EXHIBIT 4.1


 


DESCRIPTION OF SECURITIES OF INMUNE BIO, INC.



REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES
EXCHANGE ACT OF 1934


 


The following information
is a summary of information concerning the common stock, par value $0.001 per share (the “Common
Stock”), of INmune Bio Inc. (“Corporation” “Company” “we,” “our,” or “us”)
and does not purport to be complete. It is subject to and qualified in its entirety by reference to our Articles of Incorporation (the
“Articles of Incorporation”), and Bylaws (the “Bylaws”), each of which are incorporated by reference as an exhibit
to the Annual Report on Form 10-K of which this Exhibit 4.1 is a part.


 


Authorized Stock


 


We have 210,000,000 authorized
shares of capital stock, par value $0.001 per share, of which 200,000,000 shares are Common Stock and 10,000,000 shares are preferred
stock.


 


Common Stock Voting, Dividends and Liquidation
Rights


 


We are authorized to issue
200,000,000 shares of Common Stock, $0.001 par value per share. 


 


Holders of Common Stock are
entitled to one vote for each share on all matters presented to the stockholders. Holders of Common Stock do not have cumulative voting
rights. Therefore, holders of a majority of the shares of Common Stock voting for the election of directors can elect all of the directors.
Holders of Common Stock representing 33.3 percent of our capital stock issued, outstanding and entitled to vote, represented in person
or by proxy, are necessary to constitute a quorum at any meeting of stockholders. A vote by the holders of a majority of the Company’s
outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to the
Company’s certificate of incorporation.


 


Holders of Common Stock are
entitled to share in all dividends that our Board of Directors, in its discretion, declares from legally available funds. In the event
of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain
after payment of liabilities and after providing for each class of stock, if any, having preference over the Common Stock. The Common
Stock has no pre-emptive, subscription or conversion rights and there are no redemption provisions applicable to the Common Stock.


 


Preferred Stock and Anti-Takeover Provisions


 


Preferred Stock


 


We are authorized to issue
up to 10,000,000 shares of preferred stock, par value $0.001 per share, from time to time in one or more classes or series.


 


Our articles of incorporation
authorizes our Board of Directors to issue preferred stock from time to time with such designations, preferences, conversion or other
rights, voting powers, restrictions, dividends or limitations as to dividends or other distributions, qualifications or terms or conditions
of redemption as shall be determined by the Board of Directors for each class or series of stock. Preferred stock is available for possible
future financings or acquisitions and for general corporate purposes without further authorization of stockholders unless such authorization
is required by applicable law, the rules of the Nasdaq Capital Market or other securities exchange or market on which our stock is then
listed or admitted to trading.


 






     


     


    

 


Our Board of Directors may
authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights
of the holders of Common Stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions
and other corporate purposes could, under some circumstances, have the effect of delaying, deferring or preventing a change-in-control
of the Company.


 


Series A Junior Participating
Preferred Stock


 


On December 30, 2020, we filed
a Certificate of Designation of Series A Junior Participating Preferred Stock (the “Series A Preferred Stock”) with the Secretary
of State of the State of Nevada to designate 45,000 shares as Series A Preferred Junior Participating Preferred Stock.


 


The Series A Preferred Stock
shall rank, with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of the
Corporation, junior to all series of any other class of the Preferred Stock issued either before or after the issuance of the Series A
Preferred Stock, unless the terms of any such series shall provide otherwise, and shall rank senior to the Common Stock.


 


Voting Rights


 


The holders of the Series
A Preferred Stock shall be entitled to vote upon any matter submitted to our stockholders for a vote. Each one (1) share of Series
A Preferred Stock shall have one thousand (1,000) votes per share.


