AGREEMENT AND PLAN OF MERGER
among
JJR VI ACQUISITION CORP.,
ATLAS ACQUISITION CORP.,
KINGSWAY FINANCIAL SERVICES INC.
and
AMERICAN INSURANCE ACQUISITION INC.

--------------------------------------------------------------------------------

December 14, 2010

ARTICLE 1 DEFINITIONS<wf:span
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1.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 2 TRANSACTION<wf:span
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2.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
2.2<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
2.3<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
2.4<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
2.5<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
2.6<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
2.7<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF JJR VI<wf:span
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3.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
3.2<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
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3.21<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY<wf:span
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4.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
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4.5<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
4.6<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
4.7<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
4.8<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
4.9<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
4.10<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
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4.40<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
4.41<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
4.42<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
4.43<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
4.44<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF KFS<wf:span
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5.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
5.2<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
5.3<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
5.4<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
5.5<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES<wf:span
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6.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
6.2<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 7 COVENANTS OF THE COMPANY AND KFS<wf:span
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7.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
7.2<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
7.3<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
7.4<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
7.5<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
7.6<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
7.7<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
7.8<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
7.9<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 8 COVENANTS OF JJR VI<wf:span
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8.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
8.2<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
8.3<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
8.4<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
8.5<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
8.6<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
8.7<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
8.8<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
8.9<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
8.10<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 9 ADDITIONAL COVENANTS OF KFS<wf:span
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9.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
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9.4<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
9.5<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 10 CONDITIONS PRECEDENT<wf:span
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10.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
10.2<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 11 CLOSING<wf:span
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11.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
11.2<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
11.3<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 12 TERMINATION<wf:span
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12.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
12.2<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
12.3<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
12.4<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 13 INDEMNIFICATION<wf:span
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13.1<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
13.2<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
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13.6<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
13.7<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
13.8<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
13.9<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
ARTICLE 14 ADDITIONAL COVENANTS<wf:span
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ARTICLE 15 GENERAL<wf:span
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15.8<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>
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15.16<wf:span xmlns:wf="http://www.webfilings.com/wfml/2009"><wf:tab/></wf:span>

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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is entered into on December 14, 2010 by and
between JJR VI Acquisition Corp. (“JJR VI”), an Ontario corporation, Atlas
Acquisition Corp. (“Subco”), a Delaware corporation, Kingsway Financial Services
Inc. (“KFS”), an Ontario corporation, and American Insurance Acquisition Inc.
(the “Company”), a Delaware corporation.
RECITALS:
WHEREAS the respective Boards of Directors of JJR VI, Subco, KFS and the Company
have determined that it is advisable and in the best interests of the respective
corporations and their stockholders that Subco be merged with and into the
Company in accordance with the General Corporation Law of the State of Delaware
(the “DGCL”) and the terms of this Agreement such that the Company will be the
surviving corporation and will become a subsidiary of JJR VI (the “Merger”);
AND WHEREAS from and after the Effective Time, the parties intend that the
Resulting Issuer shall be treated as a “domestic corporation” for U.S. federal
(and applicable state and local) income tax purposes under Section 7874 of the
U.S. Internal Revenue Code of 1986, as amended (the “Code”) and any
corresponding provisions of state and local tax law;
AND WHEREAS JJR VI, Subco, KFS and the Company desire to make certain
representations, warranties, covenants, and agreements in connection with, and
establish various conditions precedent to, the Merger.
Now, therefore, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties and covenants
herein contained, the Parties agree as follows:
Article 1
DEFINITIONS
1.1
Definitions. In this Agreement (including the preamble, recitals and each
Schedule hereto), the following terms have the meanings ascribed thereto as
follows:

“ACIC” means American Country Insurance Company, a corporation incorporated
under the laws of the State of Illinois.
“Acquisition” means the merger of Subco with and into the Company and which
acquisition shall constitute the Qualifying Transaction of JJR VI within the
meaning of the CPC Policy.
“Act” means the Securities Act (Ontario), the regulations thereto and all
Blanket Rulings, Policy Statements, Orders, Rules and Notices of the Ontario
Securities Commission, which have the force of law.
“Adverse Development Agreement” has the meaning set forth in subsection 10.1(t)
hereof.
“Affiliate” has the meaning specified in the OBCA.
“Agreement” means this Agreement and Plan of Merger and any instrument
supplemental or ancillary hereto; and the expressions “Article”, “section”, and
“subsection” followed by a number means and refers to the specified Article,
section or subsection of this Agreement.
“Ancillary Agreements” means all agreements, certificates and other instruments
delivered or given pursuant to this Agreement.
“ASI” means American Service Insurance Company, Inc., a corporation incorporated
under the laws of Illinois.
“Assets” means the property and assets of the Company, ACIC and/or ASI as a
going concern, of every kind and description and wheresoever situated.
“Atlas Information” has the meaning set forth in Section 4.16 hereof.
“August Meeting Matters” means the following items approved by the JJR VI
Shareholders at a meeting held on August 20, 2010:
(a)
the Name Change;

(b)
the appointment of KPMG LLP as the new auditors of JJR VI upon completion of the
Merger;

(c)
the Continuance;

(d)
the election of directors; and

(e)
the adoption of the Stock Option Plan.

“Benefit Plans” means each pension, retirement, stock purchase, profit sharing,
stock option, deferred compensation, severance or termination pay, insurance,
medical, hospital, dental, vision care, drug, sick leave, leave of absence,
disability, salary continuation, legal benefits, unemployment benefits, vacation
pay, holiday pay, employee loan, education assistance, incentive or bonus or
similar plan, policy or arrangement maintained, sponsored or contributed to by
the entity in question.
“Board of Directors” means the board of directors of the Company.
“Building Expense Subsidy Agreement” has the meaning set forth in subsection
10.1(s) hereof.
“Buildings” has the meaning set forth in Section 4.16 hereof.
“Business Day” means any day, other than a Saturday, Sunday or statutory holiday
in the State of Delaware or the City of Toronto.
“Cayman Articles” means the memorandum and articles of association attached
hereto as Schedule 8.6.
“Certificate of Merger” has the meaning set forth in subsection 2.1(c) hereof.
“Claims” has the meaning set forth in Section 13.1 hereof.
“Closing” means the completion of the transactions contemplated herein.
“Closing Date” means (i) December 31, 2010, however if all conditions set forth
in Article 10 (other than those conditions that by their nature are to be
satisfied or waived at Closing) have not been satisfied or waived by that date,
then “Closing Date” means the first Business Day following the date upon which
all such conditions are satisfied or waived, or (ii) such other Business Day as
the Parties may agree in writing.
“Code” has the meaning specified in the recitals above.
“Company” means American Insurance Acquisition Inc., a Delaware corporation,
which is wholly‑owned by KAI.
“Company Common Shares” means the shares of common stock in the capital of the
Company.
“Company Information” has the meaning set forth in subsection 8.5(a) hereof.
“Company Officers” means Scott Wollney and Paul Romano.
“Company Preferred Shares” means the shares of preferred stock in the capital of
the Company.
“Company’s Financial Statements” means the audited financial statements of ACIC
and ASI as at, and for the fiscal years ended, December 31, 2007, 2008 and 2009
and the unaudited interim financial statements of ACIC and ASI as at, and for
the period ended, September 30, 2010, copies of which are annexed hereto as
Schedule 1.1(a).
“Company Shareholders” means the holders of the Company Common Shares.
“Company Shares” means Company Common Shares and Company Preferred Shares.
“Company Warrant” means a common share purchase warrant of the Company, expiring
three years after the closing of the Acquisition, entitling the holder thereof
to one Company Common Share upon exercise of such warrant and payment of the
$2.00 exercise price, subject to the terms of the warrant certificate.
“Consolidation” means the consolidation of JJR VI Common Shares on the basis of
one new JJR VI Common Share for each 10 outstanding JJR VI Common Shares
outstanding prior thereto.
“Constituent Corporations” means Subco and the Company.
“Continuance” means the continuance of JJR VI from the OBCA to the Companies Law
of the Cayman Islands.
“Corporate or Partnership Subsidiary” means (i) an entity treated as a
corporation for U.S. federal income tax purposes in which a Person directly or
indirectly holds equity interests equal to fifty percent (50%) or more of the
voting power or value of such entity, or (ii) a partnership or disregarded
entity for U.S. federal income tax purposes in which a Person directly or
indirectly holds a ten percent (10%) or greater interest in the profits or
capital of such entity.
“CPC Policy” means Policy 2.4 – Capital Pool Companies of the TSXV.
“December Meeting Matters” means the following items to be considered by JJR VI
Shareholders at a meeting to be held on December 17, 2010:
(a)
the Consolidation;

(b)
the Share Amendment;

(c)
the election of the board of directors of the Resulting Issuer; and

(d)
the adoption of the amended Stock Option Plan.

“DGCL” has the meaning set forth in the first recital above.
“Disclosure Letter” means the letter dated the date hereof from the Company
addressed to JJR VI and KFS setting out certain disclosures contemplated in this
Agreement.
“Distributors” means those licensed agents who distribute policies of insurance
on behalf of the Company, ACIC or ASI.
“Effective Time” means the time the Merger becomes effective as specified in the
Certificate of Merger, which is anticipated to be 11:59 p.m. on the Closing Date
or such other date and time as JJR VI and the Company may agree.
“Environment” includes the air, surface water, ground water, body of water, any
land, soil or underground space even if submerged under water or covered by a
structure, all living organisms and the interacting natural systems that include
components of air, land, water, organic and inorganic matters and living
organisms and the environment or natural environment as defined in any
environmental law, and “Environmental” shall have a similarly extended meaning.
“Environmental Laws” means all applicable laws relating in whole or in part to
the Environment including those relating to the storage, generation, use,
handling, manufacture, processing, transportation, import, export, treatment,
release or disposal of any Hazardous Substance and any laws relating to asbestos
or asbestos containing materials in the Environment, in the workplace or in any
building.
“Equity” means Equity Financial Trust Company.
“Escrow Agreement” means the subscription receipt escrow agreement between KAI
and Equity dated November 1, 2010.
“Filing Statement” means the filing statement of JJR VI in the form prescribed
by the TSXV, pertaining to the Qualifying Transaction and which shall be filed
on SEDAR prior to the closing of the Acquisition.
“Final Date” means January 31, 2011.
“GAAP” means generally accepted accounting principles as in effect from
time‑to‑time, consistently applied.
“Governmental Entity” means any government, parliament, legislature, regulatory
authority, governmental department, agency, commission, board, tribunal, crown
corporation, court or other law, rule or regulation‑making entity having
jurisdiction or exercising executive, legislative, judicial, regulatory or
administrative powers on behalf of any federation or nation, or any province,
territory, state or other subdivision thereof or any municipality, district or
other subdivision thereof, including, for greater certainty and without
limitation, any securities authorities and stock exchanges.
“Hazardous Substance” means any pollutant, contaminant, waste, hazardous
substance, hazardous material, toxic substance, dangerous substance or dangerous
good as defined, judicially interpreted or identified in any Environmental Law.
“Indemnified Party” has the meaning set forth in subsection 13.8 hereof.
“Indemnified Person” has the meaning set forth in subsection 13.4(a) hereof.
“Indemnifying Party” has the meaning set forth in subsection 13.4(a) hereof.
“Intellectual Property” means all, domestic or foreign, trade or brand names,
business names, business styles, trade marks, trade mark registrations and
applications, service marks, service mark registrations and applications,
distinguishing guises, copyrights, copyright registrations and applications,
industrial design, patents, patent registrations and applications and other
patent rights (including any patents issued on such applications or rights),
internet domain names, internet websites, database rights, logos, Software,
Software licenses, trade secrets, proprietary information and know‑how,
equipment and parts lists and descriptions, instruction manuals, inventions,
inventors’ notes, research data, unpatented blue prints, drawings and designs,
formulae, processes, technology and other intellectual, industrial or
proprietary rights, whether registered or not, anywhere in the world together
with all rights under licences, registered user agreements, technology transfer
agreements and other contracts or instruments relating to any of the foregoing.
“JJR Indemnified Parties” has the meaning set forth in Section 13.1 hereof.
“JJR VI” means JJR VI Acquisition Corp.
“JJR VI Assets” means the property and assets of JJR VI as a going concern, of
every kind and description and wheresoever situated.
“JJR VI Common Shares” means common shares in the capital of JJR VI.
“JJR VI Information” has the meaning set forth in subsection 7.5(a) hereof.
“JJR VI Option” means an outstanding stock option of JJR VI.
“JJR VI’s Financial Statements” means the audited financial statements of JJR VI
for the period from December 21, 2009 to December 31, 2009, annexed hereto as
Schedule 1.1(b).
“JJR VI Shareholders” means the holders of JJR VI Common Shares.
“KAI” means Kingsway America Inc., a Delaware corporation and a wholly‑owned
subsidiary of KFS.
“KAI Notes” means the promissory notes dated November 1, 2010, of the Company
evidencing debt to KAI in the aggregate amount of $7,967,005.
“KFS” means Kingsway Financial Services Inc., a corporation incorporated under
the laws of Ontario.
“KFS Assigning Agreements” means the agreements listed in Section 10.1(p) of the
Disclosure Letter.
“KFS Officers” means Larry Swets, Daniel Brazier, and Bill Hickey.
“KFS Surviving Agreements” means the agreements listed in Section 10.1(n) of the
Disclosure Letter.
“KFS Termination” has the meaning set forth in Section 12.1 hereof.
“KFS Terminating Agreements” means the agreements listed in Section 10.1(o) of
the Disclosure Letter.
“KFS Transferred Intellectual Property” means the intellectual property listed
in Section 10.1(q) of the Disclosure Letter.
“Letter of Intent” means the letter agreement between JJR VI and KFS dated May
26, 2010, as amended on July 29, 2010, as of August 31, 2010, as of September 5,
2010, as of September 10, 2010, as of September 17, 2010, as of September 24,
2010, as of October 1, 2010, as of October 8, 2010, as of October 22, 2010 and
as of November 5, 2010.
“Licences” has the meaning set forth in Section 4.20 hereof.
“Lien” means any mortgage, encumbrance, charge, pledge, hypothecation, security
interest, assignment, lien (statutory or otherwise), charge, title retention
agreement or arrangement, restrictive covenant or other encumbrance of any
nature or any other arrangement or condition, which, in substance, secures
payment, or performance of an obligation or restricts transfer.
“Material Adverse Effect” means, with respect to any Person, an event, matter or
circumstance, the effect of which is materially adverse to the business,
operations or condition (financial or otherwise) of the Person, other than any
effect resulting from (i) changes in general economic conditions affecting the
Person and the industry in which the Person operates, (ii) changes in applicable
laws, (iii) changes in GAAP, or (iv) this Agreement, or the Ancillary
Agreements, or the completion of the transactions contemplated in this Agreement
and the Ancillary Agreements.
“Merger” means the merger of Subco with and into the Company pursuant to the
provisions of the DGCL in the manner contemplated in and pursuant to the terms
and conditions of this Agreement.
“NAIC” means National Association of Insurance Commissioners.
“Name Change” means a change of the name of JJR VI from “JJR VI Acquisition
Corp.” to “Atlas Financial Holdings, Inc.” or such other name as is agreed to by
the Company and JJR VI.
“Non‑Assignable Contract” means any of the KFS Assigning Agreements or Shared
Agreements:
(a)
an assignment or attempted assignment of which would constitute a breach thereof
without the consent of a third party if such consent has not been obtained; or

(b)
an assignment of which would contravene any applicable law.

“OBCA” means the Business Corporations Act (Ontario).
“Offer” has the meaning set forth in Section 12.1 hereof
“Party” means a party to this Agreement and “Parties” means all parties to this
Agreement.
“Permitted Activities” has the meaning set forth in Section 7.3 hereof.
“Permitted Party” has the meaning set forth in Section 7.3 hereof.
“Person” includes an individual, corporation, partnership, joint venture, trust,
unincorporated organization, the Crown or any agency or instrumentality thereof
or any other juridical entity.
“Private Placement” means the private placement of 3,983,502 Subscription
Receipts undertaken by the Company on November 1, 2010 for gross proceeds of
$7,967,005.
“Real Property” has the meaning set forth in Section 4.16 hereof.
“Registration Rights Agreement” has the meaning set forth in subsection 10.2(h)
hereof.
“Required Consents and Approvals” means:
(a)
the approval of the Department of Insurance in the State of Illinois;

(b)
the approval of the TSXV of the Acquisition and conditional approval for the
listing of the Resulting Issuer Ordinary Shares;

(c)
the approval of the shareholders of JJR VI to the December Meeting Matters;

(d)
the approval of the Ontario Companies and Personal Property Security Branch of
the Ministry of Government Services (Ontario) for the Consolidation;

(e)
the approval of the Ministry of Finance (Ontario), the Ontario Securities
Commission and the Ontario Companies and Personal Property Security Branch of
the Ministry of Government Services (Ontario) for the Continuance; and

(f)
the approval of The Cayman Islands Registrar of Companies for the Continuance.

