Exhibit 10.2

LIPOCINE INC.

2011 EQUITY INCENTIVE PLAN

OPTION AGREEMENT

(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)

Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Option
Agreement, Lipocine Inc. (the “Company”) has granted you an option under its
2011 Equity Incentive Plan (the “Plan”) to purchase the number of shares of the
Company’s Common Stock indicated in your Grant Notice at the exercise price
indicated in your Grant Notice. Defined terms not explicitly defined in this
Option Agreement but defined in the Plan shall have the same definitions as in
the Plan.

The details of your option are as follows:

1. VESTING. Subject to the limitations contained herein, your option will vest
as provided in your Grant Notice, provided that vesting will cease upon the
termination of your Continuous Service.

2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common Stock
subject to your option and your exercise price per share referenced in your
Grant Notice may be adjusted from time to time for Capitalization Adjustments.

3. EXERCISE RESTRICTION FOR NON-EXEMPT EMPLOYEES. In the event that you are an
Employee eligible for overtime compensation under the Fair Labor Standards Act
of 1938, as amended (i.e., a “Non-Exempt Employee”), you may not exercise your
option until you have completed at least six (6) months of Continuous Service
measured from the Date of Grant

4. EXERCISE PRIOR TO VESTING (“EARLY EXERCISE”). If permitted in your Grant
Notice (i.e., the “Exercise Schedule” indicates “Early Exercise Permitted”) and
subject to the provisions of your option, you may elect at any time that is both
(i) during the period of your Continuous Service and (ii) during the term of
your option, to exercise all or part of your option, including the unvested
portion of your option; provided, however, that:

(a) a partial exercise of your option shall be deemed to cover first vested
shares of Common Stock and then the earliest vesting installment of unvested
shares of Common Stock;

(b) any shares of Common Stock so purchased from installments that have not
vested as of the date of exercise shall be subject to the purchase option in
favor of the Company as described in the Company’s form of Early Exercise Stock
Purchase Agreement;

(c) you shall enter into the Company’s form of Early Exercise Stock Purchase
Agreement with a vesting schedule that will result in the same vesting as if no
early exercise had occurred; and

 

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(d) if your option is an Incentive Stock Option, then, to the extent that the
aggregate Fair Market Value (determined at the time of grant) of the shares of
Common Stock with respect to which your option plus all other Incentive Stock
Options you hold are exercisable for the first time by you during any calendar
year (under all plans of the Company and its Affiliates) exceeds one hundred
thousand dollars ($100,000), your option(s) or portions thereof that exceed such
limit (according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.

5. METHOD OF PAYMENT. Payment of the exercise price is due in full upon exercise
of all or any part of your option. You may elect to make payment of the exercise
price in cash or by check or in any other manner permitted by your Grant Notice,
which may include one or more of the following:

(a) Provided that at the time of exercise the Common Stock is publicly traded
and quoted regularly in The Wall Street Journal, pursuant to a program developed
under Regulation T as promulgated by the Federal Reserve Board that, prior to
the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.

(b) Provided that at the time of exercise the Common Stock is publicly traded
and quoted regularly in The Wall Street Journal, by delivery to the Company
(either by actual delivery or attestation) of already-owned shares of Common
Stock that are owned free and clear of any liens, claims, encumbrances or
security interests, and that are valued at Fair Market Value on the date of
exercise. Notwithstanding the foregoing, you may not exercise your option by
tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption of
the Company’s stock.

6. WHOLE SHARES. You may exercise your option only for whole shares of Common
Stock.

7. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained
herein, you may not exercise your option unless the shares of Common Stock
issuable upon such exercise are then registered under the Securities Act or, if
such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option also must comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.

8. TERM. You may not exercise your option before the commencement or after the
expiration of its term. The term of your option commences on the Date of Grant
and expires upon the earliest of the following:

(a) Immediately upon the termination of your Continuous Service for Cause;

 

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(b) Three (3) months after the termination of your Continuous Service for any
reason other than your Disability or death, provided that if during any part of
such three (3) month period your option is not exercisable solely because of the
condition set forth in the section above relating to “Securities Law
Compliance,” your option shall not expire until the earlier of the Expiration
Date or until it shall have been exercisable for an aggregate period of three
(3) months after the termination of your Continuous Service;

(c) twelve (12) months after the termination of your Continuous Service due to
your Disability;

(d) twelve (12) months after your death if you die either during your Continuous
Service or within three (3) months after your Continuous Service terminates;

(e) the Expiration Date indicated in your Grant Notice; or

(f) the day before the tenth (10th) anniversary of the Date of Grant.

