KINGSWAY ANNOUNCES CHANGE IN CHIEF EXECUTIVE OFFICER

Toronto, Ontario (September 5, 2018) - (TSX: KFS, NYSE: KFS) Kingsway Financial Services Inc. (“Kingsway” or the “Company”) is pleased to announce that Mr. John T. (“JT“) Fitzgerald, formerly the Company's President and Chief Operating Officer, has been appointed to the role of Chief Executive Officer and President effective today.

Mr. Larry G. Swets, Jr., former Chief Executive Officer, will transition to a role as Senior Advisor to the Company and will remain on the Company’s Board of Directors.

“JT's appointment and the orderly transition announced today are the culmination of a careful and deliberate process overseen by the Board of Directors,” said Terence Kavanagh, Chairman of Kingsway’s Board of Directors. “The Board believes this is the appropriate time for a transition given the anticipated completion of the Mendota sale and the shift in focus away from merchant banking activities towards executing our Extended Warranty Segment strategy. We have been impressed by JT's contributions to the Company in his role as President and COO and are confident that he is the right leader to guide Kingsway through the next phase of its evolution. We are also pleased that Larry will continue as a Senior Advisor and Director and will focus on maximizing the value of our portfolio of passive investments and our NOL utilization strategy via our Leased Real Estate segment.”

Mr. Fitzgerald stated, “I am honored to lead this great company and eager to begin expanding upon the foundation built by Larry. I believe Kingsway's portfolio of operating companies has excellent organic growth opportunities and margin improvement potential. I also believe that we will have opportunities to grow our portfolio via strategic acquisitions. I look forward to working with our talented and dedicated team to help Kingsway grow and prosper.”

Mr. Kavanagh continued, “Over the last decade at Kingsway, Larry accomplished much, and we are thankful for his outstanding leadership during his entire tenure. As CEO, Larry significantly improved Kingsway, restructuring its balance sheet, delivering strong returns in its portfolio, and building a great team. Under Larry's leadership, Kingsway became a stronger and more focused company, and now consists of businesses with talented leadership and strong market positions. The Board looks forward to its ongoing involvement with Larry as both an Advisor to and Director of the Company.”

Mr. Swets said, “It has been a privilege to lead Kingsway for the past eight years. I am proud of all that the team has accomplished, and I’m very pleased that JT Fitzgerald has been appointed to succeed me. This transition represents the natural evolution of the collaborative relationship JT and I have developed since he joined the Company. I look forward to my ongoing involvement and specific focus on NOL utilization and investment value maximization, and I share the Board's confidence that Kingsway will flourish under JT’s leadership.”

As CEO, Mr. Fitzgerald will continue to serve on Kingsway’s Board of Directors, which he joined in April 2016.

About the Company

Kingsway is a holding company that owns or controls subsidiaries primarily in the insurance, extended warranty, asset management and real estate industries. The common shares of Kingsway are listed on the Toronto Stock Exchange and the New York Stock Exchange under the trading symbol “KFS.”

 

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. Words such as “expects,” “believes,” “anticipates,” “intends,” “estimates,” “seeks” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect Kingsway management’s current beliefs, based on information currently available and include statements relating to the proposed sale of our insurance subsidiaries. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including the failure to consummate the proposed sale of our insurance subsidiaries, the failure to obtain necessary regulatory approvals and the diversion of management time on transaction-related matters. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the section entitled “Risk Factors” in the Company’s 2017 Annual Report on Form 10-K. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Additional Information

Additional information about Kingsway, including a copy of its 2017 Annual Report and filings on Forms 10-Q and 8-K, can be accessed on the Canadian Securities Administrators’ website at www.sedar.com , on the EDGAR section of the U.S. Securities and Exchange Commission’s website at www.sec.gov or through the Company’s website at www.kingsway-financial.com .

September 5, 2018

John T. Fitzgerald

888 E. Deerpath Rd.

Lake Forest, IL 60045

Dear JT:

We are pleased to offer you the role of President and CEO of Kingsway. The following is a summary of the principal terms of the offer we agreed to in our conversations in New York:

Position: President and CEO, Director

Base Salary: $500,000 annually

Annual Cash Bonus: 2018 and 2019 cash bonus will be 10% of Warranty segment EBITDA minus Holding Company general expenses. Holding Company general expenses will exclude intercompany interest income/expense, interest on external debt, gain/loss on disposal of subsidiaries, fair value of debt, and other mutually agreeable non-recurring or restructuring expenses. The Bonus will be paid no later than April 30 ^th of the year following the bonus period.

Existing Equity Grant: Existing 500,000 share grant to include provisions for pro rata time vesting for termination without ‘cause’ or resignation for ‘good reason’.