 


Liquidation Rights


 


    Upon
any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (i) to the holders of the Common Stock or
of shares of any other stock of the Corporation ranking junior, either as to dividends or upon liquidation, dissolution or winding up,
to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $1,000 per
share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that,
the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common
Stock, or (ii) to the holders of shares of stock ranking on a parity either as to dividends or upon liquidation, dissolution or winding
up with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion
to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up


 


Redemption Rights


 


The shares of Series A Preferred Stock shall not
be redeemable from any holder.


 



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Rights Agreement


 


One December
30, 2020, the Board of Directors (the “Board”) the Company approved and adopted a Rights Agreement, dated as of December 30,
2020 (the “Rights Agreement”), by and between the Company and VStock Transfer, LLC, as rights agent. Pursuant to the Rights
Agreement, the Board declared a dividend of one preferred share purchase right (each, a “Right”) for each outstanding share
of common stock, par value $0.001 per share, of the Company (each, a “Common Share” and, collectively, the “Common Shares”).
The Rights are distributable to stockholders of record as of the close of business on January 11, 2021 (the “Record Date”).
One Right also will be issued together with each Common Share issued by the Company after January 11, 2021, but before the Distribution
Date (as defined below) (or the earlier redemption or expiration of the Rights) and, in certain circumstances, after the Distribution
Date.


 


Generally, the
Rights Agreement works by causing substantial dilution to any person or group that acquires beneficial ownership of twenty percent (20%)
or more of the Common Shares without the approval of the Board. As a result, the overall effect of the Rights Agreement and the issuance
of the Rights may be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving
the Company that is not approved by the Board. The Rights Agreement is not intended to interfere with any merger, tender or exchange offer
or other business combination approved by the Board. The Rights Agreement also does not prevent the Board from considering any offer that
it considers to be in the best interest of its stockholders.


 


The following
is a summary description of the Rights and material terms and conditions of the Rights Agreement. This summary is intended to provide
a general description only, does not purport to be complete and is qualified in its entirety by reference to the complete text of the
Rights Agreement, a copy of which is filed as Exhibit 4.1 to the Registration Statement on Form 8-A filed with the SEC on December 30
,2020 (the “8-A”). All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the
Rights Agreement.


 


The Rights


 


Subject to the
terms, provisions and conditions of the Rights Agreement, if the Rights become exercisable, each Right would initially represent the right
to purchase from the Company one one-thousandth of a share of a newly-designated series of preferred stock, Series A Junior Participating
Preferred Stock, par value $0.001 per share, of the Company (each, a “Series A Preferred Share” and, collectively, the “Series
A Preferred Shares”), at an exercise price of $300.00 per one one-thousandth of a Series A Preferred Share, subject to adjustment
(the “Exercise Price”). If issued, each one one-thousandth of a Series A Preferred Share would give the stockholder approximately
the same dividend, voting and liquidation rights as does one Common Share. However, prior to exercise, a Right does not give its holder
any rights as a stockholder of the Company, including, without limitation, any dividend, voting or liquidation rights. A copy of the Certificate
of Designation of Series A Junior Participating Preferred Stock (the “Series A Certificate of Designation”) that the Company
intends to file with the Secretary of State of the State of Nevada on December 30, 2020 to designate the Series A Preferred Shares is
filed as Exhibit 3.1 to 8-A.


 






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Initial Exercisability


 


Initially, the
Rights will not be exercisable, certificates will not be sent to stockholders and the Rights will automatically trade with the Common
Shares. Until the Rights separate from the Common Shares and become exercisable (or the earlier redemption or expiration of the Rights),
the Rights will be evidenced by Common Share certificates, Rights relating to any uncertificated Common Shares that are registered in
book entry form will be represented by a notation in book entry on the records of the Company, and the surrender for transfer of any Common
Shares will also constitute the transfer of the associated Rights.