If your option is an Incentive Stock Option, note that to obtain the federal
income tax advantages associated with an Incentive Stock Option, the Code
requires that at all times beginning on the date of grant of your option and
ending on the day three (3) months before the date of your option’s exercise,
you must be an employee of the Company or an Affiliate, except in the event of
your death or Disability. The Company has provided for extended exercisability
of your option under certain circumstances for your benefit but cannot guarantee
that your option will necessarily be treated as an Incentive Stock Option if you
continue to provide services to the Company or an Affiliate as a Consultant or
Director after your employment terminates or if you otherwise exercise your
option more than three (3) months after the date your employment with the
Company or an Affiliate terminates.

9. EXERCISE.

(a) You may exercise the vested portion of your option (and the unvested portion
of your option if your Grant Notice so permits) during its term by delivering a
Notice of Exercise (in a form designated by the Company) together with the
exercise price to the Secretary of the Company, or to such other person as the
Company may designate, during regular business hours, together with such
additional documents as the Company may then require.

(b) By exercising your option you agree that, as a condition to any exercise of
your option, the Company may require you to enter into an arrangement providing
for the payment by you to the Company of any tax withholding obligation of the
Company arising by reason of (1) the exercise of your option, (2) the lapse of
any substantial risk of forfeiture to which the shares of Common Stock are
subject at the time of exercise, or (3) the disposition of shares of Common
Stock acquired upon such exercise.

(c) If your option is an Incentive Stock Option, by exercising your option you
agree that you will notify the Company in writing within fifteen (15) days after
the date of any disposition of any of the shares of the Common Stock issued upon
exercise of your option that occurs within two (2) years after the date of your
option grant or within one (1) year after such shares of Common Stock are
transferred upon exercise of your option.

 

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(d) By exercising your option you agree that you shall not sell, dispose of,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
any shares of Common Stock or other securities of the Company held by you, for a
period of one hundred eighty (180) days following the effective date of a
registration statement of the Company filed under the Securities Act or such
longer period as necessary to permit compliance with FINRA Rule 2711 or NYSE
Member Rule 472 and similar rules and regulations (the “Lock-Up Period”);
provided, however, that nothing contained in this section shall prevent the
exercise of a repurchase option, if any, in favor of the Company during the
Lock-Up Period. You further agree to execute and deliver such other agreements
as may be reasonably requested by the Company and/or the underwriter(s) that are
consistent with the foregoing or that are necessary to give further effect
thereto. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to your shares of Common Stock until the
end of such period. The underwriters of the Company’s stock are intended third
party beneficiaries of this Section 9(d) and shall have the right, power and
authority to enforce the provisions hereof as though they were a party hereto.

10. TRANSFERABILITY.

(a) If your option is an Incentive Stock Option, your option is not
transferable, except by will or by the laws of descent and distribution, and is
exercisable during your life only by you. Notwithstanding the foregoing, by
delivering written notice to the Company, in a form satisfactory to the Company,
you may designate a third party who, in the event of your death, shall
thereafter be entitled to exercise your option.

(b) If your option is a Nonstatutory Stock Option, your option is not
transferable, except (i) by will or by the laws of descent and distribution,
(ii) with the prior written approval of the Company, by instrument to an inter
vivos or testamentary trust, in a form accepted by the Company, in which the
option is to be passed to beneficiaries upon the death of the trustor (settlor)
and (iii) with the prior written approval of the Company, by gift, in a form
accepted by the Company, to a permitted transferee under Rule 701 of the
Securities Act.

11. RIGHT OF FIRST REFUSAL.

(a) Grant of Right of First Refusal. Except as provided in Section 11(g) below,
in the event you, your legal representative, or other holder of shares acquired
upon exercise of your option proposes to sell, exchange, transfer, pledge, or
otherwise dispose of any shares acquired upon exercise of you option (the
“Transfer Shares”) to any person or entity, including, without limitation, any
shareholder of the Company, the Company shall have the right to repurchase the
Transfer Shares under the terms and subject to the conditions set forth in this
Section 11 (the “Right of First Refusal”).

