PURCHASE AGREEMENT THE WESTAIM CORPORATION as Purchaser and KINGSWAY FINANCIAL SERVICES INC. as Seller January 25, 2010 TABLE OF CONTENTS

"Applicable Interest Rate" means, at any time, the rate of interest per annum equal to the rate which the principal office of the Canadian Imperial Bank of Commerce in Toronto, Ontario quotes, publishes and refers to as its "prime rate" and which is its reference rate of interest for loans in Canadian dollars made in Canada to Canadian borrowers plus 1% per annum, adjusted automatically with each quoted or published change in such rate, all without the necessity of any notice to a Party or any other Person.

"Appointed Actuary" means the appointed actuary of the Company, currently Pierre Laurin, Towers Perrin.

"Assets" means all property and assets of the Company of every nature and kind and wherever located including (i) the Owned Properties and the buildings, improvements and fixtures located thereon, (ii) all machinery, equipment, furniture, accessories and supplies of all kinds, (iii) all trucks, cars and other vehicles, (iv) all accounts receivable of the Company of every nature and kind,

"Business" means the property and casualty insurance business (including, without limitation, the surety business) carried on by the Company as of the date hereof.

"Business Day" means any day, other than a Saturday, Sunday or statutory or civic holiday in Toronto, Ontario.

"Business Transfer Agreement" means the business transfer agreement made as of the 1s^t day of October, 2009 between KGIC and the Company pursuant to which KGIC ceded, transferred and assigned to the Company certain assets and liabilities of KGIC.

"Carrying Value" has the meaning specified in 2.7(a).

"Closing" means the completion of the transaction of purchase and sale contemplated in this Agreement.

"Closing Date" means the later of: (i) March 26, 2010; or (ii) two (2) Business

"Closing Period" means the period between the close of business on the date of this Agreement and the Closing.

"Commissioner" means the Commissioner of Competition appointed under the Competition Act.

"Common Shares" means common shares in the capital of the Company.

"Commutation Agreement" means, collectively (i) the commutation and release agreement between KGIC and the Company made effective as of October 1, 2009; (ii) the commutation and release agreement between the Company and Kingsway Reinsurance (Bermuda) Ltd. made effective as of October 1, 2009; and (iii) the commutation and release agreement between KGIC and Kingsway Reinsurance (Bermuda) Ltd. made effective as of October 1, 2009.

"Company" has the meaning specified in the Recitals.

disclosed to the Purchaser or its representatives prior to the Closing
Date by the Seller, the Company or their representatives or otherwise; or

collected by the Purchaser or its representatives prior to the Closing
Date from the Seller, the Company or their representatives or otherwise,

Matters reflected in the Disclosure Schedule are not necessarily limited to those
matters required by this Agreement to be reflected in such Disclosure Schedule. Such additional matters are set forth for informational purposes only and do not necessarily include other matters of a similar nature.

The Disclosure Schedule and the information contained in it do not constitute or
imply, and will not be construed as:

a standard of materiality or a standard for what is or is not in the Ordinary Course or what does or does not constitute Commercially Reasonable Efforts.

100% of the amount by which the Estimated Dividend exceeds the Actual Dividend,

as to $20,000,000 by wire transfer payable to or to the order of an
independent escrow agent to be agreed upon by the Parties prior to Closing, in trust (the "Escrow Agent") to be held by the Escrow Agent in escrow in accordance with the terms and conditions of an escrow agreement to be entered into between the Parties and the Escrow Agent prior to Closing substantially in the form attached as Exhibit 2.4(a)(i) (the "Escrow Agreement") pending final adjustment of the Purchase Price in accordance with the provisions of Section 2.5;

as to $5,000,000 by wire transfer payable to or to the order of the Escrow
Agent in trust, to be held by the Escrow Agent in escrow in accordance with the terms and conditions of the Escrow Agreement pending final determination of the Final 2009 Audited Financial Statements in accordance with the provisions of Section 2.5;

as to $7,500,000 by wire transfer payable to or to the order of the Escrow
Agent in trust, to be held by the Escrow Agent in escrow in accordance with the terms and conditions of the Escrow Agreement pending adjustments to the Purchase Price in accordance with the provisions of Section 2.7; and

as to the balance of the Purchase Price by wire transfer of immediately
available funds as directed by the Seller, in writing.

