Exhibit 10.2

 

AGREEMENT

 

This AGREEMENT (this “Agreement”) is dated as of August 10, 2016 by and among
DarioHealth Corp., a Delaware corporation (the “Company”), Dicilyon Consulting
and Investment Ltd.(“Dicilyon”) and David Edery, an individual (“Edery” and
together with Dicilyon collectively referred to as the “Investor”). The Company
and the Investor shall be individually referred to as a “Party” and collectively
as the “Parties.”

 

WHEREAS, Investor purchased certain securities from the Company which were
granted certain registration rights which required, among other things, the
continued effectiveness of certain registration statements (the “Registration
Rights”); and

 

WHEREAS, the Company has agreed to issue the Investor the Warrant (as
hereinafter defined) in consideration for the waiver of the Registration Rights;
and

 

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 Investor agree as
follows:

 

1.          Issuance of Warrant. As consideration for the Investor’s execution
of this Agreement, the Company will issue Dicilyon a warrant to purchase 300,000
shares of the Company’s common stock in the form annexed hereto as Exhibit A
(the “Warrant”). The shares of common stock underlying the Warrant shall be
referred to as the “Warrant Shares.”

  

2.          Release by Investor. In consideration of the mutual covenants and
agreements set forth in this Agreement, Dicilyon and Edery on behalf of
themselves and their respective direct or indirect affiliates, members,
shareholders, successors, parent companies, subsidiaries, related business
entities, managers, officers, directors, employees, agents, attorneys, heirs,
executors, administrators, predecessors, beneficiaries, successors and/or
assigns, and any other persons or entities acting on behalf of Dicilyon and
Edery, unconditionally and irrevocably and forever waive, release, discharge,
and covenant not to sue (either directly or indirectly) the Company and/or any
of its respective direct and/or indirect affiliates, members, shareholders,
parent companies, subsidiaries, related business entities, managers, officers,
directors, employees, agents, attorneys, heirs, executors, administrators,
predecessors, beneficiaries, successors and/or assigns, and any other persons or
entities acting on behalf of the Company, from any and all claims, actions,
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages (including, without limitation,
compensatory, consequential and/or punitive damages), judgments, extents,
executions, demands, fees, and liabilities of any kind whatsoever, at law or in
equity (each, a “Claim”, and collectively, “Claims”) whether known or unknown,
which each of Dicilyon and Edery ever had, now has or can, shall, or may have
against the Company and its direct or indirect affiliates, members,
shareholders, parent companies, subsidiaries, related business entities,
managers, officers, directors, employees, agents, attorneys, heirs, executors,
administrators, predecessors, beneficiaries, successors and/or assigns, and any
other persons or entities acting on behalf of the Company, arising by reason of
any matter, cause or thing whatsoever, from the beginning of the world to the
date of this Agreement, including, without limitation, any Claims relating to
the waiver of the Registration Rights or otherwise arising under or in
connection with any business or personal relationship, contract, or agreement
existing or imputed by law, known or unknown.

 

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Dicilyon and Edery irrevocably and forever covenant to refrain from asserting,
directly or indirectly, any Claim of any kind which is based upon any matter
released or disclaimed by this Agreement. Dicilyon and Edery represent and
warrant that they have not assigned or transferred any Claim (or any interest in
any Claim) released or discharged by Dicilyon and Edery pursuant to this
Agreement. The releases set forth in this Section 2 shall be construed as
broadly as possible.

 

3.          Registration Rights. On or prior to November 30, 2016, the Company
shall prepare and file with the Securities and Exchange Commission (the “SEC”) a
Registration Statement for the resale of the Warrant Shares. The Company shall
use its commercially best efforts to cause the Registration Statement to be
declared effective under the Securities Act of 1933, as amended (the “Securities
Act”), as promptly as possible after the filing thereof, and shall use its
commercially best efforts to keep such Registration Statement, with respect to
Dicilyon, continuously effective under the Securities Act until the earlier to
occur of (i) the date on which the Dicilyon may sell the Warrant Shares then
held in compliance with Rule 144, (ii) all Warrant Shares covered by the
Registration Statement have been sold by the Investor, or (iii) two years from
the effective date of the Registration Statement.

  

4.          Provision by Investor of Certain Information in Connection with the
Registration Statement. The Investor agrees to furnish to the Company in writing
(i) such information as the Company may reasonably request for use in connection
with the Registration Statement within 5 business days after receipt of a
request therefor, and (ii) a completed questionnaire in the form satisfactory to
the Company. The Investor agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by the Investor not materially misleading.

