ex10_3.htm


    
      

    

    Exhibit
      10.3

     

    REGISTRATION
      RIGHTS AGREEMENT

    


    This
      REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into
      as of __________, __, 200__, by and between Rexahn Pharmaceuticals, Inc., a
      Delaware corporation (the “Company”), and KT&G Corporation, a Korean
      corporation (the “Purchaser”).

    


    Recital

    


    The
      parties have agreed to enter into this Agreement in connection with, and as
      a
      condition to the Closing under, the Securities Purchase Agreement, dated as
      of
      November 19, 2007, by and between the Company and the Purchaser (the
“Purchase Agreement”).

    


    Agreement

    


    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and the Purchaser agree as
      follows:

    


    1.          
        Definitions.  In addition to the terms defined
      elsewhere in this Agreement, (a) capitalized terms that are not otherwise
      defined herein have the meanings given to such terms in the Purchase Agreement,
      and (b) the following terms have the meanings indicated:

    


    “Actual
      Minimum” means, as of any date, the maximum aggregate number of shares of
      Common Stock then issued or potentially issuable in the future pursuant to
      the
      Transaction Documents, including Warrant Shares issuable upon exercise in full
      of all Warrants.

    


    “Effective
      Date” means the date on which the Registration Statement is first declared
      effective by the SEC.

    


    “Filing
      Date” means, with respect to the Registration Statement required to be filed
      pursuant to Section 2, the 60th day following the date on which the
      Common Stock is listed for trading on the American Stock Exchange.

    


    “Holder”
      means any holder, from time to time, of Registrable Securities.

    


    “Post-Effective
      Amendment” means a post-effective amendment to the Registration
      Statement.

    


    “Post-Effective
      Amendment Filing Deadline” means the 10th Trading Day after the Registration
      Statement ceases to be effective pursuant to the applicable securities laws
      due
      to the passage of time or the occurrence of an event requiring the Company
      to
      file a Post-Effective Amendment.

    


    “Prospectus”
      means the prospectus included in the Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the 1933 Act), as amended or supplemented by any
      prospectus supplement, with respect to the terms of the offering of any portion
      of the Registrable Securities covered by the Registration Statement, and all
      other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    “Registrable
      Securities” means any Common Stock (including Warrant Shares) issued or
      issuable pursuant to the Transaction Documents, together with any securities
      issued or issuable upon any stock split, dividend or other distribution,
      recapitalization or similar event with respect to the foregoing; provided,
      however, that any Common Stock will cease to be a Registrable Security when
      (i) it has been sold under the Registration Statement, or (ii) it may be
      transferred pursuant to Rule 144 under the 1933 Act.

    


    “Registration
      Statement” means the registration statement required to be filed hereunder,
      including the Prospectus, amendments and supplements to such registration
      statement or Prospectus, including pre- and post-effective amendments, all
      exhibits thereto, and all material incorporated by reference or deemed to be
      incorporated by reference in such registration statement.

    


    “Required
      Effectiveness Date” means, with respect to the Registration Statement
      required to be filed hereunder, the 90th day (or the 120th day in the event
      the
      Company receives comments to the Registration Statement from the SEC) following
      the Filing Date.

    


    “Required
      Holders” means the Holders of a majority of the Registrable
      Securities.

    


    “Rule
      415,” “Rule 424” and “Rule 461” means Rule 415, Rule 424 and
      Rule 461, respectively, promulgated by the SEC pursuant to the 1933 Act, as
      such
      Rules may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the SEC having substantially the same effect as such
      Rule.

    


    List
      of Additional Definitions.  The following is a list of additional
      terms used in this Agreement and a reference to the Section hereof in which
      such
      term is defined:

     

    
      	
              Term

            	
              Section

            
	
              Advice

            	
              6

            
	
              Effectiveness
                Period

            	
              2(a)

            
	
              Event

            	
              2(c)

            
	
              Event
                Date

            	
              2(c)

            
	
              Indemnified
                Party

            	
              5(c)

            
	
              Indemnifying
                Party

            	
              5(c)

            
	
              Losses

            	
              5(a)

            
	
              Purchaser
                Counsel

            	
              3(a)

            


    

    


    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    


    2.        
          Shelf Registration.

    


    (a)           On
      or prior to the Filing Date, the Company shall prepare and file with the SEC
      a
“Shelf” Registration Statement covering the resale of all Registrable Securities
      eligible to be registered under the 1933 Act and rules and practices of the
      SEC
      for an offering to be made on a continuous basis pursuant to Rule
      415.  The Registration Statement shall be on Form SB-2 (or Form S-3 if
      the Company is then eligible to use such Form) and shall contain (except if
      otherwise directed by the Holders) the “Plan of Distribution” attached hereto as
Annex A.  The Company shall use its best efforts to cause the
      Registration Statement to be declared effective under the 1933 Act as promptly
      as possible after the filing thereof, but in any event prior to the Required
      Effectiveness Date, and shall use its best efforts to keep such Registration
      Statement continuously effective under the 1933 Act until the earliest of (i)
      the fifth anniversary of the Effective Date, (ii) when all Registrable
      Securities are eligible for resale pursuant to subsection (k) of Rule 144 under
      the 1933 Act, and (iii) when all Registrable Securities covered by such
      Registration Statement have been sold (the “Effectiveness
      Period”).  The Company shall notify each Holder in writing
      promptly (and in any event within one Business Day) after receiving notification
      from the SEC that a Registration Statement has been declared
      effective.

