Document:

a101consentagreementdate

                                                                     Exhibit 10.1                        UNITED STATES OF AMERICA               BEFORE THE FEDERAL TRADE COMMISSION                                              )                                            ) In the Matter of                           )                                            )    File No. 191-0074        Rent-A-Center, Inc.,                  )           a corporation.                    )                                            )                AGREEMENT CONTAINING CONSENT ORDER         The Federal Trade Commission (“Commission”) has initiated an investigation of  certain acts and practices of Rent-A-Center, Inc. (“RAC” or “Proposed Respondent”),  Aaron’s Inc., and Buddy’s Newco, LLC.  The Commission’s Bureau of Competition has  prepared a draft administrative complaint (“Draft Complaint”).  The Bureau of  Competition and Proposed Respondent enter into this Agreement Containing Consent  Order (“Consent Agreement”) to cease and desist from engaging in such anticompetitive  practices to resolve the allegations in the Draft Complaint through a proposed Decision  and Order (“Decision and Order”), both of which are attached, to present to the  Commission.         IT IS HEREBY AGREED by and between Proposed Respondent, by its duly  authorized officers and attorneys, and counsel for the Commission that:      1. Proposed Respondent RAC, is a corporation organized, existing, and doing       business under and by virtue of the laws of the State of Delaware, with its       principal address at 5501 Headquarters Drive, Plano, Texas 75024.     2. Proposed Respondent admits all the jurisdictional facts set forth in the Draft       Complaint.     3. Proposed Respondent waives:        a. any further procedural steps;        b. the requirement that the Decision and Order contain a statement of findings of         fact and conclusions of law;        c. all rights to seek judicial review or otherwise to challenge or contest the          validity of the Decision and Order entered pursuant to this Consent          Agreement; and

 

   d. any claim under the Equal Access to Justice Act.  4. This Consent Agreement is for settlement purposes only and does not constitute    an admission by Proposed Respondent that the law has been violated as alleged in    the Draft Complaint, or that the facts as alleged in the Draft Complaint, other than    jurisdictional facts, are true.  5. Proposed Respondent shall submit an initial compliance report, pursuant to    Commission Rule 2.33, 16 C.F.R. § 2.33, no later than 60 days after the date on    which Proposed Respondent executes this Consent Agreement and subsequent    compliance reports every 30 days thereafter until the Decision and Order becomes    final.  After the Decision and Order becomes final, the reporting obligations    contained in the Decision and Order shall control and the reporting obligations    under this Consent Agreement shall cease.  Each compliance report shall set forth    in detail the manner in which Proposed Respondent has complied, has prepared to    comply, is complying, and will comply with the Consent Agreement and the    Decision and Order.  Proposed Respondent shall provide sufficient information    and documentation to enable the Commission to determine independently whether    Proposed Respondent is in compliance with the Consent Agreement and the    Decision and Order.  6. Each compliance report submitted pursuant to Paragraph 5 shall be verified in the    manner set forth in 28 U.S.C. § 1746 by the Chief Executive Officer or another    officer or employee specifically authorized to perform this function.  Commission    Rule 2.41(a), 16 C.F.R. § 2.41(a), requires that the Commission receive an    original and 2 copies of each compliance report.  Proposed Respondent shall file a    paper original of each compliance report with the Secretary of the Commission    and electronic copies of each compliance report with the Secretary at    ElectronicFilings@ftc.gov, and with the Compliance Division at    bccompliance@ftc.gov.  7. This Consent Agreement, and any compliance reports filed pursuant to this    Consent Agreement, shall not become part of the public record of the proceeding    unless and until the Commission accepts the Consent Agreement.  If the    Commission accepts this Consent Agreement, the Commission will place it,    together with the Draft Complaint, the proposed Decision and Order, an    explanation of the provisions of the proposed Decision and Order, and any other    information that may help interested persons understand the order on the public    record for the receipt of comments for 30 days.  8. If the Commission accepts this Consent Agreement, the Commission may,    without further notice to Proposed Respondent: (a) issue and serve its Complaint    (in such form as the circumstances may require), and (b) issue and serve its    Decision and Order containing injunctive relief in disposition of the    proceeding.  Further, at any time before the Commission issues and serves its    Decision and Order, the Commission may withdraw its acceptance of this Consent    Agreement pursuant to the provisions of Commission Rule 2.34, 16 C.F.R. §

