Underwriting Agreement, dated August 2, 2018, between AirXpanders, Inc. and Canaccord Genuity (Australia) Limited

Underwriting Agreement

AirXpanders, Inc.

Term

Meaning

Accepted Offer CDIs 

those Offer CDIs in respect of which the Issuer or the Underwriter receives Valid Applications from Eligible Holders.

Accepting Holder

a CDI Holder or Stockholder, from whom a Valid Application is received by the Issuer, accepting all or part of its Entitlement.

Affiliate

in respect of any person, any other person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such person; and ‘control’ (including the terms ‘controlled by’ and ‘under common control with’) means the possession, direct or indirect, of the power to direct or cause the direction of the management, policies or activities of a person, whether through the ownership of securities, by contract or agency or otherwise.

Announcement Date

has the same meaning as set out in the Timetable.

Application Money

the application money delivered by CDI Holders and Stockholders to the Registry in respect of a Valid Application.

ASIC

the Australian Securities and Investments Commission.

ASX

ASX Limited (ABN 98 008 624 691) and, where the context requires, its related bodies corporate (as defined in the Corporations Act), or the financial market operated by ASX Limited.

ASX Materials

the Offer Release, the Appendix 3B, Cleansing Notice and any announcement or material accompanying them given to ASX by the Issuer in respect of the Offer.

ASX Settlement

ASX Settlement Pty Limited (ABN 49 008 504 532).

ASX Settlement Operating Rules

the settlement rules of the settlement facility provided by ASX Settlement.

Authorisation

an authorisation, consent, licence, declaration, approval, exemption, notarisation or waiver, however it is described; and

Business Day

has the meaning given to that expression in the Listing Rules.

CDI

a CHESS Depository Interest issued by CDN, with each CDI representing a one third interest in a corresponding Share.

CDI Holder

a holder of CDIs.

CDN

CHESS Depositary Nominees Pty Limited (ABN 75 071 346 506).

Certificate

a certificate in the form of Schedule 2 executed by two directors of the Issuer.

CHESS

has the meaning given to that expression in the Listing Rules.

CHESS Depository Interest

a security interest as defined in the ASX Settlement Operating Rules.

Claim

in relation to any person, a claim, allegation, action, proceeding, order, debt or demand made against the person, however arising, and whether present or future, fixed or unascertained, actual or contingent, whether at law, in equity, under statute or otherwise.

Cleansing Notice

the notice given to ASX by the Issuer under section 708AA(2)(f) in respect of the Offer, meeting the requirements of section 708AA(7).

Commission

the United States Securities and Exchange Commission.

Completion

will occur when all of the Offer CDIs to be issued under the Offer in accordance with this agreement have been allotted by the Issuer in accordance with the Offer.

Conditional Placement

the offer of 299,060 Placement Shares to the Barry Cheskin at the Placement Offer Price, the issue of which is conditional on Securityholder Approval.

Conditional Placement Allotment Date

has the same meaning as set out in the Timetable.

Constitution

the constitution, articles of association, by laws or other equivalent document of the Issuer as at the date of this agreement.

Corporations Act

the Corporations Act 2001 (Cth).

Defaulting Holder

an Accepting Holder who, by 10.30 am on the Settlement Date, has not paid in full and clear funds the Offer Price in respect of each of the Accepted Offer CDI in respect of which it has lodged a Valid Application.

Defective

In the case of the Cleansing Notice - if it is defective within the meaning of section 708AA(11).

Due Diligence Committee

the committee formed by the Issuer in connection with the Offer.

Due Diligence Committee Report

the report of the Due Diligence Committee to the Issuer and its directors and Underwriter (and its representatives) dated on or about the date of this agreement, including all annexures and schedules to the report.

Due Diligence Process Outline

the memorandum including its schedules, annexures and attachments setting out the responsibilities and purpose of the Due Diligence Committee, the final form of which is annexed to the Due Diligence Committee Report.

Due Diligence Program

the due diligence and verification procedures adopted by the Issuer and summarised in the Due Diligence Process Outline.

Due Diligence Questionnaire

the written questionnaire in the form agreed by the Underwriter and the Issuer prior to the date of this agreement to be completed by senior management of the Issuer, in relation to the business and prospects of the Issuer amongst other matters.

Due Diligence Materials

the materials prepared or received by the Issuer in respect of the conduct of the Offer and preparation of Offer Documents.

Eligible Holder

a CDI Holder and Stockholder at the Record Time with an address on the Issuer’s register of members in Australia or New Zealand.

Encumbrance

any mortgage, lien, charge, pledge, assignment by way of security, security interest, title retention, preferential right or trust arrangement, Claim, covenant, profit à prendre, easement or any other security arrangement or any other arrangement having the same effect.

Entitlement

the entitlement of an Eligible Holder to be issued 15 Offer CDIs for every 16 CDIs (or 45 Offer CDIs for every 16 Shares) held at the Record Time under the Offer.

Entitlement and Acceptance Form

a personalised entitlement and acceptance form to subscribe for Offer CDIs in the form of the entitlement and acceptance form accompanying the Offer Booklet.

Entitlement Offer

the pro rata entitlement offer of Offer CDIs to Eligible Holders entitling each such Eligible Holder to subscribe at the Offer Price for 15 Offer CDIs for every 16 CDIs (or 45 Offer CDIs for every 16 Shares) held by that Eligible Holder at the Record Time.

Event of Termination

an event entitling the Underwriter to terminate this agreement or its obligations under this agreement as provided in clause 10.

Excluded Information

has the meaning given to that term in clause 4.1(g).

Excluded Holders

those CDI Holders and Stockholders (or beneficial owners of CDIs and Shares) at the Record Time with a registered address outside Australia, New Zealand and any other countries and jurisdictions as agreed between the Issuer and the Underwriter, and in respect of whom Listing Rule 7.7.1(a) applies; provided that any such holder of CDIs that is in the United States or is a US person (as defined in Rule 902(k) of Regulation S under the Securities Act), and any holder of CDIs who holds CDIs for the account or benefit of a person that is in the United States or is a US person (to the extent that person holds CDIs for the account or benefit of such a person) is an Excluded Holder.

Government Agency

a government or government department or other body;

Group

the Issuer and its related bodies corporate.

Indemnified Party

means:

Initial Placement

the offer of 20,142,123 Placement Shares to the Vivo Investors at the Placement Offer Price.

Initial Placement Allotment Date

has the same meaning as set out in the Timetable.

Insolvent

A person is Insolvent if:

Intellectual Property Right

has the meaning given in clause 4.1(q).

Issuer Information

any information made public to ASX pursuant to the continuous disclosure obligations of the Issuer or otherwise, or provided to one or more investors (either individually or generally) by or on behalf of the Issuer (including, for the avoidance of doubt, any Publication).

Listing Rules

the Listing Rules of ASX (including the ASX Settlement Operating Rules, the ASX Operating Rules and the ASX Clear Operating Rules) as waived or modified by ASX in respect of the Issuer or the Group or the Offer in any particular case.

Loss

in relation to a person, a damage, loss, cost, expense or liability incurred by the person, including legal costs on a full indemnity basis, penalties, fines and interest, however and wherever arising and whether present or future, fixed or unascertained, actual or contingent.

Offer

the pro rata entitlement offer of Offer CDIs to Eligible Holders entitling each such Eligible Holder to subscribe at the Offer Price for 15 Offer CDIs for every 16 CDIs (or 45 Offer CDIs for every 16 Shares) held by that Eligible Holder at the Record Time.

Offer Booklet

the retail offer booklet provided to Eligible Holders in connection with the Offer.

Offer CDIs

the CDIs that are offered for subscription pursuant to the Offer (and which, for the avoidance of doubt, does not include any CDIs that would have been offered to the Placement Share Offerees had such Placement Share Offerees been entitled to participate in the Offer and the equivalent number of additional CDIs the Placement Share Offerees purchase under the Placement).

Offer Documents

the documents issued or published by or on behalf of the Issuer in respect of the Offer, being:

Offer Period

the period commencing on the date of this agreement and ending on Completion.

Offer Price

$0.075. 

Offer Proceeds

the amount calculated pursuant to the following formula:

Offer Release

the ASX release by the Issuer outlining the terms of the Offer and related information, including any investor presentation.

Placement

the offer of the Placement Shares to the Placement Share Offerees at the Placement Offer Price, to raise US$3,417,576, comprising the Initial Placement and the Conditional Placement.