New Equity Grant: An additional restricted stock grant – subject to shareholder approval -- of 1,000,000 shares of KFS stock with 100,000 shares vesting annually on each anniversary of the acceptance of the position of CEO.

Severance Agreement: 12months of base salary and other terms consistent with the current severance agreements of other executive managers.

If you agree that the terms set forth above represent our mutual understanding, please sign this letter in the space provided below and return a copy to me.

We look forward to working with you!

Best,

Terence Kavanagh

Chairman of the Board of Directors

Kingsway Financial Services Inc.

I accept these terms: _______________________________________

John T. Fitzgerald

KINGSWAY FINANCIAL SERVICES INC.

45 Saint Clair Avenue West, Suite 400, Toronto, Ontario M4V1K9 (416) 848-1171 Fax: (416) 850-5439

September 5, 2018

John T. Fitzgerald

888 East Deerpath Road

Lake Forest, IL 60045

Dear John,

In connection with your employment with Kingsway America Inc. ("Company" or we), this letter shall constitute our sole agreement relating to amounts owing to you in connection with any termination of your employment. For the avoidance of doubt, the severance payment contemplated herein supersedes and replaces any other severance payment offered by the Company, such as under the Kingsway America Inc. Severance Plan, but does not affect your rights with respect to COBRA or any other state statutes, if any.

In the event that we terminate your employment without Cause (as hereinafter defined), or you terminate your employment for Constructive Termination (as hereinafter defined), we will pay you as severance an amount equal to twelve (12) months base salary at the rate being paid on the date your employment is terminated, less applicable withholdings, in one (1) lump-sum payment no later than fourteen (14) days after your separation date.

For purposes of this agreement, “Cause” shall mean the Participant’s involuntary termination of employment by the Corporation upon the occurrence of any of the following by the Participant:  (i) an intentional act of fraud, embezzlement, theft, or any other illegal act against the Corporation, any of which would constitute a felony; (ii) the Participant’s improper disclosure or use of the Corporation’s confidential information but only where the Corporation has established that such disclosure or use has financially and materially injured the Corporation; or (iii) a material breach of the Participant’s duty of loyalty to the Corporation but only where the Corporation has established that such breach has financially and materially injured the Corporation.

For purposes of this agreement, “Constructive Termination” shall mean the voluntary termination of employment by a Participant within forty-five (45) days following written notice to each independent member of the Board of Directors setting forth in reasonable detail the occurrence of any of the following events without the Participant’s written consent that is not cured by the Corporation within thirty (30) days after such notice: (i) any material diminution in job duties and responsibilities or the imposition of job requirements materially inconsistent with Participant’s position with the Corporation; (ii) a reduction in Participant’s then-current base salary, other than an across-the-board reduction of no more than ten percent (10%) in the base salary of all executive level employees, (iii) a material reduction in the Participant’s annual incentive compensation opportunities; or (iv) the Participant has established that he has been subject to a hostile work environment.

No severance payment whatsoever shall be payable upon your voluntary resignation without Constructive Termination or upon termination of your employment for Cause.

As consideration for the severance and benefits to be provided to you pursuant to this letter and as a condition to your receipt of any payments hereunder, you agree to execute a separation and release agreement in which you will agree to release any and all claims against the Company, other than (1) claims for unemployment compensation; (2) indemnification rights existing at law, pursuant to the bylaws of Employer or any of its parents, subsidiaries, or affiliates, or under any separate written agreement; (3) coverage rights under directors and officers policies of insurance; and (4) vested employee benefits, if any.

Sincerely,

KINGSWAY AMERICA INC.

By: ________________________________

Terence M. Kavanagh

Chairman, Kingsway Financial Services Inc.

By: ________________________________

William A. Hickey, Jr.

Vice President and Chief Operating Officer

Kingsway America Inc.

Acknowledgment:

By: _________________________________

John T. Fitzgerald

RESTRICTED STOCK AGREEMENT

MEMORANDUM OF AGREEMENT (this “ Agreement ”) made as of the 5th day of September, 2018.

WHEREAS, the Corporation has established the Kingsway Financial Services Inc. 2013 Equity Incentive Plan, as amended from time to time (the “Plan” ), to attract, retain and motivate persons as officers and other employees of the Corporation and its Subsidiaries and to advance the interests of the Corporation by providing such persons with the opportunity to acquire an increased proprietary interest in the Corporation pursuant to and in accordance with the Plan;

WHEREAS, the Participant was previously granted 500,000 restricted stock units of the Corporation (the “ Original RSU Grant ”) pursuant to that certain Restricted Stock Unit Agreement, dated August 24, 2016, by and between the Participant and the Corporation (the “ Original Grant Agreement ”);

WHEREAS, effective as of the execution and delivery of this Agreement, the Original RSU Grant shall be cancelled and of no force or effect; and

WHEREAS, the Participant is an officer or employee of the Corporation, or one of its Subsidiaries, and the Board of Directors of the Corporation has authorized the granting to the Participant by the Corporation of 500,000 shares of Restricted Stock pursuant to this Agreement.

