Corporate Governance

Board Charter

1 Introduction

The purpose of this Board Charter (Charter) is to set out the role, responsibilities, structure and processes for the Board of Directors (Board) of AirXpanders, Inc. (AirXpanders).

2 Objectives and duties

2.1 Key objectives

The Board of AirXpanders is ultimately responsible for the overall direction of the AirXpanders group and oversight and review of the management, administration and overall governance of th AirXpanders group, including:

  1. the protection of stockholders’ interests;
  2. authorising policies and overseeing the strategic direction of the Air Xpanders group;
  3. establishing goals for management and monitoring the achievement of these goals; and
  4. engaging, reviewing and replacing the Chief Executive Officer.

The Board does not participate in the day-to-day affairs or management of the AirXpanders group.

2.2 Duties of the Board

In carrying out its responsibilities the Board will at all times recognise its responsibility:

  1. to act honestly, fairly and diligently in the best interests of all stockholders;
  2. to act in accordance with relevant laws and regulations;
  3. to act in accordance with all relevant AirXpanders group policies; and
  4. to avoid or manage conflicts of interests.

3 Composition of the Board and term of office

3.1 Composition

The Board will, subject to the provisions of the AirXpanders’ constituent documents, be responsible for:

  1. determining the size and composition of the Board;
  2. reviewing membership of the Board and considering the appointment and re-election of Board members; and
  3. appointing the Chairman of the Board.

The Board will ideally be composed of:

  1. a majority of independent non-executive directors;
  2. directors with an appropriate range of skills, knowledge, experience, independence and diversity;
  3. directors who can understand and competently deal with current and emerging business issues; and
  4. directors who can effectively review and challenge the performance of management and exercise independent judgement.

As a relatively small company (amongst those listed on the ASX), AirXpanders may face particular issues in ensuring that aspects of the ideal composition for the Board (as set out above and in section 6.1 below) is met. For instance, while AirXpanders will aim for the Board to have a majority of independent directors and an independent Chairman, this may not always be possible, particularly while the operations of the AirXpanders group are at the development and early commercialisation stage.

3.2 Independence

  1. If a director is or becomes aware of any information, facts or circumstances that will or may affect that director’s independence, the director must immediately disclose all relevant details in writing to the Company Secretary and the Chairman.
  2. The Board will regularly assess the independence of each non-executive director. The assessment will ideally be made at least annually at or around the time that the Board considers candidates for election to the Board. In the case of changes in a non-executive director’s interests, positions, associations or relationships, the review should be made as soon as practicable after the Board becomes aware of the change. If the Board determines that a director’s status as an independent director has changed, the determination will be disclosed and explained to the market in a timely manner.
  3. An independent director is a non-executive director who is free of any interest, position, association or relationship that might influence, or reasonably be perceived to influence, in a material respect, his or her capacity to bring independent judgement to bear on issues before the Board and to act in the best interests of AirXpanders and its securityholders generally.
  4. In considering from time to time whether a director is independent and the criteria against which the Board determines the materiality of a relationship, the Board is to have regard to
    • the guidance relevant to assessing the independence of a director contained in the ASX Corporate Governance Council’s Corporate Governance Principles and
      Recommendations;
    • developments in international corporate governance standards; and
    • any independent professional advice sought by the Board at its discretion
  5. The Board considers an interest, position, association or relationship to have an effect of a kind described in paragraph (c), where it is of substance and consequence and there is a real and sensible possibility that it would affect the director’s judgement across many or all aspects of the director’s role.


3.3 Commitment

Non-executive directors are expected to devote the necessary time to discharge their duties. It is Board policy that prior to their appointment, non-executive directors must provide the Chairman with details of their other ongoing commitments and an indication of time involved in fulfilling those commitments and to acknowledge that they will have adequate time to meet what is expected of them as a director of AirXpanders. Further, they should consult with the Chairman, or the Board, and should inform the Nomination and Remuneration Committee, before accepting any appointment as a director of another company.

3.4 Term

All directors are required to submit themselves for re-election in accordance with the terms of the AirXpanders group’s constituent documents. To ensure the Board has the benefit of regular new input and to avoid the potential for loss of objectivity over time, directors will retire after 9 years. A director can continue to hold office after a 9 year term provided their ongoing candidacy is recommended by the Nomination and Remuneration Committee.

4 Role and responsibilities of the Board

The Board’s responsibilities include:

4.1 Strategy and planning

  1. Reviewing and approving corporate strategies, objectives, budgets, plans and policies developed by management and evaluating the performance of the AirXpanders group against those strategies and business plans in order to:
  2. maximise stockholder wealth;
  3. monitor the performance of functions delegated to management, including the progress of major capital expenditure, capital management, acquisitions, divestitures and strategic commitments; and
  4. assess the suitability of the AirXpanders group’s overall strategies, business plans and resource allocation.
  5. Monitoring financial and business results to understand the financial position of AirXpanders.
  6. Monitoring and assessing AirXpanders’ capital structure to determine whether it remains appropriate.

4.2 Reporting

  1. Monitoring communications to stockholders and the ASX (including disclosures made under the ASX continuous disclosure requirements).
  2. Approving the annual report and financial statements and other reports to stockholders or the ASX.
  3. Monitoring the integrity of reporting.
  4. Calling meetings of stockholders.

4.3 Risk management and internal controls

  1. Approving the AirXpanders group’s risk management framework and internal compliance and controls systems relevant to both financial and non-financial risk.
  2. Overseeing management’s implementation of systems to monitor and address the financial, operational and business risk management policies.
  3. Implementing appropriate procedures to ensure compliance with all applicable laws.
  4. Monitoring compliance with regulatory requirements.
  5. Considering the adequacy of insurance cover.

4.4 Corporate governance

  1. Regularly reviewing and approving the AirXpanders group’s corporate governance policies and procedures.
  2. Evaluating compliance with the AirXpanders group’s corporate governance policies and procedures.

4.5 Personnel

  1. Appointing and, where appropriate, removing the Chief Executive Officer.
  2. Appointing and, where appropriate, removing the Company Secretary.
  3. Regularly evaluating the performance of the Chief Executive Officer and executives.
  4. Reviewing and approving the remuneration framework for directors and senior executives of AirXpanders.
  5. Ensuring appropriate resources are available to management, to enable management to carry out its duties.
  6. Considering material changes in personnel policies and strategies.
  7. Approving short-term and long-term incentive plans (including equity-based incentive plans).

5 Delegation of authority

5.1 Delegation to management

The Board has ultimate responsibility for the strategic direction and control of the AirXpanders group. The Board delegates management of AirXpanders’ resources to the executive team under the leadership of the Chief Executive Officer, to deliver the strategic direction and goals determined by the Board. A key function of the Board, which is conducted at Board meetings, is to monitor the performance of executives in this function.

5.2 Delegation to committees

The Board, from time to time, establishes committees to streamline the discharge of its responsibilities and, for each standing committee, adopts a formal charter setting out the matters relevant to the composition, responsibilities and administration of such committees. The Board has, at the date of this Charter, established the:

  1. Audit and Risk Committee; and
  2. Nomination and Remuneration Committee.

The Board may also delegate specific functions to ad hoc committees on an “as needs” basis. The powers delegated to these committees will be set out in Board resolutions. The split of powers between the Board, committees and senior management will be determined by the Board. Regular review of the division of responsibilities to ensure they remain appropriate to the needs of AirXpanders should be undertaken.

6 Appointment and responsibilities of Chairman and Lead Independent Director

6.1 Chairman

The Board will appoint a Chairman in accordance with AirXpanders’ constituent documents. Ideally, the Chairman will be an independent non-executive director – although it is acknowledged that this may not be possible given the size and stage of development of AirXpanders. The role of Chairman must not be held by someone who is performing the role of Chief Executive Officer.

The responsibilities of the Chairman are to:

  1. maintain effective communication between the Board and management;
  2. lead the Board;
  3. ensure the efficient organisation and conduct of the Board’s function;
  4. brief all directors in relation to issues arising at Board meetings;
  5. chair general meetings of AirXpanders; and
  6. exercise such specific and express powers as are delegated to the Chairman by the Board from time to time.

6.2 Lead Independent Director

The Board may appoint a Lead Independent Director. If it does, the Lead Independent Director must be a non-executive director who satisfies the criteria for independence in this Charter.

Subject to AirXpanders’ by-laws, any Lead Independent Director will:

  1. with the Chairman, establish the agenda for regular Board meetings;
  2. serve as chair of Board meetings in the absence of the Chairman or where the Chairman is conflicted;
  3. establish the agenda for meetings of the independent directors;
  4. coordinate with the committee chairs regarding meeting agendas and informational requirements;
  5. preside over meetings of the independent directors;
  6. preside over any portions of meetings of the Board at which the evaluation or compensation of the Chief Executive Officer is presented or discussed;
  7. preside over any portions of meetings of the Board at which the performance of the Board is presented or discussed; and
  8. perform such other duties as may be established or delegated by the Chairman or the Board of Directors.

If there are no independent directors, the responsibilities above (so far as they are relevant) will be undertaken as determined by the Board.

7 The role of management

The day-to-day management of AirXpanders and its businesses is the responsibility of the Chief Executive Officer, supported by the executive team.

The Board delegates to the Chief Executive Officer the necessary powers to manage the day-to-day business of AirXpanders, subject to those powers reserved to the Board in section .

The key responsibilities of the Chief Executive Officer are to:

  1. manage and administer the day-to-day operations of AirXpanders and the AirXpanders group in accordance with the strategy, business plans and policies approved by the Board;
  2. develop strategies for AirXpanders and the AirXpanders group, its businesses and management, and make recommendations to the Board on such strategies;
  3. develop the AirXpanders group’s annual budget and conduct the AirXpanders group’s activities within the approved annual budget;
  4. develop and maintain the AirXpanders group’s risk management systems, including internal compliance and control mechanisms;
  5. assign responsibilities clearly to the executive team, and supervise and report on their performance to the Board;
  6. recommend to the Board significant operational changes, and major capital expenditure, acquisitions or divestments, which are beyond any delegated thresholds;
  7. report regularly to the Board with timely and quality information, such that the Board is fully informed to discharge its responsibilities effectively; and
  8. exercise such additional powers as are delegated to the Chief Executive Officer by the Board from time to time.

