PRER14C: Preliminary revised information statements
Published on December 4, 2007
UNITED
STATES
SECURITIES
AND EXCHANGE
COMMISSION
Washington, D.C. 20549
SCHEDULE 14C
INFORMATION
STATEMENT PURSUANT TO SECTION 14(c)
OF
THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No.
1)
Check
the
appropriate box:
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x
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Preliminary
Information Statement
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¨
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Confidential,
for use of the Commission only (as permitted by Rule 14c-5
(d)(2))
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¨
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Definitive
Information Statement
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REXAHN
PHARMACEUTICALS, INC.
______________________________________________________________________________________
(Name
of
Registrant As Specified In Charter)
Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required.
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¨
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Fee
computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed
pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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(5)
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Total
fee paid:
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¨
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Fee
paid previously with preliminary
materials.
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¨
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement
No:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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REXAHN
PHARMACEUTICALS, INC.
9620
Medical Center Drive,
Rockville,
Maryland 20850
(240)
268-5300
INFORMATION
STATEMENT
____________________
Rexahn
Pharmaceuticals, Inc. (“Rexahn”, the “Company”, “we” or “us”) is required to
deliver this Information Statement to its stockholders in order to inform
them
that the holders of our common stock have taken certain actions that would
normally require a stockholders meeting, without holding such a
meeting.
THIS
INFORMATION STATEMENT IS FIRST BEING SENT OR GIVEN TO THE HOLDERS OF OUR
COMMON
STOCK ON OR ABOUT DECEMBER 4, 2007.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
AUTHORIZATION
OF SECURITIES ISSUANCE BY WRITTEN CONSENT
Matters
Approved by Written Consent
Rexahn
hereby gives notice to the holders of its common stock, par value $.0001
per
share, that on November 19, 2007, the holders representing a majority of
the
voting power of the outstanding common stock adopted resolutions by written
consent (the “Written Consent”), in lieu of a meeting of
stockholders. These resolutions authorize our proposed issuance of up
to 10,000,000 shares of our common stock at a price of not less than $1.40
per
share, and our issuance to each purchaser of such common stock a warrant
to
purchase additional shares of our common stock equal to 20% of the number
of
shares of our common stock purchased thereby. The Written Consent
requires that the warrants have an exercise price of at least $1.80 per
share.
The
Written Consent also authorizes us to accord “full ratchet” anti-dilution
protection to the purchasers of the common stock and the warrants. If
a purchaser acquires common stock that is subject to “full ratchet”
anti-dilution protection, this means that if we issue a share of common
stock to
another party at a purchase price less than $1.40 per share, we will be
obligated to issue an additional number of shares of common stock to the
initial
purchaser such that its effective purchase price per share equals the lowest
such price at which we issue any share of our common stock. If a
purchaser’s warrants are subject to “full ratchet” anti-dilution protection,
this means that if we issue a share of common stock at a purchase price
of less
than $1.80 per share, the exercise price of the initial purchaser’s warrants
will be reduced to the lowest such price at which we issue any share of
our
common stock.
Reason
for Obtaining the Written Consent
Our
common stock is not currently listed on the American Stock Exchange (the
“AMEX”) (or any other exchange), and thus we are not subject to its
rules and requirements. Nevertheless, we intend to seek to list our
common stock on the AMEX in the future and therefore have voluntarily elected
to
comply with its rules as if our common stock were in fact currently
listed.
If
our
common stock were listed on the AMEX, under Section 713(a) of the AMEX
Company Guide, we would be required to obtain prior stockholder approval
of the
issuance of securities in any private transaction involving (i) the
issuance of shares of common stock (or securities convertible into or
exercisable for common stock) for less than the greater of book or market
value
of the common stock which together with sales by our officers, directors
or
principal shareholders would equal 20% or more of our common stock outstanding
before such issuance or (ii) the issuance of shares of common stock (or
securities convertible into or exercisable for common stock) equal to 20%
or
more of our common stock outstanding before the issuance for less than
the
greater of book or market value of the common stock.
