AGREEMENT AND PLAN OF MERGER BY AND AMONG FAIRFAX FINANCIAL HOLDINGS LIMITED, FAIRFAX INVESTMENTS USA CORP. AND ODYSSEY RE HOLDINGS CORP

Exhibit 2.01

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

FAIRFAX FINANCIAL HOLDINGS LIMITED,

FAIRFAX INVESTMENTS USA CORP.

AND

ODYSSEY RE HOLDINGS CORP.

DATED AS OF SEPTEMBER 18, 2009

Table of Contents

AGREEMENT AND PLAN OF MERGER

          THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), dated as of September 18, 2009, is entered into by and among Fairfax Financial Holdings Limited, a corporation incorporated under the laws of Canada (“ Parent ”), Fairfax Investments USA Corp., a Delaware corporation and a wholly-owned subsidiary of Parent (“ Merger Sub ”), and Odyssey Re Holdings Corp., a Delaware corporation (the “ Company ”).

          WHEREAS, Parent and its affiliates beneficially and of record own 42,399,400 shares of the common stock, par value $.01 per share, of the Company (the “ Common Stock ”), which represents approximately 72.6% of the outstanding shares of Common Stock;

          WHEREAS, Parent has proposed to the Board of Directors of the Company (the “ Company Board ”) that Parent or one of its wholly-owned direct or indirect Subsidiaries (as defined herein) acquire all of the issued and outstanding shares of Common Stock not owned by Fairfax and its Subsidiaries (other than the Company and the Subsidiaries of the Company (the “ Company Subsidiaries ”)). Parent and the Subsidiaries of Parent other than the Company and the Company Subsidiaries are collectively referred to as the “ Fairfax Group ”; and such outstanding shares of Common Stock not owned by the Fairfax Group are collectively referred to as the “ Shares ”;

          WHEREAS, the Company Board has established a special committee consisting of independent directors (the “ Special Committee ”) to review, evaluate and negotiate any proposal made by the Fairfax Group to acquire Shares, including the Offer (as defined herein), the Merger (as defined herein) and the other transactions contemplated by this Agreement (collectively, the “ Transactions ”) and to make a recommendation to the Company Board with respect thereto;

          WHEREAS, Merger Sub hereby agrees to commence, and Parent shall cause Merger Sub to commence, subject to the terms and conditions provided herein, a tender offer (as it may be amended from time to time in accordance with this Agreement, the “ Offer ”) to acquire up to 100% of the Shares for an amount equal to $65.00 per Share, net to the stockholders who tender their Shares, in cash and subject to any required withholding of taxes;

          WHEREAS, following the consummation of the Offer, Merger Sub will merge with and into the Company with the Company surviving as a Subsidiary of Parent (the “ Merger ”), and, subject to certain limitations as set forth herein, each Share that is not tendered and accepted pursuant to the Offer will thereupon be canceled and converted into the right to receive cash in an amount equal to the Offer Price (as defined herein), subject to the terms and conditions set forth in this Agreement;

          WHEREAS, the Special Committee has unanimously (i) determined that the terms of this Agreement and the Transactions are fair to and in the best interests of the Company and the holders of the Shares, (ii) approved and declared advisable this Agreement and the Transactions, and (iii) recommended to the Company Board that the Company Board adopt resolutions approving and declaring advisable this Agreement and the Transactions and recommending that the holders of Shares accept the Offer, tender their Shares to Merger Sub

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pursuant to the Offer and, to the extent that any such holders do not tender their Shares and to the extent required by applicable Law, adopt and approve this Agreement (such recommendation by the Special Committee, the “ Special Committee Recommendation ”);

          WHEREAS, the Company Board, based on the Special Committee Recommendation, has (i) determined that the terms of this Agreement and the Transactions are fair to and in the best interests of the Company and the holders of the Shares, (ii) approved and declared advisable this Agreement and the Transactions, and (iii) resolved to recommend to the holders of Shares that such holders tender their Shares pursuant to the Offer and, to the extent any such holders do not tender their Shares and to the extent required by applicable Law, adopt and approve this Agreement (such recommendation, the “ Company Board Recommendation ”); and

          WHEREAS, the Board of Directors of each of Parent and Merger Sub have unanimously approved the Merger and this Agreement and deem it advisable and in the best interests of their stockholders to consummate the Transactions, on the terms and conditions set forth herein.

          NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement, Parent, Merger Sub and the Company hereby agree as follows:

ARTICLE I

THE TENDER OFFER

          SECTION 1.01.  The Offer .

          (a) Subject to the terms and conditions of this Agreement, Merger Sub shall, and Parent shall cause Merger Sub to, as promptly as practicable and in no event later than ten business days after the date hereof, commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) the Offer at a purchase price of $65.00 per Share, net to the seller in cash but subject to any required withholding of taxes (such price, or any higher price offered and paid by Merger Sub in its sole discretion in the Offer, the “ Offer Price ”).

          (b) The initial expiration date of the Offer shall be 12:00 midnight, New York City Time, on the date that is twenty business days following the date on which the Offer was commenced (the “ Initial Expiration Date ” and together with any expiration time and date established pursuant to an extension of the Offer as so extended pursuant to the terms and conditions set forth herein, the “ Expiration Date ”).

          (c) The obligation of Merger Sub to commence the Offer and to accept for payment and pay for Shares tendered pursuant to the Offer shall be subject only to (i) the non-waivable condition that pursuant to the Offer, prior to the Expiration Date, there shall have been validly tendered and not properly withdrawn a number of Shares which constitutes at least a majority of the outstanding Shares (excluding from the numerator of such calculation any shares held by stockholders that are affiliated with the Company, including the members of the Fairfax

Group and the directors and executive officers of each of the Company, Merger Sub and Parent, as of the Acceptance Time) (the “ Minimum Condition ”) and (ii) the other conditions set forth in Annex I hereto (together with the Minimum Condition, the “ Offer Conditions ”).

          (d) Merger Sub expressly reserves the right to (i) increase the Offer Price and (ii) to waive any of the Offer Conditions or to modify the terms of the Offer, except that, without the prior written consent of the Company (acting pursuant to a resolution adopted by both the Special Committee and the Company Board), Merger Sub shall not, and Parent shall not permit Merger Sub to, do any of the following: (A) decrease the Offer Price, change the form of consideration to be paid in the Offer or decrease the number of Shares subject to the Offer, (B) impose any conditions to the Offer other than the Offer Conditions set forth in Annex I hereto or modify any of the Offer Conditions set forth in Annex I hereto in any manner adverse to the holders of Shares, (C) otherwise amend or modify the Offer in a manner that would materially and adversely affect the holders of Shares, (D) amend, modify or waive the Minimum Condition and (E) except as otherwise provided in this Section 1.01(d), extend the Offer. Notwithstanding the foregoing, unless this Agreement has been terminated in accordance with Section 8.01, Merger Sub may, without the consent of the Company (or the Special Committee or Company Board), (I) extend the Offer for one or more consecutive increments of not more than ten business days each, if at any otherwise scheduled Expiration Date any of the Offer Conditions shall not have been satisfied or, if permissible, waived; (II) extend the Offer for any minimum period required by any rule, regulation, interpretation or position of the U.S. Securities and Exchange Commission (the “ SEC ”) or the staff thereof applicable to the Offer; or (III) if Shares have been accepted for payment but the number of shares of Common Stock collectively owned by the Fairfax Group is less than 90% of the then outstanding shares of Common Stock, extend the Offer for an aggregate period of not more than fifteen business days (for all such extensions) beyond the date on which Shares are first accepted for payment as a “subsequent offering period” (as such term is defined in Rule 14d-1(g)(8) under the Exchange Act) in accordance with Rule 14d-11 of the Exchange Act. In addition, if at any otherwise scheduled Expiration Date any Offer Condition has not been satisfied or waived, Merger Sub shall, and Parent shall cause Merger Sub to, at the request of the Company (acting pursuant to a resolution of the Special Committee), extend the Expiration Date for one or more consecutive increments of not more than ten business days each until the earliest to occur of (x) the satisfaction or waiver of such Offer Conditions, (y) termination of this Agreement in accordance with its terms, and (z) the Outside Date. In addition, Merger Sub shall, and Parent shall cause Merger Sub to, at the request of the Company (acting pursuant to a resolution of the Special Committee), make available a subsequent offering period in accordance with Rule 14d-11 under the Exchange Act of not less than ten business days; provided that Merger Sub shall not be required to make available such a subsequent offering period in the event that, prior to the commencement of such subsequent offering period, the Fairfax Group collectively holds at least 90% of the outstanding shares of Common Stock.