“Resulting Issuer” means JJR VI upon the completion of the Merger.
“Resulting Issuer Option” means a stock option of the Resulting Issuer.
“Resulting Issuer Ordinary Shares” means the ordinary voting shares in the share
capital of the Resulting Issuer.
“Resulting Issuer Preferred Shares” means the preferred shares in the share
capital of the Resulting Issuer.
“Resulting Issuer Restricted Voting Shares” means the restricted voting shares
in the share capital of the Resulting Issuer.
“Resulting Issuer Warrant” means a common share purchase warrant of the
Resulting Issuer, expiring three years after the closing of the Acquisition,
entitling the holder thereof to one Resulting Issuer Ordinary Share upon
exercise of such warrant and payment of the $2.00 exercise price, subject to the
terms of the warrant certificate.
“SEDAR” means the System for Electronic Document Analysis and Retrieval.
“Share Amendment” means the amendment to the proposed articles of association of
JJR VI to provide for Resulting Issuer Preferred Shares and Resulting Issuer
Restricted Voting Shares to be considered by the shareholders at a meeting of
JJR VI Shareholders to be held on December 17, 2010.
“Shared Agreement” means each agreement listed on Section 10.1(p) of the
Disclosure Letter pursuant to which KFS or an Affiliate and one of the Company,
ACIC or ASI is a party and whereby such parties share the rights, interests,
benefits and liabilities thereunder in accordance with the terms of each such
contract.
“Software” means all computer programs in source, object and executable code
form used (including all modules, routines and sub‑routines), data, databases,
and all source and other preparatory materials relating to them (including user
requirements), functional specifications, and programming specifications, ideas,
principles, programming languages, algorithms, flow charts, logic, logic
diagrams, orthographic representations, file structures, coding sheets, coding
(including any relevant manuals or other documentation), computer‑generated
works together with all translations, adaptations, modifications, derivations,
combination and derivative works (other than so‑called shrink‑wrap software and
similar computer software commonly used in business).
“Solicitation Activities” has the meaning set forth in Section 7.3 hereof.
“Statutory Statements” means the financial statements required to be filed by
ACIC and ASI with the Department of Insurance in the State of Illinois for the
fiscal years ended December 31, 2009, 2008 and 2007 and for the nine‑month
period ended September 30, 2010.
“Stock Option Plan” means the stock option plan to be adopted by the Resulting
Issuer upon completion of the Acquisition, substantially in the form approved by
the JJR VI Shareholders at the meeting held on December 17, 2010.
“Subco” means Atlas Acquisition Corp., a direct, wholly‑owned subsidiary of JJR
VI incorporated under the DGCL on December 6, 2010 for the sole purpose of
effecting the Merger in connection with the Acquisition.
“Subco Shares” means all of the outstanding common shares in the capital of
Subco.
“Subordinated Surplus Debentures” means collectively, the U.S. $8,800,000
principal amount subordinated surplus debenture issued by ASI in favour of KAI
dated September 30, 2009 with a maturity date of September 30, 2039, the U.S.
$4,700,000 principal amount subordinated surplus debenture issued by ACIC in
favour of KAI dated September 30, 2009 with a maturity date of September 30,
2039 and the U.S. $950,000 principal amount subordinated surplus debenture
issued by Southern United Fire Insurance Company in favour of KAI dated
September 18, 2009 with a maturity date of September 30, 2039.
“Subscription Receipt” means a subscription receipt issued by the Company under
the Private Placement at a purchase price of $2.00 per receipt, each
exchangeable into one Company Common Share and one Company Warrant immediately
prior to the Merger.
“Subscription Receipt Agreement” means the subscription receipt agreement
between the Company, KAI and Equity dated November 1, 2010 regarding the
Subscription Receipts.
“SUGAT” means Southern United General Agency of Texas, Inc.
“Surviving Corporation” has the meaning set forth in subsection 2.1(a) hereof.
“Target” has the meaning set forth in Section 12.1 hereof.
“Target Alternative Transaction” has the meaning set forth in Section 12.1
hereof.
“Target Alternative Transaction Agreement” has the meaning set forth in Section
12.1 hereof.
“Tax Benefit” has the meaning set forth in subsection 13.5(c) hereof.
“Tax Proceeding” has the meaning set forth in subsection 13.4(b) hereof.
“Third Party Claim” has the meaning set forth in Section 13.4(a) hereof.
“Transferred Employees” means the employees listed in Section 4.41 of the
Disclosure Letter.
“Transition Services Agreement” means the transition services agreement to be
entered into at Closing between KFS and the Company in substantially the form
attached hereto as Schedule 10.1(l).
“TSXV” means the TSX Venture Exchange.
“UCC Lease Agreement” has the meaning set forth in subsection 10.1(j) hereof.
Article 2    
TRANSACTION
2.1
Transaction.

(a)
The Merger. At the Effective Time, subject to the terms and conditions of this
Agreement and the Certificate of Merger, Subco shall be merged with and into the
Company pursuant to this Agreement and the DGCL, the separate corporate
existence of Subco shall cease, and the Company shall continue as the surviving
corporation under its present name pursuant to the DGCL. The Company, in its
capacity as the corporation surviving the Merger, is hereinafter sometimes
referred to as the “Surviving Corporation”.

(b)
Effect of Merger. The effect of the Merger shall be as set forth in section 259
of the DGCL and, as such, the Surviving Corporation shall succeed to and possess
all the properties, rights, privileges, immunities, powers, franchises and
purposes, and shall be subject to all the duties, liabilities, debts,
obligations, restrictions and disabilities, of the Constituent Corporations, all
without further act or deed.

(c)
Effective Time. The consummation of the Merger shall be effected at the
Effective Time. Subject to the provisions of this Agreement, Subco and the
Company will cause a copy of the Certificate of Merger, substantially in the
form attached hereto as Schedule 2.1(c) (the “Certificate of Merger”), and such
other documents as are required to be filed to give effect to the Merger to be
executed, delivered and filed with the Secretary of State of the State of
Delaware in accordance with section 251 of the DGCL to reflect the Effective
Time.

(d)
Certificate of Incorporation; Bylaws. From and after the Effective Time and
until further amended in accordance with applicable law, the Certificate of
Incorporation of the Surviving Corporation shall be the Certificate of
Incorporation of the Company, as amended to be in substantially the form
provided in the Certificate of Merger. From and after the Effective Time and
until further amended in accordance with law, the By‑laws of the Company as in
effect immediately prior to the Effective Time shall be the By‑laws of the
Surviving Corporation.

(e)
Taking of Necessary Action; Further Action. JJR VI, Subco, KFS and the Company
shall each use its commercially reasonable efforts to take all such action as
may be necessary or appropriate to effect the Merger including obtaining all
orders and approvals required from applicable third parties. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all properties, rights, privileges,
immunities, powers and franchises of either of the Constituent Corporations, the
officers of the Surviving Corporation are fully authorized in the name of each
Constituent Corporation or otherwise to take, and shall take, all such lawful
and necessary action.

2.2    Public Announcement.
Immediately after the execution of this Agreement, JJR VI shall issue a public
announcement, announcing the entering into of this Agreement, which announcement
shall address all matters required by TSXV policies and shall be in form and
substance acceptable to each of them, acting in a commercially reasonable
manner. Subject to applicable law, no Party shall issue any news release or
public statements with respect to this Agreement or the Merger without giving
notice of such announcement or statement to all of the other Parties, consulting
the other Parties with respect to its form and content, and obtaining the
consent of the other Parties, such consent not to be unreasonably withheld or
delayed. Notwithstanding the foregoing, the disclosing party shall have the
right to make the announcement or statement without the consent of the other
Parties if the disclosing party has been advised by its legal counsel that the
information must be disclosed under applicable law or that changes to the
proposed disclosure suggested by any other Party would make the disclosure
misleading or otherwise not responsive to applicable law. As used in this
Section 2.2, a public announcement or statement includes a filing with a
Governmental Entity.
2.3    Merger Events.
Upon the terms and subject to the conditions set forth in this Agreement, at the
Effective Time:
(a)
each Company Common Share issued and outstanding immediately prior to the Merger
becoming effective (other than those Company Common Shares held by KAI) shall be
converted into the right to receive one (1) fully paid and non‑assessable
Resulting Issuer Ordinary Share;

(b)
each Company Common Share issued and outstanding immediately prior to the Merger
becoming effective and held by KAI shall be converted into the right to receive
one (1) fully paid and non‑assessable Resulting Issuer Restricted Voting Share;

(c)
each Company Preferred Share issued and outstanding immediately prior to the
Merger becoming effective shall be converted into the right to receive one (1)
fully paid and non‑assessable Resulting Issuer Preferred Share;

(d)
each Subco Share issued and outstanding immediately prior to the Merger becoming
effective shall be exchanged for one (1) share of common stock of the Surviving
Corporation; and

(e)
the Surviving Corporation shall be a wholly‑owned subsidiary of JJR VI.

2.4    Convertible Securities.
Upon the terms and subject to the conditions set forth in this Agreement, at the
Effective Time:
(a)
each Company Warrant issued and outstanding immediately prior to the Merger
becoming effective shall be exchanged pursuant to its terms for one Resulting
Issuer Warrant;

(b)
each JJR VI Option issued and outstanding immediately prior to the Merger
becoming effective shall be exchanged pursuant to its terms for one Resulting
Issuer Option; and

(c)
the certificates representing the Company Warrants shall cease to represent any
claim upon or interest in the Company other than the right of the holder to
receive, pursuant to the terms hereof, warrants of the Resulting Issuer in
accordance with subsection 2.4(a) hereof.

2.5    Certificates.
At the Effective Time:
(a)
the certificates representing each Company Common Share and Company Preferred
Share shall be cancelled, and Resulting Issuer Ordinary Shares, Resulting Issuer
Restricted Voting Shares and Resulting Issuer Preferred Shares shall be issued
to the registered holders, respectively, pursuant to the rights provided in
Section 2.3 and a certificate representing each such share shall be issued to
the holders;

(b)
the original share certificate of Subco registered in the name of JJR VI shall
be cancelled and the Surviving Corporation shall issue to JJR VI a share
certificate for the number of Surviving Corporation shares to be issued to JJR
VI as provided in Section 2.3 hereof;

(c)
the certificates representing the Company Shares shall cease to represent any
claim upon or interest in the Company other than the right of the holder to
receive, pursuant to the terms hereof, shares of the Resulting Issuer in
accordance with subsection 2.5(a) hereof; and

(d)
subject to the delivery and surrender by the holder thereof to JJR VI of
certificates representing Company Warrants, JJR VI shall issue to each such
holder certificates representing the number of Resulting Issuer Warrants to
which such holder is entitled.

2.6    Merged Corporation.
Unless otherwise determined in accordance with applicable law by the Surviving
Corporation or its shareholders, the following provisions will apply:
(a)
Number of Directors. The board of directors of the Surviving Corporation shall
consist of a minimum number of one (1) director and a maximum of twelve (12)
directors. The directors of the Surviving Corporation from time‑to‑time shall be
empowered to determine the number of directors of the Surviving Corporation
within the minimum and maximum number set out in the Certificate of
Incorporation of the Surviving Corporation, as amended from time‑to‑time.

(b)
Officers and Directors. As of the Effective Time, the initial directors of the
Surviving Corporation shall be:

Scott D. Wollney
Jordan M. Kupinsky
Larry G. Swets
Gordon Pratt
As of the Effective Time, the initial officers of the Surviving Corporation and
their titles shall be as follows:
Scott Wollney
‑
Chief Executive Officer
Paul Romano
‑
Chief Financial Officer

(c)
Fiscal Year. The fiscal year end of the Surviving Corporation shall be December
31 in each year, until changed by resolution of the Board of Directors.

(d)
Name. The name of the Surviving Corporation shall be American Insurance
Acquisition Inc. or such other name as agreed to by JJR VI and the Company.

(e)
Registered Office. The registered office of the Surviving Corporation shall be
the registered office of the Company.

2.7    Fractional Shares.
No fractional Resulting Issuer Ordinary Shares, Resulting Issuer Restricted
Voting Shares and Resulting Issuer Preferred Shares will be issued or delivered
pursuant to the Acquisition, rather each holder of a Company Share entitled to a
fractional share shall be paid the fair value therefor in cash.
Article 3    
REPRESENTATIONS AND WARRANTIES OF JJR VI
JJR VI hereby represents and warrants to the Company and KFS as follows and
acknowledges that the Company and KFS are relying on such representations and
warranties in connection with the transactions contemplated hereby:
3.1    Incorporation, Organization and Authority of JJR VI and Subco.
JJR VI is a corporation duly incorporated, organized and validly subsisting and
in good standing under the laws of the Province of Ontario, and has all the
requisite corporate capacity and authority to enter into this Agreement and to
perform its obligations hereunder and to carry on its business and to own, lease
and operate JJR VI Assets. Subco is the only subsidiary of JJR VI. Subco is a
corporation duly incorporated, organized and validly subsisting and in good
standing under the laws of the State of Delaware, and has all the requisite
corporate capacity and authority to enter into this Agreement and to perform its
obligations hereunder.
3.2    Necessary Proceedings.
All necessary and/or required corporate measures, proceedings and actions of the
directors and shareholders of JJR VI and Subco have been taken to authorize and
enable each of JJR VI and Subco to enter into and deliver this Agreement and to
perform its obligations hereunder, other than the approval of the Company
Shareholders for the December Meeting Matters.
3.3    Valid and Binding Obligation.
This Agreement has been duly executed and delivered by each of JJR VI and Subco
and constitutes a legal, valid and binding obligation of each of JJR VI and
Subco enforceable against each of them in accordance with its terms subject only
to:
(a)
any limitation under applicable laws relating to bankruptcy, insolvency,
moratorium, reorganization and other similar laws relating to or affecting the
enforcement of creditors’ rights generally; and

(b)
the fact that equitable remedies, including the remedies of specific performance
and injunction, may only be granted in the discretion of a court.

3.4    Share Capital.
The authorized capital of JJR VI consists of an unlimited number of JJR VI
Common Shares of which 10,700,000 have been duly and validly issued and are
outstanding as fully paid and non‑assessable shares as of the date hereof. The
authorized capital of Subco consists of 3,000 common shares of par value
U.S.$0.0001 of which 100 common shares have been duly and validly issued and are
outstanding as fully paid and non‑assessable shares as of the date hereof.
Except as contemplated by this Agreement, there is no other agreement,
obligation (contractual or otherwise), right or option existing or pending
pursuant to which JJR VI or Subco is or might be required to issue any shares or
other securities of its capital other than the 856,000 options granted to
insiders of JJR VI, the 214,000 options to be granted to a director of JJR VI
prior to Closing and the 250,000 options granted to the agent of JJR VI in JJR
VI’s initial public offering with each such option exercisable for one (1) JJR
VI Common Share on a pre‑Consolidation basis. No holder of outstanding
securities of JJR VI or Subco is entitled to any pre‑emptive or similar rights
to acquire or subscribe for any securities of JJR VI or Subco, as applicable. At
Closing, subject to receipt of all necessary approvals, the authorized capital
of JJR VI will consist of 800,000,000 Resulting Issuer Ordinary Shares,
200,000,000 Restricted Voting Shares and 200,000,000 Preferred Shares, of which
4,553,502 Resulting Issuer Ordinary Shares, 13,804,061 Resulting Issuer
Restricted Voting Shares (registered in the name of KAI) and 18,000,000
Resulting Issuer Preferred Shares (registered in the name of KAI) will be issued
and outstanding as validly issued, fully paid and non‑assessable.
3.5    Title to JJR VI Assets.
JJR VI has good and marketable title to JJR VI Assets free and clear of any
actual, pending or, to the knowledge or belief of JJR VI, threatened claims or
Liens whatsoever, including without limitation any action, proceeding or
investigation affecting title to JJR VI Assets, at law or in equity, before any
court, administrative agency or other tribunal or any governmental authority, to
all of JJR VI Assets and to any properties.
3.6    Reporting Issuer.
JJR VI is a reporting issuer under the Act, the Securities Act (Alberta) and the
Securities Act (British Columbia) and JJR VI’s name does not appear on a list of
defaulting reporting issuers maintained by the securities commissions of Alberta
and Ontario. JJR VI is in compliance and up to date with all filings under
applicable corporate and securities rules and regulations.
3.7    Cease Trading.
No order ceasing or suspending trading in securities of JJR VI or prohibiting
the sale of securities by JJR VI or JJR VI Shareholders is currently in effect
and no proceedings for this purpose have been instituted, are pending, or, to
its knowledge, contemplated or threatened other than the trading halt imposed by
the TSXV on May 27, 2010 in connection with the announcement of the Qualifying
Transaction.
3.8    Financial Statements.
JJR VI’s Financial Statements have been prepared in accordance with Canadian
GAAP and present fairly JJR VI Assets and liabilities (whether accrued,
absolute, contingent or otherwise) and the financial condition of JJR VI as of
the date thereof.
3.9    Business of JJR VI.
JJR VI has conducted its activities in material compliance with the CPC Policy
and has not carried on any business activity which is not in compliance with the
CPC Policy.
3.10    Liabilities of JJR VI.
There are no known liabilities or indebtedness (whether accrued, absolute,
contingent or otherwise) of JJR VI or Subco of any kind whatsoever, and, to the
best of the knowledge of JJR VI, there is no reasonable basis for assertion
against JJR VI or Subco of any liabilities or indebtedness of any kind, other
than:
(a)
liabilities or indebtedness disclosed or reflected in or provided for in JJR
VI’s Financial Statements; or

(b)
liabilities or indebtedness incurred since the date of JJR VI’s Financial
Statements which were incurred in the ordinary course of the routine daily
affairs of JJR VI’s business (including professional fees incurred in connection
with the Merger).

