Document:

EX-4.13

 

Exhibit 4.13

November 19, 2004

ODYSSEY RE HOLDINGS CORP.

300 First Stamford Place

Stamford, Connecticut, 06902

				
	 	Re:	 	Registration Rights Agreement

Ladies and Gentlemen:

     Pursuant to the Master Note Purchase Agreement (the “Note Purchase Agreement”), dated as of
November 19, 2004 among Fairfax Financial (US) LLC (“Financial”), Fairfax Financial Holdings
Limited, as guarantor, NMS Services (Cayman) Inc. (“NMS”) and Banc of America Securities LLC
(“BAS”), as agent, relating to the issuance and sale of Financial’s promissory notes set forth
therein (the “Notes”), NMS has agreed to purchase from Financial, from time to time, certain Notes
on the terms set forth in the Note Purchase Agreement. The Notes will be exchangeable into shares
of common stock, par value $0.01 per share (the “Common Stock”), of Odyssey Re Holdings Corp., a
Delaware corporation (the “Company”). The Notes will be exchangeable on the terms, and subject to
the conditions, set forth in the Note Purchase Agreement. To induce NMS to purchase the Notes, and
for $10 and other good and valuable consideration the sufficiency of which is hereby acknowledged
by the parties hereto, the Company has agreed to provide the registration rights set forth in this
Agreement.

     The Company hereby agrees with NMS, individually and as representative of the Holders (as
defined below), and BAS as follows:

     SECTION 1. Definitions.

     Capitalized terms used in this Agreement and not otherwise defined shall have the meanings set
forth in the Note Purchase Agreement. As used in this Agreement, the following terms shall have
the following meanings:

     “Affiliate Holder” means NMS, any Holder that is an affiliate of NMS or any Holder that is any
entity sponsored or organized by, or on behalf of or for the benefit of, NMS or an affiliate of
NMS, as specified by such Holder in a Notice of Sale.

 

 

     “Amendment Effectiveness Deadline Date” has the meaning set forth in Section 4(b)(i)(A).

     “BAS” has the meaning set forth in the introductory paragraph hereto.

     “BAS Indemnified Party” means each of BAS, NMS and any other affiliate of NMS designated by
NMS to purchase, sell, receive or deliver any shares of Common Stock to or from Financial under the
terms of the Notes or the Note Purchase Agreement.

     “Business Day” means a day that, in the City of New York, is not a day on which banking
institutions are authorized by law or regulation to close.

     “Commission” means the Securities and Exchange Commission.

     “Common Stock” has the meaning set forth in the introductory paragraph hereto.

     “Company” has the meaning set forth in the introductory paragraph hereto.

     “Effectiveness Period” has the meaning specified in 2(b).

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Exchange Date” has the meaning set forth in the Note Purchase Agreement.

     “Exchange Shares” means the shares of Common Stock of the Company delivered to NMS or any
affiliate thereof upon exchange of the Notes pursuant to the terms of the Notes and the Note
Purchase Agreement.

     “Holder” means any of NMS or any transferee of any Exchange Shares from NMS or any other
Holder.

     “Material Adverse Change” means any material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the condition, financial or
otherwise, or in the earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its subsidiaries, considered as
one entity.

     “NASD” means the National Association of Securities Dealers, Inc.

     “NMS” has the meaning set forth in the introductory paragraph hereto.

     “Non-Affiliate Holder” means any Holder that is not an Affiliate Holder.

 

 

     “Note Purchase Agreement” has the meaning set forth in the introductory paragraph hereto.

     “Notes” has the meaning set forth in the introductory paragraph hereto.

     “Notice of Sale” has the meaning specified in Section 4(b)(i).

     “Prospectus” means the prospectus relating to the Exchange Shares included in the Registration
Statement, as amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by reference into such
prospectus.

     “Registration Statement” means a registration statement on Form S-3 filed with the Commission
pursuant to Rule 415 under the Securities Act, which such registration statement shall provide for
the public resales of all Exchange Shares held by Holders as provided for herein.

     “Relevant Exchange” means the principal United States national securities exchange or
automated quotation system on which the Common Stock is listed or quoted.

     “Sale Date” has the meaning specified in Section 3(c).

     “Sale Value” has the meaning specified in Section 4(b)(ii)(C).

     “SEC Filings” means each Registration Statement, each Prospectus and each document of the
Company referred to in Section 4(a)(ix)(A) and (B).

     “Securities Act” means the Securities Act of 1933, as amended.

     “Suspension Period” has the meaning specified in Section 4(a)(iii).

     “Threshold Amount” has the meaning specified in Section 4(b)(ii)(C).

     SECTION 2. Shelf Registration.

     (a) Registration Statement. The Company shall, as promptly as reasonably practicable following
the date hereof, file with the Commission under the Securities Act the Registration Statement, or
file an amendment to an existing registration statement to provide for public resales of all
Exchange Shares held by Holders as provided for herein (in which case such amended registration
statement shall be the “Registration Statement” hereunder), in either case in a form that has been
reviewed and approved by NMS and BAS and use its reasonable best efforts to comply with the
registration agreements and procedures set forth in Section 4 hereof. The Company shall use its
reasonable best efforts to

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cause the Registration Statement thereof to be declared effective by the Commission as
promptly as practicable.

     (b) Continuous Effectiveness. Subject to any notice delivered by the Company, pursuant to
Section 4(a)(iii), of the existence of any fact or event of the kind described in Section
4(a)(ii)(D), the Company shall use its reasonable best efforts to keep the Registration Statement
continuously effective, supplemented and amended as required by the provisions of Section 4 hereof
to the extent necessary to ensure that (1) it is available for public resales by the Holders of
Exchange Shares and (2) it conforms with the requirements of this Agreement and the Securities Act
and the rules and regulations of the Commission promulgated thereunder as announced from time to
time, for a period (the “Effectiveness Period”) beginning on the date of effectiveness of the
Registration Statement and ending on the earliest to occur of:

     (i) two years following the date the Exchange Shares are delivered upon exchange of
the Notes;

     (ii) the date when all Holders are able to sell all Exchange Shares immediately
pursuant to Rule 144(k) under the Securities Act (or any other similar provision then in
force); or

     (iii) the date when all Holders have disposed of the Exchange Shares under the
Registration Statement.

     SECTION 3. Representations, Warranties and Agreements.

     (a) Basic Representations. The Company represents and warrants to and agrees with NMS, BAS
and each Holder as follows:

     (i) The Company is duly organized and existing and in good standing under the laws of
the jurisdiction of its incorporation.

     (ii) The Company has all corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby.

     (iii) This Agreement has been duly authorized, executed and delivered by, and is a
valid and binding agreement of, the Company, enforceable in accordance with its terms,
except as rights to indemnification or contribution hereunder may be limited by applicable
law and except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.

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     (b) Equity Representations. The Company makes the representations and warranties set forth in
Annex A hereto to NMS, BAS and each Holder.

     (c) Bring-Down of Representations; Registration Representations. The Company shall make the
representations and warranties set forth in Section 3(a) and Section 3(b) as of the date of this
Agreement and as of the Exchange Date. In addition, the Company shall make the representations and
warranties set forth in Section 3(a) and Section 3(b) and the additional representations and
warranties set forth in Annex B hereto as of the date of the effectiveness of any Registration
Statement (if such Registration Statement is declared effective after the date hereof), and as of
each day (each such day, a “Sale Date) from and including the date specified in a Notice of Sale as
the intended date for sales to commence until and including the date on which the Exchange Shares
to be sold pursuant to such Notice of Sale have been sold by such Holder (which in no event shall
be later than sixty days from the first Sale Date specified in such Notice of Sale).

     SECTION 4. Registration Agreements and Procedures. (a) The Company covenants and agrees with
NMS, BAS and each Holder as follows:

     (i) During the Effectiveness Period, prior to amending or supplementing the
Registration Statement or the related Prospectus, the Company shall furnish to NMS and BAS
for review a copy of each such proposed amendment or supplement, and the Company shall not
file any such proposed amendment or supplement without the consent of NMS and BAS, which
consent shall not be unreasonably withheld. For the purpose of this Section 4(a)(i), if,
after two Business Days following the receipt by NMS and BAS of each such proposed
amendment or supplement, neither NMS nor BAS shall have responded to the Company in
writing (which, for the avoidance of doubt, may include electronic mail or other
electronic transmission), then NMS and BAS shall be deemed to have consented to such
proposed amendment or supplement.