The
common stock authorized to be issued pursuant to the Written Consent, together
with the common stock issuable upon exercise of the warrants authorized
to be
issued pursuant to the Written Consent, may be issued at a discount to
the
market price of our common stock. In addition, the common stock
authorized to be issued pursuant to the Written Consent, together with
the
common stock issuable upon exercise of the warrants authorized to be issued
pursuant to the Written Consent, may constitute more than 20% of the number
of shares of our common stock currently outstanding. Moreover, even
if the common stock actually issued pursuant to the Written Consent, together
with the common stock issuable upon exercise of the warrants actually issued
pursuant to the Written Consent, does not constitute more than 20% of the
number
of shares of our common stock currently outstanding, as a result of the
operation of the anti-dilution protection authorized by the Written Consent,
such common stock, together with the common stock issuable upon exercise of
the warrants, nevertheless ultimately could constitute more than 20% of the
number of shares of our common stock currently outstanding under certain
circumstances.
Effectiveness
of the Written Consent
The
stockholder action by written consent was taken pursuant to Section 228 of
the Delaware General Corporation Law, which permits any action that may
be taken
at a meeting of the stockholders to be taken by written consent by the
holders
of the number of shares of voting stock required to approve the action
at a
meeting. This Information Statement shall constitute notice to you of
such action by written consent contemplated by Section 228(e) of the
Delaware General Corporation Law. This Information Statement is being
furnished to all stockholders of the Company pursuant to Section 14(c) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
rules thereunder, solely for the purpose of informing stockholders of these
corporate actions before they take effect. In accordance with
Rule 14c-2 under the Exchange Act, the stockholder consent is expected to
become effective 20 calendar days following the date this Information
Statement is sent or given to the Company’s stockholders, or as soon thereafter
as is reasonably practicable.
The
Written Consent was signed on November 19, 2007 by persons who, as of the
execution date, collectively owned 26,042,425 shares of our common stock,
representing 51.71% of our outstanding common stock. The parties who
executed the Written Consent were as follows: Chang H. Ahn, Inok
Ahn, Tae Heum Jeong, KT&G Corporation, Suk Hyung Kwon,
Young Soon Park and Rexgene Biotech Co., Ltd. As of the date
upon which the Written Consent was signed, each share of common stock was
entitled to one vote. No payment was made to any person in consideration
of their executing the Written Consent.
November
23, 2007 has been fixed as the record date for the determination of stockholders
who are entitled to receive this Information Statement. On November
23, 2007, 50,360,632 shares of our common stock were
outstanding.
2
SECURITIES
PURCHASE AGREEMENTS PURSUANT TO THE WRITTEN CONSENT
Securities
Purchase Agreements
On
November 19, 2007, we entered into a Securities Purchase Agreement (the
“KT&G Securities Purchase Agreement”) with KT&G Corporation, a Korean
corporation (“KT&G”). Pursuant to the KT&G Securities
Purchase Agreement, KT&G agreed to purchase, upon and subject to the terms
and conditions stated therein, (i) 2,142,858 shares of our common stock and
(ii) a warrant to acquire up to 428,572 shares of our common stock at an
exercise price of $1.80 per share, for aggregate cash consideration of
$3,000,001.20.
The
obligation of KT&G to purchase our securities under the KT&G Securities
Purchase Agreement is subject to our receipt of binding commitments from
third
parties to purchase an additional $5,000,000 of our common stock and warrants
on
terms no less favorable than those applicable to KT&G. We have
not received such commitments as of the date of this report, and there can
be no
assurance that we will receive such commitments in the future. The
KT&G Securities Purchase Agreement will terminate if the closing thereunder
has not occurred on or prior to December 31, 2007.
