Exhibit 10.1

 

WARRANT EXCHANGE AGREEMENT

 

THIS WARRANT EXCHANGE AGREEMENT (this “Agreement”) is dated as of May 18, 2015,
by and between Catasys, Inc., a Delaware corporation with offices located at
11601 Wilshire Blvd., Suite 950, Los Angeles, California 90025 (the “Company”),
and each of the warrant holders identified on the signature pages hereto (each,
the “Investor,” and collectively, the “Investors”).

 

WHEREAS:

 

A.     The Investors hold warrants to purchase up to certain shares of common
stock, par value $0.0001 per share, of the Company (the “Common Stock”), as set
forth next to each Investor’s name on Schedule I attached hereto, at an exercise
price of $0.58 per share (the “Warrants), as set forth next to such Investor’s
name on Schedule I attached hereto.

 

B.     The Company wishes to eliminate Warrants to eliminate the treatment of
such Warrants as a stockholders’ liability in the Company’s financial
statements.

 

C.     The Company and the Investor desire to enter into this Agreement,
pursuant to which the Company shall, exchange each Warrant for one share of the
Company’s Common Stock (collectively, the “Shares”).

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:

 

1.     EXCHANGES.

 

1.1     Exchange. Immediately upon the execution of this Agreement by the
Investors and the Company (the “Effective Date”), the Investors shall be
entitled to receive Shares in exchange for the Warrants currently held by each
Investor, as set forth next to such Investor’s name on Schedule I attached
hereto upon delivery of the Warrants. Each Investor agrees to promptly deliver
his Warrants after the execution of this Agreement.

 

1.2     Delivery. In exchange for the Warrants, the Company shall within ten
(10) Trading Days of receipt by the Company of the Investor’s original
certificates evidencing the Warrants, (i) deliver or cause to be delivered to
the Investor certificates for the Shares, as set forth next to such Investor’s
name on Schedule I attached hereto, or (ii) cause American Stock Transfer &
Trust Company, LLC (together with any subsequent transfer agent, the “Transfer
Agent”) through the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer Program, to credit the Shares to the Investor’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian system.

 

2. REPRESENTATIONS AND WARRANTIES.

 

2.1     Investor Representations and Warranties. The Investor hereby represents
and warrants to the Company as follows:

 

(a)     Organization; Authority. The Investor is either an individual or an
entity duly incorporated or formed, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation with full
capacity, right, corporate, partnership, limited liability company or similar
power and authority, as applicable, to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its
obligations hereunder. The execution and delivery of this Agreement and
performance by the Investor of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate, partnership, limited
liability company or similar action, as applicable, on the part of the Investor.
This Agreement has been duly executed by the Investor, and when delivered by the
Investor in accordance with the terms hereof, will constitute the valid and
legally binding obligation of the Investor, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

 
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(b)     Reliance on Exemptions. The Investor understands that the Shares are
being offered and sold to in reliance upon specific exemptions from the
registration requirements of the Securities Act of 1933, as amended (the
“Securities Act”) and state securities laws and that the Company is relying upon
the truth and accuracy of, and the Investor’s compliance with, the
representations, warranties, covenants, agreements, acknowledgments and
understandings of the Investor contained in this Agreement in order to determine
the availability of such exemptions and the eligibility of the Investor to
acquire the Shares.

 

(c)     Investor Status. At the time the Investor was offered the Shares
hereunder: (i) it was, and as of the date hereof it is an “accredited investor”
as defined in Rule 501 of Regulation D promulgated under the Securities Act,
(ii) it was, and as of the date hereof it is a “qualified institutional buyer”
as defined in Rule 144A under the Securities Act. The Investor is not required
to be registered as a broker-dealer under Section 15 of the Exchange Act.

 

(d)     Experience of the Investor. The Investor, 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 Shares, and has so evaluated the
merits and risks of such investment. The Investor is able to bear the economic
risk of an investment in the Shares and, at the present time, is able to afford
a complete loss of such investment.