8 Role of Company Secretary

  1. The Company Secretary’s responsibilities include: organising Board and Board committee meetings, including preparing agendas and papers;
  2. preparing minutes of Board and Board committee meetings;
  3. monitoring completion of action items arising from Board and Board committee meetings;
  4. providing governance, administrative, technical and other support to the directors;
  5. retaining professional advisers at the request of the Board or a Board committee;
  6. keeping statutory records up to date;
  7. attending to the statutory requirements relating to AirXpanders’ registered office, annual returns and lodgement of other documents with ASIC and the ASX;
  8. monitoring compliance with Board and Board committee policy and procedures; and
  9. helping to organise and facilitate the induction and professional development of directors.
  10. The Company Secretary will attend all Board and Board committee meetings. All directors will have direct access to the Company Secretary and vice versa.

9 Governance

9.1 Code of Conduct

All directors are expected to comply with the AirXpanders group’s Code of Conduct.

9.2 Conflicts of interest

Directors are required to take all reasonable steps to avoid actual, potential or perceived conflict s of interest with AirXpanders.

Each director has a duty not to place themselves in a position that gives rise to a real or substantial possibility of conflict, whether it be a conflict of interest or conflict of duties. Each director is required:

  1. (a) to ensure that the Board is notified (whether by formal standing notice or declaration immediately on becoming aware) of any interest that may give rise to a real or substa ntial possibility of conflict, including any material personal interests; and
  2. (b) if any matter that is, or is likely to be, brought before the Board could give rise, or be perceived to give rise, to a real or substantial possibility of conflict, then the director:
  • (i) must disclose this to the Board;
  • (ii) will continue to receive Board papers or other information that relates to the matter that is the subject of the conflict of interest, unless the director requests, or the Chairman determines, that they not receive any or all of those documents; and
  • (iii) must withdraw from any part of a Board or committee meeting for the duration of any discussion in relation to the matter and not vote on the matter, unless a majority of directors who do not have an interest in the matter resolve that the disclosed interest should not disqualify the director.

9.3 Confidentiality

Each director has a duty to maintain the confidentiality of information they learn by virtue of their position as director.

9.4 Trading in AirXpanders’ securities

Each director must comply with the policy for trading in AirXpanders’ securities.

10 Administrative matters

The Board will determine a schedule of meetings at the beginning of each year. Additional meetings will be held as required to address specific issues. Senior executives will be invited to attend Board or committee meetings (or parts of meetings) from time to time where the Board or committee considers their involvement will assist the consideration of items of business before the meeting.

All minutes of the Board or a committee are required to be signed by the Chairman of the meeting as a
true and correct record.

11 Independent advice

The Board collectively, and each director individually, may obtain independent professional advice at AirXpanders’ expense, as considered necessary to assist in fulfilling their relevant duties and responsibilities. Individual directors who wish to obtain independent professional advice should seek the approval of the Chairman (acting reasonably), and will be entitled to reimbursement of all reasonable costs in obtaining such advice. In the case of a request made by the Chairman, approval is required by the Lead Independent Director (if any), and otherwise the Board excluding the Chairman.

12 Inconsistency with constituent documents

To the extent that there is any inconsistency between this Charter and AirXpanders’ constituent documents, the constituent documents will prevail.

13 Review of this Charter

The Board will periodically review this Charter to determine its adequacy. Approved by the Board of Directors of AirXpanders, Inc.

Nomination and Remuneration

1 Purpose

The Nomination and Remuneration Committee (Committee) is established by the Board of Directors (Board) of AirXpanders, Inc. (AirXpanders). This Charter governs the operations of the Committee and sets out the membership, operation and responsibilities of the Committee.

The primary purpose of the Committee is to support and advise the Board by:

  1. establishing processes for the identification of suitable candidates for appointment to the Board;
  2. establishing processes for reviewing the performance of individual directors, the Board as a whole, and Board committees;
  3. determining the executive remuneration policy;
  4. determining the non-executive director and remuneration policy; and
  5. reviewing and approving all equity based incentive plans.

2 Membership of the Committee

2.1 Membership

The Committee will ideally consist of:

  1. only non-executive directors;
  2. a majority of independent directors;
  3. an independent chair; and
  4. a minimum of three members.

However, as relatively small company (amongst those listed on the ASX), AirXpanders may face particular issues in ensuring that the ideal composition for the Committee (as set out above) is met. While AirXpanders will aim for the Committee to meet that ide al composition, this may not always be possible, particularly while the operations of the AirXpanders group are at the development and early commercialisation stage.

The Committee will appoint the Committee Chairman from one of its number.

2.2 Appointment and term

The members of the Committee will be determined by the Board having regard to section 2.1 of this Charter. There is no prescribed term for membership. Membership of the Committee ceases when a member ceases to be a director of AirXpanders.

The Board may appoint additional non-executive directors to the Committee or remove and replace members of the Committee by resolution. Members may withdraw from membership by written notification to the Board.

3 Administrative matters

3.1 Meetings

The Committee will meet as often as necessary to undertake its role effectively, but must meet at least twice a year. The quorum necessary for a meeting of the Committee will be two members. The Company Secretary must on request from any Committee member, convene a meeting of the Committee. Notice must be given to every Committee member of every Committee meeting but there is no minimum notice period. Acknowledgment of receipt of notice by all members is not required before the meeting may be validly held. Members of management may attend meetings of the Committee at the invitation of the Committee Chairman, but, other than executive directors, must not be appointed members of the Committee.

3.2 Access and external engagement

The Committee has rights of access to management and rights to seek explanations and additional information. The Committee may, upon notifying the Chairman of the Board, seek the advice of AirXpanders’ solicitors (at the cost of AirXpanders) as to any matter pertaining to the powers or duties of the Committee.

The Committee may, with the prior approval of the Chairman of the Board, instruct the Chief Executive Officer to engage such other independent advisers in relation to any matter pertaining to the responsibilities of the Committee, as the Committee may require.

3.3 Agenda and minutes

The Company Secretary will:

  1. attend all Committee meetings as minute secretary;
  2. in conjunction with the Chairman of the Committee, prepare an agenda to be circulated to each Committee member before each meeting of the Committee;
  3. prepare minutes of each Committee meeting.

4 Reporting

Normally, a Committee meeting will be held immediately before a Board meeting, but not necessarily every Board meeting. There will be included in the Board papers for the Board meeting following a meeting of the Committee the minutes of the previous Committee meeting.

The Committee Chairman will provide a brief oral report at the Board meeting as to any material matters arising out of the immediately preceding Committee meeting. All directors will be permitted, within the Board meeting, to request information of the Committee Chairman or members of the Committee.

5 Duties and responsibilities

5.1 Board structure and appointments

The Committee will:

  1. make recommendations to the Board regarding criteria for Board membership and periodically review those criteria;
  2. periodically review the structure of the Board, having regard to the balance of skills, knowledge, experience, independence and diversity on the Board and the time commitments of non-executive directors and recommend changes when necessary;
  3. make recommendations to the Board regarding the appointments and re-election of directors, including identifying suitable candidates for new appointments;
  4. ensure that effective training and education programmes for new and existing directors are in place, and regularly review the effectiveness of those programmes;
  5. develop and review, on a regular basis, Board and executive management succession plans and provide advice to the Board on those plans;
  6. develop strategies to address Board diversity;
  7. develop and implement a process for evaluating the performance of the Board, the Board committees and directors; and
  8. develop a process for recruiting a new director, including evaluating the balance of skills, knowledge, experience, independence and diversity on the Board and, in light of this evaluation, preparing a description of the role and capabilities required for a particular appointment.

5.2 Non-executive director remuneration

The Committee will:

  1. review and make recommendations to the Board regarding the policy for the remuneration (including fees, travel and other benefits) of non-executive directors (including the process by which any pool of directors’ fees approved by stockholders is allocated to directors);
  2. review retirement and termination payments for non-executive directors; and
  3. provide advice to the Board on those matters.

5.3 Executive remuneration policy

The Committee will:

  1. review AirXpanders’ policy for determining executive remuneration, including superannuation, pension and compensation payments, and make any recommendations to the Board regarding amendments to that policy that the Committee may consider appropriate from time to time;
  2. review the ongoing appropriateness and relevance of the executive remuneration policy and other executive benefit programs, including a review of AirXpanders’ recruitment, retention and termination policies and procedures for executives; and
  3. oversee the implementation of this remuneration policy within AirXpanders.

5.4 Executive directors and executives

The Committee will:

  1. (a) consider and make recommendations to the Board on the entire specific remuneration for each executive director (including base pay, incentive payments, equity awards, retirement rights and service contracts) having regard to the executive remuneration policy; and(b) review and approve the proposed remuneration arrangements (including base pay, incentive payments, equity awards, retirement rights and service contracts) for the direct reports of executive directors.

5.5 Executive and employee incentive plans

The Committee will:

  1. (a) review and approve the design of all executive and employee incentive plans, including stock and option plans;
  2. (b) regularly review all plans in the light of legislative, regulatory and market developments;
  3. (c) review and approve total proposed awards under each plan; and
  4. (d) review, approve and keep under review performance hurdles for each equity-based plans.

5.6 Human resources policies

The Committee will oversee the establishment and implementation of appropriate human resources policies for AirXpanders.

5.7 Superannuation

The Committee will regularly review:

  1. (a) AirXpanders’ superannuation arrangements (if any); and
  2. (b) AirXpanders’ compliance with relevant laws and regulations in relation to superannuation arrangements.

5.8 Remuneration report

The Committee will oversee management’s preparation of the annual remuneration report for inclusion in AirXpanders’ annual report, and make recommendations to the Board in relation to it.

5.9 Evaluation of Board and Committees

The Committee will oversee the self-assessment by the Board and Board committees.

5.10 Evaluation of executives

The Committee will:

  1. develop and implement a plan for identifying, assessing and enhancing competencies of executives; and
  2. ensure that the performance of each executive is evaluated at least annually.