The Seller will provide the Purchaser and its auditors access, upon every
reasonable request, to all working papers of the Company, the Company's auditors and their actuarial experts and the Appointed Actuary, all accounting books and records of the Company and the appropriate personnel. As soon as possible following receipt of the Draft 2009 Audited Financial Statements, the Purchaser will notify the Seller in writing if it has any objections. If the Purchaser does not notify the Seller that it has an objection within five (5) days of receipt, the Purchaser will be deemed to have accepted the Draft 2009 Audited Financial Statements and the Draft 2009 Audited Financial Statements will be deemed to be the Final 2009 Audited Financial Statements.

If the Purchaser disputes the Draft Audited Financial Statements and the Parties
are unable to resolve the Purchaser's objections and agree upon the Draft 2009 Audited Financial Statements on or before February 25, 2010, the Seller shall cause the Draft 2009 Audited Financial Statements prepared by the Company to be finalized by the Company and filed by the Company with OSFI within the time period prescribed. Notwithstanding such filing, the Parties will thereafter work expeditiously and in good faith in an attempt to resolve such dispute within a further period of twenty (20) days after the date of notification by the Purchaser to the Seller of such dispute, failing which the dispute will be submitted for determination to an independent national firm of chartered accountants mutually agreed to by the Seller and the Purchaser (and, failing such agreement within a further period of two (2) Business Days, such independent national firm of chartered accountants will be a Canadian office of PricewaterhouseCoopers LLP, or if such firm is unable to act, a Canadian office of Ernst & Young LLP. The determination of the accountants will be final and binding upon the Parties and will not be subject to appeal, absent manifest error. For these purposes, the appointed accountants are acting as experts and not as arbitrators.

The Seller and the Purchaser will each bear the fees and expenses of their
respective auditors in preparing or reviewing, as the case may be, the Draft 2009 Audited Financial Statements. If a national firm of chartered accountants is retained to resolve a dispute, the costs and expenses of such firm will be borne equally by the Seller and the Purchaser. However, the Seller and the Purchaser will each bear their own costs in presenting their respective cases to such firm.

The Draft 2009 Audited Financial Statements, together with the auditor's report, filed with OSFI by the Company pursuant to Section 2.5(c) shall, in the absence of an objection by the Purchaser, be the final 2009 Audited Financial Statements (the "Final 2009 Audited Financial Statements"). If the Purchaser has objected to the Draft 2009 Audited Financial Statements in accordance with the provisions of Section 2.5(c), then the Final 2009 Audited Financial Statements shall be, as applicable, the Draft 2009 Audited Financial Statements agreed to by the Parties pursuant to Section 2.5(c) or the Draft 2009 Audited Financial Statements as determined by the independent accounting firm pursuant to Section 2.5(c). Such Final 2009 Audited Financial Statements are final and binding upon the Parties and are not subject to appeal, absent manifest error.

Following Closing, the Purchase Price will be increased or decreased, as the
case may be, dollar-for-dollar, to the extent that the Book Value as determined from the Final 2009 Audited Financial Statements is more or less than the Book Value in the Draft 2009 Audited Financial Statements. Notwithstanding any other provisions herein, the I3ook Value figure determined from the Final 2009 Audited Financial Statements shall include a provision of $4 million to reflect vacation accrual and uncertainty relating to loss transfer / subrogation rights of the Company. To the extent that the $4 million provision is not reflected in the Final 2009 Audited Financial Statements, an adjustment shall be made accordingly to the Purchase Price on a dollar-for-dollar basis.