          (e) Upon the expiration of the Offer, subject to the terms and conditions of the Offer and this Agreement, Merger Sub shall, and Parent shall cause Merger Sub to, accept for payment and pay for, as promptly as practicable, all Shares validly tendered and not properly withdrawn pursuant to the Offer (including any subsequent offering period). The time that Merger Sub accepts for payment the Shares tendered pursuant to the Offer is referred to herein as the “ Acceptance Time ”.

          (f) Parent shall provide or cause to be provided to Merger Sub on a timely basis all funds necessary to purchase any Shares that Merger Sub becomes obligated to purchase pursuant to the Offer.

          SECTION 1.02.  The Offer Documents; Schedule 13E-3 .

          (a) On the date of commencement of the Offer, Merger Sub and, to the extent required by Law, its affiliates, shall file with the SEC, pursuant to and in accordance with Rule 14d-3 and Regulation M-A under the Exchange Act (“ Regulation M-A ”), a Tender Offer Statement on Schedule TO with respect to the Offer, which shall contain an offer to purchase and a related letter of transmittal and summary advertisement, in each case, reflecting the terms and conditions of this Agreement as they relate to the Offer (such Schedule TO and the documents included therein pursuant to which the Offer will be made, together with any supplements or amendments thereto, the “ Offer Documents ”) and shall cause the Offer Documents to be disseminated to holders of Shares. The Company shall promptly furnish to Merger Sub all information concerning the Company that may be required by applicable Laws or reasonably requested by Merger Sub for inclusion in the Offer Documents. Each of Parent and Merger Sub agrees to use reasonable best efforts to respond promptly to any comments of the SEC or its staff with respect to the Offer Documents or the Offer, and each of Parent, Merger Sub and the Company agrees to promptly correct any information provided by it for use in the Offer Documents if and to the extent that such information shall become false or misleading in any material respect or as otherwise required by the applicable U.S. federal securities laws, including the rules and regulations of the SEC thereunder (collectively, the “ Securities Laws ”). Parent and Merger Sub shall take all steps necessary to amend or supplement the Offer Documents and to cause the Offer Documents, as so amended or supplemented, to be filed with the SEC and to be disseminated to the holders of Shares, in each case as and to the extent required by applicable Securities Laws. The Company and the Special Committee, and their respective counsel, shall be given reasonable opportunity to review and comment on the Offer Documents (including any amendments or supplements thereto) before they are filed with the SEC or disseminated to the stockholders of the Company. Parent shall, and shall cause Merger Sub to, provide the Company and the Special Committee, and their respective counsel, with copies of any written comments, and shall inform them of any oral comments, that Parent, Merger Sub or their counsel receives from the SEC or its staff with respect to the Offer Documents promptly after the receipt of such comments and shall give the Company and the Special Committee, and their respective counsel, a reasonable opportunity to review and comment on any written or oral responses to such comments.

          (b) On the date of commencement of the Offer, the Company, Parent, Merger Sub and such other affiliates of Parent as may be required under applicable Law shall file with the SEC, pursuant to and in accordance with Rule 13e-3 and Regulation M-A, a joint Rule 13e-3 Transaction Statement on Schedule 13E-3 with respect to the Transactions (the “ Schedule 13E-3 ”, which may mean the Schedule 13E-3 included in the Schedule TO as described in the second proviso of this sentence); provided that, to the extent that the Company is not filing the Schedule 14D-9 (as defined herein) on the same day as the date of commencement of the Offer, such obligation on the part of the Company shall not apply; and provided further that at their option, subject to applicable Law, Parent and Merger Sub may include the Schedule 13E-3 in the Schedule TO included in the Offer Documents. Each of Parent, Merger Sub and the Company