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Corporation, it is agreed by and between the parties hereto as follows:

“Cause”  shall mean the Participant’s involuntary termination of employment by the Corporation upon the occurrence of any of the following by the Participant:  (i) an intentional act of fraud, embezzlement, theft, or any other illegal act against the Corporation, any of which would constitute a felony; (ii) the Participant’s improper disclosure or use of the

Corporation’s confidential information but only where the Corporation has established that such disclosure or use has financially and materially injured the Corporation; or (iii) a material breach of the Participant’s duty of loyalty to the Corporation but only where the Corporation has established that such breach has financially and materially injured the Corporation.

“Constructive Resignation” shall mean the Participant’s voluntary termination of employment by the Corporation as a result of the Participant’s habitual neglect or gross negligence in the performance of the Participant’s duties and responsibilities that has a material adverse effect on the business or financial condition of the Corporation, after written notice from the Board setting forth the facts in reasonable detail constituting habitual neglect or gross negligence that the Participant does not cure within thirty (30) days of such notice.

“Constructive Termination” shall mean the voluntary termination of employment by a Participant within forty-five (45) days following written notice to each independent member of the Board of Directors setting forth in reasonable detail the occurrence of any of the following events without the Participant’s written consent that is not cured by the Corporation within thirty (30) days after such notice: (i) any material diminution in job duties and responsibilities or the imposition of job requirements materially inconsistent with Participant’s position with the Corporation; (ii) a reduction in Participant’s then-current base salary, other than an across-the-board reduction of no more than ten percent (10%) in the base salary of all executive level employees, (iii) a material reduction in the Participant’s annual incentive compensation opportunities; or (iv) the Participant has established that he has been subject to a hostile work environment.

“Disability” shall mean the inability of the Participant to continue employment with the Corporation or a Subsidiary due to a long-term disability for which benefits are claimed or received under an insurance plan established by the Corporation or a Subsidiary.

August 24, 2016, and the date of the termination of employment, and all other Restricted Shares held by the Participant shall be forfeited.

Service, the Participant shall (i) notify the Corporation of such election by delivering to the Corporation a copy of the fully-executed Section 83(b) Election Form attached hereto as Exhibit A, and (ii) pay to the Corporation an amount sufficient to satisfy any taxes or other amounts required by any governmental authority to be withheld or paid over to such authority with respect to such unvested shares. The Corporation agrees that when the Participant is subject to withholding tax on W-2 of the Participant, the Corporation will accept Restricted Shares (using the Fair Market Value of the Common Shares calculated in accordance with the Plan) in an amount necessary to fulfill the withholding obligations. The Participant agrees to transfer Restricted Shares necessary to meet that obligation.

[Signature Page Follows]

IN WITNESS WHEREOF this Agreement has been executed by the parties hereto.

EXHIBIT A -- SAMPLE 83(B) ELECTION

ELECTION TO INCLUDE VALUE OF RESTRICTED PROPERTY
IN GROSS INCOME

IN YEAR OF TRANSFER UNDER CODE SECTION 83(b)

The undersigned hereby elects pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include the value of the property described below in gross income in the year of transfer and supplies the following information in accordance with the regulations promulgated thereunder:

1. The name, address and taxpayer identification number of the undersigned are:

[Name]

[Address]

[Social Security Number]

2. Description of the property with respect to which the election is being made:

[insert number of shares] common shares of Kingsway Financial Services Inc., an Ontario corporation, granted to the undersigned as restricted stock.

3. The date on which the property was transferred is [insert grant date] .

The taxable year to which this election relates is calendar year 2018

4. The nature of the restrictions to which the property is subject is:

If the employment of the undersigned terminates prior to a specified date, the undersigned will forfeit the property transferred to the undersigned.

5. Fair market value:

The fair market value (determined without regard to any restrictions) of the property with respect to which this election is being made was $ [insert fair market value of a share on grant date] per share at the time of transfer.

6. Amount paid for property:

The taxpayer has paid $0 for the property.

7. Furnishing statement to employer:

A copy of this statement has been furnished to Kingsway Financial Services Inc.

Dated: ________________

______________________________________

INDEMNIFICATION AGREEMENT

THIS AGREEMENT is made effective this ___ day of ___ by and between Kingsway Financial Services Inc., an Ontario corporation (the “ Corporation ”), and _________ (the “ Director and/or Officer ”).