Placement Offer Price

US$0.16719.

Placement Proceeds

the amount calculated pursuant to the following formula:

Placement Shares

the total of 20,441,183 Shares to be offered and issued under the Placement.

Placement Share Offerees

means the following CDI Holders and Stockholders located in the United States:

Publication

any announcements, advertisements, publicity or roadshow materials relating to the Group or the Offer published by the Issuer or on its behalf after execution of this agreement.

Record Date

has the same meaning as set out in the Timetable.

Record Time

7.00pm (Australian Eastern Standard time) on the Record Date.

Registration Statement

a registration statement on Form S-1 filed with the Commission and relating to the Offer CDIs, including a preliminary prospectus and such amendments to such registration statement as may have been required to the date of this agreement.

Registry

the Issuer’s registry, Computershare Investor Services Pty Ltd.

Regulation S

Regulation S under the Securities Act.

Rules and Regulations

the rules and regulations of the Commission under the Securities Act.

Securityholder Approval

the approval of Stockholders to the issue of Placement Shares to Barry Cheskin for the purposes of Listing Rule 10.11 and for all other purposes.

Share

the fully paid and nonassessable shares of Class A Common Stock of the Issuer.

Stockholder

a holder of Shares.

Securities Act

the U.S. Securities Act of 1933 (as amended).

Shortfall Notice

a notice from the Issuer to the Underwriter specifying the number of Offer CDIs for which Valid Applications in respect of the Offer have not been received.

Shortfall CDIs

the number of Offer CDIs offered under the Offer for which Valid Applications have not been received from Eligible Holders in respect of their Entitlement; and

Timetable

the timetable for the Offer set out in Schedule 3, as it may be varied pursuant to clause 6.4.

Underwriter

Canaccord.

United States

has the meaning given to that term in Rule 902(l) under the Securities Act.

Valid Application

has the meaning given to that expression by clause 1.4.

Verification Materials

the contents of the file maintained by the Issuer in relation to the verification of statements made in the Offer Documents, verified as part of the Due Diligence Program.

Vivo Investors

Vivo Ventures Fund VII, L.P.; and

(a)

a reference to document or agreement (including this agreement) includes any variation or replacement of it;

(b)

a reference to legislation includes regulations and other instruments under it and any variation or replacement of any of them;

(c)

a reference to a section, Chapter, Part or Division is a reference to a section, Chapter, Part or Division of the Corporations Act, as modified by any applicable ASIC Class Order, including ASIC Class Order [CO 14/827];

(d)

the singular includes the plural and vice versa;

(e)

the word ‘person’ includes an individual, a body corporate, a partnership, a joint venture, an unincorporated body, an association and a Government Agency;

(f)

a reference to a particular person includes the person’s executors, administrators, successors and permitted substitutes (including persons taking by novating) and assigns;

(g)

an agreement, representation or warranty in favour of two or more persons is for the benefit of them jointly and each of them individually;

(h)

an agreement, representation or warranty by two or more persons binds them jointly and each of them individually;

(i)

a group of persons or things is a reference to any two or more of them jointly and to each of them individually;

(j)

a reference to dollars, A$ or $ is a reference to the lawful currency of Australia;

(k)

a period of time dating from a given day or the day of an act or event, is to be calculated exclusive of that day;

(l)

the meaning of general words is not limited by specific examples introduced by ‘including’, ‘for example’ or ‘such as’ or similar expressions;

(m)

a reference to a time of the day is a reference to Australian Eastern Standard time;

(n)

any date referred to in the Timetable has the same meaning where used in this agreement, as it may be varied under clause 6.4;

(o)

the word agreement includes an undertaking or other binding arrangement or understanding, whether or not in writing;

(p)

the words subsidiary or related body corporate have the same meanings as in the Corporations Act; and

(q)

references to applicable law include all laws applicable to the Issuer, the Group and the Offer within or outside Australia (such as the Corporations Act) and includes the Listing Rules and policies, guidelines, official directives or requests of or by any Government Agency, whether or not having the force of law.

1.3

Business Days

(a)

if the act involves a payment that is due on demand, the person must do it on or by the next Business Day; and

(b)

in any other case, the person must do it on or by the previous Business Day.

1.4

Valid Application

(a)

by way of a duly completed Entitlement and Acceptance Form and submitted to the Registry in accordance with the Offer and the Issuer receives the Offer Price in cleared funds; or

(b)

payment for the CDIs applied for by BPAY (and completion of an Entitlement and Acceptance Form is not therefore required),

1.5

Knowledge

2.1

Appointment

2.2

Agreement to underwrite

(a)

The Underwriter agrees to underwrite subscriptions for the Offer CDIs on the terms and conditions of this agreement.

(b)

For the avoidance of doubt, the Underwriter will not offer or sell any Placement Shares under this agreement and is under no obligation to underwrite the Placement.

2.3

Sub-underwriting

2.4

Co-lead managers, Co-managers and brokers

3.1

Condition precedent to binding agreement

3.2

Conditional obligations of the Underwriter

(a)

(Due Diligence Questionnaire) delivery to the Underwriter of the Due Diligence Questionnaire, completed to the satisfaction of the Underwriter and delivered to the Underwriter by 5.00pm on the day immediately prior to the Announcement Date;

(b)

(Due Diligence Committee Report) delivery to the Underwriter, prior to 8.00am on the Announcement Date a copy of the final Due Diligence Committee Report contemplated by the Due Diligence Process Outline in a form and substance satisfactory to the Underwriter, which is to be addressed to, and expressed to be for the benefit of, each member of the Due Diligence Committee, the Issuers and the Underwriter (and its respective representatives) and signed by each member of the Due Diligence Committee and accompanied by:

(1)

each senior management sign-off signed by each person named in the Due Diligence Process Outline and addressed to, and expressed to be for the benefit of, each member of the Due Diligence Committee, the Issuer and the Underwriter (and its respective representatives);

(2)

a legal opinion in respect of Australian legal matters addressed to, and expressed to be for the benefit of, the Issuer and the Underwriter (and its respective representatives), in a form and substance satisfactory to the Underwriter from Johnson Winter & Slattery, Australian legal counsel to the Issuer; and

(3)

all other opinions, sign-offs and reports referred to in the Due Diligence Committee Report signed and addressed to, and expressed to be for the benefit of, each member of the Due Diligence Committee (and its respective representatives) and the Underwriter (and its respective representatives);

(c)

(Regulatory relief) the Issuer obtains before 9:00am on the Announcement Date, in a form and substance satisfactory to the Underwriter, all approvals, consents, modifications or waivers of or from ASIC, ASX or any other Government Agency that are necessary to implement the Offer in accordance with this agreement (including the Timetable);

(d)

(Trading Halt) ASX granting the Issuer a trading halt in connection with the Offer, pursuant to ASX Listing Rule 17.1, commencing before 10.00am two trading days immediately before the Announcement Date for a period of not less than two Business Days;

(e)

(ASX Materials) the Issuer issuing and releasing to ASX the ASX Materials in a form acceptable to the Underwriter prior to 10.00am on the Announcement Date;

(f)

(Placement) the Issuer entering into a purchase agreement with the Placement Share Offerees for the sale and issue of the Placement Shares prior to 10.00am on the Announcement Date;

(g)

(Vivo funds) the Vivo Investors paying their portion of the Placement Proceeds in accordance with their purchase agreement with the Issuer not later than seven Business Days after the date of this agreement; and

(h)

(Registration Statement and Prospectus Filings) notification that the Registration Statement has become effective shall be received by the Underwriter not later than five Business Days after the date of this agreement and all filings made pursuant to Rules 424, 430A, or 430C of the Rules and Regulations, as applicable, shall have been made or will be made in accordance with all such applicable rules.

