ex10_4.htm


    
      

    

    Exhibit
      10.4

     

    
      Execution
        Copy

      


      SECURITIES
        PURCHASE AGREEMENT

      


      This
        SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into
        as of November 20, 2007, by and between Rexahn Pharmaceuticals, Inc., a Delaware
        corporation (the “Company”), and Rexgene Biotech Co., Ltd., a Korean
        corporation (the "Purchaser").

      


      Recitals

      


      The
        Company and the Purchaser are executing and delivering this Agreement in
        reliance upon the exemption from securities registration afforded by Section
        4(2) under the Securities Act of 1933, as amended (the “1933 Act”), and
        the provisions of Regulation D (“Regulation D”), as promulgated by the
        U.S. Securities and Exchange Commission (the “SEC”) under the 1933
        Act.

      


      The
        Purchaser wishes to purchase, and the Company wishes to sell and issue to
        the
        Purchaser, upon the terms and subject to the conditions stated in this
        Agreement, (i) 714,286 shares (the “Initial Shares”) of its common stock,
        par value $0.0001 per share (the “Common Stock”), and (ii) a warrant, in
        substantially the form attached hereto as Exhibit A (the
“Warrant”), to acquire up to 142,857 shares of Common Stock (as
        exercised, the “Warrant Shares”) at an exercise price of $1.80 per share,
        for aggregate cash consideration of $1,000,000.40.

      


      Contemporaneous
        with the execution and delivery of this Agreement, the parties hereto are
        executing and delivering a Registration Rights Agreement, in the form attached
        hereto as Exhibit B (the “Registration Rights Agreement”),
        pursuant to which the Company has agreed to provide certain registration
        rights
        under the 1933 Act and the rules and regulations promulgated thereunder,
        and
        applicable state securities laws.

      


      Agreement

      


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

      


      1.       
             DEFINITIONS.  In addition to
        those terms defined above and elsewhere in this Agreement, for the purposes
        of
        this Agreement, the following terms shall have the meanings here set
        forth:

      


      1.1           “1934
        Act” means the Securities Exchange Act of 1934, as amended.

      


      1.2           “Affiliate”
        means, with respect to any Person, any other Person that directly or indirectly
        through one or more intermediaries controls, is controlled by or is under
        common
        control with, such Person, as such terms are used in and construed under
        Rule
        144 under the 1933 Act.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      1.3           “Business
        Day” means any day other than Saturday, Sunday or any other day on which
        commercial banks in the City of New York are authorized or required by law
        to
        remain closed.

      


      1.4           “Closing”
        means the closing of the purchase and sale of the Securities pursuant to
        Section 2.1.

      


      1.5           “Closing
        Date” means the date and time of the Closing.

      


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

      


      1.7           “Eligible
        Market” means any of the New York Stock Exchange, the American Stock
        Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the
        NASDAQ
        Capital Market or the NASD Over-the-Counter Bulletin Board.

      


      1.8           “Lien”
        means any lien, charge, claim, security interest, encumbrance, right of first
        refusal or other restriction.

      


      1.9           “Material
        Adverse Effect” means a material adverse effect on (i) the condition
        (financial or otherwise), business, assets or results of operations of the
        Company,  (ii) the Company’s ability to perform any of its obligations
        under the terms of the Transaction Documents in any material respect or (iii)
        the rights and remedies of the Purchaser under the Transaction
        Documents.

      


      1.10           “Person”
        means an individual, corporation, partnership, limited liability company,
        trust,
        business trust, association, joint stock company, joint venture, pool,
        syndicate, sole proprietorship, unincorporated organization, governmental
        authority or any other form of entity not specifically listed
        herein.

      


      1.11           “Registration
        Statement” means a registration statement meeting the requirements set forth
        in the Registration Rights Agreement and covering the resale of the Initial
        Shares and the Warrant Shares.

      


      1.12           “Securities”
        means the Common Stock, the Warrant and the Warrant Shares issued or issuable
        pursuant to the Transaction Documents.

      


      1.13           “Subsidiary”
        means any Person in which the Company, directly or indirectly, owns capital
        stock or holds an equity or similar interest.

      


      1.14           “Trading
        Day” means (a) any day on which the Common Stock is listed or quoted and
        traded on its primary Trading Market, (b) if the Common Stock is not then
        listed
        or quoted and traded on any Eligible Market, then a day on which trading
        occurs
        on the NASDAQ Global Market (or any successor thereto), or (c) if trading
        ceases
        to occur on the NASDAQ Global Market (or any successor thereto), any Business
        Day.


      
        
          
          

        

        
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      1.15           “Trading
        Market” means the NASD Over-the-Counter Bulletin Board or any other Eligible
        Market, or any other national securities exchange, market or trading or
        quotation facility on which the Common Stock is then listed or
        quoted.

      


      1.16           “Transaction
        Documents” means this Agreement, the Registration Rights Agreement, the
        Warrant and any other agreement entered into, now or in the future, by the
        Company in connection with this Agreement or any of the other Transaction
        Documents.