agrees to use reasonable best efforts promptly to respond to any comments of the SEC or its staff with respect to the Schedule 13E-3 filed by it and promptly to correct any information provided by it for use in such Schedule 13E-3 if and to the extent that such information shall become false or misleading in any material respect or as otherwise required by the Securities Laws. Each party shall take all steps necessary to amend or supplement its Schedule 13E-3 and to cause such Schedule 13E-3, as so amended or supplemented, to be filed with the SEC, in each case as and to the extent required by applicable Securities Laws. Each of Parent, the Company and the Special Committee and its respective counsel shall be given reasonable opportunity to review and comment on each Schedule 13E-3 (including any amendments or supplements thereto) before it is filed with the SEC. Each of Parent, the Company and the Special Committee shall provide the others and their respective counsel with copies of any written comments, and shall inform them of any oral comments, such Person or its counsel receives from the SEC or its staff with respect to such Schedule 13E-3 promptly after the receipt of such comments and shall give the others a reasonable opportunity to review and comment on any written or oral responses to such comments.

          SECTION 1.03.  Company Actions .

          (a) No later than ten business days from the date of commencement of the Offer, the Company shall file with the SEC a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer containing, to the extent that no Change in Recommendation (as defined herein) shall have occurred in accordance with Section 6.02, the Special Committee Recommendation and the Company Board Recommendation (together with all amendments, supplements and exhibits thereto, the “ Schedule 14D-9 ”) and shall cause the Schedule 14D-9 to be disseminated to the holders of Shares, in each case in a manner that complies with Rule 14d-9 under the Exchange Act and the Securities Laws. The Company shall deliver copies of the proposed form of the Schedule 14D-9 to Parent within a reasonable time prior to the filing thereof with the SEC for review and comment by Parent and its counsel. Each of Parent and Merger Sub shall, and Parent shall cause any of its affiliates to, promptly furnish to the Company all information concerning the Parent, Merger Sub and the affiliates of Parent that may be required by applicable Laws or reasonably requested by the Company for inclusion in the Schedule 14D-9. Each of the Company, Parent and Merger Sub shall use reasonable best efforts promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect or as otherwise required by the Securities Laws. The Company shall take all steps necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9, as so amended or supplemented, to be filed with the SEC and to be disseminated to the holders of Shares, in each case as and to the extent required by the Securities Laws. The Company shall provide Parent and its counsel with copies of any written comments, and shall inform them of any oral comments, that the Company or the Special Committee, or their respective counsel, receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt of such comments and shall give Parent and its counsel a reasonable opportunity under the circumstances to review and comment on any written or oral responses to such comments. The Company agrees to use reasonable best efforts to respond promptly to any comments of the SEC or its staff with respect to the Schedule 14D-9.

          (b) In connection with the Offer, the Company shall reasonably promptly furnish or cause to be furnished to Parent and Merger Sub (i) mailing labels, security position listings of Shares held in stock depositories and any available listing or computer file containing the names and addresses of the record holders of Shares, each as of the most recent practicable date, and (ii) such additional information, including updated lists of stockholders, mailing labels and lists of securities positions and such other information and assistance as Parent, Merger Sub or their agents may reasonably request in connection with communicating to the record and beneficial holders of Shares with respect to the Offer and the Merger.

          (c) The Company hereby consents, to the extent that no Change in Recommendation (as defined herein) shall have occurred in accordance with Section 6.02, to the inclusion in the Offer Documents and the Schedule 13E-3 of the Special Committee Recommendation and the Company Board Recommendation.

          SECTION 1.04.  Directors . Following the Acceptance Time and until the Effective Time, the Company Board shall at all times include the directors that currently comprise the Special Committee, and none of Parent, Merger Sub and the Company shall take any action to cause any change in the composition of the Special Committee. After the Acceptance Time and prior to the Effective Time, in addition to any approvals of the Company Board or the stockholders of the Company as may be required by the Company Charter (as defined herein), the Company Bylaws (as defined herein) or applicable Law, and without limiting the other requirements set forth herein, the affirmative vote of a majority of the members of the Special Committee shall be required (a) for the Company to terminate this Agreement or amend this Agreement, (b) for the Company to exercise or waive any of the Company’s benefits, rights or remedies under this Agreement, (c) for the Company to take any action that would prevent or materially delay the consummation of the Merger, (d) except as otherwise expressly contemplated by this Agreement, to amend the Company Charter or the Company Bylaws or (e) for the Company Board to take any other action under this Agreement, in each case, if such termination, amendment, exercise, waiver or other action would reasonably be expected to adversely affect the holders of Shares.

