TAX BENEFIT PRESERVATION PLAN AGREEMENT
DATED AS OF SEPTEMBER 27, 2010
BETWEEN
KINGSWAY FINANCIAL SERVICES INC.
AND
COMPUTERSHARE INVESTOR SERVICES INC.
AS RIGHTS AGENT

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TAX BENEFIT PRESERVATION PLAN AGREEMENT
This TAX BENEFIT PRESERVATION PLAN AGREEMENT, dated as of September 27, 2010
(this "Agreement"), between KINGSWAY FINANCIAL SERVICES INC., a corporation
incorporated under the laws of the Province of Ontario (the "Corporation"), and
COMPUTERSHARE INVESTOR SERVICES INC., a company existing under the laws of
Canada (the "Rights Agent").
WHEREAS:
(a)
The Corporation (or one or more of its Subsidiaries) has generated net operating
loss carryovers for United States income tax purposes.

(b)
The ability to preserve and use these net operating losses (the "NOLs") may be
limited or impaired by future ownership changes within the meeting of
Section 382 of the United States Internal Revenue Code.

(c)
The Board of Directors of the Corporation, in the exercise of its fiduciary
duties, has determined that it is advisable and in the best interest of the
Corporation to adopt and maintain a tax benefit preservation plan (the "Plan")
to deter ownership changes that may adversely affect the Corporation's or its
Subsidiaries' ability to utilize tax benefits and thereby seek to preserve their
ability to use the NOLs.

(d)
In order to implement the adoption of the Plan, the Board of Directors has
authorized:

i.
and declared the issuance of one purchase right (a "Right") effective as of the
Record Time in respect of each Common Share outstanding at the Record Time; and

ii.
the issuance of one Right in respect of each Common Share issued after the
Record Time and before the earliest of the Distribution Date, the Redemption
Date, the Early Expiration Date and the Final Expiration Date.

(e)
Each Right entitles the holder thereof, after the Distribution Date, to purchase
securities of the Corporation pursuant to the terms and subject to the
conditions set forth in this Agreement.

(f)
The Corporation has appointed the Rights Agent to act on behalf of the
Corporation and the holders of Rights, and the Rights Agent has agreed to act on
behalf of the Corporation in connection with the issuance, transfer, exchange
and replacement of Rights Certificates, the

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exercise of Rights and other matters referred to in this Agreement.
(g)
Capitalized terms used above without definition have the meanings given to them
in Section 1 of this Agreement.

NOW, THEREFORE, in consideration of the premises and the respective agreements
set forth herein, the Corporation and the Rights Agent agree as follows:
Section 1.Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
"1933 Securities Act" means the Securities Act of 1933 of the United States, as
amended.
"1934 Exchange Act" means the Securities Exchange Act of 1934 of the United
States, as amended.
"5% Shareholder" means (i) a Person or group of Persons that is a "5-percent
shareholder" of the Corporation pursuant to Treasury Regulation
Section 1.382-2T(g) or (ii) a Person that is a "first tier entity" or "higher
tier entity" (as such terms are defined in Treasury Regulation
Section 1.382-2T(f)) of the Corporation if that Person has a "public group" or
individual, or a "higher tier entity" of that Person has a "public group" or
individual, that is treated as a "5-percent shareholder" of the Corporation
pursuant to Treasury Regulation Section 1.382-2T(g).
"Acquire" (or "Own") means to obtain (or have, respectively) ownership for
purposes of Section 382 of the Code without regard to the constructive ownership
rules described in Treasury Regulation Section 1.382‑2T(h)(2), (h)(3) and (k)
(and "Acquisition" shall have a correlative meaning).
"Acquiring Person" means any Person who or which is or becomes a 5% Shareholder
(other than by reason of Treasury Regulation Section 1.382-2T(j)(3)(i) or solely
as a result of a transaction in which no "5-percent shareholder" (as defined in
Section 382 and Treasury Regulations thereunder) experiences an increase in its
percentage stock ownership interest of the Corporation, as determined in
accordance with Treasury Regulation Sections 1.382-2(a), 1.382- 2T(g), (h), (j)
and (k)), whether or not such Person continues to be a 5% Shareholder, but shall
not include:
(i)    any Exempt Person;
(ii)    any Grandfathered Person;
(iii)    any Person who or which the Board determines, in its sole discretion,
has inadvertently become a 5% Shareholder (or has inadvertently failed to
continue to qualify as a Grandfathered Person), so

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long as such Person promptly enters into, and delivers to the Corporation, an
irrevocable commitment promptly to divest and thereafter promptly divests
(without exercising or retaining any power, including voting, with respect to
such securities), sufficient Corporation Securities so that such Person's
Percentage Stock Ownership is less than 5% (or, in the case of any Person who or
which has inadvertently failed to continue to qualify as a Grandfathered Person,
the Corporation Securities that caused such Person to so fail to qualify as a
Grandfathered Person);
(iv)    any Person that has become a 5% Shareholder if the Board in good faith
determines that such Person's attainment of 5% Shareholder status has not
jeopardized or endangered the Corporation's utilization of the Tax Benefits or
is otherwise in the best interests of the Corporation; provided that such Person
does not increase its Percentage Stock Ownership over such Person's lowest
Percentage Stock Ownership immediately following such determination by the
Board, other than any increase pursuant to or as a result of (A) a stock
dividend, rights dividend, stock split, reverse stock split or similar
transaction effected by the Corporation or (B) any redemption of Corporation
Securities by the Corporation; and provided further that such Person shall be an
"Acquiring Person" if the Board makes a contrary determination in good faith;
and
(v)    any Person if, on the date that would have been (absent this clause (v)
of the definition of "Acquiring Person") a Shares Acquisition Date with respect
to such Person, such Person does not Beneficially Own any Corporation
Securities.
"Affiliate" means, with respect to any Person, any Person directly or indirectly
controlling, controlled by or under common control with, such other Person;
provided, however, that a Person will not be deemed to be the Affiliate of
another Person solely because either or both Persons are or were directors of
the Corporation. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control with")
when used with respect to any Person, means the possession, directly or
indirectly, of the power to cause the direction of management and/or policies of
such Person, whether through the ownership of voting securities by contract or
otherwise.
A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to
"Beneficially Own", any securities (i) which such Person directly owns or
(ii) which such Person would be deemed to constructively own pursuant to
Section 382 and the Treasury Regulations promulgated thereunder.
"Authorized Officer" is used with the meaning set forth in Section 5.
"Board" or "Board of Directors" means the Board of Directors of the Corporation.

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"Business Day" means any day other than a Saturday, a Sunday, or a day on which
banking institutions in Toronto, Ontario are authorized or obligated by law or
executive order to close.
"Canadian-U.S. Exchange Rate" shall mean on any date the inverse of the
U.S.-Canadian Exchange Rate.
"Canadian Dollar Equivalent" of any amount which is expressed in United States
dollars shall mean on any day the Canadian dollar equivalent of such amount
determined by reference to the Canadian-U.S. Exchange Rate on such date.
"Close of Business" on any given date means the time on such date (or if such
date is not a Business Day, the time on the next succeeding Business Day) at
which the office of the transfer agent of the Common Shares in the City of
Toronto (or after the Distribution Date, the office of the Rights Agent in the
City of Toronto) is closed to the public.
"Code" means the Internal Revenue Code of 1986 of the United States, as amended
from time to time, or any successor statute.
"Common Stock" or "Common Shares" when used with reference to the Corporation
shall mean the Common Shares in the capital of the Corporation. "Common Stock"
when used with reference to any Person other than the Corporation shall mean the
capital stock (or equity interest) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
"Corporation Securities" means (i) Common Shares, (ii) warrants, rights, or
options (including any interest treated as an option pursuant to Treasury
Regulation Section 1.382-4(d)(9)) to acquire Common Shares and (iii) any other
interest that would be treated as "stock" of the Corporation pursuant to
Treasury Regulation Section 1.382- 2T(f)(18).
"Distribution Date" means the tenth day after the Shares Acquisition Date
(including any such Shares Acquisition Date which is after the date of this
Agreement and prior to the issuance of the Rights); provided that if such tenth
day occurs prior to Shareholder Approval, the Distribution Date shall be the
tenth day after the date of Shareholder Approval.
"Early Expiration Date" is used with the meaning set forth in Section 7(a).
"Exchange Ratio" is used with the meaning set forth in Section 25(a).

