimile signature or by or through such other electronic form in which a party may place or evidence its signature hereon (including an electronic scan of same), each of which so executed shall be deemed to be an original and such counterparts together shall be deemed to be one and the same instrument, which shall be deemed to be executed as of the day and year first above written.
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KINGSWAY FINANCIAL SERVICES INC.
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Per:
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Name:
Title:
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Per:
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Name:
Title:
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SIGNED, SEALED AND DELIVERED
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In the presence of:
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)
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)
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Signature of Witness
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Name:
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)
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Print Full Name of Witness
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)
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22.
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This Agreement is governed by the laws of the State of Illinois.
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23.
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All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.
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1.
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Kingsway hereby retains the advisory services of Swets in respect of the matters set out in Appendix “A” to this Agreement (the “Services”).
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2.
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Swets agrees that he will devote the necessary time and energy to ensure the Services are carried out to the reasonable satisfaction of Kingsway as set forth in this Agreement.
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3.
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Beginning on September 5, 2018 (the “Effective Date”), Swets shall receive a base consulting fee of USD $25,000 per month, payable in arrears. The first payment will be due on October 6, 2018
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4.
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After the end of the Term (as defined below) of this Agreement, certain Services shall be offered on an hourly rate, as set forth in Appendix “A” to this Agreement.
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5.
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In advance of any hourly fees being paid, or in connection with the reimbursement of expenses incurred in connection with the provision of the Services, Swets shall submit an invoice, which shall include a detailed account of the work performed/progress report on each of the projects on which Swets is then currently working, or details of the expense(s) incurred, as applicable.
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6.
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Upon receipt of such invoice,
Kingsway shall remit payment to Swets
by check or wire transfer
within 5 days.
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7.
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Kingsway shall make its staff reasonably available to Swets in support of his provision of the Services for the Term of this Agreement, as such Term may be extended in accordance with this Agreement. In addition, Kingsway shall provide reasonable access to executive administrative support to assist Swets in the provision of the Services during the Term of this Agreement.
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8.
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The term of this Agreement shall commence on the Effective Date, for an initial term of twelve (12) months after the Effective Date (the “Initial Term”), unless terminated earlier or extended as provided by this Agreement. The parties may mutually agree to extend the Initial Term or any renewal term of this Agreement for subsequent six (6) month terms (the term of this Agreement, as may be extended, the “Term”). The parties shall provide written notice to each other of either (i) their respective intent to extend the Term, or (ii) their intent to allow the Term to lapse, as applicable, at least 90 days before the end of any such Term. For greater certainty, the Term will elapse unextended at the end of such Term unless both parties mutually agree on the subsequent six (6) month extension.
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9.
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Notwithstanding Section 8
above, Kingsway may terminate this Agreement upon a material breach by Swets, which breach is not cured within ten (10) days of written notice. After termination, no further base consulting fee payments shall be due Swets attributable to any period after the termination date.
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10.
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Notwithstanding any termination of this Agreement, Swets shall continue to be obligated to provide his services as set out in Section 1 of Appendix “A” for a period of up to five (5) years after termination or such longer period as may be agreed to by the Parties, and Kingsway shall be obligated to reimburse Swets for such services in accordance with Appendix “A” and the provisions of this Agreement related thereto.
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11.
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Sections 15, 16, 20, 22 and 23 inclusive, General and Arbitration shall survive any termination or expiration of this Agreement.
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12.
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Except as may be otherwise set forth in this Agreement, Swets agrees that Kingsway shall not be responsible for providing an office, a vehicle, equipment, tools, licencing fees, or insurance coverage in order for Swets to provide Services.
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13.
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Kingsway agrees that Swets shall determine his schedule and methodology to ensure that the Services rendered are completed within any reasonable project timetable established by Kingsway after consultation with Swets.
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14.
|
It is agreed that Swets shall act as an independent contractor in the provision of all Services under this Agreement. Accordingly, Swets shall bear all liability that results from the provision of Services under this Agreement, including, but not limited to, remittances for any personal or corporate taxes, payroll taxes, insurance premiums or any other duties, levies or taxes. For greater certainty, the Parties agree that nothing in this Agreement creates an employer and employee relationship between the Parties. As services hereunder are to be rendered in the United States, any tax reporting of payments to Swets hereunder, such as the equivalent of an IRS form 1099, will not be reported in Canada.