     (ii) During the Effectiveness Period for any Registration Statement, the Company
shall promptly advise NMS and BAS in writing (A) of the receipt of any comments of, or
requests for additional or supplemental information from, the Commission regarding such
Registration Statement, (B) of the time and date of any filing of any post-effective
amendment to such Registration Statement or any amendment or supplement to any related
preliminary prospectus or the related Prospectus, (C) of the time and date that any
post-effective amendment to such Registration Statement becomes effective, (D) of the
occurrence of any event or the existence of any condition as a result of which it is
necessary to amend or supplement the related Prospectus so that such Prospectus does not
include an untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a

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purchaser of Common Stock, not misleading, and (E) of the issuance by the Commission
of any stop order suspending the effectiveness of such Registration Statement or any
post-effective amendment thereto or of any order preventing or suspending the use of any
related preliminary prospectus or the related Prospectus, or of any proceedings to remove,
suspend or terminate from listing or quotation the Common Stock from the Relevant
Exchange, or of the threatening or initiation of any proceedings for any of such purposes.
If the Commission shall enter any such stop order at any time, the Company shall use its
reasonable best efforts to obtain the lifting of such order at the earliest possible
moment. Additionally, the Company agrees that it shall comply with the provisions of
Rules 424(b), 430A and 434, as applicable, under the Securities Act and will use its
reasonable best efforts to confirm that any filings made by the Company under such Rule
424(b) were received in a timely manner by the Commission.

     (iii) If, during the Effectiveness Period for any Registration Statement, any event
shall occur or condition exist as a result of which it is necessary to amend or supplement
the related Prospectus so that such Prospectus does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered to a purchaser
of Common Stock, not misleading, or if in the reasonable opinion of NMS or BAS or counsel
for NMS or BAS it is otherwise necessary to amend or supplement such Prospectus to comply
with law, the Company agrees to promptly prepare, (subject to Section 4(a)(i)) file with
the Commission and furnish at its own expense to NMS and BAS, amendments or supplements to
such Prospectus so that the Prospectus as so amended or supplemented will not include an
untrue statement of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser of Common Stock, not misleading. Notwithstanding the foregoing,
the Company may suspend the effectiveness of the Registration Statement by written notice
to the Holders for a period not to exceed an aggregate of forty-five days in any 90-day
period (each such period, a “Suspension Period”) if:

     (x) an event occurs and is continuing as a result of which the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein would, in the Company’s judgment, contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading; and

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     (y) the Company determines in good faith that the disclosure of such event
at such time would be seriously detrimental to the Company and its subsidiaries;

provided that, in the event that such disclosure relates to a previously undisclosed,
proposed or pending material business transaction, the disclosure of which the Company
determines in good faith would be reasonably likely to impede the Company’s ability to
consummate such transaction, the Company may extend a Suspension Period from forty-five
days to sixty days; provided that Suspension Periods shall not exceed an aggregate of 110
days in any 360-day period. The Company shall not be required to specify in any written
notice to the Holders the nature of the event giving rise to any Suspension Period.

     (iv) The Company agrees to furnish to NMS and BAS, without charge, during the
Effectiveness Period for any Registration Statement, as many copies of the related
Prospectus and any amendments and supplements thereto as NMS and BAS may reasonably
request.

     (v) The Company shall cooperate with NMS and BAS and counsel for NMS and BAS to
qualify or register the Common Stock registered pursuant to any Registration Statement for
sale under (or obtain exemptions from the application of) the state securities or blue sky
laws of those jurisdictions designated by NMS or BAS, shall comply with such laws and
shall continue such qualifications, registrations and exemptions in effect so long as
required for the distribution of such Common Stock. The Company shall not be required (A)
to qualify generally to do business, subject itself to general taxation or consent to
general service of process in any jurisdiction where it would not otherwise be required to
do so but for this sub-paragraph (v) or (B) to provide any material undertaking or make
any changes to its by-laws or certificate of incorporation that the board of directors of
the Company reasonably determines to be contrary to the best interests of the Company.
The Company will advise NMS and BAS promptly of the suspension of the qualification or
registration of (or any such exemption relating to) such Common Stock for offering, sale
or trading in any jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its reasonable best efforts to obtain the
withdrawal thereof at the earliest possible moment.

     (vi) The Company shall continue to engage and maintain, at its expense, one or more
registrars and transfer agents for the Common Stock.

     (vii) As soon as practicable following the effectiveness of any Registration
Statement, the Company will make generally available to its

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security holders and to NMS and BAS an earnings statement (which need not be audited)
that satisfies the provisions of Section 11(a) of the Securities Act.

     (viii) The Company shall file, on a timely basis, with the Commission and the
Relevant Exchange all reports and documents required to be filed under the Exchange Act or
the rules of the Relevant Exchange.

     (ix) During the period of three years hereafter the Company shall furnish to NMS and
BAS, to the extent not available on EDGAR, (A) as soon as practicable after the end of
each fiscal year, copies of the Annual Report of the Company containing the balance sheet
of the Company as of the close of such fiscal year and statements of income, stockholders’
equity and cash flows for the year then ended and the opinion thereon of the Company’s
independent public or certified public accountants; (B) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Current Report on Form 8-K or other report filed by the Company with
the Commission or any securities exchange or automated quotation system; and (C) as soon
as available, copies of any report or communication of the Company mailed generally to
holders of its capital stock.

       (b) Registration Procedures.

     (i) Each Holder wishing to sell Exchange Shares pursuant to a Registration Statement
and related Prospectus agrees to deliver a notice to the Company at least five Business
Days prior to any intended distribution of Exchange Shares setting forth in reasonable
detail the name of such Holder and whether such Holder is an Affiliate Holder or a
Non-Affiliate Holder, the number of Exchange Shares proposed to be sold, the first Sale
Date for such Exchange Shares, the plan of distribution of such Exchange Shares and such
other information as the Company may reasonably request (the “Notice of Sale”). During
the Effectiveness Period, the Company shall, as promptly as practicable after the date a
Notice of Sale is delivered by any Holder, and in any event upon the later of (x) ten
Business Days, in the case of an Affiliate Holder, or thirty Business Days, in the case of
a Non-Affiliate Holder, after such date (but no earlier than ten Business Days, in the
case of an Affiliate Holder, or thirty Business Days, in the case of a Non-Affiliate
Holder, after effectiveness of the Registration Statement) or (y) ten Business Days, in
the case of an Affiliate Holder, or thirty Business Days, in the case of a Non-Affiliate
Holder, after the expiration of any Suspension Period when a Notice of Sale is delivered
during, or within ten Business Days (in the case of an

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Affiliate Holder) or thirty Business Days (in the case of a Non-Affiliate Holder) of,
such Suspension Period:

     (A) if required by applicable law, file with the SEC a post-effective
amendment to the Registration Statement or prepare and, if required by
applicable law, file a supplement to the related Prospectus or a supplement or
amendment to any document incorporated therein by reference or file any other
required document so that the Holder delivering such Notice of Sale is named as
a selling securityholder in the Registration Statement and the related
Prospectus in such a manner as to permit such Holder or BAS to deliver such
Prospectus to purchasers of the Exchange Shares in accordance with applicable
law and, if the Company shall file a post-effective amendment to the
Registration Statement, use its reasonable best efforts to cause such
post-effective amendment to be declared effective under the Securities Act as
promptly as is practicable, but in any event by the date (the “Amendment
Effectiveness Deadline Date”) that is sixty days after the date such
post-effective amendment is required by this clause to be filed;

     (B) provide such Holder, NMS and BAS copies of any documents filed pursuant
to clause (A) above; and

     (C) notify such Holder, NMS and BAS as promptly as practicable after the
effectiveness under the Securities Act of any post-effective amendment filed
pursuant to clause (A) above;

provided that if such Notice of Sale is delivered during a Suspension Period, the Company
shall so inform the Holder delivering such Notice of Sale and shall take the actions set
forth in clauses (A), (B) and (C) above upon expiration of the Suspension Period in
accordance with Section 4(a). Notwithstanding anything contained herein to the contrary,
(x) the Company shall be under no obligation to name any Holder that has not delivered a
Notice of Sale as a selling securityholder in any Registration Statement or related
Prospectus and (y) the Amendment Effectiveness Deadline Date shall be extended by up to
ten Business Days from the expiration of a Suspension Period if such Suspension Period
shall be in effect on the Amendment Effectiveness Deadline Date.