3.11    Guarantees.
Neither JJR VI nor Subco are a party to, or bound by, any agreement of
guarantee, indemnification, assumption or endorsement or any like commitment of
the obligations, liabilities (contingent or otherwise) or indebtedness of any
other Person.
3.12    Absence of Other Agreements.
Other than as set out in Schedule 3.12, JJR VI is not a party to any material
contract nor is it bound by any outstanding contract or commitment which
requires prior approval in connection with the Acquisition. All the material
contracts, agreements, commitments, indentures and other instruments to which
JJR VI is a party are in good standing and in full force and effect without
amendment thereto, JJR VI is entitled to all benefits thereunder and, to the
best of the knowledge of JJR VI, the other parties to such contracts,
agreements, commitments, indentures and other instruments are not in default or
breach of any of their obligations thereunder.
3.13    Public Disclosure.
JJR VI has made all material filings required to be made by it under applicable
securities laws and stock exchange rules. None of the materials filed by, or on
behalf of, JJR VI with the applicable securities regulators and the TSXV contain
a misrepresentation (as defined in the Act) or omit to state a material fact as
at the date of such filing, which has not been corrected. JJR VI has not filed
any confidential material change reports. No adverse material information (as
that terms is defined under TSXV policies) exists in relation to JJR VI which
has not been publicly disclosed.
3.14    No Breach Caused by this Agreement.
Neither the execution nor delivery of this Agreement nor the fulfillment or
compliance with any of the terms and conditions hereof will conflict with, or
result in, nor will they with the giving of notice or the lapse of time or both
result in, a breach of the terms, conditions or provisions of, or constitute a
default under, the articles and by‑laws or Certificate of Incorporation or
By‑Laws, of JJR VI or Subco or any indenture, mortgage, lease, agreement or
instrument to which JJR VI or Subco is subject to, or will require any consent
or other action by any administrative or governmental body, other than the
Required Consents and Approvals. Each of JJR VI and Subco have complied with all
licenses, franchises, leases, permits, approvals, agreements and applicable law
to which it is a party or by which it is bound, the breach of which would
adversely affect the Acquisition or the operations or condition, financial or
otherwise, of JJR VI.
3.15    Litigation.
There are no claims, demands, disputes, actions, suits, proceedings or
investigations pending or, to the knowledge of JJR VI, threatened against or
directly or indirectly affecting JJR VI or Subco (including without limitation,
restraining or preventing JJR VI from issuing Resulting Issuer Ordinary Shares,
Resulting Issuer Restricted Voting Shares and Resulting Issuer Preferred Shares
pursuant to the Merger), at law or in equity or before or by any federal, state,
municipal or other governmental court, department, commission, board, bureau,
agency or instrumentality, domestic or foreign, nor is JJR VI or Subco subject
to any presently effective adverse order, writ, injunction or decree of any such
body.
3.16    No Brokers.
Neither JJR VI nor Subco has entered into any agreement which would entitle any
Person to any valid claim against JJR VI, Subco, KFS or the Company for a
broker’s commission, finder’s fee or any like payment in respect of the Merger
or any other matters contemplated by this Agreement.
3.17    Approvals.
No approval of, or registration, declaration or filing by JJR VI or Subco with,
any federal, provincial or local court, authority or administrative agency or
Governmental Entity is necessary to authorize the execution and delivery of this
Agreement, or any and all of the documents and instruments to be delivered under
this Agreement, by JJR VI or Subco or the consummation by JJR VI or Subco of the
transactions contemplated herein, other than those approvals set out in
paragraphs (b) to (f) of the definition of Required Consents and Approvals.
3.18    Compliance with Laws.
Neither JJR VI nor Subco is in violation of any federal, provincial, municipal
or other law, regulation or order of any government or governmental or
regulatory authority, domestic or foreign which has had or would reasonably be
expected to have a Material Adverse Effect on JJR VI or Subco.
3.19    Shareholders’ Agreements, etc.
Other than any escrow agreements required by the TSXV, there are no
shareholders’ agreements, pooling agreements, voting trusts or other similar
agreements with respect to the ownership or voting of any JJR VI Common Shares.
3.20    No Bankruptcy.
No proceedings have been taken, are pending or authorized by JJR VI or Subco or,
to the knowledge of JJR VI, by any other person in respect of the bankruptcy,
insolvency, liquidation or winding up of JJR VI or Subco.
3.21    Business Activities.
Upon the Merger, none of JJR VI, Subco or any other Corporate or Partnership
Subsidiary of JJR VI or Subco will have any business activities in the Cayman
Islands.
Article 4    
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to JJR VI as follows and acknowledges that
JJR VI is relying on such representations and warranties in connection with the
transactions contemplated hereby:
4.1    Incorporation, Organization and Authority of the Company.
The Company is a corporation duly incorporated, organized and validly subsisting
and in good standing under the DGCL, and has all the requisite corporate
capacity and authority to enter into this Agreement and to perform its
obligations hereunder and to carry on its business and to own, lease and operate
the Assets.
4.2    Ownership of Subsidiaries.
The only subsidiaries of the Company are ACIC, ASI and SUGAT. The Company owns
all of the issued and outstanding securities of ACIC and ASI and ASI owns all of
the issued and outstanding securities of SUGAT. Each of ACIC, ASI and SUGAT has
been duly incorporated and organized, and is validly existing as a corporation
in good standing, under the laws of its jurisdiction of incorporation. Each of
ACIC, ASI and SUGAT is duly qualified to carry on its business, and is in good
standing, in each jurisdiction in which the character of its properties, owned
or leased, or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified does not constitute or would not
reasonably be expected to have a Material Adverse Effect on any of the Company,
ACIC or ASI. All of the outstanding capital stock of ACIC, ASI and SUGAT is held
by the Company or ASI, as applicable, free and clear of any Lien or any other
limitation or restriction (including any restriction on the right to vote or
transfer the same).
4.3    Necessary Proceedings.
All necessary and/or required corporate measures, proceedings and actions of the
directors and shareholders of the Company have been taken to authorize and
enable the Company to enter into and deliver this Agreement and to perform its
obligations hereunder.
4.4    Valid and Binding Obligation.
The execution and delivery of this Agreement by the Company and the consummation
by it of the transactions under this Agreement have been duly authorized by the
Board of Directors of the Company and its shareholders as applicable, and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement. This Agreement has been duly executed and delivered by
the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms subject only to:
(a)
any limitation under applicable laws relating to bankruptcy, insolvency,
moratorium, reorganization and other similar laws relating to or affecting the
enforcement of creditors’ rights generally; and

(b)
the fact that equitable remedies, including the remedies of specific performance
and injunction, may only be granted in the discretion of a court.

4.5    Share Capital.
The authorized capital of the Company consists of 34,000,000 Company Common
Shares and 39,000,000 Company Preferred Shares, of which 13,804,960 Company
Common Shares and 18,000,000 Preferred Shares are duly and validly issued and
outstanding as fully paid and non‑assessable and issued in compliance with all
applicable laws. Other than the Company Common Shares and Company Warrants to be
issued pursuant to the Subscription Receipts under the Private Placement and the
Company Common Shares to be issued upon the conversion of the Company Preferred
Shares, there is no other agreement, obligation, right or option, (contractual
or otherwise), existing or pending pursuant to which the Company, ACIC or ASI is
or might be required to issue, repurchase, redeem or otherwise acquire any
further shares or other securities of its capital.
4.6    Cease Trading.
No order ceasing or suspending trading in securities of the Company, ACIC or ASI
or prohibiting the sale of securities by the Company or the Company Shareholders
is currently in effect and to the knowledge of the Company no proceedings for
this purpose have been instituted, are pending, contemplated or threatened.
4.7    Title to Assets.
Each of the Company, ACIC and ASI has good and marketable title to its Assets
free and clear of any actual, pending or, to the knowledge of the Company,
threatened claims or Liens, whatsoever, including without limitation any action,
proceeding or investigation affecting title to the Assets, at law or in equity,
before any court, administrative agency or other tribunal or any governmental
authority, to any of the Assets and to any properties, save and except in any
case which would not reasonably be expected to have a Material Adverse Effect on
any of the Company, ACIC or ASI. None of the Company, ACIC nor ASI has granted
or entered into any agreement, option, understanding or commitment or any
encumbrance of or disposal of the Assets or an interest therein or any right or
privilege capable of becoming any such agreement or option with respect to the
Assets and will not do so prior to the Effective Time.
4.8    Licences.
Except as set out in Section 4.8 of the Disclosure Letter:
(a)
Each of the Company, ACIC and ASI possesses all Licences necessary to own their
respective properties and Assets and to carry on their respective businesses as
currently conducted by them, save and except for such Licenses which would not
reasonably be expected to have a Material Adverse Effect on any of the Company,
ACIC or ASI and such Licences are listed in Section 4.8 of the Disclosure
Letter. Each of the Company, ACIC and ASI has at all times possessed all
Licences which are necessary to own their respective properties and Assets and
to carry on their respective businesses as conducted by them at all such times,
save and except for such Licenses which would not reasonably be expected to have
a Material Adverse Effect on any of the Company, ACIC or ASI. The Licences
listed in Section 4.8 of the Disclosure Letter are the only Licences necessary
for the operation of the business of each of the Company, ACIC and ASI and the
ownership of the Assets of each of the Company, ACIC and ASI and such Licences
are in full force and effect unamended. Neither the nature of the business of
each of the Company, ACIC and ASI nor the location or character of any of the
Assets of any of the Company, ACIC or ASI requires any of Company, ACIC or ASI
to be in good standing in any jurisdiction other than jurisdictions where it is
duly registered, licensed or otherwise qualified and in good standing for such
purpose.

(b)
Each of the Company, ACIC and ASI is in compliance in all material respects with
all provisions of the Licences and there are no proceedings in progress, or
pending or threatened, which may result in revocation, cancellation, suspension
or any adverse modification of any of the Licences. The Licences are free and
clear of any Liens and no Licence is subject to any material restrictions or
undertakings.

(c)
Subject to obtaining all Required Consents and Approvals, no Licence is void or
voidable or will be terminated or suspended as a result of the Merger and
neither the terms and conditions relating to such Licences nor the legislation
or regulations pursuant to which the same were issued require that any consent
or approval of, or filing with or notice to, any Governmental Entity having
jurisdiction over any the Company, ACIC or ASI or other Person be made to assure
the continued holding by each of the Company, ACIC and ASI, as applicable, of
such Licences after the Effective Time, except for the Required Consents and
Approvals.

4.9    Policy Liabilities and Reserves.
The actuarial and related liabilities of each of the Company, ACIC and ASI and
the changes thereto shown in the Company’s Financial Statements have been valued
by Towers Watson, the independent actuary of each of ACIC and ASI, as
applicable, and are in accordance with all applicable regulatory requirements
and, to the knowledge of the Company, accepted actuarial practice in the United
States of America. To the knowledge of the Company, the amount of policy
liabilities of each of ACIC and ASI makes appropriate provision for all
policyholder obligations and the Company’s Financial Statements fairly present
the results of each of ACIC’s and ASI’s appointed actuary’s valuation. All
provisions relative to any policy issued or assumed by any of ACIC and ASI and
in force have been taken into account by the appointed actuary of such company
in determining the actuarial liabilities of such company. Each of ACIC and ASI
has made full disclosure to its appointed actuary of all relevant information
required for the preparation of the valuation of the actuarial and related
liabilities of such company. There have been no changes in actuarial assumptions
or methods since December 31, 2009 and no circumstances have arisen which are
materially and adversely inconsistent with such actuarial assumptions and
methods and changes. No Governmental Entity having jurisdiction over any the
Company, ACIC or ASI is disputing the methods employed by it in establishing and
valuing current policy liabilities nor is any such Governmental Entity
requesting or requiring that capital, in addition to the current amount thereof,
should be invested in one of the Company, ACIC and ASI or that one of the
Company, ACIC and ASI increase its risk based capital. The risk based capital of
each of ACIC and ASI was prepared in accordance with applicable standards and
all related mechanical calculations were accurately performed. All material
information and data relating to the determination of policy liabilities of each
of ACIC and ASI has been provided to JJR VI.
4.10    Statutory Statements.
The Company has made the Statutory Statements available to JJR VI. The Statutory
Statements fairly present, in all material respects, the statutory financial
condition and statutory results of operations for each of ACIC and ASI for the
period therein specified and were prepared in conformity with statutory
accounting principles prescribed or permitted by any Governmental Entity having
jurisdiction over ACIC or ASI applied on a consistent basis during the periods
presented, except as expressly set forth within the subject Statutory
Statements. Notwithstanding the foregoing, any implied or actual representation
or warranty made by the Company with respect to the net deferred tax asset of
ACIC and ASI as shown in the Statutory Statements is qualified as being made to
the knowledge of the Company.
4.11    Investments.
(a)
Section 4.11 of the Disclosure Letter sets forth a complete and accurate list of
all of the investments owned by each of ACIC and ASI as at November 30, 2010
including the security owned, the maturity date, the cost thereof to each of the
Company, ACIC or ASI, gains realized since December 31, 2009 and the market
value thereof as at November 30, 2010. The investments of the Company, ACIC and
ASI comply with the requirements of all applicable laws relating thereto and
with the applicable investment policies of each of the Company, ACIC or ASI, as
the case may be, and all such investments are evidenced by appropriate written
instruments and certificates (except where in non‑certified form), are valid and
genuine and enforceable in accordance with their terms.

(b)
Each of the Company, ACIC and ASI beneficially owns the investments listed in
Section 4.11 of the Disclosure Letter under its name free and clear of all
Liens. No such investments are in default with respect to the payment of
principal or interest.

4.12    Distributor Loans.
Section 4.12 of the Disclosure Letter sets forth a complete and accurate list
of: (a) all loans and commitments to make loans made to Distributors by any of
the Company, ACIC and ASI, including a description of outstanding principal and
interest and material terms, including any overdue amounts and maturity date;
and (b) all other outstanding financing agreements and arrangements between each
of the Company, ACIC and ASI and all Distributors. Such loans comply with the
requirements of all applicable laws relating thereto and all such loans are
evidenced by appropriate written agreements and are valid and genuine and
enforceable in accordance with their terms.
4.13    Regulatory Matters.
(a)
There are no outstanding orders, notices or similar requirements relating to any
of the Company, ACIC and ASI or their respective properties, Assets and
operations, issued by any Governmental Entity having jurisdiction over any of
the Company, ACIC or ASI which have been received by any of the Company, ACIC
and ASI and which would have a Material Adverse Effect on the Company, ACIC or
ASI and there are no matters under discussion with any such Governmental
Entities relating to such orders, notices or similar requirements.

(b)
Each of the Company, ACIC and ASI is in compliance with all applicable
regulatory requirements and agreements. All policies, policy forms and policy
wording are and in compliance with applicable laws. To the extent any compliance
issues were raised in the past, they have been addressed. True and complete
copies of all regulatory reports, examinations (market conduct, compliance,
actuarial or otherwise) and inspections and related correspondence in connection
with all Governmental Entities having jurisdiction over any of the Company, ACIC
or ASI during the past five (5) years have been provided to JJR VI.

(c)
All risks insured by policies issued by each the Company, ACIC and ASI have been
underwritten in accordance with the written underwriting guidelines of such
company which existed at the time the policies were issued. The current written
underwriting guidelines of each of the Company, ACIC and ASI have been provided
to JJR VI.

4.14    Reinsurance.
(a)
Section 4.14 of the Disclosure Letter contains a list of all reinsurance
agreements and treaties in effect to which any of the Company, ACIC or ASI is a
party, including any terminated or expired agreement or treaty under which there
remains any outstanding liability in excess of five hundred thousand dollars
($500,000), the effective date of each such agreement or treaty, the termination
date of any agreement or treaty which has a definite termination date, the
renewal date and notice of renewal requirements for any agreement or treaty
which has renewal rights. No side agreements or letters exist that alter any
terms of any reinsurance agreements or treaties listed in Section 4.14 of the
Disclosure Letter.

(b)
Each reinsurance transaction is evidenced by an appropriate signed agreement or
treaty; no reinsurance transactions have been entered into by any of the
Company, ACIC or ASI since December 31, 2009 other than ordinary course quota
share cession of amounts in excess of any of the Company’s, ACIC’s or ASI’s risk
retention in respect of newly written business, nor has any of the Company, ACIC
or ASI authorized or agreed or otherwise become committed to enter into any such
reinsurance transaction. All of the Company’s, ACIC’s or ASI’s reinsurance
agreements and treaties are valid and binding obligations, enforceable in
accordance with their terms and will be given effect to as bona fide reinsurance
agreements with real transfer of risk for all accounting, tax, regulatory and
actuarial purposes.

(c)
Neither the Company, ACIC nor ASI is in default under any reinsurance agreement
or treaty, has received notice from any reinsurer that it is not in good
standing thereunder or has failed to meet the underwriting standards required
for any business reinsured thereunder and there exists no material dispute
between any of the Company, ACIC or ASI and the other party or parties to such
agreements or treaties. All reinsurance premium payments due in connection with
the policies issued by any of the Company, ACIC or ASI have been paid in full.
There are no circumstances or events which are likely to lead to the
cancellation, withdrawal or suspension of any reinsurance agreement or treaty.
Neither the Company, ACIC nor ASI has waived any rights thereunder, and no
default or breach exists in respect thereof on the part of any of the other
parties thereto and no event has occurred which, after the giving of notice or
the lapse of time or both, would constitute such a default or breach.

(d)
Except as described in Section 4.14 of the Disclosure Letter, there are no
circumstances or events which are likely to lead to the cancellation or
suspension of any reinsurance agreement or treaty to which any of the Company,
ACIC or ASI is a party in relation to the business or to the termination of any
such agreement or treaty at a date earlier than the date otherwise provided
under such agreement or treaty.

