Exhibit 10.1

 

FORM OF
AMENDMENT AND EXCHANGE AGREEMENT

 

This AMENDMENT AND EXCHANGE AGREEMENT (the “Agreement”), dated as of August
[  ], 2014, is made by and among LabStyle Innovations Corp., a Delaware
corporation, with headquarters located at 9 Halamish Street, Caesarea Industrial
Park, 38900, Israel (the ”Company”), and the Company investor listed on the
signature page attached hereto (the “Holder”). Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings set forth in the
Securities Purchase Agreement (as defined below).

 

A.           Pursuant to that certain Securities Purchase Agreement, dated as of
February 12, 2014, by and among the Company, the Holder and certain other
investors party thereto (“Securities Purchase Agreement”), the Company sold to
the Holders (i) shares (the “Common Shares”) of the Company’s common stock, par
value $0.0001 per share (the “Common Stock”) and (ii) Warrants, in substantially
the form attached to the Securities Purchase Agreement as Exhibit A (the
“Warrants”), representing the right to acquire additional shares of Common Stock
(the “Warrant Shares”).

 

B.           The Securities Purchase Agreement and related Registration Rights
Agreement dated as of February 12, 2014 by and among the Company, the Holder and
certain other investors party thereto (the “Registration Rights Agreement”)
contain certain terms and conditions that the Company and the Holder desire to
amend and/or terminate pursuant to the terms of this Agreement.

 

C.           In consideration of such amendments and/or terminations, the
Company and the Holder desire to exchange all of the Warrants held by the
Holders for shares of Common Stock (the “Exchange Shares”) pursuant to the terms
hereof in a transaction undertaken in reliance upon the exemption from
registration provided by Section 3(a)(9) of the Securities Act of 1933, as
amended (the “1933 Act”).

 

D.           The Company is negotiating the exchange of the other Warrants
issued pursuant to the Securities Purchase Agreement that are currently
outstanding in the same form as this Agreement (the “Other Agreements”).

 

NOW THEREFORE, in consideration of the foregoing mutual premises and the
covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt, and legal adequacy of which is hereby acknowledged,
the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.INCORPORATION OF PREMISES; CAPITALIZED TERMS.

 

(a)           The Company and the Holder agree that the premises of this
Agreement set forth above are incorporated into and form an integral part of
this Agreement.

 

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(b)           Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Securities Purchase Agreement.

 

2.ISSUANCE OF EXCHANGE SHARES.

 

Subject to the satisfaction (or waiver) of the conditions set forth in Section 5
and 6 below, the Company and the Holder hereby agree that on August 22, 2014,
all the Warrants held by the Holder shall be exchanged, in a transaction
undertaken in reliance upon the exemption from registration provided by Section
3(a)(9) of the 1933 Act (such transaction, the “Exchange”) into the number of
Exchange Shares (the “Exchange Shares Number”) equal to the sum of (a) the
number of shares of Common Stock equal to the difference calculated by
subtracting (I) the Number of Shares Previously Delivered, as set forth on the
Holder's signature page attached hereto, from (II) quotient determined by
dividing (x) the Purchase Price paid by the Holder at the Closing as set forth
on the Holder's signature page attached hereto by (y) the Adjustment Price and
(b) the number of shares of Common Stock equal to the product of (i) the Number
of Initial Warrants, as set forth on the Holder's signature page attached
hereto, and (ii) the quotient determined by dividing $2.35 by $0.45. After such
Exchange: (i) all of the Company’s obligations under the Securities Purchase
Agreement to deliver any additional Adjustment Shares to the Holder will be
deemed satisfied and (ii) all of the Company’s obligations under the Warrants
held by the Holder will be deemed satisfied and such Warrants terminated. As
used herein, the "Adjustment Price" means ninety percent (90%) of the lower of
(i) the arithmetic average of the Weighted Average Prices of the Common Stock
during the three (3) Trading Days immediately following August 18, 2014, and
(ii) the Closing Sale Price of the Common Stock on August 21, 2014.