 

    2.34.  If the Commission withdraws its acceptance of this Consent Agreement, the      Commission will notify Proposed Respondent and take other actions it considers      appropriate.        9. The Decision and Order shall become final upon service.  Delivery of the      Complaint and the Decision and Order to Proposed Respondent by any means      provided in Commission Rule 4.4(a), 16 C.F.R. § 4.4(a), or by delivery to United      States counsel for Proposed Respondent identified in this Consent Agreement,      shall constitute service to Proposed Respondent.  Proposed Respondent waives     any rights it may have to any other manner of service.  Proposed Respondent also     waives any rights it may otherwise have to service of any appendices attached or     incorporated by reference into the Decision and Order, if Proposed Respondent is     already in possession of such appendices, and agrees that it is bound to comply     with and will comply with the Decision and Order to the same extent as if it had     been served with copies of the appendices.   10. The Complaint may be used in construing the terms of the Decision and Order     and no agreement, understanding, representation, or interpretation not contained     in the Decision and Order or the Consent Agreement may be used to vary or     contradict the terms of the Decision and Order.    11. By signing this Consent Agreement, Proposed Respondent represents and      warrants that:       a. it can fulfill all the terms of and accomplish the full relief contemplated by the         Decision and Order including, among other things, effectuating all required         divestitures, assignments and transfers, and obtaining any necessary approvals         from governmental authorities, leaseholders, and other third parties to         effectuate the divestitures, assignments, and transfers; and               b. all parents, subsidiaries, affiliates, and successors necessary to effectuate the         full relief contemplated by this Consent Agreement and the Decision and         Order are parties to this Consent Agreement and are bound as if they had         signed this Consent Agreement and were made parties to this proceeding, or         are within the control of parties to this Consent Agreement and the Decision         and Order, or will be after the acquisition.    12. Proposed Respondent has read the Draft Complaint and the proposed Decision      and Order.  Proposed Respondent agrees to comply with the terms of the proposed      Decision and Order from the date it signs this Consent Agreement.  Proposed      Respondent understands that once the Commission has issued the Decision and      Order, it will be required to file one or more compliance reports setting forth in      detail the manner in which it has complied, has prepared to comply, is complying,      and will comply with the Decision and Order.  When final, the Decision and      Order shall have the same force and effect and may be altered, modified, or set      aside in the same manner and within the same time as provided by statute for      other orders.  Proposed Respondent further understands that it may be liable for                                                     

 

civil penalties in the amount provided by law for each violation of the Decision  and Order.    

 

RENT-A-CENTER, INC.                     FEDERAL TRADE COMMISSION   __/s/ Mitch Fadel__________             __/s/ Joseph A. Lipinsky____  By:  Mitch Fadel                        By:  Joseph A. Lipinsky  Chief Executive Officer                 Attorney  Rent-A-Center, Inc.                     Northwest Region   Dated: _12/02/2019__________                                          __/s/ Tina Kondo__________                                          Tina Kondo  __/s/ Nelly Agin_____________           Assistant Director Northwest  Neely Agin                              Region  Winston & Strawn LLP Counsel  for Rent-A-Center, Inc.                                          __/s/ Charles Harwood______  Dated: ___12/02/2019________            Charles Harwood                                          Director                                          Northwest Region                                           __/s/ Ian R. Conner__________                                          Ian R. Conner                                          Deputy Director                                          Bureau of Competition                                           __/s/ D. Bruce Hoffman______                                          D. Bruce Hoffman                                          Director                                          Bureau of Competition                                           Dated: __02/21/2020________ 

 

