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________________________________________________
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Securities
registered pursuant to Section 12(b) of the Act:
Title of Each
Class
Trading
Symbol(s)
Name of Each
Exchange on Which Registered
Common Stock,
$0.001 par value
HQI
The NASDAQ Stock
Market LLC
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of
1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐
Item 1.01. Entry into a Material Definitive
Agreement.
On June 29, 2021 HireQuest, Inc. (the "Company") and all of its
subsidiaries as borrowers (collectively with the Company, the
"Borrowers") entered into a Revolving Credit and Term Loan
Agreement with Truist Bank, as Administrative Agent, the lenders
from time to time made a party thereto, and Truist Securities, Inc.
as Sole Lead Arranger and Sole Book Runner (the "Credit Agreement")
for (i) a $60 million revolving line of credit with a $20 million
sublimit for letters of credit (the "Line of Credit") and (ii) a
$3,153,500 term loan (the "Term Loan"). Truist Bank may also make
Swingline Loans available in its discretion. The Credit Agreement
replaces the Company's prior $30 million credit facility with
BB&T, now Truist. The Credit Agreement provides for a
borrowing base on the Line of Credit that is derived from the
Borrowers' accounts receivable subject to certain reserves and
other limitations. Interest will accrue on the outstanding balance
of the Line of Credit and Swingline Loans at a variable rate equal
to (a) the LIBOR Index Rate plus a margin between 1.25% and 1.75%
per annum or (b) the then applicable Base Rate, as that term is
defined in the Credit Agreement plus a margin between 0.25% and
0.75% per annum. In each case, the applicable margin is determined
by the Company's Average Excess Availability on the Line of Credit,
as defined in the Credit Agreement. Interest will accrue on the
Term Loan at a variable rate equal to (a) the LIBOR Index Rate plus
2.0% per annum or (b) the then applicable Base Rate plus 1.0% per
annum. In addition to interest on outstanding principal under the
Credit Agreement, the Borrowers will pay a commitment fee on the
unused portion of the Line of Credit in an amount equalt to 0.25%
per annum. All loans made pursuant to the Line of Credit mature on
June 29, 2026. The Term Loan will be paid in equal monthly
installments based upon a 15-year amortization of the original
principal amount of the Term Loan and will be payable in monthly
installments with the remaining principal balance due and payable
in full on the earlier of the date of termination of the
committments on the Line of Credit and June 29, 2036.
The Credit Agreement and other loan
documents contain customary representations and warranties,
affirmative, and negative covenants, including without limitation,
those covenants governing indebtedness, liens, fundamental changes,
restricting certain payments including dividends unless certain
conditions are met, transactions with affiliates, investments,
engaging in business other than the current business of the
Borrowers and business reasonably related thereto, sale/leaseback
transactions, speculative hedging, and sale of assets. The Credit
Agreement and other loan documents also contain customary events of
default including, without limitation, payment default, material
breaches of representations and warranties, breach of covenants,
cross-default on material indebtedness, certain bankruptcies,
certain ERISA violations, material judgments, change in control,
termination or invalidity of any guaranty or security documents,
and defaults under other loan documents. The Credit Agreement also
requires the Borrowers, on a consolidated basis, to comply with a
fixed charge coverage ratio of at least 1.25:1.00 and a leverage
ratio of not more than 3.0:1.0. The obligations under the Credit
Agreement and other loan documents are secured by substantially all
of the assets of the Borrowers as collateral including, without
limitation, their accounts and notes receivable, stock of the
Company's subsidiaries, and intellectual property and the real
estate owned by HQ Real Property
Corporation.
The Company utilized the proceeds
of the Term Loan (i) first to pay off its existing credit facility
with BB&T, now Truist, and (ii) second, to pay transaction fees
and expenses incurred in connection with closing the transactions
described above. The Company intends to utilize the proceeds of any
loans made under the Line of Credit and the remainder of the Term
Loan for working capital, required letters of credit, and general
corporate purposes in accordance with the terms of the Credit
Agreement.
The foregoing summary of the Credit Agreement and the transactions
contemplated thereby is qualified in its entirety by reference to
the text of such agreement, a copy of which is attached hereto as
Exhibit 10.1 and incorporated by reference herein.
Item 2.03. Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement
of a Registrant.
The description of the Credit
Agreement and the transactions contemplated thereby under Item 1.01
above is incorporated by reference herein in its
entirety.
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf
by the undersigned, hereunto duly authorized.