5.11 Other

The Committee will perform other duties and activities that it or the Board considers appropriate.

6 Conflicts

If the Committee includes one or more executive directors:

  1. (a) they must not be involved in setting their respective own remuneration; and
  2. (b) must consider whether they are subject to a conflict of interest when setting the remuneration of other executives that may indirectly affect their own (e.g. through setting a benchmark or because of relativities) and must ensure they are not included in the setting of such remuneration.

7 Approvals

Subject to any limitations imposed by the Board from time to time, the Committee must approve the following before implementation:

  1. changes to the remuneration or contract terms of executive directors and direct reports to an executive director;
  2. the design of new, or amendments to current, stock or option plans or cash-based incentive plans;
  3. the total level of award proposed from stock or option plans or cash-base incentive plans; and
  4. termination payments to executive directors or direct reports to an executive director.

8 Review of performance

The Committee will periodically undertake an evaluation of its performance. The Board may evaluate the performance of the Committee as appropriate.

9 Review of this charter

The Board will periodically review this Charter to determine its adequacy. Approved by the Board of Directors of AirXpanders, Inc.

AUDIT AND RISK COMMITTEE CHARTER

1 Purpose

The Audit and Risk Committee (Committee) is established by the Board of Directors (Board) of AirXpanders, Inc. (AirXpanders). This Charter governs the operations of the Committee and sets out the membership, operation and responsibilities of the Committee.

The purpose of the Committee is to assist the Board in fulfilling its responsibilities in relation to AirXpanders’:

  1. financial reports;
  2. financial reporting processes;
  3. audit processes;
  4. risk management systems (financial and non-financial); and
  5. compliance framework.

However, the Board retains ultimate responsibility for each of these matters, despite the delegations to the Committee.

2 Membership of the Committee

2.1 Membership

The Committee should ideally consist of:

  1. only non-executive directors;
  2. a majority of independent directors;
  3. an independent chair, who is not Chairman of the Board; and
  4. a minimum of three members.

Subject to the qualifications in ASX Listing Rule 12.7, if AirXpanders is included in the S&P/ASX 300 index at the beginning of AirXpanders’ financial year, the composition of the Committee must satisfy the requirements above. However, as a relatively small company (amongst those listed on the ASX), AirXpanders may face particular issues in ensuring that the ideal composition for the Committee (as set out above) is met. While AirXpanders will aim for the Committee to meet that ideal composition, this may not always be possible, particularly while the operations of the AirXpanders group are at the development and early commercialisation stage.

The Committee will appoint the Committee Chairman from one of its number.It is intended that all members of the Committee must have familiarity with financial management and be able to read and understand financial statements. At least one Committee member must be a qualified accountant or otherwise have expertise in financial accounting and reporting. Some (ideally all) members of the Committee should have an understanding of the industry in which the AirXpanders group operates.

2.2 Appointment and term

The members of the Committee will be determined by the Board having regard to section 2.1 of this Charter. There is no prescribed term for membership. Membership of the Committee ceases when a member ceases to be a director of AirXpanders.

The Board may appoint additional directors to the Committee or remove and replace members of the Committee by resolution. Members may withdraw from membership by written notification to the Board.

3 Administrative matters

3.1 Meetings

The Committee will meet as often as necessary to undertake its role effectively, but must meet at least quarterly. The quorum necessary for a meeting of the Committee will be two members.

The Company Secretary must, on request from any Committee member, convene a meeting of the Committee. Notice must be given to every Committee member of every Committee meeting but there is no minimum notice period. Acknowledgment of receipt of notice by all members is not required before the meeting may be validly held. Members of management may attend meetings of the Committee at the invitation of the Committee Chairman, but other than executive directors, must not be appointed members of the Committee.

3.2 Access and external engagement

The Committee has rights of access to management and to auditors without management present and rights to seek explanations and additional information.

The Committee may, upon notifying the Chairman of the Board, seek the advice of AirXpanders’ auditors or solicitors (at the cost of AirXpanders) as to any matter pertaining to the powers or duties of the Committee.

The Committee may, with the prior approval of the Chairman, instruct the Chief Executive Officer to engage such other independent advisers in relation to any matter pertaining to the responsibilities of the Committee, as the Committee may require.

3.3 Agenda and minutes

The Company Secretary will:

  1. attend all Committee meetings as minute secretary;
  2. in conjunction with the Chairman of the Committee, prepare an agenda to be circulated to each Committee member before each meeting of the Committee;and
  3. prepare minutes of each Committee meeting.

4 Reporting

Normally, a Committee meeting will be held immediately before a Board meeting. There will be included in the Board papers for the Board meeting following a meeting of the Committee, the minutes of the previous Committee meeting (except to the extent that there is a conflict of interest affected by doing so) . The Committee Chairman will provide a brief oral report at the Board meeting as to any material matters arising out of the immediately preceding Committee meeting, including all material audit, financial reporting, internal control, risk management and compliance matters. All directors will be permitted, within the Board meeting, to request information of the Committee Chairman or members of the Committee.

5 Responsibilities

5.1 Financial reporting

The Committee is responsible for:

  1. reviewing the annual and half yearly financial stateme nts and any accompanying reports with management and the external auditor and if considered appropriate, to recommend their approval to the Board;
  2. assisting the Board in determining the reliability and integrity of accounting policies and financial reporting and disclosure practices;
  3. monitoring compliance with applicable accounting standards and other requirements relating to the preparation and presentation of financial results;
  4. reviewing the appropriateness of the accounting principles adopted by management in the preparation of financial reports and to make recommendations to the Board regarding any changes in the accounting principles to be applied in preparing AirXpanders’ financial reports;
  5. reviewing with management any significant accounting and financial reporting issues raised by the external auditor; and
  6. discussing with management any significant movements in the financial statements between periods and from budget.

5.2 External auditing

The Committee is responsible for:

    1. making recommendations to the Board in relation to:
      • The appointment, reappointment or replacement of the external auditor and the managing partner of the external auditor;
      • the remuneration and other contractual terms of the external auditor; and
      • The effectiveness and independence of the external auditor;
    2. discussing with the external auditor the overall scope of the external audit, including materiality levels and identified risk areas and making recommendations to the Board in connection with those matters;
    3. resolving disagreements between management and the external auditor regarding financial reporting;
    4. ensuring that any significant findings and recommendations made by the external auditor are received and discussed by the Committee on a timely basis;
    5. reviewing, agreeing and approving the annual audit plan for the AirXpanders group (including a review of the risk management and internal compliance and control systems);
    6. setting the policy on the provision of non-audit services and ensuring compliance with that policy;
    7. providing advice to the Board as to whether the Committee is satisfied that the provision of non-audit services is compatible with the general standard of independence, and if applicable, an explanation of why those non-audit services do not compromise audit independence, in order for the Board to assess whether it is in a position to make the statements required to be included in the financial statements and annual report of the AirXpanders group; and
    8. establishing procedures for the consideration of any complaints received from within the AirXpanders group regarding accounting, internal control and auditing matters.

5.3 Risk management

The Committee is responsible for:

  1. overseeing the establishment, methodology and implementation of the AirXpanders group’s risk management system and its resourcing, including processes to ensure that there is:
    • an adequate system of internal control, containment and management of business risks and safeguard of assets; and
    • a review of internal control systems and the operational effectiveness of the policies and procedures related to risk and control;
  2. reviewing trends in AirXpanders group’s risk profile;
  3. evaluating the adequacy and effectiveness of the management reporting and control systems used to monitor adherence to policies and limits approved by the Board for management of balance sheet risks;
  4. evaluating the adequacy and effectiveness of the AirXpanders group’s financial and operational risk management control systems by reviewing reports from management and external auditors;
  5. evaluating the structure and adequacy of the AirXpanders group’s insurance policies on an annual basis;
  6. evaluating the AirXpanders group’s exposure to fraud and overseeing investigations of allegations of fraud or other breakdowns in internal controls;
  7. reviewing the risk management framework at least annually to assess whether it continues to be sound;
  8. reviewing and approving all transactions in which AirXpanders is a participant and in which parties related to AirXpanders, including executive officers, directors, and certain other persons whom the board determines may be considered related parties of AirXpanders (for the purposes of Chapter 2E of the Corporations Act), have or will have a material direct or indirect interest; and
    • reporting to the Board on the matters above, including specific material risks identified.

5.4 Compliance

The Committee’s specific function with respect to compliance is to review and report to the Board regarding the appropriateness of the AirXpanders group’s compliance procedures, including:

  1. reviewing the procedures the AirXpanders group has in place to ensure compliance with laws and regulations that are material to the AirXpanders group, including any specific compliance requirements under the terms of any regulatory approvals granted in connection with the business of AirXpanders;
  2. reviewing compliance reports prepared by management in relation to the AirXpanders group’s compliance with legal or regulatory requirements;
  3. obtaining regular updates from management regarding any material litigation involving any member of the AirXpanders group; and
  4. reviewing any material recommendations by regulatory agencies in relation to compliance with laws or regulations applying to any member of the AirXpanders group.

5.5 Other Areas of Responsibility

The Committee is also responsible for:

  1. Periodically reviewing matters pertaining to AirXpander’s investment practices for cash management, foreign exchange, investments, and derivatives, including reviewing and approving the Investment Policy related to cash management.

6 Review of performance

The Committee will periodically undertake an evaluation of its performance. The Board may evaluate the performance of the Committee as appropriate.

7 Review of this charter

The Board will periodically review this Charter to determine its adequacy. Approved by the Board of Directors of AirXpanders, Inc.

DIVERSITY POLICY

1 Introduction

This document sets out the policy of AirXpanders, Inc. (AirXpanders) in relation to diversity. AirXpanders’ vision for diversity incorporates a number of different factors, including gender, ethnicity, disability, age, marital or family status, religious or cultural background and sexual orientation.

2 Scope

This policy applies to all AirXpanders group employees, including contractors and consultants, and includes the recruitment and selection process, terms and conditions of employment including pay, promotion, work assignment, training and any other aspect of employment.

