Common use of Subsidiaries; Investments Clause in Contracts

Subsidiaries; Investments. Section 3.1 (c) of the Disclosure Memorandum sets forth the name of each Subsidiary of the Company, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its Subsidiaries.

Subsidiaries; Investments. Section 3.1 (ca) Except for ownership in another Company or as reflected on Schedules 4.3(a) and 4.3(b), none of the Disclosure Memorandum Companies owns any equity interests in any Person. At or immediately following Closing and subject to compliance with the procedures described in Schedules 4.3(a) and 4.3(b), the interests in the Downstream Joint Ventures will be owned by the Companies free and clear of Liens other than Permitted Liens and the provisions of the Organizational Documents of the respective Downstream Joint Ventures. (i) Schedule 4.3(a) sets forth the name a complete list of each Subsidiary all of the CompanyCompany Subsidiaries, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws formation of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each such Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares ownership interests of capital stock each such Subsidiary and the record holders thereof, and (or similar information with respect to any Subsidiary not organized as ii) Schedule 4.3(b) sets forth a corporate entity). All outstanding shares complete list of the capital stock of the Subsidiaries of the Company are validly issuedall partnerships, fully paid and nonassessable and are not subject to preemptive joint ventures or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof entities (other than restrictions on transfer imposed by federal or state securities lawsSubsidiaries) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by in which the Company or any of its Subsidiaries is has, or may be bound will have at Closing, an interest, including a description of the type of such entity, the ownership interest of the Company and its Subsidiaries therein and, to issueSeller’s Knowledge, redeemthe names and ownership interests of the other holders thereof. Except as set forth on Schedule 4.3(a), purchase all of the outstanding ownership interests of the Company Subsidiaries are owned beneficially and of record by the Company or sell shares the Company’s Subsidiaries, free and clear of all Liens. (c) All of the equity interests of each Company Subsidiary capital stock are duly authorized, validly issued and outstanding and fully paid, and were issued free of preemptive rights in compliance with applicable Laws. (or other interests, d) Sellers have made available to Buyer true copies of all existing Organizational Documents of the Company Subsidiaries. (e) Sellers hereby represent with respect to Subsidiaries not organized Cedar Bayou Fractionators, L.P, a Delaware limited partnership (“CBF”) that: (i) all liabilities of CBF that are required by GAAP to be reflected or reserved against in the March 31, 2009 Balance Sheet included in the Financial Statements have been so reflected or reserved against in the March 31, 2009 Balance Sheet included in the Financial Statements; (ii) except as corporate entitiesdisclosed on Schedule 4.3(e)(ii), since the Balance Sheet Date, (x) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth business of CBF has been conducted, in Section 3.1(c) of the Disclosure Memorandumall material respects, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made only in the ordinary course consistent with past practices, and (y) there has been no damage, destruction or loss to the assets or properties of business. As used in this Agreement, CBF which could reasonably be expected to have a material and adverse impact on the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, business of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or CBF; (iii) at least 10% there are no lawsuits or actions before any Governmental Authority pending or, to the Knowledge of the equitySellers, other securities or other interests is, directly or indirectly, owned or controlled by such party or threatened by any one Person against CBF other than lawsuits or more actions which could not reasonably be expected to have a material and adverse impact on CBF and CBF is not subject to any injunction, order or unsatisfied judgment from any Governmental Authority which could reasonable be expected to have a material and adverse impact on CBF; (iv) to the Knowledge of its Subsidiaries Sellers and except as set forth in Schedule 4.3(e)(iv): (A) the operations of CBF are in compliance in all material respects with all Environmental Laws, which compliance includes the possession and maintenance of, and compliance with, all material Permits required under all applicable Environmental Laws; (B) CBF is not the subject of any outstanding administrative or by such party judicial order or judgment, agreement or arbitration award from any Governmental Authority under any Environmental Laws requiring remediation or the payment of a fine or penalty; and (C) CBF is not subject to any one action pending or more threatened in writing, whether judicial or administrative, alleging noncompliance with or potential liability under any Environmental Law; and (v) Downstream Energy Ventures Co., L.L.C. is the general partner of its SubsidiariesCBF and has not conducted any business or activities other than serving as general partner of CBF.

Subsidiaries; Investments. Section 3.1 (ca) of the Disclosure Memorandum sets forth the name of each Subsidiary of Except for the Company, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary ’s ownership of the Company is duly qualified or licensed Subsidiaries and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) 4.8 of the Disclosure MemorandumSchedule, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries Target Companies do not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries ownsown, directly or indirectly, any capital stock of, or other equity interest in, any corporation or have any direct or indirect equity or ownership interest in any corporationinterest, partnership, business associationpartnership interests, joint venture interests, or other entityparticipation interests in any other Person. (b) Except for the membership interests in Arrow Pipeline that will be acquired prior to Closing pursuant to the MHA Acquisition, except for portfolio investments made the Company owns 100% of the membership interests in each of the Company Subsidiaries free and clear of all Liens. All of the membership interests in the ordinary course Company Subsidiaries are duly authorized, validly issued and fully paid (to the extent required by the applicable Company Subsidiary’s Governing Documents) and nonassessable. Except for such membership interests owned by the Company or to be acquired by the Company pursuant to the MHA Acquisition, there are outstanding or in existence (i) no membership interests or other equity or debt securities of business. As used any Company Subsidiary, (ii) no securities of any Company Subsidiary convertible into or exchangeable for membership interests or other voting securities of the Company Subsidiary, (iii) no options, warrants, calls, subscriptions or other rights to acquire from any Company Subsidiary, and no obligation of any Company Subsidiary to issue or sell, any membership interests or other voting securities of any Company Subsidiary or any securities of any Company Subsidiary convertible into or exchangeable for such membership interests or voting securities, (iv) no equity equivalents, interests in this Agreementthe ownership or earnings, the word "Subsidiary," equity appreciation rights, phantom equity, profit participation rights, or other similar rights of or with respect to any party to this AgreementCompany Subsidiary and (v) other than as reflected in each Company Subsidiary’s Governing Documents, means any corporationno voting trust, partnership, joint venture proxy or other organization, whether incorporated agreement or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions understanding with respect to such corporation, partnership, joint venture or other organization is held by such party or by the voting of any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equitymembership interests attributable to such Company Subsidiary. There are no outstanding obligations of any Company Subsidiary to repurchase, other securities redeem or other otherwise acquire any of the foregoing membership interests, securities, options, equity equivalents, interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its Subsidiariesrights.

Subsidiaries; Investments. (a) Section 3.1 (c3.3(a) of the Disclosure Memorandum Schedule sets forth the name a complete and accurate list of each Subsidiary of the Company, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority each Acquired Company and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction other Persons in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Acquired Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock equity interests or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests isotherwise controls, directly or indirectly, and such list sets forth the name, the jurisdiction of organization, the authorized and outstanding equity interests and the record and beneficial ownership of the equity interests of any such Subsidiary and any such other Person. (b) All of the outstanding equity interests of each Subsidiary of the Acquired Companies (i) have been duly and validly issued, (ii) are fully paid and nonassessable, (iii) were not issued in violation of any preemptive rights or rights of first refusal or first offer and (iv) are owned beneficially and of record by the respective Acquired Company. There are no outstanding or controlled by such authorized equity appreciation, phantom equity interests, profit participation or similar rights with respect to any Subsidiary of any Acquired Company, nor are there any voting trusts, proxies, member agreements or any other agreements or understandings with respect to the voting, registration, sale or transfer of any equity interests of any Subsidiary of any Acquired Company. (c) There are no options, warrants or other rights to subscribe for or purchase any equity interests of any Subsidiary of any Acquired Company, and there are no securities convertible into or exchangeable for, or that otherwise confer on the holder any right to acquire, any equity interests of any Subsidiary of any Acquired Company. There are no preemptive rights or rights of first refusal or first offer, nor are there any Contracts or restrictions to which any Subsidiary of any Acquired Company is a party or by which any one Subsidiary of any Acquired Company is bound, relating to any equity interests of such Subsidiary, whether or more not outstanding. No Subsidiary of its Subsidiaries any Acquired Company currently maintains, nor does any Subsidiary of any Acquired Company have any ongoing liability for, any equity option plan or by any other plan or agreement providing for equity compensation of any Person. All of the equity interests of each Subsidiary of the Acquired Companies issued and outstanding have been granted, offered, sold and issued in compliance in all material respects with all Applicable Laws to which such party and any one Subsidiary is subject to or more of its Subsidiariesbound.

Subsidiaries; Investments. Section 3.1 Each Company's subsidiaries and ------------------------- investments in any other corporation or business entity are listed in Schedule -------- 2.04 attached hereto (c) of the Disclosure Memorandum sets forth the name of each Subsidiary of the Companycollectively, the jurisdiction of its incorporation or organization and whether it is an insurance company"Subsidiaries" and, individually, each a ---- "Subsidiary"). Each Except as set forth in Schedule 2.04 attached hereto, each ------------- Subsidiary is an entity a duly organized, validly existing and corporation or other business entity in good standing under the laws of the jurisdiction of its incorporation or organization and has the formation with full power and authority and all necessary government approvals to own, own or lease and operate its properties and to carry on conduct its business as now being in the manner and in the places where such properties are owned or leased or such business is currently conducted or proposed to be conducted. Each Subsidiary Except as disclosed in Schedule 2.04 attached hereto, all of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and ------------- outstanding shares of capital stock (of each Subsidiary are owned beneficially and of record by the relevant Company, free of any lien, restriction or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding encumbrance and said shares of the capital stock of the Subsidiaries of the Company have been duly and validly issued and are validly issuedoutstanding, fully paid and nonassessable nonassessable. The copies of each of the Subsidiaries' Articles of Incorporation and are not subject to preemptive by-laws, or other similar rights; neither the Company nor any Subsidiary organizational documents, each as amended to date, and heretofore delivered to Buyer's counsel, are complete and correct, and no amendments thereto are pending. None of the Company has Subsidiaries is in violation of any call obligations term of its Articles of Incorporation or similar liabilities with respect by- laws (or comparable organizational documents). Each Subsidiary is duly qualified to partnerships do business as a foreign corporation in each jurisdiction where (i) such Subsidiary conducts business and (ii) the laws of such jurisdiction require such qualification, and it is not required to be licensed or qualified to conduct its business or own its property in any other Subsidiaries not organized as corporate entitiesjurisdiction. Except as set forth disclosed in Section 3.1(cSchedule 2.04 attached hereto, (A) there are no outstanding ------------- warrants, options or other rights to purchase or acquire any of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interestsownership interests of any Subsidiary, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal any outstanding securities convertible into such shares or state securities laws) and no capital stock (outstanding warrants, options or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe toacquire any such convertible securities, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entitiesB) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which restrictions on the Company or transfer of any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary Subsidiaries' capital stock (or other ownership interests, with respect to Subsidiaries not organized as corporate entitiesand (C) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any no capital stock or other ownership interest of any Subsidiary has been issued in violation of any corporationforeign, partnershipfederal, business association, joint venture state or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its Subsidiarieslocal law.