      


      1.17           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

              
	
                Action

              	
                3.8

              
	
                Additional
                  Shares of Stock

              	
                5.7(b)

              
	
                Adjusted
                  Initial Shares

              	
                5.7(b)

              
	
                Adjusted
                  Purchase Price

              	
                5.7(b)

              
	
                Aggregate
                  Consideration

              	
                5.7(b)

              
	
                Agreement

              	
                Preamble

              
	
                Common
                  Stock

              	
                Recitals

              
	
                Company

              	
                Preamble

              
	
                Diluted
                  Price

              	
                5.8(a)

              
	
                Initial
                  Shares

              	
                Recitals

              
	
                Make-Whole
                  Number

              	
                5.7(b)

              
	
                Purchase
                  Price

              	
                2.1

              
	
                Purchaser

              	
                Preamble

              
	
                Registration
                  Rights Agreement

              	
                Recitals

              
	
                Regulation
                  D

              	
                Recitals

              
	
                SEC

              	
                Recitals

              
	
                Warrant

              	
                Recitals

              
	
                Warrant
                  Shares

              	
                Recitals

              
	
                1933
                  Act

              	
                Preamble

              


      


      
        
          
          

        

        
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      2.        
            PURCHASE AND SALE OF SECURITIES.

      


      2.1           Purchase
        of the Initial Shares and Warrant.  Subject to the terms and
        conditions of this Agreement and on the basis of the representations and
        warranties made herein, at the Closing the Company hereby agrees to sell
        and
        issue to the Purchaser, and the Purchaser hereby agrees to purchase from
        the
        Company, the Initial Shares and the Warrant for the aggregate purchase price
        of
        US$1,000,000.40 (the “Purchase Price”).

      


      2.2           Time
        and Place of Closing.  The Closing shall take place at the offices
        of Chadbourne & Parke LLP, 1200 New Hampshire Avenue, N.W., Washington,
        DC  20036, on the third Business Day following the date on which each
        of the conditions to the obligations of the parties to consummate the
        transactions contemplated hereby have been satisfied.

      


      2.3           Closing
        Deliveries.

      


        
        (a)           At the
        Closing, the Company shall deliver or cause to be delivered to the Purchaser
        the
        following:

      


       (i)           a
        stock certificate, free and clear of all restrictive legends (except as
        expressly provided in Section 6.1(b)), evidencing the Initial Shares,
        registered in the name of the Purchaser;

      


      (ii)           the
        Warrant, issued in the name of the Purchaser, exercisable for up to
        142,857  Warrant Shares;

       

      (iii)          the
        executed Registration Rights Agreement; and

      


      (iv)          any
        other documents reasonably requested by the Purchaser or its counsel in
        connection with the Closing, including, without limitation, certified copies
        of
        the Company’s certificate of incorporation, certificates of good standing and
        customary officers’ and secretary’s certificates.

      


        
        (b)           At the
        Closing, the Purchaser shall deliver or cause to be delivered to the Company
        the
        Purchase Price of US$1,000,000.40 by wire transfer of immediately available
        federal funds to the account of the Company.  Prior to Closing, the
        Company shall notify the Purchaser as to the account number and ABA routing
        number for such account.

      


      2.4             
        Use of Proceeds.  The Company will use the net proceeds of the
        issuance and sale of Initial Shares and the Warrant for its general working
        capital and other corporate purposes.

      


      3.          
          REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The
        Company hereby represents and warrants to the Purchaser as follows:

      


      3.1           Subsidiaries.  The
        Company has no direct or indirect Subsidiaries other than those listed in
        Schedule 3.1.  Except as disclosed in Schedule 3.1, the
        Company owns, directly or indirectly, all of the capital stock or comparable
        equity interests of each Subsidiary free and clear of any Lien, and all the
        issued and outstanding shares of capital stock or comparable equity interests
        of
        each Subsidiary are validly issued and are fully paid, non-assessable and
        free
        of preemptive and similar rights.


      
        
          
          

        

        
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      3.2           Organization
        and Good Standing.  Each of the Company and each Subsidiary is a
        corporation validly existing and in good standing under the laws of the
        jurisdiction of its incorporation or organization (as applicable), with all
        requisite power and authority to carry on its business as presently conducted
        and own and use its properties and assets.  Each of the Company and
        each Subsidiary is authorized to conduct business as a foreign corporation
        and
        is in good standing in each jurisdiction where the conduct of its business
        or
        the ownership of its property requires such qualification, except where the
        failure to be so qualified and in good standing would not, individually or
        in
        the aggregate, reasonably be expected to have or result in a Material Adverse
        Effect.

      


      3.3           Authorization;
        Enforcement.  The Company has the requisite corporate power and
        authority to enter into and to consummate the transactions contemplated by
        each
        of the Transaction Documents and otherwise to carry out its obligations
        hereunder and thereunder.  The execution and delivery of each of the
        Transaction Documents by the Company and the consummation by it of the
        transactions contemplated hereunder and thereunder have been duly authorized
        by
        all necessary action on the part of the Company and no further action is
        required by the Company in connection therewith.  Each Transaction
        Document has been (or upon delivery will have been) duly executed by the
        Company
        and, when delivered in accordance with the terms hereof, will constitute
        the
        valid and binding obligation of the Company enforceable against the Company
        in
        accordance with its terms.