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"Exempt Person" means the Corporation, any Subsidiary of the Corporation (in
each case including, without limitation, in any fiduciary capacity), any
employee benefit plan or compensation arrangement of the Corporation or any
Subsidiary of the Corporation, or any entity or trustee holding Corporation
Securities to the extent organized, appointed or established by the Corporation
or any Subsidiary of the Corporation for or pursuant to the terms of any such
employee benefit plan or compensation arrangement.
"Final Expiration Date" is used with the meaning set forth in Section 7(a).
"Grandfathered Person" means:
(i)    any Person who would otherwise qualify as an Acquiring Person as of
immediately prior to the public announcement of this Agreement, unless and until
such Person's Percentage Stock Ownership shall be increased by more than
one-tenth of one percentage point over such Person's lowest Percentage Stock
Ownership immediately prior to the public announcement of this Agreement or
thereafter, other than any increase pursuant to or as a result of (A) the
exercise of any option, warrant or convertible instrument to purchase
Corporation Securities that such Person held immediately prior to the public
announcement of this Agreement, (B) a stock dividend, rights dividend, stock
split, reverse stock split or similar transaction effected by the Corporation,
or (C) any redemption or repurchase of Corporation Securities by the
Corporation; and
(ii)    any Person who would otherwise qualify as an Acquiring Person as a
result of a redemption or repurchase of Corporation Securities by the
Corporation, unless and until such Person's Percentage Stock Ownership shall be
increased by more than one-tenth of one percentage point over such Person's
lowest Percentage Stock Ownership on or after the date of such redemption or
repurchase, other than any increase pursuant to or as a result of (A) a stock
dividend, rights dividend, stock split, reverse stock split or similar
transaction effected by the Corporation or (B) any subsequent redemption or
repurchase of Corporation Securities by the Corporation.
"Ontario Securities Act" means the Securities Act (Ontario), and the
regulations, rules, policies and notices made thereunder, and any comparable or
successor laws, regulations, rules, policies or notices thereto.
"Percentage Stock Ownership" means the percentage stock ownership interest of
the Corporation, as determined in accordance with Treasury Regulation
Sections 1.382-2(a)(3), 1.382-2T(g), (h), (j) and (k); provided, however, that
for the sole purpose of determining the percentage stock ownership of any entity
(and not for the purpose of determining the percentage stock ownership of any
other Person), Corporation Securities held by such entity shall not be treated
as no longer owned by such entity pursuant to Treasury Regulation Section 1.382-
2T(h)(2)(i)(A).

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"Person" means any individual, firm, corporation, partnership, limited liability
company, limited liability partnership, trust, estate or other entity, or any
group of Persons making a "coordinated acquisition" of shares or otherwise
treated as an entity within the meaning of Treasury Regulation
Section 1.382-3(a)(1) and shall include any successor (by merger or otherwise)
of any such entity, but shall not include a Public Group (as such term is
defined in Treasury Regulation Section 1.382-2T(f)(13)).
"Purchase Price" is used with the meaning set forth in Section 7.
"Record Time" means the Close of Business on September 27, 2010.
"Redemption Date" is used with the meaning set forth in Section 7(a).
"Redemption Price" is used with the meaning set forth in Section 24(a).
"Right" is used with the meaning set forth in the second paragraph of the
Recitals to this Agreement.
"Rights Certificate" is used with the meaning set forth in Section 3(a).
"Section 382" means Section 382 of the Code, or any successor provision or
replacement provision.
"Shareholder Approval" means the approval of this Agreement by a majority of the
votes cast by the holders of Common Shares entitled to vote and present in
person or represented by proxy at a meeting of shareholders of the Corporation
duly held in accordance with the Corporation's articles and by-laws and
applicable law, and such other approval as is required by the Toronto Stock
Exchange.
"Shares Acquisition Date" means the first date of public announcement by the
Corporation or an Acquiring Person, prior to the earliest of the Redemption
Date, the Early Expiration Date and the Final Expiration Date, that a Person has
become an Acquiring Person.
"Subsidiary" of any Person means any corporation or other entity of which a
majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person.
"Summary of Rights" is used with the meaning set forth in Section 3(b).
"Tax Benefits" means the net operating loss carryovers, capital loss carryovers,
general business credit carryovers, alternative minimum tax credit carryovers
and foreign tax credit carryovers, as well as any loss or deduction attributable
to a "net unrealized built-in loss" within the meaning of Section 382, of the
Corporation or

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any of its Subsidiaries.
"Trading Day" is used with the meaning set forth in Section 11(b).
"Treasury Regulation" means any final, temporary or proposed income tax
regulation promulgated under the Code, including any amendments thereto.
"U.S.-Canadian Exchange Rate" shall mean on any date: (i) if on such date the
Bank of Canada sets an average noon spot rate of exchange with a conversion of
one United States dollar into Canadian dollars, such rate; and (ii) in any other
case, the rate for such date for the conversion of one United States dollar into
Canadian dollars which is calculated in the manner which shall be determined by
the Board from time to time acting in good faith.
Section 2.Appointment of Rights Agent. The Corporation hereby appoints the
Rights Agent to act as agent for the Corporation and for the holders of Rights
in accordance with the terms and conditions of this Agreement, and the Rights
Agent accepts such appointment. The Corporation may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable. In such event, the
respective duties of the Rights Agent and any co-Rights Agent shall be as the
Corporation may determine with the approval of the Rights Agent (not to be
unreasonably withheld). The Rights Agent will have no duty to supervise, and
shall in no event be liable for, the acts or omissions of any co-Rights Agent.
Section 3.Issue of Rights Certificates.
(a)Subject to adjustment as herein set forth, each Right will entitle the holder
thereof, from and after the Distribution Date and prior to the earliest of the
Redemption Date, the Early Expiration Date and the Final Expiration Date, to
purchase, for the Purchase Price as at the Business Day immediately preceding
the date of exercise of the Right, one Common Share (which Purchase Price and
number of Common Shares are subject to adjustment as set forth in this
Agreement). Until the Close of Business on Distribution Date, (i) the Rights
will be evidenced (subject to the provisions of Section 3(b)) by the
certificates for Common Shares registered in the names of the holders thereof
(such certificates will also be deemed to be Rights Certificates) and not by
separate Rights Certificates, and (ii) the right to receive Rights Certificates
will be transferable only in connection with the transfer of Common Shares. As
soon as practicable after the Distribution Date, the Corporation will prepare
and execute, the Rights Agent will countersign, and the Corporation will send or
cause to be sent (and the Rights Agent will, if requested, send) by first-class,
postage-prepaid mail, to each holder of record of Common Shares as of the Close
of Business on the Distribution Date, at the address of such holder shown on the
records of the Corporation, a Rights Certificate, in substantially the form of
Exhibit A hereto (a "Rights Certificate"), evidencing one Right for each Common
Share so held (other than with respect to Rights that have become void pursuant
to Section 11(a)(ii) or that have been exchanged pursuant to Section 25). As of
the Distribution Date, the Rights will be evidenced solely by