 


 


Subject to certain
exceptions specified in the Rights Agreement, the Rights will separate from the Common Shares and become exercisable following the
earlier to occur of the tenth (10th) business day (or such later date as may be determined by the Board) after (i) the day on which a
public announcement or filing with the Securities and Exchange Commission (the “SEC”) is made indicating that a person has
become an Acquiring Person (as defined below) or that discloses information that reveals the existence of an Acquiring Person (the “Shares
Acquisition Date”), or (ii) the commencement by any person (other than certain exempted persons) of, or the first public announcement
of the intent of any person (other than certain exempted persons) to commence, a tender or exchange offer by or on behalf of a person,
the successful consummation of which would result in any person (other than certain exempted persons) becoming an Acquiring Person, irrespective
of whether any shares are actually purchased or exchanged pursuant to such offer (the earlier of these dates is called the “Distribution
Date”).


 


After the Distribution
Date, separate rights certificates will be issued and the Rights may be transferred other than in connection with the transfer of the
underlying Common Shares unless and until the Board has determined to effect an exchange pursuant to the Rights Agreement (as described
below).


 


Acquiring Person


 


Under the Rights
Agreement, an Acquiring Person is any person who or that, together with all Affiliates and Associates (as defined in the Rights Agreement)
of such person, from and after the first public announcement by the Company of the adoption of the Rights Agreement, is or becomes the
beneficial owner of twenty percent (20%) or more of the Common Shares outstanding, subject to various exceptions. For purposes of the
Rights Agreement, beneficial ownership is defined to include the ownership of derivative securities.


 


The Rights Agreement
provides that an Acquiring Person does not include the Company, any subsidiary of the Company, any employee benefit plan of the Company
or any subsidiary of the Company, or any person organized, appointed, or established to hold Common Shares pursuant to any employee benefit
plan of the Company or for the purpose of funding any such plan.


 


The Rights Agreement
also provides that the following persons shall not be deemed an Acquiring Person thereunder: (i) any person who becomes the beneficial
owner of twenty percent (20%) or more of the shares of Common Stock of the Company then outstanding solely as a result of the initial
grant or vesting of any options, warrants, rights or similar interests (including restricted shares and restricted stock units) by the
Company to its directors, officers and employees pursuant to any employee benefit or stock ownership plan of the Company, or the acquisition
of shares of Common Stock of the Company upon the exercise or conversion of any such securities so granted; (ii) any person who as the
result of an acquisition of shares of Common Stock by the Company (or any subsidiary of the Company, or any person organized, appointed,
established or holding shares of Common Stock of the Company for or pursuant to the terms of any such plan) that, by reducing the number
of shares of Common Stock of the Company outstanding, increases the proportionate number of shares of Common Stock of the Company beneficially
owned by such person to twenty percent (20%) or more of the Common Shares then outstanding; (iii) any person who or that became the beneficial
owner of twenty percent (20%) or more of the Common Shares then outstanding as a result of the acquisition of Common Shares directly from
the Company; or (iv) any person who or that would otherwise be an Acquiring Person who or that the Board determines had become such inadvertently
(including, without limitation, because (A) such person was unaware that it beneficially owned a percentage of the Common Shares that
would otherwise cause such person to be an “Acquiring Person,” or (B) such person was aware of the extent of its beneficial
ownership of Common Shares but had no actual knowledge of the consequences of such beneficial ownership under the Rights Agreement), and
who or that thereafter within five (5) business days of being requested by the Company, reduces such person’s beneficial ownership
to less than twenty percent (20%) of the Common Shares then outstanding.


 






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“Grandfathering”
of Existing Holders


 