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15.
|
Swets agrees to indemnify and save harmless Kingsway from any personal taxes, payroll with holding taxes, FICA, insurance premiums or any other duties, levies or taxes associated with any payment to Swets under this Agreement.
|
16.
|
Kingsway acknowledges and agrees that Swets’ provision of the Services hereunder is non-exclusive and Swets shall be entitled to enter into contracts for service with other entities from time to time, subject to compliance with the terms of Section 19 below.
|
17.
|
Swets agrees that he will not retain, use, misuse or disclose, directly or indirectly, any of Kingsway’s Confidential Information. Swets understands and agrees that for purposes of this Agreement, “Confidential Information” includes all confidential information and trade secrets of Kingsway and its parent company, subsidiaries and affiliates to which Swets had access during his employment, all trade secrets and other information furnished by Kingsway to Swets and all information to which Swets gained access during his employment relationship with Kingsway which is either non-public, confidential or proprietary in nature, whether such information is legally privileged or the property of Kingsway (or its parent company, subsidiaries or affiliates). Confidential Information does not include Swets’ general knowledge and know-how that is not proprietary to Kingsway, including, but not limited to, utilization of NOL’s to capitalize real estate transactions, and such information concerning insurance backed securities. Confidential Information also does not include: (a) information that was available to the general public at the time it was disclosed or which through no act or omission of Swets, becomes publicly available; (b) information that Swets rightfully possessed independent of any obligation of confidentiality; (c) information that Swets rightfully receives without obligation of confidentiality from any third-party; or (d) information Swets develops independently without using the Confidential Information. Swets recognizes that such Confidential Information is a unique asset of Kingsway, developed and perfected over a considerable time and at substantial expense to Kingsway and the disclosure of which may cause injury, loss of profits and loss of goodwill to Kingsway or its parent company, subsidiaries or affiliates. Swets represents and warrants that, at all times during his employment with Kingsway, he fully complied with any and all confidentiality agreements executed by him and any and all policies or directives of Kingsway related to the use and disclosure of Confidential Information.
|
18.
|
Acknowledgment.
|
(a)
|
Swets understands that the nature of Swets’ advisory role with Kingsway and its subsidiaries gives Swets access to and knowledge of Confidential Information. Swets further understands and acknowledges that Kingsway's and its parent and subsidiaries' ability to protect their respective Confidential Information is of great competitive importance and commercial value
|
19.
|
Non-Competition.
|
(a)
|
During the Term (the "Restricted Period"), Swets agrees and covenants not to engage in any Prohibited Activity.
|
(b)
|
For purposes of this non-competition clause, "Prohibited Activity" means (1) the acquisition, individually or as a member of a group, of a controlling interest in, (2) the de novo establishment of, individually or as a member of a group, or (3) the provision of services, whether as an employee, consultant, advisor or independent contractor, to (i) any entity, the primary business of which is the sale or issuance of product warranties, extended warranties or vehicle service agreements; (ii) any entity that directly competes with the primary business of Argo Management Group, LLC, which is to invest in service, niche manufacturing or distribution businesses valued under $50 million, utilizing the search fund model; (iii) any entity focused on utilizing structured real estate transactions where NOLs are utilized as the majority contribution of capital; or (iv) any entity that directly competes with the primary business of Insurance Income Strategies, Ltd.
|
(c)
|
Nothing herein shall prohibit Swets from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation that conducts any of the businesses described in Section 19(b) above, provided that such ownership represents a passive investment and that Swets is not a controlling person of, or a member of a group that controls, such corporation.
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20.
|
Non-Solicitation of Employees.
|
(a)
|
During the Term and for a period of one (1) year thereafter (the “Non-Solicitation Period”), Swets agrees and covenants not to solicit, hire, recruit, or attempt to solicit, hire, or recruit, any employee of Kingsway or its subsidiaries, (collectively, "Covered Employee"), or induce the termination of employment of any Covered Employee.
|
(b)
|
This non-solicitation provision explicitly covers all forms of oral, written, or electronic communication, including, but not limited to, communications by email, regular mail, express mail, telephone, fax, instant message, and social media, including, but not limited to, Facebook, LinkedIn, Instagram, Twitter, and any other social media platform, whether or not in existence at the time of entering into this Agreement.
|
21.
|
Business Opportunities.
|
(a)
|
During the Restricted Period, Swets shall submit to Kingsway all business, commercial and investment opportunities or offers presented directly to Swets, or of which Swets becomes aware other than through a fiduciary position, that relate to triple net leases on real property accompanied by self amortizing debt (“Corporate Opportunities”). Swets will provide Kingsway 10 business days to indicate its intent to pursue, otherwise Swets is entitled to pursue.
|
22.
|
Swets acknowledges and represents to Kingsway that:
|
(a)
|
The performance of the Services for Kingsway by Swets and any of his employees and/or agents shall not breach any non-competition agreement, non-solicitation agreement or any
|
(b)
|
Swets also acknowledges and represents to Kingsway that Swets shall not use in the performance of the Services any confidential materials or documents of any third party.
|
(c)
|
Swets further acknowledges and represents that he is not a party to any agreement or obligation with any third party, which conflicts with any obligations of Swets under this Agreement.
|
23.
|
Each of the parties represents and warrants: (a) it/he has the power, capacity and authority to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby; and (b) this Agreement has been duly authorized, executed and delivered by it/him and constitutes a legal, valid and binding obligation enforceable against it in accordance with its terms.
