Item 1.01
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Entry into a Material Definitive Agreement.
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On December 3, 2019,
DarioHealth Corp. (the “Company”) entered into subscription agreements (each, a “Series A-2 Subscription Agreement”
and collectively the “Series A-2 Subscription Agreements”) with accredited investors relating to an offering (the “Series
A-2 Offering”) and the sale of an aggregate of 1,915 shares of newly designated Series A-2 Preferred Stock, at a purchase
price of $1,000 per share, for aggregate gross proceeds to the Company of $1.915 million.
Additionally, on December
4, 2019, the Company entered into subscription agreements (each, a “Series A-3 Subscription Agreement” and collectively
the “Series A-3 Subscription Agreements”) with accredited investors relating to an offering (the “Series A-3
Offering”) and the sale of an aggregate of 3,808 shares of newly designated Series A-3 Preferred Stock, at a purchase price
of $1,000 per share, for aggregate gross proceeds to the Company of $3.808 million.
Additionally, on December
5, 2019, the Company entered into subscription agreements (each, a “Series A-4 Subscription Agreement” and collectively
the “Series A-4 Subscription Agreements”) with accredited investors relating to an offering (the “Series A-4
Offering” and collectively with the Series A-2 Offering and the Series A-3 Offering, the “Offering”) and the
sale of an aggregate of 745 shares of newly designated Series A-4 Preferred Stock, at a purchase price of $1,000 per share, for
aggregate gross proceeds to the Company of $745 thousand. For purposes, hereof the Series A-2 Subscription Agreements, the Series
A-3 Subscription Agreements and the Series A-4 Subscription Agreements are collectively referred to herein as the “Subscription
Agreements”).
The total aggregate
gross proceeds of the Offering described above, together with gross proceeds from the closing of the offering of Series A Preferred
Stock and Series A-1 Preferred Stock held on November 27, 2019 (as reported in the Company’s Current Reports on Forms 8-K
and 8-K/A filings made with the Securities and Exchange Commission on December 3, 2019), is $20.029 million.
In connection with
the closing of the Series A-2 Offering, on December 3, 2019 (the “A-2 Effective Date”), the Company filed the Certificate
of Designation of Preferences, Rights and Limitations of the Series A-2 Preferred Stock with the Secretary of State of the State
of Delaware (the “Series A-2 Certificate of Designation”). In addition, in connection with the closing of the Series
A-3 Offering, on December 4, 2019 (the “A-3 Effective Date”), the Company filed the Certificate of Designation of Preferences,
Rights and Limitations of the Series A-3 Preferred Stock with the Secretary of State of the State of Delaware (the “Series
A-3 Certificate of Designation”). In addition, in connection with the closing of the Series A-4 Offering, on December 5,
2019 (the “A-4 Effective Date”), the Company filed the Certificate of Designation of Preferences, Rights and Limitations
of the Series A-4 Preferred Stock with the Secretary of State of the State of Delaware (the “Series A-4 Certificate of Designation”).
Each share of Series
A-2 Preferred Stock, Series A-3 Preferred Stock and Series A-4 Preferred Stock is convertible at the option of the holder, subject
to certain beneficial ownership limitations as set forth in each of the Series A-2 Certificate of Designation, the Series A-3 Certificate
of Designation and Series A-4 Certificate of Designation, into such number of shares of Company’s common Stock (the “Common
Stock”) equal to the number of Series A Preferred Shares to be converted, multiplied by the stated value of $1,000 (the “Stated
Value”), divided by the conversion price in effect at the time of the conversion (the initial conversion price for the Series
A-2 Preferred Stock was $4.28, the initial conversion price for the Series A-3 Preferred Stock was $4.98, and the initial conversion
price of the Series A-4 Preferred Stock was $5.90, each subject to adjustment in the event of stock splits, stock dividends, and
similar transactions). In addition, the Series A-2 Preferred Stock, the Series A-3 Preferred Stock and the Series A-4 Preferred
Stock will automatically convert into shares of Common Stock, subject to certain beneficial ownership limitations, on the earliest
to occur of (i) upon the approval of the holders at least 50.1% of the outstanding shares of Series A-2 Preferred with respect
to the Series A-2 Preferred, the approval of the holders at least 50.1% of the outstanding shares of Series A-3 Preferred with
respect to the Series A-3 Preferred Stock, and the approval of the holders at least 50.1% of the outstanding shares of Series A-4
Preferred with respect to the Series A-4 Preferred Stock; or (ii) the 36-month anniversary of each of the Series A-2 Effective
Date, Series A-3 Effective Date and the Series A-4 Effective Date, respectively. The holders of Series A-2 Preferred Stock, Series
A-3 Preferred Stock and Series A-4 Preferred Stock will also be entitled dividends payable as follows: (i) a number of shares of
Common Stock equal to ten percent (10%) of the number of shares of Common Stock issuable upon conversion of the Series A-2 Preferred
Stock, Series A-3 Preferred Stock and Series A-4 Preferred Stock then held by such holder on the 12-month anniversary of the Series
A-2 Effective Date, Series A-3 Effective Date or the Series A-4 Effective Date, as applicable, (ii) a number of shares of Common
Stock equal to fifteen percent (15%) of the number of shares of Common Stock issuable upon conversion of the Series A-2 Preferred
Stock, Series A-3 Preferred Stock and Series A-4Preferred Stock then held by such holder on the 24-month anniversary of the Series
A-2 Effective Date, Series A-3 Effective Date, or Series A-4 Effective Date, as applicable, and (iii) a number of shares of Common
Stock equal to twenty percent (20%) of the shares of Common Stock issuable upon conversion of the Series A-2 Preferred Stock, Series
A-3 Preferred Stock and Series A-4 Preferred Stock then held by such holder on the 36-month anniversary of the Series A-2 Effective
Date, Series A-3 Effective Date, or Series A-4 Effective Date, as applicable.