    


    (b)           The
      Registration Statement to be filed hereunder shall cover the sale by the Holders
      of 120% of the Actual Minimum number of shares of Common Stock issuable under
      the Transaction Documents.  As promptly as possible, and in any event
      no later than the Post-Effective Amendment Filing Deadline, the Company shall
      prepare and file with the SEC a Post-Effective Amendment, if required under
      this
      Agreement.  The Company shall use its best efforts to cause the
      Post-Effective Amendment to be declared effective by the SEC as promptly as
      possible after the filing thereof, but in any event prior to the 15th Trading
      Day after the Post-Effective Amendment Filing Deadline.  The Company
      shall notify the Purchaser in writing promptly (and in any event within one
      Business Day) after receiving notification from the SEC that the Post-Effective
      Amendment has been declared effective.

    


    (c)           If:  (i)
      the Registration Statement is not filed on or prior to the Filing Date (if
      the
      Company files such Registration Statement without affording the Purchaser the
      opportunity to review and comment on the same as required by Section 3(a)
      hereof, the Company shall not be deemed to have satisfied this clause (i)),
      or
      (ii) the Company fails to file with the SEC a request for acceleration in
      accordance with Rule 461 promulgated under the 1933 Act, within five Trading
      Days after the date that the Company is notified (orally or in writing,
      whichever is earlier) by the SEC that a Registration Statement will not be
      “reviewed,” or will not be subject to further review, or (iii) the Registration
      Statement filed hereunder is not declared effective by the SEC by the Required
      Effectiveness Date, or (iv) a Post-Effective Amendment is not filed on or prior
      to the Post-Effective Amendment Filing Deadline or is not declared effective
      on
      or prior to the 15th Trading Day after the Post-Effective Amendment Filing
      Deadline, or (v) the Common Stock is not listed or quoted, or is suspended
      from
      trading on an Eligible Market for a period of five consecutive Trading Days,
      or
      (vi) the Company fails for any reason to deliver a certificate evidencing any
      Securities to the Purchaser within five Trading Days after delivery of such
      certificate is required pursuant to any Transaction Document or the exercise
      rights of the Purchaser pursuant to the Transaction Documents are otherwise
      suspended for any reason (any such failure or breach being referred to as an
      “Event,” and for purposes of clause (i), (iii) or (iv) the date on which
      such Event occurs, or for purposes of clause (ii) and (vi) the date on which
      such five Trading Day period is exceeded, or for purposes of clause (v) the
      date
      on which such three Trading Day period is exceeded, being referred to as
“Event Date”), then: (x) on each such Event Date the Company shall pay to
      the Purchaser an amount in cash, as partial liquidated damages and not as a
      penalty, equal to 2% of the aggregate purchase price paid by the Purchaser
      pursuant to the Purchase Agreement; and (y) on each monthly anniversary of
      each
      such Event Date thereof (if the applicable Event shall not have been cured
      by
      such date) until the applicable Event is cured, the Company shall pay to the
      Purchaser an amount in cash, as partial liquidated damages and not as a penalty,
      equal to 2% of the aggregate purchase price paid by the Purchaser pursuant
      to
      the Purchase Agreement; provided, however, that the maximum amount of
      such liquidated damages shall not exceed a total equal to 10% of the aggregate
      purchase price paid by the Purchaser under the Purchase
      Agreement.  Such payments shall be in partial compensation to the
      Purchaser and shall not constitute the Purchaser’s exclusive remedy for such
      events.  If the Company fails to pay any liquidated damages pursuant
      to this Section 2 in full within seven days after the date payable, the
      Company will pay interest thereon at a rate of 18% per annum (or such lesser
      maximum amount that is permitted to be paid by applicable law) to the Purchaser,
      accruing daily from the date such liquidated damages are due until such amounts,
      plus all such interest thereon, are paid in full.

    


    
      
        
          
          

        

        
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    (d)           During
      the period subsequent to the Filing Date and prior to the Effective Date, the
      Company shall not prepare and file with the SEC a registration statement
      relating to an offering for its own account or the account of others under
      the
      1933 Act of any of its equity securities.

    


    (e)           Notwithstanding
      anything in this Agreement to the contrary, after 60 consecutive Trading Days
      of
      continuous effectiveness of the Registration Statement filed and declared
      effective pursuant to this Agreement, the Company may, by written notice to
      the
      Purchaser, suspend sales under a Registration Statement after the Effective
      Date
      thereof and/or require that the Purchaser immediately cease the sale of shares
      of Common Stock pursuant thereto and/or defer the filing of any subsequent
      Registration Statement if the Company is engaged in a material merger,
      acquisition or sale and the Board of Directors determines in good faith, by
      appropriate resolutions, that, as a result of such activity, (A) it would be
      materially detrimental to the Company (other than as relating solely to the
      price of the Common Stock) to file a Registration Statement at such time and
      (B)
      it is in the best interests of the Company to defer proceeding with such
      registration at such time.  Upon receipt of such notice, the Purchaser
      shall immediately discontinue any sales of Registrable Securities pursuant
      to
      such registration until the Purchaser has received copies of a supplemented
      or
      amended Prospectus or until the Purchaser is advised in writing by the Company
      that the then-current Prospectus may be used and has received copies of any
      additional or supplemental filings that are incorporated or deemed incorporated
      by reference in such Prospectus.  In no event, however, shall this
      right be exercised to suspend sales beyond the period during which (in the
      good
      faith determination of the Company’s Board of Directors) the failure to require
      such suspension would be materially detrimental to the Company.  The
      Company’s rights, under this Section 2(e) may be exercised for a period
      of no more than 45 days in the aggregate in any 12-moth period, of which no
      more
      than 20 days may be consecutive.  Immediately after the end of any
      suspension period under this Section 2(e), the Company shall take all
      necessary actions (including filing any required supplemental prospectus) to
      restore the effectiveness of the applicable Registration Statement and the
      ability of the Purchaser to publicly resell their Registrable Securities
      pursuant to such effective Registration Statement.  The provisions of
Sections 3(b) and 3(d) hereof shall not be applicable during the
      pendency of any suspension period under this Section 2(e).