                         UNITED STATES OF AMERICA                   BEFORE THE FEDERAL TRADE COMMISSION          COMMISSIONERS:          Joseph J. Simons, Chairman                                 Noah Joshua Phillips                                 Rohit Chopra                                Rebecca Kelly Slaughter                                Christine S. Wilson                                               )         In the Matter of                    )                                            )        Rent-A-Center, Inc.,                )     Docket No. C-               a corporation.                )                                             )                                DECISION AND ORDER         The Federal Trade Commission (“Commission”), having initiated an investigation of   certain acts and practices of Rent-A-Center, Inc. (“Respondent”), Aaron’s Inc., and Buddy’s   Newco, LLC, and Respondent having been furnished thereafter with a copy of the draft  Complaint that counsel for the Commission proposed to present to the Commission for its  consideration and which, if issued by the Commission, would charge Respondent with violations  of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45; and         Respondent, its attorneys, and counsel for the Commission having thereafter executed an   Agreement Containing Consent Order (“Consent Agreement”), containing an admission by   Respondent of all the jurisdictional facts set forth in the aforesaid draft Complaint, a statement   that the signing of said Consent Agreement is for settlement purposes only and does not   constitute an admission by Respondent that the law has been violated as alleged in such   Complaint, or that the facts as alleged in such Complaint, other than jurisdictional facts, are true,   and waivers and other provisions as required by the Commission’s Rules; and                                              1 

 

            The Commission having thereafter considered the matter and having determined it had   reason to believe that Respondent has violated the said Act, and that a Complaint should issue   stating its charges in that respect, and having accepted the executed Consent Agreement and   placed such Consent Agreement on the public record for a period of thirty (30) days for the   receipt and consideration of public comments, now in further conformity with the procedure   described in Commission Rule 2.34, 16 C.F.R. § 2.34, the Commission hereby makes the   following jurisdictional findings and issues the following Decision and Order (“Order”):     1.    Respondent Rent-A-Center, Inc., is a corporation organized, existing, and doing business         under and by virtue of the laws of the State of Delaware, with its principal address at         5501 Headquarters Drive, Plano, Texas 75024.       2.    The Federal Trade Commission has jurisdiction of the subject matter of this proceeding         and of the Respondent, and the proceeding is in the public interest.                                        ORDER                                         I.          IT IS HEREBY ORDERED that, as used in this Order, the following definitions shall   apply:     A.    “RAC” or “Respondent” means Rent-A-Center, Inc., its directors, officers, partners,        employees, agents, representatives, successors, and assigns; and the joint ventures,        subsidiaries, partnerships, divisions, groups, and affiliates controlled by Rent-A-Center,        Inc., and the respective directors, officers, employees, agents, representatives, successors,        and assigns of each.     B.    “Aaron’s” means Aaron’s Inc., a corporation organized existing, and doing business         under and by virtue of the laws of the State of Georgia, with its headquarters and         principal place of business located at 400 Galleria Parkway SE, Suite 300, Atlanta,         Georgia 30339.     C.    “Buddy’s” means Buddy’s Newco, LLC, d/b/a Buddy’s Home Furnishings, a limited         liability company organized, existing, and doing business under and by virtue of the laws         of the State of Delaware, with its headquarters and principal place of business located at         4705 S. Apopka Vineland Road, Suite 206, Orlando, Florida 32819.    D.     “Commission” means the Federal Trade Commission.                                              2 

 