Subsidiaries; Investments. Section 3.1 (ca) of the Disclosure Memorandum sets forth the name of Schedule 2.3 attached hereto lists each Subsidiary of the Company, the Company and such Subsidiary's jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessaryorganization. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company isowns, directly or indirectly, all of the record outstanding capital stock (or other ownership interests) of each of its Subsidiaries which, with respect to each such Subsidiary, has been duly authorized and validly issued and is fully paid and, if applicable, non assessable and were not issued in violation of any preemptive right or other contractual obligations. The Company is the beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries Subsidiaries, free and clear of any and all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and there are no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any outstanding options, warrants, convertible securities, calls, rights, commitments, preemptive rights to subscribe to, calls or commitments agreements or instruments or understandings of any character whatsoever relating tocharacter, obligating any Subsidiary of the Company to issue, deliver or sell, or cause to be issued, delivered or sold, contingently or otherwise, additional shares of such Subsidiary or any securities or rights obligations convertible into or exchangeable for such shares or exercisable forto grant, shares extend or enter into any such option, warrants, convertible security, call, right, commitment, preemptive right or agreement. No Subsidiary of the Company owns any capital stock of the Company. Except as disclosed on Schedule 2.3 attached hereto, the Company and its Subsidiaries have no investments (whether through acquisition of an equity interest or otherwise) in any other person, joint venture, business, corporation, partnership, trust or other interestsentity. There are no stockholder agreements, voting trusts, proxies or other agreements or understanding with respect to or concerning the purchase, sale or voting of the capital stock or Stock Rights of any of the Subsidiaries not organized as corporate entitiesof the Company. No Subsidiary of the Company is in default under or in violation of any provision of its Organizational Documents. (b) The Company has the ability (A) to effect any action requiring the approval of the shareholders of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound (B) to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) designate all of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority members of the Board board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more directors of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more each of its Subsidiaries.

Subsidiaries; Investments. Section 3.1 (c) Except as set forth on the ------------------------- "Subsidiaries Schedule" attached hereto, the Company does not own or hold any --------------------- shares of stock or any other security or interest in any other Person or any rights to acquire any such stock or other security or interest. All of the Disclosure Memorandum sets forth the name of each Subsidiary of the Companyauthorized, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock of each of the Company's Subsidiaries (or similar information with respect to any the "Subsidiary not organized as a corporate entity)Stock") and the class and par value of ---------------- such Subsidiary Stock are set forth on the Subsidiaries Schedule. All of the --------------------- issued and outstanding shares of the capital stock of the Subsidiaries of the Company Subsidiary Stock have been duly authorized, are validly issued, fully paid paid, and nonassessable nonassessable, and are held of record and beneficially by the Persons and in the amounts set forth on the Subsidiaries ------------ Schedule and are not subject to to, nor were they issued in violation of, any -------- preemptive rights or other similar rights; neither rights of first refusal, and are owned of record and beneficially by the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except respective Persons as set forth in Section 3.1(c) of on the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries Schedule --------------------- free and clear of all Liens and other restrictions with respect (but subject to the transferability applicable laws concerning unregistered securities). There are no outstanding or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any authorized options, warrants, rights, contracts, calls, puts, rights to subscribe tosubscribe, calls conversion rights or other agreements or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is a party or may be bound to issuewhich are binding upon the Company or any of its Subsidiaries providing for the issuance, redeem, purchase disposition or sell shares acquisition of Subsidiary any capital stock (of any of the Company's Subsidiaries. There are no outstanding or other interestsauthorized stock appreciation, phantom stock or similar rights with respect to Subsidiaries not organized as corporate entities) the Company's Subsidiaries. There are no voting trusts, proxies or securities convertible into any other agreements or exchangeable or exercisable for any such shares or interests. Except for understandings with respect to the ownership interests set forth in Section 3.1(c) voting of the Disclosure Memorandum, neither Subsidiary Stock. Neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect is subject to any party obligation (contingent or otherwise) to this Agreement, means repurchase or otherwise acquire or retire any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, shares of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesStock.

Subsidiaries; Investments. (a) Section 3.1 (c5.9(a) of the Disclosure Memorandum Schedule sets forth (i) the name of each Subsidiary of the Company, (ii) the jurisdiction of its incorporation or organization formation of each such Subsidiary, (iii) the authorized, issued and whether it is an insurance companyoutstanding Equity Interests in each such Subsidiary and (iv) the names and ownership interest of the equity holders or holders of Equity Interests in each such Subsidiary. Except as set forth in Section 5.9(a) of the Disclosure Schedule, the Company does not own, directly or indirectly, or have voting rights with respect to, any capital stock or other Equity Interests in any corporation, partnership or other Person. (b) Each Subsidiary of the Company is an entity a limited liability company and is duly organizedformed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization formation and has the all requisite limited liability company power and authority and all necessary government approvals to own, lease and operate its assets and properties and to carry on its business businesses as now being presently conducted. Each Subsidiary of the Company is duly qualified or licensed to transact business as a foreign limited liability company and is in good standing to do business in each jurisdiction in which the property owned, leased or operated by it nature of its activities or the nature character of the business conducted by assets and properties that it owns, leases or operates makes such qualification necessary, except where the failure to be so qualified or licensing necessaryin good standing would not reasonably be expected, individually or in the aggregate, to have a Company Material Adverse Effect. The Company has heretofore furnished or made available to USF&G Purchaser correct and complete and correct copies of the articles Organizational Documents of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock . (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. c) Except as set forth in Section 3.1(c5.9(c) of the Disclosure MemorandumSchedule, all of the issued and outstanding Equity Interests in each Subsidiary of the Company is(i) have been duly authorized, (ii) are validly issued, (iii) are not subject to any future capital calls (except as provided in the Organizational Documents of such Subsidiary or under applicable Law) and (iv) are owned by the Company, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (Liens, other than Permitted Liens or restrictions on transfer imposed by under the Contracts listed in Section 5.9(c) of the Disclosure Schedule and restrictions on transfer of such Equity Interests under federal or and state securities laws as a result of the fact that the Equity Interests have not been registered or qualified for transfer under such laws) and no capital stock . None of the Equity Interests of any Subsidiary of the Company are subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Law governing such Subsidiary, the Organizational Documents of such Subsidiary or any Contract to which the Company or such Subsidiary is a party or otherwise bound. There are not any bonds, debentures, notes or other indebtedness of any Subsidiary of the Company having the right to vote (or other interestsconvertible into, with respect or exchangeable for, securities having the right to Subsidiaries not organized as corporate entitiesvote) on any matters on which holders of any of its Subsidiaries is or Equity Interests in such Subsidiary may become required to be issued by reason of any vote (“Voting Subsidiary Debt”). There are no outstanding options, warrants, rights to subscribe tocalls, calls rights, convertible or exchangeable securities or other Contracts, commitments or arrangements of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect i) pursuant to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries Subsidiary is or may be bound obligated to issue, redeemdeliver or sell, purchase or sell shares of Subsidiary capital stock (cause to be issued, delivered or other interestssold, with respect to Subsidiaries not organized as corporate entities) any issued or securities unissued Equity Interests or any security convertible into for or exchangeable or exercisable for into any such shares or interests. Except for the ownership interests set forth Equity Interest in Section 3.1(c) any Subsidiary of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Voting Subsidiary of such party is a general partner; Debt, (ii) voting power obligating the Company or any Subsidiary to elect a majority of the Board of Directors issue, grant, extend or others performing similar functions with respect to enter into any such corporationoption, partnershipwarrant, joint venture call, right, security, commitment, Contract, arrangement or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; undertaking or (iii) at least 10% that give any Person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of the equity, other securities or other interests is, directly or indirectly, owned or controlled by any Equity Interest in any such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesSubsidiary.