 

3.EXCHANGE; CLOSING; AMENDMENTS.

 

(a)           Procedure. At the Closing (as defined in Section 3(b) hereof), the
Company shall issue and deliver to the Holder a stock certificate representing
the Exchange Shares in an amount equal to the Exchange Shares Number (or, with
the consent of the Holder, issue Exchange Shares equal to the Exchange Shares
Number by recording such Exchange Shares in the Holder’s account at Company’s
transfer agent in restricted book entry form), with the Exchange Shares Number
calculated pursuant to Section 2 hereof, and effective upon receipt of such
Exchange Shares, the Warrants held by the Holder will be deemed cancelled and
all rights of the Holder thereunder will terminate. No later than five (5)
Business Days following the Closing Date (as defined in Section 2(b)), the
Holder shall return the original Warrant to the Company.

 

(b)           Closing. The date and time of the closing (the “Closing”) of the
transactions specified in Sections 2 and 3(a) above shall be 10:00 a.m., New
York City Time, on August 22, 2014 (or such other date and time as is mutually
agreed to by the Company and the Holder) (the “Closing Date”), subject to the
notification of satisfaction (or waiver) of the conditions to Closing set forth
in Sections 5 and 6 hereof. The Closing shall occur at the offices of Ellenoff
Grossman & Schole LLP, 1345 Avenue of the Americas, New York, New York 10105 and
may be undertaken remotely by electronic exchange of documentation.

 

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(c)           Legends. The Holder understands that the certificates or other
instruments representing the Exchange Shares and, until such time as the resale
of the Exchange Shares have been registered under the 1933 Act, the stock
certificates or other instruments representing the Exchange Shares, except as
set forth below, shall bear any legend as required by the "blue sky" laws of any
state and a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock certificates or
other instruments):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

At the request of the Holder, which request may be made by the Holder to the
transfer agent at any practicable time following execution of this Agreement, on
(i) the Closing Date, if the Company is then in compliance with Rule 144(c)(1)
or (ii) such date occurring after the Closing Date if the Company is in
compliance with Rule 144(c)(1) the ("Legend Removal Date"), the legend set forth
above shall be removed and the Company shall issue to such holder by electronic
delivery at the applicable balance account at the DTC, if, unless otherwise
required by state securities laws: (i) such Exchange Shares are registered for
resale under the 1933 Act, (ii) in connection with a sale, assignment or other
transfer, such holder provides the Company with an opinion of counsel, in a
generally acceptable form, to the effect that such sale, assignment or transfer
of the Exchange Shares may be made without registration under the applicable
requirements of the 1933 Act, or (iii) the Exchange Shares can be sold, assigned
or transferred pursuant to Rule 144 or Rule 144A. The Company shall be
responsible for the fees of its transfer agent and all DTC fees associated with
such issuance as well as the fees of legal counsel to the Company if such
counsel provides such opinion. If the Company shall fail for any reason or for
no reason to issue to the holder of the Exchange Shares within three (3) Trading
Days after the occurrence of any of (i) through (iii) above, issue such Exchange
Shares to such holder by electronic delivery at the applicable balance account
at DTC, and if on or after such Trading Day such holder effects a Buy-In, then
the Company shall, within three (3) Trading Days after such holder's request and
in the holder's discretion, either (i) pay the Buy-In Price in cash, at which
point the Company's obligation to deliver such unlegended Exchange Shares shall
terminate, or (ii) promptly honor its obligation to deliver to such holder such
unlegended Exchange Shares as provided above and pay cash to such holder in an
amount equal to the excess (if any) of the Buy-In Price over the product of (A)
such number of shares of Common Stock, times (B) the Closing Sale Price (as of
the Common Stock defined in the Warrants) on the date of the occurrence of any
of clauses (i) through (iii), as applicable.