On
November 20, 2007, we entered into a Securities Purchase Agreement (the “Rexgene
Securities Purchase Agreement” and together with the KT&G Securities
Purchase Agreement, the “Securities Purchase Agreements”) with Rexgene Biotech
Co., Ltd., a Korean corporation (“Rexgene”). Pursuant to the Rexgene
Securities Purchase Agreement, Rexgene agreed to purchase, upon and subject
to
the terms and conditions stated therein, (i) 714,286 shares of our common
stock
and (ii) a warrant to acquire up to 142,857 shares of our common stock at
an exercise price of $1.80 per share, for aggregate cash consideration of
$1,000,000.40. The obligation of Rexgene to purchase our securities
under the Rexgene Securities Purchase Agreement is subject to the prior or
contemporaneous closing of the sale of our securities to KT&G pursuant to
the KT&G Securities Purchase Agreement.
The
Securities Purchase Agreements contain customary representations, warranties
and
covenants. The Securities Purchase Agreements accord KT&G and
Rexgene “full ratchet” anti-dilution protection for a period of two years
following the closing of their purchase of our securities. This means
that if we issue a share of our common stock at a purchase price of less
than
$1.40 per share during the relevant period, we will be obligated to issue
an
additional number of shares of our common stock to KT&G and Rexgene such
that their effective purchase price per share equals the lowest such price
at
which we issue any share of our common stock. In addition, the
Securities Purchase Agreements obligate us to take commercially reasonable
efforts to list our common stock on the AMEX within the next three
years.
Warrants
The
warrants will be exercisable for a term of three years following their issuance
to KT&G and Rexgene upon closing of their respective purchases of our
securities pursuant to the Securities Purchase Agreements. The
warrants include customary terms providing for adjustment of the exercise
price
and the number of shares subject to receipt upon exercise that are applicable
in
the event of stock splits, stock dividends, pro rata distributions,
fundamental transactions and the like. The warrants also are subject
to “full ratchet” anti-dilution protection. This means that if we
issue a share of our common stock at a purchase price of less than $1.80,
the
exercise price of the warrants will be reduced to the lowest such price at
which
we issue any share of our common stock. Certain securities issuances
by us will not trigger this anti-dilution protection.
3
Registration
Rights Agreements
Upon
closing of the securities issuances to KT&G and Rexgene pursuant to their
respective Securities Purchase Agreements, we will enter into a separate
Registration Rights Agreement with each of KT&G and
Rexgene. Pursuant to these agreements, we will agree to file a shelf
registration statement with the Securities and Exchange Commission covering
the
resale of the common stock to be issued pursuant to the related Securities
Purchase Agreement, and the common stock to be issued upon exercise of the
warrant to be issued pursuant to the related Securities Purchase
Agreement. We will be obligated to file such resale registration
statement with the SEC no later than 60 days after our common stock is
listed for trading on the AMEX. If we fail to file the resale
registration statement by such date, or if we fail to take certain other
actions
required under the Securities Purchase Agreement, we will be obligated to
pay to
KT&G and Rexgene each month, as liquidated damages, an amount equal to 2% of
the amount of their respective investments pursuant to the Securities Purchase
Agreements. If we fail to pay the liquidated damages when and as due,
we will be obligated to pay interest thereon at a rate of 18% per
annum.
No
Other Existing Agreements
Rexahn
is
not party to any agreements providing for the sale of any of its securities
other than the Securities Purchase Agreements.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Other
than as set forth below, we are not aware of any beneficial owner of more
than
5% of our outstanding common stock. The table below sets forth the
beneficial ownership of our common stock by the following individuals or
entities:
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·
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each
person, or group of affiliated persons, known to us to own beneficially
own 5% or more of our outstanding common
stock;
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·
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each
director;
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·
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each
executive officer; and
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·
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all
of the directors and executive officers as a
group.
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This
information includes the actual ownership of such persons as of November
23,
2007, and the projected ownership of such persons assuming the sale of
$8,000,000 of our common stock and warrants on substantially the terms
applicable to the proposed sales to KT&G and Rexgene pursuant to their
respective Securities Purchase Agreements as described above (i.e., the
issuance of 5,714,286 shares of common stock and warrants to purchase 1,142,857
shares of common stock at $1.80 per share, for total consideration of
$8,000,000).