3.3

Obligation to satisfy conditions

3.4

Waiver

3.5

Notice

3.6

Conditions not satisfied

4.1

The Issuer

(a)

(status) it is a company duly incorporated under the laws of the place of its incorporation;

(b)

(capacity) it has full legal capacity and power to enter into this agreement and to carry out the transactions that this agreement contemplates;

(c)

(corporate authority) it has taken all corporate action that is necessary or desirable to authorise its entry into this agreement and its carrying out of the transactions that this agreement contemplates;

(d)

(Authorisation) it holds each Authorisation that is necessary to:

(1)

execute this agreement and to carry out the transactions that this agreement contemplates;

(2)

ensure that this agreement is legal, valid and binding; and

(3)

enable it to properly carry on its business,

(e)

(agreement effective) immediately following effectiveness of the Regiatration Statement, this agreement will constitute its legal, valid and binding obligations, enforceable against it in accordance with its terms subject to any necessary stamping or registration;

(f)

(information) all information:

(1)

whether in written or verbal form and provided by or on behalf of the Issuer to the Underwriter, or contained in any public or other media statements made by, or on behalf of the Issuer, in relation to the Offer and the Group, including information provided in response to the Due Diligence Questionnaire; and

(2)

comprising the Issuer’s periodic and continuous disclosure filed with ASX and / or ASIC, and / or included on the Issuer’s website,

(g)

(no inside information)

(1)

other than the Offer and information contained in the ASX Materials provided to the Underwriter immediately prior to execution of this agreement and each day this representation and warranty is repeated, it is not aware of any information that is not generally available at the date of this agreement which, if made generally available, would be likely to have a material effect upon the price or value of the CDIs or would otherwise be required to be disclosed as ‘excluded information’ under subsections 708AA(7)(d) or 708A(8) (Excluded Information);

(2)

the ASX Materials, which are required to contain Excluded Information, will not omit any information which is Excluded Information at the time of their release to ASX; and

(3)

it is not aware of anything that will result in there being any Excluded Information at any time before Completion;

(h)

(Offer Documents) the Offer Documents do not contain:

(1)

any statements that are misleading or deceptive or likely to mislead or deceive and do not omit information required by the Corporations Act or any other applicable law; or

(2)

any forecasts, expressions of opinion, intention or expectation that are not based on reasonable grounds,

(i)

(disclosure obligations) it is not in breach of, and will not before the expiry of the Offer Period be in breach of, any provision of Chapter 3 of the Listing Rules;

(j)

(due diligence) it has made, and will continue until Completion to make, reasonable enquiries to ensure that there are no material omissions from the Offer Documents or Issuer Information or omissions from the Offer Documents or Issuer Information of information required by the Corporations Act and any applicable laws and that the statements included in the Offer Documents or Issuer Information are true and not misleading or deceptive or likely to mislead or deceive, and the issue of the Offer Documents does not constitute conduct by any person which is misleading or deceptive or likely to mislead or deceive;

(k)

(Issuer Information) the Issuer Information, when considered in aggregate, does not contain any statements that are misleading or deceptive in any material respect or likely to mislead or deceive in any material respect;

(l)

(litigation) neither it nor any entity in the Group is involved in any litigation, arbitration or administrative proceeding relating to claims or amounts which are material in the context of the Group or the Offer, nor, to the best of the knowledge, information and belief of the Issuer, after due enquiry, is any such litigation, arbitration or administrative proceeding pending, threatened or contemplated, including submissions, petitions, applications to government ministers in any jurisdiction in which it operates or other persons or authorities;

(m)

(financial reporting internal controls) the Issuer maintains a system of internal controls over financial reporting that has been designed by the Issuer’s principal executive officers and principal financial officers, or under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. To the best of the Issuer’s knowledge, information and belief, after due enquiry, the Issuer’s internal controls over financial reporting are effective and there is no material weakness in its internal controls over financial reporting;

(n)

(financial information in Offer Documents) the financial and accounting information contained in the Offer Documents (Financial Information), if any, has been prepared in good faith and in a manner consistent with the principles, policies and procedures used for the preparation of the Issuer’s last audited financial statements. The Financial Information has been accurately extracted from the Issuer’s management accounts and reporting systems and the assumptions and adjustments used in the preparation of the Financial Information which reflects the terms of the Offer are reasonable and appropriate. The Financial Information in respect of the Group’s future performance is based on reasonable grounds and has been prepared on the basis of reasonable and appropriate assumptions;

(o)

(title to property) the Issuer and each other member of the Group have all real and personal property necessary to conduct its business as currently conducted. Any real property and buildings held under lease by the Issuer and each other member of the Group are held by it under valid, subsisting and enforceable leases with such exceptions as would not have a material adverse effect;

(p)

(licences and approvals) each Group member holds all Authorisations, licences, permits, approvals, concessions and other consents necessary (Approvals):

(A)

for it to conduct each of its businesses in the manner in which those businesses have been conducted prior to the date of this agreement in accordance with all applicable laws (including occupational health and safety and environmental laws); and

(B)

all such Approvals are in full force and effect and not liable to be revoked or not renewed, except as would not individually or in the aggregate, have a material adverse effect, financial or otherwise, on the Issuer or any of its related bodies corporate;

(q)

(intellectual property) the Issuer and each Group member owns or possesses adequate rights to use all patents, patent applications, registered designs, trademarks, trade names, trademark registrations, licences and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) necessary for the conduct of their respective businesses (together, the Intellectual Property Rights), except where the failure to own or possess the same could not reasonably be expected to result in a material adverse effect on the condition, financial or otherwise, of the Issuer or any of its related bodies corporate; and the Issuer and the Group have not received any notice of any claim of infringement of or conflict with any such rights of others, except where such infringement or conflict could not reasonably be expected to result in a material adverse effect on the condition, financial or otherwise, of the Issuer or any of its related bodies corporate;

(r)

(Certificate) the contents of a Certificate given under this agreement are true and correct and not misleading or deceptive as at the date the Certificate is given;

(s)

(rights issue) the Offer will be a rights issue within the meaning given in section 9A and may be conducted under, and will be undertaken in compliance with section 708AA, and each of the conditions in that section which require satisfaction for the purposes of conducting the Offer is or will be satisfied by the relevant date for satisfaction referred to in the particular condition;

(t)

(Cleansing Notice) the Issuer is able to provide, and there is nothing preventing it from providing the Cleansing Notice as contemplated in this agreement;

(u)

(securityholder approval) the Issuer does not require the approval of any class of any security in the Issuer to complete the Offer;

(v)

(conduct) the Issuer has not engaged and will not engage in conduct that is misleading or deceptive or is likely to mislead or deceive in connection with the Placement or the Offer;

(w)

(business) since the last balance date, with the exception of the Offer and any fact, matter or circumstance fairly disclosed in the ASX Materials or to ASX prior to the date of this agreement:

(1)

its business has, in all material respects, been carried on in the ordinary and usual course;

(2)

there has been no change in its assets, total liabilities or financial condition or profitability except for changes in the ordinary course of business, none of which individually or in the aggregate could reasonably be expected to have a material adverse effect on the condition, financial or otherwise, of the Issuer or any of its related bodies corporate; and

(3)

none of its business, assets, liabilities, financial position nor prospects have been adversely affected by any matter, either financial or otherwise which has a material adverse effect on the business as a whole;

(x)

(Offer CDIs) subject to the terms of ASIC Class Order [CO 14/827]:

(1)

the Offer CDIs will be in a class of securities that are quoted on a financial market operated by ASX without being suspended from trading for more than a total of 5 trading days during the shorter of the period during which the class of securities has been quoted and the 12 months before the date of issue of the Offer CDIs (the Relevant Period);

(2)

no:

(A)

exemption under sections 111AS or 111AT; or

(B)

order under sections 340 or 341,

(3)

ASIC has not made a determination under sub-section 708AA(3) of the Corporations Act that it is satisfied that the Issuer has, within the previous 12 months, contravened any of the provisions listed in that sub-section;

(y)

(purpose) the Issuer is issuing the Offer CDIs for the purpose set out in the Offer Documents;

(z)

(Offer CDIs) when issued, the Offer CDIs will be duly and validly authorised and issued, fully paid, free from all Encumbrances (other than those provided in the Constitution), will conform to the description of the Offer CDIs contained in the Offer Documents and will rank equally with all other CDIs on issue;

(aa)

(Listing) it has not ceased to be admitted to the official list of ASX, nor has removal from the official list of ASX been threatened by ASX, and quotation of the CDIs on ASX has not been suspended or terminated in the 12 months prior to the date of this agreement;

(bb)

(no contravention from execution or performance) no member of the Group is in contravention of:

(1)

any applicable law to which it is subject or any order of any Government Agency that is binding on it;

(2)

the Listing Rules or any other applicable requirement of ASX or ASIC or any agreement binding on it;

(3)

any Authorisation binding on it;

(4)

any ruling, court decree, undertaking or instrument binding on, or applicable to any member of the Group; or

(5)

its Constitution;

(cc)