     (ii) In connection with the resale of Exchange Shares by a Holder pursuant to the
Registration Statement and any related Prospectus, the Company shall:

     (A) cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be

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filed pursuant to Rule 424 under the Securities Act, and to comply fully
with the applicable provisions of Rule 424 and Rule 430A under the Securities
Act;

     (B) comply with the provisions of the Securities Act with respect to the
disposition of all Exchange Shares covered by the Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the Holders set forth in the Registration Statement or
supplement to the Prospectus;

     (C) in the case of a resale of Exchange Shares by an Affiliate Holder, upon
written request, cause to be delivered (but no more often than once every sixty
days and a maximum of twice during the Effectiveness Period, with the second
delivery, if any, occurring only if the product of the number of Exchange Shares
specified in the applicable Notice of Sale multiplied by the Closing Price on
the date of such Notice of Sale (the “Sale Value”) exceeds $20,000,000 (the
“Threshold Amount”)) to such Affiliate Holder and BAS by PriceWaterhouseCoopers
LLP, independent public or certified public accountants for the Company, a
letter dated as of the first Sale Date for such Exchange Shares and addressed to
such Affiliate Holder and BAS, in form and substance satisfactory to such
Affiliate Holder and BAS, containing statements and information of the type
ordinarily included in accountant’s “comfort letters” to underwriters, delivered
according to Statement of Auditing Standards No. 72 (or any successor bulletin),
with respect to the audited and unaudited financial statements and certain
financial information contained in any Registration Statement and the related
Prospectus;

     (D) in the case of a resale of Exchange Shares by an Affiliate Holder, upon
written request, cause to be delivered (but no more often than once every sixty
days and a maximum of twice during the Effectiveness Period, with the second
delivery, if any, occurring only if the applicable Sale Value exceeds the
Threshold Amount) to such Affiliate Holder and BAS the favorable opinions and
letters of counsel for the Company reasonably acceptable to such Affiliate
Holder and BAS, dated as of the first Sale Date for such Exchange Shares and
addressed to such Affiliate Holder and BAS, the forms of which are attached as
Exhibit A.

     (E) in the case of a resale of Exchange Shares by an Affiliate Holder, upon
written request, cause to be delivered (but no more often than once every sixty
days and a maximum of twice during the Effectiveness Period, with the second
delivery, if any,

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occurring only if the applicable Sale Value exceeds the Threshold Amount)
to such Holder and BAS by the Chairman of the Board, Chief Executive Officer or
President of the Company and the Chief Financial Officer or Chief Accounting
Officer of the Company, a certificate of such person dated as of the first Sale
Date for such Exchange Shares, to the effect that:

     (1) for the period from and after the date of the last amendment
or supplement to each Registration Statement and prior to such date,
there has not occurred any Material Adverse Change;

     (2) the representations and warranties of the Company set forth
in this Agreement are true and correct as of such date; and

     (3) the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
pursuant to this Agreement at or prior to such date.

     (F) upon written request, make available at reasonable times for inspection
by one or more representatives of BAS on its own behalf or on behalf of a
majority of the selling Holders, and any attorney or accountant retained by BAS
(but no more than once every sixty days and a maximum of twice during the
Effectiveness Period, with the second delivery, if any, occurring only where the
resale amount is in excess of the Threshold Amount), all financial and other
records, pertinent corporate documents and properties of the Company as shall be
reasonably necessary to enable them to conduct a reasonable investigation within
the meaning of Section 11 of the Securities Act customary in scope for
underwritten offerings of equity securities, and cause the Company’s officers,
directors, managers and employees to supply all information reasonably requested
by any such representative or representatives of the selling Holder or BAS,
attorney or accountant in connection therewith (including without limitation the
opportunity to speak with, and ask questions of, senior management, counsel and
accountants to the Company); provided, however, that the Company shall have no
obligation to deliver information to any representative pursuant to this Section
4(b)(ii)(F) unless such representative shall have executed and delivered a
confidentiality agreement in a form reasonably acceptable to the Company
relating to such information stipulating that such information shall be used
solely for the purpose of exercising rights under this Agreement.

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     (G) if requested by any selling Holder (or BAS, if such selling Holder is
an Affiliate Holder) promptly incorporate in the Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if necessary,
such information regarding such Holder as such selling Holder or BAS may
reasonably request to have included therein, including, without limitation,
information relating to the plan of distribution of the Exchange Shares;

     (H) cooperate with the selling Holder (and BAS, if such Selling Holder is
an Affiliate Holder) to facilitate the timely preparation and delivery of
certificates representing Exchange Shares to be sold and not bearing any
restrictive legends (unless required by applicable securities laws); and enable
such Exchange Shares to be in such denominations and registered in such names as
the selling Holder (or BAS, if such Selling Holder is an Affiliate Holder) may
request at least two Business Days before any Sale Date for such Exchange
Shares; and

     (I) use its reasonable best efforts to cause the Exchange Shares covered by
the Registration Statement to be registered with or approved by such other U.S.
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof to consummate the disposition of such Exchange Shares.

     (c) Expenses. The Company agrees to pay all costs, fees and expenses incurred by the Company
and by NMS, BAS or any other affiliate of NMS in connection with the transactions contemplated
hereby, including without limitation (i) all expenses incident to the issuance and delivery of
Common Stock (including all printing and engraving costs), (ii) all fees and expenses of the
registrar and transfer agent of the Common Stock, (iii) all necessary issue, transfer and other
stamp taxes in connection with the issuance and delivery of the Exchange Shares, (iv) all fees and
expenses of the Company’s counsel, independent public or certified public accountants and other
advisors, (v) all costs and expenses incurred in connection with the preparation, printing, filing,
shipping and distribution of any Registration Statement (including financial statements, exhibits,
schedules, consents and certificates of experts), each related preliminary prospectus and the
related Prospectus, and all amendments and supplements thereto, (vi) all filing fees and other
expenses incurred by the Company or NMS, BAS or any other affiliate of NMS in connection with
qualifying or registering (or obtaining exemptions from the qualification or registration of) any
Exchange Shares for offer and sale under the state securities or blue sky laws, (vii) the filing
fees incident to, and the reasonable fees and expenses of counsel for NMS, BAS and their affiliates
in connection with, the review and approval by the NASD of any underwriters’ participation in the

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offering and distribution of any Exchange Shares, (viii) the fees and expenses associated with
listing or including any shares of Common Stock delivered upon exchange of the Notes on the
Relevant Exchange, (ix) the fees and expenses of counsel for NMS, BAS and their affiliates incurred
in connection with the transactions contemplated by this Agreement and (x) all other fees, costs
and expenses referred to in Item 13 or Item 14, as the case may be, of Part II of any Registration
Statement.

     (d) Suspension of Use of Prospectus. NMS agrees, and each other Holder agrees by acquisition
of an Exchange Share, that upon receipt of any notice (a “Suspension Notice”) from the Company of
the existence of any fact of the kind described in Section 4(a)(ii)(D) hereof, such Holder will
forthwith discontinue disposition of Exchange Shares pursuant to the Registration Statement until:

     (i) such Holder has received copies of the supplemented or amended Prospectus
contemplated by Section 4(a)(iii) hereof; or

     (ii) such Holder is advised in writing by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus.

If so directed by the Company, each Holder will deliver to the Company (at the Company’s expense)
all copies, other than permanent file copies, then in such Holder’s possession of the Prospectus
covering such Exchange Shares that was current at the time of receipt of such Suspension Notice.

     (e) Accuracy of Information of Holder. NMS agrees, and each other Holder agrees by
acquisition of an Exchange Share, that no Holder shall be entitled to sell any Exchange Shares
pursuant to the Registration Statement, or to receive a Prospectus relating thereto, unless such
Holder has furnished the Company with a Notice of Sale as required pursuant to Section 4(b)(i)
hereof (including the information required to be included in such Notice of Sale) and the
information set forth in the next sentence. Each Holder agrees promptly to furnish to the Company
all information required to be disclosed in order to make the information previously furnished to
the Company by such Holder not misleading and any other information regarding such Holder and the
distribution of such Exchange Shares as the Company may from time to time reasonably request in
writing. Any sale of any Exchange Shares by any Holder shall constitute a representation and
warranty by such Holder that the information relating to such Holder and its plan of distribution
is as set forth in the Prospectus delivered by such Holder in connection with such disposition,
that such Prospectus does not as of the time of such sale contain any untrue statement of a
material fact relating to or provided by such Holder or its plan of distribution and that such
Prospectus does not as of the time of such sale omit to state any material fact relating to or
provided by such Holder or its plan of

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distribution necessary to make the statements in such Prospectus, in the light of the
circumstances under which they were made, not misleading.

     SECTION 5. Indemnification.

     (a) Indemnification of BAS Indemnified Parties. The Company agrees to indemnify and hold
harmless each of the BAS Indemnified Parties, its directors, officers and employees, and each
person, if any, who controls any BAS Indemnified Party within the meaning of the Securities Act,
the Exchange Act or Canadian securities legislation, as applicable, against any loss, claim,
damage, liability or expense, as incurred, to which such BAS Indemnified Party or such controlling
person may become subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, under the securities legislation of the provinces of Canada or other
provincial or federal statutory law or regulation of Canada or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with the written consent
of the Company), insofar as such loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based (i) upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or any amendment
thereto, including any information deemed to be a part thereof pursuant to Rule 430A or Rule 434
under the Securities Act, or the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not misleading; or (ii) upon any
untrue statement or alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and to reimburse each BAS
Indemnified Party and each such controlling person for any and all expenses (including the
reasonable fees and disbursements of counsel chosen by such BAS Indemnified Party) as such expenses
are reasonably incurred by such BAS Indemnified Party or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any
loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the Company by the Holders
expressly for use in the Registration Statement, any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto); and provided, further, that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit of any BAS Indemnified
Party from whom the person asserting any loss, claim, damage, liability or expense purchased Common
Stock, or any person controlling such BAS Indemnified Party, if copies of the Prospectus were
timely delivered to such BAS Indemnified Party pursuant to this Agreement and a copy of the
Prospectus

14

 

(as then amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such BAS Indemnified Party to such
person at or prior to the written confirmation of the sale of the Common Stock to such person, and
if such Prospectus (as so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. The indemnity agreement set forth in this Section shall
be in addition to any liabilities that the Company may otherwise have.