    


    
      
        
          
          

        

        
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    (f)           Rule
      415 Limitations.  Notwithstanding  anything in this
      Agreement to the contrary, if the SEC refuses to declare a registration
      statement filed pursuant to this Agreement effective as a valid secondary
      offering under Rule 415 promulgated under the 1933 Act due to the number of
      Registrable Securities sought to be included in such registration statement
      relative to the number of shares of Acquirer Common Stock outstanding or the
      number of outstanding shares of Acquirer Common Stock held by non-affiliates
      or
      for any other reason, then, without any liability under this Agreement or any
      further obligation to register such excess Registrable Securities, the Company
      shall be permitted to reduce  the  number
      of  Registrable  Securities included in such
      registration  statement  to an amount  that does
      not  exceed an amount  that the SEC allows for the offering
      thereunder to qualify as a valid secondary offering under Rule
      415.  The Company shall not be liable for damages under this Agreement
      as to any Registrable Securities that are not
      permitted  by  the  SEC  to
      be  included  in a
      registration  statement  due to SEC guidance relating to
      Rule 415.

    


    3.         
         Registration Procedures.

    


    (a)           Not
      less than three days prior to the filing of a Registration Statement or any
      related Prospectus or any amendment or supplement thereto, the Company shall
      (i)
      furnish to any counsel designated by the Purchaser (“Purchaser Counsel”)
      copies of all such documents proposed to be filed, which documents (other than
      those incorporated or deemed to be incorporated by reference) will be subject
      to
      the review of the Purchaser and Purchaser Counsel and (ii) cause its officers
      and directors, counsel and independent certified public accountants to respond
      to such inquiries as shall be necessary to conduct a reasonable investigation
      within the meaning of the 1933 Act.  The Company shall not file a
      Registration Statement or any such Prospectus or any amendments or supplements
      thereto to which the Required Holders shall reasonably object in writing in
      their good faith within three days of receipt.

    


    (b)           (i)  The
      Company shall prepare and file with the SEC such amendments, including
      post-effective amendments, to each Registration Statement and the Prospectus
      used in connection therewith as may be necessary to keep the Registration
      Statement continuously effective as to the applicable Registrable Securities
      for
      the Effectiveness Period and prepare and file with the SEC such additional
      Registration Statements in order to register for resale under the 1933 Act
      all
      of the Registrable Securities; (ii) cause the related Prospectus to be amended
      or supplemented by any required Prospectus supplement, and as so supplemented
      or
      amended to be filed pursuant to Rule 424; (iii) respond as promptly as
      reasonably possible, and in any event within ten business days to comments
      received from the SEC with respect to the Registration Statement or any
      amendment thereto and, as promptly as reasonably possible, upon request, provide
      the Purchaser with true and complete copies of all correspondence from and
      to
      the SEC relating to the Registration Statement; and (iv) comply in all material
      respects, to the extent applicable to the Company, with the provisions of the
      1933 Act and the 1934 Act with respect to the disposition of all Registrable
      Securities covered by the Registration Statement during the applicable period
      in
      accordance with the intended methods of disposition by the Purchaser thereof
      set
      forth in the Registration Statement as so amended or in such Prospectus as
      so
      supplemented.

    


    
      
        
          
          

        

        
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    (c)           The
      Company shall notify Purchaser Counsel as promptly as reasonably possible,
      and
      (if requested by any such Person) confirm such notice in writing no later than
      one Trading Day thereafter, of any of the following events: (i) the SEC notifies
      the Company whether there will be a “review” of any Registration Statement; (ii)
      the SEC comments in writing on any Registration Statement; (iii) any
      Registration Statement or any Post-Effective Amendment is declared effective;
      (iv) the SEC or any other Federal or state governmental authority requests
      any
      amendment or supplement to any Registration Statement or Prospectus or requests
      additional information related thereto; (v) the SEC issues any stop order
      suspending the effectiveness of any Registration Statement or initiates any
      proceedings for that purpose; (vi) the Company receives notice of any suspension
      of the qualification or exemption from qualification of any Registrable
      Securities for sale in any jurisdiction, or the initiation or threat of any
      proceeding for such purpose; or (vii) an event has occurred which requires
      a
      post-effective amendment to the Registration Statement or a supplement to the
      prospectus included therein.

    


    (d)           The
      Company shall use its best efforts to avoid the issuance of or, if issued,
      to
      obtain the withdrawal of (i) any order suspending the effectiveness of any
      Registration Statement, or (ii) any suspension of the qualification (or
      exemption from qualification) of any of the Registrable Securities for sale
      in
      any jurisdiction, as soon as possible.

    


    (e)           The
      Company shall promptly deliver to Purchaser Counsel, without charge, an
      electronic copy of the Prospectus or Prospectuses (including each form of
      prospectus) and each amendment or supplement thereto as such Persons may
      reasonably request.  The Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by the Purchaser in
      connection with the offering and sale of the Registrable Securities covered
      by
      such Prospectus and any amendment or supplement thereto.