(material contracts) each Group member has full power to enter into and comply with all contracts that are material to its business, and all such contracts are, to the best of the Issuer’s knowledge and belief, binding and enforceable by the Issuer in accordance with their terms and each Group member is not in default under any contracts that are material to its business;

(dd)

(solvency) neither it nor any member of the Group is Insolvent, and there is no act which has occurred (including entry into or performance of this agreement) nor any omission made which may result in it or any member of the Group becoming Insolvent;

(ee)

(no general solicitation or general advertising) neither the Issuer, nor any of its Affiliates, nor any person acting on behalf of the Issuer or any of its Affiliates (other than the Underwriter or any of their Affiliates or any person acting on behalf of any of them, as to whom no representation or warranty is made) has offered or sold, or will offer or sell, any Placement Shares in the United States using any form of general solicitation or general advertisement within the meaning of Rule 502(c) under the Securities Act or in any manner involving a public offering in the United States within the meaning of section 4(a)(2) of the Securities Act;

(ff)

(stabilisation; manipulation) Neither the Issuer nor any of its Affiliates nor any person acting on behalf of the Issuer or its Affiliates (other than the Underwriter or any of its Affiliates or any person acting on behalf of any of them, as to whom no representation or warranty is made) has taken or will take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilisation or manipulation of the price of the Offer CDIs in violation of any applicable law;

(gg)

(corrupt practices) None of the Issuer and its subsidiaries or, to the knowledge of the Issuer, any director, officer, employee, Affiliate or other person acting on behalf of the Issuer has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; or (iii) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment, in each case, in violation of any applicable laws;

(hh)

(anti-money laundering) The operations of the Issuer and its subsidiaries are and have been conducted at all times in compliance in all material respects with the money laundering statutes of Australia, the United States and any other applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any government agency (collectively, the Money Laundering Laws) and no action, suit or proceeding by or before any court or government, governmental department or other body, governmental, semi-governmental or judicial person or a person (whether autonomous or not) who is charged with the administration of a law, authority or body or any arbitrator involving the Issuer or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Issuer, threatened;

(ii)

(no sanctions) None of the Issuer, any of its subsidiaries or, to the knowledge of the Issuer, any director, officer, employee, Affiliate or any person acting on behalf of the Issuer or any of its subsidiaries is currently the subject or the target of any sanctions administered or enforced by the Office of Foreign Assets Control of the U.S. Department of the Treasury (including the designation as a “specially designated national” or “blocked person” thereunder), the Commonwealth of Australia, Her Majesty's Treasury in the United Kingdom, the European Union or other relevant sanctions authority (collectively, Sanctions), nor is the Issuer or any of its subsidiaries located, organised or resident in a country, region or territory that is the subject or the target of Sanctions, including, without limitation, Crimea, Cuba, Iran, North Korea, Sudan and Syria (each, a Sanctioned Country); and the Issuer will not directly or indirectly use the proceeds of the offering of the Offer CDIs, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) for the purpose of financing or facilitating the activities of any person currently the subject or the target of any Sanctions, (ii) in any Sanctioned Country or (iii) in any other manner that will result in a violation of the Sanctions by any person (including any person or entity participating in the offering of the Offer CDIs, whether as underwriter, administrative agent, adviser, investor or otherwise);

(jj)

(compliance with registration requirements) The Registration Statement has been prepared by the Issuer in compliance with the Securities Act and the Rules and Regulations, will be filed with the Commission and will also be released to ASX in accordance with ASX rules. Copies of the Registration Statement including the related preliminary prospectus to be filed by the Issuer with the Commission shall be delivered to the Underwriter; and

(kk)

(no registration rights) No holder of Shares or CDIs is a party to any registration rights agreements with the Issuer that requires the Issuer to register any securities of the Issuer because of the filing of the Registration Statement or the related prospectus or the offering of the Offer CDIs, except in connection with the Private Placement or for rights that have been duly waived by such holder or have expired.

4.2

The Underwriter

(a)

(status) it is duly incorporated under the laws of the place of its incorporation;

(b)

(capacity) it has full legal capacity and power to enter into this agreement and to carry out the transactions that this agreement contemplates;

(c)

(corporate authority) it has taken all corporate action that is necessary or desirable to authorise its entry into this agreement and its carrying out of the transactions that this agreement contemplates;

(d)

(Authorisation) it holds each Authorisation that is necessary to:

(1)

execute this agreement and to carry out the transactions that this agreement contemplates;

(2)

ensure that this agreement is legal, valid, binding and admissible in evidence; and

(3)

enable it to properly carry on its business,

(e)

(agreement effective) immediately following effectiveness of the Registration Statement, this agreement will constitute its legal, valid and binding obligations, enforceable against it in accordance with its terms subject to any necessary stamping or registration;

(f)

(compliance with registration requirements) no sales of Offer CDIs shall be made until the Registration Statement and related prospectus has been declared effective by the Commission; and

(g)

(no US offer by the Underwriter) it will not offer or sell any Offer CDIs in the United States.

4.3

Warranties to be read independently

4.4

Reliance

4.5

Notice of breach

(a)

The Issuer undertakes to the Underwriter that it will notify the Underwriter as soon as it becomes aware of a breach of any representation or warranty under clause 4.1 relating to it or the Group or of any undertaking given by it in this agreement.

(b)

Each Underwriter undertakes to the Issuer that it will notify the Issuer as soon as it becomes aware of a breach of any representation or warranty under clause 4.2 relating to it or of any undertaking given by it in this agreement.

4.6

Repetition

4.7

Acknowledgement

5

Undertakings

(a)

(compliance) ensure that the Offer Documents, the Placement and the Offer comply with the Corporations Act, all applicable laws and the Listing Rules;

(b)

(contravention) not before Completion commit, be involved in or acquiesce in any activity that breaches:

(1)

the Corporations Act;

(2)

any other applicable law or regulation, including, without limitation, the Securities Act;

(3)

the Listing Rules;

(4)

its Constitution; or

(5)

any legally binding requirement of ASIC or ASX;

(c)

(Constitution) not during the Offer Period vary any term of its Constitution without the prior written consent of the Underwriter;

(d)

(Insolvency) not during the Offer Period become Insolvent and must procure that none of its related bodies corporate become Insolvent during the Offer Period;

(e)

(no related party) ensure that no related party (as such term is defined in the Corporations Act) participates or subscribes for any Shortfall CDIs, except as permitted by applicable law or the Listing Rules;

(f)

(confidential) keep the terms of this agreement confidential except as disclosed in the Offer Documents or as required by law;

(g)

(no further issues) not during the period ending 90 days after Completion, allot or agree to allot any Shares, CDIs or other securities of the Issuer or any member of the Group or grant or agree to grant any options in respect of Shares, CDIs or other securities of the Issuer or any member of the Group (including securities convertible or exchangeable into equity, or that represent the right to receive equity) (or do anything economically equivalent to any of the foregoing), except without the prior written consent of the Underwriter, other than:

(1)

the issue of the Offer CDIs (or the Shares the subject of the CDIs);

(2)

the issue of the Placement Shares;

(3)

the issue of warrants to Oxford Finance LLC (or the Shares the subject of those warrants);

(4)

an issue of or an agreement to issue securities pursuant to a non-underwritten dividend reinvestment plan or an employee incentive scheme (as those terms are defined in the Listing Rules) (including the options to be issued to the Company’s Chief Executive Officer pursuant to his employment agreement); or

(5)

an issue of securities as a result of the conversion of any convertible securities (as that term is defined in the Listing Rules) which are on issue at the date of this agreement.

