Exhibit 10.6

 

AGREEMENT REGARDING OUTSTANDING

 

CONVERTIBLE PREFERRED STOCK AND WARRANTS

 

This Agreement, dated as of June 25, 2020, is among GeoVax Labs, Inc., a
Delaware corporation (the “Company”), Sabby Healthcare Master Fund, Ltd. and
Sabby Volatility Warrant Master Fund, Ltd. (collectively, the “Sabby Funds”).

 

WHEREAS, the Company and the Sabby Funds have entered into securities purchase
agreements with respect to the acquisition by the Sabby Funds of convertible
preferred stock of the Company, $0.001 par value (“Preferred Stock”) as well as
the underlying shares of the Company’s common stock, $0.01 par value (“Common
Stock”);

 

WHEREAS, the Sabby Funds have also acquired warrants to purchase the Company’s
Common Stock;

 

WHEREAS, the only securities purchase agreement and warrants which are currently
in effect are identified on Exhibit A hereto, as well as a list of the
outstanding shares of convertible preferred stock held by each Sabby Fund as of
the date hereof; and

 

WHEREAS, the Company and the Sabby Funds wish to enter into this Agreement for
the purpose of enabling the Company to raise additional capital from third
parties;

 

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

 

ARTICLE I
THE PROPOSED BRIDGE FINANCING

 

1.

General. The Company proposes to enter into a definitive agreement or agreements
with an unaffiliated third party pursuant to which it anticipates raising
additional capital on terms substantially similar to those set forth on Exhibit
B hereto (the “Bridge Financing”). The Sabby Funds have no objection to, and
consent to, the Bridge Financing, including the pledge of the assets of the
Company and its subsidiaries as security for amounts due under the senior
secured convertible promissory note(s) contemplated by the Bridge Financing.

 

2.

Securities Purchase Agreement. The Sabby Funds hereby waive any rights that
might arise from the announcement of or entering into a definitive agreement
for, and the consummation of, the Bridge Financing, pursuant to the Securities
Purchase Agreement, including any claim that the Bridge Financing violates
Section 4.12 of the Securities Purchase Agreement.

 

3.

Term. This Article I shall remain in effect for the execution of a definitive
agreement or agreements on terms substantially similar to those set forth on
Exhibit B (or better from the point of view of the Company) with respect to the
Bridge Financing on or before June 30, 2020.

 

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ARTICLE II

PIGGYBACK REGISTRATION RIGHTS

 

 

1.

For purposes of this Article the following definitions shall apply:

 

 

a.

“Investor Shares” means shares of the Company’s Common Stock issued pursuant to
the Bridge Financing for the account of the persons who acquired such shares in
the Bridge Financing;

 

 

b.

“Registrable Securities” means, as of any date of determination, (a) all of the
shares of Common Stock then issuable upon conversion in full of the Company’s
Series J Convertible Preferred Stock or exercise of Warrant Shares (assuming on
such date the shares of the Company’s Series J Convertible Preferred Stock are
converted in full, and the Warrants are exercised, without regard to any
conversion limitations set forth in the Certificate of Designation or the
Warrants), (b) any additional shares of Common Stock issuable in connection with
any anti-dilution provisions in the Preferred Stock or the Warrants (without
giving effect to any limitations on conversion set forth in the Certificate of
Designation or the Warrants) and (c) any securities issued or then issuable upon
any stock split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing; provided, however, that any such
Registrable Securities shall cease to be Registrable Securities when and for so
long as such securities have become eligible for resale pursuant to Section
4(a)(1) and/or Rule 144 as set forth in a written opinion letter to such effect,
addressed, delivered and acceptable to the Company’s Transfer Agent and the
affected Sabby Fund(s) (in form and substance similar to the current practice
between the Company and the Sabby Funds), assuming that such securities and any
securities issuable upon exercise, conversion or exchange of which, or as a
dividend upon which, such securities were issued or are issuable, were at no
time held by any affiliate of the Company, as reasonably determined by the
Company, upon the advice of counsel to the Company; and

 

 

c.

