Prospectus excerpt: Fairfax Financial Holdings Limited (“Fairfax” or the “Company”) is offering 8,000,000 Cumulative 5-Year Rate Reset Preferred Shares, Series K (the “Series K Shares”) at a price of Cdn$25.00 per share (the “Offering”). For the initial period commencing on the Closing Date (as defined herein) and ending on and including March 31, 2017 (the “Initial Fixed Rate Period”), the holders of Series K Shares will be entitled to receive fixed cumulative preferential cash dividends, as and when declared by the board of directors of the Company (the “Board of Directors”), payable quarterly on the last business day of March, June, September and December in each year at an annual rate equal to Cdn$1.25 per share. The initial dividend, if declared, will be payable June 29, 2012 and will be Cdn$0.34589 per share, based on the anticipated closing date of March 21, 2012. See “Details of the Offering”.
For each five-year period after the Initial Fixed Rate Period (each a “Subsequent Fixed Rate Period”), the holders of Series K Shares will be entitled to receive fixed cumulative preferential cash dividends, as and when declared by the Board of Directors, payable quarterly on the last business day of March, June, September and December in each year during the Subsequent Fixed Rate Period, in an annual amount per share determined by multiplying the Annual Fixed Dividend Rate (as defined herein) applicable to such Subsequent Fixed Rate Period by Cdn$25.00. The Annual Fixed Dividend Rate for each Subsequent Fixed Rate Period will be determined by the Company on the 30th day prior to the first day of such Subsequent Fixed Rate Period and will be equal to the sum of the Government of Canada Yield (as defined herein) on the date on which the Annual Fixed Dividend Rate is determined plus a spread of 3.51%. This spread will apply to both Series K Shares and Series L Shares (as defined herein) and will remain unchanged over the life of the Series K Shares and Series L Shares. See “Details of the Offering”.