(h)

(conduct of business) carry on the Issuer’s business from the date of this agreement to the date 60 days after Completion in the ordinary course, and not dispose of any material part of its business or property except in the ordinary course or as disclosed in the Offer Documents, except with the consent of the Underwriter, such consent not to be unreasonably withheld or delayed;

(i)

(notice of breach) notify the Underwriter of any breach of any representation, warranty or undertaking given by the Issuer under this agreement or the occurrence of any event as set out in clause 10, of which it becomes aware, as soon as it becomes so aware;

(j)

(notice of conditions) notify the Underwriter if it becomes aware that any condition precedent in clause 3.2 becomes incapable of satisfaction, as soon as becoming so aware;

(k)

(supplementary disclosure) obtain the prior written consent of the Underwriter to the form and content of, and any amendments to, any Offer Documents;

(l)

(notifications) give notice to the Underwriter no later than 1 Business Day after becoming aware of any of the following in relation to the Offer or the Offer Documents:

(1)

an application being made by ASIC for an order under Part 9.5 of the Corporations Act; or

(2)

ASIC commencing any investigation or hearing under Part 3 of the Australian Securities and Investments Commission Act 2001 (Cth);

(m)

(notice to nominees) send a notice to Stockholders and CDI Holders who the Issuer believes hold its Shares or CDIs as nominee instructing them not to (i) send any Offer Document to Excluded Holders or any Stockholder, CDI Holder or person in the United States, in each case for whom they are the nominee holder and (ii) submit any Entitlement and Acceptance Form or otherwise purchase Offer CDIs on behalf of any Excluded Holders or any Stockholder, CDI Holder or person in the United States;

(n)

(correspondence with ASIC or ASX) provide the Underwriter with copies of all correspondence from ASIC or ASX (or any of their respective advisers) to it (or any of its advisers), and give the Underwriter a reasonable opportunity to comment on any correspondence from the Issuer (or any of its advisers) to ASIC or ASX (or any of their respective advisers) in connection with the Offer Documents or Offer from the date of this agreement until Completion;

(o)

(prescribed occurrences) until 60 days after Completion, ensure that none of the events set out in sections 652C(1) or (2) has occurred in relation to the Issuer or any other Group member, except as (1) disclosed to the Underwriter in writing prior to the date of this agreement, or (2) consented to by the Underwriter in writing after the date of this agreement; and

(p)

(distribution of Offer Documents) not distribute the Offer Documents or allocate Placement Shares or Offer CDIs to any person in the United States (except for Placement Share Offerees) or any other jurisdiction in which it would be prohibited from doing so.

6.1

Making of Offer

6.2

Support and access

(a)

providing a draft of the ASX Materials to the Underwriter for distribution to prospective sub-underwriters and, if requested by the Underwriter, a marked copy of the version of the ASX Materials given to ASX showing all changes from the draft provided to the Underwriter; and

(b)

if requested by the Underwriter, providing the Offer Documents to the Underwriter for distribution to prospective co-lead managers, co-managers, brokers and sub-underwriters.

6.3

Public Statements

(a)

Subject to clause 6.3(b), until the Settlement Date, neither the Issuer nor any other member of the Group, may make any public statement or announcement in relation to the Offer, its progress, the results of the Offer or the business of the Group, without the prior consent in writing of the Underwriter, such consent not to be unreasonably withheld or delayed.

(b)

Paragraph (a) does not prevent or delay the Issuer or any other member of the Group making any public statement or announcement where it is required by the Corporations Act, the Listing Rules or any other applicable law to make a public statement or announcement. Where the statement or announcement is in relation to the Offer or the business of the Group, the Issuer must use all reasonable endeavours to the extent practicable to consult with, and take into account the comments of, the Underwriter as to the form, content and timing of that statement or announcement prior to making that announcement.

6.4

Amendment

6.5

Application for quotation

6.6

Supplementary documents

(a)

of any Excluded Information that would have been required to be disclosed in the Cleansing Notice;

(b)

that the Cleansing Notice is Defective;

(c)

of a material change to the potential effect of the Offer on control of the Issuer or to the consequences of that effect; or

(d)

that any of the Offer Documents or the Issuer Information is, or becomes, misleading or deceptive or likely to mislead or deceive,

6.7

Issuer responsible

6.8

Registry

(a)

The Issuer must procure that the Registry provides such information as is reasonably requested by the Underwriter (including providing reports in relation to registered or underlying securityholdings in the Issuer required by the Underwriter) to enable or assist the Underwriter to comply with its obligations under clause 7.

(b)

The Issuer acknowledges that the Underwriter will not be in breach of this agreement by reason of failing to perform or performing later than the time specified in this agreement any obligation under this agreement the performance of which is dependent on the provision of that information within the specified time limits, to the extent that the breach is caused or contributed to by a failure on the part of the Issuer to procure the provision of, or of the Registry to provide, information as soon as reasonably practicable following a reasonable request.

7.1

Conduct of the Placement

8.1

ASX Materials

(a)

(dispatch of Offer Documents) dispatch the Entitlement and Acceptance Form and the Offer Booklet to each Eligible Holder on or before the Despatch Date; and

(b)

(Excluded Holders) comply with section 9A and Listing Rule 7.7.1(b) and send to each Excluded Holder notice of the Offer and that they will not be eligible to participate in the Offer.

8.2

Conduct

(a)

The Issuer must conduct the Offer in accordance with the Offer Documents, this agreement, the Constitution, the Timetable, the Listing Rules, the Corporations Act and all other applicable laws.

(b)

The Issuer must ensure that the Registry:

(1)

is instructed and enabled to receive Entitlement and Acceptance Forms and application monies for Offer CDIs from Eligible Holders;

(2)

credits the designated bank account on a daily basis during the period commencing on the Opening Date and ending at 10.00am on the Settlement Date with the application monies received, in accordance with any requirements of the Corporations Act; and

(3)

keeps adequate records of all Entitlement and Acceptance Forms and application monies received (regardless of whether they are Valid Applications) during the Offer Period.

(c)

The Issuer must ensure that the Registry delivers a computerised list of Accepting Holders under the Offer to the Underwriter on a daily basis (or such other intervals as reasonably requested) during the period commencing on the Opening Date and ending on the Closing Date.

8.3

Valid Applications and allocation

8.4

Details of applications

(a)

provide, or direct the Registry to provide, the Underwriter with details of all applications lodged in respect of the Offer, whether Valid Applications or not;

(b)

inform the Underwriter of the number of applications for Offer CDIs that are not Valid Applications and the grounds on which the Issuer believe those applications are not Valid Applications;

(c)

if so requested, allow the Underwriter to review the invalid applications; and

(d)

in respect of any applications that are not Valid Applications only because payment has been made by cheque, which has not yet cleared, use all reasonable efforts to maximise clearance of those cheques by 9.00am on the Shortfall Notice Date.

8.5

Shortfall Notice and Certificate

(a)

may give the Underwriter a Shortfall Notice; and

(b)

must give the Underwriter a Certificate certifying matters on that date, whether or not the Issuer gives the Underwriter a Shortfall Notice under paragraph (a).

8.6

Subscription for Shortfall CDIs

(a)

subscribe, or procure subscription for, the Shortfall CDIs; and

(b)

pay, or procure payment of, the Offer Price to the Issuer in respect of all of the Shortfall CDIs,

8.7

Settlement

(a)

settlement of the subscription of the Accepted Offer CDIs will be effected by the Registry; and

(b)

settlement of the Shortfall CDIs will take place on a DvP basis in accordance with the Listing Rules. Canaccord must procure that it or an Affiliate will act as broker under the Listing Rules and manage such settlement on behalf of the Issuer.

8.8

Allotment

(a)

the Shares to which the Offer CDIs relate to CDN;

(b)

the Accepted Offer CDIs to Accepting Holders; and

(c)

the Shortfall CDIs to or as directed by the Underwriter (as the case may be).

8.9

Holding Statements

8.10

Quotation

8.11

Defaulting Holders

9.1

Management fees

(a)

on the Initial Placement Allotment Date pay to the Underwriter in immediately available funds a management fee of 2% of the Placement Proceeds for the Initial Placement; and

(b)

on the Conditional Placement Allotment Date pay to the Underwriter in immediately available funds a management fee of 2% of the Placement Proceeds for the Conditional Placement.

9.2

Entitlement Offer fees

(a)

a management fee of 2% of the Offer Proceeds; and

(b)

an underwriting fee of 3.5% of the Offer Proceeds.

9.3

Sub-underwriting and other fees

9.4

Costs and expenses

(a)

The Issuer must within 10 Business Days of receipt of notice (including relevant tax invoices) from the Underwriter, pay or procure payment to the Underwriter (or as it directs):

(1)

all expenses (except legal costs) reasonably incurred by the Underwriter in relation to the Offer (including, without limitation, air fares, taxi fares, accommodation, roadshow and printing of presentation materials);

(2)

all legal costs and disbursements, including costs and disbursements incurred in the preparation and execution of this agreement, up to a maximum of $30,000 (excluding GST and disbursements);

(3)

any stamp duty, transfer taxes, withholding taxes or similar taxes (but excluding any income tax of the Underwriter) payable by the Underwriter in respect of this agreement or the Offer; and

(4)

all other reasonable costs, expenses and disbursements of the Underwriter in relation to the Offer, including in respect of any review of the Offer Documents or the Offer undertaken by ASX, ASIC or any other regulatory body.