 

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(d)           Amendments to Transaction Documents.

 

(i)           Ratifications. Except as otherwise expressly provided herein, the
Securities Purchase Agreement, the Registration Rights Agreement and each other
Transaction Document, are, and shall continue to be, in full force and effect
and is hereby ratified and confirmed in all respects, except that on and after
the Closing Date (i) all references in the Securities Purchase Agreement to
“this Agreement”, “hereto”, “hereof”, “hereunder” or words of like import
referring to the Securities Purchase Agreement shall mean the Securities
Purchase Agreement as amended by this Agreement, (ii) all references in the
Registration Rights Agreement to “this Agreement”, “hereto”, “hereof”,
“hereunder” or words of like import referring to the Registration Rights
Agreement shall mean the Registration Rights Agreement as amended by this
Agreement, and (iii) all references in the other Transaction Documents, to the
“Securities Purchase Agreement” and “Registration Rights Agreement” (and
corollary references to “thereto”, “thereof”, “thereunder” or words of like
import referring to the Securities Purchase Agreement and the Registration
Rights Agreement, respectively) shall mean the Securities Purchase Agreement and
Registration Rights as amended by this Agreement.

 

(ii)           Amendments. Effective as of the Closing Date, each of the
Transaction Documents are hereby amended as follows:

 

(1)           Sections 1(b) and 1(c) of the Securities Purchase Agreement are
hereby deleted in their entirety and are of no further force and effect, with
the effect in part that all of the Company’s obligations under the Securities
Purchase Agreement or any other Transaction Document to deliver any additional
Adjustment Shares to the Holder are irrevocably terminated.

 

(2)            Sections 4(j), 4(k), 4(l), 4(m), 4(n), 4(o) and 4(r) of the
Securities Purchase Agreement are hereby deleted in their entirety and are of no
further force and effect.

 

(3)           Section 2(b) of the Registration Rights Agreement (and any related
defined terms appearing in Section 1 of the Registration Rights Agreement or
related provisions of the Registration Rights Agreement generally) are hereby
deleted in their entirety and are of no further force and effect, with the
effect that the Company’s obligations under the Registration Rights Agreement to
register with the SEC any Adjustment Shares or Warrant Shares (other than those
registered under the Company’s Registration Statement on Form S-1, File No.:
333-194710, declared effective June 3, 2014 (the “Effective Registration
Statement”)) are irrevocably terminated.

 

(4)            Section 2(f) of the Registration Rights Agreement is hereby
deleted in its entirety and is of no further force and effect.

 

(5)            The defined term “Adjustment Shares” is hereby amended to mean
and refer solely and exclusively to (i) the number of shares of Common Stock
which were issued to the Holder on or about July 3, 2014 as the First Adjustment
Amount and (ii) the Exchange Shares to be issued hereunder.

 

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(6)            The defined term “Common Shares” is hereby amended to include the
Exchange Shares.

 

(7)            The defined terms “Initial Registrable Securities,” "Initial
Required Registration Amount" and “Registrable Securities” are hereby amended to
mean and refer solely and exclusively to the aggregate (i) 2,226,956 shares of
Common Stock and (ii) 1,670,216 Warrant Shares issued on February 18, 2014 under
the Transaction Documents.

 

(8)            The defined term “Registration Statement” is hereby amended to
mean and refer solely and exclusively to the Effective Registration Statement.

 

(9)           The defined term “Transaction Documents” is hereby amended to
include this Agreement.

 

(10)          All references to “Securities Purchase Agreement” and
“Registration Rights Agreement” shall mean the Securities Purchase Agreement and
Registration Rights Agreement, each as amended hereby.

 

(11)           The defined terms “Warrants” and “Warrant Shares” are hereby
deleted in their entirety.

