SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this “ Agreement ”) is made and entered into as of June 26, 2009 (the “ Effective Date ”), by and between Rexahn Pharmaceuticals, Inc., a corporation organized and existing under the laws of Delaware (the “ Company ”), and Teva Pharmaceutical Industries Limited, a limited liability company organized and existing under the laws of Israel (the “ Purchaser ”).

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 ”).

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, shares of the Company’s common stock, par value $0.0001 per share (the “ Common Stock ”), as further set forth herein.

Contemporaneous with the execution and delivery of this Agreement, the parties hereto are executing a Research and Exclusive License Option Agreement (the “ RELO Agreement ”) pursuant to which the Company shall use the funds provided by Purchaser’s purchase of Common Stock hereunder to perform a research and development program, as further described in Section 2.3.

NOW, THEREFORE, in consideration of the mutual representations, warranties and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are 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 herein set forth:

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

1.2           “ Additional Per Share Purchase Price ” means the per share purchase price payable by the Purchaser for the Additional Shares in accordance with this Agreement, which shall be equal to 120% of the closing price of the Common Stock on the primary Trading Market on which the Common Stock is then trading as reported by Bloomberg L.P. for the last trading day preceding the Second Closing Date (or if the Common Stock is not then trading on an Eligible Market, the price per share of the Common Stock shall be determined by the Board of Directors of the Company in its reasonable determination, subject to the agreement of the Purchaser in it sole and absolute discretion).

1.3           “ Additional Shares ” means a number of shares of Common Stock equal to the lesser of (i) the quotient of the Additional Aggregate Purchase Price divided by the Additional Per Share Purchase Price and (ii) the number of shares of Common Stock that when added to the Initial Shares would equal 7% of the outstanding Common Stock upon the effectiveness of the Second Closing.

1.4           “ 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.

1.5           “ Business Day ” means any calendar day, except that if an activity to be performed or an event to occur falls on a Friday, Saturday, Sunday or a day which is recognized as a national holiday in the place of performance of an applicable activity or occurrence of an applicable event, then the activity may be performed or the event may occur on the next day that is not a Friday, Saturday, Sunday or nationally recognized holiday.

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

1.7           “ Initial Closing ” means the closing of the purchase and sale of the Initial Shares pursuant to Section 2.1.

1.8           “ Initial Aggregate Purchase Price ” means $3,500,000.

1.9           “ Initial Per Share Purchase Price ” means the per share purchase price payable by the Purchaser for the Initial Shares in accordance with this Agreement, which shall be equal to 120% of the closing price of the Common Stock on the primary Trading Market on which the Common Stock is then trading as reported by Bloomberg L.P. for the last trading day preceding the Initial Closing Date.

1.10          “ Initial Shares ” means a number of shares of Common Stock equal to the lesser of (i) the quotient of the Initial Aggregate Purchase Price divided by the Initial Per Share Purchase Price and (ii) the number of shares of Common Stock that would equal 7% of the outstanding Common Stock upon the effectiveness of the Initial Closing.

1.11          “ IP Rights ” means all vested, contingent and future intellectual property rights including, but not limited to: (i) all inventions, compounds, compositions, substances, methods, processes, techniques, know-how, technology, data, information, discoveries and other results of whatsoever nature, and any patents, copyrights, proprietary intellectual or industrial rights directly or indirectly deriving therefrom, as well as provisionals, patent applications (whether pending or not), and patent disclosures together with all reissuances, continuations, continuations in part, revisions, extensions, and reexaminations thereof; (ii) all trademarks, service marks, copyrights, designs, trade styles, logos, trade dress and corporate names, including all goodwill associated therewith; (iii) any work of authorship, regardless of copyrightability, all compilations, all copyrights; and (iv) all trade secrets, confidential information and proprietary processes.

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

1.13          “ 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.

1.14          “ 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.

1.15          “ R&D Program ” has the meaning set forth in the RELO Agreement.

1.16          “ RX-3117 ” means the compound described by claim 4 of U.S. Patent No. 7,405,214B2.

1.17          “ SEC ” means the U.S. Securities and Exchange Commission.

1.18          “ Shares ” means the Initial Shares, the Additional Shares and any shares of Common Stock issued pursuant to Section 5.7 hereof, collectively.

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

1.20          “ Trading Market ” means the NYSE Amex 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.

1.21          “ Transaction Documents ” means this Agreement, the RELO Agreement and any other agreement entered into, now or in the future, by the Company or the Purchaser in connection with this Agreement or any of the other Transaction Documents.