WHEREAS the Director and/or Officer has agreed to serve, or continue to serve, as a director and/or officer of the Corporation or as a director, officer, trustee, manager, participating member and/or in any other similar capacity of an Other Entity (as defined below) (any one or more of which capacities constitute an “ Indemnified Capacity ”), providing that adequate liability insurance, indemnification or a combination thereof is, and will continue to be, provided;

AND WHEREAS the Corporation, in order to induce the Director and/or Officer to serve or continue to serve the Corporation and/or an Other Entity, has agreed to execute this Agreement to evidence the indemnification of the Director and/or Officer to the fullest extent permitted by law;

AND WHEREAS , as a result of such indemnification, the Director and/or Officer has agreed to serve or to continue to serve in an Indemnified Capacity;

NOW THEREFORE , in consideration of the promises, conditions, representations and warranties set forth herein, including the Director and/or Officer’s service or continued service to the Corporation and/or Other Entity, the Corporation and the Director and/or Officer hereby agree as follows:

had reasonable grounds for believing that the Director and/or Officer’s conduct was lawful;

(which conduct collectively constitutes the “ Standards of Conduct ”);

or reasonably expects that a Covered Claim or potential Covered Claim may be made, the Corporation will promptly give the Director and/or Officer notice thereof in writing (also a “ Commencement Notice ”).

Director and/or Officer against such Covered Claim or potential Covered Claim;

then the fees and expenses of such counsel employed by the Director and/or Officer shall be at the expense of the Corporation.

Officer is not entitled to be indemnified by the Corporation for such Losses and Expenses because the claim is an Excluded Claim or because the Director and/or Officer is otherwise not entitled to payment under this Agreement.

for wrongful acts alleged to have been committed prior to the inception date of such replacement insurance; or

nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided.

IN WITNESS WHEREOF , the Corporation and the Director and/or Officer have executed this Agreement as of the day and year first above written.

EMPLOYMENT SEPARATION AGREEMENT

AND RELEASE

This Employment Separation Agreement and Release (the “Agreement”) is entered into as of September 5, 2018 by and between Kingsway America Inc. (“Employer”) and Larry Gene Swets, Jr. (“Employee”) (together the “Parties”) and the Parties hereby agree as follows:

1. Employee has entered into a Senior Advisor Agreement with Employer dated as of the date hereof (the “Senior Advisor Agreement”).

2. Employee’s employment with Employer (and its current or former parent companies, subsidiaries, affiliates, predecessors, successors or assigns) will be terminated on September 5, 2018 (“Separation of Service Date”). The date of the “qualifying event” for the commencement of COBRA coverage, if applicable, shall be last day of the calendar month in which the Separation of Service Date occurred.

3. Separate and apart from any payments to be made pursuant to the Senior Advisor Agreement, and irrespective of Employee’s agreement to the terms of this Agreement, Employee will receive payment for his/her full wages and benefits through the Separation of Service Date and reimbursement of any outstanding bona fide business expenses for which Employee has submitted an expense report prior to the Separation of Service Date.

4. Employee acknowledges and agrees that he is not an “Eligible Employee” under Employer’s June 1, 2016 Amended and Restated Severance Plan (the “Severance Plan”) and is not entitled to any benefits under the Severance Plan.

5. Employer (and its current or former parent companies, subsidiaries, affiliates, predecessors, successors, insurers, directors, officers, employees, agents, or assigns) denies that it is liable to Employee for any reason whatsoever, and the entry into this Agreement and the Senior Advisor Agreement shall not constitute any admission or evidence of unlawful discrimination or improper conduct, and should not be construed as an admission of fault, wrongdoing, or liability.

6. Employer will continue to provide family medical, dental, and vision coverage through the Separation of Service Date. COBRA continuation for coverage under Employer’s Medical/Dental/Vision Plans will become available for election by Employee on the first day of the calendar month following the Separation of Service Date. Employee will be offered COBRA continuation for the medical, dental and vision coverage. Should Employee elect COBRA coverage, Employee will continue to be eligible for coverage under the group medical plans of Employer at active employee rates for a period of eighteen (18) months following the Separation of Service Date. Employee understands that as part of the special benefits that Employee will receive by signing the releases set forth herein (including the Separation Date Release), Employer will pay the cost of COBRA coverage, in excess of Employee’s monthly contribution, for the eighteen (18) months following the Separation of Service Date, provided Employee continues to make timely payments in the amount of Employee’s current contribution during the foregoing period. Thereafter, Employee shall be responsible for paying the full cost of any continued coverage under COBRA.