Subsidiaries; Investments. Section 3.1 (a) Schedule 3.3(a) sets forth a true, correct and complete list of all direct and indirect Subsidiaries of the Acquired Parent Entities (the “Acquired Subsidiary Entities” and each, an “Acquired Subsidiary Entity”), including each Acquired Entity Subsidiary’s name, type of entity, jurisdiction and date of incorporation or organization, authorized capital stock, partnership or membership capital or equivalent, the number and type of its issued and outstanding shares of capital stock, partnership or membership interests or similar ownership interests, and the current ownership of such shares, partnership or membership interests or similar ownership interests. (b) Except for the Acquired Subsidiary Entities and as set forth on Schedule 3.3(b), neither the Acquired Parent Entities nor any Acquired Subsidiary Entity owns, of record or beneficially, any direct or indirect equity or other ownership, capital, voting or participation interest or any right (contingent or otherwise) to acquire the same in any Person. (c) of the Disclosure Memorandum sets forth the name of each Each Acquired Subsidiary of the Company, the jurisdiction of its incorporation or organization and whether it Entity (i) is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing (or its equivalent) under the laws Laws of the its jurisdiction of its incorporation or organization and has the all other jurisdictions in which its ownership of property or conduct of business requires it to be qualified , and (ii) possesses all requisite organizational power and authority and all necessary government approvals to own, operate, lease and operate license its properties and properties, to carry on its business as now being conductedconducted and to consummate the transactions contemplated by this Agreement except where such qualification would not have a Material Adverse Effect on the Acquired Entities taken as a whole. Each True, correct and complete copies of each Acquired Subsidiary Entity’s organizational documents have been provided to the Buyer and reflect all amendments made thereto at any time prior to the Closing Date. (d) All of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock stock, partnership or membership interests or other similar ownership interests of each Acquired Subsidiary Entity (or similar information with respect to any “Acquired Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are Equity Interests”) have been duly authorized and validly issued, and are fully paid and nonassessable non-assessable. The Acquired Parent Entities or one or more Acquired Subsidiary Entities owns (beneficially and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of record) all of the Company has outstanding Acquired Subsidiary Equity Interests, free and clear of any call obligations or similar liabilities with respect to partnerships or Liens, other Subsidiaries not organized as corporate entitiesthan restrictions on transfer arising under applicable federal and state securities Laws. Except as set forth in Section 3.1(c) of the Disclosure Memorandumon Schedule 3.3(d), the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contractsissued, commitments, understandings reserved for issuance or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of outstanding (i) Acquired Subsidiary capital stock Equity Interests; (or other interests, with respect to Subsidiaries not organized as corporate entitiesii) or securities convertible into or exchangeable for Acquired Subsidiary Equity Interests or exercisable for containing any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiariesprofit participation features; or (iii) at least 10% options, warrants, stock appreciation rights, phantom stock, calls, subscriptions or other rights to acquire, or obligations to issue or allot, Acquired Subsidiary Equity Interests or any equity appreciation rights or phantom equity plans. There are no outstanding obligations of any Acquired Entity to repurchase, redeem or otherwise acquire or retire for value any Acquired Subsidiary Equity Interests. There are no statutory or contractual equityholder preemptive or similar rights, rights of first refusal or registration rights with respect to any security of any Acquired Subsidiary Entity. There are no agreements with respect to the voting or transfer of any security of any Acquired Subsidiary Entity. No Acquired Subsidiary Entity has violated any applicable federal or state securities Laws or any preemptive or similar rights created by statute, organizational document or agreement in connection with the offer, sale, issuance or allotment of any security of any Acquired Subsidiary Entity. No Acquired Subsidiary Entity has any liability for, or obligation with respect to, the payment of dividends, distributions or similar participation interests, whether or not declared or accumulated, and there are no restrictions of any kind which prevent the payment of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or foregoing by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesAcquired Subsidiary Entity.

Subsidiaries; Investments. Section 3.1 (c) of Except as set forth on the Disclosure Memorandum sets forth attached ------------------------- Investments and Subsidiaries Schedule, neither the name of each Subsidiary of Company nor its Subsidiaries ------------------------------------- own or hold the Companyright to acquire any capital stock, the jurisdiction of its incorporation partnership interest, joint venture interest or organization and whether it is an insurance companyother equity ownership interest in any other Person. Each Subsidiary identified on the Investments and Subsidiaries Schedule is an entity duly organized, validly ------------------------------------- existing and in good standing under the laws of the jurisdiction of its incorporation or organization and incorporation, has the all requisite power and authority and all necessary government approvals to own, lease and operate own its properties and to carry on its business businesses as now being conducted. Each Subsidiary of the Company conducted and is duly qualified or licensed and in good standing to do business in each every jurisdiction when such qualification is required, except when the lack of such qualification would not have a Material Adverse Effect in which the its ownership of property owned, leased or operated by it or the nature conduct of the business businesses as now conducted by requires it makes such qualification or licensing necessaryto qualify. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares equity securities of capital stock (or similar information with respect to any each Subsidiary not organized is as a corporate entity)set forth on the Investments and Subsidiaries Schedule. All outstanding shares Except as set forth ------------------------------------- on the Investments and Subsidiaries Schedule, all of the capital stock issued and outstanding ------------------------------------- equity securities of the Subsidiaries of the Company each Subsidiary have been duly authorized, are validly issued, fully paid paid, and nonassessable nonassessable, and are not subject to, nor were they issued in violation of, any preemptive rights or rights of first refusal, and are (or as of the Closing will be) owned of record and beneficially by the Company or another Subsidiary free and clear of all Encumbrances. There are no outstanding or authorized options, warrants, rights, contracts, calls, puts, rights to preemptive subscribe, conversion rights or other similar rights; neither the Company nor agreements or commitments to which any Subsidiary is a party or which are binding upon any Subsidiary providing for the issuance, disposition or acquisition of the Company has any call obligations of its equity securities. There are no outstanding or authorized equity appreciation, phantom equity or similar liabilities rights with respect to partnerships any Subsidiary. There are no voting trusts, proxies or any other Subsidiaries not organized as corporate entitiesagreements or understandings with respect to the voting of the equity securities of any Subsidiary. No Subsidiary is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any of its equity securities. Except as set forth in Section 3.1(c) of on the Disclosure MemorandumInvestments and --------------- Subsidiaries Schedule, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect does not have any obligation to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of make any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest --------------------- additional Investments in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesPerson.

Subsidiaries; Investments. Section 3.1 (c) Except as set forth on Schedule 4.6, Company does not own, directly or indirectly, any Subsidiaries and does not, directly or indirectly, own any Equity Interests in any Person. Company has delivered or otherwise made available correct and complete copies of the Disclosure Memorandum sets Organizational Documents, minute books and ownership records of each Person in Company Group and correct and complete copies in all material respects of all documents governing the Equity Interests in any Equity Affiliate owned as of the Closing by any Person in Company Group to Buyer for review. The authorized capital stock, partnership interest, membership interest or other ownership interest (collectively, the “Equity Interests”), as applicable, both as of the date of this Agreement and as of the Closing Date, of each Person in Company Group and the owners thereof are set forth on Schedule 4.6. All of the name outstanding Equity Interests of each Subsidiary of Company are duly authorized, validly issued, fully paid and nonassessable. All Equity Interests of each Subsidiary of Company are owned of record and beneficially as set forth on Schedule 4.6 and are free and clear of Liens, other than restrictions under applicable Securities Laws or other applicable foreign Laws. All Equity Interests of each Equity Affiliate owned by any Person in Company Group are owned of record and beneficially as set forth on Schedule 4.6 and, except as set forth on Schedule 4.6, are free and clear of Liens, other than restrictions under applicable Securities Laws or other applicable foreign Laws. As of the Effective Time, except as may have been created by Buyer or its Affiliates prior to the Closing or as may be required under employment agreements disclosed on Schedule 4.22 with respect to Equity Rights that may be created by Buyer or its Affiliates after the Closing, there will be no outstanding Equity Rights to acquire any Equity Interests of any Subsidiary of Company or Phantom Equity Rights with respect to any Subsidiary of Company. The outstanding Equity Interests of each Subsidiary of Company and, to the jurisdiction Knowledge of its incorporation Seller, of each Equity Affiliate, were not issued in violation of any preemptive or organization similar right of any Person and whether it is an insurance companyhave not been transferred in violation of, and are not currently subject to, any right of first refusal or similar right of any Person. The outstanding Equity Interests of each Subsidiary of Company and, to the Knowledge of Seller, of each Equity Affiliate, are not subject to any voting trust, proxy or other voting agreement or understanding with respect to the voting of such Equity Interests. All outstanding Equity Interests of each Subsidiary of Company and, to the Knowledge of Seller, of each Equity Affiliate, have been issued in transactions exempt from registration under the Securities Laws, and neither Company nor any Subsidiary of Company has violated any Securities Laws in connection with the issuance of any such Equity Interests. Each Subsidiary of Company is an entity a Person duly organized, validly existing and in good standing under the laws of the jurisdiction its place of its incorporation or organization and formation. Each Subsidiary of Company has the all requisite power and authority and all necessary government approvals to own, lease and operate own its properties Assets and to carry on conduct its business as now it is currently being conducted. Each Subsidiary of the Company is duly qualified or licensed and authorized to transact business and is in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes where such qualification or licensing necessary. The Company has heretofore made available is required to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of conduct its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forthbusiness as it is currently conducted, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions which jurisdictions are listed on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesSchedule 4.6.

Subsidiaries; Investments. Section 3.1 (a) Except for the Subsidiaries of the Company set forth in Schedule B hereto, the Company does not own any shares of capital stock or other equity or voting securities of, or similar interest in, any other Person. The Company does not act or carry on business in partnership with any other Person, nor is it a member with ownership interests (otherwise than through the holding of share capital) of any corporate entity. (b) The Company owns, either directly or indirectly through one or more subsidiaries, all of the capital stock or other equity interests of the Subsidiaries free and clear of all Liens, other than transfer restrictions imposed by applicable Laws. All of the issued and outstanding shares of capital stock or other equity interests of each of the Subsidiaries held directly or indirectly by the Company have been duly authorized and are validly issued, fully paid and nonassessable. There are no shares of capital stock or other securities of any of the Company Subsidiaries reserved for issuance or subject to preemptive rights or any outstanding subscriptions, options, warrants, calls, rights, convertible securities or other agreements or other instruments outstanding or in effect giving any Person the right to acquire any shares of capital stock or other securities of any of the Company Subsidiaries or any commitments of any character relating to the issued or unissued capital stock or other securities of any Company Subsidiary. (c) Each of the Disclosure Memorandum sets forth the name of each Subsidiary of the CompanyCompany Subsidiaries is a corporation, the jurisdiction of its incorporation limited liability company, partnership, business association or organization and whether it is an insurance company. Each Subsidiary is an entity other Person duly organized, validly existing and in good standing under the laws of the its jurisdiction of its incorporation or organization and has the requisite power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as it is now being conductedconducted except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Subsidiary of the Company Subsidiaries is duly qualified or and licensed to do business, and is in good standing to do business standing, in each jurisdiction in which where the property owned, leased character of its assets owned or operated by it held under lease or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of necessary except where the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner failures of all of such Company Subsidiaries to so qualify or be licensed has not and would not, individually or in the outstanding shares aggregate, reasonably be expected to have a Material Adverse Effect. The deposit accounts of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect the Bank are insured by the Federal Deposit Insurance Corporation to the transferability or assignability thereof (other than restrictions on transfer imposed fullest extent permitted by federal or state securities laws) the Federal Deposit Insurance Act, as amended, and no capital stock (or other intereststhe rules and regulations of the FDIC thereunder, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become and all premiums and assessments required to be issued by reason paid in connection therewith have been paid when due (after giving effect to any applicable extensions). The Bank has a Community Reinvestment Act rating of any options“satisfactory” or better. The Bank is, warrantsand will continue to be, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock duly qualified as a “minority-owned depository institution” (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth defined in Section 3.1(c) 308 of the Disclosure MemorandumFinancial Institutions Reform, neither the Company nor any Recovery and Enforcement Act of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its Subsidiaries1989).