          SECTION 1.05.  Top Up Option.

          (a) The Company hereby irrevocably grants to Merger Sub an option (the “ Top Up Option ”), exercisable upon the terms and conditions set forth in this Section 1.05, to purchase a number of newly-issued shares of Common Stock (to be agreed between the Company and Parent, acting in good faith) (the “ Top Up Option Shares ”) equal to a number of shares of Common Stock that, when added to the number of shares of Common Stock owned by the Fairfax Group at the time of such exercise, shall constitute no less than one (1) share more than ninety percent (90%) of the shares of Common Stock outstanding on a fully-diluted basis immediately after the issuance of the Top Up Option Shares at a price per share equal to the Offer Price; provided that in no event shall the Top Up Option be exercisable for a number of shares of Common Stock in excess of the Company’s then authorized and unissued shares of Common Stock (giving effect to shares of Common Stock reserved for issuance under the Company Incentive Plans (as defined herein) and the ESPP (as defined herein) as if such shares were outstanding).

          (b) Merger Sub may exercise the Top Up Option, in whole but not in part, at any time after the consummation of the Offer (for the avoidance of doubt, provided that the Minimum Condition has been satisfied and not waived by the Company) and prior to the earlier to occur of (i) the Effective Time and (ii) the termination of this Agreement in accordance with its terms. In the event that Merger Sub wishes to exercise the Top Up Option, it shall notify the Company in writing, and shall set forth in such notice: (A) the number of shares of Common Stock that will be owned by the Fairfax Group immediately preceding the purchase of the Top Up Option Shares, and (B) the place and time for the closing of the purchase of the Top Up Option Shares by Merger Sub, which shall not be more than five (5) business days after delivery of such notice (the “ Top Up Closing ”). The Company shall, as soon as practicable following receipt of such notice, notify Merger Sub of the number of shares of Common Stock then outstanding, the number of shares of Common Stock outstanding on a fully-diluted basis and the proposed number of Top Up Option Shares. At the Top Up Closing, Parent or Merger Sub shall pay the Company the aggregate purchase price for the Top Up Option Shares (calculated by multiplying the number of such Top Up Option Shares by the Offer Price) and the Company shall cause to be issued to Merger Sub a certificate (or other appropriate form of ownership, including book entry) representing the Top Up Option Shares. The aggregate purchase price payable for the Top Up Option Shares may be paid by Merger Sub by executing and delivering to the Company a promissory note having a principal amount equal to the balance of the aggregate purchase price for the Top Up Option Shares. Any such promissory note shall bear interest at the applicable federal rate as determined for U.S. federal income tax purposes, shall mature on the first (1st) anniversary of the date of execution and delivery of such promissory note and may be prepaid without premium or penalty. In the event that this Agreement is terminated after the Top Up Option is exercised and prior to the Effective Time, all amounts then owing pursuant to the promissory note (including all interest) shall thereupon become immediately due and payable.

          (c) The parties shall cooperate to ensure that the issuance of the Top Up Option Shares is accomplished consistent with all applicable Laws. Consistent therewith, Parent and Merger Sub acknowledge that the shares of Common Stock that Merger Sub may acquire upon exercise of the Top Up Option will not be registered under the Securities Act of 1933, as amended (the “ Securities Act ”), and will be issued in reliance upon an exemption thereunder for transactions not involving a public offering. Parent and Merger Sub represent and warrant to the Company that Merger Sub will be upon the purchase of the Top Up Option Shares an “accredited investor”, as defined in Rule 501 of Regulation D under the Securities Act. Merger Sub agrees that the Top Up Option and the Top Up Option Shares to be acquired upon exercise of the Top Up Option are being and will be acquired by Merger Sub for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof (within the meaning of the Securities Act).

ARTICLE II

THE MERGER

          SECTION 2.01.  The Merger .

          (a) Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), Merger Sub shall be merged with and into the Company at the Effective Time (as defined herein). Following the Effective Time, the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation in the Merger (the “ Surviving Corporation ”). The Merger shall have the effects set forth in this Agreement and the DGCL.

