Sixth Amendment to Credit Agreement with Athyrium dated February 28, 2018

THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this “Agreement”) dated as of February 28, 2018 is entered into among APOLLO ENDOSURGERY US, INC., a Delaware corporation (the “Borrower”), the Guarantors party hereto, the Lenders party hereto and ATHYRIUM OPPORTUNITIES II ACQUISITION LP, as Administrative Agent (the “Administrative Agent”). All capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement (as defined below).

WHEREAS, the Borrower, the Guarantors party thereto, the Lenders from time to time party thereto and the Administrative Agent have entered into that certain Credit Agreement dated as of February 27, 2015 (as amended, restated, supplemented or modified from time to time, the “Credit Agreement”);

WHEREAS, the Borrower has requested that the Lenders amend the Credit Agreement as set forth below; and

WHEREAS, the Lenders and the Administrative Agent are willing to amend the Credit Agreement as set forth below, subject to the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.    Amendments.

(a)    Section 8.16(a) of the Credit Agreement is hereby amended to read as follows:

(a)    [Reserved].

(b)    Section 8.16(b) of the Credit Agreement is hereby amended to read as follows:

(b)    Consolidated Debt to Revenues Ratio. Permit the Consolidated Debt to Revenues Ratio as of the end of any fiscal quarter of the Parent (or, with respect to any fiscal quarter ending prior to the Transaction Closing Date, the Borrower) to be greater than (i) 0.60 to 1.0, for any fiscal quarter ending during the period from the Closing Date to and including June 30, 2015, (ii) 0.76 to 1.0, for any fiscal quarter ending during the period from July 1, 2015 to and including June 30, 2016, (iii) 0.80 to 1.0, for the fiscal quarter ending September 30, 2016, (iv) 0.80 to 1.0, for the fiscal quarter ending December 31, 2016, (v) 0.65 to 1.0, for the fiscal quarter ending March 31, 2017, (vi) 0.61 to 1.0, for the fiscal quarter ending June 30, 2017, (vii) 0.57 to 1.0, for the fiscal quarter ending September 30, 2017, (viii) 0.53 to 1.0, for the fiscal quarter ending December 31, 2017, (ix) 0.54 to 1.0, for the fiscal quarter ending March 31, 2018, (x) 0.53 to 1.0, for the fiscal quarter ending June 30, 2018, (xi) 0.52 to 1.0, for the fiscal quarter ending September 30, 2018, (xii) 0.51 to 1.0, for the fiscal quarter ending December 31, 2018, (xiii) 0.49 to 1.0, for the fiscal quarter ending March 31, 2019, (xiv) 0.46 to 1.0, for the fiscal quarter ending June 30, 2019, (xv) 0.43 to 1.0 for the fiscal quarter ending September 30, 2019, and (xvi) 0.40 to 1.0, for any fiscal quarter ending thereafter.

(c)    Exhibit E to the Credit Agreement is hereby amended to read as set forth on Exhibit E attached hereto.

2.    Conditions Precedent. This Agreement shall be effective upon satisfaction of the following conditions precedent:

(a)    receipt by the Administrative Agent of counterparts of this Agreement duly executed by the Borrower, the Guarantors, the Lenders and the Administrative Agent;

(b)    receipt by the Administrative Agent of an amendment fee in the amount of $338,829.16; and

(c)    payment by the Borrower of all fees, charges and disbursements of counsel to the Administrative Agent incurred in connection with the preparation, execution and delivery of this Agreement.

3.    Reaffirmation. Each of the Loan Parties acknowledges and reaffirms (a) that it is bound by all of the terms of the Investment Documents to which it is a party and (b) that it is responsible for the observance and full performance of all Obligations, including without limitation, the repayment of the Term Loan. Furthermore, the Loan Parties acknowledge and confirm (i) that the Lenders have performed fully all of their obligations under the Credit Agreement and the other Investment Documents and (ii) that by entering into this Agreement, the Lenders do not, except as expressly set forth herein, waive or release any term or condition of the Credit Agreement or any of the other Investment Documents or any of their rights or remedies under such Investment Documents or any applicable law or any of the obligations of the Loan Parties thereunder.

4.    Miscellaneous.

(a)    The Credit Agreement and the obligations of the Loan Parties thereunder and under the other Investment Documents, are hereby ratified and confirmed and shall remain in full force and effect according to their terms. This Agreement is a Loan Document.

(b)    Each Guarantor (i) acknowledges and consents to all of the terms and conditions of this Agreement, (ii) affirms all of its obligations under the Loan Documents, and (iii) agrees that this Agreement and all documents executed in connection herewith do not operate to reduce or discharge its obligations under the Credit Agreement or the Loan Documents.

