Document:

Exhibit 4.1

 

DESCRIPTION
OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE

SECURITIES EXCHANGE ACT OF 1934

 

SandRidge Permian
Trust (the “Trust”) has one class of securities registered under Section 12 of the Securities Exchange
Act of 1934, as amended: its Common Units of Beneficial Interest, which are referred to in this exhibit as “Trust units.”

 

Description
of Trust Units

 

The beneficial
interest in the Trust is divided into 52,500,000 Trust units. Each Trust unit represents an equal undivided beneficial interest
in the property of the Trust.

 

Distributions; Income Computations

 

Cash distributions
to Trust unitholders are made by the Trust from its available funds for each calendar quarter. Royalty interest payments due to
the Trust with respect to any calendar quarter are based on actual production volumes attributable to the Trust properties for
the first two months of the quarter just ended as well as the last month of the immediately preceding quarter (as measured at Avalon
Energy, LLC (“Avalon”) metering systems) and actual revenues received for such volumes. Avalon will make a payment
to the Trust equal to the royalty interest payments within 45 days of the end of each calendar quarter. After the receipt
and disbursement of such payment, The Bank of New York Mellon Trust Company, N.A., the trustee of the Trust (the “Trustee”),
determines for such calendar quarter the amount of funds available for distribution to the Trust unitholders. Available funds are
the excess cash, if any, received by the Trust over the Trust’s expenses for that quarter. Available funds will be reduced
by any cash the Trustee decides to hold as a reserve against future liabilities.

 

The amount of available
funds for distribution each quarter will be payable to the Trust unitholders of record on or about the 45th day following
the end of such calendar quarter or such later date as the Trustee determines is required to comply with legal or stock exchange
requirements. The Trustee will distribute cash on or about the 60th day (or the next succeeding business day following such
day if such day is not a business day) following such calendar quarter to each person who was a Trust unitholder of record on the
quarterly record date, together with interest expected to be earned on the amount of such quarterly distribution from the date
of receipt thereof by the Trustee to the payment date.

 

Unless otherwise
advised by counsel or the IRS, the Trustee will treat the income and expenses of the trust for each quarter as belonging to the
Trust unitholders of record on the quarterly record date of the month. Trust unitholders will recognize income and expenses for
tax purposes in the quarter the Trust receives or pays those amounts, rather than in the quarter the Trust distributes them. Minor
variances may occur. For example, the Trustee could establish a reserve in one month that would not result in a tax deduction until
a later month. The Trustee could also make a payment in one month that would be amortized for tax purposes over several months.

 

Transfer of Trust Units

 

Trust unitholders
may transfer their Trust units in accordance with the trust agreement, as amended and restated, by and among SandRidge Energy, Inc.,
as Trustor, the Trustee, and The Corporation Trust Company, as Delaware Trustee (such amended and restated trust agreement, as
amended to date, the “Trust Agreement”). The Trustee will not require either the transferor or transferee to
pay a service charge for any transfer of a Trust unit. The Trustee may require payment of any tax or other governmental charge
imposed for a transfer. The Trustee may treat the owner of any Trust unit as shown by its records as the owner of the Trust unit.
The Trustee will not be considered to know about any claim or demand on a Trust unit by any party except the record owner. A person
who acquires a Trust unit after any quarterly record date will not be entitled to the distribution relating to that quarterly record
date. Delaware law will govern all matters affecting the title, ownership or transfer of Trust units.

 

     

     

    

 

Tax Schedules and Periodic Reports

 

The Trustee will
file all required trust federal and state income tax and information returns. The Trustee will prepare and mail to Trust unitholders
a Schedule K-1 that Trust unitholders need to correctly report their share of the income and deductions of the trust. The
Trustee will also cause to be prepared and filed reports required to be filed under the Securities Exchange Act of 1934, as amended,
and by the rules of any securities exchange or quotation system on which the Trust units are listed or admitted to trading.

 

Each Trust unitholder
and his representatives may examine, for any proper purpose, during reasonable business hours the records of the Trust and the
Trustee.

