DARIOHEALTH CORP. : Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant, Other Events, Financial Statements and Exhibits (Form 8-K )

Section 1.01 Entering into a Material Definitive Agreement.

On June 9, 2022 (the “Closing Date”), DarioHealth Corp. (the “Company”) has entered into a credit agreement (the “Credit Agreement”), by and between the Company, as borrower, and OrbiMed III, LP Royalty and Credit Opportunitiesas a lender (the “Lender”). The Credit Agreement provides for a five-year senior secured credit facility in the aggregate principal amount of up to $50 million (the “Loan Facility”), of which $25 million was made available on the Closing Date (the “Initial Commitment Amount”) and until $25 million will be available on or before June 30, 2023, subject to certain revenue requirements (the “Deferred Drawdown Commitment Amount”). On June 9, 2022the Company closed on the original amount of the commitment, less certain fees and expenses payable to the lender or on behalf of the lender.

All obligations under the Credit Agreement are guaranteed by all wholly owned subsidiaries of the Company other than Dario Health Services Private Limited. All obligations under the Credit Agreement and the guarantees for such obligations are secured by substantially all of the assets of the Company and each guarantor. If, up to the maturity date of the Loan Facility, the Company’s net earnings do not equal or exceed the applicable amount for the period specified in the Credit Agreement, the Company will then repay in equal monthly installments the Facility loan principal amount outstanding, together with a redemption premium and other charges. The Company will repay amounts outstanding under the Loan Facility in full immediately upon acceleration following an Event of Default, as set forth in the Credit Agreement, together with a repayment premium and other charges. .

During the term of the Loan Facility, interest payable in cash by the Company will accrue on any outstanding balance owing under the Loan Facility at an annual rate equal to the greater of (x) the adjusted SOFR rate (which is the forward-looking one-month term rate based on the guaranteed overnight rate administered by the CME Group Benchmark Administration Limited) and (y) 0.50% plus, in both cases, 9.50%. In the event of default, any amount unpaid under the Loan Facility will bear interest at a rate of 5.00% above the interest rate otherwise applicable. The Company will pay certain fees in connection with the loan facility, including initial fees, unused fees on the unused portion of the loan facility, administration fees, redemption premium and exit fees, as well as certain other fees and expenses of the Lender.

The Credit Agreement contains customary events of default, including with respect to non-payment of principal, interest, fees or other amounts; the material inaccuracy of any representation or warranty; non-compliance or breach of covenants; bankruptcy and insolvency events; material monetary misjudgments; impairment of any material definitive loan documentation; other significant adverse effects; key person events and change of control.

Each of the credit agreements and a pledge and guarantee agreement entered into by the company, the guarantors and the lender on June 9, 2022 (the “Pledge and Security Agreement”) also contains a number of customary representations, warranties and covenants which, among other things, will limit or restrict the ability of the Company and its subsidiaries to (subject to certain conditions and exceptions): create liens and encumbrances; incur additional debt; merge, dissolve, liquidate or consolidate; make acquisitions, investments, advances or loans; assign or transfer assets; pay dividends or make other payments in respect of their share capital; modify certain material documents; redeem or redeem certain debts; engage in certain transactions with affiliates; and enter into certain restrictive agreements. In addition, the Company will be required to maintain at least $10 million unrestricted cash and cash equivalents at any time.

On the Closing Date, and in respect of the Initial Commitment Amount only, the Company agreed to issue to the Lender a warrant (the “Warrant”) to purchase up to 226,586 common shares of the Company, at an exercise price of $6.62 per share, which will have a duration of 7 years from the date of issue. The warrant contains customary stock adjustment provisions, as well as weighted average price protection in certain circumstances, but in no event will the exercise price of the warrant be adjusted to a price less than $4.00 per share. In the event that the Company is eligible to draw the amount of the Deferred Drawdown Commitment, the Company has agreed to issue to the lender an additional warrant (the “Additional Warrant”), with a term of 7 years from the date of issue, to purchase up to 6% of the Deferred Drawdown Commitment Amount based on a 10-day volume-weighted average price of the Company’s common stock (the “volume weighted average price”) with an exercise price equal to the volume weighted average price.

On the Closing Date, the Company and the Lender executed a registration rights agreement (the “Registration Rights Agreement”) pursuant to which the Company agreed to file a registration statement with the US Securities and Exchange Commission to register the common shares underlying the Warrant and the Additional Warrant.

The foregoing description of the terms of the Credit Agreement, the Pledge and Security Agreement, the Registration Rights Agreement and the Warrant is not intended to be exhaustive and is qualified in its entirety by reference to Credit Agreement, the Pledge and Security Agreement, the Registration Rights Agreement and the Power of Attorney, copies of which are attached hereto as Schedules 10.1, 10.2, 10.3 and 4.1, respectively, and incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information set out in Section 1.01 is incorporated by reference into this Section 2.03.

Item 8.01 Other Events.

On June 9, 2022, the Company issued a press release announcing the borrowing under the credit agreement. A copy of the press release is attached hereto as Exhibit 99.1.

Item 9.01 Financial statements and supporting documents.

(d) Exhibits

  4.1       Form of Warrant.

  10.1^     Credit Agreement, dated June 9, 2022, by and among the Company, as
          borrower, and OrbiMed Royalty and Credit Opportunities III, LP, as

  10.2      Pledge and Security Agreement, dated June 9, 2022, by and among the
          Company, Labstyle Innovation Ltd, Upright Technologies, Inc.,
          Psyinnovations, Inc., and OrbiMed Royalty and Credit Opportunities III,

  10.3      Registration Rights Agreement, dated June 9, 2022, by and between the
          Company and OrbiMed Royalty and Credit Opportunities III, LP.

  99.1      Press release of DarioHealth Corp. dated June 9, 2022.

104       Cover Page Interactive Data File (embedded within the Inline XBRL

^    Certain identified information in the exhibit has been excluded from the
     exhibit because it is both (i) not material and (ii) is the type that

DarioHealth Corp. treat as private or confidential.

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