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such Rights Certificates.
(b)As soon as practicable following the Record Time, the Corporation will, at
its option, either send (by first-class, postage-prepaid mail at the address
shown on the records of the Corporation) or make otherwise available to each
holder of record of Common Shares at the Record Time, a copy of a Summary of
Rights to Purchase Shares, in substantially the form of Exhibit B hereto (the
"Summary of Rights"). With respect to certificates for Common Shares outstanding
as of the Record Time until the Distribution Date, the Rights will be evidenced
by such certificates. Until the Distribution Date (or the earliest of the
Redemption Date, the Early Expiration Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares outstanding on the
Record Date, with or without a copy of the Summary of Rights attached thereto,
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificates.
(c)Certificates for Common Shares that become outstanding after the Record Date
but prior to the earliest of the Distribution Date, the Redemption Date, the
Early Expiration Date or the Final Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them a legend in substantially
the following form:
This certificate also evidences and entitles the holder hereof to certain rights
as set forth in a Tax Benefit Preservation Plan Agreement between Kingsway
Financial Services Inc. and Computershare Investor Services Inc., dated as of
September 27, 2010, as it may be amended from time to time (the "Tax Benefit
Preservation Plan Agreement"), the terms of which are incorporated by reference
and a copy of which is on file at the principal executive offices of the
Corporation and may be inspected during normal business hours. The Tax Benefit
Preservation Plan Agreement is also available for viewing at www.sedar.com.
Under certain circumstances, as set forth in the Tax Benefit Preservation Plan
Agreement, such Rights (as defined in the Tax Benefit Preservation Plan
Agreement) may be redeemed, may be terminated, may expire or become void or may
be evidenced by separate certificates and will no longer be evidenced by this
certificate. The Corporation will mail to the holder of this certificate a copy
of the Tax Benefit Preservation Plan Agreement without charge upon written
request. As set forth in the Tax Benefit Preservation Plan Agreement, Rights
beneficially owned by any Person (as defined in the Tax Benefit Preservation
Plan Agreement) who becomes an Acquiring Person or an Affiliate of an Acquiring
Person (each as defined in the Tax Benefit Preservation Plan Agreement) become
null and void.

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With respect to certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate (prior to the earliest of the
Distribution Date, the Redemption Date, the Early Expiration Date or the Final
Expiration Date) will also constitute the transfer of the Rights associated with
the Common Shares represented by such certificates. In the event that the
Corporation purchases or acquires any Common Shares after the Record Date but
prior to the Distribution Date, any Rights associated with such Common Shares
will be deemed cancelled and retired so that the Corporation will not be
entitled to exercise any Rights associated with Common Shares that are no longer
outstanding.
Section 4.Form of Rights Certificates. Subject to Section 23, the Rights
Certificates (and the forms of election to purchase and of assignment to be
printed on such certificates) will be substantially in the form attached hereto
as Exhibit A, and may have such legends, summaries or endorsements as the
Corporation may deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any applicable law, rule
or regulation.
Section 5.Countersignature and Registration. The Rights Certificates shall be
executed on behalf of the Corporation by any of its Chairman of the Board, Chief
Executive Officer, President, any Vice President (any of the foregoing, an
"Authorized Officer"), together with any of such other persons or together with
any one of the Secretary or an Assistant Secretary or Treasurer of the
Corporation, either manually or by facsimile signature, under the corporate seal
of the Corporation. The Rights Certificates must be manually or by facsimile
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned. Rights Certificates bearing the signature of individuals who
shall have signed any of the Rights Certificates at a time such individuals were
Authorized Officers will bind the Corporation notwithstanding that such
individual may cease to be an Authorized Officer of the Corporation before
countersignature by the Rights Agent and issuance and delivery by the
Corporation; and any Rights Certificate may be signed on behalf of the
Corporation by any individual who, at the actual date of the execution of such
Rights Certificate, shall be an Authorized Officer of the Corporation, although
at the date of the execution of this Agreement any such individual was not such
an officer.
Section 6.Registration; Transfer and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates.
(a)Following the Distribution Date, the Corporation will cause to be kept a
register (the "Rights Register") in which, subject to such reasonable
regulations as it may prescribe, the Corporation will provide for the
registration and transfer of Rights. The Rights Agent is hereby appointed the
"Rights Registrar" for the purpose of maintaining the Rights Register for the
Corporation and registering Rights and transfers of Rights as herein provided
and the Rights Agent accepts such appointment. In the event that the Rights
Agent shall cease to be the Rights

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Registrar, the Rights Agent will have the right to examine the Rights Register
at all reasonable times.
(b)Subject to the provisions of Section 13, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close of Business on
the earliest of the Redemption Date, the Early Expiration Date or the Final
Expiration Date, any Rights Certificate or Rights Certificates (other than
Rights Certificates representing Rights that have become void pursuant to
Section 11(a)(ii) or that have been exchanged pursuant to Section 25) may be
transferred, split up, combined or exchanged for another Rights Certificate or
Rights Certificates entitling the registered holder to purchase a like number of
Common Shares as the Rights Certificate or Rights Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Rights Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be transferred, split
up, combined or exchanged at the principal office of the Rights Agent. Neither
the Rights Agent nor the Corporation will be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder has completed and signed the form of
assignment on the reverse side of such Rights Certificate and has provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates thereof as the Corporation reasonably requests.
Thereupon or as promptly as practicable thereafter, the Rights Agent shall
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Corporation may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates and the Corporation may require the payment of a
sum sufficient to cover any other expenses (including the fees and expenses of
the Rights Agent) in connection therewith.
(c)Upon receipt by the Corporation and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to each of them in their own discretion to save
each of them and any of their agents harmless, and, at the Corporation's
request, reimbursement to the Corporation and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Corporation will make
and deliver a new Rights Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated. As a condition to the issuance of any new Rights
Certificate, the Corporation or the Rights Agent may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto.
Section 7.Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a)The registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein), in whole or in part, at
any time after the Distribution Date, upon surrender of the Rights

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Certificate, with the form of election to purchase on the reverse duly executed,
to the Rights Agent at the principal office of the Rights Agent, together with
payment of the Purchase Price (as defined in Section 7(b) below) for each Common
Share as to which the Rights are being exercised, at or prior to the earliest of
(i) the Close of Business on September 27, 2013 (the "Final Expiration Date"),
(ii) the time at which the Rights are redeemed as provided in Section 24 (the
"Redemption Date"), (iii) the time at which such Rights are exchanged as
provided in Section 25, (iv) the repeal of Section 382 or any successor statute,
or any other change, if the Board, in its sole discretion, determines that this
Agreement is no longer necessary for the preservation of Tax Benefits, or (v) a
determination by the Board, prior to the time any Person becomes an Acquiring
Person, that the Plan and the Rights are no longer necessary for the
preservation or existence of Tax Benefits or are no longer in the best interests
of the Corporation and its shareholders (the earliest of the dates set forth in
clauses (iii), (iv), and (v), the "Early Expiration Date").
(b)The Purchase Price for Common Shares purchasable pursuant to the exercise of
a Right shall initially be $100 (the "Purchase Price"), and shall be subject to
adjustment from time to time as provided in Section 11, and shall be payable in
lawful money of Canada in accordance with paragraph (c) below.
(c)Upon receipt of a Rights Certificate representing exercisable Rights, with
the form of election to purchase duly executed in a manner satisfactory to the
Corporation and the Rights Agent, accompanied by payment of the Purchase Price
for the shares to be purchased and an amount equal to any applicable transfer
tax required to be paid by the holder of such Rights Certificate in accordance
with Section 9, the Rights Agent shall thereupon promptly (i) requisition from
any transfer agent of the Common Shares certificates for the number of Common
Shares to be purchased (the Corporation hereby irrevocably authorizes any such
transfer agent to comply with all such requests), (ii) when appropriate,
requisition from the Corporation the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 13; (iii) after receipt
of such certificates, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder; and (iv) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price and any applicable
transfer tax shall be made in cash or by certified bank cheque or bank draft
payable to the order of the Corporation. The Corporation reserves the right to
require prior to the occurrence of an event described in Section 11(a)(ii) that,
upon any exercise of Rights, a number of Rights be exercised so that only whole
Common Shares would be issued.
(d)In case the registered holder of any Rights Certificate shall exercise less
than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Rights Certificate or to such
holder's duly authorized assigns.
(e)Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the