(e)
No reinsurance agreement or treaty contains: (i) any provision pursuant to which
the other party or parties thereto are entitled to terminate such agreement or
treaty by reason of the transactions contemplated by this Agreement; or (ii) any
“sunset” or similar provision pursuant to which claims which would otherwise be
covered by reinsurance will not be covered unless reported within a specified
period of time or prior to a specified date nor, in respect of any reinsurance
agreement or treaty, is any consent, approval, Licence, order, authorization,
registration, declaration or filing required with any Governmental Entity having
jurisdiction over any of the Company, ACIC or ASI in connection with the
transactions contemplated by this Agreement.

(f)
With respect to each reinsurance agreement or treaty listed in Section 4.14 of
the Disclosure Letter: (i) all benefits claimed by any of the Company, ACIC or
ASI as a result of such agreement or treaty, whether established as an asset,
reserve credit or otherwise, reflect obligations legally owed to such company
under the terms of such agreement or treaty; and (ii) all amounts owing by any
of the Company, ACIC or ASI under such agreements or treaties have been properly
reflected as liabilities of such company on its books.

(g)
Since December 31, 2009, there has been no material change, including
cancellation, commutation, recapture or repricing, to any reinsurance agreement
or treaty to which any of the Company, ACIC or ASI is a party.

4.15    Distributors.
(a)
Section 4.15 of the Disclosure Letter contains a complete and accurate list of
all Distributors through whom any of the Company, ACIC or ASI currently provide
insurance products or services or who such company sponsors with an annual
direct written premium volume of five hundred thousand dollars ($500,000) or
more. Particulars of all the material terms and conditions upon which each of
the Company, ACIC or ASI carries on its business through its Distributors have
been made available to JJR VI.

(b)
Section 4.15 of the Disclosure Letter contains a complete and accurate list of
all underwriting management agreements and underwriting binding authority
agreements to which any of the Company, ACIC or ASI is a party. None of the
Distributors with binding authority appointed by any of the Company, ACIC or ASI
pursuant to the agreements listed in Section 4.15 of the Disclosure Letter have
exceeded their authority nor have any of them exceeded any premium volume
limitations imposed by the applicable agreement and all of them have provided
and continue to provide such company with accurate and up‑to‑date reports
concerning premiums written by them on behalf of such company and claims
incurred in respect of business accepted by them on behalf of such company.

4.16    Real Property.
All real property owned by the Company, ACIC or ASI (the “Real Property”) is set
out in Section 4.16 of the Disclosure Letter, including the legal description
thereof and the name of the registered and beneficial owner thereof. The
Company, ACIC or ASI has good and marketable title to the identified Real
Property free and clear of all title defects and Liens. The Company has such
rights of entry and exit to and from the Real Property as are reasonably
necessary to carry on its business substantially in the manner in which it is
currently carried on. None of the Company, ACIC or ASI has entered into any
agreement to sell, transfer, encumber, or otherwise dispose of or impair its
right, title and interest in and to the Real Property. There are no work orders
outstanding against the Real Property and none of the Company, ACIC or ASI has
received any deficiency notices, requests or written advice of any breach of any
applicable law in respect of the foregoing which could, if not corrected, become
a work order or could require performance of work or expenditure of money to
correct. The Real Property is zoned to permit its current uses and the buildings
on such property (the “Buildings”) comply in all material respects with the
by‑laws and building codes of each municipality in which they are situate. No
part of the Real Property is subject to any building or use restriction that
would restrict or prevent the use and operation of the Real Property for its
current uses. The Buildings, including the roofs and structural elements
thereof, the mechanical, electrical, security, heating, cooling, sewer,
drainage, septic and plumbing systems, and all equipment necessary for the
operation thereof, are in good working condition and in good repair and
maintenance. There are no matters affecting the right, title and interest of the
Company in and to the Real Property which, in the aggregate, would adversely
affect the ability to carry on its business upon the Real Property substantially
in the manner in which such operations are currently carried on.
4.17    Environmental Matters.
To the knowledge of the Company, all operations of the Company, ACIC and ASI are
now and always have been in compliance with all applicable Environmental Laws.
To the knowledge of the Company, none of the Company, ACIC, ASI or their
businesses or the Assets are the subject of any order or request issued, filed
or imposed pursuant to any Environmental Law including any order or request
requiring any remediation or clean‑up of any Hazardous Substance or requiring
that any release, disposal or other activity be reduced, modified or eliminated,
nor to the knowledge of the Company has any investigation, evaluation or other
proceeding been commenced to determine whether any such order or request is
necessary, other than any order or request which would not reasonably be
expected to have a Material Adverse Effect on the Company, ACIC or ASI. To the
knowledge of the Company, there are no Hazardous Substances on, at or under the
Real Property.
4.18    Financial Statements.
The Company’s Financial Statements have been prepared in accordance with U.S.
GAAP and present fairly the assets, liabilities (whether accrued, absolute,
contingent or otherwise) and financial condition of ACIC and ASI, respectively,
as of the respective dates thereof and the consolidated sales, income and
results of operations of ACIC and ASI, respectively for the respective financial
periods covered thereby. Notwithstanding the foregoing, any implied or actual
representation or warranty made by the Company with respect to the net deferred
tax asset of ACIC and ASI set out in the Company’s Financial Statements is
qualified as being made to the knowledge of the Company.
4.19    Material Change.
There has been no material change in the capital, business, Assets, liabilities,
obligations, condition (financial or otherwise), results of operations,
financial position, capital or long‑term debt, affairs or prospects of the
Company, ACIC or ASI since the date of the Company’s Financial Statements.
4.20    Business of the Companies.
Each of the Company, ACIC and ASI has conducted and is conducting its respective
businesses in compliance with all applicable laws, rules and regulations of each
jurisdiction in which their respective businesses are carried on in all material
respects and each hold the necessary licenses, permits, approvals, consents,
certificates, registrations and authorizations, whether governmental, regulatory
or otherwise (collectively, the “Licences”), to enable their respective
businesses to be carried on as now conducted and their property and assets to be
owned, leased and operated, and the same are validly existing and in good
standing and none of such Licenses contains any burdensome term, provision,
condition, sanction or limitation, save and except in any case which would not
have a materially adverse effect on the operation of their respective business.
Each of ACIC and ASI is currently in compliance with minimum capital
requirements under the NAIC risk‑based capital calculation. The risk‑based
capital of ACIC is approximately 344.6% and of ASI is approximately 655.9%. To
the knowledge of the Company, no investigation, review, disciplinary action or
sanction by any Governmental Entity with respect to the Company, ACIC or ASI is
pending or threatened, nor, to the knowledge of the Company, has any
Governmental Entity indicated an intention to conduct the same.
4.21    Rating.
The current claims‑paying A.M. Best rating of each of ACIC and ASI is “B‑, Under
Review Developing” and the Company is not aware of any reason why there may be a
downgrade in the rating of either company prior to or after the Effective Time.
4.22    Liabilities.
There are no liabilities (whether accrued, absolute, contingent or otherwise)
whether due or to become due of the Company, ACIC or ASI of any kind whatsoever,
and, to the best of the knowledge of the Company, there is no reasonable basis
for assertion against the Company, ACIC or ASI of any liabilities of any kind,
other than:
(a)
liabilities disclosed or reflected in or provided for in the Company’s Financial
Statements;

(b)
the KAI Notes; or

(c)
liabilities incurred since the date of the Company’s Financial Statements which
were incurred in the ordinary course of the routine daily affairs of the
business of the Company, ACIC or ASI, respectively or, in the aggregate, are not
materially adverse to their business.

4.23    Related Party Transactions.
Except as expressly contemplated by this Agreement, there are no related party
transactions or off‑balance sheet structures or transactions with respect to any
of the Company, ACIC or ASI and there will be no such structures or transactions
in place immediately before or immediately after the Effective Time.
4.24    Indebtedness.
Except for the KAI Notes and the Subordinated Surplus Debentures or as disclosed
in the Company’s Financial Statements, none of the Company, ACIC or ASI has any
bonds, debentures, mortgages, promissory notes or other indebtedness maturing
more than one (1) year after the date of their original creation or issuance,
and none of the Company, ACIC or ASI is under any obligation to create or issue
any bonds, debentures, mortgages, promissory notes or other indebtedness
maturing more than one (1) year after the date of their original creation or
issuance.
4.25    Guarantees.
None of the Company, ACIC or ASI is a party to, or bound by, any agreement of
guarantee, indemnification, assumption or endorsement or any like commitment of
the obligations, liabilities (contingent or otherwise) or indebtedness of any
other Person.
4.26    Tax Matters.
Except as disclosed in Section 4.26 of the Disclosure Letter, to the knowledge
of the Company, none of the Company, ACIC or ASI is in arrears or in default in
respect of the filing of any required material federal, state or municipal tax
or other tax return; and (i) all material taxes, filing fees and other
assessments due and payable prior to the Closing from the Company, ACIC and ASI
shall have been paid prior to the Closing, (ii) no claim for additional taxes,
filing fees or other amounts and assessments due and payable or collectible from
the Company, ACIC and ASI has been made or threatened which has not been
collected, (iii) to the best of the knowledge of the Company, no such return
contains any misstatement or conceals any statement that should have been
included therein, and (iv) there are no audits or reviews pending or threatened
of the tax returns of the Company, ACIC and ASI (whether federal, state, local
or foreign). Each of the Company, ACIC and ASI have withheld from each payment
made to any of its employees the amount of all taxes (including but not limited
to income tax) and other deductions required to be withheld therefrom and will
have paid or will pay such amounts to the proper tax or other receiving
authority within the time required under applicable legislation.
4.27    Absence of Other Agreements.
Other than as disclosed to JJR VI in writing, none of the Company, ACIC and ASI:
(a)
is a party to any material contract; and

(b)
is bound by any outstanding contract or commitment except those entered into in
the ordinary course of business.

4.28    Good Standing of Agreements.
None of the Company, ACIC or ASI is in default or breach of any of its
obligations under any one or more contracts, agreements (written or oral),
commitments, indentures or other instruments to which it is a party or by which
it is bound save and except in any case for any default or breach which would
not reasonably be expected to have a Material Adverse Effect on any the Company,
ACIC or ASI, as applicable, and there exists no state of facts which, to the
best of the knowledge of the Company, after notice or lapse of time or both,
would constitute such a default or breach. All such contracts, agreements,
commitments, indentures and other instruments have been duly authorized,
executed and delivered and are now in good standing and in full force and effect
without amendment thereto, the Company, ACIC and ASI, as applicable, are
entitled to all benefits thereunder and, to the best of the knowledge of the
Company, the other parties to such contracts, agreements, commitments,
indentures and other instruments are not in default or breach of any of their
obligations thereunder save and except in any case which would not reasonably be
expected to have a Material Adverse Effect on any of the Company, ACIC or ASI,
as applicable.
4.29    Corporate Records.
The corporate records and minute books of each of the Company, ACIC and ASI,
respectively contain in all material respects complete and accurate minutes of
all meetings of the directors and shareholders of the applicable company held
since their respective incorporation, and signed copies of all resolutions and
by‑laws duly passed or confirmed by their respective directors or shareholders
other than at a meeting, all such meetings having been duly called and held. The
share certificate books, register of security holders, register of transfers and
register of directors and any similar corporate records of each of the Company,
ACIC and ASI are complete and accurate in all material respects.
4.30    No Breach.
None of the acquisition by the Company of the securities of ACIC and ASI, the
issuance of the KAI Notes and the completion of the Private Placement of
Subscription Receipts conflicted with or resulted in, nor did they or will they
with the giving of notice or the lapse of time or both, result in a breach of
the terms, conditions or provisions of, or constitute a default under, the
articles and by‑laws or other constating documents of any of the Company, ACIC
or ASI, or any indenture, mortgage, lease, agreement, Licence, permit or
instrument to which any of the Company, ACIC or ASI is subject to, or any
applicable law or required or will require any consent or other action by any
administrative or governmental body, save and except in any case for any breach
which did not have a Material Adverse Effect or would not reasonably be expected
to have a Material Adverse Effect on any of the Company, ACIC or ASI,
respectively. Neither the execution nor delivery of this Agreement, nor the
fulfillment or compliance with any of the terms and conditions hereof, will
conflict with, or result in, nor will they with the giving of notice or the
lapse of time or both, result in a breach of the terms, conditions or provisions
of, or constitute a default under, the articles and by‑laws or other constating
documents of any of the Company, ACIC or ASI, or any indenture, mortgage, lease,
agreement, licence, permit or instrument to which the Company, ACIC or ASI are
subject to, or any applicable law or will require any consent or other action by
any administrative or governmental body, save and except in any case for any
breach which would not reasonably be expected to have a Material Adverse Effect
on any the Company, ACIC or ASI, respectively. Each of the Company, ACIC and ASI
has materially complied with all licenses, franchises, leases, permits,
approvals and agreements to which it is a party or by which it is bound, the
breach of which would adversely affect its operations or condition, financial or
otherwise.
4.31    Severance and Employment Agreements.
Except as otherwise disclosed in Section 4.31 of the Disclosure Letter, none of
the Company, ACIC or ASI is a party to any agreement or understanding (written
or oral, by contract or at common law) providing for severance, termination or
change of control payments (including at or after the Effective Time) to, or any
employment agreement or understanding (written or oral, by contract or at common
law) with any current or former officer, director or employee where the
obligation of any one of them thereunder could exceed three months salary of
such person.
4.32    Benefit Plans.
(a)
None of the Company, ACIC or ASI has any Benefit Plans. Each of the Company,
ACIC and ASI has complied in all material respects with all laws relating to
wages, fringe benefits and the payment of withholding and similar taxes and all
applicable provisions of all laws dealing with employees and employee pension
and other benefit plans, have made all filings required to be made in connection
therewith and have made in a timely manner all contributions to any such plan
that they are required to make.

(b)
All of the Benefit Plans of the Company, ACIC and ASI have been established,
registered, invested and administered in all material respects in accordance
with all applicable laws and in accordance with their terms.

(c)
All contributions or premiums required to be made or remitted by the Company,
ACIC and ASI under the terms of a Benefit Plan and applicable laws have been
made or remitted in a timely fashion in accordance therewith.

(d)
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will accelerate the time of payment or vesting
under any Benefit Plan, or increase the amount of compensation or benefits due
any employee of the Company, ACIC and ASI.

4.33    Labour Matters.
(a)
None of the Company, ACIC or ASI is party, either directly or by operation of
law, to any labour or collective bargaining agreements.

(b)
There are no material complaints, charges, orders, investigations, prosecutions,
proceedings or claims against any of the Company, ACIC or ASI initiated or
threatened in writing to be brought or filed, with any Governmental Entity or
arbitrator based on, arising out of, in connection with, or otherwise relating
to the employment or termination of employment of any individual by any of them
including pursuant to employment or labour standards, employment equity, pay
equity, labour relations, workers’ compensation or workplace safety and
insurance, occupational health and safety, privacy, wrongful dismissal or human
rights laws.

4.34    Intellectual Property.
(a)
All Intellectual Property owned by the Company, ACIC or ASI necessary for the
conduct of their businesses on the date hereof and registered with any
Governmental Entity is set forth in Section 4.34 of the Disclosure Letter and
such Intellectual Property is in full force and effect, unamended.

(b)
The Company, ACIC and ASI own or possess adequate licenses or other valid rights
to use (in each case, free and clear of any Liens) all Intellectual Property
used in connection with their business as previously conducted or currently
conducted, and the consummation of the transactions contemplated by this
Agreement will not alter or impair the Intellectual Property used in the conduct
of such business.

(c)
To the knowledge of the Company, the use by the Company, ACIC or ASI of any of
their Intellectual Property does not infringe upon or otherwise violate the
rights of any Person.

(d)
The use by the Company, ACIC or ASI of any Intellectual Property claimed to be
owned by any third party is in accordance with any applicable license granted by
such third party (or any Person authorized by such third party) pursuant to
which the applicable company acquired the right to use such Intellectual
Property.

(e)
To the knowledge of the Company, no Person is challenging, infringing upon or
otherwise violating any right of any of the Company, ACIC or ASI with respect to
any Intellectual Property owned by or licensed to any of them.