Each of the Series
A-2 Preferred Stock, Series A-3 Preferred Stock and Series A-4 Preferred Stock will vote together with the Common Stock as a single
class on an as-converted basis on any matter presented to the shareholders of the Company. Upon any liquidation, dissolution or
winding-up of the Company, after the satisfaction in full of the debts of the Company and payment of the liquidation preference
to the Senior Securities, holders of Series A-2 Preferred Stock, Series A-3 Preferred Stock and Series A-4 Preferred Stock shall
be entitled to be paid, on a pari passu basis with the payment of any liquidation preference afforded to holders of any Parity
Securities, the remaining assets of the Company available for distribution to its stockholders. For these purposes, (i) “Parity
Securities” means the Common Stock, Series A Preferred Stock, Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series
A-3 Preferred Stock, Series A-4 Preferred Stock and any other class or series of capital stock of the Company hereinafter created
that expressly ranks pari passu with the Series A-2 Preferred Stock, Series A-3 Preferred Stock and Series A-4 Preferred Stock;
and (ii) “Senior Securities” shall mean any class or series of capital stock of the Company hereafter created which
expressly ranks senior to the Parity Securities.
The Company and the
investors in the Offering also executed a registration rights agreement (the “Registration Rights Agreement”), pursuant
to which the Company agreed to file a registration statement covering the resale of the shares of Common Stock issuable upon conversion
of the Series A-2 Preferred Stock, the Series A-3 Preferred Stock and the Series A-4 Preferred Stock within sixty days following
the final closing of the Offering.
Pursuant to the Placement
Agency Agreement (the “Placement Agency Agreement”) executed by and between the Company and the registered broker dealer
retained to act as the Company’s exclusive placement agent (the “Placement Agent”)
for the Offering, the Company paid the Placement Agent an aggregate cash fee of $599,800, non-accountable expense allowance
of $194,040 and is required to issue to the Placement Agent or its designees warrants to purchase 64,976 shares of Common Stock
at an exercise price of $4.28 per share, warrants to purchase 110,985 shares of Common Stock at an exercise price of $4.98 per
share and warrants to purchase 18,365 shares of Common Stock at an exercise price of $5.90 per share (the “Placement Agent
Warrants”). The Placement Agent Warrants are exercisable for a period of five years from the date of each respective closing.
The Subscription Agreements
contains representations and warranties that the parties made to the others in the context of all of the terms and conditions of
that agreement and in the context of the specific relationship between the parties. The provisions of such agreements, including
the representations and warranties contained therein, are not for the benefit of any party other than the parties to such agreement
and are not intended as documents for investors and the public to obtain factual information about the current state of affairs
of the parties to that agreement. Rather, investors and the public should look to other disclosures contained in the Company’s
filings with the U.S. Securities and Exchange Commission.
The securities to be
issued in the Offering are exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities
Act”) pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder. The securities
have not been registered under the Securities Act and may not be resold in the United States absent registration or an exemption
from registration. This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
The forgoing description
of the Series A-2 Certificate of Designation, the Series A-3 Certificate of Designation and Series A-4 Certificate of Designation
are qualified in their entirety by reference to the full text of such document, copies of which are filed as Exhibits 3.1, 3.2
and 3.3 to this Current Report on Form 8-K, respectively. The forgoing descriptions of the Placement Agency Agreement, the Registration
Rights Agreement, the Placement Agent Warrants and the Subscription Agreements are qualified by reference to the full text of these
documents, copies of each of which will be filed in the Company’s next periodic report due to be filed under the Exchange
Act.