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Corporation will be obligated to undertake any action with respect to any
purported transfer, split up, combination or exchange of any Rights Certificate
pursuant to Section 6 or exercise of a Rights Certificate as set forth in this
Section 7 unless the registered holder of such Rights Certificate has
(i) completed and signed the certificate following the form of assignment or the
form of election to purchase, as applicable, set forth on the reverse side of
the Rights Certificate surrendered for such transfer, split up, combination,
exchange or exercise and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or Affiliates thereof as
the Corporation may reasonably request.
Section 8.Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Corporation or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Corporation shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Rights Certificate purchased or
acquired by the Corporation otherwise than upon the exercise thereof. Subject to
applicable law and regulation, the Rights Agent shall maintain in a retrievable
database electronic records of all cancelled or destroyed Rights Certificates
which have been cancelled or destroyed by the Rights Agent. The Rights Agent
shall maintain such electronic records or physical records for the time period
required by applicable law and regulation. Upon written request of the
Corporation (and at the expense of the Corporation), the Rights Agent shall
provide to the Corporation or its designee copies of such electronic records or
physical records relating to Rights Certificates cancelled or destroyed by the
Rights Agent.
Section 9.Availability of Shares; Securities Compliance.
The Corporation covenants and agrees that it will:
(a) take all such action as may be necessary and within its power to ensure that
all Common Shares delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Common Shares (subject to payment of the
Purchase Price), be duly and validly authorized, executed, issued and delivered
and fully paid and non-assessable;
(b)take all such action as may be necessary and within its power to comply with
any applicable requirements of the Business Corporations Act (Ontario), the
Ontario Securities Act, and any applicable comparable securities legislation of
each of the provinces of Canada, and the rules and regulations thereunder, the
1933 Securities Act and the 1934 Exchange Act, or any other applicable law, rule
or regulation, in connection with the issuance and delivery of the Rights
Certificates and the issuance of any Common Shares or other Corporation
Securities upon exercise of Rights;

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(c)use reasonable efforts to cause all Common Shares issued upon exercise of
Rights to be listed on the principal exchanges or traded in the over-the-counter
markets on which the Common Shares were traded immediately prior to the Shares
Acquisition Date;
(d)cause to be reserved and kept available out of its authorized and unissued
Common Shares, the number of Common Shares that will from time to time be
sufficient to permit the exercise in full of all outstanding Rights in
accordance with Section 7; and
(e)pay when due and payable any and all federal, provincial and state transfer
taxes and charges (not including any income or capital taxes of the holder or
exercising holder or any liability of the Corporation to withhold tax) which may
be payable in respect of the original issuance or delivery of the Rights
Certificates or of any Common Shares upon the exercise of Rights. The
Corporation shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of certificates or depositary
receipts for Common Shares in a name other than that of, the registered holder
of the Rights Certificate evidencing Rights surrendered for exercise or to issue
or to deliver any certificates for Common Shares upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or until it has been
established to the Corporation's reasonable satisfaction that no such tax is
due.
Section 10.Date on Which Exercise is Effective. Each Person in whose name any
certificate for Common Shares is issued upon the exercise of Rights will for all
purposes be deemed to have become the holder of record of the Common Shares
represented thereby on, and such certificate will be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the Purchase Price (and any applicable transfer taxes and any other
governmental charges payable by the exercising holder hereunder) was made;
provided, however, that, if the date of such surrender and payment is a date
upon which the transfer books of the Corporation are closed, such Person shall
be deemed to have become the holder of record of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the Common
Share transfer books are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate will not be entitled to any rights
of a holder of Common Shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and will not be entitled to
receive any notice of any proceedings of the Corporation, except as provided
herein.
Section 11.Adjustment of Purchase Price, Number of Common Shares or Number of
Rights. The Purchase Price, the number and kind of Common Shares or other
securities subject to purchase upon the exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event the Corporation shall at any time after the Record Time
(A) declare a dividend on the

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Common Shares payable in Common Shares (other than pursuant to any optional
stock dividend program), (B) subdivide or change the outstanding Common Shares
into a greater number of Common Shares, (C) combine or change the outstanding
Common Shares into a smaller number of Common Shares or (D) issue any shares of
its capital stock in a reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, or other change, and the number and kind of
shares of capital stock, or other securities, as the case may be, issuable on
such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of
capital stock, or other securities, as the case may be, which, if such Right had
been exercised immediately prior to such date and at a time when the transfer
books of the Corporation were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification, merger, or other change.
(i)    Subject to Section 25, in the event any Person becomes an Acquiring
Person, each holder of a Right (other than an Acquiring Person or an Affiliate
of an Acquiring Person) shall thereafter have a right to receive, upon exercise
of a Right at a price equal to the then-current Purchase Price, in accordance
with the terms of this Agreement, that number of Common Shares having an
aggregate then-current per share market price (determined pursuant to
Section 11(b)) on the date of the occurrence of such event equal to twice the
Purchase Price (such Right to be adjusted in a manner analogous to adjustments
provided in this Section 11 upon each occurrence after the Shares Acquisition
Date of any events analogous to those described in this Section 11). In the
event that any Person shall become an Acquiring Person after the public
announcement of this Agreement and prior to the Distribution Date and the Rights
shall then be outstanding, the Corporation shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the Rights other
than as herein provided. From and after the occurrence of such event, any Rights
that are or were acquired or beneficially owned by any Acquiring Person (or any
Affiliate of such Acquiring Person) shall be void, and any holder of such Rights
shall thereafter have no right to exercise such Rights whether under any
provision of this Agreement or otherwise. From and after the occurrence of any
Person becoming an Acquiring Person, no Rights Certificate shall be issued
pursuant to Section 3 or Section 6 that represents Rights that are or have
become void pursuant to the provisions of this Section, and any Rights
Certificate delivered to the Rights Agent that represents Rights that are or
have become void pursuant to this Section 11(a)(ii) shall be cancelled.
(ii)    In the event that there shall not be sufficient Common Shares authorized
but unissued to permit the exercise in full of the Rights in accordance with
subparagraph (ii) above, the Corporation shall take all such action as may be
necessary to authorize additional Common Shares for issuance upon exercise of
the Rights.