3 Objectives

The key objectives of this policy are for the AirXpanders group to achieve:

  1. a diverse and skilled workforce, leading to continuous improvement in service delivery and the achievement of corporate goals;
  2. a workplace culture characterised by inclusive practices and behaviours for the benefit of all staff;
  3. improved employment and career development opportunities for women including participation in senior management and at Board level; and
  4. awareness in all staff of their rights and responsibilities in relation to fairness, equity and respect for all aspects of diversity.

4 Benefits

Diversity contributes to the achievement of corporate objectives. The AirXpanders group recognises the benefits arising from diversity at all levels of its business, which include:

  1. being able to attract people with the best skills and attributes;
  2. more lateral problem solving ability and greater opportunities for innovation;
  3. improving employee retention rates; and
  4. accessing different perspectives and ideas.

The increased focus on diversity at all levels of the business will reinforce the importance of equality in the workplace, ensuring all employees are treated with fairness and respect, and have equal access to opportunities available at work without being subjected to conscious or unconscious biases.

To this end, discrimination, harassment, vilification and victimisation cannot and will not be tolerated by the AirXpanders group.

5 Employment considerations

The AirXpanders group has programs, practices and policies covering, but not limited to, recruitment and promotion, career development and performance, talent and succession management, flexible work practices including parental leave and employee consultation. In all employment situations, merit will be the determining factor. Employees and applicants for employment will be assessed on their merits, without regard to race, age, sex, marital status or any other factor not applicable to the position. Employees are evaluated for
employment and advancement opportunities based on achievement, experience and the ultimate value they could bring to a role.

Recruiting for all staff positions, including senior management, will be from a diverse pool of candidates in accordance with the guidelines of this policy. AirXpanders’ recruitment process will be focused on criteria designed to ensure that the best people are chosen for the available positions recognising the benefits that diverse experience, perspectives and approaches can bring. External consultants should be used where appropriate to ensure the broadest possible search for candidates with the best skills and experience has been performed.

Succession plans are to be reviewed regularly to ensure an appropriate focus on diversity in accordance with this Policy.

6 Measurable Objectives

As a relatively small company (amongst those listed on the ASX), AirXpanders may face particular issues in ensuring that all of the ASX Corporate Governance Council’s recommendations and guidance in its Corporate Governance Principles and Practice

publication are satisfied. AirXpanders’ operations are currently at the development and initial commercialisation stage and it has only a small number of employees. As AirXpanders moves closer to achieving its commercialisation goals and increases its number of employees, it will:

  1. establish appropriate and measurable objectives for achieving gender diversity; and
  2. annually review and assess both the measurable objectives for achieving gender diversity and the AirXpanders group’s progress in achieving them.

7 Further information

Any person who has questions about this policy or who requires further information should contact the Chief Executive Officer or the Australian Company Secretary.

8 Review of this policy

This policy may be amended by the Board of Directors. Approved by the Board of Directors of AirXpanders, Inc.

RISK MANAGEMENT POLICY

1 Introduction

Risk influences every aspect of the business of AirXpanders, Inc. (AirXpanders). Understanding the risks faced by the AirXpanders group and managing them appropriately will enhance its ability to make better decisions, deliver on objectives and subsequently improve performance.If the AirXpanders group fails to identify, assess and manage its risks it may result in unbudgeted expenditure, damage stockholder confidence and potentially jeopardise the ongoing viability of the AirXpanders group.

The AirXpanders group views the management of risks to its people, assets and all aspects of its operations as a fundamental responsibility. It is committed to upholding its corporate and legal obligations by implementing and maintaining a level of risk management that protects and supports these responsibilities.

2 Objective

The AirXpanders group will take informed and considered risks through the introduction of a risk management framework and associated activities that will assist in the creation and protection of value.

3 Policy

To realise its risk management objective, the AirXpanders group will:

  1. identify and assess risks to its business objectives and understand how such risks influence performance;
  2. ensure that an appropriate risk management framework is in place and that this is aligned to its business strategy and that it evolves with its business;
  3. support the framework and strategy with an appropriate organisational structure and ensure that associated responsibilities are clearly defined and communicated at all levels of the business, including its control and accountability systems;
  4. ensure that risk information is communicated through a clear and robust reporting structure; and
  5. integrate ongoing risk management activities within the business.

4 Applicability

This policy applies to all areas of the AirXpanders group’s operations without exclusion and to all personnel.

5 Types of risk

5.1 Strategic risk

Strategic risks are primarily risks caused by events that are external to the AirXpanders group or risks at a group level that have a significant impact on its strategic decisions or activities.The causes of these risks include such things as national and global economies, government policies and regulations and interest rates. Often, they cannot be predicted or monitored through a systematic operation procedure. The lack of advance warning and frequent immediate response required to manage strategic risks means they are often best identified and monitored by senior management as part of their strategic planning and review mechanisms.

Accountability for managing strategic risks therefore rests with the Board and the Chief Executive Officer. The benefit of effectively managing strategic risks is being able to better forecast and quickly adapt to the changing demands that are placed upon AirXpanders.

5.2 Operational risk

Operational risks are inherent in the ongoing activities within the different business units of the AirXpanders group. These are the risks associated with such things as the day-to-day operational performance of staff. Senior management needs ongoing assurance that operational risks are identified and managed.

Accountability for managing operational risks rests particularly with the heads of business units. The benefits of efficiently managing operational risks include maintaining superior quality standards, eliminating undesirable surprises, the early identification of problem issues and being prepared for emergencies if they happen.

5.3 Project risk

Project risks are risks associated with projects that are of a specific, normally short-term nature and are frequently associated with acquisitions, change management and integration projects. An effective strategy for managing project risks is to develop a set of key criteria to manage the significant risks that are common within most projects. This approach assists project managers with the identification of the risks inherent in individual projects.

Project sponsors are accountable for the achievement of project deliverables and outcomes. However, specific risks associated with project management are normally delegated to project managers for their attention. Included among the benefits of efficiently managing project risks are the avoidance of unexpected time and cost overruns. Additionally, when project risks are well managed there are fewer integration problems with assimilating required changes back into general management functions.

6 Responsibilities

6.1 The Board

The Board is ultimately responsible for risk management in the AirXpanders group and for communicating the requirements of this policy.

The Board must satisfy itself that significant risks faced by the AirXpanders group are being managed appropriately and that the system of risk management within AirXpanders is robust enough to respond to changes in its business environment. The Board will also ensure that there is an appropriate organisation and reporting structure in place to support the delivery of this policy on an ongoing basis.

6.2 Audit and Risk Committee

The Audit and Risk Committee will have responsibilities in relation to risk management as set out in the Audit and Risk Committee Charter.

6.3 Business units

Each business unit is responsible for the identification, assessment, control, reporting and ongoing monitoring of risks within its own responsibility. Business units are responsible for implementing the requirements of this policy and for providing assurance to the Board that they have done so. The business unit, where considered appropriate, may enhance its o wn organisational structure provided that such enhancements further assist the achievement of the objectives of this policy.

6.4 Management

Management is responsible for identifying and evaluating risks within their area of responsibility, implementing agreed actions to manage risk and for reporting as well as monitoring any activity or circumstance that may give rise to new or changed risks.

6.5 Employees

All employees have a general duty of care and are responsible for complying with requests from management in connection with the application of this policy. Through appropriate preventative action, all reasonable care should be taken to manage events that have the potential to prevent AirXpanders from achieving its objectives and to ensure that AirXpanders’ operations, assets and reputation are safeguarded.

7 Further information

Any person who has questions about this policy, or who requires further information, should contact the Chief Executive Officer.

8 Review of this policy

This policy may be amended by the Board of Directors.Approved by the Board of Directors of AirXpanders, Inc.

CONTINUOUS DISCLOSURE POLICY

1  Introduction

This  document  sets out  the policies and procedures that  AirXpanders, Inc.  (AirXpanders) will comply with in relation to continuous disclosure.

2  Objectives

The objectives of this policy are to:

  1. establish  procedures  for  the  reporting  of  price  sensitive  information  to  the  Chief Executive Officer and the Australian Company Secretary for review;
  2. establish procedures for the preparation, approval and release of  announcements  to  the ASX; and
  3. establish  procedures  to  enable  compliance  by  AirXpanders  with  its  continuous disclosure obligations under the Corporations Act and ASX Listing Rules.

This policy applies to:

  1. all directors of the Board of Directors of AirXpanders (Board); and
  2. all officers, employees, contractors and consultants of the AirXpanders group.

3  Continuous disclosure obligation

3.1  Disclosure obligation

(a)  Legal obligation of disclosure

AirXpanders has continuous disclosure obligations under the Corporations Act and ASX Listing Rules  to  keep  the  market  fully  informed  of  any  price  sensitive  information  relating  to AirXpanders. ASX Listing Rule 3.1 requires that AirXpanders immediately notify the ASX of any information of which AirXpanders becomes aware, concerning AirXpanders, that a reasonable person would expect to have a material effect on the price or value of any securities issued by  AirXpanders(including  CHESS  Depositary  Interests  (CDIs)  over  securities  issued  by  AirXpanders) (Material Information).

(b)  Material effect on the price of securities

A reasonable person is taken to expect information to have a material effect on the price or value of  securities  if  it  would,  or  would  be  likely  to,  influence  persons  who  commonly  invest  in securities in deciding whether or not to subscribe for, buy or sell the securities.In forming a view as to whether a reasonable person would consider information to be material, previous disclosure to the market should be considered, for example,  previously released profit expectations, commentary on likely results, or detailed business plans or strategies. A list of matters that may be considered material is set out in  Annexure A. This list is merely
indicative and should not be seen as an exhaustive list of the matters that should be considered for disclosure.

(c)  Information in AirXpanders’ knowledge

AirXpanders becomes aware of information if any of its officers has, or ought reasonably to have, come into possession of the information in the course of the performance of  their  duties as  an officer of AirXpanders.
An  officer  includes  a  director  or  secretary  of  AirXpanders  and  a  person  who  makes,  or participates  in  making,  decisions  that  affect  the  whole  or  a  substantial  part  of  the  business  of AirXpanders.

