Item 1.01 Entry into a Material Definitive Agreement.
On June 9,
2022 (the “Closing Date”), DarioHealth Corp. (the “Company”) entered into a Credit Agreement (the “Credit
Agreement”), by and between the Company, as borrower, and OrbiMed Royalty and Credit Opportunities III, LP, as the lender (the “Lender”).
The Credit Agreement provides for a five-year senior secured credit facility in an 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 up to $25 million will be made available on or prior to June 30, 2023, subject to certain revenue requirements (the “Delayed
Draw Commitment Amount”). On June 9, 2022, the Company closed on the Initial Commitment Amount, less certain fees and expenses payable
to or on behalf of the Lender.
All obligations
under the Credit Agreement are guaranteed by all of the Company’s wholly owned subsidiaries other than Dario Health Services Private
Limited. All obligations under the Credit Agreement, and the guarantees of those obligations, are secured by substantially all of the
Company's and each guarantor's assets. If, until the maturity date of the Loan Facility, the Company’s net revenue does not
equal or exceed the applicable amount for such period as set forth in the Credit Agreement, then the Company shall repay in equal monthly
installments the outstanding principal amount of the Loan Facility, together with a repayment premium and other fees. The Company shall
repay amounts outstanding under the Loan Facility in full immediately upon an acceleration as a result of an event of default as set forth
in the Credit Agreement, together with a repayment premium and other fees.
During the term of the Loan Facility, interest payable in cash by the
Company shall accrue on any outstanding balance due under the Loan Facility at a rate per annum equal to the higher of (x) the adjusted
SOFR rate (which is the forward-looking term rate for a one-month tenor based on the secured overnight financing rate administered by
the CME Group Benchmark Administration Limited) and (y) 0.50% plus, in either case, 9.50%. During an event of default, any outstanding
amount under the Loan Facility will bear interest at a rate of 5.00% in excess of the otherwise applicable rate of interest. The Company
will pay certain fees with respect to the Loan Facility, including an upfront fee, an unused fee on the undrawn portion of the Loan Facility,
an administration fee, a repayment premium and an exit fee, as well as certain other fees and expenses of the Lender.
The Credit Agreement contains customary events of default, including
with respect to nonpayment of principal, interest, fees or other amounts; material inaccuracy of a representation or warranty; failure
to perform or observe covenants; bankruptcy and insolvency events; material monetary judgment defaults; impairment of any material definitive
loan documentation; other material adverse effects; key person events and change of control.
Each of the
Credit Agreement and a Pledge and Security Agreement entered into by the Company, the guarantors and the Lender on June 9, 2022 (the “Pledge
and Security Agreement”) also contain a number of customary representations, warranties and covenants that, among other things,
will limit or restrict the ability of the Company and its subsidiaries to (subject to certain qualifications and exceptions): create liens
and encumbrances; incur additional indebtedness; merge, dissolve, liquidate or consolidate; make acquisitions, investments, advances or
loans; dispose of or transfer assets; pay dividends or make other payments in respect of their capital stock; amend certain material documents;
redeem or repurchase certain debt; 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 of unrestricted cash and cash equivalents at all times.
On the Closing Date, and with respect to the Initial Commitment Amount
only, the Company agreed to issue the Lender a warrant (the “Warrant”) to purchase up to 226,586 shares of the Company’s
common stock, at an exercise price of $6.62 per share, which shall have a term of 7 years from the issuance date. The Warrant contains
customary share 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 the Company is eligible to draw the Delayed
Draw Commitment Amount, the Company agreed to issue the Lender an additional warrant (the “Additional Warrant”), with a term
of 7 years from the issuance date, to purchase up to 6% of the Delayed Draw 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 U.S. Securities and Exchange Commission to register the shares of common stock 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 are not intended to be complete and are qualified in
their entirety by reference to the Credit Agreement, the Pledge and Security Agreement, the Registration Rights Agreement and the Warrant,
copies of which are attached hereto as Exhibit 10.1, 10.2, 10.3 and 4.1, respectively, and incorporated herein by reference.