“Warrant Shares” means shares of Common Stock issuable by Sabby Funds upon
exercise of the Series G, H, or I Warrants (“Warrants”) listed on Exhibit A.

 

 

2.

If, at any time until the [nine (9) month] anniversary of the closing of the
Bridge Financing, the Company shall determine to prepare and file with the
Securities and Exchange Commission a registration statement relating to an
offering of Investor Shares under the Securities Act, other than on Form S-4 or
Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with the stock option or other employee benefit plans, the Company
shall deliver to each Sabby Fund a written notice of such determination and if,
within 15 calendar days after the date of delivery of such notice, a Sabby Fund
(or any permitted successor or assign) shall so request in writing, the Company
shall include in such registration statement all or any part of the Registrable
Securities that such Sabby Fund requests to be registered; provided, however,
that the Company shall not be required to register any Registrable Securities
pursuant to this Section to the extent the underwriter/placement agent (if any)
managing the offering objects in good faith in writing to inclusion of the
Registrable Securities in the related registration statement, and further
provided, that any reduction in the number of Registrable Shares held by Sabby
Funds to be included shall be in proportion to the relative beneficial ownership
of common stock by the persons who acquired shares in the Bridge Financing, on
the one hand, and the beneficial ownership of the share held by the Sabby Funds,
on the other hand.

 

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ARTICLE IIi
MISCELLANEOUS

 

1.

Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be made in accordance with the
provisions of the Certificate of Designation or the Securities Purchase
Agreement.

 

2.

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.

 

3.

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.

 

4.

Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be determined pursuant to the
Governing Law provision of the Certificate of Designation or Securities Purchase
Agreement.

 

5.

Entire Agreement. This Agreement, together with the Certificate of Designation
and the Securities Purchase Agreement, and any exhibits and schedules thereto,
contains the entire understanding of the parties with respect to the subject
matter hereof and supersedes 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.

 

6.

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.

 

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7.

Independent Nature of Purchasers’ Obligations and Rights. The obligations of
each Sabby Fund hereunder are several and not joint with the obligations of any
other Sabby Fund hereunder, and no Sabby Fund shall be responsible in any way
for the performance of the obligations of any other Sabby Fund hereunder.
Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Sabby Fund pursuant hereto, shall be deemed
to constitute the Sabby Funds as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Sabby Funds are in
any way acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Sabby Fund shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Sabby Fund to be joined
as an additional party in any proceeding for such purpose.

 

8.

Fees and Expenses. Except as expressly set forth herein, each party shall pay
the fees and expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.

 

[Signatures are on the following page.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement Regarding
Outstanding Convertible Stock to be duly executed by their respective authorized
signatories as of the date first indicated above.

 

 

 

THE COMPANY:

 

GeoVax Labs, Inc.

 

 

By:                                                          

Name: David A. Dodd

Title: President & CEO

 

 

 

THE SABBY FUNDS:

 

Sabby Healthcare Master Fund, Ltd.

 

 

By:                                                          

Name:                                                     

Title:                                                       

 

 

Sabby Volatility Warrant Master Fund, Ltd.

 

 

By:                                                          

Name:                                                     

Title:                                                       

 

 

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EXHIBIT A

 

1.

Securities Purchase Agreement, dated as of January 24, 2020 among GeoVax Labs,
Inc., a Delaware corporation (the “Company”), Sabby Healthcare Master Fund, Ltd.
and Sabby Volatility Warrant Master Fund, Ltd. The Sabby Funds purchased 300
shares of Series J Convertible Preferred Stock pursuant to this agreement, all
of which is currently outstanding.

 

2.

Series G Common Stock Purchase Warrants dated September 5, 2018.

 

3.

Series H Common Stock Purchase Warrants dated December 27, 2018.

 

4.

Series I Common Stock Purchase Warrants dated February 26, 2019.

 

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EXHIBIT B

 

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Key Terms of Proposed Bridge Financing:

 

Issuer:

 

GeoVax Labs, Inc. (GOVX)

Securities:

 

Senior Secured Convertible Promissory Note (the “Notes”)

Original Issue Discount:

 

12.5% (“OID”)

Principal Amount:

 

$1,200,000

Purchase Price:

 

$1,050,000 delivered at closing.