 

(iii)           Effect and Intent of this Agreement. To the extent of any
inconsistencies in interpretation between the terms of this Agreement and the
terms of the Transaction Documents as originally entered into between the
Company and the Holder on or about February 12, 2014, and as subsequently
amended, the terms of this Agreement shall govern. This Agreement has been
entered into pursuant to discussions and negotiations solely between the Company
and the Holder and shall be deemed an agreement in writing by the Holder to
amend the Transaction Documents in accordance with the terms thereof. The
Company and the Holder each acknowledge that the Company and the Holder have
individually negotiated and entered into this Agreement without reference to any
other holder of Company securities and that the Holder is not acting in concert
with any other person or entity in entering into this Agreement or otherwise
with respect to the Company. In addition, the Holder acknowledges and agrees
that this Agreement is the result of arms’ length negotiations between the
Company and the Holder and that the Holder has not been subject to any pressure
by the Company, or any party acting on the Company’s behalf, to enter into this
Agreement and/or consummate the transactions contemplated hereby.

 

4.REPRESENTATIONS, AGREEMENTS, WARRANTIES AND COVENANTS.

 

(a)           Holder Representations, Warranties and Covenants. The Holder
hereby represents, agrees, warrants and covenants, as applicable, to and with
the Company that:

 

(i)           Authorization; Enforcement; Validity. The Holder has the power and
authority to execute and deliver this Agreement and perform its obligations
hereunder; and this Agreement and the transactions contemplated hereby have been
duly authorized by the Holder. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Holder and shall constitute
the legal, valid and binding obligations of the Holder enforceable against the
Holder in accordance with its terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

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(ii)           No Conflicts. The execution, delivery and performance by the
Holder of this Agreement and the consummation by the Holder of the transactions
contemplated hereby will not (i) result in a violation of the organizational
documents of the Holder or (ii) conflict with, or constitute a default (or an
event which 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 of, any agreement, indenture or instrument to which the Holder is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable to
the Holder, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of the Holder to perform its obligations hereunder.

 

(iii)           Title to Warrant. The Holder is the beneficial owner and sole
legal owner of, and has good and valid title to, the Warrant, free and clear of
any mortgage, lien, pledge, charge, security interest, encumbrance, title
retention agreement, option, equity or other adverse claim thereto other than
encumbrances by one or more brokers of the Holder, which shall terminate upon
the Closing, and encumbrances under federal or state securities laws (“Claims”).
The Holder has not, in whole or in part, (i) assigned, transferred,
hypothecated, pledged or otherwise disposed of the Warrant or its rights in the
Warrant, or (ii) given any person or entity any transfer order, power of
attorney or other authority of any nature whatsoever with respect to the
Warrant. Good and valid title to the Warrant, free and clear of any Claims, will
pass to the Company upon consummation of the transaction contemplated hereby.

 

(iv)           Waiver of Registration Failures and Delay Payments. Effective as
of the Closing Date, the Holder irrevocably waives and forgives any Registration
Failure, Filing Failure, Effectiveness Failure or Maintenance Failure and any
and all related Registration Delay Payments (each as defined in the Registration
Rights Agreement) that the Company has or may have incurred on or prior to the
Closing Date and agrees that the Company will have no liability for (and is
hereby irrevocably released from any and all claims or damages related to) the
same from and after the Closing Date.

 

(v)           Waiver of Prior Breaches. Effective as of the Closing Date, the
Holder irrevocably waives and forgives any breaches by the Company of any
agreements, representations or covenants of the Company in the Transaction
Documents occurring prior to the Closing Date relating to: (A) the due
authorization or due reservation of any Adjustment Shares or other Company
securities delivered or deliverable under the Transaction Documents which might
have been, as of February 18, 2014, in excess of the Company’s authorized Common
Stock and (B) the Company’s obligation to deliver registered Adjustment Shares
to the Holder, and agrees that the Company will have no liability for (and is
hereby irrevocably released from any and all claims or damages related to) the
same from and after the Closing Date.