      


      3.4           No
        Conflicts.  The execution, delivery and performance of the
        Transaction Documents by the Company and the consummation by the Company
        of the
        transactions contemplated hereby and thereby do not and will not (a) conflict
        with or violate any provision of the Company’s or any Subsidiary’s certificate
        or articles of incorporation, bylaws or other organizational or charter
        documents, (b) conflict with, or constitute a default (or an event that with
        notice or lapse of time or both would become a default) under, or give to
        others
        any rights of termination, amendment, acceleration or cancellation (with
        or
        without notice, lapse of time or both) of, any agreement, credit facility,
        debt
        or other instrument (evidencing a Company or Subsidiary debt or otherwise)
        or
        other understanding to which the Company or any Subsidiary is a party or
        by
        which any property or asset of the Company or any Subsidiary is bound or
        affected, or (c) result in a violation of any law, rule, regulation, order,
        judgment, injunction, decree or other restriction of any court or governmental
        authority to which the Company or a Subsidiary is subject (assuming the accuracy
        of the Purchaser’s representations and warranties and compliance by the
        Purchaser with its respective covenants as set forth in this Agreement),
        including federal and state securities laws and regulations and the rules
        and
        regulations of any self-regulatory organization to which the Company or its
        securities are subject, or by which any property or asset of the Company
        or a
        Subsidiary is bound or affected; except in the case of each of clauses (b)
        and
        (c), such as would not, individually or in the aggregate, reasonably be expected
        to have or result in a Material Adverse Effect.

      


      3.5           Issuance
        of the Securities.  The Securities have been duly
        authorized.  The Initial Shares and Warrant, when issued and paid for
        in accordance with the terms of this Agreement, and the Warrant Shares issuable
        upon exercise of the Warrant when so issued and paid for in accordance with
        the
        terms of the Warrant, will be validly issued, fully paid and nonassessable,
        and
        free and clear of all Liens and charges and shall not be subject to preemptive
        or similar rights.  The Company has reserved from its duly authorized
        capital stock the maximum number of shares of Common Stock to be issued to
        the
        Purchaser upon exercise of the Securities.  Assuming the continued
        validity of the Purchaser’s representations and warranties contained in
Section 4, the offer, issuance and sale of the Securities to the
        Purchaser pursuant to this Agreement and upon exercise of the Warrant are
        exempt
        from registration requirements of the 1933 Act.


      
        
          
          

        

        
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      3.6           Capitalization.  The
        aggregate number of shares and type of all authorized, issued and outstanding
        capital stock, options and other securities of the Company (whether or not
        presently convertible into or exercisable or exchangeable for shares of capital
        stock of the Company) is set forth in Schedule 3.6.  All
        outstanding shares of capital stock are duly authorized, validly issued,
        fully
        paid and nonassessable and have been issued in compliance with all applicable
        securities laws.  Except as set forth in Schedule 3.6 and
        except for customary adjustments as a result of stock dividends, stock splits,
        combinations of shares, reorganizations, recapitalizations, reclassifications
        or
        other similar events, there are no anti-dilution or price adjustment provisions
        contained in any security issued by the Company (or in any agreement providing
        rights to security holders), and the issuance and sale of the Securities
        will
        not obligate the Company to issue shares of Common Stock or other securities
        to
        any Person (other than the Purchasers) and will not result in a right of
        any
        holder of Company securities to adjust the exercise, conversion, exchange
        or
        reset price under such securities.

      


      3.7           Answer
        to all Inquires.  The Company has answered all inquiries that the
        Purchaser has made of it concerning the Company, its business and financial
        condition, or any other matter relating to the operation of the Company and
        the
        offering and sale of the Initial Shares and Warrant. No written statement
        or
        inducement that is contrary to the information conveyed to the Purchaser
        that if
        untrue would have a material effect on the Company’s business taken as a whole
        has been made by or on behalf of the Company to the Purchaser.

      


      3.8           Absence
        of Litigation.  Except as set forth in Schedule 3.8, there
        is no action, suit, inquiry, notice of violation, proceeding or investigation
        pending or, to the knowledge of the Company, threatened against or affecting
        the
        Company, any Subsidiary, any of the Company’s officers or directors in their
        capacities as such and any of their respective properties before or by any
        court, arbitrator, governmental or administrative agency or regulatory authority
        (federal, state, county, local or foreign) (collectively, an “Action”)
        which (a) adversely affects or challenges the legality, validity or
        enforceability of any of the Transaction Documents or the Securities or (b)
        could, if there were an unfavorable decision, individually or in the aggregate,
        have or result in a Material Adverse Effect.  To the knowledge of the
        Company, no judgment, injunction, writ, award, decree or order has been issued
        by any court or other governmental authority against the Company.

      


      3.9           Labor
        Relations.  No material labor dispute exists or, to the knowledge
        of the Company is imminent, with respect to any of the employees of the
        Company.


      
        
          
          

        

        
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      3.10         Compliance.  Neither
        the Company nor any Subsidiary (i) is in default under or in violation of
        (and
        no event has occurred that has not been waived that, with notice or lapse
        of
        time or both, would result in a default by the Company or any Subsidiary
        under),
        nor has the Company or any Subsidiary received notice of a claim that it
        is in
        default under or that it is in violation of, any indenture, loan or credit
        agreement or any other agreement or instrument to which it is a party or
        by
        which it or any of its properties is bound (whether or not such default or
        violation has been waived), (ii) is in violation of any order of any court,
        arbitrator or governmental body, or (iii) is or has been in violation of
        any
        statute, rule or regulation of any governmental authority, including without
        limitation all foreign, federal, state and local laws relating to taxes,
        environmental protection, occupational health and safety, product quality
        and
        safety and employment and labor matters, except in each case as could not,
        individually or in the aggregate, reasonably be expected to have or result
        in a
        Material Adverse Effect.