    


    (f)           The
      Company shall promptly deliver to the Purchaser and Purchaser Counsel, without
      charge, as many copies of the Prospectus or Prospectuses (including each form
      of
      prospectus) and each amendment or supplement thereto as such Persons may
      reasonably request.  The Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by the Purchaser in
      connection with the offering and sale of the Registrable Securities covered
      by
      such Prospectus and any amendment or supplement thereto.

    


    (g)           (i)  In
      the time and manner required by each Trading Market, the Company shall prepare
      and file with such Trading Market an additional shares listing application
      covering all of the Registrable Securities; (ii) take all steps necessary to
      cause such Registrable Securities to be approved for listing on each Trading
      Market as soon as possible thereafter; (iii) provide to the Purchaser evidence
      of such listing; and (iv) maintain the listing of such Registrable Securities
      on
      each such Trading Market or another Eligible Market.

    


    (h)           Prior
      to any public offering of Registrable Securities, the Company shall use its
      best
      efforts to register or qualify or cooperate with the selling Purchaser and
      Purchaser Counsel in connection with the registration or qualification (or
      exemption from such registration or qualification) of such Registrable
      Securities for offer and sale under the securities or Blue Sky laws of such
      jurisdictions within the United States as the Purchaser reasonably requests
      in
      writing, to keep each such registration or qualification (or exemption
      therefrom) effective during the Effectiveness Period and to do any and all
      other
      acts or things necessary or advisable to enable the disposition in such
      jurisdictions of the Registrable Securities covered by a Registration
      Statement.

    


    
      
        
          
          

        

        
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    (i)           Subject
      to compliance by the Purchaser with Section 6 hereof, the Company shall
      cooperate with the Purchaser to facilitate the timely preparation and delivery
      of certificates representing Registrable Securities to be delivered to a
      transferee pursuant to a Registration Statement, which certificates shall be
      free, to the extent permitted by this Agreement, of all restrictive legends,
      and
      to enable such Registrable Securities to be in such denominations and registered
      in such names as the Purchaser may request.

    


    (j)           Upon
      the occurrence of any event described in Section 3(c)(vii), as promptly
      as reasonably possible, the Company shall prepare a supplement or amendment,
      including a post-effective amendment, to the Registration Statement or a
      supplement to the related Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference, and file such supplement, amendment or
      any
      other document as may be required so that, as thereafter delivered, neither
      the
      Registration Statement nor such Prospectus shall contain an untrue statement
      of
      a material fact or omit to state a material fact required to be stated therein
      or necessary to make the statements therein, in light of the circumstances
      under
      which they were made, not misleading.

    


    (k)           If
      Holders of a majority of the Registrable Securities being offered pursuant
      to a
      Registration Statement select underwriters for the offering, the Company shall
      enter into and perform its obligations under an underwriting agreement, in
      usual
      and customary form, including, without limitation, by providing customary legal
      opinions, comfort letters and indemnification and contribution
      obligations.

    


    (l)           The
      Company shall comply with all applicable rules and regulations of the
      SEC.

    


    4.        
          Registration Expenses.  The Company
      shall pay all fees and expenses incident to the performance of or compliance
      with this Agreement by the Company, including without limitation (a) all
      registration and filing fees and expenses, including without limitation those
      related to filings with the SEC, any Trading Market and in connection with
      applicable state securities or Blue Sky laws, (b) printing expenses (including
      without limitation expenses of printing certificates for Registrable Securities
      and of printing prospectuses requested by the Purchaser), (c) messenger,
      telephone and delivery expenses, (d) fees and disbursements of counsel for
      the
      Company, (e) fees and expenses of all other Persons retained by the Company
      in
      connection with the consummation of the transactions contemplated by this
      Agreement and (f) all listing fees to be paid by the Company to the Trading
      Market.

    


    5.         
         Indemnification.

    


    (a)           Indemnification
      by the Company.  The Company shall, notwithstanding any
      termination of this Agreement, indemnify and hold harmless the Purchaser, and
      its officers, directors, partners, members, agents, investment advisors and
      employees, each Person who controls the Purchaser (within the meaning of Section
      15 of the 1933 Act or Section 20 of the 1934 Act) and the officers, directors,
      partners, members, agents and employees of each such controlling Person, to
      the
      fullest extent permitted by applicable law, from and against any and all losses,
      claims, damages, liabilities, settlement costs and expenses, including without
      limitation costs of preparation of legal action and reasonable attorneys’ fees
      (collectively, “Losses”), as incurred, arising out of or based upon any
      untrue or alleged untrue statement of a material fact contained in the
      Registration Statement, any Prospectus or any form of prospectus or in any
      amendment or supplement thereto or in any preliminary prospectus, or arising
      out
      of or based upon any omission or alleged omission of a material fact required
      to
      be stated therein or necessary to make the statements therein (in the case
      of
      any Prospectus or form of prospectus or supplement thereto, in the light of
      the
      circumstances under which they were made) not misleading, except to the extent,
      but only to the extent, that (i) such untrue statements, alleged untrue
      statements, omissions or alleged omissions are based solely upon information
      regarding the Purchaser furnished in writing to the Company by the Purchaser
      or
      its counsel or other Person acting on behalf of the Purchaser expressly for
      use
      therein, or to the extent that such information relates to the Purchaser or
      the
      Purchaser’s proposed method of distribution of Registrable Securities and was
      reviewed and expressly approved in writing by the Purchaser or its counsel
      or
      other Person acting on behalf of the Purchaser expressly for use in the
      Registration Statement, such Prospectus or such form of Prospectus or in any
      amendment or supplement thereto or (ii) in the case of an occurrence of an
      event
      of the type specified in Section 3(c)(v)-(vii), the use by the Purchaser
      of an outdated or defective Prospectus after the Company has notified the
      Purchaser in writing that the Prospectus is outdated or defective and prior
      to
      the receipt by the Purchaser of the Advice contemplated in Section
      6.  The Company shall notify the Purchaser promptly of the
      institution, threat or assertion of any proceeding of which the Company is
      aware
      in connection with the transactions contemplated by this Agreement.