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(b)    In case the Corporation shall at any time after the Record Time fix a
record date for the issuance of rights, options or warrants to all holders of
Common Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Common Shares (or shares
having the same rights, privileges and preferences as the Common Shares
("equivalent common shares")) or securities convertible into or exchangeable for
or carrying a right to purchase Common Shares or equivalent common shares at a
price per Common Share or equivalent common share (or having a conversion price
or exchange price or exercise price per share, if a security convertible into
Common Shares or equivalent common shares) less than 90% of the then-current per
share market price of Common Shares (as defined in Section 11(d)) on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of Common
Shares outstanding on such record date, plus the number of Common Shares that
the aggregate offering price of the total number of Common Shares and/or
equivalent common shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such then-current market price and the denominator of which shall be the
number of Common Shares outstanding on such record date, plus the number of
additional Common Shares and/or equivalent common shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in a consideration part or all of which may be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and holders of the Rights. Such
adjustment shall be made successively whenever such a record date is fixed; and,
in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed. The granting of the right to
purchase Common Shares or equivalent common shares (whether from treasury or
otherwise) pursuant to any distribution or interest reinvestment plan and/or any
share purchase plan providing for the reinvestment of dividends payable on
securities of the Corporation and/or the investment of periodic optional
payments and/or employee benefit or similar plans (so long as such right to
purchase is in no case evidenced by the delivery of rights or warrants) shall
not be deemed to constitute an issue of rights or warrants by the Corporation;
provided, however, that in the case of any dividend reinvestment plan, the right
to purchase Common Shares is at a price per share of not less than 90% of the
then current market price per Common Share (determined as provided in such
plans).
(c)    In case the Corporation shall at any time after the Record Time fix a
record date for the making of a distribution to all holders of the Common Shares
(including any such distribution made in connection with a consolidation or
merger, amalgamation, arrangement, plan, compromise or reorganization in which
the Corporation is the continuing or successor corporation) of evidences of
indebtedness or assets (other than a dividend paid in the ordinary course or a
dividend payable in Common Shares) or subscription rights or warrants (excluding
those referred to in Section 11(a)), the Purchase Price to be in effect after
such record date shall be determined by

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multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then-current per share market
price of the Common Shares on such record date, less the fair market value (as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and holders of the Rights) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a Common Share and the denominator of which shall be such
then-current per share market price of the Common Shares. Such adjustments shall
be made successively whenever such a record date is fixed; and, in the event
that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(d)    (i) For the purpose of any computation hereunder, the "current per share
market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 20 consecutive Trading Days
immediately prior to such date; provided, however, that, in the event that the
current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or Securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 20 Trading Days
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the closing board lot sale price or, in case
no such sale takes place on such day, the average of the bid and asked prices,
for each such Security as reported on the principal stock exchange in Canada on
which the Security is listed or admitted to trading or, if the Security is not
listed or admitted to trading on any stock exchange in Canada, the last sale
price, regular way, or, in case no such sale takes place on such date, the
average of the closing bid and asked prices, regular way, for each Security as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the principal national securities
exchange in the United States on which the Security is listed or admitted to
trading, or if for any reason none of such prices is available on such day or
the Security is not listed or admitted for trading on a stock exchange in Canada
or a national securities exchange in the United States, the last quoted price,
or if not so quoted, the average of the high bid and low asked prices for the
Security in the over-the-counter market, as reported by any reporting system
then in use (as determined by the Board of Directors), or if on any such date
the Security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Security selected by the Board of Directors. The term "Trading Day" shall
mean a day on which the principal stock exchange on which the Security is listed
or admitted to trading is open for the transaction of business, or, if the
Security is not listed or admitted to trading on any stock exchange, a Business
Day. The Market Price shall be expressed in Canadian dollars and if initially
determined in respect of any day forming part of the 20 consecutive Trading Day
period in question in United States dollars, such

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amount shall be translated into Canadian dollars on such date at the Canadian
Dollar Equivalent thereof.
(i)    For the purpose of any computations under this Agreement, the "current
per share market price" of the Common Shares shall be determined in accordance
with the method set forth in Section 11(d)(i). If the Common Shares are not
publicly held or so listed or traded, "current per share market price" shall
mean the fair value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent.
(e)    Notwithstanding anything herein to the contrary, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one ten-thousandth of any Common Share or other security,
as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f)    If, as a result of an adjustment made pursuant to Section 11(a), the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Corporation other than Common Shares, thereafter
the number of such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Shares
contained in Section 11(a) through (d)(ii), inclusive, and the provisions of
Section 7, Section 9, and Section 10 with respect to the Common Shares shall
apply on like terms to any such other shares.
(g)    All Rights originally issued by the Corporation subsequent to any
adjustment made to the Purchase Price shall evidence the right to purchase, at
the adjusted Purchase Price, the number of Common Shares purchasable from time
to time under this Agreement upon exercise of the Rights, all subject to further
adjustment as provided in this Agreement.
(h)    Unless the Corporation shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(a) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Common Shares
(calculated to the nearest one ten-thousandth) obtained by (A) multiplying
(x) the number of Common Shares covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (B) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the Purchase
Price.

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(i)    The Corporation may elect, on or after the date of any adjustment of the
Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of Common Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number and kind of shares for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Corporation shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least 10 days
after the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Corporation shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Corporation, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if required
by the Corporation, new Rights Certificates evidencing all the Rights to which
such holders shall be entitled after such adjustment. Rights Certificates so to
be distributed shall be issued, executed and countersigned in the manner
provided for in this Agreement, and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in the
public announcement.
(j)    In any case in which this Section 11 shall require that an adjustment in
the Purchase Price be made effective as of a record date for a specified event,
the Corporation may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date of the
Common Shares and other capital stock or securities of the Corporation, if any,
issuable upon such exercise over and above the Common Shares and other capital
stock or securities of the Corporation, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to such adjustment.
(k)    Notwithstanding anything in this Section 11 to the contrary, the
Corporation will be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment, the Board of Directors shall
determine to be advisable in order that any consolidation or subdivision of the
Common Shares, issuance wholly for cash of any Common Shares at less than the
current market price, issuance wholly for cash of Common Shares or securities
which by their terms are convertible into or exchangeable for Common Shares,
stock dividends or issuance of rights, options or warrants referred to in
Section 11(a), hereafter made by the Corporation to holders of the Common Shares
shall not be taxable to such shareholders.

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Section 2.    Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11, the Corporation shall
promptly (a) prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (b) file with the Rights
Agent and with each transfer agent for the Common Shares a copy of such
certificate, and (c) if such adjustment occurs at any time after the
Distribution Date, mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 26. Failure to file such certificate or
to cause such notice to be given as aforesaid, or any defect therein, shall not
affect the validity of any such adjustment or change.
Section 3.    Fractional Rights and Fractional Shares.
(a)    The Corporation shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights. Any such
fractional Rights shall be null and void and the Corporation will not have any
obligation or liability in respect thereof.
(b)    The Corporation shall not be required to issue fractions of Common Shares
upon exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of fractional Common Shares, the Corporation
shall pay to the registered holders of Rights Certificates at the time such
Rights are exercised as provided in this Agreement an amount in cash equal to
the same fraction of the current market value of one Common Share. For the
purposes of this Section 13(b), the current market value of a Common Share shall
be the closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date
of such exercise.
(c)    The holder of a Right, by the acceptance of the Right, expressly waives
such holder's right to receive any fractional Rights or any fractional shares
upon exercise of a Right.
(d)    Whenever a payment for fractional shares is to be made by the Rights
Agent, the Corporation shall (i) promptly prepare and deliver to the Rights
Agent a certificate setting forth in reasonable detail the facts related to such
payment and the prices and/or formulas utilized in calculating such payments,
and (ii) provide sufficient monies to the Rights Agent in the form of fully
collected funds to make such payments.
Section 4.    Rights of Action. Subject to the terms of this Agreement, all
rights of action in respect of this Agreement, excepting the rights of action
vested solely in the Rights Agent under Section 17, are vested in the respective
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the registered holders of the Common Shares); and any registered holder of
any Rights Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common Shares),
may, in such holder's own behalf and for such holder's own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the
Corporation to enforce, or