(b) Notice of Proposed Transfer. Prior to any proposed transfer of the Transfer
Shares, you shall deliver written notice (the “Transfer Notice”) to the Company
describing fully the proposed transfer, including the number of Transfer Shares,
the name and address of the proposed transferee (the “Proposed Transferee”) and,
if the transfer is voluntary, the proposed transfer price, and containing such
information necessary to show the bona fide nature of the proposed transfer. In
the event of a bona fide gift or involuntary transfer, the

 

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proposed transfer price shall be deemed to be the Fair Market Value of the
Transfer Shares, as determined by the Board in good faith. If you propose to
transfer any Transfer Shares to more than one Proposed Transferee, you shall
provide a separate Transfer Notice for the proposed transfer to each Proposed
Transferee. The Transfer Notice shall be signed by both you and the Proposed
Transferee and must constitute a binding commitment of you and the Proposed
Transferee for the transfer of the Transfer Shares to the Proposed Transferee
subject only to the Right of First Refusal.

(c) Bona Fide Transfer. If the Company determines that the information provided
by you in the Transfer Notice is insufficient to establish the bona fide nature
of a proposed voluntary transfer, the Company shall give you written notice of
your failure to comply with the procedure described in this Section 11, and you
shall have no right to transfer the Transfer Shares without first complying with
the procedure described in this Section 11. You shall not be permitted to
transfer the Transfer Shares if the proposed transfer is not bona fide.

(d) Exercise of Right of First Refusal. If the Company determines the proposed
transfer to be bona fide, the Company shall have the right to purchase all, but
not less than all, of the Transfer Shares (except as the Company and you
otherwise agree) at the purchase price and on the terms set forth in the
Transfer Notice by delivery to you of a notice of exercise of the Right of First
Refusal within thirty (30) days after the date the Transfer Notice is delivered
to the Company. The Company’s exercise or failure to exercise the Right of First
Refusal with respect to any proposed transfer described in a Transfer Notice
shall not affect the Company’s right to exercise the Right of First Refusal with
respect to any proposed transfer described in any other Transfer Notice, whether
or not such other Transfer Notice is issued by you or issued by a person other
than you with respect to a proposed transfer to the same Proposed Transferee. If
the Company exercises the Right of First Refusal, the Company and you shall
thereupon consummate the sale of the Transfer Shares to the Company on the terms
set forth in the Transfer Notice within sixty (60) days after the date the
Transfer Notice is delivered to the Company (unless a longer period is offered
by the Proposed Transferee); provided, however, that in the event the Transfer
Notice provides for the payment for the Transfer Shares other than in cash, the
Company shall have the option of paying for the Transfer Shares by the present
value cash equivalent of the consideration described in the Transfer Notice as
reasonably determined by the Company. For purposes of the foregoing,
cancellation of any indebtedness of yours to the Company shall be treated as
payment to you in cash to the extent of the unpaid principal and any accrued
interest canceled.

(e) Failure to Exercise Right of First Refusal. If the Company fails to exercise
the Right of First Refusal in full (or to such lesser extent as the Company and
you otherwise agree) within the period specified in Section 11(d) above, you may
conclude a transfer to the Proposed Transferee of the Transfer Shares on the
terms and conditions described in the Transfer Notice, provided such transfer
occurs not later than ninety (90) days following delivery to the Company of the
Transfer Notice. The Company shall have the right to demand further assurances
from you and the Proposed Transferee (in a form satisfactory to the Company)
that the transfer of the Transfer Shares was actually carried out on the terms
and conditions described in the Transfer Notice. No Transfer Shares shall be
transferred on the books of the Company until the Company has received such
assurances, if so demanded, and has approved the proposed

 

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transfer as bona fide. Any proposed transfer on terms and conditions different
from those described in the Transfer Notice, as well as any subsequent proposed
transfer by you, shall again be subject to the Right of First Refusal and shall
require compliance by you with the procedure described in this Section 11.

