Waiver and Fourth Amendment to Loan and Security Agreement between Company and Oxford Finance LLC dated July 30, 2018

Exhibit 10.7

WAIVER AND FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS WAIVER AND FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into as of July 30, 2018 (the “Fourth Amendment Date”), by and among OXFORD FINANCE LLC, a Delaware limited liability company with an office located at 133 North Fairfax Street, Alexandria, Virginia 22314, as collateral agent (in its individual capacity, “Oxford”; and in its capacity as collateral agent, “Collateral Agent”), the Lenders listed on Schedule 1.1 of the Loan Agreement (as defined below) from time to time including Oxford in its capacity as a Lender (each a “Lender” and collectively, the “Lenders”), and AirXpanders, Inc., a Delaware corporation with offices located at 1047 Elwell Court, Palo Alto, CA 94303 (“Borrower”).

WHEREAS, Collateral Agent, Borrower and the Lenders party to the Loan Agreement from time to time have entered into that certain Loan and Security Agreement, dated as of August 4, 2017 (as amended, supplemented or otherwise modified from time to time, including, but without limitation, by that certain Waiver and First Amendment to Loan and Security Agreement dated as of November 9, 2017, that certain Waiver and Second Amendment to Loan and Security Agreement dated as of April 26, 2018, and that certain Third Amendment to Loan and Security Agreement dated as of June 5, 2018 the “Loan Agreement”) pursuant to which the Lenders have provided to Borrower certain loans in accordance with the terms and conditions thereof;

WHEREAS, an Event of Default has occurred and is continuing under Section 8.2(a) (Covenant Default) of the Loan Agreement as a result of a violation of Section 6.10 of the Loan Agreement resulting from Borrower’s failure to achieve at least 70% of budgeted total revenues on a trailing six-month basis (tested quarterly), for the reporting period ending June 30, 2018 (the “Existing Default”). By reason of the Existing Default, Collateral Agent has the right to accelerate the maturity of the unpaid balance of the Obligations. In addition, as a result of the foregoing Existing Default, Collateral Agent and the Lenders are entitled to exercise any and all default-related rights and remedies under the Loan Agreement, other Loan Documents and/or applicable Law;

WHEREAS, Borrower has requested that Collateral Agent and the Lenders waive the Existing Default;

WHEREAS, although the Lenders and Collateral Agent are under no obligation to do so, the Lenders and Collateral Agent have agreed to waive the Existing Default, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below; and

WHEREAS, Borrower, the Lenders and Collateral Agent desire to amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below;

NOW, THEREFORE, in consideration of the promises, covenants and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Borrower, the Lenders and Collateral Agent hereby agree as follows:

“(b)     Repayment. Borrower shall make monthly payments of interest-only commencing on the first (1^st) Payment Date following the Funding Date of the Term Loan, and continuing on the Payment Date of each successive month thereafter through and including the Payment Date immediately preceding the Amortization Date. Borrower agrees to pay, on the Funding Date of the Term Loan, any initial partial monthly interest payment otherwise due for the period between the Funding Date of the Term Loan and the first Payment Date thereof. Commencing on the Amortization Date, and continuing on the Payment Date of each month thereafter, Borrower shall make consecutive equal monthly payments of principal, together with applicable accrued interest, in arrears, to each Lender, as calculated by Collateral Agent (which calculations shall be deemed correct absent manifest error) based upon: (1) the amount of such Lender’s Term Loan, (2) the effective rate of interest, as determined in Section 2.3(a), and (3) a repayment schedule equal to thirty-two (32) months. All unpaid principal and accrued and unpaid interest with respect to the Term Loan is due and payable in full on the Maturity Date. The Term Loan may only be prepaid in accordance with Sections 2.2(c) and 2.2(d).”

“6.10     Financial Covenants.

(a)     Borrower shall achieve minimum trailing six-month revenue, to be tested as of the last day of each applicable quarter (as set forth in that certain Financial Covenant Side Letter) through and including the month ending December 31, 2018, on a consolidated basis with respect to Borrower and its Subsidiaries, of at least the amounts set forth in the Financial Covenant Side Letter; and thereafter, the required revenues of Borrower shall be determined by Collateral Agent and the Lenders upon receipt and review by Collateral Agent and the Lenders of Borrower’s Annual Projections delivered in accordance with Section 6.2(a)(iii); provided that such required revenues shall be:

(i) based on a minimum revenue requirement of a percentage of Borrower’s board of directors-approved revenue plan (provided that such plan is acceptable to Collateral Agent and the Lenders) to be set by Collateral Agent in its sole discretion,

(ii) in no event less than the amounts required hereunder with respect to the 2018 fiscal year of Borrower, and

(iii) at such levels that require Borrower to grow revenues sequentially quarter-over-quarter;

(b)     Borrower shall at all times maintain unrestricted cash and/or Cash Equivalents in a minimum aggregate amount of at least the amount set forth in the Financial Covenant Side Letter in accounts which are subject to a Control Agreement in favor of Collateral Agent.”