    


    
      
        
          
          

        

        
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    (b)           Indemnification
      by the Purchaser.  The Purchaser shall indemnify and hold harmless
      the Company, its directors, officers, agents and employees, each Person who
      controls the Company (within the meaning of Section 15 of the 1933 Act and
      Section 20 of the 1934 Act), and the directors, officers, agents or employees
      of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses arising solely out of or based solely upon any
      untrue statement of a material fact contained in the Registration Statement,
      any
      Prospectus, or any form of prospectus, or in any amendment or supplement
      thereto, or arising solely out of or based solely upon any omission of a
      material fact required to be stated therein or necessary to make the statements
      therein (in the case of any Prospectus or form of prospectus or supplement
      thereto, in the light of the circumstances under which they were made) not
      misleading to the extent, but only to the extent, that such untrue statement
      or
      omission is contained in any information so furnished in writing by the
      Purchaser to the Company specifically for inclusion in such Registration
      Statement or such Prospectus or to the extent that (i) such untrue statements
      or
      omissions are based solely upon information regarding the Purchaser furnished
      in
      writing to the Company by the Purchaser expressly for use therein, or to the
      extent that such information relates to the Purchaser or the Purchaser’s
      proposed method of distribution of Registrable Securities and was reviewed
      and
      expressly approved in writing by the Purchaser or its counsel or other person
      acting on behalf of the Purchaser expressly for use in the Registration
      Statement, such Prospectus or such form of Prospectus or in any amendment or
      supplement thereto or (ii) in the case of an occurrence of an event of the
      type
      specified in Section 3(c)(v)-(vii), the use by the Purchaser of an
      outdated or defective Prospectus after the Company has notified the Purchaser
      in
      writing that the Prospectus is outdated or defective and prior to the receipt
      by
      the Purchaser of the Advice contemplated in Section 6.  In no
      event shall the liability of any selling Purchaser hereunder be greater in
      amount than the dollar amount of the net proceeds received by the Purchaser
      upon
      the sale of the Registrable Securities giving rise to such indemnification
      obligation.

    


    
      
        
          
          

        

        
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    (c)           Conduct
      of Indemnification Proceedings.  (i)  If any proceeding
      shall be brought or asserted against any Person entitled to indemnity hereunder
      (an “Indemnified Party”), such Indemnified Party shall promptly notify
      the Person from whom indemnity is sought (the “Indemnifying Party”) in
      writing, and the Indemnifying Party shall be entitled to assume the defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided, however, that the failure of
      any Indemnified Party to give such notice shall not relieve the Indemnifying
      Party of its obligations or liabilities pursuant to this Agreement, except
      (and
      only) to the extent that it shall be finally determined by a court of competent
      jurisdiction (which determination is not subject to appeal or further review)
      that such failure shall have proximately and materially adversely prejudiced
      the
      Indemnifying Party.

    


     (ii)          An
      Indemnified Party shall have the right to employ separate counsel in any such
      proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless:  (i) the Indemnifying Party has agreed in writing to pay such
      fees and expenses; or (ii) the Indemnifying Party shall have failed promptly
      to
      assume the defense of such proceeding and to employ counsel reasonably
      satisfactory to such Indemnified Party in any such proceeding; or (iii) the
      named parties to any such proceeding (including any impleaded parties) include
      both such Indemnified Party and the Indemnifying Party, and a conflict of
      interest is likely to exist if the same counsel were to represent such
      Indemnified Party and the Indemnifying Party (in which case, if such Indemnified
      Party notifies the Indemnifying Party in writing that it elects to employ
      separate counsel at the expense of the Indemnifying Party, the Indemnifying
      Party shall not have the right to assume the defense thereof and such counsel
      shall be at the expense of the Indemnifying Party).  The Indemnifying
      Party shall not be liable for any settlement of any such proceeding effected
      without its written consent, which consent shall not be unreasonably
      withheld.  No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, effect any settlement of any pending
      proceeding in respect of which any Indemnified Party is a party, unless (i)
      a
      conflict of interest exists between the Indemnified Party and the Indemnifying
      Party or (ii) such settlement includes an unconditional release of such
      Indemnified Party from all liability on claims that are the subject matter
      of
      such proceeding.

    


    (iii)           All
      reasonable fees and expenses of the Indemnified Party (including reasonable
      fees
      and expenses to the extent incurred in connection with investigating or
      preparing to defend such proceeding in a manner not inconsistent with this
      Section 5) shall be paid to the Indemnified Party, as incurred, within
      ten Trading Days of written notice thereof to the Indemnifying Party (regardless
      of whether it is ultimately determined that an Indemnified Party is not entitled
      to indemnification hereunder; provided, however, that the Indemnifying
      Party shall reimburse all such fees and expenses to the extent it is finally
      judicially determined that such Indemnified Party is not entitled to
      indemnification hereunder).