       E.    “Competitor” means any Third Party, other than a RAC Franchisee, that, directly or         through a subsidiary, owns operates, is a franchisor of, or is a franchisee of, one or         more RTO Retail Centers in the United States, including Aaron’s and Buddy’s;         provided, however, this term does not include a Third Party solely engaged in a Virtual         RTO Business.    F.     “Consent Agreement” means the Agreement Containing Consent Order.     G.    “Consumer Rental Contracts” means contracts that provide a consumer with a consumer         good through a leasing arrangement that terminates when the consumer acquires full         ownership, returns the merchandise, or the lessor takes repossession of the consumer        good prior to the lessee obtaining full ownership. Consumer Rental Contracts are also        referred to as rent-to-own contracts, rental purchase agreements, or lease-to-own        agreements.     H.    “Executive Team” means the CEO, President, Executive Vice President, and General         Counsel of Respondent, and all vice president-level employees of Respondent with         operational decision-making authority over Respondent’s RTO Retail Centers.     I.    “Non-Competition Agreement” means any agreement or covenant not to operate an RTO         Retail Center within a specified geographic area for a specified period.     J.    “Third Party” means any natural person, partnership, corporation, association, trust, joint         venture, or other business or legal entity other than Respondent.     K.    “RAC Franchisee” means a Third Party business owner who operates an RTO Retail         Center under the RAC corporate trademark or associated brands.       L.    “Reciprocal Purchase Agreement” means an agreement, or a series of interdependent         agreements, through which Respondent or a RAC Franchisee agrees to close or sell one         or more of its RTO Retail Centers and sell the associated Consumer Rental Contracts to         a Competitor, and that Competitor agrees to close or sell one or more of its RTO Retail         Centers and sell the associated Consumer Rental Contracts to Respondent or a RAC         Franchisee; provided, however, this term does not include transactions whereby         Respondent’s, or a RAC Franchisee’s, purchase from, or sale to, a Competitor of an         RTO Retail Center and associated Consumer Rental Contracts is not contractually         interdependent or contingent on a reciprocal transaction.     M.    “RTO Retail Center” means a brick and mortar retail location that primarily         offers consumer goods through Consumer Rental Contracts; provided, however,         this term does not include operations associated with a Virtual RTO Business.                                             3 

 

                 N.    “Virtual RTO Business” means the business of offering on-site Consumer        Rental Contract purchase solutions at the point-of-sale at brick and mortar retail       locations other than RTO Retail Centers.                                                     II.                      IT IS FURTHER ORDERED that:                A.    Respondent shall not, directly or indirectly: (1) enter into a Reciprocal Purchase        Agreement; or (2) solicit, invite, facilitate, or enable any Third Party to enter into, a        Reciprocal Purchase Agreement.                B.    Respondent shall not enforce, in whole or part, any Non-Competition Agreement that was        part of, or contingent on, a Reciprocal Purchase Agreement.                C.    In any future franchise agreement or any renewal of an existing franchise agreement,        Respondent shall specifically prohibit the RAC Franchisee from entering into a        Reciprocal Purchase Agreement with a Competitor.                                                    III.                     IT IS FURTHER ORDERED that Respondent shall establish and maintain    a  compliance program that sets forth the policies and procedures Respondent has implemented to  comply with this Order. The compliance program shall include:                A.    Designation and retention of a compliance officer, who may be an existing employee        of Respondent, to supervise the design, maintenance, and operation of the program.        Respondent may appoint successive compliance officers as needed;                B.    Training the Executive Team regarding Respondent’s obligations under this Order:                                             4 

 

            1.     Within 30 days after this Order becomes final,          2.     At least annually during the term of the Order, and          3.     Within 30 days of when an individual first becomes a member of the Executive               Team;    C.    Policies and procedures for employees and representatives of Respondent to ask        questions about, and report violations of, this Order confidentially and without fear of        retaliation of any kind;     D.    Policies and procedures for disciplining employees and representatives of Respondent for         failure to comply with this Order; and     E.    Retention of documents and records sufficient to record Respondent’s compliance with         its obligations under this Paragraph III of this Order, including but not limited to records         showing that employees and representatives of Respondent have received all trainings        required under this Order during the preceding 2 years.                                         IV.          IT IS FURTHER ORDERED that Respondent shall file verified written reports   (“compliance reports”) in accordance with the following:    A.    Respondent shall submit:          1.     An interim compliance report 60 days after the Order is issued;          2.     Annual compliance reports each year on the anniversary of entry of the Order for               a period of 10 years; and          3.     Additional compliance reports as the Commission or its staff may request;     B.    Each compliance report shall set forth in detail the manner and form in which Respondent         intends to comply, is complying, and has complied with this Order. Each compliance         report shall contain sufficient information and documentation to enable the Commission         to determine independently whether Respondent is complying with the Order.         Conclusory statements that Respondent has complied with its obligations under the Order         are insufficient. Respondent shall include in its reports, among other information or         documentation that may be necessary to demonstrate compliance:                                               5 