 

Liability of Trust Unitholders

 

Under the Delaware
Statutory Trust Act, Trust unitholders will be entitled to the same limitation of personal liability extended to stockholders of
private corporations for profit under the General Corporation Law of the State of Delaware. No assurance can be given, however,
that the courts in jurisdictions outside of Delaware will give effect to such limitation.

 

Voting Rights of Trust Unitholders

 

The Trustee or
Trust unitholders owning at least 10% of the outstanding Trust units may call meetings of Trust unitholders. The Trust will be
responsible for all costs associated with calling a meeting of Trust unitholders unless such meeting is called by the Trust unitholders,
in which case the Trust unitholders will be responsible for all costs associated with calling such meeting of Trust unitholders.
Meetings must be held in such location as is designated by the Trustee in the notice of such meeting. The Trustee must send notice
of the time and place of the meeting and the matters to be acted upon to all of the Trust unitholders at least 20 days and
not more than 60 days before the meeting. Trust unitholders representing a majority of Trust units outstanding must be present
or represented to have a quorum. Each Trust unitholder is entitled to one vote for each Trust unit owned. Abstentions and broker
non-votes shall not be deemed to be a vote cast.

 

Unless otherwise
required by the Trust Agreement, a matter may be approved or disapproved by the vote of a majority of the Trust units held by the
Trust unitholders voting in person or by proxy at a meeting where there is a quorum. This is true, even if a majority of the total
outstanding Trust units did not approve it.

 

Amendment of
the Trust Agreement generally requires the vote of holders of (i) a majority of the Trust units (excluding Trust units owned
by Avalon and its affiliates) and (ii) a majority of the Trust units (including Trust units owned by Avalon and its affiliates),
in each case voting in person or by proxy at a meeting of such unitholders at which a quorum is present. At any time that Avalon
and its affiliates collectively own less than 10% of the total Trust units outstanding, however, the standard for approval will
be the vote of the holders of a majority of the Trust units, including Trust units owned by Avalon and its affiliates, voting in
person or by proxy at a meeting of the unitholders at which a quorum is present. Abstentions and broker non-votes will not be deemed
to be a vote cast. However, no amendment may:

 

		·	increase the power of the Trustee to engage in business or investment activities;

 

		·	alter the rights of the Trust unitholders as among themselves; or

 

		·	permit the Trustee to distribute the Royalty Interests (as defined in the Trust Agreement) in kind.

 

Amendments to the
Trust Agreement’s provisions addressing the following matters may not be made without Avalon’s consent:

 

		·	dispositions of the Trust’s assets;

 

		·	indemnification of the Trustee;

 

     -2-

     

    

 

		·	reimbursement of out-of-pocket expenses of Avalon when acting as the Trust’s agent;

 

		·	termination of the Trust; and

 

		·	amendments of the Trust Agreement.

 

Certain amendments
to the Trust Agreement do not require the vote of the Trust unitholders. The Trustee may amend or supplement the Trust Agreement,
the conveyances, the administrative services agreement, or the registration rights agreement, without the approval of the
Trust unitholders, to cure ambiguities, to correct or supplement defective or inconsistent provisions, to grant any benefit to
all Trust unitholders, to evidence or implement any changes required by applicable law or to change the name of the Trust, provided,
however, that any such supplement or amendment does not adversely affect the interests of the Trust unitholders. Furthermore, the
Trustee, acting alone, may amend the administrative services agreement without the approval of Trust unitholders if such amendment
would not increase the cost or expense of the Trust or create an adverse economic impact on the Trust unitholders.

 

All other
permitted amendments to the Trust Agreement and other agreements listed above may only be made by the vote of the holders of (i) a
majority of the Trust units (excluding Trust units owned by Avalon and its affiliates) and (ii) a majority of the Trust units
(including units owned by Avalon and its affiliates), in each case voting in person or by proxy at a meeting of such holders at
which a quorum is present; except that at any time that Avalon and its affiliates collectively own less than 10% of the total Trust
units outstanding, the standard for approval will be the vote of the holders of a majority of the Trust units, including Trust
units owned by Avalon and its affiliates, voting in person or by proxy at a meeting of such holders at which a quorum is present.
Abstentions and broker non-votes will not be deemed to be a vote cast.