     (b) Indemnification of the Company, its Directors and Officers. NMS and BAS agree to
indemnify and hold harmless the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer or controlling person may become
subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of NMS and BAS), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or
is based upon any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or arises out of or is based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the Registration Statement,
any preliminary prospectus, or the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company by the Holders expressly
for use therein; and to reimburse the Company, or any such director, officer or controlling person
for any legal and other expense reasonably incurred by the Company, or any such director, officer
or controlling person in connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action. The Company hereby acknowledges that
the only information that the Holders will furnish to the Company expressly for use in any
Registration Statement, any preliminary prospectus or any Prospectus (or any amendment or
supplement thereto) will be set forth in a letter to the Company from NMS. The indemnity agreement
set forth in this Section shall be in addition to any liabilities that NMS and BAS may otherwise
have.

     (c) Notifications and Other Indemnification Procedures. Promptly after receipt by an
indemnified party under this Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof, but the omission so

15

 

to notify the indemnifying party will not relieve it from any liability which it may have to
any indemnified party for contribution or otherwise than under the indemnity agreement contained in
this Section or to the extent it is not prejudiced as a proximate result of such failure. In case
any such action is brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties
similarly notified, by written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such
action include both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that a conflict may arise between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action or that there may be
legal defenses available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of such indemnifying
party’s election so to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party under this Section for
any legal or other expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance
with the proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one separate counsel (together
with local counsel), approved by the indemnifying party, representing the indemnified parties who
are parties to such action) or (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and expenses of counsel
shall be at the expense of the indemnifying party.

     (d) Settlements. The indemnifying party under this Section shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of
the nature contemplated by clause (a) and (b) above effected without its written consent if (i)
such settlement is entered into more than forty-

16

 

five days after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at least thirty days
prior to such settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the date of such
settlement. Notwithstanding the immediately preceding sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, an indemnifying party shall not be liable for any settlement of the nature
contemplated by clause (a) and (b) above effected without its consent if such indemnifying party
(iv) reimburses such indemnified party in accordance with such request to the extent it determines
in good faith such request to be reasonable and (v) provides written notice to the indemnified
party substantiating in reasonable detail the unpaid balance as unreasonable, in each case prior to
the date of such settlement. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement, compromise or consent to the entry of judgment in any
pending or threatened action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of such action, suit or
proceeding.

     SECTION 6. Contribution.

     (a) If the indemnification provided for in Section 5 is for any reason held to be unavailable
to or otherwise insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a
result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such
proportion as is appropriate to reflect the relative benefits received by the Company, on the one
hand, and the BAS Indemnified Parties, on the other hand, from the transactions contemplated by
this Agreement and the Note Purchase Agreement or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative fault of the Company,
on the one hand, and the BAS Indemnified Parties, on the other hand, in connection with the
statements or omissions or inaccuracies in the representations and warranties herein which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand, and the BAS
Indemnified Parties, on the other hand, in connection with the transactions contemplated by this
Agreement and the Note Purchase Agreement shall be deemed to be, respectively, the aggregate
principal amount of the Notes and the total discounts and placement fees received by the BAS
Indemnified Parties in connection herewith and therewith (which discounts and fees the parties
acknowledge to be zero). The relative fault of the

17

 

Company, on the one hand, and the BAS Indemnified Parties, on the other hand, shall be
determined by reference to, among other things, whether any such untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact or any such inaccurate
or alleged inaccurate representation or warranty relates to information supplied by the Company, on
the one hand, or the BAS Indemnified Parties, on the other hand, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.

     (b) The amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject to the limitations
set forth in Section 5(c), any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. The provisions set forth in
Section 5(c) with respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section 6; provided, however, that no additional notice shall
be required with respect to any action for which notice has been given under Section 5(c) for
purposes of indemnification.

     (c) The Company and the BAS Indemnified Parties agree that it would not be just and equitable
if contribution pursuant to this Section 6 were determined by pro rata allocation (even if the BAS
Indemnified Parties were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred to in this Section
6.

     (d) Notwithstanding the provisions of this Section 6, no BAS Indemnified Party shall be
required to contribute any amount in excess of the amount by which the total aggregate proceeds
received by NMS from the transactions contemplated hereby exceeds the amount of any damages that
NMS has otherwise been required to pay in connection herewith. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 6(d), each director, officer and employee of a BAS Indemnified Party and each
person, if any, who controls a BAS Indemnified Party within the meaning of the Securities Act and
the Exchange Act shall have the same rights to contribution as such BAS Indemnified Party and each
director of the Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the Company.

     SECTION 7. Governing Law.

     THIS AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
CHOICE OF LAW RULES THEREOF.

18

 

     SECTION 8. Assignment and Transfer; Successors and Assigns

     The rights and duties under this Agreement may not be assigned or transferred by either party
hereto without the prior written consent of the other party hereto; provided that if any transferee
of any Holder shall acquire Exchange Shares, in any manner, whether by operation of law or
otherwise (other than transferees that have acquired the Exchange Shares pursuant to the
Registration Statement or Rule 144 under the Securities Act) such transferee shall be a Holder
hereunder and such Exchange Shares shall be entitled to the benefits of this Agreement.

     SECTION 9. Third Party Beneficiaries.

     The Holders shall be third party beneficiaries to the agreements made hereunder by the
Company, and shall have the right to enforce such agreements directly.

     SECTION 10. Notices. All notices and other communications hereunder shall be in writing and shall
be deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to each of NMS and BAS shall be given to it at 9 West 57th Street, 40th
Floor, New York, NY 10019; Telecopy No. 212-847-5124; Attention: Glen Rae. Notices to Financial
shall be given to it at 5205 North O’Connor Blvd., Irving, TX 75039; Telecopy No. 972-831-6368;
Attention: John Cassil, President. Notices to the Company shall be given to it at 300 First
Stamford Place, Stamford, Connecticut, 06902; Telephone No. 203-977-8000; Attention: Donald L.
Smith, General Counsel.

19

 

Please confirm your agreement to the foregoing by signing and returning to us the enclosed
duplicate of this Agreement.

	 	 	 	 	 
	 	Very truly yours,

NMS SERVICES (CAYMAN) INC.

	 
	 	By:  	/s/ Eric P. Hambleton
 	 
	 	 	Name:  	Eric P. Hambleton 	 
	 	 	Title:  	Authorized Signatory 	 
	 

	 	 	 	 	 
	 	BANC OF AMERICA SECURITIES LLC

	 
	 	By:  	/s/ Robert Kevin Beauregard
 	 
	 	 	Name:  	Robert Kevin Beauregard 	 
	 	 	Title:  	Managing Director 	 
	 

	 	 	 	 	 
	Acknowledged and agreed to as of

the date first above written,

ODYSSEY RE HOLDINGS CORP.

	 	 
	By:  	/s/ Charles D. Troiano	 	 
	 	Name:  	Charles D. Troiano 	 	 
	 	Title:  	Executive Vice President

& Chief Financial Officer 	 	 
	 

	 	 	 	 	 
	 	 	 
	By:  	/s/ Donald L. Smith
 	 	 
	 	Name:  	Donald L. Smith 	 	 
	 	Title:  	Senior Vice President 	 	 
	 

 

 

Annex A

Equity Representations

     (a) No Applicable Registration or Other Similar Rights. There are no persons with
registration or other similar rights to have any equity or debt securities registered for sale
under the Registration Statement or included in the resale contemplated by this Agreement, except
for such rights as have been duly disclosed in any SEC Filing.

     (b) No Material Adverse Change. Except as otherwise disclosed in the most recent applicable
SEC Filings, subsequent to the respective dates as of which information is given in the SEC
Filings: (i) there has been no Material Adverse Change; (ii) the Company and its subsidiaries,
considered as one entity, have not incurred any material liability or obligation, indirect, direct
or contingent, not in the ordinary course of business nor entered into any material transaction or
agreement not in the ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made (other than ordinary cash dividends on the
Company’s Common Stock that the Company has announced publicly) by the Company or, except for
dividends paid to the Company or other subsidiaries, any of its subsidiaries on any class of
capital stock or repurchase or redemption by the Company or any of its subsidiaries of any class of
capital stock.