  

5.          Authority; No Conflict. Each Party represents that he or it has full
right, power and authority to enter into this Agreement, and this Agreement
constitutes a legal, valid and binding obligation of such Party. Each Party
represents that the execution, delivery and performance of this Agreement do not
violate or conflict with any law applicable to him or it, any agreement or
instrument to which he or it is a party, any order or judgment of any court or
other agency of government applicable to him or it or any contractual
restriction binding on or affecting him or it.

  

6.          Legal Fees. Each Party will pay his or its own legal fees and costs
with respect to this Agreement.

 

7.          Related Parties; Successors in Interest.  The Parties hereby agree
that this Agreement shall be binding upon the Parties and each of them, and, as
applicable, upon (i) their predecessors, successors and heirs, (ii) their
affiliates, subsidiaries, divisions, alter egos and related entities, and
(iii) their officers, directors, trustees, partners, parents, stockholders,
employees, attorneys, assigns, agents and representatives, and any or all of
them.

  

8.          No Admission.  The Parties expressly agree that this Agreement is
made in compromise of disputed claims and with no admission as to fault or
liability by any of them.

  

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9.          Publicity.  The Parties agree that the terms of this Agreement are
confidential and may not be disclosed to any third parties except to comply with
applicable laws. The Parties agree not to issue any press releases or other
public statement regarding the waiver of the Registration Rights, including this
Agreement, except that the Parties may issue reports, releases or other
announcements reasonably required for SEC, public company reporting or other
necessary regulatory purposes. Notwithstanding anything contained herein to the
contrary, the Investor acknowledges and agrees that the Company may be required
to publicly report the contents of this Agreement and publicly file a copy of
this Agreement in order to comply with SEC regulations.

  

10.           No Assignment. This Agreement, and any and all rights, duties and
obligations hereunder, shall not be assigned, transferred, delegated or
sublicensed by any Party without the prior written consent of the other Parties.
Any attempt by a Party without such permission to assign, transfer, delegate or
sublicense any rights, duties or obligations that arise under this Agreement
shall be void.

  

11.          Advice of Counsel.  Each Party represents that it has been
represented, or has had the opportunity to be represented, by independent legal
counsel of its own choice throughout all of the negotiations that preceded the
execution of this Agreement and that it has executed this Agreement with the
consent and upon the advice of such independent legal counsel, or that it has
had the opportunity to seek such consent and advice. Each Party acknowledges
that it has read this Agreement and assents to all the terms and conditions
contained herein without any reservation whatsoever and that it has had the
opportunity to have the same explained to it by its own counsel, who have
answered any and all questions which have been asked of them, with regard to the
meaning of any provision hereof.

  

12.          Entire Agreement.  This Agreement contain the entire agreement and
understanding of the Parties concerning the subject matter hereof, and supersede
and replace all prior negotiations, proposed agreements, representations, and
agreements. Each of the Parties acknowledges that it is not executing this
Agreement in reliance on any promise, representation, or warranty not contained
in this Agreement.

 

13.          Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

  

14.          Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.

  

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15.          Waivers; Amendment. A provision of this Agreement may be waived
only by a writing signed by the waiving Party. No provision of this Agreement
may be modified, supplemented or amended except in a written instrument signed
by the Parties.

 

16.           Construction. The parties agree that each of them and/or their
respective counsel have reviewed and had an opportunity to revise this Agreement
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments thereto.

  

17.          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 each other party, it being understood that the
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, 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 or “.pdf” signature page were an original
thereof.

 

 

 

 

 

[signature page follows]

 

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

 

      DARIOHEALTH CORP.                     By: /s/ Zvi Ben-David        Name:
Zvi Ben-David         Title:   CFO         INVESTOR:         Dicilyon Consulting
and Investment Ltd.         By: David Edery        Name: David Edery       
Title: Chairman         By: /s/ David Edery         Name: David Edery           

 

 

 

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Exhibit A

 

Form of Warrant

 

 

 

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NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE COMPANY TO
SUCH EFFECT.

  

  August 10, 2016

 

DARIOHEALTH CORP.

Common Stock Purchase Warrant

 

THIS CERTIFIES THAT, for value received, ___________________________ (the
“Holder”), is entitled to subscribe for and purchase, at the Exercise Price (as
defined below), from DarioHealth Corp., a Delaware corporation (the “Company”),
shares of the Company’s common stock, par value $0.0001 (the “Common Stock”), at
any time prior to 5:00 p.m., New York time, on March 8, 2021 (the “Warrant
Exercise Term”).

