hqi_ex42






 







DESCRIPTION OF THE REGISTRANT’S SECURITIES



REGISTERED PURSUANT TO SECTION 12



OF THE SECURITIES EXCHANGE ACT OF 1934


 



Introduction


 



The following is a summary of information concerning the capital
stock of HireQuest, Inc. (the “Company”). This
discussion is subject to the relevant provisions of Delaware law
and is qualified in its entirety by reference to the
Company’s Certificate of Incorporation and Bylaws. The
Company’s Certificate of Incorporation and Bylaws include
more details regarding the provisions described below and other
provisions. The Company has filed copies of those documents with
the United States Securities and Exchange Commission
(“SEC”).


 



Authorized Capital Stock


 



The Company’s authorized capital stock consists of 30,000,000
shares of common stock, par value $0.001 per share (“Common
Stock”), and 1,000,000 shares of preferred stock, par value
$0.001 per share (“Preferred Stock”).


 



Common Stock


 



Dividends. Holders of shares of
our Common Stock will be entitled to receive dividends when, as and
if declared by the Company’s Board of Directors (the
“Board”) at its discretion out of funds legally
available for that purpose, subject to the preferential rights of
any outstanding shares of Preferred Stock. The timing, declaration,
amount and payment of future dividends depends on the
Company’s financial condition, earnings, capital requirements
and debt service obligations, as well as legal requirements,
regulatory constraints, industry practice and other factors that
the Board deems relevant. The Company’s Board makes all
decisions regarding its payment of dividends from time-to-time in
accordance with applicable law.


 



Voting Rights. The holders of
the Company’s Common Stock are entitled to one vote for each
share held of record on all matters submitted to a vote of the
stockholders. With certain exceptions, a majority of the votes cast
at a stockholder meeting at which a quorum is present must approve
all stockholder matters. Except with respect to vacancies or new
directorships, the Company’s Bylaws provide that directors
are elected by a plurality of the votes cast on the election of
directors at a stockholder meeting at which a quorum is present.
The holders of the Company’s Common Stock do not have
cumulative voting rights for the election of directors or for any
other purpose.


 



Other Rights.
Subject to any preferential liquidation rights of holders of
Preferred Stock that may be outstanding, upon the Company’s
dissolution, the holders of Common Stock will be entitled to share
ratably in its assets legally available for distribution to
the Company’s stockholders. The
holders of the Common Stock do not have preemptive rights or
preferential rights to subscribe for shares of the Company’s
capital stock.


 



Fully Paid. The issued and
outstanding shares of Common Stock are fully paid and
non-assessable. Any additional shares of Common Stock that may be
issued in the future will also be fully paid and
non-assessable.


 



Undesignated Preferred Stock


 



The Company currently has no outstanding shares of Preferred Stock,
and the Board has no present intention to issue any shares of
Preferred Stock. The Company is authorized to issue up to 1,000,000
shares of Preferred Stock in one or more class or series. The
Board, without further action by the holders of the Common Stock,
may issue shares of Preferred Stock. The Board is vested with the
authority to fix by resolution the designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions of any Preferred Stock
issued, including, without limitation, redemption rights, dividend
rights, liquidation preferences and conversion or exchange rights
of any class or series of Preferred Stock, and to fix the number of
classes or series of Preferred Stock, the number of shares
constituting each class or series and the voting powers for each
class or series.


 



Anti-Takeover Provisions of the Company’s Certificate of
Incorporation and Bylaws and Delaware Law


 



The Company’s Certificate of Incorporation and Bylaws include
a number of provisions that may have the effect of delaying,
deferring or preventing another party from acquiring control of it
and encouraging persons considering unsolicited tender offers or
other unilateral takeover proposals to negotiate with the
Company’s Board rather than pursue non-negotiated takeover
attempts. These provisions include the items described
below.


 



Filling Vacancies. Any
vacancy on the Board, however occurring, including a vacancy
resulting from an increase in the size of the Board, may be filled
by the affirmative vote of a majority of the Board’s
directors then in office, even if less than a quorum. The treatment
of vacancies may have the effect of making it more difficult for
stockholders to change the composition of the
Board.


