Item 1.01 Entry into a Material Definitive Agreement.
On
November 12, 2015, the Board of Directors of Lipocine Inc. (the “Company”) adopted a stockholder rights plan. The plan is
similar to plans adopted by many other companies and was not adopted in response to any hostile takeover attempt. On November 5, 2018,
the Board of Directors adopted an Amended and Restated Stockholder Rights Agreement in order to extend the expiration date of the stockholder
rights plan until November 5, 2021. On November 1, 2021, the Company adopted a Second Amended and Restated Stockholder Rights Agreement
(the “Rights Agreement”) in order to extend the expiration date of the stockholder rights plan until November 1, 2024. Other
than extending the expiration date of the Rights Agreement, no material changes have been made to the prior stockholder rights plan.
Preferred
stock purchase rights (the “Rights”) were distributed to the stockholders on November 30, 2015. The Rights Agreement is designed
to deter coercive takeover tactics, including the accumulation of shares in the open market or through private transactions and to prevent
an acquiror from gaining control of the Company without offering a fair price to all of the Company’s stockholders.
Each
Right entitles stockholders to buy one one-thousandth of a share of Series A Junior Participating Preferred Stock (the “Preferred
Stock”) at a price of $63.96 per one-thousandth share (the “Purchase Price”). The Rights generally become exercisable
upon the earlier to occur of (i) 10 business days following a public announcement that a person or group of affiliated or associated
persons has, subsequent to the adoption of the Rights Agreement, become an Acquiring Person (as defined below) or (ii) 10 business days
(or such later date as may be determined by action of the Board of Directors prior to such time as any person or group of affiliated
or associated persons becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender offer
or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 15% or more of the outstanding
common stock of the Company (the earlier of the dates described in clauses (i) and (ii) being called the “Distribution Date”).
Except in certain situations, a person or group of affiliated or associated persons becomes an “Acquiring Person” upon acquiring
beneficial ownership, subsequent to the adoption of the Rights Agreement, of 15% or more of the outstanding shares of common stock of
the Company.
In
the event that a person becomes an Acquiring Person, other than pursuant to a board-approved tender or exchange offer for all the outstanding
shares of the Company, then each Right not owned by an Acquiring Person will entitle its holder to purchase from the Company, at the
Right’s then current exercise price, in lieu of shares of Preferred Stock, that number of shares of common stock of the Company
which at the time such person became an Acquiring Person had a market value of twice the Purchase Price (the Company may at its option
substitute one one-thousandth of a share of Series A Preferred Stock for some or all of the shares of common stock so issuable).
In
addition, if after any person has become an Acquiring Person, (a) the Company is acquired in a merger or other business combination,
or (b) 50% or more of the Company’s assets, or assets accounting for 50% or more of its earning power, are sold, leased, exchanged
or otherwise transferred (in one or more transactions), proper provision shall be made so that each holder of a Right (other than the
Acquiring Person, its affiliates and associates and certain transferees thereof, whose Rights became void) shall thereafter have the
right to purchase from the acquiring corporation, for the Purchase Price, that number of shares of common stock of the acquiring corporation
which at the time of such transaction would have a market value of twice the Purchase Price.
The
Company is entitled to redeem the Rights at $0.001 per Right at any time prior to the time an Acquiring Person becomes such.
The
Rights are intended to enable all stockholders to realize the long-term value of their investment in the Company. The Rights do not prevent
a takeover attempt, but should encourage anyone seeking to acquire the Company to negotiate directly with the Board of Directors.
The
above description of the terms of the Rights Agreement is a summary and does not purport to be complete, and is qualified in its entirety
by reference to the copy of the Second Amended and Restated Stockholder Rights Agreement and related exhibits, dated November 1, 2021,
between the Company and American Stock Transfer & Trust Company, LLC, which is attached hereto as Exhibit 4.1 and incorporated herein
by reference.