Beneficial
ownership is determined in accordance with the rules of the
SEC. Except as indicated by footnote and subject to community
property laws where applicable, each person or entity named in the table
has
sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by him, her or it. In computing the
number of shares beneficially owned by a person and the percentage ownership
of
that person, shares of common stock that will be subject to options held
by that
person that are exercisable as of November 23, 2007, or will become exercisable
within 60 days thereafter are deemed outstanding, while such shares are not
deemed outstanding for purposes of computing percentage ownership of any
other
person.
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Current
Beneficial Ownership of Common Stock(1)
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Projected
Beneficial Ownership of Common Stock(2)
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Number
of Shares
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Percent-age
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Number
of Shares
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Percent-age
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Directors
and Executive Officers:
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Chang
H. Ahn+
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15,500,000 | (3) | 30.78 | % | 15,500,000 | (3) | 27.64 | % | ||||||||
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Charles
Beever+
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20,000 | (4) |
*
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20,000 | (4) |
*
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Kwang
Soo Cheong+
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20,000 | (5) |
*
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20,000 | (5) |
*
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||||||||||
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Tae
Heum Jeong+
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1,250,000 | (6) | 2.48 | % | 1,250,000 | (6) | 2.23 | % | ||||||||
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Y.
Michele Kang+
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20,000 | (7) |
*
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20,000 | (7) |
*
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David
McIntosh+
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165,000 | (8) |
*
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165,000 | (8) |
*
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Freddie
Ann Hoffman+
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0
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*
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0
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*
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All
executive officers and directors as a group (7 persons)
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16,975,000 | (3)-(8) | 33.71 | % | 16,975,000 | (3)-(8) | 30.27 | % | ||||||||
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Holders
of more than 5% of shares:
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Chong
Kun Dang Pharmaceutical Corp.++
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3,000,000 | (9)(10) | 5.96 | % | 3,000,000 | (9)(10) | 5.35 | % | ||||||||
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KT&G
Corporation+++
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2,500,000 | (9) | 4.96 | % | 5,071,430 | (9)(11) | 9.04 | % | ||||||||
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Rexgene
Biotech Co., Ltd.++++
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4,791,670 | (9) | 9.51 | % | 5,648,813 | (9)(12) | 10.07 | % | ||||||||
_____________________________
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+
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c/o
Rexahn Pharmaceuticals, Inc., 9620 Medical Center Drive, Rockville,
MD
20850.
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++
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368,
3-ga, Chungjeong-ro, Seodaemun-gu, Seoul 120-756,
Korea.
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+++
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100
Pyongchon dong, Daedeog-gu, Daejeon 306-130,
Korea.
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++++
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9F
Wooyoung Venture Bldg. 1330-13, Seocho-dong, Seocho-gu, Seoul
137-070, Korea.
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(1)
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Based
on 50,360,632 shares outstanding as of November 23,
2007.
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(2)
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Based
on 56,074,918 shares to be outstanding upon completion of the proposed
$8,000,000 sale of 5,714,286 shares of common stock and warrants
to
purchase 1,142,857 shares of common stock at $1.80 per
share.
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(3)
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Includes
Dr. Ahn’s options to purchase 1,000,000 shares of common stock that are
currently exercisable or exercisable within 60 days of November
23, 2007
at an exercise price of $0.80 per share, 500,000 shares held by
Dr. Ahn’s
wife, Inok Ahn, and Mrs. Ahn’s options to purchase 500,000 shares of
common stock that are currently exercisable or exercisable within
60 days
of November 23, 2007 at an exercise price of $0.80 per
share.
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(4)
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Includes
Mr. Beever’s options to purchase 20,000 shares of common stock that are
currently exercisable or exercisable within 60 days of November
23, 2007 at an exercise price of $1.20 per
share.
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(5)
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Includes
Mr. Cheong’s options to purchase 20,000 shares of common stock that are
currently exercisable or exercisable within 60 days of November
23, 2007
at an exercise price of $1.20 per
share.