7. Employee holds 1,382,665 shares of restricted stock of Employer (the “Restricted Stock”), of which 1,032,665 shares will be forfeited subject to the terms of and execution of the Amended Award Agreement and the Membership Interest Purchase Agreement of even date herewith. The remaining 350,000 shares of Restricted Stock (the “Remaining Shares”) shall remain outstanding and subject to vesting pursuant to the terms set forth in the Amended Award Agreement.

8. Except as provided herein, Employee understands that his eligibility for coverage under the benefit plans of Employer will end on the Separation of Service Date. More specifically, Employee is not eligible to (a) receive any payment under Employer’s 2018 bonus plan or (b) participate in any Employer bonus plan following the Separation of Service Date. Notwithstanding the foregoing, nothing herein shall reduce or eliminate vested rights or benefits under any retirement plan (qualified or nonqualified). Employee’s stock under the employee stock matching program will vest as outlined in that plan.

9. Employee releases, forever discharges and covenants not to sue Employer or its current or former parent companies, subsidiaries, affiliates, predecessors, successors, insurers, directors, officers, employees, agents, or assigns, with respect to any and all claims, causes of action, suits, debts, sums of money, controversies, agreements, promises, damages, and demands whatsoever, including attorneys’ fees and court costs, in law or equity or before any federal, state or local administrative agency, whether known or unknown, suspected or unsuspected, which Employee has, had, or may have, based on any event occurring, or alleged to have occurred, to the date of this Agreement. This release includes, but is not limited to, claims under Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, the Rehabilitation Act, the Age Discrimination in Employment Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act, the Illinois Human Rights Act, the Illinois Wage Payment and Collection Act, the Illinois Minimum Wage Law, the Illinois Equal Pay Act, any other Illinois wage and hour laws; and any other federal, state or local statute, law, regulation, ordinance, or order, claims for retaliatory discharge, and claims arising under common law, contract, implied contract, public policy or tort. To the extent that any such claim cannot be waived as a matter of law, it is understood that Employee reserves the right to file such claim, but Employee expressly waives Employee’s right to any relief of any kind should any person or entity pursue any claim on Employee’s behalf. This Agreement does not prevent Employee from filing a charge, testifying, assisting, or cooperating with the EEOC or similar government agency, but Employee waives any right to any relief of any kind should the EEOC or similar government agency pursue any claim on Employee’s behalf. Notwithstanding the foregoing release of all claims, it is understood and agreed that the following, if any, are not released: (a) the Employer’s breach of any terms and conditions of this Agreement; (b) claims for unemployment compensation; (c) claims for workers’ compensation benefits; (d) claims for continuing health insurance coverage under COBRA; (e) any rights to indemnification arising under the Company’s certificate of incorporation, by-laws or indemnification agreement in effect on the date of the Agreement; and (f) claims pertaining to vested benefits under any retirement plan governed by the Employee Retirement Income Security Act (ERISA).

10. Employee expressly waives and relinquishes all rights and benefits provided to Employee by any statute or other law which prohibits release of unspecified claims and

acknowledges that this release is intended to include all claims Employee has or may have against Employer (or its current or former parent companies, subsidiaries, affiliates, predecessors, successors, insurers, directors, officers, employees, agents, or assigns), whether Employee is aware of them or not, and that all such claims are released by this Agreement.

11. Employee has been paid for all wages due, has suffered no occupational illness or injury, and has no other claims against Employer (or its current or former parent companies, subsidiaries, affiliates, predecessors, successors, insurers, directors, officers, employees, agents, or assigns). Employee agrees that, unless otherwise required by law or as otherwise provided in this Agreement, Employee will not in the future file, participate or testify in, encourage or instigate the filing of any complaint or lawsuit, by any party, in any federal, state or local court, against Employer (or its current or former parent companies, subsidiaries, affiliates, predecessors, successors, insurers, directors, officers, employees, agents, or assigns) based upon any event occurring prior to the date of execution of this Agreement.

12. Employee represents that Employee has not filed any charges, lawsuits or proceedings against Employer (or its current or former parent companies, subsidiaries, affiliates, predecessors, successors, insurers, directors, officers, employees, agents, or assigns) prior to this date.

13. Employee agrees to execute an additional, separate release in the form set forth in Sections 9, 10, 11 and 12 herewith dated as of the Separation of Service Date if such date is a date other than the date hereof (the “Separation Date Release”) and Employee acknowledges that the amounts payable hereunder and pursuant to the Senior Advisor Agreement are conditioned on the execution of the Separation Date Release.