“6.14 Additional Warrants in Connection with Fourth Amendment. Within five (5) Business Days following the last closing of the Next Equity Financing, Borrower shall deliver to the Lenders a warrant (or split warrants) exercisable for such number of shares of the Class A Common Stock (“Common Stock”) as shall equal to One Hundred Fifty Thousand Dollars ($150,000.00), divided by the lower of (i) ten-day average of the closing prices of Borrower’s CDIs on the Australian Securities Exchange prior to the Fourth Amendment Date, multiplied by three and converted to U.S. dollars at the prevailing Australian dollar to U.S. dollar exchange rate as published by the Reserve Bank of Australia on the last day of the relevant ten day period, or  (ii) the Next Equity Financing Price, subject to adjustment thereafter from time to time in accordance with the provisions of the Warrant; provided, that, if an Event of Default occurs after the Fourth Amendment Date but prior to the closing of the Next Equity Financing, then, at the Lenders’ option, Borrower shall deliver to the Lenders a warrant (or split warrants) exercisable for such number of shares of Common Stock as shall equal to One Hundred Fifty Thousand Dollars ($150,000.00), divided by the lower of (i) ten-day average of the closing prices of Borrower’s CDIs on the Australian Securities Exchange prior to the Fourth Amendment Date, multiplied by three and converted to U.S. dollars at the prevailing Australian dollar to U.S. dollar exchange rate as published by the Reserve Bank of Australia on the last day of the relevant ten day period, or  (ii) ten-day average of the closing prices of Borrower’s CDIs on the Australian Securities Exchange prior to the occurrence of such Event of Default, multiplied by three and converted to U.S. dollars at the prevailing Australian dollar to U.S. dollar exchange rate as published by the Reserve Bank of Australia on the last day of the relevant ten day period.  As used herein (i) “CDI” means a CHESS Depositary Interest representing one-third of a share of Common Stock; (ii) “Next Equity Financing” means the first sale or issuance by the Company on or after the Fourth Amendment Date, in a single transaction or series of related transactions (but specifically excluding sales or issuances to directors of Borrower that require separate shareholder approval and the filing of proxies), of shares of its stock (including Common Stock, convertible preferred stock or other senior equity securities to one or more investors for cash for financing purposes); (iii) “Next Equity Financing Securities” means the type, class and series of stock (including Common Stock, convertible preferred stock or other senior equity security sold or issued by the Company in the Next Equity Financing); and (iv) “Next Equity Financing Price” means the lowest price per share in U.S. dollars for which Next Equity Financing Securities are sold or issued by the Company in the Next Equity Financing, provided that, if the Next Equity Financing includes the sale or issuance of CDIs in Australian dollars then the Next Equity Financing Price will be lowest price per CDI in Australian dollars sold or issued in the Next Equity Financing, multiplied by three and converted to U.S. dollars at the prevailing Australian dollar to U.S. dollar exchange rate as published by the Reserve Bank of Australia on the business day immediately prior to the closing of the Next Equity Financing. For the avoidance of doubt, (i) the warrant price per share shall be the applicable price per share used to calculate the number of warrants shares in the foregoing provision; and (ii) for purposes of determining the “Next Equity Financing” under the foregoing provision, both private placements and rights offerings in a series of related transactions shall be included.

6.     Section 13.1 of the Loan Agreement is hereby amended by amending and restating the following definitions therein as follows:

“‘Amortization Date’ is, with respect to a Term Loan, January 1, 2020.”

    “‘Financial Covenant Side Letter’ is that certain second amended and restated financial covenant side letter dated as of the Fourth Amendment Date, or any date thereafter, among Borrower, Collateral Agent and the Lenders.”

“‘Key Person’ is each of Borrower’s (i) Chief Executive Officer, who is Frank Grillo as of the Fourth Amendment Date, and (ii) Chief Financial Officer and Chief Operating Officer, who is Scott Murcray as of the Effective Date.

                    “‘Fourth Amendment Date’ is July 30, 2018.”

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” (Emphasis added.)

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IN WITNESS WHEREOF, the parties hereto have caused this Waiver and Fourth Amendment to Loan and Security Agreement to be executed as of the date first set forth above.