Maturity:

 

12 months from Closing Date.

Interest:

 

5% interest per annum.

Conversion Price:

 

The Holder of this Note is entitled, at its option, at any time after the
requisite 144 holding period, to convert all or any amount of the principal face
amount of this Note then outstanding into shares of the Company’s common stock
(the “Common Stock”) without restrictive legend of any nature, at a price
(“Conversion Price”) for each share of Common Stock equal $0.50 per share. The
notes shall have a blocker of 4.99%.

Use of Proceeds:

 

The proceeds received by the Company shall be used for working capital purposes.
The Company may not use funds at any time to lend money, give credit or make
advances or pay back salary to any officers, directors, employees or affiliates
of the Company. The Company may use the proceeds to fund its subsidiaries
working capital needs, subject to the same restrictions on use.

Share Reservation:

 

The Company shall maintain, at all times, a reserve of shares in the name of
investors equal to 5x the number of shares required for full conversion of the
Notes and exercise of the Warrants, and, if necessary, will seek shareholder
approval of the Company to increase in authorized capital or reverse split (and
the implementation of such action) such that the Company shall have in reserve a
number of shares equal 5x the full conversion of the Notes into Common Stock or
exercise of any such.

Event of Default:

 

The Events of Default will be further outlined in the Transaction documents.
Upon the occurrence of an Event of Default, the Investors shall have the right
to be prepaid at 130% of the outstanding principal balance and accrued interest
immediately due prior to such Event of Default. Following an Event of Default,
interest shall accrue at rate of 1.5% per month (18% annual) until paid. In the
event of default, the Conversion Price shall be equal to 70% of the lowest
trading price of the Common Stock as reported on the OTCQB or other principal
market where the Company’s Common Stock is traded (the “Trading Market”) for the
ten prior trading days. The 4.99% blocker shall remain in effect.

 

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Prepayment:

 

The Notes may be prepaid at any time for the first 90 days at face value plus
interest. Starting on day 91 the note may be prepaid in an amount equal to 110%
of the outstanding principal and accrued interest and 120% of the outstanding
principal and accrued interest for days 181-365 days after issuance. In order to
prepay the Notes after day 181, the Company must give at least 20 trading days’
written notice to the Investors-during which time the Investors may convert the
Notes in whole or in part, subject to the 4.99% blocker.

Seniority:

 

The Notes will be senior to all obligations of the Company.

Warrants:

 

100% warrant coverage shall be exercisable for a period of 5 years post issuance
at an exercise price of $0.50 per share (the “Exercise Price”). The 4.99%
blocker shall also apply to warrant exercises.

 

The Warrants will contain a cashless exercise provision if not covered by a
registration statement by month six.

 

The Company may call the warrants if the stock trades at $1.25 for a period of
10 straight trading days and the warrant shares are covered by an effective
registration statement. Additionally, the average daily volume of the Common
Stock for the previous 10 trading days must be greater than $200,000.

Qualified Offering:

 

The Note and accrued interest will be mandatorily convertible upon a Qualified
Offering (minimum of $6 million public offering on a national exchange) at the
lower of the conversion price or 20% of the offering price. The Investors will
execute a 30 day lock-up for any amount due upon the Qualified Offering.
Following that period the investor will enter a leak-out agreement for an
additional 60 days.

Legal Fees:

 

The Company will pay the Investors’ reasonable legal fees at the closing of the
Transaction, not to exceed $30,000. A $5,000 deposit should be sent to the
investors Law firm.

Right of Participation:

 

The Investors shall be granted a right of participation of 25% in all subsequent
financings conducted by the Company, except exempt issuances, strategic
investors and raises that are $15 million or more, for the longer of a period of
12 months following the closing of the Transaction or until the debt is retired.

Anti-Dilution:

 

The shares underlying the Notes and Warrants will be subject to anti-dilution
protection.