(f) Transferees of Transfer Shares. All transferees of the Transfer Shares or
any interest therein, other than the Company, shall be required as a condition
of such transfer to agree in writing (in a form satisfactory to the Company)
that such transferee shall receive and hold such Transfer Shares or interest
therein subject to all of the terms and conditions of this Option Agreement,
including this Section 11 providing for the Right of First Refusal with respect
to any subsequent transfer. Any sale or transfer of any shares acquired upon
exercise of the Option shall be void unless the provisions of this Section 11
are met.

(g) Transfers Not Subject to Right of First Refusal. The Right of First Refusal
shall not apply to any transfer or exchange of the shares acquired upon exercise
of the Option if such transfer or exchange is in connection with a Corporate
Transaction. If the consideration received pursuant to such transfer or exchange
consists of stock of an Affiliate, such consideration shall remain subject to
the Right of First Refusal unless the provisions of Section 11(i) below result
in a termination of the Right of First Refusal.

(h) Assignment of Right of First Refusal. The Company shall have the right to
assign the Right of First Refusal at any time, whether or not there has been an
attempted transfer, to one or more persons as may be selected by the Company.

(i) Early Termination of Right of First Refusal. The other provisions of this
Option Agreement notwithstanding, the Right of First Refusal shall terminate and
be of no further force and effect upon (a) the occurrence of a Change in
Control, unless the surviving, continuing, successor, or other business entity
or parent thereof, as the case may be (the “Acquiring Corporation”) assumes the
Company’s rights and obligations under the Option or substitutes a substantially
equivalent option for the Acquiring Corporation’s stock for the Option, or
(b) the existence of a public market for the class of shares subject to the
Right of First Refusal. A “public market” shall be deemed to exist if (i) such
stock is listed on a national securities exchange (as that term is used in the
Exchange Act) or (ii) such stock is traded on the over-the-counter market and
prices therefor are published daily on business days in a recognized financial
journal.

12. RIGHT OF REPURCHASE. To the extent provided in the Company’s bylaws in
effect at such time the Company elects to exercise its right, the Company shall
have the right to repurchase all or any part of the shares of Common Stock you
acquire pursuant to the exercise of your option.

13. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or service
contract, and nothing in your option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or an Affiliate, or of the Company or an Affiliate to continue your employment.
In addition, nothing in your option shall obligate the Company or an Affiliate,
their respective stockholders, Boards of Directors, Officers or Employees to
continue any relationship that you might have as a Director or Consultant for
the Company or an Affiliate.

 

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14. WITHHOLDING OBLIGATIONS.

(a) At the time you exercise your option, in whole or in part, or at any time
thereafter as requested by the Company, you hereby authorize withholding from
payroll and any other amounts payable to you, and otherwise agree to make
adequate provision for (including by means of a “cashless exercise” pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or
an Affiliate, if any, which arise in connection with the exercise of your
option.

(b) Upon your request and subject to approval by the Company, in its sole
discretion, and compliance with any applicable legal conditions or restrictions,
the Company may withhold from fully vested shares of Common Stock otherwise
issuable to you upon the exercise of your option a number of whole shares of
Common Stock having a Fair Market Value, determined by the Company as of the
date of exercise, not in excess of the minimum amount of tax required to be
withheld by law (or such lower amount as may be necessary to avoid
classification of your option as a liability for financial accounting purposes).
If the date of determination of any tax withholding obligation is deferred to a
date later than the date of exercise of your option, share withholding pursuant
to the preceding sentence shall not be permitted unless you make a proper and
timely election under Section 83(b) of the Code, covering the aggregate number
of shares of Common Stock acquired upon such exercise with respect to which such
determination is otherwise deferred, to accelerate the determination of such tax
withholding obligation to the date of exercise of your option. Notwithstanding
the filing of such election, shares of Common Stock shall be withheld solely
from fully vested shares of Common Stock determined as of the date of exercise
of your option that are otherwise issuable to you upon such exercise. Any
adverse consequences to you arising in connection with such share withholding
procedure shall be your sole responsibility.

(c) You may not exercise your option unless the tax withholding obligations of
the Company and/or any Affiliate are satisfied. Accordingly, you may not be able
to exercise your option when desired even though your option is vested, and the
Company shall have no obligation to issue a certificate for such shares of
Common Stock or release such shares of Common Stock from any escrow provided for
herein unless such obligations are satisfied.