4.35    Privacy.
The Company, ACIC and ASI have conducted their businesses in material compliance
with all applicable privacy laws, and have not received written notice of any
request, complaint, investigation, inquiry or claim relating to their handling
of personal information.
4.36    Litigation.
There are no claims, demands, disputes, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
or directly or indirectly affecting any of the Company, ACIC or ASI or their
properties or assets, at law or in equity, or before or by any federal, state,
municipal or other governmental court, department, commission, board, bureau,
agency or instrumentality, domestic or foreign, nor are the Company, ACIC or ASI
subject to any presently effective adverse order, writ, injunction or decree of
any such body which would reasonably be expected to have a Material Adverse
Effect on any of the Company, ACIC or ASI or prevent or materially delay the
Merger.
4.37    No Brokers.
None of the Company, ACIC or ASI has entered into any agreement which would
entitle any Person to any valid claim against JJR VI or the Company, ACIC or ASI
for a broker’s commission, finder’s fee or any like payment in respect of the
sale by their holders of the Company Common Shares and Company Preferred Shares
held by them to JJR VI or any other matters contemplated by this Agreement.
4.38    Dividends.
Since September 30, 2010, none of the Company, ACIC nor ASI has, directly or
indirectly, declared or paid any dividend or declared or made any other
distribution on any of its shares or securities or, directly or indirectly,
redeemed, purchased or otherwise acquired any of its shares or securities or
agreed to do any of the foregoing.
4.39    Approvals.
No approval of, registration, declaration or filing with any federal, provincial
or local court, authority or administrative agency is necessary to authorize the
execution and delivery of this Agreement, or any and all of the documents and
instruments to be delivered under this Agreement or the consummation of the
transactions contemplated herein other than the Required Consents and Approvals
and the filing of Certificate of Merger to effect the Merger.
4.40    Compliance with Laws.
None of the Company, ACIC or ASI is in violation of any federal, state,
municipal or other law, regulation or order of any government or governmental or
regulatory authority, domestic or foreign, save and except in any case which
would not have a Material Adverse Effect on the Company, ACIC or ASI,
respectively.
4.41    Assets and Employees.
The Assets of the Company, ACIC and ASI are all of the assets currently used in
connection with the business of such entities. The Transferred Employees are all
of the employees that currently manage and are involved in the day to day
operation of the business of ACIC and ASI. An offer of employment has been made
by ACIC or ASI, as applicable, to each Transferred Employee and was accepted by
each Transferred Employee such that each Transferred Employee will become an
employee of ACIC or ASI effective on the Closing
4.42    Shareholders’ Agreements, etc.
To the best of the knowledge of the Company, there are no shareholders’
agreements, pooling agreements, voting trusts or other similar agreements with
respect to the ownership or voting of any of the shares of the Company, ACIC or
ASI.
4.43    No Bankruptcy.
No proceedings have been taken, are pending or authorized by the Company, ACIC
or ASI or, to the knowledge of the Company, by any other person in respect of
the bankruptcy, insolvency, liquidation or winding up of the Company, ACIC or
ASI.
4.44    Business Activities.
None of the Company, ACIC, ASI, SUGAT or any other Corporate or Partnership
Subsidiary of the Company, ACIC, ASI or SUGAT has any business activities in the
Cayman Islands.
Article 5    
REPRESENTATIONS AND WARRANTIES OF KFS
KFS hereby represents and warrants to JJR VI as follows and acknowledges that
JJR VI is relying on such representations and warranties in connection with the
transactions contemplated hereby:
5.1    Valid and Binding Obligation.
This Agreement has been duly executed and delivered by KFS and constitutes a
legal, valid and binding obligation of KFS, enforceable against it in accordance
with its terms subject only to:
(a)
any limitation under applicable laws relating to bankruptcy, insolvency,
moratorium, reorganization and other similar laws relating to or affecting the
enforcement of creditors’ rights generally; and

(b)
the fact that equitable remedies, including the remedies of specific performance
and injunction, may only be granted in the discretion of a court.

5.2    No Breach.
The sale by KAI to the Company of the securities of ACIC and ASI did not
conflict with or result in, nor did it or will it with the giving of notice or
the lapse of time or both, result in a breach of the terms, conditions or
provisions of, or constitute a default under, the articles and by‑laws or other
constating documents of KFS or any Affiliate or any indenture, mortgage, lease,
agreement, Licence, permit or instrument to which KFS or an Affiliate is subject
to, save and except in any case for any breach which did not have a Material
Adverse Effect or would not reasonably be expected to have a Material Adverse
Effect on KFS or an Affiliate, respectively, or any applicable law or required
or will require any consent or other action by any administrative or
governmental body. Neither the execution nor delivery of this Agreement nor the
fulfillment or compliance with any of the terms and conditions hereof will
conflict with, or result in, nor will they with the giving of notice or the
lapse of time or both, result in, a breach of the terms, conditions or
provisions of, or constitute a default under, any indenture, mortgage, lease,
agreement or instrument to which KFS, KAI or an Affiliate thereof is subject to,
or will require any consent or other action by any administrative or
governmental body. KFS and KAI have materially complied with all licenses,
franchises, leases, permits, approvals and agreements to which each is a party
or by which each is bound, the breach of which would adversely affect the
completion of the Merger.
5.3    Litigation.
There are no claims, demands, disputes, actions, suits, proceedings or
investigations pending or, to the knowledge of KFS, threatened against or
directly or indirectly affecting KFS, KAI or an Affiliate, at law or in equity
or before or by any federal, state, municipal or other governmental court,
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, nor is KFS, KAI or an Affiliate subject to any presently effective
adverse order, writ, injunction or decree of any such body, which would
reasonably be expected to prevent or have an adverse impact on the consummation
by KFS, KAI or the Company of the transactions contemplated herein.
5.4    No Brokers Fees.
None of KFS, KAI or an Affiliate thereof has entered into any agreement which
would entitle any Person to any valid claim against JJR VI or the Company for a
broker’s commission, finder’s fee or any like payment in respect of the Merger
or any other matters contemplated by this Agreement.
5.5    Stock and Options.
KAI holds of record and owns beneficially 13,804,001 Company Common Shares and
18,000,000 Company Preferred Shares, being all of the issued and outstanding
Company Common Shares and Company Preferred Shares on the date hereof, which
Company Common Shares and Company Preferred Shares are free and clear of any
Liens, restrictions on transfer, taxes, security interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands. None of
KFS or any Affiliate thereof owns any other securities of the Company. KAI is
not a party to any option, warrant, purchase right, or other contract or
commitment that could require KAI to sell, transfer, or otherwise dispose of any
securities of the Company (other than this Agreement). KAI is not a party to any
voting trust, proxy, or other agreement or understanding with respect to the
voting of any capital stock of the Company.
Article 6    
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
6.1    Survival of Representations and Warranties.
The representations and warranties made by the Parties and contained in this
Agreement, or contained in any Ancillary Agreement, shall survive the Closing as
follows:
(a)
the representations and warranties of a Party relating to tax matters will
survive the Closing for ninety (90) days following the expiration of any time
allowed for objecting to and appealing from the determination of any proceedings
relating to any assessment or reassessment of tax against the applicable Party
or its subsidiaries, as the case may be;

(b)
the limitation period applicable to any proceeding relating to the
representations and warranties contained in Sections 3.4, 4.2, 4.7 and 5.5 of
this Agreement will survive the Closing for a period of 2 years and remain in
effect for such period; and

(c)
the limitation period applicable to any proceeding relating to each of the
representations and warranties contained in this Agreement other than those
contemplated by (a) and (b) or any Ancillary Agreement (unless otherwise stated
in the Ancillary Agreement) will survive the Closing for a period of 18 months
and remain in effect for such period;

after which period, if no claim has, prior to the expiry of such period, been
specifically made in writing under this Agreement against a party with respect
to any breach of any representation or warranty made by such party, such party
will have no further liability with respect to such representation or warranty;
provided that, if the matter involves intentional misrepresentation or fraud,
there shall be no time limit and a claim may be brought at any time.
6.2    Survival of Covenants.
All covenants and agreements of the Parties set forth in this Agreement to be
performed after the Closing Date shall survive the Closing.
Article 7    
COVENANTS OF THE COMPANY AND KFS
Each of the Company and KFS hereby covenants and agrees with JJR VI as follows
until the earlier of the Effective Time or the termination of this Agreement in
accordance with its terms:
7.1    Investigations and Availability of Records.
JJR VI and/or its directors, officers, auditors, counsel and other authorized
representatives shall be permitted to make such commercially reasonable
investigations of the properties, Assets and business of the Company, ACIC and
ASI and of their financial and legal condition as JJR VI reasonably deems
necessary or desirable. If reasonably requested, the Company shall provide
copies of the corporate records, including minute books, share ledgers and the
records maintained in connection with the business of the Company, ACIC and ASI.
Such investigations will not, however, affect or mitigate in any way the
representations and warranties contained in this Agreement, which
representations and warranties shall continue in full force and effect for the
benefit of JJR VI in accordance with the terms hereof.
7.2    Necessary Consents.
Each of the Company and KFS shall use its commercially reasonable efforts to
obtain from the directors and shareholders of the Company, ACIC and ASI, as
applicable, and all Governmental Entities governing such entities such approvals
or consents as are required to complete the transactions contemplated herein.
7.3    Non‑Solicitation.
Other than in connection with Permitted Activities (as that term is defined
below), the Company and KFS shall not, directly or indirectly, solicit,
initiate, knowingly encourage, cooperate with or facilitate (including by way of
furnishing any non‑public information or entering into any form of agreement,
arrangement or understanding) the submission, initiation or continuation of any
oral or written inquiries or proposals or expressions of interest regarding,
constituting or that may reasonably be expected to lead to any activity,
arrangement or transaction, or propose any activities or solicitations, in
opposition to or in competition with the Merger, and without limiting the
generality of the foregoing, not to induce or attempt to induce any other person
to initiate any shareholder proposal or “takeover bid”, exempt or otherwise,
within the meaning of the Act, for securities or assets of the Company, ACIC
and/or ASI, nor to undertake any transaction or negotiate any transaction which
would be or potentially could be in conflict with the Merger, including, without
limitation, allowing access to any third party (other than the representatives
of the Company and KFS) to conduct due diligence, nor to permit any of its
officers or directors to authorize such access, except as required by statutory
obligations. The foregoing prohibited activities are referred to herein as
“Solicitation Activities”. In the event KFS, the Company or any of their
affiliates, including any of their officers or directors, receives any form of
offer or inquiry in respect of the foregoing or any Permitted Activities, KFS
shall forthwith (in any event within one business day following receipt) notify
JJR VI of such offer or inquiry and provide JJR VI with such details as it may
request. “Permitted Activities” means any Solicitation Activities with Berkshire
Hathaway Inc., Bayside Capital or American European Insurance Group, Inc. or any
of their respective affiliates or associates (each a “Permitted Party”).
7.4    Ordinary Course Business.
The Company shall, and shall ensure that each of its subsidiaries, maintains its
corporate status and operates its business in a prudent and business‑like manner
in the ordinary course and in a manner consistent with past practice and none of
the Company or any of its subsidiaries shall:
(a)
issue any debt, equity or other securities, except in connection with the
Private Placement;

(b)
borrow money or incur any indebtedness for money borrowed, except in the
ordinary course of business or enter into any material operating lease or create
any Liens or other encumbrances on its property;

(c)
make loans, advances, or other payments, excluding routine advances to employees
for expenses incurred in the ordinary course;

(d)
declare or pay any dividends, make other distributions or return of capital or
distribute any of the properties or assets of the Company, ACIC or ASI to
shareholders or otherwise dispose of any of such properties or assets;

(e)
adopt, establish, increase or modify the amount of (or accelerate the payment or
vesting of) any benefit or amount payable as compensation or under, any Benefit
Plan or any other contract, agreement, commitment, arrangement, plan or policy
providing for compensation or benefits to any former, present or future
director, officer or employee of it;

(f)
take or fail to take any action which would render, or that would be reasonably
expected to render, any of such party’s representations or warranties hereunder
to be untrue or would be reasonably expected to prevent or materially impede,
interfere with or delay the Merger;

(g)
amend or consent to any amendment of, the Subscription Receipt Agreement or
Escrow Agreement or consent to any waiver of any condition in the Subscription
Receipt Agreement or Escrow Agreement without the prior written consent of JJR
VI;

(h)
alter or amend the articles or by‑laws of the Company, ACIC or ASI, except as
expressly required to give effect to the matters contemplated herein; and

(i)
except as otherwise permitted or contemplated herein, enter into any transaction
or material contract which is not in the ordinary course of business or engage
in any business enterprise or activity materially different from that carried on
by the Company, ACIC and ASI as of the date hereof.

7.5    Confidentiality.
(a)
Each of the Company and KFS shall keep confidential any information, trade
secrets or financial or business documents (collectively, the “JJR VI
Information”) received by it from JJR VI concerning JJR VI or its business and
shall not disclose such JJR VI Information to any third party provided that any
of such JJR VI Information may be disclosed to the directors, officers,
employees, representatives and professional advisors of the Company or KFS, as
applicable, who need to know such JJR VI Information in connection with the
transactions contemplated hereby (provided the Company and KFS shall use all
reasonable efforts to ensure that such directors, officers, employees,
representatives and professional advisors keep confidential such JJR VI
Information) and provided further that neither the Company nor KFS will be
liable for disclosure of JJR VI Information upon occurrence of one or more of
the following events:

(i)
JJR VI Information becoming generally known to the public other than through a
breach of this Agreement;

(ii)
JJR VI Information being lawfully obtained by the Company or KFS, as applicable,
from a third party or parties without breach of this Agreement by the Company or
KFS, as shown by documentation sufficient to establish the third party as a
source of JJR VI Information;

(iii)
JJR VI Information being known to the Company or KFS, as applicable, prior to
disclosure by JJR VI, as shown by documentation sufficient to establish such
knowledge;

(iv)
the disclosure is required by law; or

(v)
JJR VI having provided its prior written approval for such disclosure.

(b)
In the event this Agreement is terminated in accordance with the provisions
hereof, the Company and KFS shall:

(i)
use all reasonable efforts to ensure that all JJR VI Information and all
documents prepared or obtained in the course of its investigations of JJR VI or
its business and all copies thereof are either destroyed or returned to JJR VI
so as to insure that, so far as possible, any JJR VI Information obtained during
and as a result of such investigations by the directors, officers, employees,
representatives and professional advisors of the Company and KFS is not
disseminated beyond those individuals concerned with such investigations; and

(ii)
not directly or indirectly, use for its own purposes, any JJR VI Information,
discovered or acquired by it or by the directors, officers, employees
representatives and professional advisors of the Company and KFS as a result of
JJR VI making available to them those documents and assets relating to the
business of JJR VI.

7.6    Status and Filings.
The Company will, and KFS will cause the Company to, maintain its corporate
status and comply with applicable laws (including applicable securities and
corporate laws) including any applicable filing requirements required in
connection with the Merger and the Meeting Matters.
7.7    Material Change.
Each of the Company and KFS agree to provide prompt and full disclosure to JJR
VI of any material information, change or event in the business, operations,
financial condition or other affairs of the Company, ACIC or ASI prior to
Closing or any event, condition or circumstance that might be reasonably
expected to cause any representation or warranty contained in this Agreement or
an Ancillary Agreement to be untrue or inaccurate at the Effective Time in any
material respect.
7.8    All Other Action.
Each of the Company and KFS shall take all such actions as are within its power
to control, and shall use commercially reasonable efforts to cause other actions
to be taken which are not within its power to control, so as to satisfy each of
the conditions precedent to be satisfied by it, ACIC or ASI as soon as
practicable and in any event before the Effective Date, and to take, or cause to
be taken, all other actions and to do, or cause to be done, all other things
necessary, proper or advisable that are commercially reasonable to permit the
completion of the Acquisition pursuant to the Merger in accordance with the
terms and conditions of this Agreement, and applicable law.
7.9    Inversion.
The parties intend that the Resulting Issuer shall be treated as a domestic
corporation for U.S. federal (and applicable state and local) income tax
purposes under Section 7874 of the Code and none of the Company, ACIC, ASI or
SUGAT or any of their subsidiaries will take any position on any U.S. federal,
state, local or other income or franchise tax return, or take any other
reporting position, that is inconsistent with such treatment unless otherwise
required by a final U.S. federal court decision, a closing agreement with The
Internal Revenue Service or by applicable U.S. federal, state or local income or
franchise tax law. In furtherance of the foregoing, prior to Closing, KFS shall
cause the Company, ACIC, ASI, SUGAT and any other Corporate or Partnership
Subsidiary of the Company, ACIC, ASI or SUGAT not to conduct any business
activities in the Cayman Islands.
Article 8    
COVENANTS OF JJR VI
JJR VI hereby covenants and agrees with the Company and KFS as follows until the
earlier of the Effective Time or the termination of this Agreement in accordance
with its terms:
8.1    Investigations and Availability of Records.
The Company, KFS and/or their directors, officers, auditors, counsel and other
authorized representatives, as applicable, shall be permitted to make such
commercially reasonable investigations of the property, assets and business of
JJR VI and of its financial and legal condition as the Company and KFS
reasonably deem necessary or desirable. If reasonably requested, JJR VI shall
provide copies of JJR VI’s corporate records, including its minute books, share
ledgers and the records maintained in connection with the business of JJR VI.
Such investigations will not, however, affect or mitigate in any way the
representations and warranties contained in this Agreement, which
representations and warranties shall continue in full force and effect for the
benefit of the Company and KFS.
8.2    Necessary Consents.
JJR VI shall use its commercially reasonable efforts to obtain from JJR VI’s
directors, shareholders, the TSXV and all Governmental Entities governing it and
Subco such approvals or consents as are required to complete the transactions
contemplated herein.
8.3    Non‑Solicitation.
JJR VI shall not, directly or indirectly, solicit, initiate, knowingly
encourage, cooperate with or facilitate (including by way of furnishing any
non‑public information or entering into any form of agreement, arrangement or
understanding) the submission, initiation or continuation of any oral or written
inquiries or proposals or expressions of interest regarding, constituting or
that may reasonably be expected to lead to any activity, arrangement or
transaction or propose any activities or solicitations in opposition to or in
competition with the Merger, and without limiting the generality of the
foregoing, not to induce or attempt to induce any other person to initiate any
shareholder proposal or “takeover bid”, exempt or otherwise, within the meaning
of the Act, for securities of JJR VI, nor to undertake any transaction or
negotiate any transaction which would be or potentially could be in conflict
with the Merger, including, without limitation, allowing access to any third
party (other than its representatives) to conduct due diligence, nor to permit
any of its officers or directors to do so, except as required by statutory
obligations In the event JJR VI or any of its affiliates, including any of their
officers or directors, receives any form of offer or inquiry in respect of any
of the foregoing, JJR VI shall forthwith (in any event within one business day
following receipt) notify KFS of such offer or inquiry and provide KFS with such
details as it may request.
8.4    Ordinary Course of Business.
JJR VI shall maintain its corporate status and operate its business in a prudent
and business‑like manner in the ordinary course and in a manner consistent with
past practice and shall not:
(a)
issue any debt, equity or other securities, except in connection with any
outstanding options, warrants or other rights or the Private Placement or the
Transaction;

(b)
borrow money or incur any indebtedness for money borrowed;

(c)
declare or pay any dividends or distribute any of its properties or assets to
shareholders;

(d)
alter or amend its articles or by‑laws except as required to give effect to the
matters contemplated herein including the Consolidation, Name Change,
Continuance and Share Amendment;

(e)
except as otherwise permitted or contemplated herein, enter into any transaction
or material contract which is not in the ordinary course of business or engage
in any business enterprise or activity materially different from that carried on
by JJR VI as of the date hereof.