1.22           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:

2.            PURCHASE AND SALE OF SHARES .

2.1            Initial Closing .

(a)            Purchase of the Initial Shares .  Subject to the terms and conditions of this Agreement and on the basis of the representations and warranties made herein, at the Initial 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 for an aggregate purchase price equal to the Initial Aggregate Purchase Price.

(b)            Time and Place of Initial Closing .  The Initial Closing and delivery of all items to be delivered hereunder at the Initial Closing shall take place at the offices of Loeb & Loeb LLP, 345 Park Avenue, New York, New York 10154, or at such other place as may be mutually agreed upon between the parties hereto, on the third Business Day following the date on which each of the conditions to the obligations of the parties to consummate the Initial Closing contemplated hereby have been satisfied or waived by the party entitled to the benefit thereof (such date, the “ Initial Closing Date ”).

(c)            Initial Closing Deliveries .

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

(A)          a stock certificate, free and clear of all restrictive legends (except as expressly provided in Section 5.1(a)), evidencing the Initial Shares, registered in the name of the Purchaser;

(B)           a copy of the RELO Agreement executed on behalf of the Company;

(C)           a compliance certificate, in form and substance reasonably satisfactory to the Purchaser, certifying the accuracy of the Company’s representations and warranties in the Transaction Documents as of the Initial Closing Date; and

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

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

(A)           the Initial Aggregate Purchase Price of $3,500,000 by wire transfer of immediately available funds to the account of the Company;

(B)           a copy of the RELO Agreement executed on behalf of the Purchaser;

(C)           a compliance certificate, in form and substance reasonably satisfactory to the Company, certifying the accuracy of the Purchaser’s representations and warranties in the Transaction Documents as of the Initial Closing Date; and

(D)           any other documents reasonably requested by the Company or its counsel in connection with the Initial Closing, including, without limitation, customary officers’ and secretary’s certificates.

(d)            Conditions to Initial Closing .

(i)             Conditions Precedent to the Obligations of the Purchaser . The obligation of the Purchaser to acquire the Initial Shares at the Initial Closing is subject to the satisfaction or waiver by the Purchaser, at or before the Initial Closing, of each of the following conditions:

(A)            Representations and Warranties . The representations and warranties of the Company contained in the Transaction Documents shall be true and correct in all material respects as of the date when made and as of the Initial Closing Date 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 Initial 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)            No Material Adverse Effect . Since the date of execution of this Agreement, no event or series of events shall have occurred that would reasonably be expected to have or result in a Material Adverse Effect;

(E)            Pre-Clinical Development Requirements; R&D Program; R&D Budget .  The Purchaser and the Company shall have agreed upon (1) a set of requirements to apply to the pre-clinical development of RX-3117 (the “ Pre-Clinical Development Requirements ”); (2) the R&D Program; and (3) a budget (the “ R&D Budget ”) to govern the expenditure of the $1,250,000 of the Initial Aggregate Purchase Price to be allocated to the R&D Program as provided in Section 2.3(a);

(F)            Purchaser Validation Study .  The Purchaser in its sole discretion shall be satisfied with the results of its ongoing validation study relating to RX-3117, which determination shall be made by the Purchaser no later than 60 days after completion of such validation study and in any event, no later than September 30, 2009; and

(G)            NYSE Amex Approval .  The NYSE Amex shall have approved the Initial Shares for listing on the NYSE Amex.

(ii)            Conditions Precedent to the Obligations of the Company . The obligation of the Company to sell the Initial Shares at the Initial 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 in the Transaction Documents shall be true and correct in all material respects as of the date when made and as of the Initial Closing Date as though made on and as of such date;

(B)            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;

(C)            Pre-Clinical Development Requirements; R&D Budget .  The Purchaser and the Company shall have agreed upon (1) the Pre-Clinical Development Requirements and (2) the R&D Budget; and

(D)            NYSE Amex Approval .  The NYSE Amex shall have approved the Initial Shares for listing on the NYSE Amex.

2.2            Second Closing .

(a)           No sooner than 60 days prior to the scheduled exhaustion (pursuant to the R&D Budget) of the $1,250,000 of the Initial Aggregate Purchase Price allocated to the R&D Program, or at such other time as may be mutually agreed upon by the Company and the Purchaser, the Company shall deliver to the Purchaser an updated R&D Budget (the “ Updated R&D Budget ”), which Updated R&D Budget, together with an expenditure schedule and payment mechanism for the remaining funding of the R&D Program, shall be subject to the written approval of the Purchaser.