 

         1.     The identity and job title of the compliance officer;          2.     A description of how Respondent is complying with Paragraph II.B of the Order               with respect to each Reciprocal Purchase Agreement in existence prior to the date               of this Order and include, if applicable, any amendments, appendices, exhibits,               schedules and modifications made thereto;          3.     With each annual compliance report, provide an electronic Excel spreadsheet               listing each RTO Retail Center for which either 1) Respondent or a RAC               Franchisee sold an RTO Retail Center’s Consumer Rental Contracts to a               Competitor, or 2) Respondent or a RAC Franchisee acquired a Competitor’s               Consumer Rental Contracts and provide the following information regarding               each listed RTO Retail Center:                 a.    Whether Respondent or a RAC Franchisee acquired or sold Consumer                     Rental Contracts and the identity of the affiliated RTO Retail Center;                b.     The address of the RTO Retail Center;                 c.    The name of all other parties to the transaction, and if another party was a                     franchisee, the name of the franchisor of that party;                d.     Whether Respondent or a RAC Franchisee has entered into a Non-                     Competition Agreement in connection with the transaction; and                 e.    A short summary of the relevant terms of the transaction including, but not                     limited to: (i) the purchase price and/or valuation of assets; (ii) the closing                     date of the transaction; and (iii) if Respondent or a RAC Franchisee                     acquired or sold Consumer Rental Contracts from multiple RTO Retail                     Centers in the same transaction, the addresses of the other RTO Retail                     Centers;                              Provided, however, for purposes of this Paragraph IV.B.3, RAC shall: (i) provide               such requested information as related to the RAC Franchisees if RAC has custody               or control or access to such information; or (ii) make good faith efforts to obtain               such information from the RAC Franchisees if that information is not otherwise               available.    C.     Respondent shall verify each compliance report in the manner set forth in 28 U.S.C.         § 1746 by the Chief Executive Officer or another officer or employee specifically         authorized to perform this function. Respondent shall submit an original and 2 copies of         each compliance report as required by Commission Rule 2.41(a), 16 C.F.R. § 2.41(a),                                             6 

 

          including a paper original submitted to the Secretary of the Commission and electronic         copies to the Secretary at ElectronicFilings@ftc.gov and to the Compliance Division at         bccompliance@ftc.gov. In addition, Respondent shall provide a copy of each compliance         report to the Monitor if the Commission has appointed one in this matter.                                         V.          IT IS FURTHER ORDERED that Respondent shall notify the Commission at least 30   days prior to:    A.     The proposed dissolution of Rent-A-Center, Inc.;    B.     The proposed acquisition, merger, or consolidation of Rent-A-Center, Inc.; or     C.    Any other change in Respondent including, but not limited to, assignment and the         creation or dissolution of subsidiaries, if such change might affect compliance obligations         arising out of this Order.                                         VI.          IT IS FURTHER ORDERED that, for purposes of determining or securing compliance   with this Order, and subject to any legally recognized privilege, upon written request and five (5)   days’ notice to the relevant Respondent, made to its principal place of business as identified in   this Order, registered office of its United States subsidiary, or its headquarters office, the notified   Respondent shall, without restraint or interference, permit any duly authorized representative of   the Commission:     A.    Access, during business office hours of the Respondent and in the presence of counsel, to         all facilities and access to inspect and copy all business and other records and all         documentary material and electronically stored information as defined in Commission         Rules 2.7(a)(1) and (2), 16 C.F.R. § 2.7(a)(1) and (2), in the possession or under the         control of the Respondent related to compliance with this Order, which copying services         shall be provided by the Respondent at the request of the authorized representative of the         Commission and at the expense of the Respondent; and     B.    To interview officers, directors, or employees of the Respondent, who may have counsel        present, regarding such matters.                                              7 

 