8.5    Confidentiality.
(a)
JJR VI shall keep confidential any information, trade secrets or financial or
business documents (collectively the “Company Information”) received by it from
the Company or KFS concerning the Company, ACIC, ASI or any of their businesses
and shall not disclose such Information to any third party provided that any of
such Company Information may be disclosed to JJR VI’s directors, officers,
employees, representatives and professional advisors who need to know such
Company Information in connection with the transactions contemplated hereby
(provided JJR VI shall use all reasonable efforts to ensure that such directors,
officers, employees, representatives and professional advisors keep confidential
such Company Information) and provided further that JJR VI will not be liable
for disclosure of the Company Information upon the occurrence of one or more of
the following events:

(i)
the Company Information becoming generally known to the public other than
through a breach of this Agreement;

(ii)
the Company Information being lawfully obtained by JJR VI from a third party or
parties without breach of this Agreement by JJR VI, as shown by documentation
sufficient to establish the third party as a source of the Company Information;

(iii)
the Company Information being known to JJR VI prior to disclosure by the
Company, or its Affiliates, as shown by documentation sufficient to establish
such knowledge;

(iv)
the disclosure is required by law; or

(v)
the Company having provided its prior written approval for such disclosure by
JJR VI.

(b)
In the event this Agreement is terminated in accordance with the provisions
hereof JJR VI shall:

(i)
use all reasonable efforts to ensure that all Company Information and all
documents prepared or obtained in the course of its investigations of the
Company or its business and all copies thereof are either destroyed or returned
to the Company so as to ensure that, so far as possible, any Company Information
obtained during and as a result of such investigations by the directors,
officers, employees, representatives and professional advisors of JJR VI is not
disseminated beyond those individuals concerned with such investigations; and

(ii)
not directly or indirectly, use for its own purposes, any Company Information,
discovered or acquired by it or by the directors, officers, employees,
representatives and professional advisors of JJR VI as a result of the Company
making available to them those documents and assets relating to the business of
the Company.

8.6    JJR VI Meeting Matters.
On or prior to the Effective Time and subject to all necessary regulatory and
corporate approvals, JJR VI shall use its commercially reasonable efforts to do
the following: (a) file articles of amendment to effect the Consolidation; (b)
convene and hold a meeting to approve the December Meeting Matters; and (c) file
an application for approval of the continuance to the Cayman Islands with the
Ministry of Finance (Ontario) and The Cayman Islands Registrar of Companies
including the Cayman Articles.
8.7    Material Change.
JJR VI agrees to provide prompt and full disclosure to the Company and KFS of
any material information, change or event in the business, operations, financial
condition or other affairs of JJR VI prior to Closing or any event, condition or
circumstance that might be reasonably expected to cause any representation or
warranty of it contained in this Agreement or an Ancillary Agreement to be
untrue or inaccurate at the Effective Time.
8.8    All Other Action.
JJR VI shall take all such actions as are within its power to control, and shall
use commercially reasonable efforts to cause other actions to be taken which are
not within its power to control, so as to satisfy each of the conditions
precedent to be satisfied by it as soon as practical and in any event before the
Effective Time, and use commercially reasonable efforts to take, or cause to be
taken, all other actions and to do, or cause to be done, all other things
necessary, proper or advisable to permit the completion of the Acquisition
pursuant to the Merger in accordance with the terms and conditions of this
Agreement, and applicable law.
8.9    Inversion.
The parties intend that the Resulting Issuer shall be treated as a domestic
corporation for U.S. federal (and applicable state and local) income tax
purposes under Section 7874 of the Code and none of JJR, Subco or any of their
Corporate or Partnership Subsidiaries will take any position on any U.S.
federal, state, local or other income or franchise tax return, or take any other
reporting position that is inconsistent with such treatment unless otherwise
required by a final U.S. federal court decision, a closing agreement with the
Internal Revenue Service or by applicable U.S. federal, state or local income or
franchise tax law.
8.10    Business Activities.
None of JJR VI, Subco or any other Corporate or Partnership Subsidiary of JJR VI
or Subco will conduct any business activities in the Cayman Islands.
Article 9    
ADDITIONAL COVENANTS OF KFS
KFS hereby covenants and agrees with JJR VI as follows until the earlier of the
Effective Time or the termination of this Agreement in accordance with its
terms:
9.1    Principal Shareholder Support.
KFS shall cause KAI to vote all of the Company Common Shares and Company
Preferred Shares in favour of the Merger and the transactions contemplated
thereby or any matter that could reasonably be expected to facilitate it. KFS
will use, and shall cause KAI to use, all reasonable efforts to co‑operate with
JJR VI and the Company in respect of the Merger and facilitate, assist with,
encourage and provide any information reasonably requested by such persons in
order to carry out the transactions contemplated herein and shall not, or permit
KAI to, take any steps in contravention thereof.
9.2    Escrow.
KFS shall cause KAI to enter into an escrow agreement with JJR VI at Closing as
required by the TSXV in respect of the Resulting Issuer Ordinary Shares,
Resulting Issuer Restricted Voting Shares and/or Resulting Issuer Preferred
Shares that KAI will hold after the Closing and shall use its reasonable efforts
to cause its Affiliates or associates to enter into any other escrow agreement,
if required by the TSXV.
9.3    All Other Action.
KFS shall take all such actions as are within its power to control, and shall
use commercially reasonable efforts to cause other actions to be taken which are
not within its power to control, so as to satisfy each of the conditions
precedent to be satisfied by it or the Company as soon as practical and in any
event before the Effective Time, and use commercially reasonable efforts to
take, or cause to be taken, all other actions and to do, or cause to be done,
all other things necessary, proper or advisable to permit the completion of the
Acquisition pursuant to the Merger in accordance with the terms and conditions
of this Agreement, and applicable law.
9.4    Subscription Receipt Escrow Agreement.
KFS shall cause KAI to issue the Release Certificate (as that term is defined in
the Escrow Agreement) upon the satisfaction of all the conditions precedent set
forth in Section 10.2. Neither the Company nor KAI shall agree to any amendments
to the Escrow Agreement or Subscription Receipt Agreement without the prior
written consent of JJR VI.
9.5    Affiliate Investment.
KFS shall cause the investment in KFS Capital LLC held by ASI to be transferred
to an Affiliate of KFS for a cash amount equal to its carrying value immediately
prior to Closing.
Article 10    
CONDITIONS PRECEDENT
10.1    Conditions for the Benefit of JJR VI.
The transactions contemplated herein are subject to the following conditions to
be fulfilled or performed on or prior to the Effective Time, which conditions
are for the exclusive benefit of JJR VI and may be waived, in whole or in part,
by JJR VI in its sole discretion:
(a)
Truth of Representations and Warranties. The representations and warranties of
the Company and KFS contained in this Agreement or in any Ancillary Agreement
shall have been true and correct as of the date of this Agreement, or the
Ancillary Agreement, as applicable and shall be true and correct as of the
Effective Time in all material respects (save and except for any representation
or warranty already qualified by materiality which shall be true and correct in
all respects) with the same force and effect as if such representations and
warranties had been made on and as of such time except as affected by
transactions contemplated or permitted by this Agreement.

(b)
Performance of Obligations. The Company and KFS shall have performed, fulfilled
or complied with, in all material respects, all of their obligations, covenants
and agreements contained in this Agreement and in any Ancillary Agreement to be
fulfilled or complied with by them at or prior to the Effective Time.

(c)
No Material Adverse Effect. From the date of this Agreement, there shall not
have occurred a Material Adverse Effect in any of the Company, ACIC or ASI,
financial or otherwise, prior to the Effective Time.

(d)
Officer’s Certificate. JJR VI shall have received a certificate of the Company
and KFS at the Closing signed by a senior officer of each and confirming that
the conditions in subsections 10.1(a), (b) and (c) have been satisfied.

(e)
Approvals and Consents. All Required Consents and Approvals shall have been
obtained or given on terms acceptable to JJR VI acting reasonably.

(f)
Deliveries. The Company and KFS shall have delivered or caused to be delivered
to JJR VI the closing documents as set forth in Section 11.2 in a form
satisfactory to JJR VI acting reasonably.

(g)
Proceedings. All proceedings to be taken in connection with the transactions
contemplated in this Agreement and any Ancillary Agreement shall be satisfactory
in form and substance to JJR VI, acting reasonably, and JJR VI shall have
received copies of all instruments and other evidence as it may reasonably
request in order to establish the consummation or closing of such transactions
and the taking of all necessary final and non‑appealable proceedings in
connection therewith.

(h)
Private Placement. The Subscription Receipts shall have been exchanged in
accordance with their terms into Company Common Shares and Company Warrants, and
the proceeds of the Private Placement of $7,970,005 shall have been received by
the Company from Equity as escrow agent.

(i)
Continuance and Consolidation. The Continuance and Consolidation shall have been
completed.

(j)
Premises. The Company shall have entered into the UCC Lease Agreement in
substantially the form attached hereto as Schedule 10.1(j).

(k)
Tax‑Sharing Arrangements. All tax‑sharing agreements or similar agreements with
respect to or involving the Company or its subsidiaries (including, for greater
certainty, the amended and restated Kingsway affiliated group tax allocation
agreement effective October 30, 2009 referenced on Schedule 10.1(o) of the
Disclosure Letter hereto) shall be terminated as of the Closing and after the
Closing, the Company and its subsidiaries shall not be bound thereby or have any
liability thereunder and such agreements shall have no further effect for any
taxable period (whether the current year or any past or future period).

(l)
Transition Services Agreement. KFS shall have entered into the Transition
Services Agreement with the Company in substantially the form attached hereto as
Schedule 10.1(l).

(m)
Director and Officer Release. Each of Roger T. Beck, Stephen P. Marsden, Hassan
Baqar, D. Ann Brooks and Leeann H. Repta shall have provided a full and final
release to the Company, ACIC and/or ASI, as applicable, on terms satisfactory to
JJR VI.

(n)
Surviving Agreements. The KFS Surviving Agreements shall remain in full force
and effect, unamended on the Effective Date.

(o)
Terminating Agreements. The KFS Terminating Agreements shall have been
terminated on terms satisfactory to JJR VI without cost or penalty to the
Company and/or its subsidiaries.

(p)
Assigning Agreements. The KFS Assigning Agreements shall have been assigned to
the Company, ACIC and/or ASI, as applicable, on terms satisfactory to JJR VI.

(q)
Intellectual Property. The KFS Transferred Intellectual Property shall have been
transferred or licensed to the Company, ACIC or ASI, as applicable, on terms
satisfactory to JJR VI.

(r)
Indebtedness. There shall be no debts or amounts owing by the Company, ACIC or
ASI to KFS or any Affiliate thereof or any past or present officer, director or
employee of the Company, ACIC, ASI, KFS or an Affiliate thereof. The KAI Notes
and Subordinated Surplus Debentures shall have been repaid in full or otherwise
eliminated.

(s)
Building Expense Subsidy Agreement. KAI and the Company shall have entered into
the Building Expense Subsidy Agreement in substantially the form attached hereto
as Schedule 10.1(s).

(t)
Adverse Development Agreement. KFS and the Company shall have entered into the
Adverse Development Agreement in substantially the form attached hereto as
Schedule 10.1(t).

(u)
No Legal Action. No action or proceeding shall be pending or threatened by any
Person (other than JJR VI or KFS or any of their respective Affiliates) in any
jurisdiction, to enjoin, restrict or prohibit any of the transactions
contemplated by this Agreement or any of the Acquisition Agreements.

(v)
Change in Law. Since the date of this Agreement, no law, proposed law or any
change in any law or in the interpretation or enforcement of any law shall have
been introduced, enacted or announced, the effect of which would be to prevent
JJR from, or to increase materially the cost to JJR of, completing the
transaction contemplated in this Agreement or any of the Acquisition Agreements.

(w)
Tax Obligations. The Company shall have delivered to JJR VI a properly executed
statement that shares of capital stock of the Company do not constitute “United
States real property interests” under Section 897(c) of the Code for purposes of
satisfying JJR VI’s obligations, if any, under Treasury Regulations Section
1.1445‑2(c)(3). In addition, simultaneously with delivery of such statement, the
Company shall have provided to JJR VI a form of notice to the Internal Revenue
Service in accordance with the requirements of Treasury Regulations Section
1.897‑2(h)(2) along with written authorization for JJR VI to deliver such notice
form to the Internal Revenue Service on behalf of the Company upon the Closing.

10.2    Conditions for the Benefit of the Company and KFS.
The transactions contemplated herein are subject to the following conditions to
be fulfilled or performed on or prior to the Effective Time, which conditions
are for the exclusive benefit of the Company and KFS and may be waived, in whole
or in part, by the Company and KFS in their sole discretion:
(a)
Truth of Representations and Warranties. The representations and warranties of
JJR VI contained in this Agreement or in any Ancillary Agreement shall have been
true and correct as of the date of this Agreement or the Ancillary Agreement, as
applicable, and shall be true and correct as at the Effective Time in all
material respects (save and except for any representation or warranty already
qualified by materiality, which shall be true and correct in all respects) with
the same force and effect as if such representations and warranties had been
made at such time except as affected by transactions contemplated or permitted
by this Agreement.

(b)
Performance of Obligations. JJR VI shall have performed, fulfilled or complied
with, in all material respects, all of its obligations, covenants and agreements
contained in this Agreement and in any Ancillary Agreement to be fulfilled or
complied with by JJR VI at or prior to the Effective Time.

(c)
No Material Adverse Effect. From the date of this Agreement, there shall not
have occurred a Material Adverse Effect in JJR VI, except for a decrease in JJR
VI’s working capital position necessary to facilitate the Acquisition.

(d)
Officer’s Certificate. The Company and KFS shall have received a certificate of
JJR VI as at the Closing signed by a senior officer or director and confirming
that the conditions in subsections 10.2(a), (b) and (c) have been satisfied.

(e)
Approvals and Consents. All Required Consents and Approvals shall have been
obtained or given on terms acceptable to the Company and KFS acting reasonably.
The Consolidation and the Continuance, including the filing of the Cayman
Articles, shall have occurred.

(f)
Deliveries. JJR VI shall have delivered or caused to be delivered to the Company
and KFS the closing documents as set forth in Section 11.3 in a form
satisfactory to the Company and KFS, as applicable, acting reasonably.

(g)
Proceedings. All proceedings to be taken in connection with the transactions
contemplated in this Agreement and any Ancillary Agreement shall be satisfactory
in form and substance to the Company and KFS, acting reasonably, and the Company
and KFS shall have received copies of all instruments and other evidence as it
may reasonably request in order to establish the consummation or closing of such
transactions and the taking of all necessary proceedings in connection
therewith.

(h)
Registration Rights Agreement. JJR VI shall have executed a registration rights
agreement (the “Registration Rights Agreement”) on terms and conditions
acceptable to KFS and JJR VI acting reasonably.

(i)
Records Retentions Agreement. The Company shall have entered into a records
retentions agreement with KAI on terms satisfactory to KFS and JJR VI acting
reasonably.

(j)
Opinion. KFS shall have received an opinion of Cayman counsel to JJR VI that the
Resulting Issuer Ordinary Shares, the Resulting Issuer Restricted Voting Shares
and the Resulting Issuer Preferred Shares to be issued on the Merger shall have
been validly issued.

(k)
No Legal Action. No action or proceeding shall be pending or threatened by any
Person (other than JJR VI or KFS or any of their respective Affiliates) in any
jurisdiction, to enjoin, restrict or prohibit any of the transactions
contemplated by this Agreement or any of the Acquisition Agreements.

(l)
Change in Law. Since the date of this Agreement, no law, proposed law or any
change in any law or in the interpretation or enforcement of any law shall have
been introduced, enacted or announced, the effect of which would be to prevent
KFS or the Company from, or to increase materially the cost to KFS or the
Company of, completing the transaction contemplated in this Agreement or any of
the Acquisition Agreements.

Article 11    
CLOSING
11.1    Time of Closing.
The Closing of the transactions contemplated herein shall be completed at the
offices of Fasken Martineau DuMoulin LLP, 333 Bay Street, Suite 2400, Bay
Adelaide Centre, Toronto, Ontario on the Closing Date, or at such other time
and/or place as may be mutually agreed upon by the Parties hereto.
11.2    KFS and Company Closing Documents.
On the day of Closing, KFS and the Company shall deliver to JJR VI the following
documents:
(a)
certificates evidencing the Company Common Shares, Company Preferred Shares and
Company Warrants;

(b)
a certified copy of the resolutions of the directors and/or shareholders, as
required, of the Company and KFS approving and authorizing the transactions
herein contemplated;

(c)
a certified copy of the charter documents and by‑laws of the Company, ACIC and
ASI;

(d)
executed copies of the Building Expense Subsidy Agreement, Adverse Development
Agreement, Transition Services Agreement and the UCC Lease Agreement;

(e)
evidence of the termination of the KFS Terminating Agreements and the assignment
to the Company, ACIC and/or ASI of the KFS Assigning Agreements; and

(f)
such other certificates, instruments and documents as may be reasonably
requested by JJR VI prior to the Closing to evidence the satisfaction of the
conditions precedent and to carry out the intent and purposes of this Agreement.