(d)  Release of information to others

Material  Information  must  not  be  released  to  any  person  (e.g.  brokers,  analysts,  the  media, professional bodies or any other person) until AirXpanders has given the information to the ASX and has received an acknowledgement that the ASX has released the information to the market

3.2  Requirement to disclose information ‘immediately’

Under ASX Listing Rule 3.1,  Material Information must be disclosed to  the  ASX immediately upon  AirXpanders  becoming  aware  of  the  information,  unless  it  falls  within  the  exception  to disclosure under ASX Listing Rule 3.1A (see section 3.3 below).ASX considers the  word “immediately” should not be read as meaning  “instantaneously”, but rather as meaning “promptly and without delay”.Factors that the  ASX will take into account in assessing whether AirXpanders has complied with its obligations to disclose information promptly and without delay include:

  1. where and when the information originated;
  2. the forewarning (if any)  AirXpanders had of the information;
  3. the amount and complexity of the information concerned;
  4. the need in some cases to verify the accuracy or bona fides of the information;
  5. the need for an announcement to be carefully drawn so that it is accurate, complete and not misleading;
  6. the  need  in  some  cases  for  an  announcement  to  comply  with  specific  legal  o r  ASX Listing Rule requirements; and
  7. the need in some cases for an announcement to be approved by the Board.

3.3  Exceptions to disclosure

ASX Listing Rule  3.1A provides that Material Information will not need to be provided to  the ASX in certain circumstances. The  application of ASX Listing Rule 3.1A  will be determined on a case-by-case basis.

Material Information will not need to be provided to  the  ASX if  all  of the following  exceptions apply in respect of the Material Information:

  1. one or more of the following five situations applies:
    • it would be a breach of the law to disclose the Material Information;
    • the Material Information concerns an incomplete proposal or negotiation;
    • the Material Information comprises matters of supposition or is insufficiently definite to warrant disclosure;
    • the Material Information is generated for the internal management purposes of AirXpanders; or
    • the Material Information is a trade secret; and
  2. the information is confidential and ASX has not formed the view that the information has ceased to be confidential; and
  3. a reasonable person would not expect the information to be disclosed.

3.4  Procedure for disclosure

The following procedures apply to the preparation, approval and release of continuous disclosure announcements to the ASX:

  1.  Executives  and  senior  management  must  notify  the  Chief  Executive  Officer and Chief Financial Officer as soon as they become aware of information that  may be Material Information (see below).
  2.  Chief Financial Officer will:
    • review the Material Information reported by executives and senior management with the Chief Executive Officer (or in his absence, the Chairman);
    • determine, in consultation with the Chief Executive Officer (or in his absence,the Chairman), whether any of the Material Information is required to be disclosed to the ASX;
    • if disclosure is required, request the Australian Company Secretary to prepare the form of announcement to the ASX, for approval by the Chief Financial Officer and, if the Chief Financial Officer considers it necessary, the Board;
    • once approved, authorize the Australian Company Secretary to lodge the announcement with the ASX; and
    • post the announcement on AirXpanders’ website after receiving confirmation from the ASX that it has been released to the market.
  3. (c) When assessing whether to approve a draft announcement, the Chief Executive Officer, Chief Financial Officer or the Board must ensure that the announcement is factual, complete, balanced and expressed in a clear and objective manner that allows investors to assess the impact of the information when making investment decisions. In this context, “balanced” means disclosing both positive and negative information.

3.5  Obligations of executives and senior managers

As soon as an executive or senior manager  becomes  aware of information that  may be Material Information,  the executive or senior manager  must provide to  the Chief Executive Officer and the Chief Financial Officer the following information:

  1. a general description of the matter;
  2. details of the parties involved;
  3. the relevant date of the event or transaction;
  4. the status of the matter (e.g.  final/negotiations still in progress/preliminary negotiations only);
  5. the estimated value of the transaction (if applicable);
  6. the estimated effect on AirXpanders’ finances or operations; and
  7. the names of any in-house or external advisers involved in the matter.Any change in the information  must be immediately  notified to  the Chief Executive Officer and the Australian Company Secretary.The determination of whether certain information is Material Information necessarily involves the  use  of  judgement.  Any  information  that  may  have  a  material  effect  on  the  price  of AirXpanders’ securities should be treated as if it is Material Information and the  Chief Executive Officer and the Australian Company Secretary  should be notified following the process outlined above.

3.6  Analyst/media communications

Information  provided  to,  and  discussions  with,  analysts  are  also  subject  to  the  continuous disclosure policy.
Only  the  Chairman  and  Chief  Executive  Officer  are  authorised  to  issue  statements  or  make comments to the media or to speak on behalf of  AirXpanders  to analysts or journalists. Other executives or members of senior management may speak on behalf of AirXpanders subject to prior approval from the  Chairman or  Chief Executive Officer.  The  Chief Financial Officer  is  authorised  to  speak  to  analysts  and  proxy  advisers  about  matters  specific  to  the financial reports of AirXpanders.Material Information must not be selectively disclosed (i.e. to analysts, the media or members of the medical community) before being announced to the ASX. All information that is proposed to be  presented  to  analysts,  journalists  or  members  of  the  medical  community  that  may  include Material  Information  should  be  provided  to  the  Chief  Executive  Officer  and  the  Chief Financial Officer before presenting that information externally. All inquiries from analysts must be referred to the Chief Executive Officer or the Chief Financial Officer (in the case of financial reports). All material to be presented at an analyst briefing must be approved by or referred through the  Chief Executive Officer  (or his or her delegate)  before the briefing.

All inquiries from the media must be referred to the  Chief Executive Officer. All media releases must  be  approved  by  or  referred  through  the  Chief  Executive  Officer  (or  his  or  her  delegate) before release to journalists.

3.7  Interview/briefing black-out period

During the period from the end of the financial year or half -year and the release to the ASX of the financial results of  AirXpanders  for the relevant period, no employee of  AirXpanders  maydiscuss  financial  performance  or  forecasts  with  any  analyst,  investor  or  the  media,  unless  the information has already been disclosed to the ASX.Any person who is given permission by the  Chief Executive Officer  to give a  media interview, speak with analysts, or make a presentation must notify the Australian Company Secretary of thedate  and  time  for  the  interview  and  must  give  a  copy  of  any  presentation  to  the  Australian Company Secretary, before the interview/presentation.

Additional periods in which interviews may not be given or in which presentations may not be made without the specific permission of the  Chief Executive Officer  may be imposed. Relevant persons will be notified of any such additional interview/briefing black-out period.

3.8  Market rumours and correcting a false market

Under  ASX  Listing  Rule  3.1B,  if  the  ASX  considers  that  there  is,  or  is  likely  to  be,  a  false market  in  AirXpanders’  securities,  and  requests  information  from  AirXpanders  to  correct  or prevent the false market AirXpanders must immediately give that information to the ASX.This obligation to give  information  applies  even where an exception described above in  section 3.3 applies. Unless disclosure is required to correct or prevent a false market, AirXpanders has a general “no comment” policy in relation to market speculation and rumours.

3.9  Trading halts and suspensions

In order to facilitate an orderly and informed market, it may be necessary to request a trading halt or voluntary suspension of trading in AirXpanders’ securities from the ASX, for example:

  1. to manage unexplained material price and/or volume change;
  2. if confidential information about AirXpanders is inadvertently disclosed;
  3. prior to a press conference or briefing being held in advance of a formal announcement; or
  4. to  prevent  an  uninformed  market  pending  the  announcement  of  price  sensitive information.

The  Chief Executive Officer  is authorised to request a trading halt or voluntary suspension. In the absence of the  Chief Executive Officer,  any two directors are together  authorised to make a decision to request a trading halt or voluntary suspension. In these circumstances the Chief Executive Officer will first consult with the Chairman (or in his absence,  the Lead Independent  Director, failing whom, another director)  regarding the decision to request a trading halt or a voluntary suspension. No  other  employees  are  authorised  to  request  a  trading  halt  or  suspension  on  behalf  of AirXpanders.

4  Relationship  between  continuous  disclosure  and  other  disclosure obligations

In addition to complying with its continuous disclosure obligations,  AirXpanders  is required to disclose other types of information under the ASX Listing Rules and  applicable securities laws. For example, AirXpanders must prepare and issue quarterly ASX releases and periodic financial reports and accounts.  AirXpanders acknowledges that compliance with its obligations to  prepare such documents  does not  affect  its  continuous disclosure obligations under  ASX  Listing Rules3.1 and 3.1B.

5  Communication with stockholders

AirXpanders  acknowledges  that  effective  communication  with  CDI  holders  and  stockholders assists  the  creation  and  maintenance  of  an  informed  market  in  AirXpanders’  securities  and enhances  corporate  governance  by  encouraging  a  culture  of  transparency  in  relation  to AirXpanders’ activities.  AirXpanders seeks to:

  1. provide a comprehensive and up-to-date website, which includes copies of all Material Information lodged with the ASX (including announcements and financial information) as  well  as  relevant  and  non-confidential  policies  and  charters  and  other  company information;
  2. place  all  relevant  announcements,  briefings  and  speeches  made  to  the  market  or  the media on the website; and
  3. place full text of annual reports, notices of meetings of stockholders and accompanying explanatory notes on the website. Stockholder  meetings  are  an  opportunity  for  CDI  holders  and  stockholders  and  other stakeholders to hear from and put questions to the Board, management and the external auditor. Stockholders and CDI holders may attend the meeting in  person or by proxy, representative or attorney. If stockholders or CDI holders are present at  stockholder meetings, the Chairman will provide  reasonable  time  following  the  consideration  of  reports  for  questions  and  comment  on these matters.