    


    (d)           Contribution.  (i)  If
      a claim for indemnification under Section 5(a) or (b) is
      unavailable to an Indemnified Party (by reason of public policy or otherwise),
      then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
      shall contribute to the amount paid or payable by such Indemnified Party as
      a
      result of such Losses, in such proportion as is appropriate to reflect the
      relative fault of the Indemnifying Party and Indemnified Party in connection
      with the actions, statements or omissions that resulted in such Losses as well
      as any other relevant equitable considerations.  The relative fault of
      such Indemnifying Party and Indemnified Party shall be determined by reference
      to, among other things, whether any action in question, including any untrue
      or
      alleged untrue statement of a material fact or omission or alleged omission
      of a
      material fact, has been taken or made by, or relates to information supplied
      by,
      such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission.  The amount paid or payable by a party
      as a result of any Losses shall be deemed to include, subject to the limitations
      set forth in Section 5(c), any reasonable attorneys’ or other reasonable
      fees or expenses incurred by such party in connection with any proceeding to
      the
      extent such party would have been indemnified for such fees or expenses if
      the
      indemnification provided for in this Section 5 was available to such
      party in accordance with its terms.

    


    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

     

    (ii)           The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or
      by any other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding
      paragraph.  Notwithstanding the provisions of this Section
      5(d), the Purchaser shall not be required to contribute, in the aggregate,
      any amount in excess of the amount by which the net proceeds actually received
      by the Purchaser from the sale of the Registrable Securities subject to the
      proceeding exceeds the amount of any damages that the Purchaser has otherwise
      been required to pay by reason of such untrue or alleged untrue statement or
      omission or alleged omission.  No Person guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
      be
      entitled to contribution from any Person who was not guilty of such fraudulent
      misrepresentation.

    


    6.         
         Dispositions.  The Purchaser agrees that it
      will comply with the prospectus delivery requirements of the 1933 Act as
      applicable to it in connection with sales of Registrable Securities pursuant
      to
      the Registration Statement.  The Purchaser further agrees that, upon
      receipt of a notice from the Company of the occurrence of any event of the
      kind
      described in Sections 2(f) or 3(c)(v), (vi) or
(vii), the Purchaser will discontinue disposition
      of such Registrable
      Securities under the Registration Statement until the Purchaser’s receipt of the
      copies of the supplemented Prospectus and/or amended Registration Statement
      contemplated by Section 3(j), or until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus
      may be
      resumed, and, in either case, has received copies of any additional or
      supplemental filings that are incorporated or deemed to be incorporated by
      reference in such Prospectus or Registration Statement.  The Company
      may provide appropriate stop orders to enforce the provisions of this
      paragraph.

    


    7.        
          Miscellaneous.

    


    (a)           Remedies.  In
      the event of a breach by the Company or by a Holder of any of their obligations
      under this Agreement, each Holder or the Company, as the case may be, in
      addition to being entitled to exercise all rights granted by law and under
      this
      Agreement, including recovery of damages, will be entitled to specific
      performance of its rights under this Agreement.  The Company and each
      Holder agree that monetary damages would not provide adequate compensation
      for
      any losses incurred by reason of a breach by it of any of the provisions of
      this
      Agreement and hereby further agrees that, in the event of any action for
      specific performance in respect of such breach, it shall waive the defense
      that
      a remedy at law would be adequate.

    


    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

    

    


    (b)           Amendments
      and Waivers.  The provisions of this Agreement, including the
      provisions of this sentence, may not be amended, modified or supplemented,
      and
      waivers or consents to departures from the provisions hereof may not be given,
      unless the same shall be in writing and signed by the Company and the Required
      Holders.

    


    (c)           No
      Inconsistent Agreements.  Neither the Company nor any of its
      subsidiaries has entered, as of the date hereof, nor shall the Company or any
      of
      its subsidiaries, on or after the date of this Agreement, enter into any
      agreement with respect to its securities that is inconsistent with the rights
      granted to the Holders in this Agreement or otherwise conflicts with the
      provisions hereof.  Except as and to the extent specified in the
      applicable schedule to the Purchase Agreement, neither the Company nor any
      Subsidiary has previously entered into any agreement granting any registration
      rights with respect to any of its securities to any Person that have not been
      satisfied in full.

    


    (d)           No
      Piggyback on Registrations.  Neither the Company nor any of its
      security holders (other than the Holders in such capacity pursuant hereto)
      may
      include securities of the Company in the Registration Statement other than
      the
      Registrable Securities, and the Company shall not after the date hereof enter
      into any agreement providing any such right to any of its security holders
      other
      than upon written consent of the Required Holders, unless the rights so granted
      are subject in all respects to the prior rights in full of the Holders set
      forth
      herein and are not otherwise in conflict with the provisions of this
      Agreement.

    


    (e)           Shareholder
      Obligations.  The selling Holders shall furnish to the Company
      such information regarding themselves and the Registrable Securities held by
      them as shall be required to effect the registration of their Registrable
      Securities, and the Company may exclude from the registration statement the
      shares of any Holder that does not do so on a timely basis.