     (c) Independent Accountants. PricewaterhouseCoopers LLP, who has expressed its opinion with
respect to the financial statements (which term as used in this Agreement includes the related
notes thereto) and supporting schedules filed with the Commission as a part of the most recent
applicable SEC Filings, is an independent public or certified public accountant as required by the
Securities Act.

     (d) Preparation of the Financial Statements. The financial statements filed with the
Commission as a part of the most recent applicable SEC Filings together with the related notes
present fairly the consolidated financial position of the Company and its subsidiaries as of and at
the dates indicated and the results of their operations and cash flows for the periods specified.
The supporting schedules, if any, included as exhibits to the SEC Filings present fairly the
information required to be stated therein. Such financial statements and supporting schedules have
been prepared in conformity with generally accepted accounting principles as applied in the United
States (“U.S. GAAP”) applied on a consistent basis throughout the periods involved, except as may
be expressly stated in the related notes thereto. No other financial statements or supporting
schedules are required to be included in the SEC Filings.

     (e) Incorporation and Good Standing of the Company and its Subsidiaries. Each of the Company
and its subsidiaries has been duly

A-1

 

incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation and has corporate power and
authority to own, lease and operate its properties and to conduct its business as described in the
SEC Filings, except where failure to so own and operate any property or conduct any business would
not result in a Material Adverse Change, and, in the case of the Company, to enter into and perform
its obligations under this Agreement. Each of the Company and each subsidiary is duly qualified
as a foreign corporation to transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of property or the
conduct of business, except for such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material Adverse Change. All of
the issued and outstanding capital stock of each subsidiary has been duly authorized and validly
issued, is fully paid and nonassessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or
claim.

     (f) Capitalization and Other Capital Stock Matters. The authorized, issued and outstanding
capital stock of the Company is as set forth in the most recent applicable SEC Filings. The Common
Stock conforms in all material respects to the description thereof contained in the SEC Filings.
All of the issued and outstanding shares of Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable and have been issued in compliance with federal and state
securities laws. None of the outstanding shares of Common Stock were issued in violation of any
preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase
securities of the Company. There are no authorized or outstanding options, warrants, preemptive
rights, rights of first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the Company or any of its
subsidiaries other than those described in the SEC Filings. The description of the Company’s stock
option, stock bonus and other employee incentive plans or arrangements, and the options or other
rights granted thereunder, set forth in the SEC Filings accurately and fairly presents in all
material respects the information required to be shown with respect to such plans, arrangements,
options and rights.

     (g) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
Required. Neither the Company nor any of its subsidiaries is in violation of its certificate of
incorporation or by laws or is in default (or, with the giving of notice or lapse of time, would be
in default) (“Default”) under any indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Company or any of its subsidiaries is a party or
by which it or any of them may be bound or to which any of the property or assets of the Company or
any of its subsidiaries is subject (each, an “Existing Instrument”), except for such Defaults as
would not, individually or in the aggregate, result in a Material Adverse Change. The Company’s

A-2

 

execution, delivery and performance of this Agreement and consummation of the transactions
contemplated hereby (i) have been duly authorized by all necessary corporate action and will not
result in any violation of the provisions of the certificate of incorporation or by laws of the
Company or any subsidiary, (ii) are within the Company’s corporate powers, (iii) will not conflict
with or constitute a breach of, or Default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries
pursuant to, or require the consent of any other party to, any Existing Instrument, except for such
conflicts, breaches, Defaults, liens, charges or encumbrances as would not, individually or in the
aggregate, result in a Material Adverse Change and (iv) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to the Company or any
subsidiary, except for any violations which would not, individually or in the aggregate, result in
a Material Adverse Change. Assuming compliance by NMS and BAS with the terms and conditions
contained in the Note Purchase Agreement, no consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory authority or agency, is
required for the Company’s execution, delivery and performance of this Agreement and consummation
of the transactions contemplated hereby, except such as (i) are contemplated by this Agreement
under the Securities Act or (ii) have been obtained or made by the Company and are in full force
and effect under the Securities Act, applicable state securities or blue sky laws and from the
NASD.

     (h) No Material Actions or Proceedings. There are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company’s knowledge, threatened (i) against or affecting
the Company or any of its subsidiaries, (ii) to the best of the Company’s knowledge, which has as
the subject thereof any officer or director of, or property owned by, the Company or any of its
subsidiaries or (iii) relating to environmental or discrimination matters, where in any such case
(A) such action, suit or proceeding could reasonably be expected to be determined adversely to the
Company or such subsidiary and (B) any such action, suit or proceeding, if so determined adversely,
would reasonably be expected to result in a Material Adverse Change or would reasonably be expected
to adversely affect the consummation of the transactions contemplated by this Agreement. No labor
dispute with the employees of the Company or any of its subsidiaries exists or, to the best of the
Company’s knowledge, is threatened or imminent, which might reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Change.

     (i) Intellectual Property Rights. The Company and its subsidiaries own or possess sufficient
trademarks, trade names, patent rights, copyrights, licenses, approvals, trade secrets and other
similar rights (collectively, “Intellectual Property Rights”) reasonably necessary to conduct their
businesses as now conducted; and the expected expiration of any of such Intellectual Property
Rights would not result in a Material Adverse Change. Neither the

A-3

 

Company nor any of its
subsidiaries has received any notice of infringement or conflict with asserted Intellectual
Property Rights of others, which infringement or conflict, if the subject of an unfavorable
decision, would result in a Material Adverse Change.

     (j) All Necessary Licenses. Each of Odyssey America Reinsurance Corporation, Clearwater
Insurance Company, Hudson Insurance Company, Newline Syndicate 1218 and Hudson Specialty Insurance
Company (each an “Insurance Subsidiary”, collectively the “Insurance Subsidiaries”) is duly
licensed to conduct an insurance or a reinsurance business, as the case may be, under the insurance
statutes of each jurisdiction in which the conduct of its business requires such licensing, except
for such jurisdictions in which the failure of the Insurance Subsidiaries to be so licensed would
not, individually or in the aggregate, result in a Material Adverse Change. The Insurance
Subsidiaries have made all required filings under applicable insurance statutes in each
jurisdiction where such filings are required, except for such jurisdictions in which
the failure to make such filings would not, individually or in the aggregate, result in a
Material Adverse Change. Each of the Insurance Subsidiaries has all other necessary authorizations,
approvals, orders, consents, certificates, permits, registrations and qualifications of and from
all insurance regulatory authorities necessary to conduct their respective businesses as described
in the SEC Filings, except where the failure to have such authorizations, approvals, orders,
consents, certificates, permits, registrations or qualifications would not, individually or in the
aggregate, result in a Material Adverse Change, and the Company and each of its Insurance
Subsidiaries has not received any notification from any insurance regulatory authority to the
effect that any additional authorization, approval, order, consent, certificate, permit,
registration or qualification is required to be obtained by the Company and each of its Insurance
Subsidiaries in any case where it could be reasonably expected that (x) the Company and each of its
Insurance Subsidiaries would be required either to obtain such additional authorization, approval,
order, consent, certificate, permit, registration or qualification or to cease or otherwise limit
the writing of certain business and (y) the failure to obtain such additional authorization,
approval, order, consent, certificate, permit, registration or qualification or the limiting of the
writing of such business would result in a Material Adverse Change; and no insurance regulatory
authority having jurisdiction over the Company or any of its Insurance Subsidiaries has issued any
order or decree impairing, restricting or prohibiting (i) the payment of dividends by any of the
Insurance Subsidiaries to its parent, other than those restrictions applicable to insurance or
reinsurance companies generally, or (ii) the continuation of the business of the Company or any of
the Insurance Subsidiaries in all material respects as presently conducted.

     (k) Title to Properties. Except as otherwise disclosed in the SEC Filings, the Company and
each of its subsidiaries has good and marketable title to all the properties and assets reflected
as owned by each of them in the SEC Filings, in each case free and clear of any security interests,
mortgages, liens,

A-4

 

encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not materially interfere with the
use made or proposed to be made of such property by the Company or such subsidiary. The real
property, improvements, equipment and personal property held under lease by the Company or any
subsidiary are held under valid and enforceable leases, with such exceptions as do not result in a
Material Adverse Change.

     (l) Tax Law Compliance. The Company and its consolidated subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns, other than those which would
not, individually or in the aggregate, result in a Material Adverse Change, and have paid all taxes
required to be paid by any of them and, if due and payable, any related or similar assessment, fine
or penalty levied against any of them, except assessments against which appeals have been or will
be promptly taken in good faith or as to which adequate reserves have been provided. Adequate
charges, accruals and reserves have been made in the applicable financial statements referred to in
clause (d) above in respect of all federal, state and foreign income and franchise taxes for all
periods as to which the tax liability of the Company or any of its consolidated subsidiaries has
not been finally determined.