      


      3.11         Transactions
        with Affiliates and Employees.  Except as set forth in Schedule
        3.11, none of the officers or directors of the Company and, to the knowledge
        of the Company, none of the employees of the Company is presently a party
        to any
        transaction with the Company or any Subsidiary (other than for services as
        employees, officers and directors), including any contract, agreement or
        other
        arrangement providing for the furnishing of services to or by, providing
        for
        rental of real or personal property to or from, or otherwise requiring payments
        to or from any officer, director or such employee or, to the knowledge of
        the
        Company, any entity in which any officer, director, or any such employee
        has a
        substantial interest or is an officer, director, trustee or
        partner.

      


      3.12         Title
        to Assets.  The Company and its Subsidiaries have valid title to
        or leasehold rights for all real property that is material to the business
        of
        the Company and the Subsidiaries and good and marketable title in all personal
        property owned by them that is material to the business of the Company and
        the
        Subsidiaries, in each case free and clear of all Liens, except for Liens
        disclosed in Schedule 3.12 or as do not, individually or in the
        aggregate, materially interfere with the use made and proposed to be made
        of
        such property by the Company and the Subsidiaries.  Any real property
        and facilities held under lease by the Company and its Subsidiaries are held
        by
        them under valid, subsisting and enforceable leases of which the Company
        and the
        Subsidiaries are in compliance; except as would not, individually or in the
        aggregate, reasonably be expected to have or result in a Material Adverse
        Effect.

      


      3.13         Registration
        Rights.  Except as described in Schedule 3.13, the Company
        has not granted or agreed to grant to any Person any rights (including
“piggy-back” registration rights) to have any securities of the Company
        registered with the SEC or any other governmental authority that have not
        been
        satisfied or waived.

      


      3.14         Form
        SB-2 Eligibility.  The Company is eligible to register the resale
        of its Common Stock for resale by the Purchasers under Form SB-2 promulgated
        under the 1933 Act.

      


      3.15         Disclosure.  All
        disclosure provided to the Purchaser regarding the Company, its business
        and the
        transactions contemplated hereby, including the Schedules to this Agreement,
        furnished by or on behalf of the Company are true and correct in all material
        respects and do not contain any untrue statement of a material fact to the
        extent of the Company’s knowledge.  Except for the transactions
        contemplated by this Agreement, no event or circumstance has occurred or
        information exists with respect to the Company or any of its Subsidiaries
        or its
        or their business, properties, prospects, operations or financial conditions,
        which, under applicable law, rule or regulation, requires public disclosure
        or
        announcement by the Company but which has not been so publicly announced
        or
        disclosed.


      
        
          
          

        

        
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      4.          
          REPRESENTATIONS AND WARRANTIES OF THE
        PURCHASER.  The Purchaser hereby represents and warrants to the
        Company as follows:

      


      4.1         
           Organization; Authority.  The Purchaser is an
        entity duly organized, validly existing and in good standing under the laws
        of
        the Republic of Korea.  The Purchaser has the requisite corporate
        power and authority to enter into and to consummate the transactions
        contemplated by the Transaction Documents to which it is a party and otherwise
        to carry out its obligations hereunder and thereunder.  The execution,
        delivery and performance by the Purchaser of the Transaction Documents to
        which
        it is a party have been duly authorized by all necessary action on the part
        of
        the Purchaser.  Each Transaction Document to which the Purchaser is a
        party has been (or upon delivery will have been) duly executed by the Purchaser
        and, when delivered by the Purchaser in accordance with terms hereof, will
        constitute the valid and legally binding obligations of the Purchaser,
        enforceable against it in accordance with its terms.

      


      4.2      
              The Purchaser’s Status.  At
        the time the Purchaser was offered the Securities, it was, and at the date
        hereof it is, an “accredited investor” as defined in Rule 501(a) under the 1933
        Act.  The Purchaser is not a broker-dealer, or required to be
        registered as a broker-dealer, under Section 15 of the 1934 Act.

      


      4.3         
           Experience of the Purchaser.  The Purchaser,
        either alone or together with its representatives, has such knowledge,
        sophistication and experience in business and financial matters so as to
        be
        capable of evaluating the merits and risks of the prospective investment
        in the
        Securities, and has so evaluated the merits and risks of such investment,
        and
        the Purchaser has had available such information with respect to the Company
        as
        the Purchaser deems necessary or appropriate to make such evaluation and
        an
        informed investment decision with respect thereto. The Purchaser is able
        to bear
        the economic risk of an investment in the Securities and, at the present
        time,
        is able to afford a complete loss of such investment.

      


      4.4     
               General
        Solicitation.  The Purchaser is not purchasing the Securities as a
        result of any advertisement, article, notice or other communication regarding
        the Securities published in any newspaper, magazine or similar media or
        broadcast over television or radio or presented at any seminar or any other
        general solicitation or general advertisement.

      


      4.5     
               No Public Sale or Distribution;
        Investment Intent.  The Purchaser is acquiring the Securities in
        the ordinary course of business for its own account for investment purposes
        only
        and not with a view towards, or for resale in connection with, the public
        sale
        or distribution thereof, and the Purchaser does not have a present intention
        nor
        a present arrangement to effect any distribution of the Securities to or
        through
        any person or entity; provided, however, that by making the
        representations herein, the Purchaser does not agree to hold any of the
        Securities for any minimum or other specific term and reserves the right
        to
        dispose of the Securities at any time in accordance with or pursuant to an
        effective registration statement or an exemption under the 1933
        Act.


