LPC receives 179,598 free shares up front and could receive another 89,799 free shares. The total 269,397 free shares sold, at say $5.00, would give LPC a $1,346,985 profit.
In consideration for entering into the Purchase Agreement, the Company issued to the Selling Security Holder, 179,598 shares of Common Stock as a commitment fee and shall issue up to 89,799 shares pro rata, which commitment fee shares are also being registered hereunder, when and if, the Selling Security Holder purchases at the Company’s discretion the $50,000,000 aggregate commitment. The Purchase Agreement may be terminated by the Company at any time at its discretion without any cost to the Company.
LPC will be able to buy at a slight discount and should be able to make some money on the shares purchased. I don't think LPC will risk holding the shares for very long. After all, they are a financing company. Dr. Missling will have to space sales to them in order to limit the impact of their sales. Had AVXL done a secoundary offering, I'm sure it would have included full warrants. The buyers of secoundary offerings usually dump their shares after the restricted period and hang on to the warrants. The warrants are dilutive and add additional selling pressure when they are sold.
The purchase price per share for each such Regular Purchase will be equal to the lower of:
•the lowest sale price for our common stock on the purchase date of such shares; or
•the arithmetic average of the three lowest closing sale prices for our common stock during the 10 consecutive business days ending on the business day immediately preceding the purchase date of such shares.
Another term of the agreement-
No Short-Selling or Hedging by Lincoln Park
Lincoln Park has agreed that neither it nor any of its affiliates shall engage in any direct or indirect short-selling or hedging of our common stock during any time prior to the termination of the Purchase Agreement.