 

The Trustee must
consent before all or any part of the Trust assets can be sold except in connection with the dissolution of the Trust or limited
sales directed by Avalon in conjunction with its sale of any properties in which the Trust owns a royalty interest.

 

     -3-ex_176040.htm

Exhibit 4.2

 

DESCRIPTION OF SECURITIES

 

As of December 31, 2019, the common stock, par value $1.25 per share, was the only class of securities of First National Corporation (the “Company”) registered under Section 12 of the Securities Exchange Act of 1934, as amended.

           

The following section describes the general terms and provisions of the shares of the Company’s common stock. You should read the Company’s articles of incorporation, as amended, and bylaws for additional information about the common stock. The articles of incorporation and bylaws are included as exhibits to the Company’s Annual Report on Form 10-K, to which this exhibit also is attached.

 

General

 

As of December 31, 2019, the Company had 9,000,000 shares of capital stock authorized. This authorized capital stock consisted of:   

 

	 	
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			8,000,000 shares of common stock, par value $1.25 per share, 4,969,716 of which were outstanding; and

			

	 	
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			1,000,000 shares of preferred stock, par value $1.25 per share, none of which were outstanding.

			

 

Voting Rights

 

Each holder of common shares is entitled to one vote per share held on any matter submitted to a vote of shareholders. There are no cumulative voting rights in the election of directors or otherwise.

 

Dividends

 

Holders of common shares are entitled to receive dividends when and as declared by the board of directors out of funds legally available, subject to certain restrictions imposed by state and federal laws and the preferential dividend rights of the preferred stock. The Company is a corporation separate and distinct from First Bank. Since most of the Company’s revenues will be received by it in the form of dividends or interest paid by First Bank, the Company’s ability to pay dividends will be subject to certain regulatory restrictions.

 

No Preemptive or Conversion Rights

 

Holders of the Company’s common shares do not have preemptive rights to purchase additional shares of any class of the Company’s stock, and have no conversion or redemption rights.

 

Calls and Assessments

 

All of the issued and outstanding common shares are non-assessable.

 

Liquidation Rights

 

In the event of the Company’s liquidation, dissolution or winding up, the holders of common shares (and the holders of any class or series of stock entitled to participate with the common shares in the distribution of assets) shall be entitled to receive, in cash or in kind, the Company’s assets available for distribution remaining after payment or provision for payment of the Company’s debts and liabilities and distributions or provision for distributions to holders of the preferred stock having preference over the common shares.

 

Preferred Stock

 

The Company’s board of directors is granted the authority from time to time to issue preferred stock in one or more series and in connection with the creation of any such series to fix by resolution the preferences, limitations and relative rights thereof. As of December 31, 2019, there were 1,000,000 authorized shares of preferred stock, par value $1.25 per share, of which 13,900 have been designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series A and 695 have been designated as the Fixed Rate Cumulative Perpetual Preferred Stock, Series B. No shares of preferred stock were outstanding as of December 31, 2019.

 

The preferences and other terms of any series of preferred stock will be fixed by an amendment to the Company’s articles of incorporation designating the terms of that series. Because the Company’s board of directors has the power to establish the preferences and rights of each series of preferred stock, it may afford the holders of any series of preferred stock preferences and rights, voting or otherwise, senior to the rights of holders of the Company’s common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of common stock until the Company’s board of directors determines the specific rights of the holders of preferred stock. However, the effects might include:

 

	 	
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			restricting dividends on the Company’s common stock;

			

	 	
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			diluting the voting power of the Company’s common stock;

			

	 	
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			impairing liquidation rights of the Company’s common stock; or

			

	 	
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			discouraging, delaying or preventing a change in control of the Company without further action by its shareholders.

			

 

 

 

 

Certain Provisions of the Company’s Articles of Incorporation and Bylaws and Virginia Law

 

General

        

The Company’s articles of incorporation and bylaws contain provisions that could make more difficult an acquisition of the Company by means of a tender offer, a proxy contest or otherwise. In addition, Virginia has two antitakeover statutes, the Affiliated Transactions Statute and the Control Share Acquisitions Statute, that could make it more difficult for another party to acquire the Company without the approval of the Company’s board of directors.  These provisions are expected to discourage specific types of coercive takeover practices and inadequate takeover bids as well as to encourage persons seeking to acquire control to first negotiate with the Company. Although these provisions may have the effect of delaying, deferring or preventing a change in control, the Company believes that the benefits of increased protection through the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure the Company outweigh the disadvantages of discouraging these proposals because, among other things, negotiation of such proposals could result in an improvement of their terms.