14. Employer releases, forever discharges and covenants not to sue Employee or his successors, agents, or assigns, with respect to any and all claims, causes of action, suits, debts, sums of money, controversies, agreements, promises, damages, and demands whatsoever, including attorneys’ fees and court costs, in law or equity or before any federal, state or local administrative agency, whether known or unknown, suspected or unsuspected, which Employer has, had, or may have, based on any event occurring, or alleged to have occurred, to the date of this Agreement. Notwithstanding the foregoing release of all claims, it is understood and agreed that the following claims, if any, are not released: (a) the Employee’s breach of any terms and conditions of this Agreement; and (b) the Employee’s fraud, embezzlement or criminal activities during Employee’s employment with Employer.

15. Employee agrees that Employee will not retain, use, misuse or disclose, directly or indirectly, any of Employer’s Confidential Information. Employee understands and agrees that for purposes of this Agreement, “Confidential Information” includes all confidential information and trade secrets of Employer (and its parent company, subsidiaries and affiliates) to which Employee had access during his/her employment, all trade secrets and other information furnished by Employer to Employee and all information to which Employee gained access during his/her employment relationship with Employer which is non-public, confidential or proprietary in nature, whether such information is legally privileged or the property of Employer or its parent company, subsidiaries and affiliates. Confidential Information does not include Employee’s general knowledge and know-

how that is not proprietary to Employer, 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 the Employee, becomes publicly available; (b) information that Employee already rightfully possessed independent of any obligation of confidentiality; (c) information that Employee rightfully receives without obligation of confidentiality from Employer; or (d) information the Employee develops independently without using the Confidential Information. Employee recognizes that such Confidential Information is a unique asset of Employer, developed and perfected over a considerable time and at substantial expense to Employer and the disclosure of which may cause injury, loss of profits and loss of goodwill to Employer or its parent company, subsidiaries or affiliates. Employee represents and warrants that, at all times during his/her employment with Employer, Employee fully complied with any and all confidentiality agreements executed by him/her and any and all policies or directives of Employer related to the use and disclosure of Confidential Information.

16. Nothing in this Agreement prohibits Employee from reporting possible violations of law or regulation to any governmental agency or entity including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Equal Employment Opportunity Commission, and any Inspector General, or making other disclosures that are protected under the whistleblower provisions of law or regulation. Employee does not need the prior authorization of the Company to make any such reports or disclosures and Employee is not required to notify the Company that Employee has made such reports or disclosures. Employee is not precluded from receiving any monies properly awarded under the whistleblower provisions of law and regulation for complaints or disclosures made to governmental agencies.

17. This Agreement, the Senior Advisor 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 Senior Advisor Agreement and the Amended and Restated Restricted Stock Agreement that pertain to the subject matter of this Agreement, the Senior Advisor 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.

18. Employee is advised to consult with an attorney before signing this Agreement.

19. If for any reason any portion of this Agreement shall be held invalid or unenforceable, this fact shall not affect the validity or enforceability of the remaining portions of this Agreement.

20. Employee acknowledges that Employee has fully read this Agreement, understands its terms, has been advised to consult with an attorney prior to signing this Agreement and is entering into this Agreement knowingly and voluntarily.

21. 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) days after being sent by registered or certified mail, return receipt requested, first class postage prepaid, addressed as follows (or to such new address as the addressee of such a communication may have notified the sender thereof:

To Kingsway:                Kingsway America Inc.

150 Pierce Road, Suite 600

Itasca, IL 60143

Attn:    William A. Hickey, Jr.

Phone:    847-871-6416

Email:    whickey@kingswayfinancial.com

To Swets:                Larry G. Swets, Jr.

105 South Maple Street

Itasca, IL 60143

Phone:    630-824-8199

Email:    swetsholdings@gmail.com

SENIOR ADVISOR AGREEMENT

THIS AGREEMENT entered into this 5th day of September, 2018

B E T W E E N :

KINGSWAY AMERICA INC.

(“Kingsway”)

and

LARRY GENE SWETS, JR.

(“Swets”)

WHEREAS Swets has the been the President of Kingsway America Inc., since January 1, 2011 and Chief Executive Officer (“CEO”) of Kingsway Financial Services, Inc. (“KFS”) since July 1, 2010, and will be resigning from both positions effective as of September 5, 2018;

AND WHEREAS Kingsway and Swets have entered into an Employment Separation Agreement and Release dated as of the date hereof (the “Separation Agreement”);

AND WHEREAS Kingsway and its affiliates wish to retain the services of Swets for a transitional period, in light of Swets’ considerable and valuable skills, experience and institutional knowledge;

AND WHEREAS Kingsway wishes to enter into this Senior Advisor Agreement (the “Agreement”) with Swets for an initial term of twelve months from the date of the Agreement, and Swets wishes to act as a senior advisor to Kingsway for such initial term;

AND WHEREAS it is the intention of Kingsway and Swets (the “Parties”) to establish an independent contractor relationship for all purposes and not continue an employee and employer relationship;

ACCORDINGLY , for good and valuable consideration the Parties enter into this Agreement whereby Swets will provide the senior advisory services to Kingsway under the following terms:

SENIOR ADVISORY SERVICES

FEES

and additional payments will be due on the same day of each month thereafter. Swets shall also be entitled to the reimbursement of reasonable, documented, out of pocket expenses incurred by him in connection with the provision of the Services.