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24.
|
This Agreement shall be governed by and construed in accordance with the laws of Illinois, without reference to its conflict of laws principles.
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25.
|
The invalidity or unenforceability of any provision of the Agreement shall not affect the validity or enforceability of any other provision in this Agreement. Any court is expressly authorized to modify any unenforceable provision of this Agreement instead of severing the unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to the provision, or making any other modifications it deems warranted to carry out the intent and purpose of the Agreement.
|
26.
|
This Agreement, including any of the rights, duties or obligations herein, is not assignable or transferable by Kingsway or Swets without the prior written consent of the other party. Any attempt to assign any of the rights, duties or obligations in this Agreement without such written consent is void.
|
27.
|
Apart from Kingsway and Swets, no other person shall have any rights under this Agreement.
|
28.
|
Swets shall ensure that only Swets shall provide the Services to Kingsway, unless Kingsway provides written consent to allow another employee or agent of Swets to provide it services on behalf of Swets.
|
29.
|
There shall be no waiver of breach of any term or condition of this Agreement unless the waiver is in writing signed by the party who has not committed the breach.
|
30.
|
Swets agrees that this Agreement represents a new relationship with Kingsway and not a continuation of any pre-existing relationship.
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31.
|
This Agreement, including Appendix “A”, the Separation Agreement and the Amended and Restated Restricted Stock Agreement contain the entire understanding of the parties with respect to the subject matter hereof and thereof, there are no restrictions, agreements, promises, representations, warranties, covenants or other undertakings other than those expressly set forth in this Agreement, the Separation Agreement and the Amended and Restated Restricted Stock Agreement that pertain to the subject matter of this Agreement, the Separation Agreement and the Amended and Restated Restricted Stock Agreement;
provided
, however, that this Agreement does not supersede other agreements between the parties relating to other matters. This Agreement may be amended only by a written instrument duly executed by all of the parties or their respective successors or assigns.
|
32.
|
Swets acknowledges that he has had the opportunity to receive independent legal advice or such other advice as he has deemed necessary in relation to this Agreement. Swets further acknowledges that Swets understands his rights and obligations under this Agreement, is voluntarily signing this Agreement, and accepts the terms of this Agreement.
|
33.
|
The Parties agree that any dispute, controversy, or claim arising out of or related to in any way to this Agreement or the Parties' employment relationship or termination of that relationship, or any breach of this Agreement or the Separation Agreement, shall be submitted to and decided by binding arbitration in Chicago, Illinois. Arbitration shall be administered under the laws of the American Arbitration Association (AAA) in accordance with the AAA’s Employment Arbitration Rules in effect at the time the arbitration is commenced. The AAA’s rules are also available online at www.adr.org. Discovery in any arbitration proceeding shall be conducted according to the AAA’s Employment Arbitration Rules. To the extent not provided for in the AAA’s Employment Arbitration Rules, the Arbitrator has the power to order discovery upon a showing that discovery is necessary for a party to have a fair opportunity to present a claim or defense.
|
34.
|
This agreement to arbitrate covers all grievances, disputes, claims, or causes of action that otherwise could be brought in a federal, state, or local court or agency under applicable federal, state, or local laws, arising out of or relating to Swets’ employment and the termination thereof, including claims Swets may have against Kingsway or against its officers, directors, supervisors, managers, employees, or agents in their capacity as such or otherwise, or that Kingsway may have against Swets. The claims covered by this agreement to arbitrate include, but are not limited to, claims for breach of any contract or covenant (express or implied), tort claims, claims for wages, or other compensation due, claims for wrongful termination (constructive or actual), claims for discrimination or harassment (including, but not limited to, harassment or discrimination based on race, age, color, sex, gender, national origin, alienage or citizenship status, ancestry, creed, religion, marital status, partnership status, military status, unfavorable discharge from military service, order of protection status, predisposing genetic characteristics, medical condition, psychological condition, mental condition, criminal accusations and convictions, arrest record, expunged or sealed convictions, disability, pregnancy, sexual orientation, or any other trait or characteristic protected by federal, state, or local law), and claims for violation of any federal, state, local, or other governmental law, statute, regulation, or ordinance relating to the matters set forth in Paragraph 34 hereof.