(c)    The Loan Parties represent and warrant to the Lender that:

(i)    each Loan Party has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of this Agreement.

(ii)    this Agreement has been duly executed and delivered by each Loan Party and constitutes a legal, valid and binding obligation of each Loan Party, enforceable against each such Loan Party in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting enforceability of creditors’ rights generally and to general principles of equity.

(iii)    no approval, consent, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement.

(iv)    (A) the representations and warranties of the Borrower and each other Loan Party contained in Article VI of the Credit Agreement or any other Investment Document, or which are contained in any document furnished at any time under or in connection therewith, are true and correct in all material respects (and in all respects if any such representation and warranty is already qualified by materiality or reference to Material Adverse Effect) on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects (and in all respects if any such representation and warranty is already qualified by materiality or reference to Material Adverse Effect) as of such earlier date and (B) no event has occurred and is continuing which constitutes a Default or an Event of Default.

(d)    This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imagine means (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.

(e)    If any provision of this Agreement is held to be illegal, invalid or unenforceable, (i) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby and (ii) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(f)    THIS AGREEMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

Date:                    

The undersigned Responsible Officer hereby certifies as of the date hereof that [he][she] is the _______________ of Apollo Endosurgery, Inc., a Delaware corporation (the “Parent”), and that, in [his][her] capacity as such, [he][she] is authorized to execute and deliver this Compliance Certificate to the Administrative Agent on the behalf of the Parent, and that:

[1.    Attached hereto as Schedule 1 are the year‑end audited financial statements required by Section 7.01(a) of the Credit Agreement for the fiscal year of the Parent ended as of the above date, together with the report and opinion of an independent certified public accountant required by such Section.]

[1.    Attached hereto as Schedule 1 are the unaudited financial statements required by Section 7.01(b) of the Credit Agreement for the fiscal quarter of the Parent ended as of the above date. Such financial statements fairly present in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Parent and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.]

[Use following paragraph 1 for financial statements delivered for the last calendar month of any fiscal year:]

[1.    Attached hereto as Schedule 1 are the unaudited financial statements required by Section 7.01(c) of the Credit Agreement for the calendar month of the Parent ended as of the above date. Such financial statements fairly present in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Parent and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.]

2.    The undersigned has reviewed and is familiar with the terms of the Credit Agreement and has made, or has caused to be made, a reasonably detailed review of the transactions and condition (financial or otherwise) of the Parent during the accounting period covered by the attached financial statements.

3.    A review of the activities of the Parent during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Parent and its Subsidiaries performed and observed all of its obligations under the Investment Documents, and

[select one:]

[to the best knowledge of the undersigned during such fiscal period, the Parent and its Subsidiaries performed and observed each covenant and condition of the Investment Documents applicable to it, and no Default has occurred and is continuing.]

[or:]

[the following covenants or conditions have not been performed or observed and the following is a list of each such Default and its nature and status:]

4.    The financial covenant analyses and calculation of the Consolidated Debt to Revenues Ratio set forth on Schedule 2 attached hereto are true and accurate on and as of the date of this Compliance Certificate.

[5.    Attached hereto as Schedule 3 is a supplement setting forth information regarding the amount of all Dispositions, Involuntary Dispositions, Debt Issuances, Extraordinary Receipts and Acquisitions that occurred during the period covered by the financial statements attached hereto as Schedule 1.] To be included for Compliance Certificate delivered in connection with financial statements pursuant to Section 7.01(a) or (b).

[6.    Attached hereto as Schedule 4 is (i) a list of (A) all applications by any Loan Party, if any, for Copyrights, Patents or Trademarks made since [the Closing Date] [the date of the prior Compliance Certificate], (B) all issuances of registrations or letters on existing applications by any Loan Party for Copyrights, Patents and Trademarks received since [the Closing Date] [the date of the prior Compliance Certificate], (C) all Trademark Licenses, Copyright Licenses and Patent Licenses entered into by any Loan Party since [the Closing Date] [the date of the prior Compliance Certificate] and (D) such supplements to Schedule 6.17 as are necessary to cause such schedule to be true and complete as of the date of such certificate and (ii) the insurance binder or other evidence of insurance for any insurance coverage of any Loan Party or any Subsidiary that was renewed, replaced or modified during the period covered by the financial statements attached hereto as Schedule 1.] To be included for Compliance Certificate delivered in connection with financial statements pursuant to Section 7.01(a) or (b).

IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate as of the date set forth above.

Apollo Endosurgery, Inc.,

a Delaware corporation

By:                    

Name: