Document:

DESCRIPTION OF SECURITIES

 

EXHIBIT 4.1

 

DESCRIPTION OF SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

The following summary describes the common stock of LogicQuest Technology, Inc., a Nevada corporation (“LogicQuest” or the “Company”), which is registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Only the Company’s common stock is registered under Section 12 of the Exchange Act.

 

DESCRIPTION OF COMMON STOCK

 

The following description of our common stock is a summary and is qualified in its entirety by reference to our Articles of Incorporation, as amended and our Bylaws, as amended, and by applicable law. For purposes of this description, references to “LogicQuest,” “we,” “our” and “us” refer to LogicQuest.

 

Authorized Capitalization

 

We have authorized capital stock consisting of 20,000,000 shares of common stock, $0.001 par value per share and 10,000,000 shares of preferred stock, $0.001 par value per share (“Preferred Stock”). 

 

Common Stock

 

Voting Rights. Each share of our common stock is entitled to one vote on all stockholder matters. Shares of our common stock do not possess any cumulative voting rights.

 

Except for the election of directors, if a quorum is present, an action on a matter is approved if it receives the affirmative vote of the holders of a majority of the voting power of the shares of capital stock present in person or represented by proxy at the meeting and entitled to vote on the matter, unless otherwise required by applicable law, Nevada law, our Articles of Incorporation, as amended or Bylaws, as amended. The election of directors will be determined by a plurality of the votes cast in respect of the shares present in person or represented by proxy at the meeting and entitled to vote, meaning that the nominees with the greatest number of votes cast, even if less than a majority, will be elected. The rights, preferences and privileges of holders of common stock are subject to, and may be impacted by, the rights of the holders of shares of any series of preferred stock that we have designated, or may designate and issue in the future.

 

Dividend Rights. Each share of our common stock is entitled to equal dividends and distributions per share with respect to the common stock when, as and if declared by our Board of Directors, subject to any preferential or other rights of any outstanding preferred stock.

 

Liquidation and Dissolution Rights. Upon liquidation, dissolution or winding up, our common stock will be entitled to receive pro rata on a share-for-share basis, the assets available for distribution to the stockholders after payment of liabilities and payment of preferential and other amounts, if any, payable on any outstanding preferred stock.

  

Other Matters. No holder of any shares of our common stock has a preemptive right to subscribe for any of our securities, nor are any shares of our common stock subject to redemption or convertible into other securities.Exhibit
4.1

 

DESCRIPTION
OF SECURITIES

 

General

 

The
following description summarizes important terms of the classes of our capital stock. This summary does not purport to be complete
and is qualified in its entirety by the provisions of our articles of incorporation and our bylaws which have been filed as exhibits
to our annual report.

 

Our
authorized capital stock consists of 200,000,000 shares of Common Stock, par value $0.01 per share, and 10,000,000 shares of Preferred
Stock, par value $0.01 per share.

 

As
of December 31, 2020, there were 12,401,580 shares of Common Stock, 1,890,000 shares of Series A Preferred Stock and 641,254 shares
of Series B Preferred Stock issued and outstanding. No other shares of our capital stock were issued and outstanding as of such
date.

 

Common
Stock

 

Holders
of our Common Stock are entitled to one vote for each share on all matters voted upon by our stockholders, including the election
of directors, and do not have cumulative voting rights. Subject to the rights of holders of any then outstanding shares
of our Preferred Stock, our Common Stockholders are entitled to any dividends that may be declared by our board. Holders
of our Common Stock are entitled to share ratably in our net assets upon our dissolution or liquidation after payment or provision
for all liabilities and any preferential liquidation rights of our Preferred Stock then outstanding. Holders of our Common
Stock have no preemptive rights to purchase shares of our stock. The shares of our Common Stock are not subject to any redemption
provisions.  The rights, preferences and privileges of holders of our Common Stock will be subject to those of the holders
of any shares of our Preferred Stock that we may issue in the future.

 

Preferred
Stock

 

Our
articles of incorporation further authorize the board of directors to issue, from time to time, without stockholder approval,
up to 10,000,000 shares of Preferred Stock. Our board may, from time to time, authorize the issuance of one or more classes or
series of Preferred Stock without stockholder approval. Subject to the provisions of our articles of incorporation and limitations
prescribed by law, our board is authorized to adopt resolutions to issue shares, establish the number of shares, change the number
of shares constituting any series, and provide or change the voting powers, designations, preferences and relative rights, qualifications,
limitations or restrictions on shares of our Preferred Stock, including dividend rights, terms of redemption, conversion rights
and liquidation preferences, in each case without any action or vote by our stockholders.

 

One
of the effects of undesignated Preferred Stock may be to enable our board to discourage an attempt to obtain control of our company
by means of a tender offer, proxy contest, merger or otherwise. The issuance of Preferred Stock may adversely affect the rights
of our common stockholders by, among other things: restricting dividends on the Common Stock; diluting the voting power of the
Common Stock; impairing the liquidation rights of the Common Stock; or delaying or preventing a change in control without further
action by the stockholders.

 

Series
A Preferred Stock

 

On
May 8, 2019, we filed a certificate of designation with the Nevada Secretary of State to establish our Series A Preferred Stock.
We designated a total of 4,000,000 shares of Preferred Stock as “Series A Cumulative Convertible Preferred Stock.”
Our Series A Preferred Stock has the following voting powers, designations, preferences and relative rights, qualifications, limitations
or restrictions:

 

Ranking.
The Series A Preferred Stock ranks, as to dividend rights and rights upon our liquidation, dissolution, or winding up, senior
to our Common Stock and pari passu with our Series B Preferred Stock. The terms of the Series A Preferred Stock will not
limit our ability to (i) incur indebtedness or (ii) issue additional equity securities that are equal or junior in rank to the
shares of our Series A Preferred Stock as to distribution rights and rights upon our liquidation, dissolution or winding up.

 

Dividend
Rate and Payment Dates. Dividends on our Series A Preferred Stock are cumulative and payable monthly in arrears to all
holders of record on the applicable record date. Holders of our Series A Preferred Stock will be entitled to receive cumulative
dividends in the amount of $0.017 per share each month, which is equivalent to the rate of 8% of the $2.50 liquidation preference
per share. Dividends on shares of our Series A Preferred Stock will continue to accrue even if any of our agreements prohibit
the current payment of dividends or we do not have earnings.

 

     

     

    

 

Liquidation
Preference. The liquidation preference for each share of our Series A Preferred Stock is $2.50. Upon a liquidation, dissolution
or winding up of our company, holders of shares of our Series A Preferred Stock will be entitled to receive, before any payment
or distribution is made to the holders of our Common Stock and on a pari passu basis with holders of our Series
B Preferred Stock, the liquidation preference with respect to their shares plus an amount equal to any accrued but unpaid dividends
(whether or not declared) to, but not including, the date of payment with respect to such shares.

 

Stockholder
Optional Conversion. Each share of Series A Preferred Stock is convertible, at any time and from time to time, at the
option of the holder thereof and without the payment of additional consideration, into that number of shares of Common Stock determined
by dividing the liquidation preference of such share by the conversion price then in effect. The conversion price is initially
equal $2.50, subject to adjustment as set forth in the certificate of designation. In addition, if at any time the trading price
of our Common Stock is greater than the liquidation preference of $2.50, we may deliver a written notice to all holders to cause
each holder to convert all or part of such holders Series A Preferred Stock.

 

Company
Call and Stockholder Put Options. Commencing on the fifth anniversary of the initial issuance of shares of our Series
A Preferred Stock and continuing indefinitely thereafter, we shall have a right to call for redemption the outstanding shares
of our Series A Preferred Stock at a call price equal to $3.75, or 150% of the original issue price of our Series A Preferred
Stock, and correspondingly, each holder of shares of our Series A Preferred Stock shall have a right to put the shares of Series
A Preferred Stock held by such holder back to us at a put price equal to $3.75, or 150% of the original issue purchase price of
such shares.

 

Further
Issuances. We will not be required to redeem shares of our Series A Preferred Stock at any time except as otherwise described
above under the caption “Company Call and Stockholder Put Options.” Accordingly, the shares of our Series A Preferred
Stock will remain outstanding indefinitely, unless we decide, at our option, to exercise our call right, the holder of the Series
A Preferred Stock exercises his put right or the holder of shares of Series A Preferred Stock converts such stock into Common
Stock in accordance with the terms of the Series A Preferred Stock. The shares of Series A Preferred Stock are not subject to
any sinking fund.

 

Voting
Rights. We may not authorize or issue any class or series of equity securities ranking senior to the Series A Preferred
Stock as to dividends or distributions upon liquidation (including securities convertible into or exchangeable for any such senior
securities) or amend our articles of incorporation (whether by merger, consolidation, or otherwise) to materially and adversely
change the terms of the Series A Preferred Stock without the affirmative vote of at least two-thirds of the votes entitled to
be cast on such matter by holders of our outstanding shares of Series A Preferred Stock, voting together as a class. Otherwise,
holders of the shares of our Series A Preferred Stock do not have any voting rights.

 

Series
B Preferred Stock

 

On
December 2, 2019, we filed a certificate of designation with the Nevada Secretary of State to establish our Series B Preferred
Stock. We designated a total of 1,000,000 shares of Preferred Stock as “Series B Cumulative Redeemable Preferred Stock.”
Our Series B Preferred Stock has the following voting powers, designations, preferences and relative rights, qualifications, limitations
or restrictions:

 

Ranking.
The Series B Preferred Stock ranks, as to dividend rights and rights upon our liquidation, dissolution, or winding up, senior
to our Common Stock and pari passu with our Series A Preferred Stock. The terms of the Series B Preferred Stock do not
limit our ability to (i) incur indebtedness or (ii) issue additional equity securities that are equal or junior in rank to the
shares of our Series B Preferred Stock as to distribution rights and rights upon our liquidation, dissolution or winding up.

 

Dividend
Rate and Payment Dates. Dividends on the Series B Preferred Stock are cumulative and payable monthly in arrears to all
holders of record on the applicable record date. Holders of our Series B Preferred Stock are entitled to receive cumulative dividends
in the amount of $0.067 per share each month, which is equivalent to the annual rate of 8% of the $10.00 liquidation preference
per share; provided that upon an event of default (generally defined as our failure to pay dividends when due or to redeem shares
when requested by a holder), such amount shall be increased to $0.083 per month, which is equivalent to the annual rate of 10%
of the $10.00 liquidation preference per share. Dividends on shares of our Series B Preferred Stock will continue to accrue even
if any of our agreements prohibit the current payment of dividends or we do not have earnings.

 

Liquidation
Preference. The liquidation preference for each share of our Series B Preferred Stock is $10.00. Upon a liquidation, dissolution
or winding up of our company, holders of shares of our Series B Preferred Stock will be entitled to receive, before any payment
or distribution is made to the holders of our Common Stock and on a pari passu basis with holders of our Series
A Preferred Stock, the liquidation preference with respect to their shares plus an amount equal to any accrued but unpaid dividends
(whether or not declared) to, but not including, the date of payment with respect to such shares.

 

    2

     

    

 

Company
Call and Stockholder Put Options. Commencing on November 29, 2024 (the fifth anniversary of the initial closing of this
offering) and continuing indefinitely thereafter, we shall have a right to call for redemption the outstanding shares of our Series
B Preferred Stock at a call price equal to $15.00, or 150% of the original issue price of our Series B Preferred Stock, and correspondingly,
each holder of shares of our Series B Preferred Stock shall have a right to put the shares of Series B Preferred Stock held by
such holder back to us at a put price equal to $15.00, or 150% of the original issue purchase price of such shares.

 

Further
Issuances. We will not be required to redeem shares of our Series B Preferred Stock at any time except as otherwise described
above under the caption “Company Call and Stockholder Put Options.” Accordingly, the shares of our Series B Preferred
Stock will remain outstanding indefinitely, unless we decide, at our option, to exercise our call right, the holder of the Series
B Preferred Stock exercises his put right. The shares of Series B Preferred Stock will not be subject to any sinking fund.

 

Voting
Rights. We may not authorize or issue any class or series of equity securities ranking senior to the Series B Preferred
Stock as to dividends or distributions upon liquidation (including securities convertible into or exchangeable for any such senior
securities) or amend our articles of incorporation (whether by merger, consolidation, or otherwise) to materially and adversely
change the terms of the Series B Preferred Stock without the affirmative vote of at least two-thirds of the votes entitled to
be cast on such matter by holders of our outstanding shares of Series B Preferred Stock, voting together as a class. Otherwise,
holders of the shares of our Series B Preferred Stock will not have any voting rights.

 

No
Conversion Right. The Series B Preferred Stock are not convertible into shares of our Common Stock.

 

Anti-takeover
Effects of Nevada Law

 

Business
Combinations

 

The
“business combination” provisions of Sections 78.411 to 78.444, inclusive, of the Nevada Revised Statutes prohibit
a Nevada corporation with at least 200 stockholders from engaging in various “combination” transactions with any interested
stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder,
unless the transaction is approved by the board of directors prior to the date the interested stockholder obtained such status;
or after the expiration of the three-year period, unless:

 

		●	the
                                         transaction is approved by the board of directors or a majority of the voting power held
                                         by disinterested stockholders, or

 

		●	if
                                         the consideration to be paid by the interested stockholder is at least equal to the highest
                                         of: (a) the highest price per share paid by the interested stockholder within the three
                                         years immediately preceding the date of the announcement of the combination or in the
                                         transaction in which it became an interested stockholder, whichever is higher, (b) the
                                         market value per share of common stock on the date of announcement of the combination
                                         and the date the interested stockholder acquired the shares, whichever is higher, or
                                         (c) for holders of preferred stock, the highest liquidation value of the preferred stock,
                                         if it is higher.

 

A
“combination” is defined to include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer
or other disposition, in one transaction or a series of transactions, with an “interested stockholder” having: (a)
an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation, (b) an aggregate
market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation, or (c) 10% or more
of the earning power or net income of the corporation. In general, an “interested stockholder” is a person who, together
with affiliates and associates, owns (or within three years, did own) 10% or more of a corporation’s voting stock.

 

These
provisions could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts
to acquire our company even though such a transaction may offer stockholders the opportunity to sell their stock at a price above
the prevailing market price.

 

    3

     

    

 

Control
Share Acquisitions

 

The
“control share” provisions of Sections 78.378 to 78.3793, inclusive, of the Nevada Revised Statutes, which apply only
to Nevada corporations with at least 200 stockholders, including at least 100 stockholders of record who are Nevada residents,
and which conduct business directly or indirectly in Nevada, prohibit an acquiror, under certain circumstances, from voting its
shares of a target corporation’s stock after crossing certain ownership threshold percentages, unless the acquiror obtains
approval of the target corporation’s disinterested stockholders. These provisions specify three thresholds: one-fifth or
more but less than one-third, one-third but less than a majority, and a majority or more, of the outstanding voting power. Once
an acquiror crosses one of the above thresholds, those shares in an offer or acquisition, and acquired within 90 days thereof,
become “control shares” and such control shares are deprived of the right to vote until disinterested stockholders
restore the right. These provisions also provide that if control shares are accorded full voting rights and the acquiring person
has acquired a majority or more of all voting power, all other stockholders who do not vote in favor of authorizing voting rights
to the control shares are entitled to demand payment for the fair value of their shares in accordance with statutory procedures
established for dissenters’ rights.

 

Anti-takeover
Effects of Articles of Incorporation and Bylaws

 

Our
articles of incorporation and bylaws also contain certain provisions that may have anti-takeover effects, making it more difficult
for or preventing a third party from acquiring control of our company or changing our board of directors and management.

 

As
noted above, our articles of incorporation authorize our board to issue up to 10,000,000 shares of Preferred Stock without further
stockholder approval. The Preferred Stock may be issued in one or more series, the terms of which may be determined at the time
of issuance by the board of directors without further action by the stockholders. These terms may include preferences as to dividends
and liquidation, conversion rights, redemption rights and sinking fund provisions. The issuance of any Preferred Stock could diminish
the rights of holders of Common Stock, and therefore could reduce the value of such Common Stock. In addition, specific rights
granted to future holders of Preferred Stock could be used to restrict our ability to merge with, or sell assets to, a third party.
The ability of the board to issue Preferred Stock could make it more difficult, delay, discourage, prevent or make it more costly
to acquire or effect a change-in-control, which in turn could prevent stockholders from recognizing a gain in the event that a
favorable offer is extended and could materially and negatively affect the market price of our Common Stock.

 

In
addition, according to our articles of incorporation and bylaws neither the holders of Common Stock nor the holders of Preferred
Stock have cumulative voting rights in the election of directors. The lack of cumulative voting makes it more difficult for other
stockholders to replace the board of directors or for a third party to obtain control of our company by replacing the board of
directors. The bylaws also contain a limitation as to who may call special meetings as well as require advance notice of stockholder
matters to be brought at a meeting. Additionally, our bylaws also provide that no director may be removed by less than a two-thirds
vote of the issued and outstanding shares entitled to vote on the removal.

 

Transfer
Agent and Registrar

 

The
transfer agent and registrar for our Common Stock is First American Stock Transfer, Inc. with an address at 4747 North 7th Street
Suite 170, Phoenix AZ 85014. Their phone number is (602) 485-1346.

 

    4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00325-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00325-of-00352.parquet"}]]