The Purchaser will provide the Seller, its auditors and actuaries access, upon
every reasonable request, to all work papers of the Company and the Company's auditors and actuaries, accounting books and records of the Company and the appropriate personnel to verify the accuracy, presentation and other matters relating to the preparation of the 2012 Audited Financial Statements, the KGIC Actuarial Opinion and the KGIC Actuarial Reports. Within thirty (30) days following receipt of the 2012 Audited Financial Statements, the KGIC Actuarial Opinion and the KGIC Actuarial Reports, the Seller will notify the Purchaser in writing if it has any objections to the calculation of the KGIC Claims Reserve Development. The notice of objection must contain a statement describing the basis of each of the Seller's objections and each amount in dispute. The Seller is deemed to have accepted the KGIC Actuarial Opinion if it does not notify the Purchaser of its objection within the specified period of thirty (30) days.

If the Seller disputes the KGIC Claims Reserve Development, the Parties will
work expeditiously and in good faith in an attempt to resolve such dispute within a further period of twenty (20) days after the date of notification by the Seller to the Purchaser of such dispute, failing which the dispute will be submitted for determination to an independent actuary mutually agreed to by the Seller and the Purchaser and, failing such agreement, within a further period of two (2) Business Days, a Canadian office of Ernst & Young LLP if PricewaterhouseCoopers LLP is appointed as accountant in accordance with Section 2.5(c), or alternatively a Canadian office of PricewaterhouseCoopers LLP if Ernst & Young LLP is unable to be appointed as accountant in accordance with Section 2.5(c). The determination of the independent actuary will be final and binding upon the Parties and will not be subject to appeal, absent manifest error. For these purposes, the appointed independent actuary is acting as an expert and not as an arbitrator.

The Seller ~ and the Purchaser will each bear the fees and expenses of their
respective auditors and actuary in preparing or reviewing, as the case may be, the 2012 Audited Financial Statements, the KGIC Actuarial Opinion and the KGIC Actuarial Reports. If an independent actuary is retained to resolve a dispute, the costs and expenses of such person will be borne equally by the Seller and the Purchaser. However, the Seller and the Purchaser will each bear their own costs in presenting their respective cases to such person.

Immediately following the thirty (30) day period referred to in Section 2.6(b) or the resolution of any dispute in accordance with Section 2.6(c), the Purchaser will deliver to the Seller a statement of the final KGIC Claims Reserve Development (the "Final KGIC Claims Reserve Development"). Such Final

On Closing, the Purchaser will acquire 100% of the Book Value of the Company and accordingly will pay 94.5% of the carrying value of the Hurontario Property as reflected in the 2009 Annual Financial Statements (the "Carrying Value").

On the date hereof, the Purchaser estimates the market value of the Hurontario Property to be not more than $29.5 million (the "Estimated Value").

the Purchase Price shall be reduced by $0.945 for every $1.00 by
which the Carrying Value exceeds the sale price (the "Sale Price") (however, in no event shall the Purchase Price be reduced by an amount that is greater than the difference between Carrying Value and the Estimated Value; and

the Purchase Price shall be increased by $0.945 for every $1.00 by
which the Sale Price exceeds the Carrying Value; and

result in a breach or a violation of, or cause the termination or revocation of, any
Material Authorization held by the Seller or the Company or necessary to the ownership of the Purchased Shares, the use of the Assets or the operation of the Business;

result in a breach or a violation of any judgment, judicial order or decree of any
Governmental Authority; or

assuming the filings, notices and Authorizations referred to in Section 3.5 are
duly and timely made or obtained, result in a breach or a violation of any Law applicable to the Seller or the Company.

the purchase, subscription, allotment or issuance of any unissued shares or other
securities of the Company.

the Company owns all rights, title and interest in and to all of the issued and outstanding limited partnership units in the Partnership and is the sole limited partner in the Partnership;

the Seller owns all of the issued and outstanding shares in the capital of the General Partner, the general partner of the Partnership;

all licenses or similar agreements to which the Company is a party, either
as licensee or licensor, with respect to IP Rights which are material to the Business.