|
35.
|
Swets and Kingsway expressly intend and agree that: (a) class action and representative action procedures shall not be asserted, nor will they apply, in any arbitration; (b) each will not assert class action or representative action claims against the other in arbitration or otherwise; and (c) Swets and Kingsway shall only submit their own, individual claims in arbitration and will not seek to represent the interests of any other person. Further, Swets and Kingsway expressly intend and agree that any claims by Swets will not be joined, consolidated, or heard together with claims of any other employee.
|
36.
|
Any arbitral award determination shall be final and binding upon the Parties. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
|
37.
|
If any provision of this agreement to arbitrate is adjudged to be void or otherwise unenforceable, in whole or in part, the void or unenforceable provision shall be severed and such adjudication shall not affect the validity of the remainder of this agreement to arbitrate.
|
38.
|
Any and all notices or other communications hereunder shall be in writing and shall be deemed properly served (i) on the date sent if transmitted by hand delivery with receipt therefore, (ii) on the date of transmittal if sent by email if sent on a business day, if not, on the next succeeding business day, (iii) one business day after the notice is deposited with an overnight courier, or (iv) three (3)
|
39.
|
All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.
|
|
|
KINGSWAY AMERICA INC.
|
||
|
|
Per:
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
Witness
|
Name: Larry Gene Swets, Jr.
|
1.
|
Risk mitigation
|
a.
|
Scope
: Swets agrees to cooperate with Kingsway in the truthful and honest investigation, prosecution and/or defense of any claim in which Kingsway or any of its subsidiaries or KFS may have an interest, which may include, without limitation, making himself available on a reasonable basis to participate in any legal or regulatory proceeding involving any of such persons, allowing himself to be interviewed by representatives of Kingsway, participating as requested in interviews and/or preparation by any of such persons of other witnesses, protecting the applicable legal privileges of such persons, appearing for depositions and testimony without requiring a subpoena, and producing and/or providing any documents or names of other persons with relevant information.
|
b.
|
Payment
: For this work, after the termination or expiration of the Term, Swets will be paid on an hourly basis at a rate of USD $375 per hour, and shall invoice Kingsway for such work, in accordance with the terms of the Agreement.
|
c.
|
Term
: As set out in the Agreement, these services shall continue for a period of up to five (5) years after termination, or such longer period as may be agreed to by the Parties, as they are required by Kingsway.
|
2.
|
Value maximization and monetization of investments
|
a.
|
Scope
: Assisting the KFS Board and Kingsway management team with the review, evaluation, management and monetization of certain investments within the knowledge of Swets during his tenure with Kingsway and KFS.
|
3.
|
Assessment of transaction opportunities
|
a.
|
Scope
: Assisting the KFS Board and Kingsway management team with the creation, sourcing and evaluation of investment structures and opportunities consistent with Kingsway's investment objectives.
|
4.
|
Ongoing capital-raising efforts
|
a.
|
Scope
: Assisting the Board and Kingsway management team with ongoing efforts of Kingsway and its affiliates to raise capital privately or publicly.
|
BETWEEN:
|
|
|
|
KINGSWAY FINANCIAL SERVICES INC.,
incorporated pursuant to the laws of the Province of Ontario |
|
|
(hereinafter called the
“Corporation”
)
|
|
|
|
OF THE FIRST PART
|
|
- and -
|
|
|
LARRY G. SWETS, JR.
(hereinafter called the “Participant” ) |
|
|
|
OF THE SECOND PART
|
|
|
|
1.
|
In this Agreement and in any amendments hereto, words and phrases as used herein shall have the same meaning as used in the Plan.
|
2.
|
The Participant acknowledges and agrees that 1,032,665 shares represented by the Original Grant are hereby forfeited by the Participant as of his termination of employment with the Company and that the Restricted Shares shall be held by the Participant subject to the terms and conditions hereinafter set out and those of the Plan.
|
3.
|
The Restricted Shares shall become fully vested, and the Restriction Period shall lapse, upon (i) the completion of the sale by 1347 Investors LLC of its entire interest in the common shares of Limbach Holdings, Inc. and (ii) the subsequent completion of the liquidation of 1347 Investors LLC and distribution of its assets to its members.
|
4.