                                                                 VII.                     IT IS FURTHER ORDERED that in connection with any legal proceeding brought by  the Commission against Aaron’s or Buddy’s alleging that Respondent or a RAC Franchisee  entered illegal Reciprocal Purchase Agreements, Respondent shall:                A.    Agree to service of process of all Commission subpoenas issued under Rule 3.34 of the       Commission Rules of Practice, 16 C.F.R. ¶ 3.34; and                B.    Negotiate in good faith with the Commission to provide a declaration, affidavit, and/or        sponsoring witness, if necessary, to establish the authenticity and admissibility of any        documents and/or data that Respondent produces or has produced to the Commission.                                                    VIII.                      IT IS FINALLY ORDERED that this Order shall terminate 20 years from the date it is  issued.                By the Commission.                               April Tabor  Secretary Acting                SEAL:   ISSUED:                                             8Exhibit

Exhibit 4.18

DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES
EXCHANGE ACT OF 1934

James River Group Holdings, Ltd. (“we,” “our”, “us”, or the “Company”) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: our common shares.

DESCRIPTION OF SHARE CAPITAL

The following summary descriptions of our share capital, memorandum of association and third amended and restated bye-laws (“bye-laws”) are intended as summaries only and are qualified in their entirety by reference to our memorandum of association and bye-laws, copies of which are filed as exhibits to our Annual Report on Form 10-K, and by applicable law.

Share Capital

Our authorized share capital consists of 200,000,000 common shares, par value $0.0002 per share, and 20,000,000 preferred shares, par value $0.00125 per share.

Preferred Shares

Pursuant to Bermuda law and our bye-laws, our board of directors by resolution may establish one or more series of preferred shares having such number of shares, designations, dividend rates, relative voting rights, conversion or exchange rights, redemption rights, liquidation rights and other relative participation, optional or other special rights, qualifications, limitations or restrictions as may be fixed by the board without any further shareholder approval. Such rights, preferences, powers and limitations as may be established could have the effect of discouraging an attempt to obtain control of the Company.

Common Shares

Common shares have no pre-emptive rights or other rights to subscribe for additional shares, and no rights of redemption, conversion or exchange. Under certain circumstances and subject to the provisions of Bermuda law and our bye-laws, we may be required to make an offer to repurchase shares held by members. All shares sold pursuant to a registered offering are, when issued, fully paid and non-assessable.

Dividend Policy

The board may, subject to Bermuda law and our bye-laws, declare a dividend to be paid to our members as of a record date determined by the board, in proportion to the number of shares held by such holder, subject to any rights of holders of preferred shares. No unpaid dividend shall bear any interest.

Voting Rights

In general, and subject to the adjustments described below, shareholders have one vote for each common share held by them and are entitled to vote, on a non-cumulative basis, at all meetings of members. Under our bye-laws, if, and so long as, the votes conferred by the “Controlled Shares” (as defined below) of any person would otherwise cause such person (or any other person) to be treated as a “9.5% Shareholder” (as defined below) with respect to any matter (including, without limitation, election of directors), the votes conferred by the Controlled Shares owned by shareholders of such person’s “Controlled Group” (as defined below) will be reduced (and will be automatically reduced in the future) by whatever amount is necessary so that after any such reduction the votes conferred by the Controlled Shares of such person will not result in any other person being treated as a 9.5% Shareholder with respect to the vote on such matter. These reductions will be made pursuant to formulas provided in our bye-laws, as applied by the board within its discretion. Under these provisions certain shareholders may have their voting rights limited to less than one vote per share, while other shareholders may have voting rights in excess of one vote per share. Any person who was a 9.5% Shareholder as of the end of the business day on which our initial public offering was consummated is exempt from these voting restrictions.