The Company has the right and authority to use, and to continue to use after the
Closing Date, the Material IP Rights in connection with the conduct of the Business in the manner presently conducted, and to the Seller's knowledge, such use or continuing use does not infringe upon or violate any rights of any other Person. To the Seller's knowledge, all licenses to which the Company is a party relating to the Material IP Rights, true and complete copies of which have been made available to the Purchaser, are in good standing, binding and enforceable in accordance with their respective terms and no material default exists on the part of the Company thereunder.

The Company has maintained or caused to be maintained, in full force and
effect, its rights to its registered Material IP Rights. To the knowledge of the Seller, applications for registration of the Company's Material IP Rights are in good standing, have been filed in a timely manner within the appropriate offices

All of the Material IP Rights and the Material Software of the Company
developed or created by employees (including former employees) of the Company or pursuant to Contracts with outside consultants or contractors have been assigned to the Company in writing or in another enforceable manner.

Except as set out in Section 3.24(h) of the Disclosure Schedule, no royalty or
other fee is required to be paid by the Company to any other Person for the use of any Material IP Rights and there are no restrictions on the ability of the Company to use and exploit all rights in such Material IP Rights.

The Company has prepared and filed all Tax Returns within the prescribed periods with the appropriate Taxing Authority in accordance with applicable Laws. The Company has reported all material income and all other material amounts and information required by applicable Law to be reported on each such Tax Return.

The Company has paid, within the prescribed period, all material Taxes which are required to be paid to any Taxing Authority pursuant to applicable Law.

The Company has duly and timely withheld and collected all Taxes required by applicable Law to be withheld or collected by it and has duly and timely remitted to the appropriate Taxing Authority all such Taxes as and when required by applicable Law.

There are no proceedings, investigations or audits pending or, to the knowledge of the Seller, threatened against the Company in respect of any Taxes. All income Tax Returns of the Corporation for taxation years ended on or before December 31, 2008 have been assessed by the relevant Taxing Authority.

To the knowledge of the Seller, the Company is conducting the Business in compliance with all applicable Environmental Laws except where noncompliance would not reasonably be expected to have a Material Adverse Effect.

To the knowledge of the Seller, except as disclosed in Section 3.31 of the Disclosure Schedule, none of the Owned Properties:

has been used by the Company as a waste disposal site or as a licensed landfill; or

has asbestos, asbestos containing materials, PCBs, radioactive substances or aboveground or underground storage systems, active or abandoned, located on, at or under them contrary to Environmental Laws.

Except as set forth in Section 3.31 of the Disclosure Schedule, to the knowledge
of the Seller, there are no contaminants located in the ground or in groundwater under any of the Owned Properties contrary to Environmental Laws which would reasonably be expected to have a Material Adverse Effect.

Except as set out in Section 3.31 of the Disclosure Schedule, since January 1,
2007, the Company has not been required by any Governmental Authority to:

perform any environmental closure, decommissioning, rehabilitation,
restoration or post-remedial investigations, on, about, or in connection with any of the Owned Properties.

Section 3.31 of the Disclosure Schedule sets out all material environmental
reports, surveys, assessments and other documents in the possession of the Seller or the Company relating to environmental matters affecting the Business or any of the Owned Properties in a material manner (collectively, the "Material Environmental Reports"). True, correct and complete copies of the Material Environmental Reports have been made available to the Purchaser. The Purchaser acknowledges that all matters disclosed in the Material Environmental Reports are considered to be accepted exceptions to this Section 3.31 and will not give rise to any claim for breach of any representation and warranty contained in this Section 3.31.

This Section 3.31, to the exclusion of the other representations and warranties
contained in Article III, sets out in full the representations and warranties made or to be made by the Seller in or pursuant to this Agreement that deal with, refer to or cover any matter relating to Environmental Laws or compliance therewith.