    


    (f)           Piggy-Back
      Registrations.  If at any time during the Effectiveness Period
      there is not an effective Registration Statement covering all of the Registrable
      Securities and the Company shall determine to prepare and file with the SEC
      a
      registration statement relating to an offering for its own account or the
      account of others under the 1933 Act of any of its equity securities, other
      than
      on Form S-4 or Form S-8 (each as promulgated under the 1933 Act) or their then
      equivalents relating to equity securities to be issued solely in connection
      with
      any acquisition of any entity or business or equity securities issuable in
      connection with stock option or other employee benefit plans, then the Company
      shall send to each Holder written notice of such determination and, if within
      fifteen days after receipt of such notice, any such Holder shall so request
      in
      writing, the Company shall include in such registration statement all or any
      part of such Registrable Securities such holder requests to be
      registered.  The selling Holders shall enter into and timely perform
      their obligations under the underwriting agreement, if any, and shall execute
      other customary agreements necessary or appropriate to facilitate the offering,
      including without limitation custody agreements and powers of
      attorney.

    


    
      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

    


    (g)           Notices.  Any
      and all notices or other communications or deliveries required or permitted
      to
      be provided hereunder shall be in writing and shall be deemed given and
      effective on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile telephone number
      specified in this Section 7(g) prior to 18:30 (New York City time) on a
      Trading Day, (b) the next Trading Day after the date of transmission, if such
      notice or communication is delivered via facsimile at the facsimile telephone
      number specified in this Agreement on a day that is not a Trading Day or later
      than 18:30 (New York City time) and earlier than 24:00 (New York City time)
      on
      any Trading Day, (c) the Trading Day following the date of mailing, if sent
      by
      U.S. nationally recognized overnight courier service, or (d) upon actual receipt
      by the party to whom such notice is required to be given.  The address
      for such notices and communications shall be as set forth in the Purchase
      Agreement.

    


    (h)           Successors
      and Assigns.  This Agreement shall inure to the benefit of and be
      binding upon the successors and permitted assigns of each of the parties and
      shall inure to the benefit of each Holder.  The Company may not assign
      its rights or obligations hereunder without the prior written consent of each
      Holder.  The Purchaser may assign its rights and obligations hereunder
      to a transferee or assignee of Registrable Securities in the manner and to
      the
      extent permitted under the Purchase Agreement.

    


    (i)           Assignment
      of Registration Rights.  The rights of each Holder hereunder,
      including the right to have the Company register for resale Registrable
      Securities in accordance with the terms of this Agreement, shall be
      automatically assignable by each Holder to any Affiliate of such Holder or
      any
      other Holder or Affiliate of any other Holder of all or a portion of the
      Preferred Stock or the Registrable Securities if:  (i) the Holder
      agrees in writing with the transferee or assignee to assign such assignment,
      (ii) the Company is, within a reasonable time after such transfer or assignment,
      furnished with written notice of (a) the name and address of such transferee
      or
      assignee, and (b) the securities with respect to which such registration rights
      are being transferred or assigned, (iii) following such transfer or assignment
      the further disposition of such securities by the transferee or assignees is
      restricted under the 1933 Act and applicable state securities laws, (iv) at
      or
      before the time the Company receives the written notice contemplated by clause
      (ii) of this Section 7(i), the transferee or assignee agrees in writing
      with the Company to be bound by all of the provisions of this Agreement, (v)
      such transfer shall have been made in accordance with the applicable
      requirements of the Purchase Agreement, and (vi) at least 80,000 shares of
      Registrable Securities (appropriately adjusted for any stock dividend, split
      or
      combination of the Common Stock) are being transferred to such transferee or
      assignee in connection with such assignment of rights.  In addition,
      each Holder shall have the right to assign its rights hereunder to any other
      Person who is a transferee of Registrable Securities with the prior written
      consent of the Company, which consent shall not be unreasonably
      withheld.  The rights to assignment shall apply to the Holders (and to
      subsequent) successors and assigns.

    


    (j)           Counterparts.  This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement.  In the event that any
      signature is delivered by facsimile transmission, such signature shall create
      a
      valid binding obligation of the party executing (or on whose behalf such
      signature is executed) the same with the same force and effect as if such
      facsimile signature were the original thereof.

    


    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

    


    (k)           GOVERNING
      LAW; VENUE; WAIVER OF JURY TRIAL.  ALL QUESTIONS CONCERNING THE
      CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL
      BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
      REPUBLIC OF KOREA WITHOUT REGARD TO CONFLICTS OF LAWS
      PRINCIPLES.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
      THE EXCLUSIVE JURISDICTION OF THE SEOUL CENTRAL DISTRICT COURT OF THE
      REPUBLIC OF KOREA, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
      HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
      DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY
      SUIT,
      ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
      JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS
      IMPROPER.  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF
      PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
      PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
      OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS
      IN
      EFFECT FOR NOTICES TO IT UNDER THIS WARRANT AND AGREES THAT SUCH SERVICE SHALL
      CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING
      CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS
      IN ANY MANNER PERMITTED BY LAW.  THE COMPANY AND THE PURCHASER HEREBY
      WAIVE ALL RIGHTS TO A TRIAL BY JURY.

    


    (l)           Cumulative
      Remedies.  The remedies provided herein are cumulative and not
      exclusive of any remedies provided by law.

    


    (m)           Severability.  If
      any term, provision, covenant or restriction of this Agreement is held by a
      court of competent jurisdiction to be invalid, illegal, void or unenforceable,
      the remainder of the terms, provisions, covenants and restrictions set forth
      herein shall remain in full force and effect and shall in no way be affected,
      impaired or invalidated, and the parties hereto shall use their reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction.  It is hereby stipulated and declared to be
      the intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    


    (n)           Headings.  The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

    


    [Signature
      page follows]

    


    
      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

    

    


    IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of the date first written above.