The Rights Agreement
also provides that any person who beneficially owned twenty percent (20%) or more of the Common Shares immediately prior to the first
public announcement by the Company of the adoption of the Rights Agreement (each a “Grandfathered Person”), shall not be deemed
to be an “Acquiring Person” for purposes of the Rights Agreement unless and until a Grandfathered Person becomes the beneficial
owner of one or more additional Common Shares after the first public announcement by the Company of the adoption of the Rights Agreement
(other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Shares, pursuant to a split,
reclassification or subdivision of the outstanding Common Shares or pursuant to the acquisition of beneficial ownership of Common Shares
upon the vesting or exercise of any option, warrants or other rights, or upon the initial grant or vesting of restricted stock, granted
or issued by the Company to its directors, officers and employees, pursuant to a compensation or benefits plan or arrangement adopted
by the Board). However, if upon acquiring beneficial ownership of one or more additional Common Shares at any time after the first public
announcement by the Company of the adoption of the Rights Agreement, the Grandfathered Person does not, at such time, beneficially own
twenty percent (20%) or more of the Common Shares then outstanding, the Grandfathered Person will not be treated as an “Acquiring
Person” for purposes of the Rights Agreement.


 


lip-In Trigger


 


If a person
becomes an Acquiring Person, then, following the occurrence of the Distribution Date and subject to the terms, provisions and conditions
of the Rights Agreement, each Right will entitle the holder thereof to purchase from the Company, upon payment of the Exercise Price,
in lieu of a number of one one-thousandths of a Series A Preferred Share, a number of Common Shares (or, in certain circumstances, cash,
property or other securities of the Company) having a then-current market value of twice the Exercise Price. However, the Rights are not
exercisable until such time as the Rights are no longer redeemable by the Company, as further described below.


 


Following the
occurrence of an event set forth in the preceding paragraph, all Rights that are or, under certain circumstances specified in the Rights
Agreement, were beneficially owned by an Acquiring Person or certain of its transferees will become null and void and nontransferable.


 






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Flip-Over Trigger


 


If, after an
Acquiring Person obtains beneficial ownership of twenty percent (20%) or more of the Common Shares, (i) the Company merges into another
entity, (ii) an acquiring entity merges into the Company, or (iii) the Company sells or transfers more than fifty percent (50%) of its
assets, cash flow or earning power, then each Right (except for Rights that have previously been voided as set forth above) will entitle
the holder thereof to purchase, upon payment of the Exercise Price, in accordance with the terms of the Rights Agreement, a number of
shares of common stock of the person engaging in the transaction having a then-current market value of twice the Exercise Price.


 


Redemption of the Rights


 


At any time
until the close of business on the tenth (10th) business day after the Shares Acquisition Date (or, if the tenth (10th) business day after
the Shares Acquisition Date occurs before the Record Date, the close of business on the Record Date), or thereafter under certain circumstances,
the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (the “Redemption Price”). The
Redemption Price may be paid in cash, Common Shares or other forms of consideration, as determined by the Board, in the exercise of its
sole discretion. The redemption of the Rights may be made effective at such time, on such basis and subject to such conditions as the
Board in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption Price without any interest thereon.


 


Exchange of the Rights


 


At any time
after any person (other than certain exempted persons and Grandfathered Persons) becomes an Acquiring Person, and prior to the acquisition
by any person of beneficial ownership of fifty percent (50%) or more of the Common Shares, the Board may, at its option, cause the Company
to exchange all or part of the then outstanding and exercisable Rights (other than Rights held by the Acquiring Person or any Affiliate
or Associate thereof, which would have become null and void and nontransferable in accordance with the terms of the Rights Agreement),
in whole or in part, for Common Shares at an exchange ratio (subject to adjustment) of two Common Shares for each Right.


 


In any exchange
of the Rights pursuant to the Rights Agreement, the Company, at its option, may, and to the extent there are an insufficient number of
authorized Common Shares not reserved for any other purpose to exchange for all of the outstanding Rights, shall, substitute preferred
stock or other securities of the Company for some or all of the Common Shares exchangeable for Rights such that the aggregate value received
by a holder of Rights in exchange for each Right is substantially the same value as one Common Share. The exchange of the Rights by the
Board may be made effective at such time, on such basis, and subject to such conditions as the Board in its sole discretion may establish.
Immediately upon the action of the Board authorizing the exchange of the Rights, the right to exercise the Rights will terminate, and
the only right of the holders of Rights will be to receive the Common Shares or other consideration issuable in connection with the exchange.