Except as set out in Section 3.32 of the Disclosure Schedule, there is no labour
strike, picketing, slow down, work stoppage or lock out, existing or pending, against the Company or any of its operations which would reasonably be expected to have a Material Adverse Effect. The Company has not, in the last two (2) years, experienced any labour strike, picketing, slowdown, work stoppage or lock out, or to the knowledge of the Seller, any organizing campaign, by or with respect to its Employees.

The employees of the Seller that ceased to be employees of the Seller and
became Employees of the Company effective as of January 1, 2010, were transitioned to employment with the Company in compliance with all applicable laws and have been employed by the Company on the same or substantially the same terms and conditions as their employment with the Seller. No claims have been asserted by any such Employees against the Seller or the Company with respect to the transfer of their employment and, to the knowledge of the Seller, no such claims have been threatened.

Section 3.33 of the Disclosure Schedule sets out a true, correct and complete list
of all material retirement, pension, supplemental pension, savings, retirement savings, retiring allowance, bonus, profit sharing, stock purchase, stock option, phantom stock, share appreciation rights, deferred compensation, change of control, life insurance, medical, hospital, dental care, vision care, drug, sick leave, short term or long term disability, salary continuation, unemployment benefits, vacation, incentive, compensation or other employee benefit plan that is maintained or otherwise contributed to, or required to be contributed to, by or on behalf of the Company for the benefit of current or former Employees of the Company other than government sponsored pension, employment insurance, workers compensation and health insurance plans (collectively, the "Employee Plans").

Each Employee Plan has been maintained in compliance in all material respects
with its terms and with the requirements of all applicable Laws except where the failure to do so would not reasonably be expected to have a Material Adverse Effect. Each Employee Plan that is required to be registered under applicable Laws is registered with the appropriate Governmental Authorities.

There are no actions, suits, investigations, arbitration or other proceedings
pending with respect to the Employee Plans which would reasonably be expected to have a Material Adverse Effect.

There is no pending termination or winding-up procedure in respect of any of
the Employee Plans.

the text of all Employee Plans (where no text exists, a summary has been

all materials relating to the Employee Plans distributed to new or existing
members of such plan in the last year;

the most recent actuarial valuation of each Employee Plan for which such valuation is required by applicable Law;

the most recent annual information returns filed with Governmental
Authorities in respect of each Employee Plan for which such filing is required by applicable Law.

No promises or commitments have been made by the Company to amend in any
material respect any Employee Plan or to establish any material new benefit plan, except as required by applicable Laws or as set out in Section 3.33 of the Disclosure Schedule.

Except for the Employee Plans set out in Section 3.33 of the Disclosure
Schedule, no Employee Plan has a deficit or solvency deficiency.

Contract with an unexpired term of three (3) months or more, except in the Ordinary Course;

continuing Contract or commitment for the purchase of materials, supplies, equipment or services, except in the Ordinary Course;

Contract, agreement or other instrument which has had a Material Adverse Effect.

none of the Reinsurance Treaties is with a reinsurer that has become insolvent or bankrupt or that has entered into any composition agreement with its creditors, or any statutory or judicial proceeding of compromise with its

except as disclosed in Section 3.41 of the Disclosure Schedule, all other
reinsurance arrangements for the Company's insurance risks (other than pursuant to reinsurance treaties the respective policy periods of which have

for purposes other than those for which such Transaction Personal Information
was collected prior to the Closing; or

which does not relate directly to the carrying on of the Business or to the
carrying out of the purposes for which the transactions contemplated by this Agreement were implemented.

During the Closing Period, the Seller shall cause the Company to conduct the
Business in the Ordinary Course.