(b)           No later than 60 days following receipt by the Purchaser of the Updated R&D Budget, the Purchaser shall deliver to the Company a written notice (the “ Second Closing Notice ”) stating whether the Purchaser elects to proceed to the Second Closing (as defined below), which determination shall be made by the Purchaser in its sole discretion.  If the Purchaser does not elect to proceed to the Second Closing, then the parties hereto shall have no further rights or obligations under this Section 2 or under Section 5.7 hereof.

(c)           If the Purchaser elects to proceed to the Second Closing, within 15 days following the receipt of the Second Closing Notice a closing shall be held at the offices of Loeb & Loeb LLP, 345 Park Avenue, New York, New York 10154, or at such other place as may be mutually agreed upon between the parties hereto, on such date and time as shall be mutually agreed upon between the parties hereto (the “ Second Closing ” and the date of the Second Closing, the “ Second Closing Date ”).

(d)           It shall be a condition to the obligation of the Company and the Purchaser to consummate the Second Closing that the NYSE Amex shall have approved the Additional Shares for listing on the NYSE Amex.

(e)           It shall be a condition to the obligation of the Purchaser to consummate the Second Closing that the Company shall have complied in all respects with its obligations in respect of the R&D Program including, without limitation, the R&D Budget.

(f)           At the Second Closing the following transactions shall take place, all of which shall be deemed to have occurred simultaneously:

(i)           The Company shall sell and issue to the Purchaser, and the Purchaser shall purchase from the Company, the Additional Shares for an aggregate purchase price equal to the amount required to complete funding of the R&D Program (the “ Additional Aggregate Purchase Price ”) pursuant to the Updated R&D Budget.

(ii)           The Purchaser shall transfer to the Company the Additional Aggregate Purchase Price by wire transfer of immediately available funds to the account of the Company.

(iii)           If Additional Shares are being issued, the Company shall deliver to the Purchaser a stock certificate, free and clear of all restrictive legends (except as expressly provided in Section 5.1(a)), evidencing the Additional Shares, registered in the name of the Purchaser.

(iv)          The Company shall provide the Purchaser with updated schedules to this Agreement, complete and accurate as of the Second Closing.

(vi)          The Purchaser shall provide the Company with a compliance certificate, in form and substance reasonably satisfactory to the Company, certifying the accuracy of the Purchaser’s representations and warranties in the Transaction Documents as of the Second Closing Date; and any other documents reasonably requested by the Company or its counsel in connection with the Second Closing.

2.3            Use of Proceeds .  The Company will use the net proceeds of the issuance and sale of Shares as follows:

(a)           $1,250,000 of the Initial Aggregate Purchase Price to fund the R&D Program; provided that the Company shall conduct the R&D Program strictly in accordance with the R&D Budget; and provided , further , that the R&D Program and the R&D Budget and each update to the R&D Program and the R&D Budget shall form a part of this Agreement and constitute an amendment hereto;

(b)           $2,250,000 of the Initial Aggregate Purchase Price for general working capital and other corporate purposes; and

(c)           the Additional Aggregate Purchase Price strictly in accordance with the terms of the Updated R&D Budget, including, without limitation, the expenditure schedule and payment mechanism included therewith.

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.

3.2            Organization and Good Standing .  The Company is a corporation validly existing and in good standing under the laws of the State of Delaware, with all requisite power and authority to carry on its business as presently conducted and own and use its properties and assets. The Company 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 to which the Company is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered by the Company in accordance with the terms hereof, will constitute the legal, 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 certificate 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 debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company 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 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 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 Shares .  The Shares have been duly authorized and when issued in accordance with the terms of this Agreement will be validly issued, fully paid, nonassessable and free and clear of all Liens and charges (other than any Liens or charges arising solely from any action of the Purchaser or its Affiliates) and shall not be subject to preemptive or similar rights.  Assuming the validity of the Purchaser’s representations and warranties contained in Section 4, the offer, issuance and sale of the Shares to the Purchaser pursuant to this Agreement is 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 of the Company’s 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 Shares will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchaser) 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            Absence of Litigation .  Except as set forth in Schedule 3.7 , 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 of the Company’s officers or directors in their capacities as such and any of the Company’s properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) which (a) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Shares or (b) could, if there were an unfavorable decision, individually or in the aggregate, have or result in a Material Adverse Effect. Except as set forth in Schedule 3.7 , no judgment, injunction, writ, award, decree or order has been issued by any court or other governmental authority against the Company.

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

3.9            Reporting Company .  The Company is a publicly held company subject to reporting obligations pursuant to Section 13 of the 1934 Act and has a class of common equity registered pursuant to Section 12(b) of the 1934 Act.

3.10          Informat