15. TAX CONSEQUENCES. You hereby agree that the Company does not have a duty to
design or administer the Plan or its other compensation programs in a manner
that minimizes your tax liabilities. You shall not make any claim against the
Company, or any of its Officers, Directors, Employees or Affiliates related to
tax liabilities arising from your option or your other compensation. In
particular, you acknowledge that this option is exempt from Section 409A of the
Code only if the exercise price per share specified in the Grant Notice is at
least equal to the “fair market value” per share of the Common Stock on the Date
of Grant and there is no other impermissible deferral of compensation associated
with the option. Because the Common Stock is not traded on an established
securities market, the Fair Market Value is determined by the Board, perhaps in
consultation with an independent valuation firm retained by the Company.

 

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You acknowledge that there is no guarantee that the Internal Revenue Service
will agree with the valuation as determined by the Board, and you shall not make
any claim against the Company, or any of its Officers, Directors, Employees or
Affiliates in the event that the Internal Revenue Service asserts that the
valuation determined by the Board is less than the “fair market value” as
subsequently determined by the Internal Revenue Service.

16. NOTICES. Any notices provided for in your option or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by mail by the Company to you, five (5) days after deposit in
the United States mail, postage prepaid, addressed to you at the last address
you provided to the Company.

17. GOVERNING PLAN DOCUMENT. Your option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your option, and is
further subject to all interpretations, amendments, rules and regulations, which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of your option and those of the
Plan, the provisions of the Plan shall control.

 

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LIPOCINE INC.

STOCK OPTION GRANT NOTICE

(2011 EQUITY INCENTIVE PLAN)

Lipocine Inc. (the “Company”), pursuant to its 2011 Equity Incentive Plan (the
“Plan”), hereby grants to Optionholder an option to purchase the number of
shares of the Company’s Common Stock set forth below. This option is subject to
all of the terms and conditions as set forth herein and in the Option Agreement,
the Plan, and the Notice of Exercise, all of which are attached hereto and
incorporated herein in their entirety.

 

 

Optionholder:

       

 

   

Date of Grant:

       

 

   

Vesting Commencement Date:

       

 

   

Number of Shares Subject to Option:            

       

 

   

Exercise Price (Per Share):

       

 

   

Total Exercise Price:

       

 

   

Expiration Date:

       

 

 

 

Type of Grant:

   ¨ Incentive Stock Option1                ¨ Nonstatutory Stock Option

Exercise Schedule:        

   ¨ Same as Vesting Schedule                ¨ Early Exercise Permitted

Vesting Schedule:

   Twenty-five percent (25%) of the shares (rounded down to the nearest whole
number of shares) vest on the first anniversary of the Vesting Commencement
Date; thereafter 1/48th of the shares vest in monthly installments measured from
the first anniversary of the Vesting Commencement Date.

Payment:

   By one or a combination of the following items (described in the Option
Agreement):   

¨      By cash or check

¨      Pursuant to a Regulation T Program if the Shares are publicly traded

¨      By delivery of already-owned shares if the Shares are publicly traded

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Stock Option Grant Notice, the
Option Agreement and the Plan. Optionholder further acknowledges that as of the
Date of Grant, this Stock Option Grant Notice, the Option Agreement, and the
Plan set forth the entire understanding between Optionholder and the Company
regarding the acquisition of stock in the Company and supersede all prior oral
and written agreements on that subject with the exception of (i) Stock Awards
previously granted and delivered to Optionholder under the Plan or the Company’s
2000 Stock Option Plan, and (ii) the following agreements only:

 

            OTHER AGREEMENTS:

         

 

 

1  If this is an Incentive Stock Option, it (plus other outstanding Incentive
Stock Options) cannot be first exercisable for more than $100,000 in value
(measured by exercise price) in any calendar year. Any excess over $100,000 is a
Nonstatutory Stock Option.

 

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LIPOCINE INC.     OPTIONHOLDER: By:             Signature       Signature Title:
        Date:             Date:          

ATTACHMENTS:     Option Agreement, 2011 Equity Incentive Plan, and Notice of
Exercise

 

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