 


Expiration of the Rights


 


On December
20, 2021 the Company and V Stock Transfer, LLC entered into Amendment No. 1 to the Rights Agreement pursuant to which the expiration date
of the Rights Agreement was extended from December 30, 2021 to December 30, 2022. The Rights and the Rights Agreement (as amended) will
expire upon the earliest to occur of (i) the date on which all of the Rights are redeemed, (ii) the date on which the Rights are exchanged,
and (iii) the close of business on December 30, 2022.


 






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Amendment of Rights Agreement


 


Except as otherwise
provided in the Rights Agreement, the Company, by action of the Board, may from time to time, in its sole and absolute discretion, supplement
or amend any provision of the Rights Agreement in any respect without the approval of any holders of Rights, including, without limitation,
in order to (i) cure any ambiguity in the Rights Agreement, (ii) correct or supplement any provision contained in the Rights
Agreement that may be defective or inconsistent with any other provisions contained therein, (iii) shorten or lengthen any time period
in the Rights Agreement, or (iv) otherwise change, amend, or supplement any provisions in the Rights Agreement in any manner that
the Company may deem necessary or desirable; provided, however, that from and after such time as any person becomes an
Acquiring Person, the Rights Agreement may not be supplemented or amended in any manner that would adversely affect the interests of the
holders of Rights (other than Rights that have become null and void pursuant to the Rights Agreement) as such or cause the Rights Agreement
to become amendable other than in accordance with the terms of the Rights Agreement. Without limiting the foregoing, the Company, by action
of the Board, may at any time before any person becomes an Acquiring Person amend the Rights Agreement to make the provisions of the Rights
Agreement inapplicable to a particular transaction by which a person might otherwise become an Acquiring Person or to otherwise alter
the terms and conditions of the Rights Agreement as they may apply with respect to any such transaction.


 


Rights of Holders


 


Until a Right
is exercised, a Right does not give its holder any rights as a stockholder of the Company, including, without limitation, any dividend,
voting or liquidation rights.


 


Anti-Dilution Provisions


 


The Board may
adjust the Exercise Price, the number of Series A Preferred Shares issuable and the number of outstanding Rights to prevent dilution that
may occur from a stock dividend, a stock split or a reclassification of the Series A Preferred Shares or Common Shares.


 


With certain
exceptions, no adjustments to the Exercise Price will be made until the cumulative adjustments amount to at least one percent (1%) of
the Exercise Price. No fractional Series A Preferred Shares will be issued other than fractions that are integral multiples of one one-thousandth
of a share and, in lieu thereof, an adjustment in cash will be made based on the current market price of the Series A Preferred Shares.


 


Tax Consequences


 


The adoption
of the Rights Agreement and the subsequent distribution of the Rights to stockholders should not be a taxable event for the Company or
its stockholders under presently existing U.S. federal income tax laws. However, if the Rights become exercisable or if the Rights are
redeemed, stockholders may recognize taxable income, depending on the circumstances then existing.


 






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Authority of the Board


 


When evaluating
decisions relating to the redemption of the Rights or any amendment to the Rights Agreement to delay or prevent the Rights from detaching
and becoming exercisable as a result of a particular transaction, pursuant to the Rights Agreement, the Board, or any future board of
directors, would not be subject to restrictions such as those commonly known as “dead-hand,” “slow-hand,” “no-hand,”
or similar provisions.


 


Certain Anti-Takeover Effects


 


The Rights are
not intended to prevent a takeover of the Company and should not interfere with any merger or other business combination approved by the
Board. However, the Rights may cause substantial dilution to a person or group that acquires beneficial ownership of twenty percent (20%)
or more of the issued and outstanding Common Shares (which includes for this purpose stock referenced in derivative transactions and securities)
without the approval of the Board.


 


SEC Registration


 


Since the Rights
are not exercisable immediately, registration with the SEC of the Series A Preferred Shares issuable upon exercise of the Rights is not
required until the Rights become exercisable.