 



Advance Notice Requirements.
The Company’s Bylaws establish advance notice procedures with
regard to stockholder proposals relating to the nomination of
candidates for election as directors or new business to be brought
before meetings of the Company’s stockholders. These
procedures provide that notice of stockholder proposals must be
timely given in writing to the Company’s secretary prior to
the meeting at which the action is to be taken. Generally, to be
timely, notice must be received at the Company’s principal
executive offices not later than the 45th day nor earlier than the
75th day before the one-year anniversary of the date on which the
Company first mailed its proxy materials or a notice of
availability of proxy materials (whichever is earlier) for the
preceding year’s annual meeting. The Company’s Bylaws
specify the requirements as to form and content of all
stockholders’ notices. These requirements may preclude
stockholders from bringing matters before the stockholders at an
annual or special meeting.


 



Choice of Forum. The
Company’s Bylaws provide that, unless consent is given in
writing to an alternative forum, the Court of Chancery of the State
of Delaware (or, if that court does not have jurisdiction, the
federal district court for the District of Delaware) will be the
sole and exclusive forum for (i) any derivative action or
proceeding brought on the Company’s behalf, (ii) any action
asserting a claim of a breach of a fiduciary duty owed by any of
the Company’s directors, officers and employees to the
Company or its stockholders, (iii) any action asserting a claim
pursuant to any provision of the Delaware General Corporation Law,
the Company’s Certificate of Incorporation or Bylaws, or (iv)
any action asserting a claim that is governed by the internal
affairs doctrine. Although the Company believes this provision is
beneficial by providing increased consistency in the application of
Delaware law in the types of lawsuits to which it applies, the
provision may have the effect of discouraging lawsuits against the
Company’s directors and officers.


 



Section 203 of the Delaware General Corporation
Law. The Company is subject to
the provisions of Section 203 of the Delaware General Corporation
Law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an
"interested stockholder" for a three-year period following the time
that this stockholder becomes an interested stockholder, unless the
business combination is approved in a prescribed manner. Under
Section 203, a business combination between a corporation and an
interested stockholder is prohibited unless it satisfies one of the
following conditions:


 



● before
the stockholder became interested, the Board approved either the
business combination or the transaction which resulted in the
stockholder becoming an interested stockholder;



● upon
consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder
owned at least 85% of the Company’s voting stock outstanding
at the time the transaction commenced, excluding for purposes of
determining the voting stock outstanding, shares owned by persons
who are directors and also officers, and employee stock plans, in
some instances, but not the outstanding voting stock owned by the
interested stockholder; or



● at or
after the time the stockholder became interested, the business
combination was approved by the Board and authorized at an annual
or special meeting of the stockholders by the affirmative vote of
at least two-thirds of the outstanding voting stock which is not
owned by the interested stockholder.


 



Section 203 defines a business combination to include:


 



● any
merger or consolidation involving the Company and the interested
stockholder;



● any
sale, transfer, lease, pledge or other disposition involving the
interested stockholder of 10% or more of the Company’s our
assets;



● subject to exceptions, any
transaction that results in the issuance or transfer by the Company
of any of its stock to the interested
stockholder;



● subject to exceptions, any
transaction involving the Company that has the effect of increasing
the proportionate share of the stock of any of the Company’s
class or series beneficially owned by the interested stockholder;
and



● the
receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided
by or through the Company.


 



In general, Section 203 defines an interested stockholder as any
entity or person beneficially owning 15% or more of the outstanding
voting stock of the Company and any entity or person affiliated
with or controlling or controlled by the entity or
person.


 



Undesignated Preferred Stock.
The Company’s Certificate of Incorporation provides for
1,000,000 authorized shares of Preferred Stock. The existence of
authorized but unissued shares of Preferred Stock may enable the
Board to discourage an attempt to obtain control of the Company by
means of a merger, tender offer, proxy contest or otherwise. For
example, if in the due exercise of its fiduciary obligations, the
Board were to determine that a takeover proposal is not in the best
interests of the Company’s stockholders, the Board could
cause shares of Preferred Stock to be issued without stockholder
approval in one or more private offerings or other transactions
that might dilute the voting or other rights of the proposed
acquirer or insurgent stockholder or stockholder group. In this
regard, the Company’s Certificate of Incorporation grants the
Board broad power to establish the rights and preferences of
authorized and unissued shares of Preferred Stock. The issuance of
shares of Preferred Stock could decrease the amount of earnings and
assets available for distribution to holders of shares of Common
Stock. The issuance may also adversely affect the rights and
powers, including voting rights, of these holders and may have the
effect of delaying, deterring or preventing a change in control of
the Company.


 



Transfer Agent


 



Our transfer agent is Continental Stock Transfer & Trust
located at 17 Battery Street, 8th Floor, New York, New York,
10004.


 



Listing


 



Our Common Stock is listed on The Nasdaq Stock Market under the
symbol “HQI”.