Subsidiaries; Investments. Section 3.1 Each Company's subsidiaries and ------------------------- investments in any other corporation or business entity are listed in Schedule -------- 2.04 attached hereto (c) of collectively, ---- the Disclosure Memorandum sets "Subsidiaries" and, individually, each a "Subsidiary"). Except as set forth the name of in Schedule 2.04 attached hereto, each Subsidiary of the Company, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity a duly organized, validly ------------- existing and corporation or other business entity in good standing under the laws of the jurisdiction of its incorporation or organization and has the formation with full power and authority and all necessary government approvals to own, own or lease and operate its properties and to carry on conduct its business as now being conducted. Each Subsidiary of in the Company is duly qualified or licensed manner and in good standing to do business in each jurisdiction in which the property owned, places where such properties are owned or leased or operated by it such business is currently conducted or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available proposed to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entitiesbe conducted. Except as set forth disclosed in Section 3.1(c) of the Disclosure MemorandumSchedule 2.04 attached hereto, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (------------- of each Subsidiary are owned beneficially and of record by the relevant Company, free of any lien, restriction or other interestsencumbrance and said shares have been duly and validly issued and are outstanding, with respect to Subsidiaries not organized as corporate entities) fully paid and nonassessable. The copies of each of its Subsidiaries free the Subsidiaries' Articles of Incorporation and clear of all Liens by-laws, or other organizational documents, each as amended to date, and other restrictions with respect heretofore delivered to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) Buyer's counsel, are complete and correct, and no capital stock amendments thereto are pending. None of the Subsidiaries is in violation of any term of its Articles of Incorporation or by-laws (or other interestscomparable organizational documents). Each Subsidiary is duly qualified to do business as a foreign corporation in each jurisdiction where (i) such Subsidiary conducts business and (ii) the laws of such jurisdiction require such qualification, with respect to Subsidiaries and it is not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of licensed or qualified to conduct its business or own its property in any optionsother jurisdiction. Except as disclosed in Schedule 2.04 attached hereto, (A) there ------------- are no outstanding warrants, options or other rights to subscribe to, calls purchase or commitments acquire any of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, the shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) ownership interests of any of its Subsidiaries and Subsidiary, or any outstanding securities convertible into such shares or outstanding warrants, options or other rights to acquire any such convertible securities, (B) there are no contracts, commitments, understandings or arrangements by which restrictions on the Company or transfer of any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary Subsidiaries' capital stock (or other ownership interests, with respect to Subsidiaries not organized as corporate entitiesand (C) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any no capital stock or other ownership interest of any Subsidiary has been issued in violation of any corporationforeign, partnershipfederal, business association, joint venture state or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its Subsidiarieslocal law.

Subsidiaries; Investments. Section 3.1 (c) Except as set forth on the "Subsidiaries ------------------------- ------------ Schedule" attached hereto, neither of the Disclosure Memorandum sets forth the name Companies own or hold any shares of each Subsidiary -------- stock or any other security or interest in any other Person or any rights to acquire any such stock or other security or interest. All of the Companyauthorized, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock of each of the Companies' Subsidiaries (or similar information with respect to any the "Subsidiary not organized as a corporate entity)Stock") and the class and par value of such ---------------- Subsidiary Stock are set forth on the Subsidiaries Schedule. All of the issued --------------------- and outstanding shares of the capital stock of the Subsidiaries of the Company Subsidiary Stock have been duly authorized, are validly issued, fully paid paid, and nonassessable non-assessable, and are held of record and beneficially by the Persons and in the amounts set forth on the Subsidiaries ------------ Schedule and are not subject to to, nor were they issued in violation of, any -------- preemptive rights or other similar rights; neither rights of first refusal, and are owned of record and beneficially by the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except respective Persons as set forth in Section 3.1(c) of on the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries Schedule --------------------- free and clear of all Liens and Liens. There are no outstanding or authorized options, warrants, rights, contracts, calls, puts, rights to subscribe, conversion rights or other restrictions agreements or commitments to which either of the Companies or any of their Subsidiaries is a party or which are binding upon either of the Companies or any of their Subsidiaries providing for the issuance, disposition or acquisition of any capital stock of any of the Companies' Subsidiaries. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to any of the Companies' Subsidiaries. There are no voting trusts, proxies or any other agreements or understandings with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) voting of any Subsidiary Stock. Neither of its the Companies nor any of their Subsidiaries is subject to any obligation (contingent or may become required otherwise) to be issued by reason of repurchase or otherwise acquire or retire any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesStock.

Subsidiaries; Investments. 3.5.1 Section 3.1 (c) of the Disclosure Memorandum sets forth the name of each Subsidiary of the Company, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary 3.5.1 of the Company is duly qualified or licensed Disclosure Schedule sets forth a true, correct and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature complete list of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock all of the Subsidiaries of the Company are validly issued(each, fully paid a “Company Subsidiary”), including each Company Subsidiary’s (a) legal name, (b) type of business entity, (c) jurisdiction of formation or organization, and nonassessable and are not subject to preemptive (d) the current ownership of all outstanding shares, partnership or membership interests or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or ownership interests. Except for the ownership interests Company Subsidiaries set forth in on Section 3.1(c) 3.5.1 of the Company Disclosure MemorandumSchedule, neither the Company nor any of its Subsidiaries Company Subsidiary owns, directly of record or indirectlybeneficially, any capital stock direct or indirect equity or other ownership ownership, capital, voting or participation interest or any right (contingent or otherwise) to acquire the same in any corporationPerson. 3.5.2 All of the membership interests of each Company Subsidiary (“Subsidiary Equity Interests”) have been duly authorized and validly issued, partnershipand are fully paid and non-assessable. The Company or one or more Company Subsidiaries owns (beneficially and of record) 100% of the outstanding Subsidiary Equity Interests, business associationand such Subsidiary Equity Interests are free and clear of any Liens and other restrictions on transfer, joint venture other than as provided for in the organizational documents of such Company Subsidiaries and other restrictions on transfer arising under applicable federal and state securities Laws. Other than the Subsidiary Equity Interests listed in Section 3.5.2 of the Company Disclosure Schedule, there are no issued, reserved for issuance or outstanding (a) Subsidiary Equity Interests, (b) securities convertible into or exchangeable for Subsidiary Equity Interests or containing any profit participation features or (c) options, warrants, stock appreciation rights, phantom stock, calls, subscriptions or other entityrights to acquire, except or obligations to issue or allot, Subsidiary Equity Interests or any equity appreciation rights or phantom equity plans. There are no outstanding obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire or retire for portfolio investments made in the ordinary course value any Subsidiary Equity Interests. There are no statutory or contractual equity holder preemptive or similar rights, rights of business. As used in this Agreement, the word "Subsidiary," first refusal or registration rights with respect to any party to this Agreement, means security of any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions Company Subsidiary. There are no agreements with respect to such corporationthe voting or transfer of any security of any Company Subsidiary. No Company Subsidiary has violated any applicable federal or state securities Laws or any preemptive or similar rights created by statute, partnershiporganizational document or agreement in connection with the offer, joint venture sale, issuance or other organization is held by such party allotment of any security of any Company Subsidiary. No Company Subsidiary has any liability for, or obligation with respect to, the payment of dividends, distributions or similar participation interests, whether or not declared or accumulated, and there are no restrictions of any kind which prevent the payment of the foregoing by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesCompany Subsidiary.

Subsidiaries; Investments. (a) Section 3.1 (c6.4(a) of the Company Disclosure Memorandum Schedules sets forth the name of each Subsidiary corporate structure chart specifying all Subsidiaries of the Company, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as with respect to each Subsidiary (a) its jurisdiction of organization, and (b) the Company, record holders of its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entitiesequity interests thereof. Except as set forth in Section 3.1(c6.4(a) of the Company Disclosure MemorandumSchedules, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) equity securities of each Subsidiary of its Subsidiaries the Company are duly authorized and validly issued, fully paid and non-assessable (if applicable), and were offered, sold and delivered in compliance with all applicable securities Laws, and are owned by one or more of the Target Companies free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer those, if any, imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there such Subsidiary’s Organizational Documents). There are no contracts, commitments, understandings or arrangements by Contracts to which the Company or any of its Subsidiaries Affiliates is a party or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entitiesthe voting (including voting trusts or proxies) or securities convertible into or exchangeable or exercisable for of the equity interests of any Subsidiary of the Company other than the Organizational Documents of any such shares Subsidiary. Except as set forth in Section 6.4(a) of the Company Disclosure Schedules, there are no outstanding or interestsauthorized options, warrants, rights, agreements, subscriptions, convertible securities or commitments to which any Subsidiary of the Company is a party or which are binding upon any Subsidiary of the Company providing for the issuance or redemption of any equity interests of any Subsidiary of the Company. There is no outstanding equity appreciation, phantom equity, profit participation or similar rights granted by any Subsidiary of the Company. No Subsidiary of the Company has any limitation, whether by Order or applicable Law, on its ability to make any distributions or dividends to its equity holders or repay any debt owed to another Target Company. Except for the ownership equity interests set forth in of the Subsidiaries listed on Section 3.1(c6.4(a) of the Company Disclosure MemorandumSchedules, neither the Company nor any of its Subsidiaries ownsdoes not own, directly or indirectly, any capital stock equity interests of, or other ownership interest otherwise Control, any Person. Except as set forth in Section 6.4(a) or Section 6.4(b) of the Company Disclosure Schedules, no Target Company is a participant in any corporationjoint venture, partnershippartnership or similar arrangement. There are no outstanding contractual obligations of a Target Company to provide funds to, business associationor make any loan or capital contribution to any other Person. (b) Section 6.4(b) of the Company Disclosure Schedules sets forth the corporate structure chart specifying all Investments of the Company, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," and with respect to any party to this Agreementeach Investment, means any corporation, partnership, joint venture or other (a) its jurisdiction of organization, whether incorporated or unincorporated, of which: and (ib) such party or any other Subsidiary the record holders of such party is a general partner; (iiInvestment. Except as set forth in Section 6.4(b) voting power to elect a majority of the Board Company Disclosure Schedules all of Directors the outstanding equity securities owned, beneficially or others performing similar functions of record by the Company of each Investment of the Company are duly authorized and validly issued, fully paid and non-assessable (if applicable), and were offered, sold and delivered in compliance with respect to such corporationall applicable securities Laws, partnership, joint venture or other organization is held and are owned by such party or by any one or more of its Subsidiariesthe Target Companies free and clear of all Liens (other than those, or if any, imposed by such party and Investment’s Organizational Documents). There are no Contracts to which the Company or any one or more of its Subsidiaries; Affiliates is a party or bound with respect to the voting (including voting trusts or proxies) of the equity interests of any Investment of the Company other than the Organizational Documents of any such Investment. Except as set forth in Section 6.4(b) of the Company Disclosure Schedules, nothing in any (i) Organizational Document of any of the Investments, (ii) material agreement entered into by any such Investment of which the Company has Knowledge, or (iii) at least 10% Order or Law binding on such Investment, contains any restrictions on the ability of the equity, other securities such Investment to make any distributions or other interests is, directly dividends to its equity holders or indirectly, owned or controlled by such party or by repay any one or more of its Subsidiaries or by such party and debt owed to any one or more of its SubsidiariesTarget Company.