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otherwise act in respect of, such holder's right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement, and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
Section 5.    Agreements of Right Holders. Every holder of a Right, by accepting
the same, consents and agrees with the Corporation and the Rights Agent and with
every other holder of a Right that:
(a)    prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Shares;
(b)    after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent, duly endorsed or accompanied by a proper instrument
of transfer;
(c)    the Corporation and the Rights Agent may deem and treat the person in
whose name the Rights Certificate (or, prior to the Distribution Date, the
associated certificate for Common Shares) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificate, or the associated certificate
for Common Shares made by anyone other than the Corporation or the Rights Agent)
for all purposes whatsoever, and neither the Corporation nor the Rights Agent
shall be affected by any notice to the contrary;
(d)    notwithstanding anything in this Agreement to the contrary, neither the
Corporation nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree, judgment or ruling issued by any court of
competent jurisdiction or by any governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation;
(e)    such holder has waived his or her right to receive a fractional Right, or
fractional Common Share; and
(f)    without the approval of any holder of Rights and upon the sole authority
of the Board, this Agreement may be supplemented or amended from time to time in
accordance with its terms.
Section 6.    Rights Holder Not Deemed a Shareholder. No holder, as such, of any
Rights shall be entitled to vote,

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receive dividends or be deemed for any purpose the holder of the Common Shares
or any other securities of the Corporation which may at any time be issuable on
the exercise of the Rights, nor shall anything contained in this Agreement or in
any Rights Certificate be construed or deemed to confer upon the holder of any
Right or Rights Certificate, as such, any of the rights, titles, benefits, or
privileges of a shareholder of the Corporation or any right to vote at any
meeting of shareholders of the Corporation whether for the election of directors
or otherwise or upon any matter submitted to holders of Common Shares at any
meeting thereof, or to give or withhold consent to any action of the
Corporation, or to receive notice of any meeting or other action affecting any
shareholder of the Corporation except as expressly provided in this Agreement,
or to receive dividends, distributions, or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate have been validly
exercised in accordance with the provisions of this Agreement.
Section 7.    Concerning the Rights Agent. The Corporation agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it under this
Agreement, and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties.
The Corporation also agrees to indemnify the Rights Agent, its officers,
directors and employees for, and to hold it harmless against, any loss,
liability, cost, claim, action, suit, damage or expense incurred (that is not
the result of the negligence, bad faith or willful misconduct on the part of the
Rights Agent, its officers, directors or employees) for anything done, suffered
or omitted by the Rights Agent in connection with the acceptance, execution and
administration of this Agreement and the exercise and performance of its duties
hereunder, including the costs and expenses of defending against any claim of
liability, which right to indemnification will survive the termination of this
Agreement or the resignation or removal of the Rights Agent.
The Rights Agent shall be protected and will incur no liability for, or in
respect of any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for Common Shares or for other securities of the Corporation,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
Section 8.    Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger, amalgamation, arrangement or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the stock transfer or shareholder services business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto; provided that

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such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 20. In case, at the time such successor Rights
Agent succeeds to the agency created by this Agreement, any of the Rights
Certificates have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates have not been countersigned, any successor Rights
Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement. In case at any time the name of the
Rights Agent is changed and at such time any of the Rights Certificates shall
have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
Section 9.    Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
to all of which the Corporation and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a)    The Rights Agent may consult with legal counsel (who may be legal counsel
for the Corporation), and the opinion of such counsel will be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion; the Rights
Agent may also, with the approval of the Corporation (such approval not to be
unreasonably withheld) and at the expense of the Corporation, consult with such
other experts as the Rights Agent shall consider necessary or appropriate to
properly carry out the duties and obligations imposed under this Agreement and
the Rights Agent shall be entitled to act and rely in good faith on the advice
of any such expert.
(b)    Whenever in the performance of its duties under this Agreement the Rights
Agent shall deem it necessary or desirable that any fact or matter (including,
without limitation, the identity of any Acquiring Person and the determination
of "current market price") be proved or established by the Corporation prior to
taking or suffering any action under this Agreement, such fact or matter (unless
other evidence in respect thereof be specifically prescribed in this Agreement)
may be deemed to be conclusively proved and established by a certificate signed
by any Authorized Officer and delivered to the Rights Agent; and such
certificate will constitute full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c)    The Rights Agent will be liable hereunder to the Corporation and any
other Person only for its own

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gross negligence, bad faith or willful misconduct.
(d)    The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for Common Shares or the Rights Certificates (except its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the
Corporation only.
(e)    The Rights Agent will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery of this Agreement
(except the due authorization, execution, and delivery by the Rights Agent) or
in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor will it be responsible for any breach by the
Corporation of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 11(a)(ii)) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Section 3, Section 11, or
Section 25, or the ascertaining of the existence of facts that would require any
such change or adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice that such change or
adjustment is required); nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization of any Common Shares to be
issued pursuant to this Agreement or any Rights or as to whether any Common
Shares will, when issued, be duly and validly authorized, executed, issued and
delivered and fully paid and non-assessable.
(f)    The Corporation agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g)    The Rights Agent is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from any Authorized
Officer, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered by
it in good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. It is understood that
instructions to the Rights Agent shall, except where circumstances make it
impracticable or the Rights Agent otherwise agrees, be given in writing and,
where not in writing, such instructions shall be confirmed in writing as soon as
reasonably possible after the giving of such instructions.
(h)    The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty either itself or by or through its
attorneys or agents, and the Rights Agent will not be answerable or accountable
for any act, default, neglect or misconduct of any such attorneys or agents or
for any loss to the Corporation resulting from any such act, default, neglect or
misconduct, provided that reasonable care was exercised

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in the selection and continued employment thereof.
(i)    If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the representation and certification included in
the form of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response, the Rights Agent
shall not take any further action with respect to such requested exercise or
transfer without first consulting with the Corporation.
(j)    At any time and from time to time after the Distribution Date, upon the
request of the Corporation, the Rights Agent shall deliver to the Corporation a
list, as of the most recent practicable date (or as of such earlier date as may
be specified by the Corporation), of the holders of record of the Rights.
Section 10.    Change of Rights Agent. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 60
days' notice (or such lesser notice as is acceptable to the Corporation) in
writing mailed to the Corporation and to each transfer agent of the Common Stock
by registered or certified mail, in the event that the transfer agent is a
Person other than the Rights Agent or one of the Rights Agent's affiliates. The
Corporation may remove the Rights Agent or any successor Rights Agent upon 60
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Stock by registered
or certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Corporation will appoint a successor to the Rights
Agent. If the Corporation shall fail to make such appointment within a period of
60 days after giving notice of such removal or within 60 days after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (which
holder shall, with such notice, submit such holder's Rights Certificate for
inspection by the Corporation), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Corporation or by such a court, shall be a corporation or other entity organized
and doing business under the laws of Canada or a province thereof authorized to
carry on the business of a trust company in the Province of Ontario. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent, following
payment of all outstanding fees and expenses owed to it under this Agreement,
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Corporation shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Stock and mail a notice thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for in this Section 20,
however, or any defect therein, will not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.