    


    
      	 	
              REXAHN
                PHARMACEUTICALS, INC.  

            
	 	   
	 	   
	 	   
	 	
              By:

            	 	 
	 	
              Name:

            	 	 
	 	
              Title:

            	 	 
	 	   
	 	   
	 	
              KT&G
                CORPORATION  

            
	 	   
	 	   
	 	   
	 	
              By:

            	 	 
	 	
              Name:

            	 	 
	 	
              Title:

            	 	 


    

    


    


    


    [Signature
      page to Registration Rights Agreement]

    


    
      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

    

    


    Annex
      A

    


    Plan
      of Distribution

    


    The
      selling stockholders may, from time to time, sell any or all of their shares
      of
      common stock on any stock exchange, market or trading facility on which the
      shares are traded or in private transactions.  These sales may be at
      fixed or negotiated prices.  The selling stockholders may use any one
      or more of the following methods when selling shares:

    


    
      	
               

            	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits Purchaser;

            


    

    


    
      	
               

            	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            


    

    


    
      	
               

            	
              ·

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            


    

    


    
      	
               

            	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            


    

    


    
      	
               

            	
              ·

            	
              privately
                negotiated transactions;

            


    

    


    
      	
               

            	
              ·

            	
              short
                sales;

            


    

    


    
      	
               

            	
              ·

            	
              broker-dealers
                may agree with the selling stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            


    

    


    
      	
               

            	
              ·

            	
              a
                combination of any such methods of sale;
                and

            


    

    


    
      	
               

            	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            


    

    


    The
      selling stockholders may also sell shares under Rule 144 under the 1933 Act,
      if
      available, rather than under this prospectus.

    


    The
      selling stockholders may also engage in short sales against the box, puts and
      calls and other transactions in our securities or derivatives of our securities
      and may sell or deliver shares in connection with these trades.

    


    Broker-dealers
      engaged by the selling stockholders may arrange for other brokers-dealers to
      participate in sales.  Broker-dealers may receive commissions or
      discounts from the selling stockholders (or, if any broker-dealer acts as agent
      for the purchaser of shares, from the purchaser) in amounts to be
      negotiated.  The selling stockholders do not expect these commissions
      and discounts to exceed what is customary in the types of transactions
      involved.  Any profits on the resale of shares of common stock by a
      broker-dealer acting as principal might be deemed to be underwriting discounts
      or commissions under the 1933 Act.  Discounts, concessions,
      commissions and similar selling expenses, if any, attributable to the sale
      of
      shares will be borne by a selling stockholder.  The selling
      stockholders may agree to indemnify any agent, dealer or broker-dealer that
      participates in transactions involving sales of the shares if liabilities are
      imposed on that person under the 1933 Act.

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    The
      selling stockholders may from time to time pledge or grant a security interest
      in some or all of the shares of common stock owned by them and, if they default
      in the performance of their secured obligations, the pledgees or secured parties
      may offer and sell the shares of common stock from time to time under this
      prospectus after we have filed an amendment to this prospectus under Rule
      424(b)(3) or other applicable provision of the 1933 Act amending the list of
      selling stockholders to include the pledgee, transferee or other successors
      in
      interest as selling stockholders under this prospectus.

    


    The
      selling stockholders also may transfer the shares of common stock in other
      circumstances, in which case the transferees, pledgees or other successors
      in
      interest will be the selling beneficial owners for purposes of this prospectus
      and may sell the shares of common stock from time to time under this prospectus
      after we have filed an amendment to this prospectus under Rule 424(b)(3) or
      other applicable provision of the 1933 Act amending the list of selling
      stockholders to include the pledgee, transferee or other successors in interest
      as selling stockholders under this prospectus.

    


    The
      selling stockholders and any broker-dealers or agents that are involved in
      selling the shares of common stock may be deemed to be “underwriters” within the
      meaning of the 1933 Act in connection with such sales.  In such event,
      any commissions received by such broker-dealers or agents and any profit on
      the
      resale of the shares of common stock purchased by them may be deemed to be
      underwriting commissions or discounts under the 1933 Act.

    


    We
      are
      required to pay all fees and expenses incident to the registration of the shares
      of common stock, including the fees and disbursements of counsel to the selling
      stockholders.  We have agreed to indemnify the selling stockholders
      against certain losses, claims, damages and liabilities, including liabilities
      under the 1933 Act.

    


    The
      selling stockholders have advised us that they have not entered into any
      agreements, understandings or arrangements with any underwriters or
      broker-dealers regarding the sale of their shares of common stock, nor is there
      an underwriter or coordinating broker acting in connection with a proposed
      sale
      of shares of common stock by any selling stockholder.  If we are
      notified by any selling stockholder that any material arrangement has been
      entered into with a broker-dealer for the sale of shares of common stock, if
      required, we will file a supplement to this prospectus.  We have
      advised each Selling Stockholder that it may not use shares registered on this
      Registration Statement to cover short sales made prior to the date on which
      this
      Registration Statement shall have been declared effective by the
      Commission.  If the selling stockholders use this prospectus for any
      sale of the shares of common stock, they will be subject to the prospectus
      delivery requirements of the 1933 Act.

    


    The
      anti-manipulation rules of Regulation M under the 1934 Act may apply to sales
      of
      our common stock and activities of the selling stockholders.