11.3    JJR VI’s Closing Documents.
On the day of Closing, JJR VI shall deliver to the Company the following
documents:
(a)
a certified copy of the resolutions of the directors and shareholders, as
required, of JJR VI and Subco approving and authorizing the transactions herein
contemplated;

(b)
a certified copy of the charter documents and by‑laws of JJR VI and Subco;

(c)
evidence of the conditional approval of the TSXV of the Acquisition;

(d)
an executed copy of the Registration Rights Agreement; and

(e)
such other certificates, instruments and documents as may be reasonably
requested by the Company and KFS prior to the Closing to evidence the
satisfaction of the conditions precedent and to carry out the intent and
purposes of this Agreement.

Article 12    
TERMINATION
12.1    Target Alternative Transaction.
In the event that KFS or an affiliate of KFS (including KAI, the Company, ACIC
or ASI) receives a bona fide offer, whether written or oral, (an “Offer”) from a
third party to acquire assets or shares of the Company, ACIC or ASI
(collectively, the “Target”), directly or indirectly, including in the event of
a financing of Target, or to enter into an arrangement or agreement which would
materially interfere with the Merger which KFS, Target or an affiliate of KFS or
Target wishes to pursue at the instruction of its board of directors or a
committee thereof, including without in any way limiting the generality of the
foregoing, any such arrangement or agreement resulting from an unsolicited offer
or proposal from a third party (a “Target Alternative Transaction”), then KFS
shall provide forthwith a copy of the Offer to JJR VI or if made orally, a
written summary of the Offer (and in any event within one business day following
receipt thereof) and KFS may terminate this Agreement upon written notice to the
Company and JJR VI. Upon termination of this Agreement by KFS by written notice
to JJR VI (the “KFS Termination”) or upon KFS, Target or an affiliate of either
entering into an agreement, including a letter of intent (the “Target
Alternative Transaction Agreement”), directly or indirectly, at any time
following the date of this Agreement and prior to January 31, 2011, with respect
to the Target Alternative Transaction, KFS shall forthwith provide JJR VI with a
copy of the Target Alternative Transaction Agreement.
12.2    Termination.
In addition to the rights of termination in Section 12.1, this Agreement also
may be terminated at any time prior to the Effective Time:
(a)
by mutual written consent of the Parties hereto;

(b)
by any Party by notice to the other Parties if the Merger has not been
consummated by 5:00 p.m. (Toronto time) on the Final Date (provided that the
right to terminate this Agreement under this subsection 12.2(b) shall not be
available to any Party whose breach of or failure to (or whose Affiliate’s
breach of or failure to) fulfill any obligation under this Agreement has been a
principal cause, or resulted in, the failure of the Merger to occur on or before
the Final Date);

(c)
by JJR VI by notice to the other Parties if any condition set out in Section
10.1 has not been satisfied (or is incapable of being satisfied) or has not been
waived on or before the time of Closing provided, however, that the right to
terminate this Agreement under this subsection 12.2(c) shall not be available to
JJR VI if its failure or the failure of an Affiliate to perform any material
covenant, agreement or obligation hereunder has been a principal cause, or
resulted in, the failure of the Closing to occur on or before such date; or

(d)
by the Company or KFS by notice to the other Parties if any condition set out in
Section 10.2 has not been satisfied (or is incapable of being satisfied) or has
not been waived on or before the time of Closing provided, however, that the
right to terminate this Agreement under this subsection 12.2(d) shall not be
available to any Party whose failure or whose Affiliate’s failure to perform any
material covenant, agreement or obligation hereunder has been a principal cause,
or resulted in, the failure of the Closing to occur on or before such date.

12.3    Reimbursement of Expenses.
KFS shall, within ten (10) Business Days following the earlier of (a) a KFS
Termination or (b) the entering into of the Target Alternative Transaction
Agreement, make a cash payment to JJR VI in the amount of $500,000, which
payment shall constitute full and final compensation and remedy to JJR VI for
any breach or the non‑performance of this Agreement and any and all fees and
expenses associated therewith. The Parties agree that the payment represents a
genuine pre‑estimate of damages with respect to the termination of this
Agreement and is not a penalty. Each Party irrevocably waives any right that it
may have to raise as a defence that any liquidated damages are excessive or
punitive.
12.4    Effect of Termination.
In the event of termination of this Agreement, this Agreement shall immediately
become void and there shall be no liability or obligation on the part of any
Party, or their respective officers, directors, shareholders or Affiliates to
perform its obligations hereunder; provided that (a) no such termination shall
relieve any Party from liability or limit or affect any right or cause of action
for any breach of this Agreement including from any inaccuracy in the
representations and warranties and any non‑performance of the covenants; (b) KFS
shall make the cash payment required by Section 12.3, if applicable; and (c) the
provisions of Sections 7.5, 8.5, 12.1, 12.3 and Section 15.6 of this Agreement
shall remain in full force and effect and survive any termination of this
Agreement.
Article 13    
INDEMNIFICATION
13.1    Indemnities by the Company.
KFS shall fully indemnify, defend and hold harmless JJR VI and its subsidiaries,
officers, directors and shareholders (collectively, the “JJR Indemnified
Parties”) from and against any claim, demand, action, cause of action, damage,
loss, cost, liability or expense (including judicial or administrative actions,
suits or proceedings, and including interest, penalties, professional fees and
disbursements) (collectively, “Claims”) arising out of any misrepresentation or
breach of any warranty or covenant by KFS or the Company under this Agreement or
any Ancillary Agreement, including, for greater certainty, any Claims resulting
from KFS’ entering into this Agreement and the consummation of the transactions
contemplated hereby or the disposition by KFS of its interest in ACIC and ASI to
the Company including any Claim arising from a class action, oppression or other
suit brought by one or more shareholders of KFS. In each case, such indemnity
shall include, without limitation, reasonable legal fees and expenses in
connection with any action or proceeding against the JJR Indemnified Parties in
any third party action or proceeding for which indemnification by KFS is
required. For greater certainty and for the purposes of avoiding duplication,
adverse development pursuant to the Adverse Development Agreement shall not
constitute a Claim and shall be dealt with pursuant to the Adverse Development
Agreement.
13.2    Indemnities by JJR VI.
JJR VI shall fully indemnify, defend and hold harmless each of KFS and its
subsidiaries and their respective subsidiaries, officers, directors and
shareholders (collectively, the “KFS Indemnified Parties”), as the case may be,
from and against any Claims arising out of any misrepresentation or breach of
any warranty or breach of any covenant by JJR VI under this Agreement or any
Ancillary Agreement, including, for greater certainty, any Claim resulting from
JJR VI entering into this Agreement and the consummation of the transactions
contemplated hereby. In each case, such indemnity shall include, without
limitation, reasonable legal fees and expenses in connection with any action or
proceeding against the KFS Indemnified Parties in any third party action or
proceeding for which indemnification by JJR VI is required.
13.3    Agency for Representatives.
Each Party agrees that it accepts each indemnity in favour of any of its
Indemnified Parties as agent and trustee of each. Each Party agrees that a Party
may enforce an indemnity in favour of any of that Party’s Indemnified Parties on
their behalf.
13.4    Indemnification Procedure: Third Party Claims.
(a)
If any legal proceeding is initiated, or any claim is asserted, by a third party
(a “Third Party Claim”) against a JJR Indemnified Party or a KFS Indemnified
Party, as the case may be, (the “Indemnified Person”) and the Indemnified Person
proposes to demand indemnification from a Party (the “Indemnifying Party”), the
Indemnified Person shall immediately give notice to that effect to the
Indemnifying Party. The failure to give, or delay in giving, such notice will
not relieve the Indemnifying Party of its obligations except and only to the
extent of any prejudice caused to the Indemnifying Party by such failure or
delay. From the time the Indemnified Person receives notice of the Third Party
Claim, the Indemnified Person shall protect its rights and the rights of the
Indemnifying Party in respect of such Third Party Claim.

(b)
After the Closing, as between the Parties, KFS shall exercise at its expense,
control over the handling, disposition and settlement of any audit,
investigation or similar proceeding in respect of any taxes due or payable by
the Company for which KFS may be liable or against which KFS may be required to
indemnify JJR VI (a “Tax Proceeding”). JJR VI shall notify KFS in writing
promptly upon receiving written notice of any such Tax Proceeding. If KFS fails,
within a reasonable time, to exercise control over the Tax Proceeding, JJR VI
may, in its sole discretion, assume control of the Tax Proceeding at its
expense.

(c)
The Indemnifying Party has the right (but not the obligation), by notice to the
Indemnified Person given not later than thirty (30) days after receipt of the
notice described in subsection 13.4(a), to assume control of the defence,
compromise or settlement of the Third Party Claim.

(d)
Upon the assumption of control by the Indemnifying Party:

(i)
the Indemnifying Party will proceed with the defence, compromise or settlement
of the Third Party Claim at the Indemnifying Party’s sole cost and expense;

(ii)
the Indemnifying Party will keep the Indemnified Person advised with respect to
the defence, compromise or settlement of the Third Party Claim; and

(iii)
the Indemnified Person may retain separate co counsel at its sole cost and
expense, and may participate in the defence of the Third Party Claim (provided
the Indemnifying Party will continue to control such defence).

(e)
The Indemnifying Party will not enter into any compromise or settlement with
respect to a Third Party Claim or a Tax Proceeding without the consent of the
Indemnified Person (which consent may not be unreasonably or arbitrarily
withheld or delayed).

(f)
The Indemnified Person shall co‑operate with the Indemnifying Party, make
available to the Indemnifying Party all relevant information in its possession
or under its control and take such other steps as are, in the reasonable opinion
of counsel for the Indemnifying Party, necessary or desirable to enable the
Indemnifying Party to conduct its defence of the Third Party Claim or to handle,
dispose of or settle a Tax Proceeding.

(g)
If the Indemnifying Party fails to give the Indemnified Person the notice
provided in subsection 13.4(c), the Indemnified Person may, in its sole
discretion, assume control of the defence, compromise or settlement of the Third
Party Claim and retain such counsel as it may deem appropriate, the whole at the
Indemnifying Party’s sole cost and expense.

(h)
If the Indemnified Person assumes control pursuant to subsection 13.4(g), any
settlement, compromise or other final determination of the Third Party Claim
will be binding upon the Indemnifying Party subject to the right of the
Indemnifying Party to dispute that indemnification is required pursuant to this
Agreement.

13.5    Duty to Mitigate and Subrogation.
(a)
The Indemnified Person must, and nothing in this Agreement in any way is
intended to restrict or limit the obligation at law or otherwise of the
Indemnified Person to, mitigate any damages which it may suffer or incur by
reason of (i) the breach by an Indemnifying Party of any representation,
warranty, covenant or obligation of the Indemnifying Party under this Agreement,
or (ii) the occurrence of any indemnifiable event pursuant to the Agreement. The
amount of damages under this Article 13 will be determined net of any amounts
recovered or recoverable by the Indemnified Person under insurance policies,
indemnities, reimbursement arrangements or similar agreements. The Indemnified
Person shall take all commercially reasonable steps to seek such recovery. Each
Party waives, to the extent permitted under its applicable insurance policies,
any subrogation rights that its insurer may have with respect to any
indemnifiable damages.

(b)
The Indemnified Person shall, to the extent permitted by law, subrogate its
rights and, to the extent applicable, the rights of the Company relating to any
Third Party Claim to the Indemnifying Party and shall make or permit to be made
all counterclaims and join to any litigation all other Persons as may be
reasonably required by the Indemnifying Party, the whole at the cost and expense
of the Indemnifying Party.

(c)
In determining the amount of Damages for which a claim may be made under this
Article 13, if a deduction, tax credit, loss carry over or other amount (each a
“Tax Benefit”) of the Indemnified Person is utilized to reduce the amount of
income, taxable income or tax payable for any taxation year in which a liability
or claim is realized or, but for the utilization of such Tax Benefit, would be
realized, the amount of the liability or claim shall be determined without
taking into account any such Tax Benefit.

13.6    Limitations on Liability.
Notwithstanding the foregoing provisions of this Article 13:
(a)
KFS shall have no liability under this Article 13 and no damages may be
recovered from KFS under this Article 13 unless the Claims of the JJR
Indemnified Parties exceed in the aggregate $100,000. In the event such Claims
exceed $100,000, KFS shall be liable for all such Claims, including the initial
$100,000. Further, the liability of KFS in respect of Claims for damages under
this Article 13 shall not exceed in the aggregate $7,967,005. Such limitations,
however, shall have no application to any Claim by JJR VI Indemnified Parties in
respect of an intentional breach of this Agreement or any Ancillary Agreement by
KFS or KFS’ fraudulent or deceitful act.

(b)
JJR VI shall have no liability under this Article 13 and no damages may be
recovered from JJR VI under this Article 13 unless the Claims of the KFS
Indemnified Parties exceed in the aggregate $100,000. In the event such Claims
exceed $100,000, JJR VI shall be liable for all such Claims, including the
initial $100,000. Further, the liability of JJR VI in respect of Claims for
damages under this Article 13 shall not exceed in the aggregate $2,000,000. Such
limitations, however, shall have no application to any Claim by KFS Indemnified
Parties in respect of an intentional breach of this Agreement or any Ancillary
Agreement by JJR VI or JJR VI’s fraudulent or deceitful act.

13.7    Direct Claims.
A Claim for indemnification for any matter not involving a Third Party Claim
must be asserted by notice (setting out in reasonable detail the factual basis
for the Claim and the amount of potential damages arising therefrom) to the
Party from whom indemnification is sought within the periods specified in
Article 6 of this Agreement and will be subject, at all times, to the provisions
of Sections 13.5, 13.6 and 13.9.
13.8    General Limitations.
JJR VI and KFS shall have no liability to a KFS Indemnified Party or JJR
Indemnified Party (each an “Indemnified Party”), as applicable hereunder:
(a)
in respect of any matter or thing done or omitted to be done by or at the
direction or with the consent of the Indemnified Party; and

(b)
in respect of more than one representation, warranty or covenant that relates to
the same matter or thing in this Agreement or an Ancillary Agreement.

13.9    Indemnification Sole Remedy.
Subject to Article 12, and except in respect of Section 14.1, Section 14.2,
Section 14.4 and Section 14.6 for a claim for specific performance or injunctive
relief, and as otherwise expressly provided in this Agreement or in any
Ancillary Agreement, the indemnifications provided for in this Article 13
constitute the sole remedy available to the KFS, the Company and JJR VI from and
after the Closing Date with respect to any and all breaches or failures of
representations, warranties, covenants, conditions, agreements or obligations
contained in this Agreement and the Ancillary Agreements. In furtherance of the
foregoing, each of the Parties hereby waives, from and after the Closing, to the
fullest extent permitted under applicable law, any and all other rights, claims
and causes of action it may have against the other Parties relating to the
subject matter of this Agreement.
Article 14    
ADDITIONAL COVENANTS
14.1    Non‑Solicitation.
(a)
For a period of three (3) years following the Closing Date, KFS shall not,
directly or indirectly, and shall ensure that its Affiliates (other than the
Company, ACIC, or ASI) do not, either alone or in concert with any Person,
solicit, market, sell, underwrite or service commercial automobile liability and
commercial auto physical damage insurance using the rates, forms and pricing
methodologies developed by the Company or as filed by ACIC and/or ASI in states
where they are licensed to write business on the Closing Date. For the avoidance
of doubt, business of the type written by KFS Affiliates on the Closing Date,
other than the Company, ACIC or ASI, is not considered competing business. It is
understood that KFS will not use information that was only available to it as a
result of ownership of the Company, ACIC or ASI, to enhance or otherwise modify
the nature of business written by KFS or its Affiliates to make those products
similar to the Company’s, ACIC’s or ASI’s. Pricing methodologies developed by
KFS or its Affiliates relating to Truck Insurance remain the property of KFS or
its Affiliates post‑Closing, whether or not resources of the Company, ACIC or
ASI were involved in the development of Truck Insurance‑related business, and it
is not considered a violation of this Agreement for KFS or its Affiliates to
solicit, market, sell, underwrite or service Truck Insurance. For purposes of
this subsection, “Truck Insurance” means insurance where the subject of coverage
is semi‑truck, semi‑truck and trailer or other similar vehicles used for the
transport of cargo where vehicle weights are typically greater than 30,000
pounds.

(b)
For a period of three (3) years following the Closing Date, KFS shall not,
directly or indirectly, and shall ensure that its Affiliates do not, directly or
indirectly, solicit, induce or entice for employment, engagement or retainer,
any executive, officer or employee of the Company, ACIC or ASI or otherwise
persuade or influence, or in any manner attempt to persuade or influence, any
such executive, officer or employee to terminate or discontinue his, her or its
employment, engagement or retainer with the Company, ACIC or ASI, to alter his
or her relationships with the Company, ACIC or ASI, or to become employed,
engaged or retained by any Person other than the Company, ACIC or ASI. This
subsection 14.1(b) does not apply to the employment of any Person (including,
for greater certainty, a Transferred Employee) where contact with KFS in such
regard was initiated by (i) the Person, in response to an advertisement or
otherwise, or (ii) a recruitment agency that was not directed to solicit
executives, officers or employees of the Company, ACIC or ASI.

