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Item 1.01
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Entry into a Material Definitive Agreement
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On March 1, 2017, NanoVibronix, Inc. (the “Company”)
completed a bridge financing, pursuant to which the Company received from three accredited investors $250,000 of loans and issued
to the investors convertible promissory notes (the “Notes”) in an aggregate principal amount of $250,000 and seven-year
warrants (the “Warrants”) to purchase an aggregate of 100,000 shares of common stock (the “Warrant Shares”)
at an exercise price of $5.90 per share (the “Exercise Price”).
The principal amount and all accrued but unpaid interest on
the Notes will become due and payable on the date (the “Maturity Date”) that is the earlier of the (i) 5-year
anniversary of the date of issuance, or (ii) the date the Company completes an equity financing pursuant to which the Company issues
and sells shares of capital stock resulting in aggregate proceeds of at least $2,000,000 (a “Qualified Financing”).
The Notes bear interest at a rate of 6% per annum, payable on the Maturity Date. To the extent not previously converted, on the
Maturity Date, each investor will receive, at the option of the investor, either (a) cash equal to the original principal amount
of the Notes and interest then accrued and unpaid thereon, or (b) shares of common stock or Series C Convertible Preferred Stock
of the Company, at a price per share equal to the lesser of: (x) 80% of the amount equal to the quotient obtained by dividing (i) the
estimated value of the Company as of the Maturity Date, as determined in good faith by the Company’s board of directors,
by (ii) the aggregate number of outstanding shares of the Company’s common stock, as of the Maturity Date on a fully
diluted basis, and (y) $5.90 per share, as such amount may be adjusted for any stock split, stock dividend, reclassification or
similar events affecting the capital stock of the Company. Upon consummation of a Qualified Financing, the investors may elect
to have the outstanding principal and accrued but unpaid interest thereon converted into shares of the same class and series of
equity securities sold in such Qualified Financing, provided that the investor may elect to receive shares of Series C Convertible
Preferred Stock instead of shares of common stock, to the extent that common stock are issued in such Qualified Financing, at a
price per share equal to the lesser of: (a) 80% of the price per share at which such securities are sold in such Qualified Financing
and (b) $5.90 per share, as such amount may be adjusted for any stock split, stock dividend, reclassification or similar events
affecting the Company’s capital stock. If there is a change of control and the Notes have not been previously converted otherwise,
the investors may, at their option, (a) receive an amount in cash equal to the sum of the original principal amount of the Notes
and interest then accrued and unpaid thereon, or (b) convert the Notes and all accrued and unpaid interest thereon into shares
of common stock or Series C Convertible Preferred Stock of the Company immediately prior to the closing of such change of control
transaction at a price per share equal to the lesser of: (x) 80% of the amount equal to the quotient obtained by dividing (i) the
estimated value of the Company implied by the exchange ratio set forth in the agreement governing such change of control transaction,
as determined in good faith by the Company’s board of directors, by (ii) the aggregate number of outstanding shares
of the Company’s common stock, immediately prior to such change of control on a fully diluted basis, and (y) $5.90 per share,
as such amount may be adjusted for any stock split, stock dividend, reclassification or similar events affecting the Company’s
capital stock.
The Warrants are immediately
exercisable. The Warrants may be exercised on a cashless basis if there is no effective registration statement registering the
resale of the Warrant Shares after the six month anniversary of the issuance date of the Warrants. The Exercise Price is adjustable
for certain events, such as distribution of stock dividends, stock splits or fundamental transactions including mergers or sales
of assets. A holder of the Warrants will not have the right to exercise any portion of the Warrant if the holder (together with
its affiliates) would beneficially own in excess of 9.99% of the number of shares of the Company’s common stock outstanding
immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the
Warrants. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided
that any increase in such percentage shall not be effective until 61 days after such notice to the Company.
The foregoing descriptions of the Notes
and the Warrants are qualified in their entirety by the full text of the form of each document which are filed as Exhibits 10.1
and 10.2 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.