          (b) Notwithstanding anything in this Agreement to the contrary, if following the Offer and the subsequent offering period (if any) and the exercise (if any) of the Top Up Option, the requirements for a short form merger pursuant to Section 253 of the DGCL (a “ Short Form Merger ”) are satisfied (or may be satisfied solely through actions of the Fairfax Group) such that the Merger may be effected without a meeting, vote or written consent of the stockholders of the Company, Parent, Merger Sub and the Company shall, and Parent shall cause the other members of the Fairfax Group to, take all reasonable actions to consummate the Merger pursuant to Section 253 of the DGCL as soon as practicable after the satisfaction or waiver of the conditions to Closing set forth in Article VII hereof (and in any event within the time parameters set forth in Section 2.02 below).

          SECTION 2.02.  Closing . The closing of the Merger (the “ Closing ”) will take place at 9:00 a.m., New York City time, on the third business day after satisfaction or (to the extent permitted by Law) waiver of the conditions set forth in Article VII (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or (to the extent permitted by Law) waiver of those conditions), at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017, unless another time, date or place is agreed to in writing by Parent and the Company, provided , however , that, to the extent the Information Statement (as defined herein) is required to be delivered to the Company’s stockholders pursuant to this Agreement and the Exchange Act, the Closing shall not occur until a date that is at least twenty calendar days after the mailing of the Information Statement to the Company’s stockholders. The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date ”.

          SECTION 2.03.  Effective Time . Subject to the provisions of this Agreement, as promptly as practicable on the Closing Date, the Company shall file a certificate of merger, if the Merger is effected pursuant to Section 251 of the DGCL, or Merger Sub shall file a certificate of ownership and merger, if the Merger is effected pursuant to Section 253 of the DGCL (each, a “ Certificate of Merger ”), in such form as is required by, and executed and acknowledged in accordance with, the relevant provisions of the DGCL, and the parties shall make all other filings and recordings required under the DGCL. The Merger shall become effective at such date and time as the Certificate of Merger is filed with the Secretary of State of the State of Delaware or at such subsequent date and time as Parent and the Company shall agree and specify in the Certificate of Merger. The date and time at which the Merger becomes effective is referred to in this Agreement as the “ Effective Time ”.

          SECTION 2.04.  Certificate of Incorporation and Bylaws . At the Effective Time, the Amended and Restated Certificate of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation

and the Amended and Restated Bylaws of the Company, as in effect immediately prior to the Effective Time, shall be the By-laws of the Surviving Corporation until thereafter amended in accordance with their respective terms and the DGCL.

          SECTION 2.05.  Directors . The directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation until their respective successors are duly elected or appointed and qualified in the manner provided in the certificate of incorporation and bylaws of the Surviving Corporation, or until their earlier death, resignation or removal, or otherwise as provided by Law.

          SECTION 2.06.  Officers . The officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation until their respective successors are duly elected or appointed and qualified in the manner provided in the certificate of incorporation and bylaws of the Surviving Corporation, or until their earlier death, resignation or removal, or otherwise as provided by Law.

ARTICLE III

EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES; COMPANY EQUITY AWARDS

          SECTION 3.01.  Effect on Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of capital stock of the Company or any shares of capital stock of Parent or Merger Sub:

          (a) Each share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $.01 per share, of the Surviving Corporation.

          (b) Each share of 8.125% series A preferred stock, par value $0.01 per share, of the Company (the “ Series A Preferred Stock ”) issued and outstanding immediately prior to the Effective Time (other than shares to be canceled pursuant to clause (d) below) shall remain outstanding as Series A Preferred Stock of the Surviving Corporation and will have such terms as set forth in the Certificate of Designations Establishing the Designations, Powers, Preferences, Rights, Qualifications, Limitations And Restrictions of 8.125% series A preferred stock, dated as of October 17, 2005, pursuant to which they were issued (the “ Series A Certificate of Designations ”).

          (c) Each share of floating rate series B preferred stock, par value $0.01 per share, of the Company (the “ Series B Preferred Stock ” and together with the Series A Preferred Stock, the “ Preferred Stock ”) issued and outstanding immediately prior to the Effective Time (other than shares to be canceled pursuant to clause (d) below) shall remain outstanding as Series B Preferred Stock of the Surviving Corporation and will have such terms as set forth in the Certificate of Designations Establishing the Designations, Powers, Preferences, Rights, Qualifications, Limitations And Restrictions of floating rate series B preferred stock, dated as of

October 17, 2005, pursuant to which they were issued (the “ Series B Certificate of Designations ”).

