EXHIBIT 10.1
Published on November 21, 2007
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of November 19, 2007, by and between Rexahn Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), and KT&G Corporation, 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) 2,142,858 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 428,572 shares of Common Stock (as
exercised, the “Warrant Shares”) at an exercise price of $1.80 per share,
for aggregate cash consideration of $3,000,001.20.
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 and shall be on such date amd
time as is mutually agreed upon but no later than December 31, 2007 by the
Company and the Purchaser.
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:
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Term
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Section
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Action
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3.8
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Additional
Shares of Stock
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5.7(b)
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Adjusted
Initial Shares
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5.7(b)
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Adjusted
Purchase Price
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5.7(b)
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Aggregate
Consideration
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5.7(b)
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Agreement
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Preamble
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Common
Stock
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Recitals
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Company
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Preamble
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Diluted
Price
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5.8(a)
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Initial
Shares
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Recitals
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Make-Whole
Number
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5.7(b)
|
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Purchase
Price
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2.1
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Purchaser
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Preamble
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Registration
Rights Agreement
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Recitals
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Regulation
D
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Recitals
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SEC
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Recitals
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Warrant
|
Recitals
|
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Warrant
Shares
|
Recitals
|
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1933
Act
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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$3,000,001.20 (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 428,572 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$3,000,001.20 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.
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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.
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.
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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.
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.
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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.
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.
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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.
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.
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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.
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.
9
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.
(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:
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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.
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(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.
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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.
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).
11
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:
“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 2,142,858 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.
12
“Make-Whole
Number” means (1) the quotient of $3,000,001.20 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;
(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; and
(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) Third
Party Financing Commitments. The Company shall have received
binding commitments from third parties to purchase an aggregate of $5,000,000
of
its Common Stock and warrants on terms no less favorable than those applicable
to the Purchaser hereunder.
(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;
13
(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.
(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
|
14
|
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
|
KT&G
Corporation
|
|
|
New
Business Development Bureau
|
||
|
17th
Floor, Kosmo Tower, 1002
|
||
|
Daechi-dong,
Gangnam-gu
|
||
|
Seoul,
Korea 135-280
|
||
|
Attn: Hyo-Jin
Oh
|
||
|
Fax
No.: 82-2-3404-4670
|
||
|
Email:
kail05@ktng.com
|
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.
16
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.
[Signature
page follows]
17
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
|
||
|
KT&G
CORPORATION
|
||
|
By:
|
/s/ Yong-Tak,
Kang. Ph.D
|
|
|
Name:
|
Yong-Tak,
Kang. Ph.D
|
|
|
Title:
|
Managing
Director
|
|
|
Chief
of Growth Business Headquarter
|
||
[Signature
page to Securities Purchase Agreement]