TERM

PROVISION OF SERVICES

NON-EXCLUSIVITY

CONFIDENTIALITY

RESTRICTIVE COVENANTS

to Kingsway and its parent and subsidiaries, and that improper use or disclosure by Swets may result in unfair or unlawful competitive activity.

NO BREACH OF OTHER OBLIGATIONS

agreement to keep confidential the proprietary information of any present or prior client, employer or proprietor of Swets or any third party.

GENERAL

ARBITRATION

days after being sent by registered or certified mail, return receipt requested, first class postage prepaid, addressed as follows (or to such new address as the addressee of such a communication may have notified the sender thereof):

To Kingsway:                Kingsway America Inc.

150 Pierce Road, Suite 600

Itasca, IL 60143

Attn:    William A. Hickey, Jr.

Phone:    847-871-6416

Email:    whickey@kingswayfinancial.com

To Swets:                Larry G. Swets, Jr.

105 South Maple Street

Itasca, IL 60143

Phone:    630-824-8199

Email:    swetsholdings@gmail.com

[ Signature page follows .]

    

DATED at Itasca, IL this 5th day of September, 2018.

DATED at Itasca, IL this 5th day of September, 2018.

    

APPENDIX “A”

Services Summary:     Unless specifically set forth otherwise below, the Senior Advisor shall be responsible for providing the following Services to Kingsway and its affiliates in exchange for payment of the base consulting fee as set forth in the attached Agreement:

AMENDED AND RESTATED RESTRICTED STOCK AGREEMENT

MEMORANDUM OF AGREEMENT (this “ Agreement ”) made as of the 5th day of September, 2018.

WHEREAS the Corporation has established the Kingsway Financial Services Inc. 2013 Equity Incentive Plan, as amended from time to time (the “Plan” ), to attract, retain and motivate persons as officers and other employees of the Corporation and its Subsidiaries and to advance the interests of the Corporation by providing such persons with the opportunity to acquire an increased proprietary interest in the Corporation pursuant to and in accordance with the Plan;

WHEREAS the Participant was previously granted 1,382,665 shares of restricted stock of the Corporation (the “ Original Grant ”);

WHEREAS, as of the termination of the Participant’s employment with the Corporation, the Participant will forfeit 1,032,665 shares of restricted stock represented by the Original Grant; and

WHEREAS, the remaining 350,000 shares of restricted stock (the “ Restricted Shares ”) will remain outstanding pursuant to this Agreement and the Plan and the Restricted Stock Agreement dated as of March 28, 2014 with respect to the Original Grant shall be amended and restated as set forth herein.

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Corporation, it is agreed by and between the parties hereto as follows:

For the avoidance of doubt, the Company believes the signing of this Agreement will be a taxable event for the Participant. As a result, the Tax Date will be deemed to be the date this Agreement is fully executed. After the signing of this Agreement, the Company will withhold from the Restricted Shares the necessary number of Common Shares having an aggregate Fair Market Value, determined as of the Tax Date, in order to meet its obligations to remit the minimum tax withholding for federal and state income and employment taxes. The Participant will be responsible to pay all taxes due to the vesting of the Restricted Shares in excess of the minimum tax withholding amount. The Company will not withhold any further Common Shares or require further withholding tax at vesting and/or delivery of the remaining Common Shares. The Participant acknowledges that he shall not have the right to compel any additional Common Shares to be acquired by the Company to meet his tax obligations.

IN WITNESS WHEREOF this Agreement has been executed by the parties hereto.

MEMBERSHIP INTEREST PURCHASE AGREEMENT

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this " Agreement "), dated as of September 5, 2018, is entered into between 1347 Capital LLC, a Delaware limited liability company (the " Seller "), and IGI Partners, LLC (the " Buyer ").

WHEREAS, Seller owns 4,572 of the issued and outstanding units, representing 45.72% of the membership percentage interest (the " Membership Interest "), of Itasca Golf Investors, LLC, an Illinois limited liability company (the " Company "); and

WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller, the Membership Interest, subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Purchase and Sale . Subject to the terms and conditions set forth herein, at the Closing (as defined in Section 2 ), Seller shall sell, transfer and assign to Buyer, and Buyer shall purchase from Seller, all of Seller's right, title and interest in and to the Membership Interest. The aggregate purchase price for the Membership Interest shall be One Million Five Hundred Thousand U.S. Dollars ($1,500,000.00) (the " Purchase Price "). In addition, Seller shall transfer to the Company the URL itascagolf.com (the “URL”).