      
        
          
          

        

        
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      4.6         
           Information Regarding the Company.  The
        Purchaser has been furnished with or has had access to documents and records
        of
        the Company so as to allow the Purchaser to understand and evaluate such
        records
        and documents fully.  In addition, the Purchaser has received from the
        Company such other information concerning its operations, financial condition
        and other matters as the Purchaser has requested and considered all factors
        the
        Purchaser deems material in deciding on the advisability of investing in
        the
        Securities. The Purchaser acknowledges that any business plans prepared by
        the
        Company have been, and continue to be, subject to change and that any
        projections included in such business plans or otherwise are necessarily
        speculative in nature, and that some or all of the assumptions underlying
        the
        projections will not materialize or will vary significantly from actual
        results.

      


      4.7        
            No Distribution.  The Purchaser has not
        distributed the records and documents the Company provided to the Purchaser
        under this Agreement to any other Person.

      


      4.8      
              Information Regarding the
        Purchaser.  All information which the Purchaser has provided to
        the Company concerning itself, its financial position, and the knowledge
        of
        financial and business matters of the person making the investment decision
        on
        behalf of the  Purchaser, including all information contained herein,
        is true and complete as of the date of this Agreement and will be true and
        complete as of the Closing Date, and if there should be any adverse change
        in
        such information prior to the Closing, the Purchaser will immediately provide
        the Company, in writing, with accurate and complete information concerning
        any
        such change. The representations and warranties contained herein and all
        other
        information that the Purchaser has provided to the Company are true and accurate
        as of their date and shall be true and accurate as of the date of the
        Purchaser’s admission to the Company as a stockholder.  If in any
        respect such representations, warranties or information shall not be true
        and
        accurate at any time prior to the Purchaser’s admission as a stockholder, the
        Purchaser agrees to give prompt written notice of such fact to the Company,
        specifying which representations, warranties or information are not true
        and
        accurate and the reasons therefore.

      


      5.        
            COVENANTS AND AGREEMENTS.

      


      5.1           
         Transfer Restrictions.

      


       
        (a)           The
        Purchaser covenants that the Securities may only be disposed of pursuant
        to an
        effective registration statement under the 1933 Act or pursuant to an available
        exemption from the registration requirements of the 1933 Act, and in compliance
        with any applicable state securities laws.  In connection with any
        transfer of Securities other than pursuant to an effective registration
        statement or to the Company or pursuant to Rule 144(k) under the 1933 Act,
        the
        Company may require the transferor to provide to the Company an opinion of
        counsel selected by the transferor and reasonably acceptable to the Company,
        the
        form and substance of which opinion shall be reasonably satisfactory to the
        Company, to the effect that such transfer does not require registration under
        the 1933 Act.  Notwithstanding the foregoing, the Company hereby
        consents to and agrees to register on the books of the Company without any
        such
        legal opinion, any transfer of Securities by the Purchaser to an Affiliate
        of
        the Purchaser, provided that the transferee certifies to the Company
        that it is an “accredited investor” as defined in Rule 501(a) promulgated under
        the 1933 Act.


      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

       
        (b)           The
        Purchaser agrees to the imprinting, except as otherwise permitted by Section
        5.1(c), of a legend in substantially the following form on any certificate
        evidencing Securities:

      


      
        	 	
                THESE
                  SECURITIES [AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF] HAVE
                  NOT
                  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
                  “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS IN RELIANCE UPON AN
                  EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, AND, ACCORDINGLY,
                  MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
                  UNLESS
                  REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE
                  SECURITIES
                  LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
                  NOT
                  SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
                  AND IN
                  COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY
                  LAWS.  THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL REASONABLY
                  SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY PROPOSED OFFER,
                  SALE,
                  TRANSFER OR OTHER DISPOSITION IS IN COMPLIANCE WITH THE SECURITIES
                  ACT AND
                  ANY APPLICABLE STATE SECURITIES LAWS.

              	 


      

      


       
        (c)           Certificates
        evidencing Securities shall not be required to contain the legend set forth
        in
Section 5.1(b) or any other legend if such Securities are eligible for
        sale under Rule 144(k) under the 1933 Act or if such legend is not required
        under applicable requirements of the 1933 Act (including judicial
        interpretations and pronouncements issued by the Staff of the
        SEC).  Following such time as a legend is no longer required for
        certain Securities, the Company will, no later than ten Trading Days following
        the delivery by the Purchaser to the Company of a legended certificate
        representing such Securities, deliver or cause to be delivered to the Purchaser
        a certificate representing such Securities that is free from all restrictive
        and
        other legends.

      


      5.2         
           Reservation and Listing of Securities.

      


       
        (a)           The Company
        shall maintain a reserve from its duly authorized shares of Common Stock
        for
        issuance pursuant to the Transaction Documents in such amount as may be required
        to fulfill its obligations in full under the Transaction Documents.