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5
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(6)
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Includes
Mr. Jeong’s options to purchase (i) 150,000 shares of common stock that
are currently exercisable or exercisable within 60 days of November
23, 2007 at an exercise price of $0.24 per share and (ii) 600,000
shares of common stock that are currently exercisable or exercisable
within 60 days of November 23, 2007 at an exercise price of $0.80 per
share.
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(7)
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Includes
Ms. Kang’s options to purchase 20,000 shares of common stock that are
currently exercisable or exercisable within 60 days of November
23, 2007 at an exercise price of $1.20 per
share.
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(8)
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Includes
Mr. McIntosh’s options to purchase (i) 125,000 shares of common stock
that are currently exercisable or exercisable within 60 days of
November
23, 2007 at an exercise price of $0.80 per share, (ii) 20,000 shares
of common stock that are currently exercisable or exercisable within
60
days of November 23, 2007 at an exercise price of $3.00 per share and
(iii) 20,000 shares of common stock that are currently exercisable
or
exercisable within 60 days of November 23, 2007 at an exercise price
of $1.20 per share.
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(9)
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The
boards of directors of each of Rexgene, Chong Kun Dang and KT&G, each
a Korean corporation, have sole voting and sole investment power
as to the
shares owned by their respective
corporations.
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(10)
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Includes
750,000 shares of common stock held by Kyungbo Pharm, a subsidiary
of
Chong Kun Dang. Excludes 2,000,000 shares of common stock held
by Jang-Han Rhee, Chairman of Chong Kun Dang and a former director
of
Rexahn.
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(11)
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Includes
2,142,858 shares of common stock subject to purchase by KT&G
Corporation pursuant to its Securities Purchase Agreement, and
428,572
shares of common stock subject to purchase by it upon exercise
of warrants
subject to purchase pursuant to such Securities Purchase
Agreement.
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(12)
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Includes
714,286 shares of common stock subject to purchase by Rexgene Biotech
Co.,
Ltd. pursuant to its Securities Purchase Agreement, and 142,857
shares of
common stock subject to purchase by it upon exercise of warrants
subject
to purchase pursuant to such Securities Purchase
Agreement.
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NO
APPRAISAL OR DISSENTERS’ RIGHTS
Under
the
Delaware General Corporation Law, our stockholders are not entitled to any
dissenters’ rights or appraisal of their shares of common stock in connection
with the approval of the actions described in this Information
Statement.
NO
ACTION IS REQUIRED
No
other
votes are necessary or required. This Information Statement is first
being mailed or given to stockholders on or about December 4,
2007. In accordance with the Exchange Act, the Written Consent and
the approval of the matters described in the Written Consent, the actions
described in this Information Statement will become effective 20 calendar
days following the mailing of this Information Statement, or as soon
thereafter as is reasonably practicable.
6
INTEREST
OF CERTAIN PERSONS IN OR OPPOSITION
TO
MATTERS TO BE ACTED UPON
None
of
our officers or directors have any substantial interest, direct or indirect,
in
the matters to be acted upon, other than his or her role as an officer or
director and the holder of common stock as described above.
BROKERS,
CUSTODIANS, ETC.
We
have
asked brokers and other custodians, nominees and fiduciaries to forward
this
Information Statement to the beneficial owners of common stock held of
record by
such persons and will reimburse such persons for out-of-pocket expenses
incurred
in forwarding such material.
WHERE
YOU CAN FIND MORE INFORMATION ABOUT US
We
file
annual, quarterly and current reports and proxy statements with the
SEC. Our SEC filings are available to the public via the internet at
the SEC’s website at www.sec.gov. You may also read and copy any
document that we file with the SEC at the SEC’s public reference room at
100 F Street, N.E., Washington, D.C. 20549.
You
can
call the SEC at 1-800-SEC-0330 for further information on the public reference
room and its copy charges. We maintain a website at www.rexahn.com,
where we post our SEC filings.
You
may
also request a copy of our filings, without charge, by calling our Investor
Relations department at (240) 268-5300 or writing to us at the following
address: 9620 Medical Center Drive, Rockville, Maryland 20850,
Attention: Investor Relations.
7