Except as otherwise contemplated in this Agreement, without limiting the
generality of Section 5.5(a), during the Closing Period the Company shall not, without the prior written approval of the Purchaser (which approval shall not be withheld except for such conduct which could reasonably be expected to result in a Material Adverse Effect):

discharge any secured or unsecured obligation or liability (whether
accrued, absolute, contingent or otherwise) which individually or in the aggregate exceeds $250,000 except in the Ordinary Course;

increase its indebtedness for borrowed money or make any loan or advance or assume, guarantee or otherwise become liable with respect to

except for payments previously approved by the Seller and accrued for in
the Final 2009 Audited Financial Statements, make any bonus or profit sharing distribution or similar payment of any kind except as may be required by the terms of a Material Contract;

remove the auditor, actuary or, except as contemplated herein, any director or terminate any officer or other senior Employee of the Company, except upon prior notice to the Purchaser;

grant any increase in the rate of wages, salaries, bonuses or other remuneration of any Employees, except in the Ordinary Course pursuant to a periodic review or as may be required by the terms of a Material Contract;

increase the benefits to which Employees are entitled under any benefit plan or create any new Employee Plan;

cancel or waive any material claims or rights, except in the Ordinary
Course;

except for Material Contracts entered into in the Ordinary Course
(including, without limitation, broker contracts and facultative reinsurance contracts), enter into any Material Contract that cannot be terminated without penalty on thirty (30) days' notice or less;

amend or change its constating documents or by-laws or issue any Common Shares, options, warrants or other securities;

declare or pay any dividends (other than the Actual Dividend) or make any other distribution to shareholders or purchase or redeem any securities of the Company or pay any management or like fee to the Seller or to an Affiliate of the Seller;

do any other thing which may have a Material Adverse Effect on the transactions contemplated in this Agreement or any of the Acquisition Agreements; or

authorize, agree, or otherwise commit, whether or not in writing, to do any of the foregoing.

notify and, where applicable, obtain Purchaser's prior approval on any
event or circumstance which results or could reasonably be expected to result in a Material Adverse Effect in the Business or in the operation of its properties and of any materially adverse Governmental Authority complaints, investigations or hearings (or communications indicating that the same may be contemplated), adjudicatory proceedings, or submissions involving any material assets or properties of the Company, and keep the Purchaser fully informed of such events and permit its representatives prompt access to all materials prepared in connection therewith. The Purchaser shall have the right to review and comment on any such matters that arise;

co-operate fully with the Purchaser in connection with any meetings and discussions to be held prior to Closing with regulators, brokers, Reinsurers and ratings agencies and in connection therewith to provide such readily available information and analyses respecting the Company as may be reasonably requested;

use Commercially Reasonable Efforts to preserve intact the current business organization of the Company, keep available the services of the present employees and agents of the Company, and maintain good relations with, and the goodwill of, the brokers, other representatives, Reinsurers, suppliers, customers, landlords, creditors and other Persons having business relationships with the Company; and

use Commercially Reasonable Efforts to (i) ensure that all reinsurance
arrangements of the Company in force at the date hereof in respect of the Business remain in fierce on the same terms for the full term of such arrangement; and (ii) in consultation with the Purchaser, pursue negotiation to renew expiring reinsurance arrangements in the Ordinary Course.

make, or cause to be made, all such filings and submissions under all
Laws applicable to it (including the Insurance Companies Act (Canada), the Competition Act and any other applicable antitrust Laws), as may be required for it to complete the purchase and sale of the Purchased Shares in accordance with the terms of this Agreement and the other transactions contemplated by this Agreement and each of the Acquisition Agreements; and

use Commercially Reasonable Efforts to obtain, or cause to be obtained,
all Authorizations necessary or advisable in order to complete the transfer of the Purchased Shares and the other transactions contemplated by this Agreement and each of the Acquisition Agreements.

co-operate with one another in connection with any filing or other
submission aimed at resolving any investigation or other inquiry concerning the transaction contemplated in this Agreement initiated by the responsible Minister under the Investment Canada Act, the Commissioner of Competition, or any other antitrust Governmental Authority, including providing each other with copies of any notifications, filings, applications and/or other submissions in draft form for the other Party to confirm that information contained within is consistent and accurate;

use Commercially Reasonable Efforts to cause any applicable waiting periods under the Competition Act, or any other applicable antitrust Law to terminate or expire at the earliest possible date and to obtain any necessary approvals of the transaction contemplated in this Agreement from the Commissioner of Competition, or any other antitrust Governmental Authority; and

co-operate with each other in obtaining the TSX Approval and in connection with all matters relating thereto, including using Commercially Reasonable Efforts to provide the Purchaser with all information that is reasonably necessary in connection with obtaining shareholder approval.