 

Special Voting Provisions

 

The Company’s articles of incorporation currently provide that unless previously approved by a majority of directors, the following transactions with a beneficial owner, directly or indirectly, of more than five percent of the Company’s outstanding capital stock entitled to vote require approval by at least 80 percent of the Company’s outstanding capital stock entitled to vote:   

 

	 	
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			any merger or consolidation with or into any other corporation;

			

	 	
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			any share exchange in which a corporation, person or entity acquires the issued or outstanding shares of the Company’s capital stock pursuant to a vote of shareholders;

			

	 	
			●

				
			any issuance of the Company’s shares that results in the acquisition of control of the Company by any person, firm or corporation or group of one or more thereof that previously did not control the Company;

			

	 	
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			any sale, lease, exchange, mortgage, pledge or other transfer, in one transaction or a series of transactions, of all, or substantially all, of the Company’s assets to any other corporation, person or entity;

			

	 	
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			the adoption of a plan for the Company’s liquidation or dissolution proposed by any other corporation, person or entity;

			

	 	
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			any proposal in the nature of a reclassification or reorganization that would increase the proportionate voting rights of any other corporation, person or entity; or

			

	 	
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			any transaction similar to, or having similar effect as, any of the foregoing transactions.

			

 

If any of the foregoing transactions is with a corporation, person or entity that is not a beneficial owner, directly or indirectly, of more than five percent of the Company’s outstanding capital stock entitled to vote, the affirmative vote of two-thirds of the Company’s outstanding capital stock entitled to vote shall be required to approve the transaction.

 

Advance Notice for Shareholder Proposals or Nominations at Meetings

 

The Company’s bylaws also prescribe the procedure that a shareholder must follow to nominate directors or to bring other business before shareholders’ meetings. For a shareholder to nominate a candidate for director or to bring other business before a meeting, notice must be received by the Company’s Secretary not less than 60 days and not more than 90 days prior to the date of the meeting. Notice of a nomination for director must describe various matters regarding the nominee and the shareholder giving the notice. Notice of other business to be brought before the meeting must include a description of the proposed business, the reasons therefore, and other specified matters regarding the shareholder giving the notice.

 

Blank Check Preferred Stock

 

As permitted by the Virginia Stock Corporation Act (the “Virginia SCA”), the Company’s board of directors may issue shares of preferred stock without shareholder approval. The Company’s board of directors has the flexibility to deter attempts to gain control of the Company by including extraordinary voting, dividend, redemption or conversion rights in any preferred stock that it may deem appropriate to issue.

 

Increasing the Number of Directors

 

Under the Virginia SCA, a board of directors may amend or repeal bylaws unless articles of incorporation or other provisions of Virginia law reserve such power exclusively in the shareholders or the shareholders, in adopting or amending particular bylaws, expressly prohibit the board of directors from amending or repealing that bylaw. The Company’s articles of incorporation do not reserve the power to amend the Company’s bylaws to increase or decrease the number of directors exclusively to the shareholders and no bylaw, or amendment thereto, expressly prohibits the board of directors from amending the bylaws to increase or decrease the number of directors. In addition, according to the Company’s articles of incorporation and bylaws, the newly created directorships resulting from an increase in the number of authorized directors by not more than two directors shall be filled by the directors then in office. As a result, if faced with an attempt to take control of the Company’ s board, the Company’s directors may increase the size of the board of directors and install directors opposed to the hostile takeover attempt.

 

No Cumulative Voting

 

The Company’s articles of incorporation do not provide for cumulative voting in the election of directors.

 

Removal of Directors

 

The Company’s articles of incorporation currently provide that a director may not be removed from office as a director except by the affirmative vote of the holders of 80% of the shares of the Company’s common stock issued, outstanding and entitled to vote.

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