 

(e)     Offer Process. The Investor acknowledges that the Investor was advised
that the Investor would have up to 20 business days to accept the offer to
exchange Investors’ Warrants.

 

(f)     Free and Clear. The Warrants delivered to the Company pursuant to the
Agreement will be delivered to the Company free and clear of any and all liens,
proxies, agreements and other encumbrances.

 

2.2     Company Representations and Warranties. The Company represents and
warrants to the Investor as follows:

 

(a)     Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated have been
duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Board of Directors or the
Company’s stockholders in connection herewith. This Agreement 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, except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

 

 
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(b)     No Conflicts. The execution, delivery and performance by the Company of
this Agreement, the issuance and sale of the securities hereunder and the
consummation by it of the transactions contemplated hereby do not and will not:
(i) conflict with or violate any provision of the Company’s certificate or
articles of incorporation, bylaws or other organizational or charter documents,
(ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the creation of
any lien upon any of the properties or assets of the Company, 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 (iii) conflict with or 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, or by which any property or asset of the Company is bound or affected;
except in the case of each of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a material adverse effect.

 

(c)     Issuance of the Securities. The securities to be issued hereunder are
duly authorized and, when issued and paid for in accordance with this Agreement,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all liens imposed by the Company.

 

3. LOCK-UP.

 

In conjunction with the execution of this Agreement, each Investor shall execute
a lock-up agreement with respect to the Shares, in substantially the form
attached hereto as Exhibit A.

 

4. MISCELLANEOUS.

 

4.1     No Commissions. Neither the Company nor the Investor has paid or given,
or will pay or give, to any person, any commission or other remuneration,
directly or indirectly, in connection with the transactions contemplated by this
Agreement.

 

4.2     Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.

 

4.3     Amendment. This Agreement may only be amended by a written instrument
executed by each of the parties hereto.

 

4.4     Execution in Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of the parties
hereto and delivered to each of the other parties hereto. Delivery of a signed
counterpart of this Agreement by facsimile or email/pdf transmission shall
constitute valid and sufficient delivery thereof.

 

 

 

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IN WITNESS WHEREOF, the Investor and the Company have caused their respective
signature pages to this Agreement to be duly executed as of the date first
written above.

 

  COMPANY:        

 

CATASYS, INC. 

 

     

 

By:  

 /s/ Richard Anderson

 

 

 

Name:  

Richard Anderson

 

 

 

Title:  

President and Chief Operating Officer

 

 

 
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      IN WITNESS WHEREOF, the Investor and the Company have caused their
respective signature pages to this Agreement to be duly executed as of the date
first written above.

 

 

Name of Investor: ________________________________________________________

 

Signature of Authorized Signatory of Investor:
__________________________________

 

Name of Authorized Signatory:
____________________________________________________

 

Title of Authorized Signatory:
_____________________________________________________

 

Email Address of Authorized Signatory:
_____________________________________________

 

Facsimile Number of Authorized Signatory:
__________________________________________

 

Address for Notice to Investor:

 

 

 

Address for Delivery of Certificates to Investor (if not same as address for
notice):

 

 

 

or

 

DWAC INSTRUCTIONS

Broker Name and DTC Number:

 

Account Number at DTC Participant

(if applicable):

 

 

 

 

Shares of Common Stock:

 

 

 
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Schedule I

 

 

Existing Warrants

         

Investor

Date of

Original

Issuance

Shares of

Common

Stock

Underlying the

Warrants

Exercise

Price

Expiration

Date

Number of

Shares of

Common Stock

to be Issued

             

1.

           

2.

           

3.

           

4.

           

5.

           

6.

           

7.

           

8.

           

9.

           

10.

           

11.

           

12.

           

13.

           

 

 
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Exhibit A

 

Form of Lock-Up Agreement

 

 

 

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