 

This Warrant is issued in accordance with, and subject to, the terms and
conditions described in the Agreement, dated as of even date herewith, between
the initial Holder, David Edery and the Company (the “Agreement”). All
capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Agreement.

 

This Warrant is subject to the following terms and conditions:

 

1.           Shares. The Holder has, subject to the terms set forth herein, the
right to purchase up to an aggregate of 300,000 shares of Common Stock (the
“Warrant Shares”) at a per share exercise price of $4.50, subject to adjustment
as provided for herein (the “Exercise Price”).

 

2.           Exercise of Warrant.

 

(a)           Exercise. This Warrant may be exercised by the Holder at any time
prior to the end of the Warrant Exercise Term, in whole or in part, by
delivering the notice of exercise attached as Exhibit A hereto (the “Notice of
Exercise”), duly executed by the Holder to the Company at its principal office,
or at such other office as the Company may designate, accompanied by payment, by
wire transfer of immediately available funds to the order of the Company to an
account designated by the Company, of the amount obtained by multiplying the
number of Warrant Shares designated in the Notice of Exercise by the Exercise
Price (the “Purchase Price”). For purposes hereof, “Exercise Date” shall mean
the date on which all deliveries required to be made to the Company upon
exercise of this Warrant pursuant to this Section 2(a) shall have been made. The
Holder shall not be required to deliver the original Warrant in order to effect
an exercise hereunder. No originals of the Notice of Exercise shall be required
to be delivered, nor shall any medallion guarantee (or any other type of
guarantee or notarization) of any Notice of Exercise shall be required.

 

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(b)            Cashless Exercise.

 

(i) Notwithstanding anything contained herein to the contrary, if and only if a
Registration Statement covering the resale of all or any portion of the Warrant
Shares is not available for the resale of such Warrant Shares (such unregistered
portion of the Warrant Shares, the “Unavailable Warrant Shares”), the Holder
may, in its sole discretion, exercise this Warrant solely with respect to the
Unavailable Warrant Shares and, in lieu of making the cash payment otherwise
contemplated to be made to the Company upon such exercise in payment of the
aggregate Exercise Price for such Unavailable Warrant Shares, elect instead to
exercise the Warrant on a cashless basis as described in paragraph (ii) below.

 

(ii) Upon a “cashless exercise”, the Holder shall be entitled to receive the
number of Warrant Shares equal to the quotient obtained by dividing (A-B) (X) by
(A), where:

 

  (A) = the VWAP on the Trading Day immediately preceding the Exercise Date;

 

  (B) = the Exercise Price of the Warrant, as adjusted as set forth herein; and

 

  (X) = the number of Warrant Shares that would be issuable upon exercise of the
Warrant in accordance with the terms of the Warrant if such exercise were by
means of a cash exercise rather than a cashless exercise.

 

If the Warrant Shares are issued in such a cashless exercise, the Company
acknowledges and agrees that, in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the registered characteristics
of the Warrants being exercised and the Company agrees not to take any position
contrary thereto.

 

(c)            Issuance of Certificates. As soon as practicable after the
exercise of this Warrant, in whole or in part, in accordance with Section 2(a)
hereof (and in no event later than two (2) Trading Days following the delivery
of the Notice of Exercise), the Company, at its expense, shall cause to be
issued in the name of and delivered to the Holder: (i) a certificate or
certificates for (or, if applicable, by delivery through the facilities of the
Depository Trust Company in electronic form of) the number of fully paid and
non-assessable Warrant Shares to which the Holder shall be entitled upon such
exercise and, if applicable, (ii) a new warrant of like tenor to purchase all of
the Warrant Shares that may be purchased pursuant to the portion, if any, of
this Warrant not exercised by the Holder. The Holder shall for all purposes
hereof be deemed to have become the Holder of record of such Warrant Shares on
the date on which the Notice of Exercise and payment of the Purchase Price in
accordance with Section 2(a) hereof were delivered and made, respectively,
irrespective of the date of delivery of such certificate or certificates, except
that if the date of such delivery, notice and payment is a date when the stock
transfer books of the Company are closed, such person shall be deemed to have
become the holder of record of such Warrant Shares at the close of business on
the next succeeding date on which the stock transfer books are open.

 

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(d)           Taxes. The issuance of the Warrant Shares upon the exercise of
this Warrant, and the delivery of certificates or other instruments representing
such Warrant Shares, shall be made without charge to the Holder for any tax or
other charge of whatever nature in respect of such issuance and the Company
shall bear any such taxes in respect of such issuance.