(b)

The Underwriter must obtain the Issuer’s prior written consent (which must not be unreasonably withheld) before incurring any of the costs and expenses set out in clause 9.4(a) (except those in clause 9.4(a)(2)) where an individual cost or expense exceeds A$2,000.

9.5

Costs on termination

(a)

is not be obliged to pay to the Underwriter the fees referred to in clause 9.1 the obligation to pay the fee arises before termination or withdrawal; and

(b)

is obliged to pay to the Underwriter within 5 Business Days of termination of the obligations of the Underwriter (to the extent that it has not already done so) the costs and expenses referred to in clause 9.4, incurred up to the date of termination.

9.6

Set off

10.1

Termination

(a)

(Certificate) a Certificate which is required to be furnished by the Issuer under this agreement is not furnished by the time specified or any statement in a Certificate is untrue, inaccurate, incomplete or misleading or deceptive in any material respect; or

(b)

*(general market fall) the S&P/ASX Small Ordinaries Index is at any time from and including the date of this agreement and prior to the close of trading of CDIs on the ASX on the Settlement Date lower than 90% of the level of that index as at the close of normal trading on ASX on either the Business Day immediately preceding the date of this agreement or the date of this agreement;

(c)

(ASIC action) either:

(1)

an application is made by ASIC for an order under Part 9.5 in relation to the Offer or the Offer Documents;

(2)

ASIC issues or threatens to issue proceedings in relation to the Offer, or commences any hearing, inquiry or investigation in relation to the Offer; or

(3)

ASIC commences or gives notice of an intention to commence a prosecution of the Issuer or investigation or hearing under Part 3 of the Australian Securities and Investments Commission Act 2001 (Cth) in relation to the Offer or the Offer Documents;

(d)

(regulatory action) any regulatory body withdraws, revokes or amends any regulatory approval referred to in clause 3.2(c) or there is an application to a Government Agency for an order, declaration or other remedy, or a Government Agency commences any investigation or hearing or announces its intention to do so, in each case in connection with the Offer (or any part of it) or any agreement entered into in respect of the Offer (or any part of it);

(e)

(ASX approval) ASX makes an official statement to any person, or indicates to the Issuer or any Underwriter (whether or not by official statement) that:

(1)

official quotation of all of the Offer CDIs will not be granted by ASX or will be granted subject to conditions that are not acceptable to the Underwriter or such approvals will not be given by the Trading Date (or such later date agreed in writing by the Underwriter in its absolute discretion) or is withdrawn, qualified or withheld on or before the Trading Date;

(2)

any CDIs of the Issuer will be suspended from quotation by the ASX; or

(3)

the Issuer will be removed from the official list of the ASX,

(f)

*(new circumstances) a new circumstance that would be adverse from the point of view of an investor arises that would have been required to be disclosed in the Offer Documents had it arisen before the Offer Documents were lodged with ASX;

(g)

(unable to issue) the Issuer is prevented from allotting and issuing the Shares the subject of the Offer CDIs to CDN or CDN is prevented from allotting and issuing the Offer CDIs within the time required by the Timetable, Listing Rules, applicable laws, an order of a court of competent jurisdiction or a Government Agency;

(h)

*(disclosures in Issuer Information) the Issuer Information includes:

(1)

a statement which is or becomes misleading or deceptive or likely to mislead or deceive; or

(2)

any forecasts, expressions of opinion, intention or expectation which are not based on reasonable grounds;

(i)

(Offer Documents to comply) the Offer Documents or any aspect of the Offer does not comply with the Corporations Act, Listing Rules or any other applicable law including due to:

(1)

a statement in the Offer Documents which is or becomes misleading or deceptive or likely to mislead or deceive, or omit any information that is required (including, without limitation, having regard to section 708AA); or

(2)

any forecasts, expressions of opinion, intention or expectation which are not based on reasonable grounds;

(j)

(capital structure) there is an alteration to the Issuer’s capital structure or Constitution, without the prior consent of the Underwriter or as otherwise provided in this agreement, or a breach of the Constitution occurs;

(k)

(correction notice) the Issuer becomes required to give or gives a correcting notice under subsection 708AA(10) or 708A(9);

(l)

(compliance with regulatory requirements) the Issuer commits a material breach of the Corporations Act, Listing Rules, the Constitution, or other applicable laws, or has failed to comply with its continuous disclosure obligations or its Constitution;

(m)

(offences by directors) any of the following occurs:

(1)

a director or officer (as that term is defined in the Corporations Act) of the Issuer is charged with an indictable offence;

(2)

any administrative, regulatory, self-regulating body, court or other judicial body commences any public action against any such person in their capacity as such in relation to any fraudulent conduct or activity whether or not in connection with the Offer or the Issuer engages in fraudulent activity; or

(3)

any director of the Issuer is disqualified from managing a corporation under the Corporations Act;

(n)

(withdrawal) the Issuer withdraws the Placement or the Offer or the Initial Placement or the Offer will not otherwise proceed in accordance with this agreement including, for the avoidance of doubt, if the Vivo Investors fail to pay their portion of the Placement Proceeds in accordance with their purchase agreement with the Issuer;

(o)

(insolvency) any member of the Group becomes Insolvent or there is an act or omission which is reasonably likely to result in any member of the Group becoming Insolvent;

(p)

(material adverse change) any material adverse change occurs in the assets, liabilities, financial position or performance, profits, losses or prospects of the Issuer, or the Group including any adverse change in the assets, liabilities, financial position or performance, profits, losses or prospects of the Issuer, and the Group from those respectively disclosed in the ASX Materials or any adverse information arises or is released to ASX after the date of this agreement that can reasonably be expected to have a material adverse effect on the market price of the CDIs;

(q)

(Timetable) any event specified in the Timetable is delayed for 2 or more Business Days without the prior written consent of the Underwriter;

(r)

*(disclosures) the Due Diligence Questionnaire, Due Diligence Committee Report or any other information supplied by or on behalf of the Issuer to the Underwriter in relation to the Group, the Offer or the Offer Documents is or becomes misleading or deceptive, including by way of omission;

(s)

*(market or trading disruption): there is

(1)

a suspension or material limitation in trading in securities on ASX, the New York Stock Exchange, NASDAQ, the London Stock Exchange or the Hong Kong Stock Exchange or any adverse change or disruption to the existing financial markets, political or economic conditions of Australia, Japan, Hong Kong, the Republic of China, the United Kingdom, the United States of America, a member state of the European Union or the international financial markets; or

(2)

a general moratorium on commercial banking activities is declared by the relevant central banking authority in any of those countries;

(t)

*(change in law) there is introduced into the Parliament of Australia or any State of Australia, or any federal or state parliament in the United States of America, a law or prospective law, or any new regulation is made under any statute, or a Government Agency adopts a policy, or there is any announcement that such a law, prospective law or regulation may be introduced or policy may be adopted (except where such law is announced or generally known to the market prior to the date of this agreement), any of which does or is likely to prohibit or restrict the Offer;

(u)

*(hostilities) hostilities not presently existing commence (whether war has been declared or not) or a major escalation in existing hostilities occurs (whether war has been declared or not) involving any one or more of the United States, Australia, New Zealand, the United Kingdom, France, Germany, Russia, North Korea, South Korea, China, Japan or a member state of the European Union or the declaration by any of these countries of a national emergency or war or a major terrorist act is perpetrated in any of these countries;

(v)

(misrepresentation) a representation, warranty or undertaking made or given by the Issuer under this agreement proves to be or becomes, untrue or incorrect;

(w)

*(breach) the Issuer fails to perform or observe any of its obligations or breaches any term or condition under this agreement;

(x)

*(legal proceedings) legal proceedings against the Issuer, any other Group member or against any director of the Issuer or any other Group member in that capacity is commenced or any regulatory body commences any enquiry or public action against a Group member;

(y)

*(licences) any Intellectual Property Right, licence, permit, Authorisation or consent held by any Group member that is necessary to conduct its business is revoked, withdrawn, rescinded, breached, terminated, altered or amended (other than with the consent of the Underwriter);

(z)

*(change in management) a change in the senior management of the Issuer or in the board of directors of the Issuer is announced or occurs;

(aa)

(force majeure) there is an event or occurrence, including any statute, order, rule, regulation, directive or request compliance with which is in accordance with the general practice of persons to whom the request is addressed of any Governmental Agency which makes it illegal for the Underwriter to satisfy an obligation under this agreement, or to market or promote the Offer or subscribe for Shortfall CDIs; or

(bb)

*(unauthorised public statements) the Issuer issues a public statement concerning the Offer which has not been approved by the Underwriter in breach of this agreement.