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Section 11.    Compliance with Money Laundering Legislation. The Rights Agent
shall retain the right not to act and shall not be liable for refusing to act
if, due to a lack of information or for any other reason whatsoever, the Rights
Agent reasonably determines that such an act might cause it to be in
non-compliance with any applicable anti-money laundering or anti-terrorist
legislation, regulation or guideline. Further, should the Rights Agent
reasonably determine at any time that its acting under this Agreement has
resulted in its being in noncompliance with any applicable anti-money laundering
or anti-terrorist legislation, regulation or guideline, then it shall have the
right to resign on 10 days’ written notice to the Corporation, provided: (i)
that the Rights Agent’s written notice shall describe the circumstances of such
non-compliance; and (ii) that if such circumstances are rectified to the Rights
Agent’s satisfaction within such 10-day period, then such resignation shall not
be effective.
Section 12.    Privacy Provision. The parties acknowledge that federal and/or
provincial legislation that addresses the protection of individual’s personal
information (collectively, “Privacy Laws”) applies to obligations and activities
under this Agreement. Despite any other provision of this Agreement, neither
party will take or direct any action that would contravene, or cause the other
to contravene, applicable Privacy Laws. The Corporation will, prior to
transferring or causing to be transferred personal information to the Rights
Agent, obtain and retain required consents of the relevant individuals to the
collection, use and disclosure of their personal information, or will have
determined that such consents either have previously been given upon which the
parties can rely or are not required under the Privacy Laws. The Rights Agent
will use commercially reasonable efforts to ensure that its services hereunder
comply with Privacy Laws.
Section 13.    Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Corporation
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by the Board to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement.
Section 14.    Redemption.
(a)    The Board may, at its option, at any time prior to such time as any
Person becomes an Acquiring Person, redeem all but not less than all the
then-outstanding Rights at a redemption price of $.0001 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The redemption of the Rights by the
Board may be made effective at such time, on such basis and with such conditions
as the Board, in its sole discretion, may establish. The Corporation may, at its
option, pay the Redemption Price in cash, Common Shares (based on the current
per share market price of the Common Stock at the time of redemption as
determined pursuant to Section 11(d)(i)) or any other form of consideration
deemed appropriate by the Board.

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(b)    Immediately upon the action of the Board ordering the redemption of the
Rights pursuant to paragraph (a) of this Section 24, evidence of which shall
have been filed with the Rights Agent, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights will be to receive the Redemption
Price. Within 10 days after such action of the Board ordering the redemption of
the Rights, the Corporation shall mail a notice of redemption to the Rights
Agent and all the holders of the then-outstanding Rights at their last addresses
as they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein provided will be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Corporation nor any of its Affiliates may redeem,
acquire or purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 24 or in Section 25, and other than
in connection with the purchase of Common Shares prior to the Distribution Date.
(c)    In the case of a redemption under Section 24(a), the Corporation may, at
its option, discharge all of its obligations with respect to the Rights by
(i) issuing a press release announcing the manner of redemption of the Rights
and (ii) mailing payment of the Redemption Price to the registered holders of
the Rights at their last addresses as they appear on the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent of the Common Shares, and upon such action, all outstanding
Rights Certificates and related Rights shall be void without any further action
by the Corporation.
Section 15.    Exchange.
(a)    The Board may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then-outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii)) for Common Stock at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any adjustment in the
number of Rights pursuant to Section 11(i) (such exchange ratio being
hereinafter referred to as the "Exchange Ratio").
(b)    Immediately upon the action of the Board ordering the exchange of any
Rights pursuant to paragraph (a) of this Section 25 and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights will be to receive that
number of Common Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Corporation promptly will mail a notice of
any such exchange to all of the holders of such Rights at their last addresses
as they appear upon the registry books of the Rights Agent. Any notice which is
mailed in this manner shall be deemed given, whether or not the holder receives
the notice. Each such notice of exchange will state the method by which the
exchange of the Common Shares for Rights will be effected, and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange will be effected pro rata based on

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the number of Rights (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii)) held by each holder of Rights.
(c)    In the event that there shall not be sufficient Common Shares issued but
not outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 25, the Corporation will take all
such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights.
(d)    The Corporation shall not be required to issue fractions of Common Shares
or to distribute certificates representing fractions of Common Shares. In lieu
of such fractional Common Shares, the Corporation shall pay to the registered
holders of the Rights Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (d), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i)) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 25.
Section 16.    Notice of Certain Events.
(a)    In case the Corporation shall, at any time after the Distribution Date,
propose (i) to effect any subdivision, combination, or reclassification of the
Common Shares, or (ii) to effect the liquidation, dissolution or winding up of
the Corporation, then the Corporation shall give to each holder of a Rights
Certificate, in accordance with Section 27, a notice of such proposed action,
which shall specify the date on which such reclassification, consolidation,
liquidation, dissolution, or winding up is to take place and the date of
participation by the holders of the Common Shares, if any such date is to be
fixed, and such notice shall be given at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Shares, whichever shall be the earlier.
(b)    In case the event set forth in Section 11(a)(ii) shall occur, then the
Corporation shall, as soon as practicable thereafter, give to each holder of a
Rights Certificate, in accordance with Section 27, a notice of the occurrence of
such event, which notice shall describe such event and the consequences of such
event to holders of Rights under Section 11(a)(ii).
Section 17.    Notices. Notices or demands authorized or required by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
to or on the Corporation shall be sufficiently given or made if delivered or
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Kingsway Financial Services Inc.

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45 St. Clair Avenue West, Suite 400
Toronto, ON M4V 1K9
Attention: Chief Financial Officer
Subject to the provisions of Section 20, any notice or demand authorized or
required by this Agreement to be given or made by the Corporation or by the
holder of any Rights Certificate to or on the Rights Agent shall be sufficiently
given or made if delivered or sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Corporation) as
follows:
Computershare Investor Services Inc.
100 University Avenue, 8th Floor
Toronto ON M5J 2Y1
Attn: General Manager, Client Services
Notices or demands authorized or required by this Agreement to be given or made
by the Corporation or the Rights Agent to the holder of any Rights Certificate
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry or stock transfer books of the Corporation. Any notice which is
provided in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.
Section 18.    Supplements and Amendments.
(a)    The Corporation may make amendments to this Agreement to correct any
clerical or typographical error or which are required to maintain the validity
of this Agreement as a result of any change in any applicable legislation, rules
or regulations thereunder. Notwithstanding anything in this Section 28 to the
contrary, no such amendment shall be made to the provisions affecting the Rights
Agent except with the written concurrence of the Rights Agent to such supplement
or amendment.
(b)    Subject to Section 28(a), the Corporation may, with the prior consent of
the holders of Common Shares, obtained as set forth below, at any time prior to
the Distribution Date, supplement, amend, vary, rescind or delete any of the
provisions of this Agreement and the Rights (whether or not such action would
materially adversely affect the interests of the holders of Rights generally).
Such consent shall be deemed to have been given if the action requiring such
approval is authorized by the affirmative vote of a majority of the votes cast
by holders of Common Shares present or represented at and entitled to be voted
at a meeting of the holders of Common Shares duly called and held in compliance
with applicable laws and the articles and by-laws of the Corporation.
(c)    Subject to Section 28(a), the Corporation may, with the prior consent of
the holders of Rights, at any time on or after the Distribution Date,
supplement, amend, vary, rescind or delete any of the provisions of this

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Agreement and the Rights (whether or not such action would materially adversely
affect the interests of the holders of Rights generally), provided that no such
amendment, variation or deletion shall be made to the provisions affecting the
Rights Agent except with the written concurrence of the Rights Agent thereto.
Such consent shall be deemed to have been given if such amendment, variation or
deletion is authorized by the affirmative votes of the holders of Rights present
or represented at and entitled to be voted at a meeting of the holders held in
accordance with Section 28(d) and representing 50% plus one of the votes cast in
respect thereof.
(d)    Any approval of the holders of Rights shall be deemed to have been given
if the action requiring such approval is authorized by the affirmative votes of
the holders of Rights present or represented at and entitled to be voted at a
meeting of the holders of Rights and representing a majority of the votes cast
in respect thereof. For the purposes hereof, each outstanding Right (other than
Rights which are void pursuant to the provisions hereof) shall be entitled to
one vote, and the procedures for the calling, holding and conduct of the meeting
shall be those, as nearly as may be, which are provided in the Corporation’s
by-laws and the Business Corporations Act (Ontario) with respect to meetings of
shareholders of the Corporation.
(e)    Any amendment made by the Corporation to this Agreement pursuant to
Section 28(a), other than any amendment to correct any clerical or typographical
error, shall:
(i)    if made before the Distribution Date, be submitted to the shareholders of
the Corporation at the next meeting of shareholders and the shareholders may, by
the majority referred to in Section 28(b), confirm or reject such amendment; and
(ii)    if made after the Distribution Date, be submitted to the holders of
Rights at a meeting to be called for on a date not later than immediately
following the next meeting of shareholders of the Corporation and the holders of
Rights may, by resolution passed by the majority referred to in Section 28(d),
confirm or reject such amendment.
Any such amendment shall be effective from the date of the resolution of the
Board adopting such amendment until it is confirmed or rejected or until it
ceases to be effective (as described in the next sentence) and, where such
amendment is confirmed, it continues in effect in the form so confirmed. If such
amendment is rejected by the shareholders or the holders of Rights or is not
submitted to the shareholders or holders of Rights as required, then such
amendment shall cease to be effective from and after the termination of the
meeting at which it was rejected or to which it should have been but was not
submitted or from and after the date of the meeting of holders of Rights that
should have been but was not held, and no subsequent resolution of the Board to
amend this Agreement to substantially the same effect shall be effective until
confirmed by the shareholders or holders of Rights as the case may be.