          (d) Each share of Common Stock and Preferred Stock that is directly owned by the Company as treasury stock shall automatically be canceled and shall cease to exist, and no consideration shall be delivered in exchange therefor. Each share of Common Stock and Preferred Stock owned by any wholly-owned Company Subsidiary, Parent or any other member of the Fairfax Group immediately prior to the Effective Time shall remain outstanding after the Effective Time as shares of the Surviving Corporation.

          (e) Each share of Common Stock issued and outstanding immediately prior to the Effective Time (excluding shares which remain outstanding, or to be canceled, in accordance with Sections 3.01(b), (c) or (d) and, except as provided in Section 3.01(f), the Appraisal Shares (as defined herein)) shall be converted into the right to receive the Offer Price in cash, without interest (the “ Merger Consideration ”), and at the Effective Time, all such shares of Common Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of (x) a certificate that immediately prior to the Effective Time represented any such shares of Common Stock (each, a “ Certificate ”) or (y) any such uncertificated shares of Common Stock (collectively, the “ Uncertificated Shares ”) shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration and any declared dividends with a record date prior to the Effective Time that remain unpaid at the Effective Time and that are due to such holder.

          (f) Notwithstanding anything in this Agreement to the contrary, shares (the “ Appraisal Shares ”) of Common Stock issued and outstanding immediately prior to the Effective Time that are held by any holder who is entitled to demand and properly demands appraisal of such shares pursuant to, and who complies in all respects with, the provisions of Section 262 of the DGCL (“ Section 262 ”) shall not be converted into the right to receive the Merger Consideration as provided in Section 3.01(e), but instead such holder shall be entitled to payment of the fair value of such shares in accordance with the provisions of Section 262. At the Effective Time, the Appraisal Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of Appraisal Shares shall cease to have any rights with respect thereto, except the right to receive the fair value of such shares in accordance with the provisions of Section 262. Notwithstanding the foregoing, if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 262 or a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262, then the right of such holder to be paid the fair value of such holder’s Appraisal Shares under Section 262 shall cease and such Appraisal Shares shall be deemed to have been converted at the Effective Time into, and shall have become, the right to receive the Merger Consideration as provided in Section 3.01(e). The Company shall give prompt notice to Parent of any demands for appraisal of any shares of Common Stock, withdrawals of such demands and any other instruments served pursuant to the DGCL received by the Company, and Parent shall have the right to participate in and direct all negotiations and proceedings with respect to such demands. The Company shall not, without the prior written consent of Parent (which consent shall not be unreasonably withheld or delayed), voluntarily make any payment with respect to, or settle or offer to settle, any such demands, or agree to do or commit to do any of the foregoing.

          SECTION 3.02.  Exchange Fund. (a) Paying Agent. Prior to the Closing Date, Parent shall appoint a bank or trust company reasonably acceptable to the Company to act as paying agent (the “ Paying Agent ”) for the payment of the Merger Consideration and, in connection therewith, shall enter into an agreement with the Paying Agent in a form reasonably acceptable to the Company. Parent shall deposit (i) with the Paying Agent prior to the Effective Time cash in an amount sufficient to pay the aggregate Merger Consideration (such cash being hereinafter referred to as the “ Exchange Fund ”) and (ii) on the Closing Date with the Surviving Corporation, for the benefit of the holders of Stock Options (as defined herein) and Restricted Stock (as defined herein), cash in an amount equal to any amounts ultimately required to be paid to the holders of Stock Options and Restricted Stock in the Merger as a result of the actions taken by the parties and the Special Committee pursuant to Section 3.03(a).

          (b) Exchange Procedures. As promptly as reasonably practicable after the Effective Time, Parent shall cause the Paying Agent to mail to each holder of shares of Common Stock (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates, if any, shall pass, only upon proper delivery of the Certificates or transfer of the Uncertificated Shares to the Paying Agent and which shall otherwise be in customary form reasonably satisfactory to the Com