 

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(vi)           No Commissions. The Holder is not now, and following the Closing
will not be, liable for any brokerage, finder’s or solicitation fees or
commissions with respect to the transactions contemplated by this Agreement.

 

(b)           Company Representations, Warranties and Covenants. The Company
hereby represents, agrees, warrants and covenants, as applicable, to and with
the Holder that:

 

(i)           Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to issue the Exchange Shares in accordance
with the terms hereof and thereof. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby, including, without limitation, the issuance of the Exchange
Shares have been duly authorized by the Company’s Board of Directors and no
further filing, consent or authorization is required by the Company, its Board
of Directors or its stockholders. This Agreement has been duly executed and
delivered by the Company, and constitutes the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies.

 

(ii)           Issuance of Securities. The issuance of the Exchange Shares is
duly authorized and, upon issuance in accordance with the terms hereof, the
Exchange Shares shall be validly issued and free from all preemptive or similar
rights, taxes, liens and charges and other encumbrances with respect to the
issue thereof and the Exchange Shares shall be fully paid and nonassessable with
the holder thereof being entitled to all rights accorded to a holder of Common
Stock. The offer and issuance by the Company of the Exchange Shares in
conformity with this Agreement constitute transactions exempt from registration
under the 1933 Act pursuant to Section 3(a)(9) of the 1933 Act.

 

(iii)           No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby (including, without limitation, the issuance of the Exchange
Shares) will not (i) result in a violation of the Company’ Certificate of
Incorporation or Bylaws or other organizational documents of the Company or any
of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries
or the articles of association or bylaws of the Company or any of its
Subsidiaries or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) in any respect
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including foreign, federal and
state securities laws and regulations and the rules and regulations of Principal
Market and including all applicable foreign, federal laws, rules and
regulations) applicable to the Company or any of its Subsidiaries or by which
any property or asset of the Company or any of its Subsidiaries is bound or
affected.

 

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(iv)           Consents. The Company is not required to obtain any consent from,
authorization or order of, or make any filing or registration with any court,
governmental agency or any regulatory or self-regulatory agency or any other
Person in order for it to execute, deliver or perform any of its obligations
under or contemplated by this Agreement, in each case, in accordance with the
terms hereof. All consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence have
been obtained or effected on or prior to the Closing Date, and the Company is
unaware of any facts or circumstances which might prevent the Company from
obtaining or effecting any of the registration, application or filings
contemplated by the Transaction Documents. The Company is not in violation of
the requirements of the Principal Market and has no knowledge of any facts or
circumstances which could reasonably lead to delisting or suspension of the
Common Stock in the foreseeable future. The issuance by the Company of the
Exchange Shares shall not have the effect of delisting or suspending the Common
Stock from the Principal Market.

 

(v)           Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by the Principal Market, any court, public
board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries, the Common Stock or any of the Company’s Subsidiaries or
any of the Company’s or its Subsidiaries’ officers or directors, whether of a
civil or criminal nature or otherwise, in their capacities as such.

 

(vi)           Other Agreements. The Company will not provide any holders of any
Warrant which has the same terms as the Holder’s Warrant with a more favorable
exchange ratio than is provided to the Holder hereunder or offer any
consideration (other than the reimbursement of legal fees) to any holder of such
warrants without offering the same consideration to the Holder.

 

