Document:

EXHIBIT 4.2

 

DESCRIPTION OF THE REGISTRANT’S
SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF
THE

SECURITIES EXCHANGE ACT OF 1934

 

As of December 31,
2019, 22nd Century Group, Inc. (“we” or “our”) had one class of securities, our common stock, par value
$0.00001 per share (“Common Stock”), registered under Section 12 of the Securities Exchange Act of 1934, as amended.
The following description of our Common Stock is a summary and is subject to, and is qualified in its entirety by reference to,
the provisions of our Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws, copies of which are
incorporated by reference as Exhibits 3.1, 3.1.1, 3.2 and 3.2.1, respectively, to our Annual Report on Form 10-K for the year ended
December 31, 2019 of which this Exhibit 4.2 is a part.

 

Our authorized capital
stock consists of 300,000,000 shares of Common Stock, $0.00001 par value per share, and 10,000,000 shares of preferred stock, $0.00001
par value per share. As of December 31, 2019, 138,362,809 shares of Common Stock were issued and outstanding and no shares of preferred
stock were issued and outstanding.

 

Our Common Stock is
traded on the NYSE American under the symbol “XXII.” Holders of our Common Stock are entitled to one vote for each
share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Holders of Common Stock
are entitled to receive ratably such dividends, if any, as may be declared by the board of directors out of funds legally available
therefore, subject to a preferential dividend right of outstanding preferred stock. Upon the liquidation, dissolution or our winding
up, the holders of Common Stock are entitled to receive ratably our net assets available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding preferred stock. The rights, preferences and privileges of holders
of our Common Stock are subject to, and may be adversely affected by the rights of the holders any series of preferred stock that
we may designate and issue in the future.Exhibit 4.2

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES

EXCHANGE ACT OF 1934

 

NI Holdings, Inc. (“NI Holdings,” “we,”
“our,” or “us”) has one class of securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended: our common stock.

 

DESCRIPTION OF CAPITAL STOCK

 

The following summary of the terms of our
capital stock is based upon our Articles of Incorporation (the “Articles of Incorporation”) and our Bylaws (the “Bylaws”).
The summary is not complete, and is qualified by reference to our Articles of Incorporation and our Bylaws, which are filed as
exhibits to this Annual Report on Form 10-K and are incorporated by reference herein. We encourage you to read our Articles of
Incorporation, our Bylaws, and the applicable provisions of the North Dakota Business Corporation Act for additional information.

 

Authorized Shares of Capital Stock

 

Our authorized capital stock consists of 25,000,000
shares of common stock, $0.01 par value, and 5,000,000 shares of preferred stock. As of December 31, 2019, there were 22,119,380
shares of our common stock issued and outstanding and no shares of preferred stock issued and outstanding. The outstanding shares
of our common stock are duly authorized, validly issued, fully paid, and non-assessable.

 

Listing

 

Our common stock is listed and principally traded on the NASDAQ
Capital Market under the symbol “NODK”.

 

Voting Rights

 

Each holder of shares of our common stock is
entitled to one (1) vote for each share held of record by such holder on the applicable record date on all matters submitted to
a vote of shareholders of common stock. Pursuant to our Articles of Incorporation, shareholders are not entitled to cumulate their
votes for election of directors.

 

Dividend Rights

 

Under the North Dakota Business Corporation
Act, we may only pay dividends if solvent and if payment of such dividend would not render us insolvent. Funds for the payment
of dividends must come from either proceeds of offerings retained by us or dividends paid to us by our subsidiaries. Therefore,
the restrictions on our subsidiaries’ ability to pay dividends affect our ability to pay dividends.

 

Rights upon Liquidation

 

In the event of any liquidation, dissolution
or winding up of any of our subsidiaries, we, as holder of all of the capital stock of our subsidiaries, would be entitled to receive
all assets of such subsidiaries after payment of all debts and liabilities. In the event of liquidation, dissolution or winding
up of NI Holdings, each holder of shares of our common stock would be entitled to receive a portion of our assets, after payment
of all of our debts and liabilities. If any preferred stock is issued, the holders thereof are likely to have a priority in liquidation
or dissolution over the holders of the common stock.

 

Other Rights and Preferences

 

Holders of our common stock do not have preemptive
rights with respect to any additional shares of common stock. The common stock is not subject to call for redemption.

 

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Transfer Agent and Registrar

 

Computershare Trust Company, N.A. is the transfer agent and registrar
for our common stock.