Subsidiaries; Investments. (a) Section 3.1 (c3.4(a) of the Disclosure Memorandum Schedule sets forth a true, correct and complete list of all Subsidiaries of Company, including such Subsidiary’s name, authorized Equity Interests, the name number and type of each its issued and outstanding Equity Interests, and the current ownership of such Equity Interests. (b) Except as listed on Section 3.4(a) of the Disclosure Schedule, none of Company, any of its Subsidiaries or the Blockers owns, of record or beneficially, any direct or indirect equity or other ownership, capital, voting or participation interest or any right (contingent or otherwise) to acquire the same in any Person. (c) Each Subsidiary of the Company, the jurisdiction of its incorporation or organization and whether it Company (i) is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws Laws of the its jurisdiction of organization or formation and, except as would not be material to the Company Members taken as a whole, all other jurisdictions in which its incorporation ownership of property or organization conduct of business requires it to be qualified and has the (ii) possesses all requisite organizational power and authority and all necessary government approvals to own, operate, lease and operate license its properties and properties, to carry on its business as now being conducted. Each Subsidiary conducted and to consummate the Transaction. (d) All of the Company is duly qualified or licensed issued and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature outstanding Equity Interests of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the CompanyCompany have been duly authorized and validly issued, and are fully paid and non-assessable. Company or one or more of its authorized capital stock Subsidiaries owns (beneficially and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares record) all of the capital stock outstanding Equity Interests of the Subsidiaries of the Company are validly issuedCompany, fully paid free and nonassessable clear of any Liens, other than restrictions on transfer arising under applicable federal and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entitiesstate securities Laws. Except as set forth in Section 3.1(c3.4(d) of the Disclosure MemorandumSchedule, the Company is, directly there are no outstanding or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock authorized (or other interests, with respect to Subsidiaries not organized as corporate entitiesi) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe toconvertible securities or other rights, calls arrangements or commitments of any character whatsoever relating to, to membership interests or securities any other Equity Interests which obligate any Subsidiary of Company to issue or rights convertible into or exchangeable or exercisable for, shares of capital stock (sell any membership interests or other interestsEquity Interests of the Subsidiaries of Company or (ii) equity appreciation, phantom equity, profit participation or similar rights with respect to the Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interestsCompany. Except for the ownership interests as set forth in Section 3.1(c3.4(d) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this AgreementSchedule, the word "Subsidiary," with respect to Subsidiaries of Company have not adopted, sponsored or maintained any party to this Agreement, means any corporation, partnership, joint venture equity- based or other organization, whether incorporated or unincorporated, of which: (i) such party profits interest plan or any other plan or agreement providing for equity compensation to any Person. (e) The register of the owners of Equity Interests of each Subsidiary of such party is a general partner; (ii) voting power Company and all transfer records related thereto, and all other records related to elect a majority the current and prior owners of the Board each Subsidiary of Directors or others performing similar functions Company have been made available to Buyer, are complete and correct and have been maintained in accordance with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its Subsidiariesall applicable Laws.

Subsidiaries; Investments. Section 3.1 (c) of the Disclosure Memorandum The attached Investments and Subsidiaries Schedule sets forth the name of each Subsidiary of the Company, the jurisdiction of its incorporation and the Persons owning the outstanding capital stock or organization and whether it is an insurance companyother ownership interests of such Subsidiary. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each every jurisdiction in which the property owned, leased failure to so qualify has had or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available would be reasonably expected to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as have a corporate entity)Material Adverse Effect. All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) ownership interests of each of its Subsidiaries Subsidiary (other than QuikPlay) are owned by the Company or another Subsidiary free and clear of all Liens any Encumbrance and other restrictions with respect not subject to any option or right to purchase any such shares, except, in the transferability or assignability thereof (other than restrictions case of QuikPlay as set forth in the Limited Liability Company Agreement of QuikPlay dated as of December 6, 2000. Except as set forth on transfer imposed by federal or state securities laws) the Investments and no capital stock (or other interestsSubsidiaries Schedule, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which neither the Company nor any Subsidiary has any obligation to make any additional Investments in any Person. No Subsidiary of the Company has authorized or outstanding any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares of its equity securities or interestscontaining profit participation features, or any rights (whether contract rights or otherwise) or options to subscribe for or to purchase or otherwise acquire its equity securities or any securities convertible into or exchangeable for its equity securities or any appreciation rights or phantom equity-type plans. Except for the ownership interests set forth in Section 3.1(c) No Subsidiary of the Disclosure Memorandum, neither Company is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire its equity securities. Neither the Company nor any of its Subsidiaries owns, directly or indirectly, has granted any capital stock option or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect right to any party other Person to this Agreement, means purchase or acquire any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, equity securities of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesSubsidiary.

Subsidiaries; Investments. (a) Section 3.1 (c3.4(a) of the Disclosure Memorandum Schedule sets forth the name a true, correct and complete list of each Subsidiary all Subsidiaries of the CompanyCompany (each a “Company Subsidiary”), including each Company Subsidiary’s name, type of entity, jurisdiction and date of incorporation or organization, authorized capital stock, partnership or membership capital or equivalent, the jurisdiction number and type of its incorporation issued and outstanding shares of capital stock, partnership or organization membership interests or similar ownership interests, and whether it the current ownership of such shares, partnership or membership interests or similar ownership interests. (b) Except for the Company Subsidiaries, neither the Company nor any Company Subsidiary owns, of record or beneficially, any direct or indirect equity or other ownership, capital, voting or participation interest or any right (contingent or otherwise) to acquire the same in any Person. (c) Each Company Subsidiary (i) is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws Laws of the its jurisdiction of its incorporation or organization and has the all other jurisdictions in which its ownership of property or conduct of business requires it to be qualified or licensed and (ii) possesses all requisite organizational power and authority and all necessary government approvals to own, operate, lease and operate license its properties and properties, to carry on its business as now being conducted. Each Subsidiary conducted and to consummate the transactions contemplated by this Agreement and the Ancillary Agreements to which it is or will be a party. (d) All of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock stock, partnership or membership interests and/or other similar ownership interests of each Company Subsidiary (or similar information with respect to any “Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are Equity Interests”) have been duly authorized and validly issued, and are fully paid and nonassessable non-assessable. The Company or one or more Company Subsidiaries owns (beneficially and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of record) all of the Company has outstanding Subsidiary Equity Interests, free and clear of any call obligations Liens, other than restrictions on transfer arising under applicable federal and state securities Laws or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entitiesrestrictions under the Credit Documents. Except as set forth in on Section 3.1(c3.4(d) of the Disclosure MemorandumSchedule, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contractsissued, commitments, understandings reserved for issuance or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of outstanding (i) Subsidiary capital stock Equity Interests; (or other interests, with respect to Subsidiaries not organized as corporate entitiesii) or securities convertible into or exchangeable for Subsidiary Equity Interests or exercisable for containing any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiariesprofit participation features; or (iii) at least 10% options, warrants, convertible or exchangeable securities, preemptive or antidilutive rights, stock appreciation rights, redemption rights, repurchase rights, phantom stock, calls, subscriptions or other rights to acquire, or obligations to issue or allot, under which any Company Subsidiary is or may become obligated to issue or sell, or give any Person a right to subscribe for or acquire, or dispose of, Subsidiary Equity Interests or any equity appreciation rights or phantom equity plans. No Company Subsidiary has any liability for, or obligation with respect to, the payment of dividends, distributions or similar participation interests, whether or not declared or accumulated, and, except as set forth in the Credit Documents, there are no restrictions of any kind which prevent the payment of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or foregoing by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesCompany Subsidiary.

Subsidiaries; Investments. Except as set forth in Section 3.1 (c) ------------ ------------------------- 3.05 of the Disclosure Memorandum sets Schedule, CHCI neither owns nor has any direct or indirect ownership interest in or control over any corporation, partnership, joint venture, limited liability company or partnership or other entity of any kind. The Persons listed in Section 3.05 of the Disclosure Schedule that CHCI owns or has any direct or indirect ownership interest in or control over immediately following the Spin Off are hereinafter sometimes referred to collectively as the "CHCI Subsidiaries" and individually, a "CHCI Subsidiary," and all Persons listed on Section 3.05 of the Disclosure Schedule are hereinafter sometimes referred to collectively as "All CHCI Subsidiaries." Except as set forth in Section 3.05 of the Disclosure Schedule, (i) CHCI owns directly or indirectly each of the outstanding shares of capital stock or all of the partnership or other equity interests of each of the CHCI Subsidiaries; (ii) each of the outstanding shares of capital stock in each of the CHCI Subsidiaries having corporate form is duly authorized, validly issued, fully paid and nonassessable; (iii) each of the outstanding shares of capital stock of, or partnership or other equity interests in, each of the CHCI Subsidiaries is owned, directly or indirectly, by CHCI free and clear of all liens, pledges, security interests, claims or other encumbrances; and (iv) following the Spin Off, CHCI will neither own nor have any direct or indirect ownership interest in or control over any corporation, partnership, joint venture or other entity of any kind other than the CHCI Subsidiaries. The following information for each CHCI Subsidiary as of the date hereof is set forth in Section 3.05 of the Disclosure Schedule: (i) its name and jurisdiction of incorporation or organization; (ii) its authorized capital stock or share capital or partnership or other interests; (iii) the name of each Subsidiary stockholder or owner of the Company, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (a partnership or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock equity interest and the number of issued and outstanding shares of capital stock or share capital or percentage ownership for non-corporate entities held by it; and (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares iv) the name of the capital stock of the Subsidiaries of the Company are validly issuedgeneral partner or partners, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its Subsidiariesif applicable.