      


       
        (b)           The Company
        shall (i) in the time and manner required by each Trading Market, prepare
        and
        file with such Trading Market an additional shares listing application covering
        all of the shares of Common Stock issued or issuable under the Transaction
        Documents, (ii) take all steps necessary to cause such shares of Common Stock
        to
        be approved for listing on each Trading Market as soon as possible thereafter,
        (iii) provide to the Purchasers evidence of such listing, and (iv) maintain
        the
        listing of such Common Stock on each such Trading Market.


      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      5.3          
          Reports and Filing.  Upon execution of this
        Agreement, the Company shall fully cooperate with the Purchaser in preparing,
        drafting and filing the reports the Purchaser must file with the relevant
        government authorities, agencies, offices and other institutions in connection
        with the acquisition of foreign securities by the Purchaser. The Purchaser
        shall
        fully cooperate with the Company in preparing, drafting and filing any reports
        and documents pursuant to the relevant securities laws and
        regulations.

      


      5.4         
           General Indemnity.  The Company agrees to
        indemnify and hold harmless the Purchaser and its directors, officers,
        affiliates, agents, successors and assigns from an against any and all losses,
        liabilities, deficiencies, costs, damages and expenses (including, without
        limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
        the Purchaser as a result of any inaccuracy in or breach of the representations,
        warranties or covenants made by the Company herein.  The Purchaser
        agrees to indemnify and hold harmless the Company and its directors, officers,
        affiliates, agents, successors and assigns from and against any and all losses,
        liabilities, deficiencies, costs, damages and expenses (including, without
        limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
        the Company as a result of any inaccuracy in or breach of the representations,
        warranties or covenants made by such the Purchaser herein.

      


      5.5       
             Compliance with Laws.  So long as
        the Purchaser beneficially owns any Securities, the Company will use reasonable
        efforts to comply with all applicable laws, rules, regulations, orders and
        decrees of all governmental authorities, except to the extent non-compliance
        (in
        one instance or in the aggregate) would not have a Material Adverse
        Effect.

      


      5.6        
            Disbursement of Funds.  At the Closing,
        the Purchaser shall transfer the Purchase Price to a separate account of
        the
        Company in the manner specified in Section 2.3(b).

      


      5.7       
             Antidilution.

      


       
        (a)           If, at any
        time prior to the second anniversary of the Closing Date, the Company issues
        Additional Shares of Stock at an effective net price to the Company (the
        “Diluted Price”) that is less than the Adjusted Purchase Price, then
        within ten Business Days of such issuance, the Company shall issue to the
        Purchaser an additional number of shares of Common Stock equal to the Make-Whole
        Number.  No shares shall be issued pursuant to this Section 5.8
        upon the issuance by the Company of warrants or options to purchase Common
        Stock
        or preferred stock, and any adjustment in connection with such options or
        warrants shall be made at the time such options or warrants are exercised
        and
        the Company issues Common Stock or preferred stock, as applicable, to the
        holder
        thereof (provided that such exercise occurs prior to the second
        anniversary of the Closing Date).

      


       
        (b)           For
        purposes of this Section 5.7, the following defined terms shall have the
        following meanings:


      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

       “Additional
        Shares of Stock” shall mean all shares of Common Stock and/or preferred
        stock issued by the Company, other than: (1) shares of Common Stock issued
        upon
        conversion of any shares of preferred stock of the Company; (2) shares of
        Common
        Stock and/or preferred stock and/or warrants and/or options (and the Common
        Stock or preferred stock issued upon the exercise of such warrants and/or
        options) issued before or after the Closing Date to directors, officers,
        employees, consultants and other advisors of the Company and which are approved
        by at least a majority of the Board of Directors of the Company; and (3)
        shares
        of Common Stock or preferred stock or other rights issued in connection with
        any
        stock dividends, combinations, splits, recapitalizations and the
        like.

      


      “Adjusted
        Initial Shares” means 714,286 shares of Common Stock, as adjusted by the
        Company for any stock dividend, combination, split, recapitalization and
        the
        like with respect to the Initial Shares occurring after the Closing
        Date.

      


      “Adjusted
        Purchase Price” means $1.40 per share of Common Stock,  as
        adjusted by the Company for any stock dividend, combination, split,
        recapitalization and the like with respect to the Initial Shares occurring
        after
        the Closing Date.

      


      “Aggregate
        Consideration” shall mean: (1) to the extent it consists of cash, the net
        amount of cash received by the Company after deduction of any underwriting
        or
        similar commissions, compensation or concessions paid or allowed by the Company
        in connection with such issue or sale; (2) to the extent it consists of property
        other than cash, the fair value of such property as determined by the Board
        of
        Directors of the Company; and (3) if shares of Common Stock or preferred
        stock
        are issued or sold together with other stock or securities or other assets
        of
        the Company for a consideration that covers both, the portion of the
        consideration so received that may be determined by the Board of Directors
        of
        the Company to be allocable to such shares of Common Stock or preferred
        stock.

      


      “Make-Whole
        Number” means (1) the quotient of $1,000,000.40 divided by the Diluted
        Purchase Price minus (2) the Adjusted Initial Shares.

      


      5.8         
           AMEX Listing.  Following the Closing, the
        Company shall take commercially reasonable efforts to cause the Common Stock
        to
        be listed for trading on the American Stock Exchange within three years from
        the
        Closing Date.

      


      6.         
           CONDITIONS.

      


      6.1           
         Conditions Precedent to the Obligations of the
        Purchaser.  The obligation of the Purchaser to acquire Securities
        at the Closing is subject to the satisfaction or waiver by the Purchaser,
        at or
        before the Closing, of each of the following conditions:

      


       
        (a)           Representations
        and Warranties.  The representations and warranties of the Company
        contained herein shall be true and correct in all material respects as of
        the
        date when made and as of the Closing as though made on and as of such
        date;


      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

       
        (b)           Performance.  The
        Company shall have performed, satisfied and complied in all material respects
        with all covenants, agreements and conditions required by the Transaction
        Documents to be performed, satisfied or complied with by it at or prior to
        the
        Closing;

      


       
        (c)           No
        Injunction.  No statute, rule, regulation, executive order,
        decree, ruling or injunction shall have been enacted, entered, promulgated
        or
        endorsed by any court or governmental authority of competent jurisdiction
        that
        prohibits the consummation of any of the transactions contemplated by the
        Transaction Documents;

      


       
        (d)           Material
        Adverse Changes.  Since the date of execution of this Agreement,
        no event or series of events shall have occurred that reasonably would
        reasonably be expected to have or result in a Material Adverse
        Effect;

      


       
        (e)           KT&G
        Closing.  The Company shall have consummated the sale of its
        securities to KT&G Corporation, a Korean corporation, under that certain
        Securities Purchase Agreement between the Company and KT&G Corporation of
        even date herewith; provided, however, that this condition shall be
        deemed to be satisfied if such closing occurs contemporaneously with the
        Closing
        under this Agreement; and

      


       
        (f)           Stockholder
        Approval.  The issuance of the Initial Shares and the Warrant
        shall have been approved by the holders of a majority of the shares of the
        outstanding Common Stock in accordance with all applicable requirements of
        the
        Delaware General Corporation Law and the 1934 Act.

      


      6.2      
              Conditions Precedent to the Obligations
        of the Company.  The obligation of the Company to sell Securities
        at the Closing is subject to the satisfaction or waiver by the Company, at
        or
        before the Closing, of each of the following conditions:

      


       
        (a)           Representations
        and Warranties.  The representations and warranties of the
        Purchaser contained herein shall be true and correct in all material respects
        as
        of the date when made and as of the Closing Date as though made on and as
        of
        such date;

      


       
        (b)           Performance.  The
        Purchaser shall have performed, satisfied and complied in all material respects
        with all covenants, agreements and conditions required by the Transaction
        Documents to be performed, satisfied or complied with by the Purchaser at
        or
        prior to the Closing;

      


       
        (c)           No
        Injunction.  No statute, rule, regulation, executive order,
        decree, ruling or injunction shall have been enacted, entered, promulgated
        or
        endorsed by any court or governmental authority of competent jurisdiction
        that
        prohibits the consummation of any of the transactions contemplated by the
        Transaction Documents; and

      


       
        (d)           No
        Material Adverse Effect.  Since the date of execution of this
        Agreement, no event or series of events shall have occurred that reasonably
        would reasonably be expected to have or result in a Material Adverse
        Effect.


      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

       
        (e)           Stockholder
        Approval.  The issuance of the Initial Shares and the Warrant
        shall have been approved by the holders of a majority of the shares of the
        outstanding Common Stock in accordance with all applicable requirements of
        the
        Delaware General Corporation Law and the 1934 Act.

      


      7.      
              MISCELLANEOUS.

      


      7.1         
           Entire Agreement.  The Transaction Documents,
        together with the Exhibits and Schedules thereto, contain the entire
        understanding of the parties with respect to the subject matter hereof and
        supersede all prior agreements and understandings, oral or written, with
        respect
        to such matters, which the parties acknowledge have been merged into such
        documents, exhibits and schedules.

      


      7.2       
             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 or e-mail at the facsimile number or e-mail address
        specified in this Section 7.2 prior to 18:30 (New York City time) on a
        Trading Day, (b) the Trading Day after the date of transmission, if such
        notice
        or communication is delivered via facsimile at the facsimile number specified
        in
        this Agreement later than 18:30 (New York City time) on any date and earlier
        than 24:00 (New York City time) on such date, (c) the Trading Day following
        the
        date of mailing, if sent by 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
        follows:

      


      
        	 	
                If
                  to the Company:

              	
                Rexahn
                  Pharmaceuticals, Inc.

              
	 	 	
                9620
                  Medical Center Drive

              
	 	 	
                Rockville,
                  MD 20850

              
	 	 	
                Attn:         Tae
                  Heum Jeong

              
	 	 	
                Fax
                  No.:    (240) 453-5310

              
	 	 	
                E-Mail:      ted@rexahn.com

              
	 	 	 
	 	
                With
                  a copy to:

              	
                Chadbourne
                  & Parke LLP

              
	 	 	
                1200
                  New Hampshire Avenue, N.W.

              
	 	 	
                Washington,
                  D.C.  20036

              
	 	 	
                Attn:         Hwan
                  Kim

              
	 	 	
                Fax
                  No.:    (202) 974-6790

              
	 	 	
                E-Mail:      hkim@chadbourne.com

              
	 	 	 
	 	
                If
                  to the Purchasers

              	
                Rexgene
                  Biotech Co., Ltd.