 

3.           Adjustment of Exercise Price.

 

(a)           Adjustment for Reclassification, Consolidation or Merger. If while
this Warrant, or any portion hereof, remains outstanding and unexpired there
shall be (i) a reorganization or recapitalization (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), (ii) a merger or consolidation of the Company with or into another
corporation or other entity in which the Company shall not be the surviving
entity, or a reverse merger in which the Company shall be the surviving entity
but the shares of the Company’s capital stock outstanding immediately prior to
the merger are converted by virtue of the merger into other property, whether in
the form of securities, cash or otherwise, or (iii) a sale or transfer of the
Company’s properties and assets as, or substantially as, an entirety to any
other corporation or other entity in one transaction or a series of related
transactions, then, as a part of such reorganization, recapitalization, merger,
consolidation, sale or transfer, unless otherwise directed by the Holder, all
necessary or appropriate lawful provisions shall be made so that the Holder
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the Exercise Price then in
effect, the greatest number of shares of capital stock or other securities or
property that a holder of the Warrant Shares deliverable upon exercise of this
Warrant would have been entitled to receive in such reorganization,
recapitalization, merger, consolidation, sale or transfer if this Warrant had
been exercised immediately prior to such reorganization, recapitalization,
merger, consolidation, sale or transfer, all subject to further adjustment as
provided in this Section 3. If the per share consideration payable to the Holder
for Warrant Shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by the Company’s Board of Directors. The foregoing
provisions of this paragraph shall similarly apply to successive
reorganizations, recapitalizations, mergers, consolidations, sales and transfers
and to the capital stock or securities of any other corporation that are at the
time receivable upon the exercise of this Warrant. In all events, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction, to
the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property
deliverable or issuable after such reorganization, recapitalization, merger,
consolidation, sale or transfer upon exercise of this Warrant.

 

(b)           Adjustments for Split, Subdivision or Combination of Shares. If
while this Warrant, or any portion hereof, remains outstanding and unexpired the
Company shall subdivide (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
subject to acquisition hereunder, then, upon the effective date of such
subdivision, the Exercise Price in effect immediately prior to such subdivision
will be proportionately reduced and the number of shares of Common Stock subject
to acquisition upon exercise of the Warrant will be proportionately increased.
If the Company at any time combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
subject to acquisition hereunder, then, upon the effective date of such
combination, the Exercise Price in effect immediately prior to such combination
will be proportionately increased and the number of shares of Common Stock
subject to acquisition upon exercise of the Warrant will be proportionately
decreased.

 

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(c)            Adjustment Upon Issuance of Common Stock. If and whenever on or
after the date hereof and prior to March 8, 2017 (the “Applicable Period”), the
Company issues, sells or delivers, or in accordance with this Section 3(c) is
deemed to have issued, sold or delivered, any Common Stock (including the
issuance, sale or delivery of Common Stock owned or held by or for the account
of the Company, but excluding any Excluded Securities (as hereinafter defined)
issued or sold or deemed to have been issued, sold or delivered) for a
consideration per share less than a price equal to the Exercise Price in effect
immediately prior to such issuance, sale or delivery or deemed issuance, sale or
delivery (such Exercise Price then in effect is referred to as the “Applicable
Price”) (the foregoing a “Dilutive Issuance”), then immediately after such
Dilutive Issuance, the Exercise Price then in effect shall be reduced to the New
Issuance Price (as hereinafter defined).

 

For all purposes of the foregoing (including, without limitation, determining
the adjusted Exercise Price and consideration per share under this Section
3(c)), the following shall be applicable:

 

(i) Issuance of Options. If the Company grants or sells any Options (as
hereinafter defined) (other than Options that qualify as Excluded Securities)
during the Applicable Period and the lowest price per share for which one share
is issuable upon the exercise of any such Option or upon conversion, exercise or
exchange of any Convertible Securities (as hereinafter defined) issuable upon
exercise of any such Option is less than the Applicable Price, then such share
shall be deemed to be outstanding and to have been issued and sold or delivered
by the Company at the time of the granting or sale of such Option for the New
Issuance Price. For purposes of this Section 3(c)(i), the “lowest price per
share for which one share of Common Stock is issuable upon the exercise of any
such Options or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option” shall be equal to (1) the
sum of the lowest amounts of consideration (if any) received or receivable by
the Company with respect to any one share of Common Stock upon the granting or
sale of such Option, upon exercise of such Option and upon conversion, exercise
or exchange of any Convertible Security issuable upon exercise of such Option
minus (2) the sum of all amounts paid or payable to the holder of such Option
(or any other person or entity) upon the granting or sale of such Option, upon
exercise of such Option and upon conversion, exercise or exchange of any
Convertible Security issuable upon exercise of such Option plus the value of any
other consideration received or receivable by, or benefit conferred on, the
holder of such Option (or any other person or entity). Except as contemplated
below, no further adjustment of the Exercise Price shall be made upon the actual
issuance of such shares of Common Stock or of such Convertible Securities upon
the exercise of such Options.

