DESCRIPTION OF THE REGISTRANT’S
REGISTERED PURSUANT TO SECTION
12 OF THE SECURITIES
EXCHANGE ACT OF 1934
Lipocine Inc. (“Lipocine,” “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
summary of the terms of our capital stock is based upon our Amended
and Restated Certificate of Incorporation (the “Certificate of Incorporation”) and our Amended and Restated
Bylaws (the “Bylaws”). The summary is not complete, and is qualified by reference to our Certificate 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 Certificate of Incorporation, our Bylaws and the applicable provisions of the Delaware General Corporation Law
for additional information.
Authorized Shares of Capital Stock
Our authorized capital stock consists of
100,000,000 shares of common stock, $0.0001 par value per share, and 10,000,000 shares of preferred stock, $0.0001 par value per
share. As of March [ ], 2020, there were [ ] shares of common stock outstanding, held of record by [ ] stockholders. In addition,
as of December 31, 2019, there were: (i) [ ] shares of common stock subject to outstanding options; (ii) [ ] shares of common stock
subject to outstanding restricted stock units; and (iii) [ ] shares of common stock reserved for future issuance under our Third
Amended and Restated 2014 Stock and Incentive Plan. As of March [ ], 2020, there were no shares of preferred stock outstanding.
Dividends may be declared by the
Board of Directors upon the capital stock of the corporation, subject to the provisions of the Certificate of Incorporation
and applicable law, if any, at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the Certificate of Incorporation and applicable law.
Each outstanding share of common stock
shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the corporation for their
vote. Corporate actions can generally be taken by a majority of our board and/or stockholders holding a majority of our outstanding
shares, except that amendments to our Bylaws and amendments to certain articles of our Certificate of Incorporation require the
vote of at least 66 and 2/3% of the voting power of all of the then-outstanding shares of the capital stock of the Company entitled
to vote generally in the election of directors, voting together as a single class. Additionally, our stockholders do not have cumulative
voting rights in the election of directors. Accordingly, holders of a plurality of the votes cast at a meeting of stockholders
will be able to elect all of the directors then standing for election.
Right to Receive Liquidation Distributions
In the event of our liquidation, dissolution
or winding up, holders of our common stock are entitled to receive, ratably, the net assets available to stockholders after payment
of all creditors.
Rights and Preferences
Holders of our common stock have no preemptive,
conversion, subscription or other rights, and there are no redemption or sinking fund provisions applicable to our common stock.
The rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the
rights of the holders of our outstanding preferred stock and shares of any series of our preferred stock that we may designate
in the future.
Transfer Agent and Registrar
The transfer agent and registrar for our
common stock is American Stock Transfer & Trust Company, LLC. The transfer agent and registrar’s address is 6201 15th
Avenue, Brooklyn, NY 11219. Our shares of common stock are issued in uncertificated form only, subject to limited circumstances.
Our common stock is listed on the Nasdaq Capital Market under
the symbol “LPCN”.
Certain Anti-Takeover Effects
Certain provisions of Delaware law, our
Certificate of Incorporation and our Bylaws may have the effect of delaying, deferring or discouraging another person from acquiring
control of our company. These provisions, which are summarized below, may have the effect of discouraging takeover bids. They are
also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We
believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer
outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement
of their terms.
We are governed by the provisions of Section 203 of the Delaware
General Corporation Law. In general, Section 203 prohibits a public Delaware corporation from engaging in a “business combination”
with an “interested stockholder” for a period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination”
includes mergers, asset sales or other transactions resulting in a financial benefit to the stockholder. An “interested stockholder”
is a person who, together with affiliates and associates, owns, or within three years of the date on which it is sought to be determined
whether such person is an “interested stockholder,” did own, 15% or more of the corporation’s outstanding voting
stock. These provisions may have the effect of delaying, deferring or preventing a change in our control.
Certificate of Incorporation and Bylaw Provisions
Our Certificate of Incorporation and our
Bylaws include a number of provisions that could deter hostile takeovers or delay or prevent changes in control of our management
team, including the following:
of directors vacancies. Our Certificate of Incorporation and Bylaws authorize only our board of directors to fill vacant directorships,
including newly created seats. In addition, the number of directors constituting our board of directors is permitted to be set
only by a resolution adopted by our board of directors. These provisions prevent a stockholder from increasing the size of our
board of directors and then gaining control of our board of directors by filling the resulting vacancies with its own nominees.
This makes it more difficult to change the composition of our board of directors but promotes continuity of management.
action; special meeting of stockholders. Our Certificate of Incorporation provides that our stockholders may not take
action by written consent, but may only take action at annual or special meetings of our stockholders. As a result, a holder
controlling a majority of our capital stock may not be able to amend our Bylaws or remove directors without holding a meeting
of our stockholders called in accordance with our Bylaws. Our Bylaws further provide that special meetings of our
stockholders may be called only by our board of directors, the Chairperson of our Board of Directors, our Chief Executive
Officer, or a majority of the Board of Directors, thus prohibiting a stockholder from calling a special meeting. These
provisions might delay the ability of our stockholders to force consideration of a proposal or for stockholders controlling a
majority of our capital stock to take any action, including the removal of directors.
notice requirements for stockholder proposals and director nominations. Our Bylaws provide advance notice procedures for stockholders
seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our
annual meeting of stockholders. Our Bylaws also specify certain requirements regarding the form and content of a stockholder’s
notice. These provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from
making nominations for directors at our annual meeting of stockholders if the proper procedures are not followed. We expect that
these provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s
own slate of directors or otherwise attempting to obtain control of our company.
cumulative voting. The Delaware General Corporation Law provides that stockholders are not entitled to the right to cumulate
votes in the election of directors unless a corporation’s certificate of incorporation provides otherwise. Our Certificate
of Incorporation does not provide for cumulative voting.
of undesignated preferred stock. Our Board of Directors will have the authority, without further action by the stockholders,
to issue up to 10,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated
from time to time by our Board of Directors. The existence of authorized but unissued shares of preferred stock would enable our
board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer,
proxy contest or other means.