              
	 	 	
                1330-13
                  Seocho-Dong

              
	 	 	
                Seocho-Gu,
                  Seoul, Korea

              
	 	 	
                Fax
                  No.:    82-2-587-0021

              
	 	 	
                Email:        shkwon@rexgenebio.co.kr

              
	 	 	
                Attn:         Suk
                  Hyung Kwon, CEO

              


      


      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      


      or
        such
        other address as may be designated in writing hereafter, in the same manner,
        by
        such Person.

      


      7.3        
            Amendments; Waivers.  No provision of
        this Agreement may be waived or amended except in a written instrument signed
        by
        the Company.  No waiver of any default with respect to any provision,
        condition or requirement of this Agreement shall be deemed to be a continuing
        waiver in the future or a waiver of any subsequent default or a waiver of
        any
        other provision, condition or requirement hereof, nor shall any delay or
        omission of either party to exercise any right hereunder in any manner impair
        the exercise of any such right.

      


      7.4          
          Construction.  The headings herein are for
        convenience only, do not constitute a part of this Agreement and shall not
        be
        deemed to limit or affect any of the provisions hereof.  The language
        used in this Agreement will be deemed to be the language chosen by the parties
        to express their mutual intent, and no rules of strict construction will
        be
        applied against any party.

      


      7.5       
             Successors and Assigns.  Except
        as otherwise expressly provided herein, the provisions hereof shall be binding
        upon and inure to the benefit of the parties and their successors and permitted
        assigns.

      


      7.6      
              No Third-Party
        Beneficiaries.  This Agreement is intended for the benefit of the
        parties hereto and their respective successors and permitted assigns and
        is not
        for the benefit of, nor may any provision hereof be enforced by, any other
        Person, except that each Indemnitee is an intended third-party beneficiary
        of
Section 6.4.

      


      7.7          
          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.


      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      


      7.8         
           Survival.  The representations, warranties,
        agreements and covenants contained herein shall survive the Closing and the
        delivery and/or exercise of the Securities for a period of one year;
provided, however, that if the Purchaser sells or transfers 50% or more
        the Initial Shares to any third party, such representations, warranties and
        covenants made by the parties under this Agreement immediately shall cease
        to be
        effective.

      


      7.9          
          Execution.  This Agreement may be executed in two
        or more counterparts, all of which when taken together shall be considered
        one
        and the same agreement and shall become effective when counterparts have
        been
        signed by each party and delivered to the other party, it being understood
        that
        both parties need not sign the same counterpart.  In the event that
        any signature is delivered by facsimile transmission, such signature shall
        create a valid and binding obligation of the party executing (or on whose
        behalf
        such signature is executed) with the same force and effect as if such facsimile
        signature page were an original thereof.

      


      7.10            Severability.  If
        any provision of this Agreement is held to be invalid or unenforceable in
        any
        respect, the validity and enforceability of the remaining terms and provisions
        of this Agreement shall not in any way be affected or impaired thereby and
        the
        parties will attempt to agree upon a valid and enforceable provision that
        is a
        reasonable substitute therefor, and upon so agreeing, shall incorporate such
        substitute provision in this Agreement.

      


      7.11        
           Replacement of Securities.  If any
        certificate or instrument evidencing any Securities is mutilated, lost, stolen
        or destroyed, the Company shall issue or cause to be issued in exchange and
        substitution for and upon cancellation thereof, or in lieu of and substitution
        therefor, a new certificate or instrument, but only upon receipt of evidence
        reasonably satisfactory to the Company of such loss, theft or destruction
        and
        customary and reasonable indemnity, if requested.  The applicants for
        a new certificate or instrument under such circumstances shall also pay any
        reasonable third-party costs associated with the issuance of such replacement
        Securities.

      


      7.12         
          Remedies.  In addition to being entitled to
        exercise all rights provided herein or granted by law, including recovery
        of
        damages, the Purchaser and the Company will be entitled to specific performance
        under the Transaction Documents.  The parties agree that monetary
        damages may not be adequate compensation for any loss incurred by reason
        of any
        breach of obligations described in the foregoing sentence and hereby agrees
        to
        waive in any action for specific performance of any such obligation the defense
        that a remedy at law would be adequate.

      


      7.13    
               Adjustments in Share Numbers and
        Prices.  In the event of any stock split, subdivision, dividend or
        distribution payable in shares of Common Stock (or other securities or rights
        convertible into, or entitling the holder thereof to receive directly or
        indirectly shares of Common Stock), combination or other similar
        recapitalization or event occurring after the date hereof, each reference
        in any
        Transaction Document to a number of shares or a price per share shall be
        amended
        to appropriately account for such event.


      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      


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

      


      
        	 	
                The
                  Company 

              
	 	  
	 	
                REXAHN
                  PHARMACEUTICALS, INC. 

              
	 	  
	 	  
	 	
                By:

              	
                /s/
                  Chang H. Ahn

              
	 	
                Name:  
                  

              	
                Chang
                  H. Ahn

              
	 	
                Title:

              	
                CEO

              
	 	  
	 	  
	 	
                The
                  Purchaser 

              
	 	  
	 	
                REXGENE
                  BIOTECH CO., LTD. 

              
	 	  
	 	  
	 	
                By:

              	
                /s/  S.H.
                  Kwon

              
	 	
                Name:

              	
                Suk
                  Hyung Kwon

              
	 	
                Title:

              	
                President

              


      

      


      [Signature
        page to Securities Purchase Agreement]

       

      17