Subsidiaries; Investments. (a) Section 3.1 (c4.3(a) of the Parent Disclosure Memorandum Schedule sets forth the name and jurisdiction of organization of each Subsidiary of the Company, the jurisdiction of its incorporation or organization and whether it is an insurance companyParent. Each Subsidiary of Parent’s Subsidiaries is an entity duly organized, validly existing and (to the extent the concept of good standing exists in the applicable jurisdiction) in good standing under the laws of the its jurisdiction of its incorporation organization. Each of Parent’s Subsidiaries has all requisite corporate or organization and has the other similar organizational power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of conducted except where the Company is duly qualified failure to be so licensed or licensed and in good standing to do business would not have a Parent Material Adverse Effect. (b) Other than any interests in each jurisdiction in which the property ownedParent’s Subsidiaries and, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except except as set forth in Section 3.1(c4.3(b) of the Parent Disclosure MemorandumSchedule, neither Parent nor any of its Subsidiaries owns any Equity Interests in any Person. All Equity Interests in each Subsidiary of Parent are owned by Parent or another Subsidiary of Parent free and clear of any Liens (other than restrictions under applicable federal and state securities Laws), other than Permitted Liens. (c) Each MergerSub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement. As of the date hereof and immediately prior to the Effective Time, except for (i) obligations or liabilities incurred in connection with its organization and (ii) this Agreement, the Company isAncillary Documents and the Transactions, no MergerSub has incurred, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of through any of its Subsidiaries is or may become required to be issued by reason Affiliates, any obligations or liabilities or engaged in any business activities of any options, warrants, rights to subscribe to, calls type or commitments of kind whatsoever or entered into any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings agreements or arrangements by which with any Person. No MergerSub has any Subsidiaries, and no MergerSub owns or has the Company right to acquire any security or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesPerson.

Subsidiaries; Investments. Section 3.1 (c) of The "HOLDINGS CORPORATE ORGANIZATION SCHEDULE" referenced in the Disclosure Memorandum Letter correctly sets forth the name of each Subsidiary entity in which Holdings has or, immediately after the consummation of the CompanyMerger will have, an equity interest, the jurisdiction of its incorporation and Holdings direct or organization indirect equity interest in such entity immediately prior to and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under after giving effect to the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity)Initial Closing. All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) equity interests of each such entity directly or indirectly owned by Holdings are validly issued and fully paid. Except as set forth on the HOLDINGS CORPORATE ORGANIZATION SCHEDULE referenced in the Disclosure Letter, all such shares or equity interests in entities in which Holdings' has invested more than $15 million as of its Subsidiaries the date hereof or entities that are Brazilian Entities ("Significant Investees") are owned by Holdings or a Subsidiary of Holdings free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities lawsin favor of the Purchasers) and are not subject to any option or right to purchase any such shares or equity interests. Immediately after the Initial Closing, no such Significant Investee has outstanding any equity interests or securities convertible or exchangeable for any shares of its equity interests or containing any profit participation features, nor shall it have outstanding any rights or options to subscribe for or to purchase its capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) equity interests or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporationstock appreciation rights or phantom stock plans. As of the Initial Closing and immediately thereafter, partnershipnone of Holdings or is Subsidiaries shall be subject to any obligations (contingent or otherwise) to repurchase or otherwise acquire or retire any equity interests of Subsidiary or Investee of Holdings' or any warrants, business association, joint venture options or other entityrights to acquire its equity interests. After giving effect to the Initial Closing there are no agreements between the equityholders of the Company or any Brazilian Entity with respect to the voting, except for portfolio investments made in transfer or issuance of the ordinary course equity interests of business. As used in this Agreement, the word "Subsidiary," company or such Brazilian Entity or with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority aspect of the Board affairs of Directors or others performing similar functions with respect to any such corporationPerson, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of except as set forth on the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its Subsidiaries."BRAZILIAN AGREEMENT SCHEDULE" referenced in the Disclosure Letter

Subsidiaries; Investments. Section 3.1 (a) Except for the Subsidiaries of the Company set forth in Schedule B hereto, the Company does not own any shares of capital stock or other equity or voting securities of, or similar interest in, any other Person. The Company does not act or carry on business in partnership with any other Person, nor is it a member with ownership interests (otherwise than through the holding of share capital) of any corporate entity. (b) The Company owns, either directly or indirectly through one or more subsidiaries, all of the capital stock or other equity interests of the Subsidiaries free and clear of all Liens, other than transfer restrictions imposed by applicable Laws. All of the issued and outstanding shares of capital stock or other equity interests of each of the Subsidiaries held directly or indirectly by the Company have been duly authorized and are validly issued, fully paid and nonassessable. There are no shares of capital stock or other securities of any of the Company Subsidiaries reserved for issuance or subject to preemptive rights or any outstanding subscriptions, options, warrants, calls, rights, convertible securities or other agreements or other instruments outstanding or in effect giving any Person the right to acquire any shares of capital stock or other securities of any of the Company Subsidiaries or any commitments of any character relating to the issued or unissued capital stock or other securities of any Company Subsidiary. (c) Each of the Disclosure Memorandum sets forth the name of each Subsidiary of the CompanyCompany Subsidiaries is a corporation, the jurisdiction of its incorporation limited liability company, partnership, business association or organization and whether it is an insurance company. Each Subsidiary is an entity other Person duly organized, validly existing and in good standing under the laws of the its jurisdiction of its incorporation or organization and has the requisite power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as it is now being conductedconducted except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Subsidiary of the Company Subsidiaries is duly qualified or and licensed to do business, and is in good standing to do business standing, in each jurisdiction in which where the property owned, leased character of its assets owned or operated by it held under lease or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of necessary except where the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner failures of all of such Company Subsidiaries to so qualify or be licensed has not and would not, individually or in the outstanding shares aggregate, reasonably be expected to have a Material Adverse Effect. The deposit accounts of capital stock the Bank are insured by the Federal Deposit Insurance Corporation (or other interests, with respect to Subsidiaries not organized as corporate entitiesthe “FDIC”) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed fullest extent permitted by federal or state securities laws) the Federal Deposit Insurance Act, as amended, and no capital stock (or other intereststhe rules and regulations of the FDIC thereunder, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become and all premiums and assessments required to be issued by reason paid in connection therewith have been paid when due (after giving effect to any applicable extensions). The Bank has a Community Reinvestment Act rating of any options“satisfactory” or better. The Bank is, warrantsand will continue to be, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock duly qualified as a “minority-owned depository institution” (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth defined in Section 3.1(c) 308 of the Disclosure MemorandumFinancial Institutions Reform, neither the Company nor any Recovery and Enforcement Act of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its Subsidiaries1989).

Subsidiaries; Investments. (a) Section 3.1 (c4.5(a) of the Company Disclosure Memorandum Schedule sets forth the name of each Subsidiary of the CompanySubsidiary, and, with respect to each Subsidiary, the jurisdiction in which it is incorporated or organized, the jurisdictions, if any, in which it is qualified to do business, the number of shares of its incorporation authorized capital stock, the number and class of shares thereof duly issued and outstanding, the names of all stockholders or organization other equity owners and whether it is an insurance companythe number of shares of stock owned by each stockholder or the amount of equity owned by each equity owner. Each Subsidiary is an entity a duly organized, organized and validly existing and corporation or other entity in good standing under the laws of the jurisdiction of its incorporation or organization and is duly qualified or authorized to do business as a foreign corporation or entity and is in good standing under the laws of each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where failure to so qualify would not have a Material Adverse Effect. Each Subsidiary has the all requisite corporate or entity power and authority and all necessary government approvals to own, lease and operate own its properties and to carry on its business as now being presently conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any equity interests of each Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable non-assessable, and are not subject to preemptive all such shares or other similar rights; neither equity interests represented as being owned by the Company nor are owned by it free and clear of any and all Liens, and no Subsidiary holds any shares of Company Capital Stock. No shares of capital stock are held by any Subsidiary as treasury stock. There is no existing option, warrant, call, right or Contract to which any Subsidiary is a party requiring, and there are no convertible securities of any Subsidiary outstanding which upon conversion would require, the Company has issuance of any call obligations or similar liabilities with respect to partnerships shares of capital stock or other Subsidiaries not organized as corporate entitiesequity interests of any Subsidiary or other securities convertible into shares of capital stock or other equity interests of any Subsidiary. There are no outstanding obligations of any Subsidiary to repurchase, redeem or otherwise acquire any shares of capital stock or other equity interests of any Subsidiary or other securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase shares of capital stock or other equity interests of any Subsidiary. (b) Except as set forth in on Section 3.1(c4.5(a) of the Company Disclosure MemorandumSchedule, the Company is, does not directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of indirectly own any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock equity investment or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesPerson.