|
During the Restriction Period, the Restricted Shares shall be held by a custodian in book entry form with restrictions on such shares duly noted or, alternatively, a certificate or certificates representing the Restricted Shares shall be registered in the Participant’s name and may bear a legend, in addition to any legend which may be required pursuant to the Plan, indicating that the ownership of the Common Shares represented by such certificate is subject to the restrictions, terms and conditions of the Plan and this Agreement. All such certificates shall be deposited with the Corporation, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate, which would permit transfer to the Corporation for cancellation all or a portion of the Restricted Shares in the event they are forfeited in whole or in part. Upon termination of the Restriction Period, subject to the Corporation’s right to require payment of any taxes in accordance with the Plan, the restrictions shall be removed from the requisite number of any Common Shares that are held in book entry form, and all certificates evidencing ownership of the requisite number of Common Shares shall be delivered to the Participant.
|
5.
|
The Participant shall have all rights as a shareholder of the Corporation, including, but not limited to, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Shares;
provided
,
however
, that (i) the Participant shall not be permitted to vote the Restricted Shares until they have vested and (ii) any distribution with respect to Common Shares shall be deposited with the Corporation and shall be subject to the same restrictions as the Common Shares with respect to which such distribution was made.
|
6.
|
Notwithstanding anything herein to the contrary, the underlying Common Shares may not be sold in the United States unless a Registration Statement on Form S-8 under the United States Securities Act of 1933 is in effect with respect to the Plan and the Common Shares issuable in connection with awards under the Plan. A Registration Statement on Form S-8 in connection with the Plan was filed with the U.S. Securities and Exchange Commission on February 24, 2014.
|
7.
|
The Participant understands that the Participant is solely responsible for all tax consequences to the Participant in connection with this award. The Participant represents that the Participant has consulted with any tax consultants the Participant deems advisable in connection with the award and that the Participant is not relying on the Corporation for any tax advice. By accepting this revised Agreement, the Participant acknowledges that he is required to submit to the Company the minimum statutory tax withholding requirements described in paragraph 8 below not later than one business day after the Company has determined, in good faith, that the Restricted Shares are taxable under Section 83 of the Internal Revenue Code.
|
8.
|
Prior to the delivery of the certificates for any Common Shares upon vesting under paragraph 4 above, the Participant shall have paid all federal, state, local or other taxes that are required to be withheld or paid in connection with such award. For avoidance of doubt, as of the date of this Agreement, the minimum statutory required withholding rate for federal income taxes with respect to the taxation of this award is (i) 22% for any taxable amount up to $1,000,000 and (ii) 37% for any taxable amount in excess of $1,000,000. The Participant may satisfy any such obligation by any of the following means: (A) a cash payment to the Corporation; (B) authorizing the Corporation to withhold from the Restricted Shares the whole Common Shares which would otherwise be delivered or available for vesting having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation; or (C) any combination of (A) or (B). Common Shares to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate. Any fraction of a Common Share which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder.
|
9.
|
Nothing in the Plan or herein confers upon the Participant any right to continue as a service provider to the Corporation or any Subsidiary in any capacity or affect in any way the right of the Corporation or any Subsidiary to terminate any service provider relationship at any time.
|
10.
|
Time shall be of the essence of this Agreement.
|
11.
|
The Restricted Shares are personal to the Participant and, subject to the provisions of the Plan, are non-assignable.
|
12.
|
This Agreement shall inure to the benefit of and be binding upon the Corporation, its successors and assigns, and the Participant and his legal personal representatives. This Agreement shall not be assignable by the Participant or his legal personal representatives.
|
13.
|
This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario.
|
14.
|
In the event of any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan shall prevail except with respect to Sections 3, 7 and 8 of this Agreement, the terms of which such Sections shall prevail if such terms conflict with any of the provisions of the Plan.
|
15.
|
This Agreement supersedes in its entirety that certain Restricted Stock Agreement dated as of March 28, 2014.
|
16.
|
All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.
|
|
)
|
LARRY G. SWETS, JR.
|
|
)
|
|
|
)
|
|
|
)
|
|
Witness
|
|
|
|
)
|
|
|
)
|
|
|
)
|
KINGSWAY FINANCIAL SERVICES INC.
|
|
)
|
|
|
)
|
|
|
)
|
Per:
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
SELLER
:
1347 CAPITAL LLC
|
|
By: ____________________
Name: Hassan Baqar
Title: Managing Director
|
|
BUYER
:
IGI PARTNERS, LLC
|
|
By_____________________
Name: Larry Swets
Title: President of Itasca Golf Managers, Inc., its Manager
|