 

Certain Anti-Takeover Effects

 

Certain provisions of our Articles of Incorporation and Bylaws may
be deemed to have an anti-takeover effect.

 

Advance Notice Requirements for Shareholder
Proposals and Director Nominations. Our Bylaws provide advance notice procedures for shareholders seeking to bring business
before our annual meeting of shareholders or to nominate candidates for election as directors at our annual meeting of shareholders
and specify certain requirements regarding the form and content of a shareholder’s notice. These provisions might preclude
our shareholders from bringing matters before our annual meeting of shareholders or from making nominations for directors at our
annual meeting of shareholders if the proper procedures are not followed.

 

Additional Authorized Shares of Capital
Stock. The additional shares of authorized common stock and preferred stock available for issuance under our Articles of Incorporation,
could be issued at such times, under such circumstances and with such terms and conditions as to impede a change in control.

 

Issuance of Preferred Stock. Pursuant
to our Articles of Incorporation, the board of directors of NI Holdings has authority to issue preferred stock from time to time
and to fix and determine, by resolution, the par value, voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions
thereof, if any, including specifically, but not limited to, the dividend rights, conversion rights, redemption rights and liquidation
preferences, if any, of any wholly unissued series of preferred stock (or the entire class of preferred stock if none of such shares
have been issued), the number of shares constituting any such series and the terms and conditions of the issue thereof.

 

Limitations on Stockholder Ability to Act
by Written Consent or Call Meetings. During any period in which Nodak Mutual Group, Inc. holds at least a majority of the outstanding
shares of common stock, shareholders may approve by written consent any action that could be taken at a meeting of shareholders
of NI Holdings, provided that such written consent is executed by shareholders who own of record shares having the right to cast
the number of votes required to approve such action at a meeting of shareholders of NI Holdings. Except as provided in the first
sentence above, no action required to be taken or which may be taken at any annual or special meeting of shareholders of NI Holdings
may be taken without a meeting, and the power of the shareholders of NI Holdings to consent in writing to action without a meeting
is specifically denied. A special meeting of the shareholders of NI Holdings may be called only by: (i) the Chief Executive
Officer, (ii) the Executive Committee of the board of directors, or (iii) two-thirds of the members of the board of directors
of NI Holdings.

 

Classified Board. The Company’s
board of directors is divided into three classes. The directors in each class serve for a three-year term, one class being elected
each year by the Company’s shareholders, with staggered three-year terms. Only one class of directors will be elected at
each annual meeting of the Company’s shareholders, with the other classes continuing for the remainder of their respective
three-year terms.

 

Mergers, Sale of Assets, Liquidation Approval.  Our Articles of Incorporation provide that any
merger, consolidation, sale of assets or similar transaction involving the Company requires the affirmative vote of shareholders
entitled to cast at least 80% of the votes which all shareholders are entitled to cast, unless the transaction is approved in
advance by two-thirds of the members of the board of directors. If the transaction is approved in advance by two-thirds of the
members of the board of directors, approval by the affirmative vote of a majority of the votes cast by holders of outstanding
voting stock at a meeting at which a quorum was present would be required.

 

Prohibition of Ownership and Voting of Shares
in Excess of 10%.  Our Articles of Incorporation impose limitations upon the ability of certain shareholders and
groups of shareholders to acquire or vote shares of our stock. The articles of incorporation prohibit any person other than Nodak
Mutual Group, Inc. (whether an individual, company or a group acting in concert, as defined) from acquiring voting control, as
defined. Voting control is generally defined as the beneficial ownership at any time of shares with more than 10% of the total

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voting power of the outstanding stock of NI Holdings. These provisions would not apply to the purchase of shares by underwriters
in connection with a public offering. A group acting in concert includes persons seeking to combine or pool their voting power
or other interests in common stock for a common purpose. Such a group does not include actions by the board of directors acting
solely in their capacity as the board of directors. This provision will not apply to any person or entity if two-thirds of the
members of the board of directors approve in writing the acquisition by such person or entity of beneficial ownership of shares
with more than 10% of the total voting power of the outstanding stock of NI Holdings.

 

Under this provision, shares of common stock,
if any, owned in excess of 10% will not be entitled to vote on any matter or take other shareholder action. For purposes of determining
the voting rights of other shareholders, these excess shares are essentially treated as no longer outstanding. As a result, where
excess shares are present, other shareholders will realize a proportionate increase in their voting power, but this 10% voting
restriction will not be applicable to other shareholders if their voting power increases above 10% as a result of application of
this provision to another shareholder.

 

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