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(f)    The Corporation shall be required to provide the Rights Agent with notice
in writing of any such amendment, rescission or variation to this Agreement as
referred to in this Section 28 within five days of effecting such amendment,
rescission or variation.
(g)    Any supplement or amendment to this Agreement pursuant to Section 28(b)
through Section 28(e) shall be subject to the receipt of any requisite
acceptance, approval or consent from any governmental or regulatory authority
having jurisdiction over the Corporation, including without limitation any
requisite approval of stock exchanges on which the Common Shares are listed.
Section 19.    Miscellaneous
(a)    All the covenants and provisions of this Agreement by or for the benefit
of the Corporation or the Rights Agent shall bind and enure to the benefit of
their respective successors and assigns.
(b)    All sums of money which are referred to in this Agreement are expressed
in lawful money of Canada, unless otherwise specified.
(c)    Wherever the context so requires, terms used herein importing the
singular number only shall include the plural and vice-versa and words importing
only one gender shall include all genders.
(d)    Nothing in this Agreement will be construed to give to any Person other
than the Corporation, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Shares) any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Corporation, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the Common Shares).
(e)     If any term or provision hereof or the application thereof to any
circumstance is, in any jurisdiction and to any extent, invalid or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.
(f)    This Agreement and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the Province of Ontario, Canada,
and for all purposes shall be governed by and construed in accordance with the
laws of such province.
(g)    This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same

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instrument. A signature to this Agreement transmitted electronically shall have
the same authority, effect, and enforceability as an original signature.
(h)    Descriptive headings of the several sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
(i)    Time shall be of the essence in this Agreement.
(j)    Les parties aux présentes ont exigé que la présente convention ainsi que
tous les documents et avis qui s’y rattachent et/ou qui en découleront soient
rédigés en langue anglaise. The parties hereto have required that this Agreement
and all documents and notices related thereto and/or resulting therefrom be
drawn up in the English language.
Section 20.    Determinations and Actions by the Board. For all purposes of this
Agreement, any calculation of the number of Common Shares outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding Common Shares of which any Person is the Beneficial Owner,
will be made in accordance with, as the Board deems to be applicable, the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act or the provisions of Section 382. The Board will have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board or to the Corporation, or as may be
necessary or advisable in the administration of this Agreement, including
without limitation the right and power to (a) interpret the provisions of this
Agreement (including without limitation Section 28, this Section 30 and other
provisions relating to its powers or authority under this Agreement) and
(b) make all determinations deemed necessary or advisable for the administration
of this Agreement (including without limitation any determination of whether a
Person has become an Acquiring Person or any determination as to whether
particular Rights shall have become void). All such actions, calculations,
interpretations and determinations (including any omission with respect to any
of the foregoing) which are done or made by the Board in good faith will (x) be
final, conclusive and binding on the Corporation, the Rights Agent, the holders
of the Rights and all other parties and (y) not subject the Board to any
liability to any Person, including, without limitation, the Rights Agent and the
holders of the Rights.
Section 21.    Process to Seek Exemption. Any Person who desires to effect any
acquisition of Common Shares that would, if consummated, result in such Person
(together with its Affiliates) beneficially owning 5% or more of the
then-outstanding Common Shares (or, in the case of a Grandfathered Person,
additional Common Shares representing one-tenth of one percentage point or more
of the then-outstanding Common Shares) (a "Requesting Person") may, prior to the
acquisition of the Common Shares and in accordance with this Section 31, request
that the Board grant an exemption with respect to such acquisition under this
Agreement so that such acquisition would be deemed to be an "Exempt Transaction"
for purposes of this Agreement (an "Exemption Request"). An

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Exemption Request will be in proper form and shall be delivered by registered
mail, return receipt requested, to the Secretary of the Corporation at the
principal executive office of the Corporation. To be in proper form, an
Exemption Request shall set forth (i) the name and address of the Requesting
Person, (ii) the number and percentage of Common Shares then beneficially owned
by the Requesting Person, together with all Affiliates of the Requesting Person,
and (iii) a reasonably detailed description of the transaction or transactions
by which the Requesting Person would propose to acquire Beneficial Ownership of
Common Shares aggregating 5% or more of the then-outstanding Common Shares (or,
in the case of a Grandfathered Person, additional Common Shares representing
one-tenth of one percentage point or more of the then-outstanding Common Shares)
and the maximum number and percentage of Common Shares that the Requesting
Person proposes to acquire. The Board shall make a determination whether to
grant an exemption in response to an Exemption Request as promptly as
practicable; provided, that any failure of the Board to make a determination
within such period shall be deemed to constitute the denial by the Board of the
Exemption Request. Any exemption granted under this section may be granted in
whole or in part, and may be subject to limitations or conditions, in each case
as and to the extent the Board shall determine necessary or desirable. Any
Exemption Request may be submitted on a confidential basis and, except to the
extent required by applicable law, the Corporation will maintain the
confidentiality of such Exemption Request and the Board's determination with
respect thereto.
Section 22.    Regulatory Approvals. Any obligation of the Corporation or action
or event contemplated by this Agreement shall be subject to the receipt of any
requisite acceptance, approval or consent from any governmental or regulatory
authority. Without limiting the generality of the foregoing, any issuance or
delivery of debt or equity securities (other than non-convertible debt
securities) of the Corporation upon the exercise of Rights and any amendment or
supplement to this Agreement shall be subject to the prior acceptance, approval
or consent of the Toronto Stock Exchange or any other exchange upon which the
Common Shares of the Corporation may be listed.
Section 23.    Effective Date of Agreement; Shareholder Approval Requirement.
This Agreement is in full force and effect in accordance with its terms from the
date first set forth above. Notwithstanding any provisions contained herein, if
this Agreement does not receive Shareholder Approval before March 27, 2011 (the
“Approval Deadline”), then this Agreement and any then-outstanding Rights shall
be void and of no further force and effect from and after the first to occur of
(i) a duly held shareholder meeting (including any adjournment thereof) at which
the Corporation’s shareholders fail to provide Shareholder Approval or (ii) the
Approval Deadline.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and attested, all as of the day and year first above written.
 
KINGSWAY FINANCIAL SERVICES INC.
 
By: /s/ Larry G. Swets, Jr.
 
             Name: Larry G. Swets, Jr.
              Title: President and Chief Executive Officer
 
By /s/ Daniel J. Brazier                                          
 
             Name: Daniel J. Brazier
              Title: Chief Financial Officer
 
COMPUTERSHARE INVESTOR SERVICES INC.
 
By    /s/ Paul Allen                                                        
 
             Name: Paul Allen
              Title: Profession, Client Services
 
By   /s/ Florence Smith                                                         
 
             Name: Florence Smith
              Title:Profession, Client Services