6  Management of the policy

AirXpanders  has  nominated  the  Australian  Company  Secretary  as  the  person  with  primary responsibility for all communication with the ASX. The Australian Company Secretary is responsible for:

  1. liaising with the ASX in relation to continuous disclosure issues;
  2. ensuring that the system for the disclosure of all  Material  Information to the ASX in a timely fashion is operating;
  3. co-ordinating  the  actual  form  of  disclosure,  including  reviewing  proposed announcements  by  AirXpanders  to  the  ASX  and  liaising  with  the  Chief  Executive Officer or Chairman in relation to the form of any ASX releases;
  4. liaising with the Board (where necessary) in relation to the disclosure of information;
  5. keeping a record of all ASX and other releases that have been made;
  6. periodically  reviewing  AirXpanders’  disclosure  procedures  in  light  of  changes  to  th ASX Listing Rules or  applicable securities laws  and recommending  to the Board  any necessary changes to the procedures; and
  7. preparing regular disclosure reports to the Board, which advise of:
    • material matters considered and the form of disclosure (if any); and
    • any material changes to AirXpanders’ continuous disclosure processes.

7  Contraventions and penalties

7.1  Contravention

AirXpanders takes continuous disclosure very seriously. AirXpanders contravenes its continuous disclosure  obligations  if  it  fails  to  notify  the  ASX  of  the  information  required  by  the  ASX Listing Rules.

7.2  Penalties for breach

If  AirXpanders  contravenes its continuous disclosure obligations under the  ASX  Listing Rules, the ASX may suspend trading in  AirXpanders’  securities  or may de-list  AirXpanders  from the ASX.
If  AirXpanders contravenes its continuous disclosure obligations, it may also be liable under the Corporations Act and may face:

  1. criminal liability, which attracts substantial monetary fines; and
  2. civil liability for any loss or damage suffered by any person as a result of  AirXpanders’failure to disclose relevant information to the ASX. However, if the court finds that  AirXpanders  has acted honestly and reasonably,  the court may, in its discretion, excuse AirXpanders from civil liability.

7.3  Persons involved in the contravention

AirXpanders’  directors,  officers,  employees,  contractors,  consultants  or  advisers  who  are involved in the contravention by  AirXpanders  of  its  continuous disclosure obligations  may also face criminal penalties and civil liability. Substantial  pecuniary penalties, imprisonment, or both, may apply.

7.4  “Due diligence” defence

A person  will not be considered to be involved in the contravention if the person proves that they:

  1. took  all  reasonable  steps  to  ensure  that  AirXpanders  complied  with  its  continuous disclosure obligations; and
  2. after doing so, believed on reasonable grounds that  AirXpanders  did comply  with its continuous disclosure obligations.

7.5  ASIC infringement notices

As an alternative to seeking the imposition of a civil penalty, ASIC may issue AirXpanders with an infringement notice for an alleged contravention of the continuous disclosure obligations. An infringement notice may be issued if ASIC has reasonable grounds to believe ( even if it cannot prove)  that  AirXpanders  has  contravened  its continuous  disclosure  obligations  and  ASIC  has followed specified procedures.

The risk of AirXpanders being issued with an infringement notice  despite  ASIC not being able to prove  that AirXpanders has contravened its continuous disclosure obligations underscores the importance of AirXpanders and its personnel complying with this policy.

8  Further information

Any  person  who  has  questions  about  this  policy,  or  who  requires  further  information,  should contact the Chief Executive Officer or the Chief Financial Officer.

9  Review of this policy

This policy may be amended by resolution of the Board of Directors.Approved by the Board of Directors of AirXpanders, Inc.

Annexure A – Material Information

Material Information may include:

  1. the  financial  condition,  results  of  operations,  AirXpanders-issued  forecasts  and  the  earning performance  of  AirXpanders  or  an  affiliate,  which  are  significantly  different  from  that anticipated by AirXpanders or the market;
  2. a  proposed  acquisition  or  disposition  of  material  assets  to  be  announced  by  AirXpanders,  an affiliate or joint venture partner;
  3. material  developments  in  regulatory  approval  processes,  including  in  relation  to  device reimbursement;
  4. material developments in relation to the intellectual property of AirXpanders and its affiliates;
  5. a transaction for which the consideration payable or receivable  is a significant proportion of the written down value of  AirXpanders’  consolidated assets. Normally, an amount of 5% or more would be significant, but a smaller amount may be significant in a particular case;
  6. events or occurrences that have an impact on the operations of AirXpanders or an affiliate;
  7. natural disasters or accidents that have particular relevance to the businesses of  AirXpanders  or its suppliers;
  8. significant changes in technology or the application of technology which could affect business ;
  9. a proposed announcement to alter pricing or tariff policies other than in the ordinary course of
    business;
  10. resolving to pay a dividend, or a recommendation that no dividend be paid;
  11. legal proceedings against or allegation of any breach of the law, whe ther civil or criminal, by AirXpanders  or any of its employees (other than debt recovery proceedings or insured workers’ compensation claims);
  12. any notification by a ratings agency that it will review the credit rating of AirXpanders;
  13. a change in AirXpanders’ financial forecast or expectation;
  14. the appointment of a receiver, manager, liquidator or administrator in respect of any loan, trade credit, trade debt, borrowing or securities held by AirXpanders or any affiliate;
  15. changes in AirXpanders’ senior management or auditors;
  16. entry  by  AirXpanders  or  an  affiliate  into  a  new  line  of  business  or  the  discontinuance  of  a particular line of business; and
  17. planning to undertake a significant financing or security issue (whether debt or equity) or to take other action with respect to outstanding securities (e.g. stock repurchase program, redemption of bonds) or any default on any securities.

CODE OF CONDUCT

1  Objectives

This  Code  of  Conduct  applies  to  all  officers  (including  directors  and  executives)  and  employees (Employees)  of  AirXpanders,  Inc.  (AirXpanders)  and  its  affiliates.  Directors  and  executives  of  AirXpanders are expected to lead by example and actively promote this Code of Conduct.

This Code of Conduct promotes practices that foster AirXpanders’ key values of:

  1. acting with fairness, honesty and integrity;
  2. providing a safe and healthy work environment for all Employees;
  3. being aware of and abiding by all relevant laws and regulations;
  4. not knowingly participating in any illegal or unethical activity;
  5. meeting the expectations of stockholders, customers and the community;
  6. maintaining high standards of professional behaviour;
  7. avoiding or managing conflicts of interest;
  8.  not taking advantage of property or information for personal gain or to cause detriment   to the AirXpanders group or patients; and
    • striving to be a good corporate citizen, and to achieve community respect.

The  AirXpanders  group  is committed to ensuring that  high  standards of honesty, integrity, ethics and legality are upheld and enforced.  Employees  are expected to be honest and ethical in dealing with each other, with  customers  and all other third parties. An important part of that process is establishing and adhering  to  a  set  of  principles  that  guide  the  conduct  of  everyone  associated  with  the  AirXpandersgroup.  This  Code  of  Conduct  refers  to  policies,  procedures  and  guidelines  aimed  at  ensuring  that appropriate  ethical  standards,  corporate  behaviour  and  accountability  are  maintained  across  the AirXpanders group.

The  AirXpanders  group  will make consultants and contractors aware of  AirXpanders’ expectations  of Employees as set out in this Code of Conduct  and will seek to ensure that consultants and contractors follow this Code of Conduct as if they were Employees.

2  Responsibilities under the Code

Each Employee must make himself or herself familiar with this Code of Conduct.  If  an Employee has any  doubts  about  an  issue  or  situation  they  should  notify  their  manager  (if  relevant)  or  the  Chief  Executive Officer.
All  Employees  are  responsible  for  actively  reporting,  in  good  faith,  any  inappropriate  behaviour, corrupt practices, breach of the law and any breach of this Code of Conduct.If  an  Employee  is  aware  of,  or  suspects,  a  breach  of  this  Code  of  Conduct  or  other  inappropriate behaviour,  the  matter  should  be  promptly  reported  by  following  the  steps  outlined  in  section  13.Retribution against a person for reporting or supplying information about a Code  of Conduct  or policy concern will not be tolerated.

Any person who breaches this Code of Conduct (including by failing to report a suspected breach, or by victimising another for reporting a concern) may be subject to corrective  disciplinary action, includingtermination of employment for misconduct.

3  Compliance with laws and regulations

The  members  of  the  AirXpanders  group  and  its  directors  and  officers  are  subject  to  various  legal requirements,  including  financial,  corporate,  disclosure  and  fair  trading  requirements.  Directors  and officers  also  owe  a  number  of  fiduciary  duties  to  AirXpanders.  No  director  or  officer  may  direct another Employee or any other person to violate any law on behalf of the AirXpanders group.All Employees should  comply with  the duties and obligations  that  apply to them or  AirXpanders  under any  relevant  laws  or  regulations.  Employees  are  encouraged  to  attend  seminars  presented  by  the AirXpanders  group  or other external service providers  from time to time on  relevant legal and industry developments. If an Employee needs help understanding any relevant laws and regulations, they should contact their immediate supervisor or manager (if relevant), or  the Chief Executive Officer .

4  Fair dealing

AirXpanders  aims to maintain  high  standards  of ethical behaviour in all its dealings with  patients, the medical community, stockholders, government, suppliers and the community.Employees  are  expected  to  perform  their  duties  in  a  professional  manner  and  act  with  integrity  and objectivity, striving at all times to enhance the reputation and performance of  AirXpanders.  Employees must ensure that  their  actions, and the actions of those who report to  Employees, deal fairly with  the stakeholders listed above.

5  Conflicts of interest

Employees  should  avoid  any  situation  that  involves  or  may  involve  an  actual  or  perceived  conflict between the Employee’s personal interests and the interests of the AirXpanders group. A  conflict  of  interest  may  occur  when  the  interests  of  an  Employee  or  relative  or  associate  of  the Employee,  or  a  duty  or  obligation  to  some  other  person  or  entity,  conflict  with  a  person’s  duty  or responsibility to AirXpanders.

Potential direct or indirect conflicts of  interest of  Employees or those acting on behalf of  AirXpanders (or their family, relatives, friends or agents) should be avoided. If  an Employee is  concerned that  they have a potential conflict of interest they should disclose and discuss the matter with, and seek direction from, their manager or the Chief Executive Officer.An Employee  should report any  potential or actual conflict of interests that they become aware of to their manager or the Chief Executive Officer.

The following are some common examples that  illustrate  actual or apparent conflicts of interest  that should be avoided. This is not intended to be an exhaustive list.