10.2

Exercise of rights

(a)

No event specified in clause 10.1 marked with an asterisk (*) will entitle the Underwriter to exercise its rights to terminate its obligations under this agreement pursuant to clause 10.1 or otherwise unless, in the reasonable opinion of the Underwriter the event:

(1)

has, or is likely to have, or will have once disclosed to the market, a material adverse effect on the Offer, the willingness of persons to subscribe for the Offer CDIs, the price at which securities are traded on the ASX, the settlement of the Offer CDIs to be issued, the ability of the Issuer to issue the Offer CDIs at the applicable issue price, the ability of securities to be traded on ASX, or acceptance by the Underwriter of applications for securities under the Offer;

(2)

would, or would be likely to, give rise to a liability to the Underwriter in connection with the Offer in any capacity under any applicable law; or

(3)

has given rise to or is likely to give rise to a contravention by the Underwriter of, or the Underwriter being involved in a contravention of, the Constitution, the Corporations Act, Listing Rules or any other applicable law.

(b)

Each of the paragraphs and sub-paragraphs in clause 10.1 must be construed independently and no paragraph or sub-paragraph in clause 10.1 is to be limited by implications arising from any other paragraph or sub-paragraph in clause 10.1.

10.3

Claims

10.4

Notification

10.5

Independent construction

10.6

Consequences of termination

11.1

Indemnity

(a)

(Offer Documents) any statement in the Offer Documents or Issuer Information being misleading or deceptive (including by omission) or the making, conduct, or settlement of the Offer (including Losses or Claims arising out of or in connection with the preparation for, or involvement in, investigations conducted by ASIC or any regulatory authority in relation to the issue of the Offer Documents, Issuer Information or the Offer);

(b)

(breach) the Issuer failing to perform or observe any of its obligations or undertakings under this agreement;

(c)

(misrepresentation) any representation or warranty made or given under this agreement by the Issuer under clause 4.1 of this agreement proving to have been untrue or incorrect;

(d)

(authorised publications) any Publication made or distributed by or on behalf of the Issuer (including any statement in the Offer Documents being misleading or deceptive or any omission from the Offer Documents);

(e)

(issue) the making of the Offer and the issue of the Offer CDIs (or the Shares the subject of the Offer CDIs);

(f)

(confidential soundings) any confidential soundings conducted with the consent of the Issuer in accordance with the Offer; and

(g)

(regulatory) any review, inquiry or investigation undertaken by ASIC, ASX, the Australian Taxation Office, or any other regulatory office or Government Agency in relation to the Offer or the Offer Documents.

11.2

Extent of indemnity

(a)

finally judicially determined to have resulted from the fraud, wilful misconduct, recklessness or gross negligence of that Indemnified Party;

(b)

a criminal penalty or fine which that Indemnified Party is required to pay for any contravention by it of the Corporations Act or any other applicable law; or

(c)

any amount in respect of which this indemnity would be illegal, void or unenforceable under any applicable law,

11.3

Notice

11.4

Failure to notify

11.5

Benefits of indemnity

11.6

Preservation of rights

(a)

any approval given by that party in relation to any Publication distributed in relation to the Offer with the prior approval of the Issuer or its legal advisers;

(b)

any consent to be named in any Publication distributed in relation to the Offer;

(c)

any knowledge (actual or constructive) acquired by the Indemnified Party after the date of this agreement of any failure by the Issuer to perform or observe any of its obligations under this agreement;

(d)

termination of this agreement under clause 3.6 of this agreement or termination of this agreement by the Underwriter under clause 10 of this agreement;

(e)

any inaccuracy in any representation or warranty made or deemed to have been made by the Issuer under this agreement; or

(f)

any other fact, matter or thing which might otherwise constitute a waiver of or in any way prejudice or affect any right of an Indemnified Party.

11.7

Issuer entitled to defend or institute proceedings

11.8

Separate representation

(a)

if the Issuer has not chosen legal counsel satisfactory to the Indemnified Party (acting reasonably);

(b)

without prejudice to its right of indemnity under clause 11.1, if a conflict arises for legal counsel chosen by the Issuer or between the interests of the Issuer and the interests of the Indemnified Party; or

(c)

where there may be legal defences available to the Indemnified Party that are different from or additional to those available to the Issuer or another Indemnified Party represented by such legal counsel and the counsel appointed by the Issuer does not put on and pursue those defences on behalf of the Indemnified Party to the reasonable satisfaction of such Indemnified Party; or

(d)

if the Indemnified Party reasonably believes it desirable to do so in order to protect the Indemnified Party's reputation or standing, and, for the avoidance of doubt, to be indemnified in each case for the reasonable costs and expenses of such representation under clause 11.1.

11.9

Obligations of Indemnified Parties

(a)

take such reasonable action as the Issuer requests to avoid, dispute, resist, appeal, compromise or defend any Indemnified Claim or any adjudication in respect of it;

(b)

not settle or compromise any Indemnified Claim without the prior written consent of the Issuer (such consent not to be unreasonably withheld or delayed);

(c)

render all reasonable assistance and co-operation to the Issuer in the conduct of any legal or other proceedings in respect of an Indemnified Claim; and

(d)

do anything reasonably necessary or desirable to ensure that the Issuer is subrogated to and enjoy the benefit of the rights of the Indemnified Parties in relation to any cross-claims.

11.10

Conditions precedent to Indemnified Parties’ obligations

(a)

unless the Issuer agrees to indemnify that Indemnified Party against all Loss incurred by that Indemnified Party in taking the action required, as and when they fall due, including legal costs and disbursements of its lawyers on a full indemnity basis and the cost of any involvement of any officers of the relevant Underwriter or the Indemnified Party at normal commercial rates; or

(b)

if the taking of that action would, in the reasonable opinion of the Indemnified Party or the Underwriter, be likely to damage the Indemnified Party's or the relevant Underwriter’ reputation or standing.

11.11

No settlement without consent

(a)

includes an unconditional release of the Indemnified Parties from all liability arising out of the proceeding; and

(b)

does not include a statement as to or an admission of fault, culpability or failure to act by or on behalf of the Indemnified Parties.

11.12

Right to assume control of proceedings

(a)

it will have the right to conduct the same under its sole management and control and will have absolute discretion with regards to the conduct of those proceedings including any decision to settle, compromise or consent to the entry of any judgment in relation to any Reassumed Claim the subject of those proceedings but in doing so, will consult with and take account of the views of the Issuer so far as is reasonably possible;

(b)

the indemnity given by the Issuer under clause 11.1 will not apply in respect of any additional Losses directly or indirectly suffered by that Indemnified Party resulting solely from the assumption or reassumption of the conduct of the Reassumed Claim by the Indemnified Party to the extent that Loss is suffered after the time from which the Indemnified Party assumes or reassumes the Reassumed Claim; and

(c)

the Issuer must:

(1)

render all reasonable assistance and cooperation to the Indemnified Party in the conduct of any Reassumed Claim; and

(2)

do anything reasonably necessary or desirable to ensure that the Indemnified Party is subrogated to and enjoys the benefits of the rights of the Issuer in relation to any cross claims,

11.13

Contractual contribution

11.14

Proportional contribution

11.15

No excess contribution

11.16

Acknowledgement

11.17

Right to reimbursement by the Issuer

11.18

Right to reimbursement by the Indemnified Party

11.19

No Claims against Indemnified Parties

(a)

the participation of that Indemnified Party in any transaction or proposal contemplated by this agreement;

(b)

the engagement of the Underwriter pursuant to this agreement; or

(c)

the performance by the Indemnified Party of the services contemplated by this agreement,

11.20

Claims under US law

12.1

Due diligence

(a)

make all enquiries that are reasonable in the circumstances; and

(b)

take all reasonable steps,

(c)

there are no omissions from the Offer Documents or Issuer Information of information without which the relevant documents would be or become misleading;

(d)

no statement in the Offer Documents or Issuer Information is, or becomes, false, misleading or deceptive;

(e)

the issue of an Offer Document does not constitute conduct that is misleading or deceptive or is likely to mislead or deceive;

(f)

it promptly discloses to ASX (in a form and manner approved by the Underwriter acting reasonably) all information that is not generally available of which it is, or becomes, aware if were it not to do so, the Underwriter would contravene Division 3 of Part 7.10 of the Corporations Act whether or not in relation to the Offer; and

(g)

the Issuer is made aware of any circumstances which may render the Cleansing Notice Defective as soon as practicable after any such circumstance arises.