     (m) Company Not an “Investment Company”. The Company is not required to register as an
“investment company” under the Investment Company Act of 1940, as amended.

     (n) Company’s Accounting System. The Company maintains a system of accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with U.S. GAAP and to maintain
accountability for assets; (iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences.

     (o) ERISA Compliance. The Company and its subsidiaries and any “employee benefit plan”
(within the meaning of the Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder (“ERISA”)) established or maintained by the
Company, its subsidiaries and their “ERISA Affiliates” (as defined below) are in compliance with
ERISA and the Internal Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the “Code”), except such as will not, individually or in the aggregate,
result in a Material Adverse Change. “ERISA Affiliate” means, with respect to the Company and a
subsidiary, any member of any group of organizations described in Sections 414(b), (c), (m) or (o)
of the Code of which the Company or such subsidiary is a member. No

A-5

 

“reportable event” (as defined
under ERISA) has occurred or is reasonably expected to occur with respect to any “employee benefit
plan” for which the Company, its subsidiaries or any of their ERISA Affiliates would have any
liability, which might reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Change. No “employee benefit plan” for which the Company, its subsidiaries or any
of their ERISA Affiliates would have any liability, if such “employee benefit plan” were
terminated, would have any “amount of unfunded benefit liabilities” (as defined under ERISA) which
might reasonably be expected to, individually or in the aggregate, result in a Material Adverse
Change. Neither the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any “employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of
the Code, which might reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Change. Each “employee benefit plan” established or maintained by the Company,
its subsidiaries and any of their ERISA Affiliates that is intended to be qualified under Section
401(a) of the Code is so qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification, which might reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Change. No event or series of
events of the nature described in this Section 1(p) has occurred or is reasonably expected to occur
for which the Company, its subsidiaries or any of their ERISA Affiliates would have any liability
which might reasonably be expected to, individually or in the aggregate, result in a Material
Adverse Change.

A-6

 

Annex B

Registration Representations

     (a) Each Registration Statement has been declared effective by the Commission under the
Securities Act. The Company has complied to the Commission’s satisfaction with all requests of the
Commission for additional or supplemental information. No stop order suspending the effectiveness
of any Registration Statement is in effect and no proceedings for such purpose have been instituted
or are pending or, to the best knowledge of the Company, are contemplated or threatened by the
Commission.

     (b) Each preliminary prospectus and each Prospectus when filed complied in all material
respects with the Securities Act and, if filed by electronic transmission pursuant to the
Commission’s Electronic Data Gathering And Retrieval system, was (except as may be permitted by
Regulation S-T under the Securities Act) identical to the copy thereof delivered pursuant to this
Agreement. Each Registration Statement and any post-effective amendment thereto, at the time it
became effective and at all subsequent times, complied and will comply in all material respects
with the Securities Act and did not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements
therein not misleading. Each Prospectus, as amended or supplemented, as of its date and at all
subsequent times, did not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The representations and warranties set
forth in the two immediately preceding sentences do not apply to statements in or omissions from
any Registration Statement or any post-effective amendment thereto or any Prospectus or any
amendments or supplements thereto made in reliance upon and in conformity with information relating
to any Holder furnished to the Company in writing by such Holder or BAS expressly for use therein.
There are no contracts or other documents required to be described in any Prospectus or to be filed
as exhibits to any Registration Statement that have not been described or filed as required. The
documents incorporated or deemed to be incorporated by reference in any Prospectus, at the time
they were or hereafter are filed with the Commission, complied and will comply in all material
respects with the requirements of the Exchange Act and, when read together with the other
information in such Prospectus, at the time any Registration Statement and any amendments thereto
become effective and on each Relevant Date, will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to make the fact
required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

B-1

 

     (c) The Company has delivered to NMS and BAS one complete copy of each Registration Statement
and of each consent and certificate of experts filed as a part thereof, and conformed copies of
such Registration Statement (without exhibits) and preliminary prospectuses and the related
Prospectus, as amended or supplemented, in such quantities and at such places as NMS and BAS have
reasonably requested.

     (d) The Company has not distributed and will not distribute, during any Effectiveness Period,
any offering material relating to the Common Stock other than a Prospectus (or related preliminary
prospectus) or a Registration Statement; provided, however, that this representation relates only
to offering material relating to the resale of the Exchange Shares contemplated by this Agreement,
and not to any other offering material relating to the Common Stock.

B-2

 

EXHIBIT A-1

     Opinion of Shearman & Sterling LLP, counsel for the Company, to be delivered pursuant to
Section 4(b)(ii)(D) of the Registration Rights Agreement.

     (i) The Company has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware.

     (ii) The Company has corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the most recent applicable SEC Filings and to enter
into and perform its obligations under the Registration Rights Agreement.

     (iii) The Registration Rights Agreement has been duly authorized, executed and delivered by
the Company.

     (iv) The Registration Statement has been declared effective by the Commission under the
Securities Act. To the best knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement has been issued under the Securities Act and no proceedings for such
purpose have been instituted or are pending or are contemplated or threatened by the Commission.

     (v) The statements in the Prospectus under the caption “Description of Common Stock”, insofar
as such statements constitute matters of law, summaries of legal matters, the Company’s certificate
of incorporation or by-law provisions, documents, legal proceedings or legal conclusions, fairly
present and summarize, in all material respects, the matters referred to therein.

     (vi) Based upon such counsel’s review of the New York State statutes, rules or regulations,
the Delaware General Corporation Law and the relevant United States federal laws (the “Requirements
of Law”) which in such counsel’s experience are normally applicable to transactions of the type
provided for in the Registration Rights Agreement, but without having made any special
investigation concerning any other Requirements of Law, no consent, approval or authorization is
required for the Company’s execution, delivery and performance of the Registration Rights Agreement
and consummation of the transactions contemplated thereby and by the Prospectus, except as required
under the Securities Act and applicable state securities or blue sky laws.

     (vii) The Company is not required to register as an investment company under the Investment
Company Act of 1940, as amended.

     In rendering such opinion, such counsel may rely (A) as to matters involving the application
of laws of any jurisdiction other than the General Corporation Law of the State of Delaware, the
laws of the State New York or the federal law of the United States, to the extent they deem proper
and specified in

A-1-1

 

such opinion, upon the opinion (which shall be satisfactory in form and substance to NMS and
BAS, shall expressly state that NMS and BAS may rely on such opinion as if it were addressed to
them and shall be furnished to NMS and BAS) of other counsel of good standing whom they believe to
be reliable and who are satisfactory to counsel for NMS or BAS; provided, however, that such
counsel shall further state that they believe that they and NMS or BAS are justified in relying
upon such opinion of other counsel, and (B) as to matters of fact, to the extent they deem proper,
on certificates of responsible officers of the Company and public officials.

     In addition, such counsel shall state the following in a letter delivered simultaneously with
its opinion:

     Such counsel has examined the Registration Rights Agreement and the originals, or copies
identified to their satisfaction, of such corporate records of the Company, certificates of public
officials, officers of the Company and other persons, and such other documents, agreements and
instruments as such counsel deemed necessary or appropriate as a basis for the opinions hereinafter
expressed. In their examinations, such counsel has assumed the genuineness of all signatures, the
authenticity of all documents submitted to them as originals and the conformity with the originals
of all documents submitted to them as copies. In rendering the opinions expressed below, such
counsel has relied as to factual matters, to the extent such counsel deemed proper, upon the
representations and warranties of the Company contained in or made pursuant to the Registration
Rights Agreement, certificates of officers of the Company and certificates of public officials.
Such counsel has also reviewed and participated in discussions concerning the preparation of the
Registration Statement and the Prospectus (in each case other than the documents incorporated by
reference therein) with certain officers or employees of the Company and its auditors. The
limitations inherent in the independent verification of factual matters and in the role of outside
counsel are such, however, that such counsel cannot and does not assume any responsibility for the
accuracy, completeness or fairness of any of the statements made in the Registration Statement and
the Prospectus, except as set forth in paragraph (vii) of such counsel’s opinion letter addressed
to you, dated the date hereof.

     Subject to the limitations set forth in the immediately preceding paragraph, such counsel
advises you that, on the basis of the information such counsel gained in the course of performing
the services referred to above, (i) in such counsel’s opinion, the Registration Statement and the
Prospectus (other than the financial statements, related schedules and other financial or
statistical data included therein or omitted therefrom, as to which such counsel has not been
requested to comment) appear on their face to be appropriately responsive in all material respects
to the requirements of the Securities Act and the applicable rules and regulations of the
Commission thereunder; and (ii) no facts came to such counsel’s attention which gave them reason to
believe that (a) the Registration

A-1-2

 

Statement (other than the financial statements, related schedules and other financial or
statistical data included therein or omitted therefrom, as to which such counsel has not been
requested to comment) at the time the Registration Statement became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (b) the Prospectus (other than the
financial statements, related schedules and other financial or statistical data included therein or
omitted therefrom, as to which such counsel has not been requested to comment), as of its date or
the date hereof, contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

A-1-3

 

EXHIBIT A-2

     Opinion of Donald L. Smith, Esq., General Counsel for the Company, to be delivered pursuant to
Section 4(b)(ii)(D) of the Registration Rights Agreement.