2.      Closing . Subject to the terms and conditions contained in this Agreement, the purchase and sale of the Membership Interest contemplated hereby shall take place electronically via mutual exchange of facsimile or portable document format (.PDF) signatures (the " Closing ") on the date hereof (the " Closing Date "). The Closing will be effective as of 12:01 a.m. local time in Chicago, Illinois on the Closing Date.

3.      Representations and Warranties of Seller . Seller hereby represents and warrants to Buyer as follows:

(a)      Seller is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware.

(b)      Seller has all requisite power and authority to execute and deliver this Agreement, to carry out its obligations hereunder, and to consummate the transactions contemplated hereby. Seller has obtained all necessary approvals, including the approval of the Kingsway Financial Services Inc. (“ Kingsway ”) Audit Committee pursuant to Kingsway’s Related Party Transaction Policy dated January 6, 2017, for the execution and delivery of this Agreement, the performance of

its obligations hereunder, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Seller and (assuming due authorization, execution and delivery by Buyer) constitutes Seller's legal, valid and binding obligation, enforceable against Seller in accordance with its terms.

(c)      The Membership Interest and the URL is owned of record and beneficially by Seller, free and clear of all liens, pledges, security interests, charges, claims, encumbrances, agreements, options, voting trusts, proxies and other arrangements or restrictions of any kind (" Encumbrances ").

(d)      The execution, delivery and performance by Seller of this Agreement do not conflict with, violate or result in the breach of, or create any Encumbrance on the Membership Interest pursuant to, any agreement, instrument, order, judgment, decree, law or governmental regulation to which Seller is a party or is subject or by which the Membership Interest is bound.

(e)      No governmental, administrative or other third party consents or approvals are required by or with respect to Seller in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

(f)      There are no actions, suits, claims, investigations or other legal proceedings pending or, to the knowledge of Seller, threatened against or by Seller that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.

(g)      No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller.

(h)      Seller has had full access to the financial statements and materials of the Company, including but not limited to the appraisal of the Itasca Country Club, information concerning offers and inquires by prospective purchasers, tax returns and all other information of any type that Seller wanted to review. Seller is not relying on any statement or representation of Buyer and has conducted its own due diligence prior to arriving at the Purchase Price.

4.      Representation and Warranties of Buyer .

(a)      Buyer is an Illinois limited liability company duly organized, validly existing and in good standing under the laws of the State of Illinois.

(b)      Buyer has all requisite power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by Buyer of this Agreement, the performance by Buyer of its obligations hereunder and the consummation by Buyer of the transactions contemplated hereby have been duly authorized

by all requisite action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and (assuming due authorization, execution and delivery by Seller) this Agreement constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms.

(c)      Buyer is acquiring the Membership Interest solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Buyer acknowledges that the Membership Interest is not registered under the Securities Act of 1933, as amended, or any state securities laws, and that the Membership Interest may not be transferred or sold except pursuant to the registration provisions of the Securities Act of 1933, as amended or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable.

(d)      No governmental, administrative or other third party consents or approvals are required by or with respect to Buyer in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

(e)      There are no actions, suits, claims, investigations or other legal proceedings pending or, to the knowledge of Buyer, threatened against or by Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.

(f)      No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer.

(g)      Buyer has had full access to the financial statements and materials of the Company, including but not limited to the appraisal of the Itasca Country Club, information concerning offers and inquires by prospective purchasers, tax returns and all other information of any type that Buyer wanted to review. Buyer is not relying on any statement or representation of Seller and has conducted its own due diligence prior to arriving at the Purchase Price.

5.      Survival . All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Closing hereunder.

6.      Further Assurances . Following the Closing, each of the parties hereto shall execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

7.      Expenses . 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.

8.      Entire Agreement . This Agreement constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter.

9.      Successor and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. No party may assign any of its rights or obligations hereunder without the prior written consent of the other parties hereto, which consent shall not be unreasonably withheld or delayed.

10.      Headings . The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

11.      Amendment and Modification; Waiver . This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

12.      Severability . If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

13.      Governing Law; Submission to Jurisdiction; Waiver of Jury Trial . This Agreement shall be governed by and construed in accordance with the internal laws of the State of Illinois without giving effect to any choice or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction). Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the United States District Court for the Northern District of Illinois or the Circuit Court for the Eighteenth Judicial Circuit located in DuPage County, Illinois, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive

and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES TO SUBMIT TO A TRIAL BY JUDGE, AND WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY, IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

14.      Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.