Subsidiaries; Investments. Section 3.1 (c) Except as set forth on Schedule 5.4 attached ------------------------- ------------ hereto, neither Pell Xxxxxx, Xxxxxxxxxx nor any Subsidiary of Pell Xxxxxx or Xxxxxxxxxx owns or holds any shares of stock or any other security or interest in any other Person or any rights to acquire any such stock or other security or interest. All of the Disclosure Memorandum sets forth the name of each Subsidiary of the Companyauthorized, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock of each of the Subsidiaries identified on Schedule 5.4 (or similar information with respect to any the "Subsidiary not organized as a corporate entity)Stock") ------------ ---------------- and the class and par value of such Subsidiary Stock are set forth on such Schedule. All of the issued and outstanding shares of the capital stock of the Subsidiaries of the Company Subsidiary Stock have been duly authorized, are validly issued, fully paid paid, and nonassessable nonassessable, and are held of record and beneficially by the Persons and in the amounts set forth on Schedule 5.4 and are not subject to to, nor were they issued in violation of, any ------------ preemptive rights or other similar rights; neither rights of first refusal, and are owned of record and beneficially by the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except respective Persons as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries on such Schedule free and clear of all Liens and (except as otherwise set forth on such Schedule). There are no outstanding or authorized options, warrants, rights, contracts, calls, puts, rights to subscribe, conversion rights or other restrictions agreements or commitments to which any Subsidiary identified on Schedule 5.4 is a party or which are binding ------------ upon any of the Subsidiaries providing for the issuance, disposition or acquisition of any capital stock of any of the Subsidiaries. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the transferability Subsidiaries. There are no voting trusts, proxies or assignability thereof (any other than restrictions on transfer imposed by federal agreements or state securities laws) and no capital stock (or other interests, understandings with respect to Subsidiaries not organized as corporate entities) the voting of any the Subsidiary Stock. None of its the Subsidiaries is subject to any obligation (contingent or may become required otherwise) to be issued by reason of repurchase or otherwise acquire or retire any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesStock.

Subsidiaries; Investments. Section 3.1 (ca) of the Disclosure Memorandum Schedule 2.3(a) sets forth the name names, jurisdictions of each Subsidiary of the Companyincorporation, the jurisdiction of its incorporation formation or organization and whether it the issued share capital and beneficial ownership, of all Subsidiaries of the BlueMountain Operating Companies (the “BlueMountain Subsidiaries”). The BlueMountain Operating Companies have no Subsidiaries other than the BlueMountain Subsidiaries. Other than as set forth on Schedule 2.3(a), none of the BlueMountain Operating Companies and the BlueMountain Subsidiaries owns for its own account, either directly or indirectly, any of the capital of, or other equity or proprietary interest in, any corporation, or any such interest in any association, trust, partnership, joint venture or similar entity, or in any other entity or enterprise (other than interests in the BlueMountain Funds). All the issued share capital, partnership interests, membership interests or other equity interests, as applicable, of each BlueMountain Subsidiary are validly issued, fully paid (and no money or other obligation is an insurance companyowing in respect of them), have not been issued in violation of any preemptive or similar rights, and, other than the BlueMountain Interests in BMCP London, which are addressed in Section 2.2, are owned, legally and beneficially, by one or more of the BlueMountain Operating Companies or other BlueMountain Subsidiaries, free and clear of any Claims. None of the BlueMountain Subsidiaries has any outstanding debt securities. (b) Each BlueMountain Subsidiary is an entity duly organizedformed, validly existing and in good standing under the laws of the its jurisdiction of its incorporation formation or organization and has the with full power and authority and all necessary government approvals under such laws to own, own or lease and operate its properties and to carry on conduct its business as now being currently conducted, except where the failure to have such power and authority would not reasonably be expected to adversely affect the BlueMountain Operating Companies and BlueMountain Subsidiaries, taken as a whole, in any material respect. Each Subsidiary of the Company BlueMountain Subsidiaries is duly qualified or licensed and in good standing to do business in as a foreign limited liability company, foreign limited partnership or foreign limited liability partnership under the laws of each jurisdiction in which the property owned, ownership or leasing of its properties or the conduct of its business in the manner and in the places where such properties are owned or leased or operated by it or such business is currently conducted requires such qualification, except where the nature failure to be so qualified would not reasonably be expected to have a Material Adverse Effect. True and complete copies of each of the business conducted by it makes BlueMountain Subsidiary’s Organizational Documents and, if applicable, minute books, certificates representing the equity interests of such qualification or licensing necessary. The Company has heretofore BlueMountain Subsidiary and equity transfer ledgers, have been made available to USF&G complete and correct copies Purchaser. None of the articles of incorporation (BlueMountain Subsidiaries are in default under or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company are validly issued, fully paid and nonassessable and are not subject to preemptive or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) violation of any provision of its Subsidiaries is or may become required to be issued by reason of any optionstheir Organizational Documents, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there all such documents are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party full force and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its Subsidiarieseffect.

Subsidiaries; Investments. Section 3.1 Except as set forth on the ------------------------- "Subsidiaries Schedule" attached hereto, the Operating Company does not own or ---------------------- hold any shares of stock or any other equity interest in any other Person or any rights to acquire any such stock or other equity interest (c) except Management Company owns a general partnership interest in the Operating Company). All of the Disclosure Memorandum sets forth the name of each Subsidiary of the Companyauthorized, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock of each of the Operating Company's Subsidiaries (or similar information with respect to any the "Subsidiary not organized as a corporate entity)Stock") and the class and par ---------------- value of such Subsidiary Stock are set forth on the Subsidiaries Schedule. All --------------------- of the issued and outstanding shares of the capital stock of the Subsidiaries of the Company Subsidiary Stock have been duly authorized, are validly issued, fully paid paid, and nonassessable non-assessable, and are held of record and beneficially by the Persons and in the amounts set forth on the Subsidiaries Schedule and are not subject to to, nor were they issued in violation --------------------- of, any preemptive rights or other similar rights; neither rights of first refusal, and are owned of record and beneficially by the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except respective Persons as set forth in Section 3.1(c) of on the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries ------------ Schedule free and clear of all Liens and other restrictions with respect to the transferability Liens. There are no outstanding or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any authorized -------- options, warrants, rights, contracts, calls, puts, rights to subscribe tosubscribe, calls conversion rights or other agreements or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Operating Company or any of its Subsidiaries is a party or may be bound to issuewhich are binding upon the Operating Company or any of its Subsidiaries providing for the issuance, redeem, purchase disposition or sell shares acquisition of Subsidiary any capital stock (of any of the Operating Company's Subsidiaries. There are no outstanding or other interestsauthorized stock appreciation, phantom stock or similar rights with respect to Subsidiaries not organized as corporate entities) the Operating Company's Subsidiaries. There are no voting trusts, proxies or securities convertible into any other agreements or exchangeable or exercisable for any such shares or interests. Except for understandings with respect to the ownership interests set forth in Section 3.1(c) voting of the Disclosure Memorandum, neither Subsidiary Stock. Neither the Operating Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect is subject to any party obligation (contingent or otherwise) to this Agreement, means repurchase or otherwise acquire or retire any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, shares of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesStock.

Subsidiaries; Investments. 3.5.1 Section 3.1 3.5.1 of the Company Disclosure Schedule sets forth a true, correct and complete list of all of the Subsidiaries of the Company (each, a “Company Subsidiary”), including each Company Subsidiary’s (a) legal name, (b) type of business entity, (c) of the Disclosure Memorandum sets forth the name of each Subsidiary of the Company, the jurisdiction of its incorporation formation or organization organization, (d) authorized capital stock, partnership or membership capital or equivalent, (e) the number and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction type of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (stock, partnership or membership interests or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares ownership interests and (f) the current ownership of the capital stock of the Subsidiaries of the Company are validly issuedsuch shares, fully paid and nonassessable and are not subject to preemptive partnership or other similar rights; neither the Company nor any Subsidiary of the Company has any call obligations membership interests or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or ownership interests. Except for the ownership interests Company Subsidiaries set forth in on Section 3.1(c) 3.5.1 of the Company Disclosure MemorandumSchedule, neither the Company nor any of its Subsidiaries Company Subsidiary owns, directly of record or indirectlybeneficially, any capital stock direct or indirect equity or other ownership ownership, capital, voting or participation interest or any right (contingent or otherwise) to acquire the same in any corporationPerson. 3.5.2 All of the issued and outstanding shares of capital stock, partnershippartnership or membership interests and/or other similar ownership interests of each Company Subsidiary (“Subsidiary Equity Interests”) have been duly authorized and validly issued, business associationand are fully paid and non-assessable. The Company or one or more Company Subsidiaries owns (beneficially and of record) 100% of the outstanding Subsidiary Equity Interests, joint venture and such Subsidiary Equity Interests are free and clear of any Liens and other restrictions on transfer, other than restrictions on transfer arising under applicable federal and state securities Laws. Other than the Subsidiary Equity Interests listed in Section 3.5.2 of the Company Disclosure Schedule, there are no issued, reserved for issuance or outstanding (a) Subsidiary Equity Interests, (b) securities convertible into or exchangeable for Subsidiary Equity Interests or containing any profit participation features or (c) options, warrants, stock appreciation rights, phantom stock, calls, subscriptions or other entityrights to acquire, except or obligations to issue or allot, Subsidiary Equity Interests or any equity appreciation rights or phantom equity plans. There are no outstanding obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire or retire for portfolio investments made in the ordinary course value any Subsidiary Equity Interests. There are no statutory or contractual equity holder preemptive or similar rights, rights of business. As used in this Agreement, the word "Subsidiary," first refusal or registration rights with respect to any party to this Agreement, means security of any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions Company Subsidiary. There are no agreements with respect to such corporationthe voting or transfer of any security of any Company Subsidiary. No Company Subsidiary has violated any applicable federal or state securities Laws or any preemptive or similar rights created by statute, partnershiporganizational document or agreement in connection with the offer, joint venture sale, issuance or other organization is held by such party allotment of any security of any Company Subsidiary. No Company Subsidiary has any liability for, or obligation with respect to, the payment of dividends, distributions or similar participation interests, whether or not declared or accumulated, and there are no restrictions of any kind which prevent the payment of the foregoing by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesCompany Subsidiary.