  1. Employees  should  not  exploit  their  position  or  relationship  with  AirXpanders  for  personal gain.  Employees  and  their  relatives  and  friends  should  not  give  unreasonable  gifts  to,  or receive  unreasonable  gifts  from,  patients  or  members  of  the  medical  community  using AirXpanders’ products. Employees should not accept a gift in circumstances in which it would appear to others that the gift has caused their business judgement to be compromised.
  2. Employees should avoid having a significant ownership interest in any other enterprise if that interest  compromises  or  appears  to  compromise  their  ability  to  comply  with  AirXpanders’policies  or  their  loyalty  to  AirXpanders,  irrespective  of  the  capacity  within  which  the ownership interest is held. This will not normally apply to interests in listed entities. However, if  an Employee has  any doubt about such an investment  they  should consult with  the Chief Executive Officer or Chief Financial Officer.
  3. If  an  Employee  learns  of  a  business  or  investment  opportunity  through  AirXpanders’information  or  their  position  at  AirXpanders,  they  should  not  participate  in  the  business  or make  the  investment  without  approval  from  the  Chief  Executive  Officer  or  Chief  Financial Officer.

6  Improper use or theft of AirXpanders property and assets

Employees  are expected to be responsible for protecting any  AirXpanders property and assets that are under their control and they should safeguard them from loss, theft and unauthorised use.  AirXpanders’property  and  assets  includes  cash,  securities,  business  plans,  third  party  information,  intellectual property  (computer  programs,  software,  models  and  other  items),  confidential  information,  office equipment and supplies.As a general rule, AirXpanders’ property and documents should not be removed from official premises without a good and proper reason. If removed, they should be stored in a secure manner and covered by appropriate insurances.Employees  should  use  common  sense  and  observe  standards  of  good  taste  regarding  content  and language when creating documents that may be retained by  AirXpanders or a third party. AirXpanders’ electronic communications systems  should not be used  to access or post material that is pornographic, obscene, sexually-related, profane or which is otherwise offensive or violates  AirXpanders’  policies or any laws or regulations. In addition, any use of  AirXpanders’  electronic communications systems fornon-business purposes should:

  1. be occasional;
  2. not interfere with professional responsibilities;
  3. not diminish productivity; and
  4. not violate this Code of Conduct or any other AirXpanders policies.

7  Confidentiality

In the course of business, Employees  will have access to business or personal information about the affairs of the AirXpanders group, its patients, Employees, suppliers and its business partners, and others in the medical community. The information may include business strategies, marketing and sales plans, competitive analysis, financial plans and forecasts,  patients’ personal information, clinical data, sales information, Employee information, supplier information and pricing. Each of the parties expects the confidential nature of the information they have given in good faith to be respected.Employees must keep confidential information acquired while they are with  the  AirXpanders  group, or acting  on  behalf  of  the  AirXpanders  group,  confidential,  even  after  they  leave  or  cease  their engagement with the AirXpanders group.

Employees  must  not  access  or  request  or  make  improper  use  of  or  transfer  or  disclose  confidential information to anyone else except as required by their position or as authorised or legally required. If it advertently comes into their possession it should be returned immediately.If  an  Employee  is  required  by  an  authority  to  provide  confidential  information  that  has  not  been otherwise authorised, they must notify the Chief Executive Officer or Chief Financial Officer .

8  Privacy

AirXpanders  respects  the  privacy  of  others  and  will  only  use  personal  information  collected  from Employees  for  legitimate  purposes  relating  to  their  position  with  AirXpanders.  Employees  should familiarise themselves with and comply with AirXpanders’ procedures in relation to privacy.

9  Continuous disclosure and public communications

9.1  Continuous disclosure

AirXpanders  has  adopted  a  Continuous  Disclosure  Policy  relating  to  its  obligations  under  the Corporations Act and the ASX Listing Rules to keep the market fully informed of information that may have a material effect on the price or value of AirXpanders’ securities.

Employees should ensure they are aware of, and act in accordance with the requirements of, the policy. A copy of the Continuous Disclosure Policy is available on AirXpanders’ website.

9.2  Other public communications

Employees  are responsible for the integrity of the information, reports and records under  their  control
and are expected to exercise a high standard of care in preparing materials for public communications.
Documents should:

  1. comply with any applicable legal requirements;
  2. comply with AirXpanders’ Continuous Disclosure Policy;
  3. not  contain  any  false  or  intentionally  misleading  information,  nor  intentionally  misclassify information; and
  4. comply  with  privacy  requirements  and  any  applicable  requirements  protecting  confidential information.

10  Employment

10.1  Equal opportunity and anti-discrimination

AirXpanders is committed to:

  1. equal employment opportunity; and
  2. a workplace free from any kind of discrimination, harassment or intimidation of Employees.AirXpanders  will  promptly  investigate  all  allegations  of  harassment,  bullying,  victimisation  or discrimination  and  will  take  appropriate  corrective  action.  Retaliation  against  individuals  for  raising claims of harassment or discrimination will not be tolerated.

10.2  Diversity

AirXpanders  recognises  the  value  and  unique  contribution  that  all  people  make  on  account  of  their individual skills, experiences and perspectives, and how this fosters a constructive and inclusive work culture.  In  support  of  this  recognition,  AirXpanders  has  implemented  a  Diversity  Policy  designed  to value and improve diversity in the workplace.Employees  should familiarise  themselves  with the Diversity Policy so that  their actions  are consistent with AirXpanders’ diversity objectives and principles. The policy is available on AirXpanders’ website.
10.3  Occupational health and safety AirXpanders  is committed to maintaining a healthy and safe working environment for its  Employees. All appropriate laws and internal regulations (including  work  health and safety laws) should be  fully complied with. Misusing controlled substances or alcohol or selling, manufacturing, distributing, possessing, using or being under the influence of illegal drugs on the job will not be tolerated.

Employees should be aware of all relevant standards and procedures adopted by AirXpanders to ensure the workplace is safe and without risk to the health of  Employees and others and follow any lawful and reasonable instructions consistent with those policies and procedures.

10.4  Securities trading

AirXpanders  has adopted specific guidelines for dealing in  AirXpanders’  securities.  Employees  should review  the  Securities  Trading Policy  and ensure  they  act in accordance with that policy.  The policy is available on AirXpanders’ website.

10.5  Bribes, inducements and commissions

AirXpanders  does not condone the giving or receiving of any bribe, commission or inducement, which may  influence  business  decisions  or  compromise  independent  judgement,  whether  through  an intermediary or otherwise, in any circumstance, even if it might be culturally acceptable.

Employees  should not pay or receive any bribes, inducements or commissions (this includes any item intended  to  improperly  obtain  favo urable  treatment,  whether  from  or  to  government  bodies  or otherwise). In addition, Employees should not give or receive any unreasonable gifts or otherwise act in an  unethical  way  that  may  cause  financial  detriment  or  degrade  the  reputation  or  integrity  of  the AirXpanders group.

The giving and receiving of bribes, inducements and commissions is against  AirXpanders’  policy and the  laws  of  countries  where  AirXpanders  conducts  business.  Any  Employee  found  to  be  receiving, accepting or condoning a bribe, commission or inducement, or attempting to initiate such activities maybe liable for termination and possibly criminal proceedings.

11  Politics and community

An Employee may voluntarily participate in the political process as an individual. An Employee should not engage in actions that could  cause someone to believe that their actions or statements reflect the views or position of AirXpanders.AirXpanders  is  a  responsible  corporate  citizen  and  actively  supports  the  communities  in  which  it operates.  AirXpanders  provides  information  about  itself  in  response  to  reasonable  and  responsible requests.
AirXpanders  supports  and  encourages  its  Employees  to  actively  contribute  to  the  needs  of  the community. AirXpanders’ requirements for making donations or sponsorship on behalf of  AirXpandersmust be complied with by Employees.

12  Environment and Social Responsibility

AirXpanders  is  committed  to  maintaining  an  environment  that  takes  into  consideration  the  social, ethical  and  environmental  consequences  of  AirXpanders’  activities.  Employees  should  ensure  they comply  with  all  appropriate  laws  and  internal  regulations  in  respect  of  the  social,  ethical  and environmental practices of AirXpanders.

13  Reporting unlawful and unethical behavior & Whistleblower Policy

PROPOSED

13.1 The Board of Directors encourages employees to report promptly any actual or suspected illegal, unethical or otherwise improper conduct by AirXpanders, Inc., or any of its employees, including breaches of the Code of Conduct. Employees are encouraged to raise any areas of concern at any time. A report under this Policy should be made in the following order:
o To the relevant General Manager (if not your immediate manager)
o To the relevant Group Executive, Chief Financial Officer or Human Resources Manager
o To the CEO
o If the issue is not being adequately addressed or the employee is not comfortable speaking with one of the above individuals, the concern may be reported to the Chair of the Audit and Risk Committee, Greg Lichtwardt, at glichtwardt@gmail.com
You may at any stage skip a person in the chain outlined above if that person is the subject of the report or if you have another reason to believe that the person is not likely to deal with the report properly. Nothing in this Policy should be taken as restricting you from reporting any matter or providing any information to a regulator (such as ASIC or the FDA), AirXpanders’ auditor or a member of the audit team or any other person in accordance with any relevant law, regulation or other requirement.

13.2 The Board of Directors is committed to protecting employees who report improper conduct as outlined in this Section.All reports will be kept confidential, except to the extent reasonably necessary to conduct the investigation and take any remedial actions, or as required by law. Reports can also be made anonymously if required, however this may affect the ability to investigate the matter properly and to communicate with you about your report. Disclosures that involve a threat to life or property, illegal activities or legal action against AirXpanders may require actions that do not allow for complete anonymityof the reporting person(s) (the “whistleblower”). In such cases, should it be necessary to disclose the identity of the whistleblower, reasonable steps will be taken to discuss this with the whistleblower first.