For a period of three (3) years following the Closing Date, the Seller shall not,
directly or indirectly, and shall ensure that its Affiliates do not, either alone or in concert with any Person, underwrite any standard personal lines property and casualty automobile and home insurance through any insurance broker, anywhere in Canada.

For a period of three (3) years following the Closing Date, the Seller 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 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, to alter his or her relationships with the Company, or to become employed, engaged or retained by any Person other than the Company.

Prior to Closing, the Seller shall cause the Company to use Commercially
Reasonable Efforts to negotiate reinsurance surety agreements between the Company and Lincoln General Insurance Company.

Following Closing, the Purchaser shall cause the Company to use Commercially
Reasonable Efforts to negotiate reinsurance surety agreements between the Company and Lincoln General Insurance Company.

Consents. All Required Consents and Authorizations (including those specifically identified in Sections 7.1(f) and 7.1(g) below) shall have been obtained on terms acceptable to the Purchaser, acting reasonably.

Material Adverse Effect. Since the date of this Agreement, there shall not have occurred a Material Adverse Effect.

No Legal Action. No action or proceeding shall be pending or threatened by any Person (other than the Seller, the Purchaser, the Company or any of their respective Affiliates) in any jurisdiction, to enjoin, restrict or prohibit:

MCT' of 220%. If the MCT of the Company as at December 31, 2009 as determined based upon the Final 2009 Audited Financial Statements is less than 220%, then the Seller shall have injected capital into the Company such that the MCT on December 31, 2009 would have been equal to at least 220% following such injection.

the resolutions of the board of directors of each of the Seller and
the Company approving the entering into and completion of the transaction contemplated by this Agreement and the Acquisition Agreements; and

a list of the officers and directors authorized to sign agreements
together with their specimen signatures,

Truth of Representations and Warranties. The representations and warranties of the Purchaser contained in this Agreement and in any Acquisition Agreement to which it is a party shall be true and correct in all material respects as of the Closing Date with the same force and effect as if such representations and warranties had been made on and as of such date and the Purchaser shall have executed and delivered a certificate of a senior officer to that effect.

Performance of Covenants. The Purchaser shall have fulfilled, performed or complied with in all material respects all material covenants contained in this Agreement and in any Acquisition Agreement to which it is a party to be fulfilled, performed or complied with by it at or prior to Closing and the Purchaser shall have executed and delivered a certificate of a senior officer to that effect.

Consents. All Required Consents and Authorizations (including those specifically identified in Sections 7.2(e) and 7.2(f)) shall have been obtained on terms acceptable to the Seller, acting reasonably.

No Legal Action. No action or proceeding shall be pending or threatened by any Person (other than the Purchaser, the Seller, the Company 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.

the resolutions of the shareholders and the board of directors of the
Purchaser approving the entering into and completion of the transactions contemplated by this Agreement and the Acquisition Agreements; and

a list of its officers and directors authorized to sign agreements
together with their specimen signatures,

by either the Purchaser or the Seller, if the Closing has not occurred by April 30, 2010 (other than due to the failure of the Party purporting to exercise this termination right to comply with Section 5.6 of this Agreement), which date may be extended with the written consent of both Parties; or

by the Seller, if (i) the Purchaser has not delivered to the Seller, on or before February 9, 2010, sufficient evidence that the Purchaser has received into escrow sufficient funds to complete the transactions contemplated herein or (ii) all conditions specified in the TSX Approval have not been satisfied on or before March 26, 2010, provided that in relation to circumstances contemplated in this subsection 8.1(e), the Seller's only termination right arises under this section 8.1(e) and the Seller and its Indemnified Parties right to indemnity, if applicable, is limited as set out in section 9.7(g).