Subsidiaries; Investments. Section 3.1 (ca) of the Disclosure Memorandum Schedule 3.7 correctly sets forth the name of each Subsidiary of the CompanySubsidiary, the jurisdiction of its incorporation or organization and whether it is an insurance companythe beneficial and record holder of all of the outstanding capital stock of such Subsidiary. Each Except as set forth in Schedule 3.7, each Subsidiary is an entity a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the incorporation, possesses all requisite corporate power and authority and all necessary government approvals to own, own or lease and operate its properties assets and to operate and carry on its business as now being conducted. Each Subsidiary of the Company presently conducted and is duly qualified or licensed as a foreign entity to do business, and is in good standing to do business in each jurisdiction where the failure to be so qualified would have a material adverse effect on the Company and the Subsidiaries, taken as a whole. Schedule 3.7 sets forth a list of those jurisdictions in which the property owned, leased Subsidiaries are qualified or operated by it or the nature in good standing as a foreign corporation. (b) All of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock (or similar information with respect to any of each Subsidiary not organized as a corporate entity). All outstanding shares of the capital stock of the Subsidiaries of the Company have been duly authorized, are validly issued, fully paid and nonassessable and non-assessable, are not subject to to, nor were they issued in violation of, any preemptive or similar rights with respect thereto. There are no outstanding or authorized options, warrants, rights, contracts, calls, puts, rights to subscribe, conversion rights, exchange rights or other agreements or commitments to which any Subsidiary is a party, or which is binding upon any Subsidiary, providing for the issuance, disposition or acquisition of any capital stock of any Subsidiary or the conversion into or exchange for shares of capital stock or indebtedness of any Subsidiary or other securities convertible into or exchangeable for shares of capital stock of any Subsidiary. There are no outstanding or authorized stock appreciation, phantom stock or similar rights; neither rights with respect to any Subsidiary. There are no outstanding contractual obligations of any Subsidiary to repurchase, redeem or otherwise acquire any shares of its capital stock. (c) Neither the Company nor any Subsidiary of owns or holds the Company has right to acquire any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is other security or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture venture, limited liability company or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its Subsidiariesentity.

Subsidiaries; Investments. Section 3.1 (ca) of the Disclosure Memorandum Schedule 4.5(a) sets forth the name of each Subsidiary of the CompanySubsidiary, and, with respect to each Subsidiary, the jurisdiction in which it is incorporated or organized, the jurisdictions, if any, in which it is qualified to do business, the number of shares of its incorporation authorized capital stock, the number and class of shares thereof duly issued and outstanding, the names of all stockholders or organization other equity owners and whether it is an insurance companythe number of shares of stock owned by each stockholder or the amount of equity owned by each equity owner. Each Subsidiary is an entity a duly organized, organized and validly existing and corporation or other entity in good standing under the laws of the jurisdiction of its incorporation or organization and is duly qualified or authorized to do business as a foreign corporation or entity and is in good standing under the laws of each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where failure to so qualify would not have a Company Material Adverse Effect. Each Subsidiary has the all requisite corporate or entity power and authority and all necessary government approvals to own, lease and operate own its properties and to carry on its business as now being presently conducted. Each The outstanding shares of capital stock or equity interests of each Subsidiary of have been validly issued and are fully paid and non- assessable, and all such shares or other equity interests represented as being owned by the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated are owned by it free and clear of any and all Liens, except for restrictions on transfer arising under applicable securities Laws or as set forth on Schedule 4.5(a). No shares of capital stock are held by any Subsidiary as treasury stock. Except as set forth on Schedule 4.5(a), there is no existing option, warrant, call, right or Contract to which any Subsidiary is a party requiring, and there are no convertible securities of any Subsidiary outstanding which upon conversion would require, the nature issuance of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies any shares of the articles of incorporation (capital stock or other organizational documentsequity interests of any Subsidiary or other securities convertible into shares of capital stock or other equity interests of any Subsidiary. (b) Web Xxxxxx, Inc., a corporation organized under the laws of Delaware and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each a Subsidiary of the Company, its authorized capital stock has no operations, holds no assets and has no Indebtedness, liabilities or other obligations. Wedcom Europe N.V., a corporation organized under the number of issued and outstanding shares of capital stock (or similar information with respect to any Subsidiary not organized as a corporate entity). All outstanding shares laws of the capital stock Netherlands and a former Subsidiary of the Subsidiaries of the Company are validly issuedCompany, fully paid has been liquidated and nonassessable and are not subject to preemptive or other similar rights; dissolved in accordance with applicable Law. (c) Except as set forth on Schedule 4.5(c), neither the Company nor any Subsidiary of the Company has owns any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries free and clear of all Liens and other restrictions with respect to the transferability or assignability thereof (other than restrictions on transfer imposed by federal or state equity securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesPerson.

Subsidiaries; Investments. Section 3.1 (c) Except as set forth on the ------------------------- "Subsidiaries Schedule" attached hereto, the Company does not own or hold any ---------------------- shares of stock or any other security or interest in any other Person or any rights to acquire any such stock or other security or interest. All of the Disclosure Memorandum sets forth the name of each Subsidiary of the Companyauthorized, the jurisdiction of its incorporation or organization and whether it is an insurance company. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has the power and authority and all necessary government approvals to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws of each of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forth, as to each Subsidiary of the Company, its authorized capital stock and the number of issued and outstanding shares of capital stock or any other security or interest of each of the Company's Subsidiaries (or similar information with respect to any the "Subsidiary not organized as a corporate entity)Stock") and ---------------- the class and par value of such Subsidiary Stock are set forth on the Subsidiaries Schedule. All of the issued and outstanding shares of the capital stock of the Subsidiaries of the Company Subsidiary --------------------- Stock have been duly authorized, are validly issued, fully paid paid, and nonassessable nonassessable, and are held of record and beneficially by the Persons and in the amounts set forth on the Subsidiaries Schedule and are not subject to to, nor were --------------------- they issued in violation of, any preemptive rights or other similar rights; neither rights of first refusal, and are owned of record and beneficially by the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except respective Persons as set forth in Section 3.1(c) of on the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries Schedule free and clear of all Liens and other restrictions with respect to the transferability Liens. There are no --------------------- outstanding or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any authorized options, warrants, rights, contracts, calls, puts, rights to subscribe tosubscribe, calls conversion rights or other agreements or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is a party or may be bound to issuewhich are binding upon the Company or any of its Subsidiaries providing for the issuance, redeem, purchase disposition or sell shares acquisition of Subsidiary any capital stock (or other interestsequity securities of any of the Company's Subsidiaries. There are no outstanding or authorized equity appreciation, phantom stock or similar rights with respect to Subsidiaries not organized as corporate entities) the Company's Subsidiaries. There are no voting trusts, proxies or securities convertible into any other agreements or exchangeable or exercisable for any such shares or interests. Except for understandings with respect to the ownership interests set forth in Section 3.1(c) voting of the Disclosure Memorandum, neither Subsidiary Stock. Neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect is subject to any party obligation (contingent or otherwise) to this Agreement, means repurchase or otherwise acquire or retire any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, shares of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesStock.

Subsidiaries; Investments. Section 3.1 (ca) of the Disclosure Memorandum sets forth the name of each Subsidiary of the Company, the jurisdiction of its incorporation or organization and whether it is an insurance company. (i) Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the its jurisdiction of its incorporation or organization organization, and (ii) each Subsidiary has the power and authority all powers and all necessary government governmental licenses, authorizations, permits, consents and approvals to own, lease and operate its properties and required to carry on its business as now being conducted, except for those licenses, authorizations, consents and approvals the absence of which would not be material to the Business. Each Subsidiary All Subsidiaries and their respective jurisdictions of organization are identified on Schedule 3.07. (b) All of the Company is duly qualified outstanding capital stock or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Company has heretofore made available to USF&G complete and correct copies of the articles of incorporation (or other organizational documents) and bylaws membership interests of each Subsidiary are owned by the Partnership, directly or indirectly, free and clear of its Subsidiaries. Section 3.1(c) of the Disclosure Memorandum sets forthany Lien and have been duly authorized, as to each Subsidiary of the Company, its authorized capital stock and the number of validly issued and outstanding shares of capital stock is fully paid and nonassessable. (or similar information c) Except as set forth on Schedule 3.07 with respect to the Joint Ventures and the Partnership’s ownership of the Subsidiaries, the Partnership Group does not own beneficially or of record, or have any Subsidiary ownership or similar interest in, any Equity Securities of any Person, and does not organized as a corporate entity)have an Investment of any kind in any Person. All outstanding shares of the capital stock of the Subsidiaries of the Company Equity Securities listed on Schedule 3.07 have been duly authorized, are validly issued, issued and are fully paid and nonassessable and are not subject to preemptive or other similar rights; neither owned by the Company nor any Subsidiary of the Company has any call obligations or similar liabilities with respect to partnerships or other Subsidiaries not organized as corporate entities. Except as set forth in Section 3.1(c) of the Disclosure Memorandum, the Company is, directly or indirectly, the record and beneficial owner of all of the outstanding shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of each of its Subsidiaries Partnership free and clear of all Liens and (other than Permitted Liens) or restrictions on transfer of any kind. None of the Equity Securities listed on Schedule 3.07 have been issued in violation of, or subject to, any preemptive rights or rights of subscription. The financial statements relating to any Person in which the Partnership Group holds Equity Securities as disclosed on Schedule 3.07 are not required pursuant to GAAP to be consolidated in the Financial Statements. (d) Except as set forth on Schedule 3.07, neither the Sellers, on account of their Interests, nor the Partnership Group, on account of their ownership interests in the Joint Ventures or otherwise, is under any obligation to make any loans, advances or capital contributions to, or become a borrower or guarantor or be otherwise liable with respect to any debts, liabilities or obligations of, any of the Joint Ventures nor is any such Joint Venture similarly obligated with respect to the transferability Sellers or assignability thereof (other than restrictions on transfer imposed by federal or state securities laws) and no capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries is or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, shares of capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) of any of its Subsidiaries and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may be bound to issue, redeem, purchase or sell shares of Subsidiary capital stock (or other interests, with respect to Subsidiaries not organized as corporate entities) or securities convertible into or exchangeable or exercisable for any such shares or interests. Except for the ownership interests set forth in Section 3.1(c) of the Disclosure Memorandum, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, business association, joint venture or other entity, except for portfolio investments made in the ordinary course of business. As used in this Agreement, the word "Subsidiary," with respect to any party to this Agreement, means any corporation, partnership, joint venture or other organization, whether incorporated or unincorporated, of which: (i) such party or any other Subsidiary of such party is a general partner; (ii) voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation, partnership, joint venture or other organization is held by such party or by any one or more of its Subsidiaries, or by such party and any one or more of its Subsidiaries; or (iii) at least 10% of the equity, other securities or other interests is, directly or indirectly, owned or controlled by such party or by any one or more of its Subsidiaries or by such party and any one or more of its SubsidiariesPartnership Group.