“Controlled Shares” means, in reference to any person, all shares that such person is deemed to own directly, indirectly (within the meaning of Section 958(a) of the Internal Revenue Code of 1986, as amended (the “Code”)) or, in the case of any U.S. person, constructively (within the meaning of Section 958(b) of the Code); “Controlled Group” means, with respect to any person, all shares directly owned by such person and all shares directly owned by each other member any of whose shares are included in the Controlled Shares of such person; “9.5% Shareholder” means a U.S. person (other than a 9.5% Excluded Person) that (a) owns (within the meaning of Section 958(a) of the Code) any shares; and (b) owns, is deemed to own, or constructively owns Controlled Shares which confer votes in excess of 9.5% of the votes conferred by all of the issued and outstanding shares (in each case as determined pursuant to Section 958(b) of the Code); “9.5% Excluded Person” means any person who would, immediately after the consummation of our initial public offering, be a 9.5% Shareholder pursuant to the definition of 9.5% Shareholder.

In addition, our bye-laws provide that the board may determine that certain shares shall not carry voting rights or shall have reduced voting rights to the extent that the board reasonably determines, by the affirmative vote of a majority of the directors, that it is necessary to do so to avoid any adverse tax consequences or materially adverse legal or regulatory treatment to us, any of our subsidiaries or any shareholder or its affiliates, provided that the Board will use reasonable efforts to ensure equal treatment to similarly situated members to the extent possible under the circumstances.

Our bye-laws authorize us to request information from any shareholder for the purpose of determining whether a shareholder’s voting rights are to be adjusted as described above. If, after a reasonable cure period, a member fails to respond to a request by us for information or submits incomplete or inaccurate information in response to a request, the board may eliminate the shareholder’s voting rights. A member is required to notify us in the event it acquires actual knowledge that it or one of its investors is the actual, deemed or constructive owner of 9.5% or more of our controlled shares.

Certain Bye-laws Provisions

The provisions of our bye-laws may have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that you might consider in your best interest, including an attempt that might result in your receipt of a premium over the market price for your shares. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to first negotiate with our board of directors, which could result in an improvement of such persons’ terms.

Number of Directors

Our bye-laws provide that the board shall consist of eight directors or such number in excess thereof as our board of directors may determine.

Classified Board of Directors

Our board is divided into three classes, class I, class II and class III, with members of each class serving staggered three-year terms. Our bye-laws further provide that the authorized number of directors may be increased only by resolution of the board. Any additional directorships resulting from an increase in the number of directors shall be distributed among the three classes so that, as nearly as possible, each class consists of one-third of the directors. Our classified board of directors could have the effect of delaying or discouraging an acquisition of us or a change in our management.

Removal of Directors

Our directors may be removed only for cause by the affirmative vote of the holders of at least 50% of our voting shares. Any vacancy on our board, including a vacancy resulting from an enlargement of our board, may be filled only by vote of a majority of our directors then in office. 

Shareholder Action by Written Consent

Our bye-laws provide that shareholder action may be taken at an annual meeting or special meeting of shareholders.  Failure to satisfy any of the requirements for a shareholder meeting could delay, prevent or invalidate shareholder action. 

Shareholder Advance Notice Procedure

Our bye-laws establish an advance notice procedure for shareholders to make nominations of candidates for election as directors or to bring other business before an annual meeting of our shareholders. The bye-laws provide that any shareholder wishing to nominate persons for election as directors at, or bring other business before, an annual meeting must deliver to our 

secretary a written notice of the shareholder’s intention to do so. These provisions may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. We expect that these provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company. To be timely, the shareholder’s notice must be delivered to or mailed and received by us not less than 90 days nor more than 120 days before the anniversary date of the preceding annual meeting, except that if the annual meeting is set for a date that is not within 25 days before or after such anniversary date, we must receive the notice not earlier than 120 days prior to such annual general meeting and not later than the later of 70 days prior to the date of the general meeting or the close of business on the tenth day following the earlier of the date on which notice of the annual general meeting was posted to shareholders or the date on which public disclosure of the date of the annual general meeting was made. The notice must include the following information:

		
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	the name and address of the shareholder who intends to make the nomination and the name and address of the person or persons to be nominated or the nature of the business to be proposed;

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	a representation that the shareholder is a holder of record of our share capital entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons or to introduce the business specified in the notice;

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	if applicable, a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons, naming such person or persons, pursuant to which the nomination is to be made by the shareholder;