 

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(ii) Issuance of Convertible Securities. If the Company issues or sells any
Convertible Securities (other than Convertible Securities that qualify as
Excluded Securities) during the Applicable Period and the lowest price per share
for which one share of Common Stock is issuable upon the conversion, exercise or
exchange thereof is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold or
delivered by the Company at the time of the issuance or sale of such Convertible
Securities for the New Issuance Price. For the purposes of this Section
3(c)(ii), the “lowest price per share for which one share of Common Stock is
issuable upon the conversion, exercise or exchange thereof” shall be equal to
(x) the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to one share of Common Stock upon the
issuance or sale of the Convertible Security and upon conversion, exercise or
exchange of such Convertible Security minus (2) the sum of all amounts paid or
payable to the holder of such Convertible Security (or any other person or
entity) upon the issuance or sale of such Convertible Security plus the value of
any other consideration received or receivable by, or benefit conferred on, the
holder of such Convertible Security (or any other person or entity). Except as
contemplated below, no further adjustment of the Exercise Price shall be made
upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustment of Warrants has been or is to be made pursuant to other
provisions of this Section 3(c), except as contemplated below, no further
adjustment of the Exercise Price shall be made by reason of such issue, sale or
delivery.

 

(iii) Change in Option Price. If during the Applicable Period the purchase or
exercise price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities or the rate at which any Convertible Securities are convertible into
or exercisable or exchangeable for Common Stock increases or decreases at any
time, the Exercise Price in effect at the time of such increase or decrease
shall be adjusted to the Exercise Price which would have been in effect at such
time had such revised terms been in effect. For purposes of this Section
3(c)(iii), if the terms of any Option or Convertible Security that was
outstanding as of the original issuance of the Warrants are increased or
decreased in the manner described in the immediately preceding sentence, then
such Option or Convertible Security and the shares of Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such increase or decrease. No adjustment pursuant
to this Section 3(c) shall be made if such adjustment would result in an
increase of the Exercise Price then in effect. For purposes of clarity, if the
Company enters into a Variable Rate Transaction (as hereinafter defined), the
Company shall be deemed to have issued Common Stock, Options or Convertible
Securities at the lowest possible conversion or exercise price at which such
securities may be converted or exercised. For purposes herein, no Variable Rate
Transaction shall be Excluded Securities.

 

(d)           Other Events. If any event occurs of the type contemplated by the
provisions of Section 3(a) or (b) but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, Adjustment Rights, phantom stock rights or other rights with equity
features to all holders of Common Stock for no consideration), then the
Company's Board of Directors will, at its discretion and in good faith, make an
adjustment in the Exercise Price and the number of Warrant Shares or designate
such additional consideration to be deemed issuable upon exercise of a Warrant,
so as to protect the rights of the registered Holder. No adjustment to the
Exercise Price will be made pursuant to more than one sub-section of this
Section 3 in connection with a single issuance.

 

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(e)           Notice of Adjustments. Upon any adjustment of the Exercise Price
and any increase or decrease in the number of Warrant Shares purchasable upon
the exercise of this Warrant, then, and in each such case, the Company, within
15 days thereafter, shall give written notice thereof to the Holder at the
address of such Holder as shown on the books of the Company, which notice shall
state the Exercise Price as adjusted and, if applicable, the increased or
decreased number of Warrant Shares purchasable upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation of each.

 

4.           Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
or email attachment as set forth on the signature pages attached hereto at or
prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading
Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number or email attachment as set forth on the
signature pages attached hereto on a day that is not a Trading Day or later than
5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages attached hereto.

 

5.           Legends. Unless the Warrant Shares are registered for resale with
the Commission, each certificate evidencing the Warrant Shares issued upon
exercise of this Warrant shall be stamped or imprinted with a legend
substantially in the following form (in addition to any legend required by
applicable state securities or “blue sky” laws):

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”

 

Certificates evidencing the Warrant Shares shall not be required to contain any
legend: (i) while a Registration Statement is effective under the Securities
Act, (ii) following any sale of such Warrant Shares pursuant to Rule 144, (iii)
if such Warrant Shares are eligible for sale under Rule 144, without the
requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Warrant Shares and without volume
or manner-of-sale restrictions or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission).