14.2    Assurances.
KFS:
(a)
acknowledges and agrees that it has carefully considered, with the assistance of
its counsel, the nature and extent of the restrictive covenants set forth in
Section 14.1;

(b)
acknowledges and agrees that the provisions of Section 14.1 are reasonable and
necessary to protect and preserve JJR VI’s interests in and right to use the
Assets and operate the business of the Company from and after Closing;

(c)
irrevocably waives (and agrees not to raise) as a defence any issue of
reasonableness (including the reasonableness of the territory or the duration
and scope of the covenants) in any proceeding to enforce the provisions of
Section 14.1;

(d)
acknowledges and agrees that JJR VI may suffer irreparable harm if KFS or any of
its Affiliates breach any of their obligations set out in Section 14.1; and

(e)
acknowledges and agrees that monetary damages may not be a sufficient remedy for
a breach of the provisions of Section 14.1.

Accordingly, in the event of a breach or threatened breach by KFS or any of its
Affiliates of Section 14.1, in addition to any remedy provided for at law or in
equity, JJR VI and its Affiliates shall be entitled to seek equitable relief,
including an interim injunction, interlocutory injunction and permanent
injunction or specific performance or both.
14.3    Tax Losses.
The Parties agree that (i) to the extent that the unified loss rules of Internal
Revenue Service Regulations Section 1.1502‑36 apply to the Merger, and (ii) the
application of such rules would result in the Company, ACIC and ASI, upon their
exit from the KAI consolidated federal income tax return, receiving in the
aggregate net operating loss carry forwards of less than US$38,975,400, then KFS
agrees to cause KAI to work with the Company to make such elections (to the
extent allowable by law) that would result in the Company, ACIC and ASI
receiving net operating loss carry forwards of at least US$38,975,400 in the
aggregate. Notwithstanding the preceding sentence, KAI shall not be obligated to
transfer net operating loss carry forwards in the first sentence of this Section
14.3 in excess of the amount of net operating loss carry forwards allocable to
the Company, ACIC and ASI that existed immediately prior to the Merger. The
Parties further agree that KAI shall be allowed (to the extent allowable by law)
to make the elections necessary to retain for the benefit of KAI and its
Affiliates those net operating loss carry forwards attributable to the Company,
ACIC and ASI that are not otherwise allocated to the Company, ACIC and ASI in
the first sentence of this Section 14.3. The Parties agree to co‑operate on a
best efforts basis and to make such filings and elections as are required or
necessary to give effect to this Section 14.3. In the event that the election
set forth in the first sentence of this Section 14.3 will be detrimental to KAI
and its Affiliates, KFS agrees to work in good faith with the Company to modify
such election. The Parties acknowledge that the stock of KFS is widely held and
that there has been a significant amount of trading activity in the stock of KFS
over the last twelve to eighteen months. The Parties acknowledge that it is
possible that this trading activity may have caused a limitation on the amount
of the tax losses that would have otherwise been available to the Company, ASI,
ACIC, SUGAT and/or Southern United Fire Insurance Company.
14.4    Voting.
Whenever the capital of the Resulting Issuer is divided into different classes
and the holders of the Resulting Issuer Preferred Shares or Resulting Issuer
Restricted Voting Shares have a right to consent to a matter separately as a
Class other than pursuant to Article 14 of the Cayman Articles, KFS shall cause
the holder of the Resulting Issuer Preferred Shares and the holder of the
Resulting Issuer Restricted Voting Shares (provided the holder is KFS or an
Affiliate of KFS) to vote their shares in accordance with the votes of the
Resulting Issuer Ordinary Shares on the matter. In such event, KFS shall not or
shall not permit the holder of the Resulting Issuer Preferred Shares or
Resulting Issuer Restricted Voting Shares to exercise its dissent rights in
respect of any such matter. Notwithstanding the foregoing, if the matter is one
which would affect the particular Class in a manner that is different from the
Resulting Issuer Ordinary Shares, and the difference is adverse to the holders
of such Class, the holders of such Class shall not be obligated to vote their
shares in accordance with the votes of the Resulting Issuer Ordinary Shares on
the matter.
14.5    Non‑Assignable Contracts and Shared Contracts.
(a)
Neither this Agreement nor any Ancillary Agreement shall constitute an
assignment or an attempted assignment of any Non‑Assignable Contract. KFS agrees
to assign and to cause each Affiliate to assign any Non‑Assignable Contract to
the Company, ACIC or ASI, as applicable, when such assignment is permitted and
as the Company may from time‑to‑time direct. KFS shall, and shall cause each
Affiliate to, deliver all notices, if any, required by the terms of the
Non‑Assignable Contract in connection with the assignment thereof and use
commercially reasonable efforts to obtain all consents required for the
assignment to the Company, ACIC or ASI, as applicable, of the Non‑Assignable
Contract.

(b)
In respect of Non‑Assignable Contracts, to the extent permitted by applicable
law and the provisions of such Non‑Assignable Contract: (i) if any of the
Non‑Assignable Contracts are not assignable by the terms thereof or consents to
the assignment thereof have not been obtained prior to the Effective Time, such
Non‑Assignable Contracts shall be held by KFS or the applicable Affiliate party
thereto in trust for the Company, ACIC or ASI, as applicable, and all benefits
and obligations existing thereunder shall be for the account of the Company,
ACIC or ASI, as applicable; and (ii) KFS shall take, and shall cause any
applicable Affiliate (if other than KFS) to take or cause to be taken such
reasonable action in its name or otherwise as the Company may reasonably require
so as to provide the Company, ACIC or ASI, as applicable, with the benefits
thereof. KFS shall continue to use and cause its Affiliates to continue to use
commercially reasonable efforts to obtain and deliver all remaining consents
required for the assignment to the Company, ACIC or ASI, as applicable, of the
remaining Non‑Assignable Contracts after the Effective Time.

(c)
KFS and the Company shall use commercially reasonable efforts to cause each of
the Shared Contracts to be split into two contracts, one with respect to the
rights relating to the business of KFS and the other with respect to the
business of the Company, ACIC and/or ASI. Each reference in this Agreement
relating to the assignment or non‑assignment of Non‑Assignable Contracts shall,
as it pertains to Shared Contracts, be deemed to be a reference to the intended
splitting of such Shared Contracts as described in this subsection.

14.6    Confidentiality.
From and after the Effective Time, KFS shall, and shall cause its Affiliates to,
not use or disclose to any person (other than to its directors, officers and
advisors who have a need to know in connection with the Acquisition and who have
agreed to maintain such information in the strictest confidence), directly or
indirectly all information, trade secrets or financial or business documents
regarding the Company, ACIC or ASI or their businesses or Assets (collectively
the “Atlas Information”) except as permitted in this section. KFS acknowledges
that the Atlas Information is vital, sensitive, confidential and proprietary to,
the business carried on by the Company, ACIC and ASI and the use by, or
unauthorized disclosure of the Atlas Information by KFS or its Affiliates would
be materially prejudicial and detrimental to the interests of the Company, ACIC
and ASI. The non‑disclosure obligations in this Section shall not restrict
disclosure of Atlas Information where:
(a)
the Atlas Information becomes generally known to the public other than through a
breach of this Agreement;

(b)
the Atlas Information being lawfully obtained by KFS, as applicable, from a
third party or parties without breach of this Agreement by KFS or its
Affiliates, as shown by documentation sufficient to establish the third party as
a source of Atlas Information;

(c)
the disclosure is required by law; or

(d)
JJR VI has provided its prior written approval for such disclosure.

14.7    Conduct of Business on the Closing Date.
The Parties agree that the Company, ACIC and ASI shall not transact any business
on the Closing Date other than those activities that would be conducted in the
ordinary course.
Article 15    
GENERAL
15.1    Counterparts.
This Agreement may be executed in several counterparts (by original or facsimile
signature), each of which when so executed shall be deemed to be an original and
each of such counterparts, if executed by each of the Parties, shall constitute
a valid and enforceable agreement among the Parties.
15.2    Severability.
In the event that any provision or part of this Agreement is determined by any
court or other judicial or administrative body to be illegal, null, void,
invalid or unenforceable, that provision shall be severed to the extent that it
is so declared and the other provisions of this Agreement shall continue in full
force and effect.
15.3    Applicable Law.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware without giving effect to the conflict of law principles
therein. Each party irrevocably and unconditionally attorns to the exclusive
jurisdiction of the courts of the Province of Ontario.
15.4    Successors and Assigns.
This Agreement shall accrue to the benefit of and be binding upon each of the
Parties hereto and their respective successors and assigns, provided that this
Agreement shall not be assigned by any one of the Parties without the prior
written consent of the other Parties.
15.5    Interpretation.
(a)
Schedules and Exhibits. The following Schedules attached to this Agreement and
the Disclosure Letter are hereby incorporated by reference in this Agreement and
form part hereof:

Schedule 1.1(a)    -    Company Financial Statements
Schedule 1.1(b)    -    JJR VI Financial Statements
Schedule 2.1(c)    -    Certificate of Merger
Schedule 3.12        -    Absence of Other Agreements
Schedule 8.6        -    Cayman Articles
Schedule 10.1(j)    -    UCC Lease Agreement
Schedule 10.1(l)    -    Transition Services Agreement
Schedule 10.1(s)    -    Building Expense Subsidy Agreement
Schedule 10.1(t)    -    Adverse Development Agreement
(b)
Sections and Headings. The division of this Agreement into Articles, sections
and subsections and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation hereof.

15.6    Expenses.
Notwithstanding any other provision herein, each of the Parties hereto shall be
responsible for their own costs and charges incurred with respect to the
transactions contemplated herein including, without limitation, all costs and
charges incurred prior to the date of this Agreement and all legal and
accounting fees and disbursements relating to preparing this Agreement and all
Ancillary Agreements or otherwise relating to the transactions contemplated
herein. For the purposes of clarity, the Company shall be responsible for all
listing fees in connection with any securities issued pursuant to the
Acquisition.
15.7    Further Assurances.
Each of the Parties hereto will from time‑to‑time at all times hereafter at
another Party’s request and without further consideration, do such acts and
execute and deliver such other instruments of transfer, conveyance and
assignment and take such further action as the other may reasonably require to
give effect to any matter provided for herein.
15.8    Entire Agreement.
This Agreement and the schedules referred to herein constitute the entire
agreement among the Parties hereto and supersede all prior agreements,
representations, warranties, statements, promises, information, arrangements and
understandings, whether oral or written, express or implied, with respect to the
subject matter hereof, including the Letter of Intent. None of the Parties
hereto shall be bound or charged with any oral or written agreements,
representations, warranties, statements, promises, information, arrangements or
understandings not specifically set forth in this Agreement or in the schedules,
documents and instruments to be delivered at Closing pursuant to this Agreement.
The Parties hereto further acknowledge and agree that, in entering into this
Agreement and in delivering the schedules, documents and instruments to be
delivered at Closing, they have not in any way relied, and will not in any way
rely, upon any oral or written agreements, representations, warranties,
statements, promises, information, arrangements or understandings, express or
implied, not specifically set forth in this Agreement or in such schedules,
documents or instruments.
15.9    Notices.
Any notice required or permitted to be given hereunder shall be in writing and
shall be effectively given if (i) delivered personally, (ii) sent prepaid
courier service or mail, or (iii) sent prepaid by facsimile or other similar
means of electronic communication addressed as follows:
in the case of notice to JJR VI or Subco:
JJR VI Acquisition Corp.
5 Hazelton Avenue
Suite 300
Toronto, ON M5R 2E1
Attention: Jordon Kupinsky
Tel:    416 972 6294
Fax:    416 972 6208
with copies to:
Fasken Martineau DuMoulin LLP
333 Bay Street, Suite 2400
Bay Adelaide Centre, Box 20
Toronto, ON M5H 2T6
Attention: Rubin Rapuch
Tel:    416 868 3447
Fax:    416 364 7813
in the case of notice to KFS:
Kingsway Financial Services Inc.
45 St. Clair Avenue West
Suite 400
Toronto, ON M4V 1K9
Attention: Larry Swets
Tel:    905 677‑8889
Fax:    905 677‑5008
with copies to:
Ogilvy Renault LLP
Royal Bank Plaza, South Tower
200 Bay Street
Suite 3800, P.O. Box 84
Toronto, ON M5J 2Z4
Attention: Paul Fitzgerald
Tel:    416 216 3941
Fax:    416 216 3930
in the case of notice to the Company:
American Insurance Acquisition Inc.
1209 Orange Street
Wilmington, New Castle
Delaware, U.S.A. 19801
Attention: Scott Wollney
Tel:    847 700 8600
Fax:    847 228 2580
with copies to:
Ogilvy Renault LLP
Royal Bank Plaza, South Tower
200 Bay Street
Suite 3800, P.O. Box 84
Toronto, ON M5J 2Z4
Attention: Paul Fitzgerald
Tel:    416 216 3941
Fax:    416 216 3930
Any notice, designation, communication, request, demand or other document given
or sent or delivered as aforesaid shall:
(a)
if delivered as aforesaid, be deemed to have been given, sent, delivered and
received on the date of delivery;

(b)
if sent by mail as aforesaid, be deemed to have been given, sent, delivered and
received (but not actually received) on the fourth Business Day following the
date of mailing, unless at any time between the date of mailing and the fourth
Business Day thereafter there is a discontinuance or interruption of regular
postal service, whether due to strike or lockout or work slowdown, affecting
postal service at the point of dispatch or delivery or any intermediate point,
in which case the same shall be deemed to have been given, sent, delivered and
received in the ordinary course of the mail, allowing for such discontinuance or
interruption of regular postal service; and

(c)
if sent by facsimile, be deemed to have been given, sent, delivered and received
on the date if sent prior to 5:00 p.m. on a Business Day, if not on the next
Business Day.

15.10    Waiver.
Any Party hereto which is entitled to the benefits of this Agreement may, and
has the right to, waive any term or condition hereof at any time on or prior to
the Closing Date, provided however that such waiver shall be evidenced by
written instrument duly executed on behalf of such Party.
15.11    Amendments.
No modification or amendment to this Agreement may be made unless agreed to by
the Parties hereto in writing.
15.12    Remedies Cumulative.
Except as provided herein, the rights and remedies of the Parties under this
Agreement are cumulative and in addition to and not in substitution for any
rights or remedies provided by law. Any single or partial exercise by any Party
hereto of any right or remedy for default or breach of any term, covenant or
condition of this Agreement does not waive, alter, affect or prejudice any other
right or remedy to which such Party may be lawfully entitled for the same
default or breach.
15.13    Currency.
Unless otherwise indicated, all dollar amounts referred to in this Agreement are
in the lawful money of Canada.
15.14    Number and Gender.
In this Agreement, unless there is something in the subject matter or context
inconsistent therewith:
(a)
words in the singular number include the plural and such words shall be
construed as if the plural had been used;

(b)
words in the plural include the singular and such words shall be construed as if
the singular had been used; and

(c)
words importing the use of any gender shall include all genders where the
context or the Party referred to so requires, and the rest of the sentence shall
be construed as if the necessary grammatical and terminological changes had been
made.

15.15    Knowledge.
Where any matter is stated to be “to the knowledge” or “to the best of the
knowledge” of the Company or words to like effect in this Agreement, such shall
mean the actual knowledge of the Company Officers after due inquiry, including
due inquiry of officers of the subsidiaries of the Company.
Where any matter is stated to be “to the knowledge” or “to the best of the
knowledge” of KFS or words to like effect in this Agreement, such shall mean the
actual knowledge of the KFS Officers after due inquiry, including due inquiry of
officers of the subsidiaries of KFS.
Where any matter is stated to be “to the knowledge” or “to the best of the
knowledge” of JJR VI or words to like effect in this Agreement, such shall mean
the actual knowledge of Jordan Kupinsky after due inquiry.
15.16    Time of Essence.
Time shall be of the essence hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF this Agreement has been executed by the Parties hereto as of
the date first above written.

 
JJR VI ACQUISITION CORP.

 
By:
/s/ Jordan Kupinsky
 
 
Name: Jordan Kupinsky
 
 
Title: Director

KINGSWAY FINANCIAL SERVICES INC.

 
By:
/s/ Larry G. Swets, Jr.
 
 
Name: Larry G. Swets, Jr.
 
 
Title: President & CEO
 
By:
/s/ William A. Hickey, Jr.
 
 
Name: William A. Hickey, Jr.
 
 
Title: Chief Operating Officer

AMERICAN INSURANCE ACQUISITION INC.

 
By:
/s/ Scott D. Wollney
 
 
Name: Scott D. Wollney
 
 
Title: President

ATLAS ACQUISITION CORP.

 
By:
/s/ Jordan Kupinsky
 
 
Name: Jordan Kupinsky
 
 
Title: Director

Schedule 1.1(a)
Company Financial Statements

Schedule 1.1(b)
JJR VI Financial Statements

--------------------------------------------------------------------------------

Schedule 2.1(c)
Certificate of Merger

Schedule 3.12
Absence of Other Agreements
1.
CPC Escrow Agreement dated as of January 28, 2010 among JJR VI, Equity and
certain shareholders of JJR VI.

2.
Agency Agreement dated as of January 28, 2010 between JJR VI and Macquarie
Private Wealth Inc.

3.
Transfer Agency and Registrarship Agreement dated as of January 27, 2010 between
JJR VI and Equity.

--------------------------------------------------------------------------------

Schedule 8.6
Cayman Articles

--------------------------------------------------------------------------------

Schedule 10.1(j)
Form of UCC Lease Agreement

--------------------------------------------------------------------------------

Schedule 10.1(l)
Form of Transition Services Agreement

--------------------------------------------------------------------------------

Schedule 10.1(s)
Form of Building Expense Subsidy Agreement

--------------------------------------------------------------------------------

Schedule 10.1(t)
Form of Adverse Development Agreement