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	such other information regarding each nominee to be proposed by such shareholder as would be required to be included in a proxy statement filed under the SEC’s proxy rules if the nominee had been nominated, or intended to be nominated, by the board of directors;

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	a brief description of any business desired to be brought before the general meeting, the text of the proposal or business, the reasons for conducting such business at the general meeting and any material interest in such business of such shareholder;

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	if applicable, the consent of each nominee to serve as a director if elected; and such other information that the board of directors may request in its discretion;

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	the class and number of shares that are held of record or beneficially owned by the shareholder;

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	a description of any agreement, arrangement or understanding in order to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of the shareholder;

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	the principal amount of and description of indebtedness of the Company or any of its subsidiaries that is held by the shareholder;

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	a representation as to whether the shareholder intends or is part of a group that intends to deliver a proxy statement to shareholders or to otherwise solicit proxies from other shareholders; and

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	such other information that the board of directors may request in its discretion.

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Right to Repurchase Our Common Shares in the Event of Adverse Tax Consequences

Under our bye-laws and subject to the law of the Bermuda, we have the option, but not the obligation, to purchase all or part of the shares of the Company held by a shareholder, other than any shareholder that owned more than 9.5% of the total voting power of our common shares as of the date of our initial public offering, at fair market value (as determined by the average closing sales prices of the shares on certain exchanges, or if there is no sales price or quotation available, by an investment advisor selected by our board of directors and reasonably approved by the shareholder whose shares are being purchased) to the extent that the board of directors determines that such shareholder’s ownership of such common shares may result in an adverse tax consequence or materially adverse legal or regulatory treatment for the Company or any of its subsidiaries or any other person; provided that the board of directors will use reasonable efforts to exercise such discretion equally among similarly situated shareholders.

Amendments to Memorandum of Association and Bye-laws

Amendments to our bye-laws require an affirmative vote of the majority of our board and a majority of the votes cast at any annual or special meeting of shareholders. Amendments to our memorandum of association require an affirmative vote of the majority of our board and 66.67% of the outstanding shares then entitled to vote at any annual or special meeting of shareholders. Our bye-laws also provide that specified provisions of our bye-laws may not be amended, altered or repealed unless the amendment is approved by the affirmative vote of 66.67% of the directors then in office and the holders of at least 66.67% of the issued and outstanding shares then entitled to vote at any annual or special meeting of shareholders, including the provisions governing voting, the election of directors, our classified board, director removal and amendments to our bye-laws and memorandum of association.

These provisions make it more difficult for any person to remove or amend any provisions in our memorandum of association and bye-laws that may have an anti-takeover effect.

Meetings of Shareholders

Our annual general meeting will be held each year. A special general meeting will be held when, in the judgment of the Chairman, any two directors, any director and our secretary or the board, such a meeting is necessary. In addition, upon receiving a requisition from holders of at least 10% of our voting shares, the board shall convene a special general meeting. At least two or more persons representing more than 50% of our aggregate voting power must be present to constitute a quorum for the transaction of business at a general meeting, provided that if we shall at any time have only one member, one member present in person or by proxy shall form a quorum for the transaction of business at any general meeting held during such time. No shareholder may participate in any general meeting during which the shareholder (or shareholder’s representative) is physically present in the United States. As determined according to certain adjustments of voting power specified in our bye-laws (See “- Common Shares - Voting Rights”), questions proposed for consideration by the shareholders will be decided by the affirmative vote of the majority of the votes cast.

Corporate Opportunities

Our bye-laws provide that, except for persons that are officers, managers or employees of the Company, and directors who are officers, managers or employees of the Company, no shareholder nor any of its affiliates, or any of its or their respective directors, officers, employees, agents, general or limited partners, managers, members, or shareholders, in any case whether or not one of our directors or officers, have any duty to communicate or present any investment or business opportunity or prospective transaction, agreement, arrangement, or other economic advantage to us. In addition, to the fullest extent permitted by law, such persons may engage in businesses competitive with ours. In our bye-laws we explicitly renounce any interest of the company in such opportunities and any expectation that such opportunities will be offered to us.

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