 

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6.           Removal of Legend. Upon request of a holder of a certificate with
the legends required by Section 5 hereof, the Company shall issue to such holder
a new certificate therefor free of any transfer legend, if, with such request,
the Company shall have received an opinion of counsel satisfactory to the
Company in form and substance to the effect that any transfer by such holder of
the Warrant Shares evidenced by such certificate will not violate the Securities
Act or any applicable state securities laws.

 

7.           Fractional Shares. No fractional Warrant Shares will be issued in
connection with any exercise hereunder. Instead, the Company shall round up, as
nearly as practicable to the nearest whole Share, the number of Warrant Shares
to be issued.

 

8.           Rights of Stockholders. Except as expressly provided herein, the
Holder, as such, shall not be entitled to vote or be deemed the holder of the
Warrant Shares or any other securities of the Company that may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the Holder, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value,
consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or otherwise until this Warrant shall have been exercised and the
Warrant Shares purchasable upon the exercise hereof shall have been issued, as
provided herein.

 

9.           No Transfer. This Warrant shall be assignable and transferable,
provided that no such assignment and transfer shall be valid unless (a) the same
shall be valid under and undertaken in accordance with applicable law, rule or
regulation and (b) the provision of 11(e) of this Agreement shall be adhered to
as a condition to such transfer or assignment. The Warrants may only be disposed
of in compliance with U.S. state and U.S. federal securities laws. In connection
with any transfer of the Warrants other than pursuant to an effective
Registration Statement or Rule 144, to the Company or to an affiliate of the
Holder, the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor and reasonably acceptable to
the Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Warrants under the Securities Act. As a
condition of transfer, any such transferee shall agree in writing to be bound by
the terms of this Agreement and shall have the rights and obligations of the
Holder.

 

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10.           Definitions.

 

As used herein, the following terms shall have the following meanings:

 

(a)          “Adjustment Right” means any right granted with respect to any
securities issued in connection with, or with respect to, any issuance, sale or
delivery (or deemed issuance, sale or delivery in accordance with Section 3) of
Common Stock (other than rights of the type described in Sections 3(a) and 3(b)
hereof) that could result in a decrease in the net consideration received by the
Company in connection with, or with respect to, such securities (including,
without limitation, any cash settlement rights, cash adjustment or other similar
rights) but excluding anti-dilution and other similar rights (including pursuant
to Section 3(c) of this Agreement).

 

(b)          “Approved Stock Plan” means any employee benefit plan which has
been approved by the board of directors of the Company prior to or subsequent to
the date hereof pursuant to which Common Stock and options to purchase Common
Stock may be issued to any employee, consultant, officer or director or other
service provider for services provided to the Company in their capacity as such.

 

(c)          “Convertible Securities” means any notes, rights, warrants or other
securities (other than Options) that are at any time and under any
circumstances, directly or indirectly, convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to acquire,
shares of Common Stock.

 

(d)          “Excluded Securities” means (1) Common Stock or options or other
rights to purchase Common Stock or other awards issued to directors, officers,
employees, consultants or other service providers of the Company in their
capacity as such pursuant to an Approved Stock Plan, provided that (A) all such
issuances (taking into account the Common Stock issuable upon exercise of such
options) after the date hereof pursuant to this clause (i) do not, in the
aggregate, exceed more than 30% of the Common Stock issued and outstanding
immediately prior to the date hereof; provided however, that such issuances to
consultants or other service providers do not, in each instance in the
aggregate, exceed more than 5% of the Common Stock issued and outstanding
immediately prior to the date hereof, and (B) the exercise price of any such
options is not lowered, none of such options are amended to increase the number
of shares issuable thereunder in each case other than pursuant to the terms
hereof (including any anti-dilution provisions contained therein) and none of
the terms or conditions of any such options are otherwise materially changed in
any manner that adversely affects any of the holders of Warrants; (2) Common
Stock issued upon the conversion or exercise of Convertible Securities (other
than options or other rights to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) issued prior to the
date hereof, provided that the conversion price of any such Convertible
Securities (other than options or other rights to purchase Common Stock issued
pursuant to an Approved Stock Plan that are covered by clause (1) above) is not
lowered through the amendment or waiver of such Convertible Security, none of
such Convertible Securities (other than options or other rights to purchase
Common Stock issued pursuant to an Approved Stock Plan that are covered by
clause (1) above) are amended to increase the number of shares issuable
thereunder and none of the terms or conditions of any such Convertible
Securities (other than options or other rights to purchase Common Stock issued
pursuant to an Approved Stock Plan that are covered by clause (1) above) are
otherwise materially changed in any manner that adversely affects any of the
holders of Warrants; (3) Common Stock issuable upon exercise of the Warrants;
and (4) securities issuable in connection with strategic license agreements,
other partnering arrangements or acquisitions or mergers where the purchaser or
acquirer of the securities in such issuance solely consists of (A) either (x)
the actual participants in such strategic license, strategic alliance, strategic
partnership or other partnering arrangements, (y) the actual owners of such
assets or securities acquired in such acquisition or merger or (z) the
stockholders, partners or members of the foregoing persons or entities and (B)
number or amount of securities issued to such person or entity by the Company
shall not be disproportionate (as determined in good faith by the Board of
Directors of the Company) to either (x) the fair market value of such person’s
or entity’s actual contribution to such strategic alliance or strategic
partnership or (y) the proportional ownership of such assets or securities to be
acquired by the Company, as applicable; provided, that, notwithstanding the
foregoing, such purchaser or acquirer of the securities in such issuance shall
not include any person regularly engaged in the business of buying or selling
securities.