 


Nevada Law


 


The provisions of Nevada law
and our bylaws may have the effect of delaying, deferring or preventing another party from acquiring control of the company. These provisions
may discourage and prevent coercive takeover practices and inadequate takeover bids.


 


Nevada
law contains a provision governing the acquisition of a controlling interest. This law provides generally that any person or entity that
acquires 20% or more of the outstanding voting shares of a publicly-held Nevada corporation in the secondary public or private market
may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested shareholders of the corporation
elects to restore such voting rights in whole or in part. The control share acquisition act provides that a person or entity acquires
“control shares” whenever it acquires shares that, but for the operation of the control share acquisition act, would bring
its voting power within any of the following three ranges: 20 to 33-1/3%; 33-1/3 to 50%; or more than 50%.


 


A “control share acquisition”
is generally defined as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding
control shares. The shareholders or board of directors of a corporation may elect to exempt the stock of the corporation from the provisions
of the control share acquisition act through adoption of a provision to that effect in the articles of incorporation or bylaws of the
corporation. Our Articles of Incorporation and Bylaws do not exempt our Common Stock from the control share acquisition act.


 


The control share acquisition
act is applicable only to shares of “Issuing Corporations” as defined by the Nevada law. An Issuing Corporation is a Nevada
corporation which (i) has 200 or more shareholders, with at least 100 of such shareholders being
both shareholders of record and residents of Nevada, and (ii) does business in Nevada directly or through an affiliated corporation.


 






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The Nevada “Combination
with Interested Stockholders Statute” may also have an effect of delaying or making it more difficult to effect a change in control
of our company. This statute prevents an “interested stockholder” and a resident domestic Nevada corporation from entering
into a “combination,” unless certain conditions are met. The statute defines “combination” to include any merger
or consolidation with an “interested stockholder,” or any sale, lease, exchange, mortgage, pledge, transfer or other disposition,
in one transaction or a series of transactions with an “interested stockholder” having (i) an aggregate market value equal
to 5% or more of the aggregate market value of the assets of the corporation, (ii) an aggregate market value equal to 5% or more of the
aggregate market value of all outstanding shares of the corporation, or (iii) representing 10% or more of the earning power or net income
of the corporation.


 


An “interested stockholder”
means the beneficial owner of 10% or more of the voting shares of a resident domestic corporation, or an affiliate or associate thereof.
A corporation affected by the statute may not engage in a “combination” within three years after the interested stockholder
acquires its shares unless the combination or purchase is approved by the board of directors before the interested stockholder acquired
such shares. If approval is not obtained, then after the expiration of the three-year period, the business combination may be consummated
with the approval of 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 (i) 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 he became
an interested stockholder, whichever is higher, (ii) the market value per common share on the date of announcement of the combination
or the date the interested stockholder acquired the shares, whichever is higher, or (iii) if higher for the holders of preferred stock,
the highest liquidation value of the preferred stock.


 


Articles of Incorporation
and Bylaws


 


Our Articles of Incorporation
are silent as to cumulative voting rights in the election of our directors. Nevada law requires the existence of cumulative voting rights
to be provided for by a corporation’s Articles of Incorporation. As such, the combination of the present ownership by
a few stockholders of a significant portion of our issued and outstanding Common Stock and lack of cumulative voting makes it more difficult
for other stockholders to replace our board of directors or for a third party to obtain control of us by replacing our board of directors.
Our Articles of Incorporation and Bylaws do not contain any explicit provisions that would have an effect of delaying, deferring or preventing
a change in control of our company.


 


Market Listing


 


Our common stock is traded
on The Nasdaq Capital Market under the symbol “INMB.”


 


Transfer Agent and Registrar


 


The transfer agent and registrar
for our Common Stock is VStock Transfer, LLC. The transfer agent’s address is 18 Lafayette Place, Woodmere, New York 11598.


 


 


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