any incorrectness or breach of any representation or warranty made by the Seller
in this Agreement, unless the Purchaser had actual knowledge of the incorrectness or breach prior to Closing;

any breach or non-fulfillment by the Seller of any covenant, condition or
obligation of the Seller contained in this Agreement;

any claim made by a third party against the Company that arises from action
taken by the Seller or any Affiliate of the Seller, other than the Company; or

any claim by any Person for brokerage or finder's fees, commissions or similar
payments based upon any agreement or understanding made or alleged to have been made by any such Person with the Seller or the Company (or any Person acting on their behalf) in connection with any of the transactions contemplated by this Agreement.

any incorrectness or breach of any representation or warranty made by the
Purchaser in this Agreement, unless the Seller had actual knowledge of the incorrectness or breach prior to Closing;

any breach or non-fulfillment by the Purchaser of any covenant, condition or
obligation of the Purchaser contained in this Agreement; or

any claim by any Person for brokerage or finder's fees, commissions or similar
payments based upon any agreement or understanding made or alleged to have been made by such Person with the Purchaser (or any Person acting on its behalf) in connection with any of the transactions contemplated in this Agreement.

After the Closing Date, as between the Parties, the Seller 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 the Seller may be liable or against which the Seller may be required to indemnify the Purchaser (a "Tax Proceeding"). The Purchaser shall notify the Seller in writing promptly upon receiving written notice of any such Tax Proceeding. If the Seller fails, within a reasonable time, to exercise control over the Tax Proceeding, the Purchaser may, in its sole discretion, assume control of the Tax Proceeding at its expense.

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 Section 9.3(a), to assume control of the defence, compromise or settlement of the Third Party Claim.

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

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).

If the Indemnifying Party fails to give the Indemnified Person the notice
provided in Section 9.3(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.

If the Indemnified Person assumes control pursuant to Section 9.3(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.

the Seller shall have no liability for indemnification under Article IX of this
Agreement or in any Transaction Documents and no Damages may be recovered from the Seller unless the claims of the Purchaser, the Company or any Purchaser Indemnified Person exceed in the aggregate, $250,000 in which case the liability of the Seller will be limited to the amount by which such claims exceed $250,000;

the Purchaser shall have no liability for indemnification under Article IX of this
Agreement or in any Transaction Documents and no Damages may be recovered from the Purchaser unless the claims of the Seller or any Seller Indemnified Person exceed, in the aggregate, $250,000 in which case the liability of the Purchaser will be limited to the amount by which such claims exceed $250,000. Notwithstanding the foregoing, in the event the Seller terminates this Agreement in accordance with Section 8.1(e), the Seller shall be entitled to claim for all amounts and shall not be limited to the amount by which such claims exceed $250,000;

except as provided in Section 9.7(d), the liability of the Seller in respect of
claims of the Purchaser, the Company or any Purchaser Indemnified Person for Damages under this Agreement and the Transaction Documents shall not exceed, in the aggregate (and when combined with Section 9.7(d)), thirty-five percent (35%) of the Purchase Price;

any breach of any representation, warranty, obligation, condition or covenant of
the Seller in this Agreement or any Transaction Document, which breach relates to facts or matters arising during the Closing Period and which breach was committed by the Seller or the Company as a result of written instructions received from the Purchaser (or any of its representatives); or

any matter that was the subject of an adjustment as set out in Section 9.9 of the
Disclosure Schedule and that would have otherwise given a Party a right to indemnification hereunder.

The Seller makes no representation or warranty with respect to the
Forward-Looking Information or any other information provided in any "data room" or pursuant to any management presentation or otherwise, except as expressly provided in this Agreement and the Transaction Documents and the Purchaser acknowledges that it is not relying on such information in any manner whatsoever.

The Purchaser has conducted, to its satisfaction, an independent investigation of
the Business and the operations, assets, liabilities and financial condition of the Company and, in making its determination to proceed with the transactions contemplated by this Agreement, has relied solely on the results of its own independent investigation and the representations and warranties of the Seller set out in Article III.