 

14 

 

 

 

(e)          “New Issuance Price” means a price (calculated to the nearest cent)
determined in accordance with the following formula:

 

EP2 = EP1* (A + B) ÷ (A + C).

 

For purposes of the foregoing formula, the following definitions shall apply:

 

  (i)   “EP2” shall mean the adjusted Exercise Price;

 

  (ii)    “EP1” shall mean the Exercise Price in effect immediately prior to
such issuance of Common Stock;

 

  (iii)   “A” shall mean the number of shares of Common Stock outstanding
immediately prior to such issue of additional Common Stock including the
issuance, sale or delivery of Common Stock owned or held by or for the account
of the Company, (treating for this purpose as outstanding all shares of Common
Stock issuable upon exercise of Options outstanding immediately prior to such
issue or upon conversion or exchange of Convertible Securities outstanding
(assuming exercise of any outstanding Options therefor) immediately prior to
such issue);  

 

  (iv)   “B” shall mean the number of shares of Common Stock that would have
been issued if such additional shares of Common Stock had been issued at an
Exercise Price equal to EP1 (determined by dividing the aggregate consideration
received by the Company in respect of such issue by EP1); and

 

  (v)   “C” shall mean the number of such additional shares of Common Stock
issued in such transaction.

 

(f)          “Options” means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.

 

15 

 

 

(g)          “Registration Statement” shall mean the Registration Statement
filed by the Company pursuant to Section 3 of the Agreement.

 

(h)          “Trading Day” means any day on which the Common Stock is traded on
the Trading Market, or, if the Trading Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market in the United States on which the Common Stock is then traded,
provided that “Trading Day” shall not include any day on which the Common Stock
is are scheduled to trade on such exchange or market for less than 4.5 hours or
any day that the Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market does not
designate in advance the closing time of trading on such exchange or market,
then during the hour ending at 4:00 P.M., New York City time).

 

(i)           “Trading Market” means NYSE MKT, the Nasdaq Capital Market, the
Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock
Exchange.

 

(j)          “Variable Rate Transaction” means a transaction in which the
Company (i) issues or sells any debt or equity securities that are convertible
into, exchangeable or exercisable for, or include the right to receive,
additional shares of Common Stock either (A) at a conversion price, exercise
price or exchange rate or other price that is based upon, and/or varies with,
the trading prices of or quotations for the Common Stock at any time after the
initial issuance of such debt or equity securities or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly related to
the business of the Company or the market for the Common Stock or (ii) enters
into any agreement, including, but not limited to, an equity line of credit,
whereby the Company may issue securities at a future determined price.

 

(k)          “VWAP” means, for any date, the price determined by the first of
the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the Trading Market
on which the Common Stock is then listed or quoted as reported by Bloomberg L.P.
(based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New
York City time)), (b) the volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Nasdaq Capital Market, (c) if
the Common Stock are not then listed or quoted for trading on the Nasdaq Capital
Market and if prices for the Common Stock are then reported in the OTCQB
maintained by OTC Markets Group, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of Common Stock so reported, or (d) in all other cases, the fair market
value of the Common Stock as determined by an independent appraiser selected in
good faith by the Company, the fees and expenses of which shall be paid by the
Company.

 

11.           Miscellaneous.

 

(a)          Registration Rights. The Holder shall have such registration rights
as set forth in Section 3 of the Agreement.