     (i) The Company is duly qualified as a foreign corporation to transact business and is in good
standing in the State of Connecticut and in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions (other than the State of Connecticut) where the failure to so qualify
or to be in good standing would not, individually or in the aggregate, result in a Material Adverse
Change.

     (ii) Each significant subsidiary of the Company (as defined in Rule 405 under the Securities
Act) has been duly incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the most recent applicable SEC
Filings and, to the best knowledge of such counsel, is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions where the failure to so qualify or to be in good standing would not,
individually or in the aggregate, result in a Material Adverse Change.

     (iii) All of the issued and outstanding capital stock of each such significant subsidiary of
the Company has been duly authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or, to the best knowledge of such counsel, any pending or
threatened claim.

     (iv) The authorized, issued and outstanding capital stock of the Company conforms to the
descriptions thereof set forth in the most recent applicable SEC Filings. All of the outstanding
shares of Common Stock have been duly authorized and validly issued, are fully paid and
nonassessable and, to the best of such counsel’s knowledge, have been issued in compliance with the
registration and qualification requirements of federal and state securities laws. The form of
certificate used to evidence the Common Stock is in due and proper form and complies with all
applicable requirements of the certificate of incorporation and by-laws of the Company and the
General Corporation Law of the State of Delaware. The description of the Company’s stock option,
stock bonus and other stock plans or arrangements, and the options or other rights granted and
exercised thereunder, set forth in the most recent applicable SEC Filings accurately and fairly
presents the information required to be shown with respect to such plans, arrangements, options and
rights.

A-2-1

 

     (v) Except as described in the most recent applicable SEC Filings, no stockholder of the
Company or any other person has any preemptive right, right of first refusal or other similar right
to subscribe for or purchase securities of the Company arising (i) by operation of the certificate
of incorporation or by-laws of the Company or the General Corporation Law of the State of Delaware
or (ii) to the best knowledge of such counsel, otherwise.

     (vi) To the best knowledge of such counsel, there are no legal or governmental actions, suits
or proceedings pending or threatened which are required to be disclosed in the Registration
Statement, other than those disclosed in the most recent applicable SEC Filings.

     (vii) Each of Odyssey America Reinsurance Corporation, Clearwater Insurance Company, Hudson
Insurance Company, Newline Syndicate 1218 and Hudson Specialty Insurance Company (each an
“Insurance Subsidiary”, collectively the “Insurance Subsidiaries”) is duly licensed to conduct an
insurance or a reinsurance business, as the case may be, under the insurance statutes of each
jurisdiction in which the conduct of its business requires such licensing, except for such
jurisdictions in which the failure of the Insurance Subsidiaries to be so licensed would not,
individually or in the aggregate, result in a Material Adverse Change (as defined in the
Registration Rights Agreement). The Insurance Subsidiaries have made all required filings under
applicable insurance statutes in each jurisdiction where such filings are required, except for such
jurisdictions in which the failure to make such filings would not, individually or in the
aggregate, result in a Material Adverse Change. Each of the Insurance Subsidiaries has all other
necessary authorizations, approvals, orders, consents, certificates, permits, registrations and
qualifications of and from all insurance regulatory authorities necessary to conduct their
respective businesses as described in the most recent applicable SEC Filings, except where the
failure to have such authorizations, approvals, orders, consents, certificates, permits,
registrations or qualifications would not, individually or in the aggregate, result in a Material
Adverse Change, and the Company and each of its Insurance Subsidiaries has not received any
notification from any insurance regulatory authority to the effect that any additional
authorization, approval, order, consent, certificate, permit, registration or qualification is
required to be obtained by the Company and each of its Insurance Subsidiaries in any case where it
could be reasonably expected that (x) the Company and each of its Insurance Subsidiaries would be
required either to obtain such additional authorization, approval, order, consent, certificate,
permit, registration or qualification or to cease or otherwise limit the writing of certain
business and (y) the failure to obtain such additional authorization, approval, order, consent,
certificate, permit, registration or qualification or the limiting of the writing of such business
would result in a Material Adverse Change; and no insurance regulatory authority having
jurisdiction over the Company or any of its Insurance Subsidiaries has issued any order or decree
impairing, restricting or prohibiting (i) the payment of dividends by any of the Insurance
Subsidiaries to

A-2-2

 

its parent or (ii) the continuation of the business of the Company or any of the Insurance
Subsidiaries in all material respects as presently conducted.

     (viii) The descriptions in the most recent applicable SEC Filings of U.S. insurance statutes
and regulations are accurate in all material respects and fairly summarize in all material respects
the information required to be shown and such counsel does not know of any U.S. insurance statutes
or regulations required to be described in the most recent applicable SEC Filings that are not
described as required.

     (ix) The execution and delivery of the Registration Rights Agreement by the Company and the
performance by the Company of its obligations thereunder (other than performance by the Company of
its obligations under the indemnification or contribution sections of the Registration Rights
Agreement, as to which no opinion need be rendered) (i) have been duly authorized by all necessary
corporate action on the part of the Company; (ii) will not result in any violation of the
provisions of the certificate of incorporation or by-laws of the Company or any subsidiary, (iii)
to the best knowledge of such counsel, will not constitute a breach of, or Default under, or result
in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to any Existing Instrument, except for such conflicts,
breaches, Defaults, liens, charges or encumbrances as would not, individually or in the aggregate,
result in a Material Adverse Change; and (iv) to the best knowledge of such counsel, will not
result in any violation of any law, administrative regulation or administrative or court decree
applicable to the Company or any subsidiary.

     (x) Except as disclosed in the most recent applicable SEC Filings, to the best knowledge of
such counsel, there are no persons with registration or other similar rights to have any equity or
debt securities registered for sale under the Registration Statement or included in the offering
contemplated by the Registration Rights Agreement, except for such rights as have been duly waived.

     (xi) To the best knowledge of such counsel, neither the Company nor any subsidiary is in
violation of its certificate of incorporation or by laws or any law, administrative regulation or
administrative or court decree applicable to the Company or any subsidiary or is in Default in the
performance or observance of any obligation, agreement, covenant or condition contained in any
material Existing Instrument, except in each such case for such violations or Defaults as would
not, individually or in the aggregate, result in a Material Adverse Change.

     (xii) To the best knowledge of such counsel, there are no Existing Instruments required to be
described or referred to in the Registration Statement or to be filed as exhibits thereto other
than those described or referred to therein or filed or incorporated by reference as exhibits
thereto; and the descriptions thereof and references thereto are correct in all material respects.

A-2-3

 

     In rendering such opinion, such counsel may rely (A) as to matters involving the application
of laws of any jurisdiction other than the General Corporation Law of the State of Delaware, the
laws of the State New York or the federal law of the United States, to the extent they deem proper
and specified in such opinion, upon the opinion (which shall be satisfactory in form and substance
to NMS and BAS, shall expressly state that NMS and BAS may rely on such opinion as if it were
addressed to them and shall be furnished to NMS and BAS) of other counsel of good standing whom
they believe to be reliable and who are satisfactory to counsel for NMS or BAS; provided, however,
that such counsel shall further state that they believe that they and NMS or BAS are justified in
relying upon such opinion of other counsel, and (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and public officials.

     In addition, such counsel shall state the following in a letter delivered simultaneously with
his opinion:

     Such counsel has examined the Registration Rights Agreement and the originals, or copies
identified to his satisfaction, of such corporate records of the Company, certificates of public
officials, officers of the Company and other persons, and such other documents, agreements and
instruments as such counsel deemed necessary as a basis for the statements hereinafter expressed.
In his examinations, such counsel has assumed the genuineness of all signatures, the authenticity
of all documents submitted to him as originals and the conformity with the originals of all
documents submitted to him as copies. In rendering the statements expressed below, such counsel
has relied as to factual matters, to the extent such counsel deemed proper, upon the
representations and warranties of the Company contained in or made pursuant to the Registration
Rights Agreement, certificates of officers of the Company and certificates of public officials.
Such counsel has also reviewed and participated in discussions concerning the preparation of the
Registration Statement and the Prospectus (in each case other than the documents incorporated by
reference therein) with certain officers or employees of the Company and its auditors. The
limitations inherent in the independent verification of factual matters and in the role of general
counsel are such, however, that such counsel cannot and does not assume any responsibility for the
accuracy, completeness or fairness of any of the statements made in the Registration Statement and
the Prospectus, except as set forth in paragraph (viii) of such counsel’s opinion letter addressed
to you, dated the date hereof.