12.2

Access and information

(a)

The Issuer agrees to provide, and procure each of its related bodies corporate to provide, all information and data (including confidential information prepared for or by the Issuer and its subsidiaries) that the Underwriter and its officers reasonably request (or as may be required by any Government Agency):

(1)

before the Settlement Date; and

(2)

during any regulatory inquiry or actual or threatened legal or administrative proceedings in relation to the Offer,

(b)

The Issuer may only refuse to allow the Underwriter access as contemplated in clause 12.2(a), to the extent that to do so would in the opinion of a reputable law firm with recognised expertise in the area in the relevant jurisdiction cause the Issuer to lose legal professional privilege in respect of any document or information, in which case the Issuer must use best endeavours to give the relevant document or information in a manner or form that does not result in the loss of such legal professional privilege.

12.3

ASX and ASIC

12.4

Due diligence materials

13.1

Definitions

13.2

GST payable in addition to fees and expenses

(a)

pay to the Underwriter an amount equal to any GST payable on any supply by the Underwriter under or in connection with this agreement; and

(b)

make that payment:

(1)

as and when the fees, costs, expenses and disbursements referred to in clause 9 or other consideration or part of it must be paid or provided; and

(2)

if later, such later time being not more than 5 Business Days after a tax invoice has been issued by the Underwriter,

13.3

GST on claims and expenses

(a)

if a payment to satisfy a claim or a right to claim under or in connection with this agreement (for example, for misleading or deceptive conduct or for misrepresentation or for a breach of any warranty or for indemnity or for reimbursement of any cost or expense) or any other payment made under or in connection with this agreement which is not covered by clause 13.2 gives rise to a liability to pay GST, the payer must pay, and indemnify the payee against the amount of that GST; and

(b)

if a party has a claim under or in connection with this agreement for a cost or expense on which that party must pay GST, the claim is for the cost or expense plus all GST except any GST for which that party is entitled to an input tax credit.

13.4

Tax invoice

13.5

Adjustment of additional amount

14.1

How to give a notice

(a)

in writing, signed by or on behalf of the person giving it;

(b)

addressed to the person to whom it is to be given; and

(c)

either:

(1)

delivered or sent by pre-paid mail (by airmail, if the addressee is overseas) to that person's address; or

(2)

sent by email to that person's email address.

14.2

When a notice is given

(a)

if it is delivered or sent by email, on the first to occur of:

(1)

the sender receiving an automated message confirming delivery; and

(2)

two hours after it is sent, as recorded on the device from which the email is sent but provided that the sender does not receive an automated message to the effect that the email was not delivered,

(3)

after 5.00pm (local time in the place of receipt) on a Business Day, or on a day that is not a Business Day, it will be regarded as given and received at 9.00am (local time in the place of receipt) on the next Business Day; and

(4)

before 9.00am (local time in the place of receipt) on a Business Day, it will be regarded as given and received at 9.00am (local time in the place of receipt) on that Business Day; and

(b)

if it is sent by mail – on actual receipt.

14.3

Address for notices

15.1

Governing law

(a)

This agreement is governed by the law in force in Victoria.

(b)

Each party submits to the non-exclusive jurisdiction of the courts exercising jurisdiction in Victoria, and any court that may hear appeals from any of those courts, for any proceedings in connection with this agreement, and waives any right it might have to claim that those courts are an inconvenient forum.

15.2

Giving effect to this agreement

15.3

Waiver of rights

(a)

no other conduct of a party (including a failure to exercise, or delay in exercising, the right) operates as a waiver of the right or otherwise prevents the exercise of the right;

(b)

a waiver of a right on one or more occasions does not operate as a waiver of that right if it arises again; and

(c)

the exercise of a right does not prevent any further exercise of that right or of any other right.

15.4

Operation of this agreement

(a)

This agreement constitutes the entire agreement of the parties about its subject matter and supersedes all previous agreements, understandings and negotiations on that subject matter.

(b)

Any right that a person may have under this agreement is in addition to, and does not replace or limit, any other right that the person may have.

(c)

Any provision of this agreement which is unenforceable or partly unenforceable is, where possible, to be severed to the extent necessary to make this agreement enforceable, unless this would materially change the intended effect of this agreement.

15.5

Inconsistency with other documents

15.6

Amendment

15.7

Assignment

15.8

Time is of the essence

15.9

Counterparts

15.10

Attorneys

15.11

Operation of indemnities, representations and warranties

(a)

Each indemnity, representation and warranty in this agreement survives the expiry or termination of this agreement.

(b)

A party may recover a payment under an indemnity in this agreement before it makes the payment in respect of which the indemnity is given.

15.12

Discretion in exercising rights

15.13

Extent of obligations

15.14

No liability for loss

15.15

Conflict of interest

15.16

Consents

15.17

Survival

15.18

No bias against the drafter

15.19

Acknowledgements

(a)

the Underwriter has been engaged solely as an independent contractor to provide the services set out in this agreement. In providing these services, the Underwriter is acting solely in a contractual relationship with the Issuer on an arm’s length basis;

(b)

the Underwriter is not acting as financial adviser or fiduciary to the Issuer or any other person or advising the Issuer or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Issuer must consult its own advisors on those matters and is responsible for making its own independent investigation and appraisal of the Offer. The Underwriter has no responsibility or liability to the Issuer regarding these matters;

(c)

any communication, whether written or oral, given by the Underwriter to the Issuer or any communications between the Underwriter and the Issuer can only be used and relied on by the Issuer and may not be used or relied on by any third party and may not, except to the extent required by law (and then only to the minimum extent so required), be disclosed to any third party without the prior written approval of the Underwriter (other than to the Issuer's professional advisers, so long as the Issuer procures such advisers to maintain the confidential nature of such communications, and the advisers must not place any reliance on such communications);

(d)

any review by the Underwriter of the Issuer, the Group, the Offer, the Offer Documents the terms of the Offer CDIs and related matters will be performed solely for the benefit of the Underwriter and not on behalf of the Issuer or any other person;

(e)

the Underwriter is not obliged to disclose to the Issuer or utilise for the benefit of the Issuer, any non-public information which the Underwriter or its Affiliates obtain in the normal course of their business where such disclosure or use would result in a breach of any obligation of confidentiality or any internal information management or Chinese wall policies of the Underwriter or its Affiliates;

(f)

the Underwriter may perform the services contemplated by this agreement in conjunction with its Affiliates, and any Affiliates performing these services is entitled to the benefits of and is subject to the terms of this agreement;

(g)

the Underwriter may have interests that differ from those of the Issuer and may take into account any factors (including those solely in its interest) it considers appropriate in performing duties or exercising rights under this agreement;

(h)

the Underwriter and its Affiliates are engaged in securities trading, securities brokerage and financing activities, as well as providing investment banking and financial advisory services. In the ordinary course of their trading, brokerage and financing activities, the Underwriter and its Affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for their own accounts or the accounts of their customers, in debt or equity securities or loans of any company that may be involved in the Offer or other matters contemplated by this agreement; and

(i)

without limiting any other express provisions of this agreement, to the maximum extent permitted by law, the Underwriter has no responsibility or liability to the Issuer regarding the Offer, the Offer Documents or the Issuer Information.

(a)

the Issuer has complied with all obligations on its part to be performed:

(1)

under the Underwriting Agreement between the Underwriter and the Issuer dated [insert date] 2018 (Agreement); and

(2)

in respect of the Offer under statute or otherwise;

(b)

no Event of Termination has occurred; and

(c)

the representations and warranties given by the Issuer set out in clause 4.1 of the Agreement are true and correct.

Signed for

AirXpanders, Inc. 

by

/s/ Francis Grillo

Francis Grillo

/s/ Zita Peach

Zita Peach 

Signed for

Canaccord Genuity (Australia) Limited

by

/s/ Marcus Freeman

Marcus Freeman

/s/ David Barlow

David Barlow