 

16 

 

 

(b)          This Warrant and disputes arising hereunder shall be governed by
and construed and enforced in accordance with the laws of the State of Delaware
applicable to agreements made and to be performed wholly within such State,
without regard to its conflict of law rules. Any action brought by either party
against the other concerning the transaction contemplated by this Warrant shall
be brought only in the state courts of Delaware or in the federal courts located
in the state of Delaware. The parties to this Warrant hereby irrevocably waive
any objection to jurisdiction and venue of any action instituted hereunder and
shall not assert any defense based on lack of jurisdiction or venue or based
upon forum non conveniens. The Company and Holder waive trial by jury.

 

(c)          The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof.

 

(d)          The covenants of the respective parties contained herein shall
survive the execution and delivery of this Warrant.

 

(e)          The terms of this Warrant shall be binding upon and shall inure to
the benefit of any successors or permitted assigns of the Company and of the
Holder and of the Warrant Shares issued or issuable upon the exercise hereof.
The Holder may assign any or all of its rights under the Agreement to any person
to whom the Holder assigns or transfers the Warrant.

 

(f)          This Warrant and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subject hereof.

 

(g)          The Company shall not, by amendment of its Certificate of
Incorporation or Bylaws, or through any other means, directly or indirectly,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant and shall at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder contained herein
against impairment.

 

(h)          Upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company, or, in the case of
any such mutilation, upon surrender and cancellation of such Warrant, the
Company, at its expense, will execute and deliver to the Holder, in lieu
thereof, a new Warrant of like date and tenor.

 

(i)          This Warrant and any provision hereof may be amended, waived or
terminated only by an instrument in writing signed by the Company and the
Holder.

 

17 

 

 

 

(j)          The remedies provided in this Warrant shall be cumulative and in
addition to all other remedies available under this Warrant, at law or in equity
(including a decree of specific performance and/or other injunctive relief), and
nothing herein shall limit the right of the Holder to pursue actual damages for
any failure by the Company to comply with the terms of this Warrant. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach
may be inadequate. The Company therefore agrees that, in the event of any such
breach or threatened breach, the holder of this Warrant shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.

  

 

 

 

[Signature Page Follows]

 

 

 

 

 

 

 

 

 

 

 

 

18 

 

 

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer.

 

 

  DARIO HEALTH CORP.                     By:         Name:       Title:     

 

 

 

 

19 

 

  

Exhibit A

 

NOTICE OF EXERCISE

 

  TO: DarioHealth Corp., attention: President

 

The undersigned hereby elects to purchase the below referenced shares (the
“Warrant Shares”) of Common Stock of DarioHealth Corp. (the “Company”) pursuant
to the terms of the attached Warrant, and tenders herewith payment of the
purchase price of such Warrant Shares in full. Payment of the purchase price is
being made by:

 

  ____________  a cash exercise with respect to _________________ Warrant
Shares; or

 

  ____________  a "cashless exercise" with respect to _______________ Warrant
Shares      (if permitted pursuant to Section 2(b) of the Warrant).

 

Please issue a certificate or certificates representing said shares in the name
of the undersigned or in such other name as is specified below:

 

  1. Name: __________________________________________________

 

  2. Address: ________________________________________________

 

  3.

DWAC Instructions (if applicable):

 

___________________________________________

    /

 

The undersigned hereby represents and warrants the following:

 

(a)            It (i) has such knowledge and experience in financial and
business affairs that he/she/it is capable of evaluating the merits and risks
involved in purchasing the Warrant Shares, (ii) is able to bear the economic
risks involved in purchasing the Warrant Shares, and (iii) is a “non-US person”
as defined in Regulation S promulgated under the Securities Act of 1933, as
amended;

 

(b)           In making the decision to purchase the Warrant Shares, it has
relied solely on independent investigations made by it and has had the
opportunity to ask questions of, and receive answers from, the Company
concerning the Warrant Shares, the financial condition, prospective business and
operations of the Company and has otherwise had an opportunity to obtain any
additional information, to the extent that the Company possess such information
or could acquire it without unreasonable effort or expense;

 

(c)            Its overall commitment to investments that are not readily
marketable is not disproportionate to its net worth and income, and the purchase
of the Warrant Shares will not cause such overall commitment to become
disproportionate; it can afford to bear the loss of the purchase price of the
Warrant Shares;

 

 

20 

 

 

(d)           It has no present need for liquidity in its investment in the
Warrant Shares; and

 

(e)           It acknowledges that the transaction contemplated in connection
with the purchase of the Warrant Shares has not been reviewed or approved by the
Securities and Exchange Commission or by any administrative agency charged with
the administration of the securities laws of any state, and that no such agency
has passed on or made any recommendation or endorsement of any of the securities
contemplated hereby.

 

 

         (Signature and Date)  

 

 

 

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