(vii)           Standstill. The Company will not, from and after the date hereof
and until the thirtieth (30) day following the later of (i) the date on which
the Holder may sell all of the Exchange Shares without restriction or limitation
pursuant to Rule 144 and (ii) the date the Company files its Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2014 (such later date, the
"Threshold Date"), (x) consummate any sale, pledge, contract to sell or other
disposition of any equity securities or securities convertible, exercisable or
exchangeable into equity securities of the Company (collectively, “Equity
Securities”), other than Equity Securities (that are at the time of issuance and
until the Threshold Date, shall be "restricted securities" (as defined under
Rule 144)) issued or issuable: (A) to directors, officers, employees or bona
fide consultants performing services typically performed by employees of the
Company in their capacity as such pursuant to the Company’s existing or any
future stock option, stock incentive or similar plan (as the same may be amended
from time to time) approved by the Company’s Board of Directors and majority
stockholders, (B) upon the conversion or exercise of Equity Securities (other
than securities that are covered by clause (A) above) issued prior to the date
hereof; and (C) pursuant to acquisitions or strategic transactions approved by a
majority of the disinterested directors of the Company, provided that any such
issuance shall only be to a Person (or to the equity holders of a Person) which
is, itself or through its subsidiaries, an operating company or an owner of an
asset in a business synergistic with the business of the Company and shall
provide to the Company additional benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is issuing
securities for the purpose of raising capital or to an entity whose primary
business is investing in securities, (y) enter into any equity line of credit,
"at-the-market" offering (as defined in Rule 415(a)(4) under the 1933 Act) or
substantially similar transaction, or (z) allow any registration statement with
respect to any of the Company's securities to be declared effective by the SEC.
For the avoidance of doubt, the Company shall not be prohibited from: (i)
closing the exchanges contemplated by the Other Agreements, (ii) engaging in
discussions, negotiations and document preparation with potential investors and
agents regarding financing plans and related transactions for the Company and
(iii) filing a registration statement with the SEC to register a primary
offering of securities of the Company, as long as any such registration
statement is not declared effective with the SEC on or prior to the Threshold
Date.

 

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(viii)           SEC Filings. As of their respective filing dates, the Company’s
filings with the SEC under the 1934 Act since February 18, 2014, including,
without limitation, the Company’s Annual Report on Form 10-K filed on March 4,
2014 (the “SEC Documents”), complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.  

 

(ix)           Disclosure of Transactions and Other Material Information. The
Company shall file a current report on Form 8-K (the “8-K Filing”) on or before
8:30 a.m., New York City time, on the first Business Day after both this
Agreement has been executed and the Other Agreements have been executed by the
holders of all of the Warrants, in the form required by the 1934 Act, relating
to the transactions contemplated by this Agreement and the Other Agreements and
attaching this Agreement or a form hereof (including, without limitation, all
schedules and exhibits to this Agreement) as an exhibit to such filing. From and
after the filing of the 8-K Filing with the SEC, the Holder shall not be in
possession of any material, nonpublic information received from the Company, any
of its Subsidiaries or any of their respective officers, directors, employees or
agents, that is not disclosed in the 8-K Filing. In addition, effective upon the
filing of the 8-K Filing, the Company acknowledges and agrees that any and all
confidentiality or similar obligations under any agreement, whether written or
oral, between the Company, any of its Subsidiaries or any of their respective
officers, directors, affiliates, employees or agents, on the one hand, and the
Holder or any of its affiliates, on the other hand, shall terminate. The Company
shall not, and shall cause each of its Subsidiaries and its and each of their
respective officers, directors, employees and agents, not to, provide the Holder
with any material, nonpublic information regarding the Company or any of its
Subsidiaries from and after the date hereof without the express prior written
consent of the Holder. To the extent that the Company, any of its Subsidiaries
or any of their respective officers, directors, employees, affiliates or agents
delivers any material, non-public information to the Holder without the Holder’s
consent, the Company hereby covenants and agrees that the Holder’s shall not
have any duty of confidentiality to the Company, any of its Subsidiaries or any
of their respective officers, directors, employees, affiliates or agents with
respect to, or a duty to the Company, any of its Subsidiaries or any of their
respective officers, directors, employees, affiliates or agents not to trade on
the basis of, such material, non-public information.

 

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(x)           Holding Period. For the purposes of Rule 144, the Company
acknowledges that the holding period of the Exchange Shares may be tacked onto
the holding period of the Warrants and the Company agrees not to take a position
contrary to this Section 3(b)(x). The Company shall remove any restrictive
legends on the Exchange Shares on the Legend Removal Date and agrees to take all
actions, including, without limitation, the issuance by its legal counsel of any
necessary legal opinions, necessary to issue Exchange Shares that are freely
tradable on the Principal Market without restriction and not containing any
restrictive legend without the need for any action by the Holder.

 

(xi)           Listing. The Company shall promptly secure the listing of all of
(i) the Exchange Shares and (ii) any capital stock of the Company issued or
issuable with respect to the Exchange Shares, as applicable, as a result of any
stock split, stock dividend, recapitalization, exchange or similar event or
otherwise (the “Listed Securities”) upon each national securities exchange and
automated quotation system, if any, upon which the Common Stock is then listed
(subject to official notice of issuance) and shall maintain such listing of all
Listed Securities from time to time issuable under the terms of the Transaction
Documents. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 3(b)(xi).

 

(xii)           Reporting Status. Until the earlier of (i) the date on which the
Holder has sold all the Exchange Shares and (ii) the date on which the Holder
may sell all of the Exchange Shares without restriction or limitation pursuant
to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1)
(or any successor thereto) promulgated under the 1933 Act, the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would no longer require or otherwise permit such
termination.

 

(xiii)           No Integration Actions. None of the Company, any of its
Affiliates or any Person acting on behalf of the Company or such Affiliate will
sell, offer for sale or solicit offers to buy in respect of any security (as
defined in the 1933 Act) that would be integrated with the issuance of the
Exchange Shares in a manner that would require the registration under the 1933
Act of the issuance to the Holder or require shareholder approval under the
rules and regulations of the Principal Market, and the Company will take all
action that is appropriate or necessary to assure that its offerings of other
securities will not be integrated for purposes of the 1933 Act or the rules and
regulations of the Principal Market with the issuance of Exchange Shares
contemplated hereby.

 

(xiv)           No Commissions. Except for a fixed financial advisory fee
payable by the Company to ROTH Capital Partners, LLC, the Company is not now,
and following the Closing will not be, liable for any brokerage, finder’s or
solicitation fees or commissions with respect to the transactions contemplated
by this Agreement.

 

 

10

 

 

5.CONDITIONS TO ComPANY’S OBLIGATIONs hereunder.

 

The obligations of the Company to the Holder hereunder are subject to the
satisfaction of each of the following conditions, provided that these conditions
are for the Company’s sole benefit and may be waived by the Company at any time
in its sole discretion by providing the Holder with prior written notice
thereof:

 

(a)           The Holder shall have duly executed this Agreement and delivered
the same to the Company; and

 

(b)           The representations and warranties of the Holder shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date which shall be true and correct as of such specified date), and the Holder
shall have performed, satisfied and complied with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Holder at or prior to the Closing Date.

 

6.CONDITIONS TO HOLDER’S OBLIGATIONs HEREUNDER.

 

The obligations of the Holder hereunder are subject to the satisfaction of each
of the following conditions, provided that these conditions are for the Holder’s
sole benefit and may be waived by the Holder in respect of itself at any time in
its sole discretion by providing the Company with prior written notice thereof:

 

(a)           The Company shall have duly executed this Agreement and delivered
the same to the Holder;

 

(b)           The holders of all outstanding Warrants shall have duly executed
and delivered to the Company either this Agreement or an Other Agreement;

 

(c)           The Company shall have obtained the listing of all of the Exchange
Shares on each Eligible Market on which the Common Stock is then listed for
trading;

 

(d)           The representations and warranties of the Company under this
Agreement shall be true and correct in all respects as of the date when made and
as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date which shall be true and correct
as of such specified date) and the Company shall have performed, satisfied and
complied in all respects with the covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the Company at
or prior to the Closing Date;

 

(e)           The Common Stock (i) shall be designated for quotation or listed
on the Principal Market and (ii) shall not have been suspended, as of the
Closing Date, by the SEC or the Principal Market from trading on the Principal
Market nor shall suspension by the SEC or the Principal Market have been
threatened, as of the Closing Date, either (A) in writing by the SEC or the
Principal Market or (B) by falling below the minimum listing maintenance
requirements of the Principal Market;

 

11

 

 

(f)           Counsel for the Company shall have delivered a legal opinion to
the Company's transfer agent instructing the transfer agent to deliver a number
of Exchange Shares to the Holder equal to the Exchange Shares Number by
crediting such Exchange Shares to the Holder's balance account with The
Depository Trust Company through its Deposit / Withdrawal at Custodian system in
accordance with the provisions of Section 3(a) hereof, and the Company's
transfer agent shall have delivered such Exchange Shares to such balance
account;

 

(g)           The Company shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the transactions
contemplated hereby; and

 

(h)           Since the date hereof, no event that could be reasonably expected
to cause a Material Adverse Effect shall have occurred.

 

7.TERMINATION.

 

In the event that the Closing shall not have occurred by on or before August 29,
2014, due to the Company’s or the Holder’s failure to satisfy the conditions set
forth in Sections 4 and 5 hereof (and the nonbreaching party’s failure to waive
such unsatisfied conditions(s)), the nonbreaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party. Upon
such termination, the terms hereof shall be null and void.

 

8.MISCELLANEOUS.

 

(a)           Governing Law; Jurisdiction; Jury Trial. All questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

12

 

 

(b)           Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which 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; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

 

(c)           Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

 

(d)           Severability. If any provision of this Agreement is prohibited by
law or otherwise determined to be invalid or unenforceable by a court of
competent jurisdiction, the provision that would otherwise be prohibited,
invalid or unenforceable shall be deemed amended to apply to the broadest extent
that it would be valid and enforceable, and the invalidity or unenforceability
of such provision shall not affect the validity of the remaining provisions of
this Agreement so long as this Agreement as so modified continues to express,
without material change, the original intentions of the parties as to the
subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

 

(e)           Entire Agreement; Amendments. This Agreement shall supersede all
other prior oral or written agreements among the Holder, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein and therein, and this Agreement, and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the
Holder, and any amendment to this Agreement made in conformity with the
provisions of this Section 8(e) shall be binding on the Holder and the Company.
No provision hereof may be waived other than by an instrument in writing signed
by the party against whom enforcement is sought.

 

(f)           Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered if delivered pursuant to
Section 9(f) of the Securities Purchase Agreement).

 

(g)           Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Warrants.

 

(h)           No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.

 

13

 

 

(i)           Survival. The representations, warranties and covenants of the
Company and the Holder contained herein shall survive the Closing and delivery
of the Exchange Shares.

 

(j)           Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

(k)           No Strict Construction. 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.

 

 

 

[Signature Page Follows]

 

 

 

14

 

 

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

 

 

  COMPANY:       LABSTYLE INNOVATIONS CORP.             By:       Name:      
Title:    

 

 

[Signature Page to Amendment and Exchange Agreement]

 

 

 

 

 

 

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

 

 

  HOLDER:       [               ]                     By:     Name:      
Title:                       Number of Initial Warrants1:    

 

  

          Purchase Price:    

 

  

          Number of Shares Previously Delivered2:    

 

  

     

DWAC Instructions:

 

_________________________

 

_________________________

 

_________________________

 

_________________________

 

 

 

[Signature Page to Amendment and Exchange Agreement]

 

 

--------------------------------------------------------------------------------

1 Insert number of Warrants issued to the Holder at the Closing.

 

2 Insert the number of shares of Common Stock equal to the sum of the number of
Common Shares issued to the Holder at the Closing and First Adjustment Amount
issued to the Holder pursuant to Section 1(b)(ii) of the Securities Purchase
Agreement.