     Subject to the limitations set forth in the immediately preceding paragraph, such counsel
advises you that, on the basis of the information such counsel gained in the course of performing
the services referred to above, (i) in such counsel’s opinion, the Registration Statement and the
Prospectus (other than the financial statements, related schedules and other financial or
statistical data included therein or omitted therefrom, as to which such counsel has not been
requested to comment) appear on their face to be appropriately responsive in all

A-2-4

 

material respects to the requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder; and (ii) no facts came to such counsel’s attention which
gave him reason to believe that (a) the Registration Statement (other than the financial
statements, related schedules and other financial or statistical data included therein or omitted
therefrom, as to which such counsel has not been requested to comment) at the time the Registration
Statement became effective, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading, or (b) the Prospectus (other than the financial statements, related schedules and other
financial or statistical data included therein or omitted therefrom, as to which such counsel has
not been requested to comment), as of its date or the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading.

A-2-5exv10w3

 

Exhibit 10.3

FAIRFAX INC. and ODYSSEY RE HOLDINGS CORP.

INTER-COMPANY TAX ALLOCATION AGREEMENT

Effective March 4, 2003

     WHEREAS, Fairfax Inc., a Wyoming corporation (“Parent”) and Odyssey Re Holdings Corp., a
Delaware Corporation (“ORH”), became members of an affiliated tax group filing consolidated tax
returns on March 4, 2003;

     WHEREAS, ORH automatically became a member of the TIG Holdings, Inc., Inter-Company Tax
Allocation Agreement effective January 1, 2000 (the “2000 Agreement”) on March 4, 2003;

     WHEREAS, TIG Holdings, Inc and ORH desire to remove ORH from the 2000 Agreement and Parent and
ORH desire to enter into an Inter-Company Tax Allocation Agreement effective March 4, 2003;

     NOW, THEREFORE, the parties agree as follows:

     The purpose of this agreement (the “Agreement”) is to determine the amount of federal and
(where applicable) state income tax allocated ORH and the amount ORH will pay to or receive from
Parent. This Agreement is between Parent and ORH. Parent and ORH are sometimes hereafter
collectively referred to as the “Group”.

	 	1.	 	ORH and Parent are affiliated corporations and have elected to file a
consolidated federal income tax return pursuant to the provisions of Section 1502, et
seq., the Internal Revenue Code of 1986, as amended, (the “Code”).

1

 

	 	2.	 	ORH shall compute and pay to the Parent its federal income tax liability as if
computed on a separate return. ORH shall have first use of all of its current
operating losses and credits. Additionally, Parent shall reimburse ORH for any net
operating losses (NOL’s) that can be utilized by ORH Subsidiaries reflected in Schedule
1. To the extent ORH NOL’s can be utilized by ORH subsidiaries, such NOL’s are deemed
utilized by ORH in the same tax year. The calculation of the separate federal income
tax liability of ORH shall be made pursuant to the Code and its regulations, as well as
applicable cases, rulings, etc., and shall be determined by utilizing the maximum
applicable corporate income tax rate.
	 
	 	3.	 	ORH shall pay such separate return tax liability to the Parent by no later than
the applicable due date or dates that such payments would have been required by the
Internal Revenue Service if ORH had filed a separate return, or as soon thereafter as
possible.
	 
	 	4.	 	If ORH would not have to pay any federal income tax or would have a claim for
refund of federal income taxes, the Parent will pay to ORH an amount equal to the
refund ORH would have been entitled to obtain from the Internal Revenue Service. The
Parent shall make the payment to ORH by no later than the applicable due date or dates
that payment would have been made by the Internal Revenue Service if ORH had filed a
timely claim for refund, or as soon thereafter as possible.
	 
	 	5.	 	In the event that ORH or the Parent is required or has elected to file a
unitary or combined state income tax return, which may include other affiliate
companies,

2

 

	 	 	 	the Parent will compute, report, and pay the state income tax liability in
accordance with the applicable state laws and regulations and will file the required
annual return. Within thirty (30) days from the filing of any combined state income
tax return the Parent will calculate and assess ORH’s share of the combined state
income tax liability based on (i) the methodology required or established by state
income tax law or, (ii) if none, the percentage of ORH’s separate income or tax
divided by the total separate income or tax of the State Group. Within thirty (30)
days of such assessment, each member will pay to the Parent its share of the state
income tax liability.
	 
	 	6.	 	If after the filing of a return it is determined that the liability computed
hereunder is incorrect, whether by reason of an Internal Revenue Service audit, state
audit, discovery of error, the learning of new information, or otherwise, appropriate
payments, including allocations of penalty and/or interest, if applicable, shall be
made promptly to reflect the payments that should have been made.
	 
	 	7.	 	In lieu of actual payments, adjustments to inter-company payables and
receivables may be made, and any net balances due will be paid within ninety (90) days
of each adjustment. All payments under this Agreement, including subsequent changes in
the amount of a Subsidiary’s tax liability or reimbursement payment, shall be
considered an inter-company payable or receivable, as the case may be, until such
adjustment is paid, and shall not be considered a dividend or surplus contribution.

3

 

	 	8.	 	The Parent agrees to indemnity and reimburse ORH for any and all claims,
demands, and expenses in the event that the Internal Revenue Service levies upon the
assets of ORH for unpaid taxes, including penalties and interest, in excess of that
amount for which ORH may be liable pursuant to the terms of this Agreement.
	 
	 	9.	 	This Agreement shall be applicable only with respect to periods for which the
parties are members of the same affiliated Group filing a consolidated federal income
tax return. No adjustments hereunder shall be made with respect to periods for which
either the Parent or ORH are not members of the same affiliated Group.
	 
	 	10.	 	Solely with respect to ORH, the 2000 Agreement is hereby terminated effective
on March 4, 2003, and this Agreement shall take effect on March 4, 2003 and shall
continue until terminated by the mutual written agreement of Parent and ORH. In the
event any party ceases to be affiliated with the Group, this Agreement automatically
terminates only with respect to that member. This Agreement shall
also terminate if
the Group fails to file a consolidated federal income tax return for any tax year of
this Agreement. Notwithstanding the termination of this Agreement, its provisions will
remain in effect, with respect to any period of time during the tax year in which
termination occurs, for which the income of the terminating party must be included in
the consolidate federal income tax return.

4

 

	 	11.	 	This Agreement may, from time to time, be amended, modified, and supplemented
in such manner as may be mutually agreed upon by the parties, subject to the approval
of any regulatory authorities as required by law. Any amendment, modification, or
supplement to this Agreement shall be in writing and shall be executed by a duly
appointed representative of each of the parties.
	 
	 	12.	 	Every article, term, condition, and provision of this Agreement is declared to
be independent of and severable from all other articles, terms, conditions, and
provisions of the Agreement. Invalidation, whether judicial or otherwise, of any
article, term, condition, or provision contained in the Agreement shall in no way
affect any other provisions of this Agreement, all of which shall remain in full force
and effect.
	 
	 	13.	 	The books, accounts, tax returns, and records of the Parent and ORH shall be
maintained so as to clearly and adequately disclose the precise nature and details of
the obligations and liabilities under this Agreement. All materials relating to the
tax returns, including but not limited to the returns, supporting schedules, work
papers, and correspondence, shall be available for inspection at any time during normal
business hours by the Parent or ORH. Each party to this Agreement shall maintain, at
its principal or home office, records of all tax allocations, and any subsequent
Internal Revenue Service or state review or adjustment. The provisions of this section
shall survive termination of this Agreement.

5

 

	 	14.	 	This Agreement has been approved by the Board of Directors of each party to
this Agreement.
	 
	 	15.	 	This Agreement is not assignable by any party without the prior written consent
of the other parties.

6

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by duly authorized
officers to be effective March 4, 2003.

	 	 	 	 	 
	 	Fairfax Inc.

	 
	 	By:  	/s/ John Cassil	 
	 	 	Name:  	John Cassil 	 
	 	 	Title:  	Vice President 	 
	 
	 
	 	Odyssey Re Holdings Corp.

	 
	 	By:  	/s/ Anthony J. Narciso Jr.	 
	 	 	Name:  	Anthony J. Narciso Jr. 	 
	 	 	Title:  	Controller 	 
	 

	 	 	 	 	 
	Acknowledged:

TIG Holdings, Inc.

	 	 
	By:  	/s/
Keith M. Walker	 	 
	 	 	 	 
	 	 	 	 
	 

7

 

SCHEDULE 1

Odyssey America Reinsurance Corporation

Clearwater Insurance Company (formerly known as Odyssey Reinsurance Corporation)

Hudson Insurance Corporation

Odyssey Holdings Latin America Inc.

Odyssey Latin America Inc.

Odyssey UK Holdings Corp.

Hudson Specialty Insurance Company (formerly known as General Security Indemnity Company) (effective October 28, 2003)

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