13.3 Reportable improper conduct is conduct that is illegal, unethical or in violation of AirXpanders’ policies or of a law or government regulation. It includes:
o fraudulent, corrupt or dishonest behavior
o criminal conduct
o sexual harassment, discrimination, retaliation or analogous inappropriate behavior
o legal or regulatory non-compliance (including non-compliance with health and safety requirements)
o improper accounting, internal accounting controls, or other financial matters, or the reporting of fraudulent financial information

You should also report a matter if you have previously reported but you are not satisfied with the response to your report.

13.4 Following receipt of a report, AirXpanders will ensure that:

o the alleged improper conduct is thoroughly investigated; and
o appropriate disciplinary action proportionate to the seriousness of the offense is taken if the allegation is substantiated.

Investigation processes will vary depending on the precise nature of the conduct being investigated. The purpose of the investigation is to determine whether or not your concerns are substantiated, with a view to AirXpanders then rectifying any wrongdoing uncovered to the extent that this is practicable in all the circumstances. The Board will be appropriately updated with all reports under this Policy and the investigations which follow each report.

13.5 Reprisals are adverse actions taken by one employee of AirXpanders against another employee because of a good faith report or disclosure made in accordance with this Policy. AirXpanders will ensure that reasonable measures are taken to maintain the confidentiality of the report and to protect employees against reprisals as a result of making a report under this Policy. An employee who retaliates against anyone who makes a report under this Policy will be subject to disciplinary action, which may include termination of employment. An external consultant will be engaged to perform an investigation in certain circumstances if it is deemed that special skills are required to properly conduct the investigation.

13.6 A false report could have significant effects on AirXpanders’ reputation and the reputations of other staff members and could also cause considerable waste of time and effort. Any deliberately false reporting, whether under this Policy or otherwise, will be treated as a serious disciplinary matter.

14  Conclusion

While this Code of Conduct endeavours to address a wide range of business practices and procedures, it cannot anticipate every issue that may arise and is intended to provide a set of guidelines on what is considered  acceptable  and  appropriate  behaviour.  Employees  are  responsible  to  ensure  that  they  act ethically and lawfully at all times.

15  Disclaimer

This  Code  of  Conduct  is  a  statement  of  certain  fundamental  principles,  policies  and  procedures  that govern actions  in the conduct of  AirXpanders’  business. It is not intended to  and does not create any rights  in  any  director,  executive,  consultant,  employee,  patient,  member  of  the  medical  community, supplier, competitor, security holder or any other person or entity.

16  Further information

Any person who has questions about this Code of Conduct or who requires further information should contact the Chief Executive Officer.

17  Review of this Code of Conduct

This Code of Conduct may be amended by the Board of Directors of AirXpanders.Approved by the Board of Directors of AirXpanders, Inc.

SECURITIES TRADING POLICY

1 Introduction

This document sets out the policy covering restrictions on trading in securities of AirXpanders, Inc. (AirXpanders).

2 Persons covered by this policy

This policy applies to the following persons:

  1. all directors and officers of AirXpanders;
  2. all direct reports to the Chief Executive Officer (ie. executives);
  3. all other personnel of AirXpanders (including employees and contractors); and
  4. any personal investment vehicle or self-managed superannuation fund through which any of the foregoing hold securities of AirXpanders.

In this policy, the persons listed above are called Relevant Persons.

There are additional trading restrictions on the key management personnel (KMP) of AirXpanders.

KMP means those persons having authority and responsibility for planning, directing and controlling the activities of AirXpanders, directly or indirectly, including any director (whether executive or otherwise) of AirXpanders. It will also include the management team of AirXpanders and any staff member of AirXpanders that the Board designates, from time to time, to be KMP.

All Relevant Persons (including KMP) are required to discourage, and take all reasonable steps to ensure that their direct relatives do not engage in, activities prohibited or restricted by this policy.

3 Securities covered by this policy

This policy applies to trading in all securities of AirXpanders, including:

  1. shares of stock (including but not limited to common or preferred stock);
  2. CHESS Depositary Interests;
  3. debentures (including bonds and notes);
  4. options over unissued shares or debentures;
  5. a renounceable or unrenouncable right to subscribe for shares or debentures;
  6. interests in managed investment schemes, trusts and other financial products; and
  7. derivative products issued over or in respect of any of the above (e.g. swaps, futures, hedges, and options) whether settled by cash or otherwise.

Trading in securities includes:

  1. acquiring or disposing of AirXpanders securities on market or through an off market transaction;
  2. acquiring or disposing of AirXpanders securities in connection with margin lending or other security arrangement; and
  3. stock lending arrangements affecting AirXpanders securities.

4 Prohibition on insider trading for all Relevant Persons

4.1 Regulation

Trading of securities in AirXpanders is governed by, amongst other things, the Corporations Act 2001 (Cth) (Corporations Act), the ASX Listing Rules, the US Securities Exchange Act of 1934 and other applicable securities laws. As AirXpanders’ securities are traded on ASX, this policy focuses on Australian securities laws.

4.2 General rule

The Corporations Act prohibits trading of inside information.

“Inside information” is information that:

  1. is not generally available; and
  2. if it was generally available, it would be expected to have a material effect on the price or value of securities.

A Relevant Person must not trade in AirXpanders securities when:

  1. they possess information that they know or ought reasonably to know is not generally available to the public; and
  2. if the information was generally available, it would be expected to have a material effect on the price of AirXpanders securities.
  3. prohibition also extends to the following Additional Prohibited Activities:

  4. advising, procuring or encouraging another person to deal, or enter into an agreement to deal, in AirXpanders’ securities; and
  5. directly or indirectly communicating the information to another person who a Relevant Person believes is likely to deal in, or procure another person to deal in, those securities.

prohibition applies irrespective of:

  1. how a Relevant Person learns of the information;
  2. whether the trading occurs at a time that would otherwise be permitted during a Trading Window;
  3. whether the trading occurs outside of a Blackout Period; or
  4. whether the trading was approved with written clearance.

A Relevant Person should consider carefully whether they are in possession of “inside information” and, if they have any doubt, they should not trade or undertake any Additional Prohibited Activities.

4.3 Examples of inside information

The following is illustrative only and is not exhaustive. Inside information could include:

  1. a possible acquisition or sale of any assets or businesses by AirXpanders;
  2. a pending or proposed merger, acquisition, or tender offer;
  3. any other type of change of control transaction;
  4. a pending public or private sale of debt or equity securities;
  5. the financial performance of AirXpanders against its budget or forecasts, including significant write-offs;
  6. impending bankruptcy;
  7. major scientific, clinical or regulatory results;
  8. notice of issuance of patents;
  9. senior management or board changes;
  10. a significant change in the operations or direction of the business;
  11. a major change in financing;
  12. a proposed dividend or change of dividend policy;
  13. regulatory action or investigations undertaken by a government or regulatory authority;
  14. a material change in AirXpanders’ capital structure;
  15. any material claim against AirXpanders or other unexpected material liability, including any legal proceedings;
  16. major awards or cancellations of contracts or license agreements with customers or suppliers;
  17. major changes in pricing or discount policies; or
  18. a significant new product.

5 Additional trading restrictions for KMP

In addition to the general trading restrictions set out in this policy that apply to all Relevant Persons, additional restrictions on trading in AirXpanders securities apply to KMP.

5.1 Trading windows

Subject to the general restriction on trading when in possession of inside information (set out in section 4), KMP may, unless AirXpanders advises otherwise, trade in AirXpanders securities during the following periods (Trading Windows):

  1. the 30 day period beginning on the third trading day after:

    1. the release of AirXpanders' half-yearly results to the ASX;
    2. the release of AirXpanders' annual results to the ASX;
    3. the AirXpanders’ annual meeting of stockholders; or
    4. the release of a prospectus, cleansing notice or other disclosure document offering equity securities in AirXpanders;
  2. for a rights issue of new AirXpanders securities, while the rights are being traded; or
  3. where the securities are acquired pursuant to an offer made under an approved director, executive or employee share or option plan of AirXpanders. This permission does not extend to selling any securities acquired under such a plan.

Notwithstanding the Trading Windows set out above, the Board may, during a Trading Window, determine that KMP may not buy or sell AirXpanders securities during all or part of a Trading Window. KMP will be notified of any such decision.

The Chief Executive Officer or Chief Financial Officer will notify KMP of the precise opening and closing date of each Trading Window.

5.2 Blackout periods

The Board has determined that KMP are prohibited from trading in AirXpanders securities during the following periods (Blackout Periods):

  1. the period from the end of a half-year to the release of AirXpanders' half-year financial results to the ASX; and
  2. the period from the end of a financial year to the release of AirXpanders' annual financial results to the ASX.

In addition to these set periods, the Board may, from time to time, declare any other relevant period to be a Blackout Period for the purposes of this policy.

The Chief Executive Officer or Chief Financial Officer will notify KMP of the precise opening and closing date of each Blackout Period.

5.3 Written clearance

Trading in AirXpanders securities by KMP during a Blackout Period may be permitted with:

  1. the prior written clearance (not to be unreasonably withheld or delayed) of the Chairman; or
  2. if the Chairman is absent or if the relevant dealing is proposed to be undertaken by the Chairman – the prior written clearance (not to be unreasonably withheld or delayed) of the Board,

if one of the following exceptional circumstances applies:

  1. if the KMP is facing severe financial hardship (as determined by the relevant decision maker approving the clearance) and can only meet their financial commitments by selling their securities;
  2. if the KMP is required by a court order, a court enforceable undertaking (eg. a bona fide family settlement), or some other overriding legal or regulatory requirement to transfer, or accept a transfer, of AirXpanders securities; or
  3. such other exceptional circumstances as may from time to time be determined by the relevant decision maker approving the clearance.

Where such clearance is given, the relevant trading must occur within 7 days beginning on the day after the clearance. The clearance may however be withdrawn before the relevant trading occurs if new information comes to light or there is a change in circumstances.

Any clearance to trade can be given or refused by AirXpanders in its discretion, without given any reasons. A decision to refuse clearance is final and binding on the person seeking the clearance and that person must keep that information confidential and not disclose it to anyone.

Clearance to trade will not be granted if AirXpanders is likely in the short-term to release a periodic financial report or other financial data or make an announcement of market sensitive information under Listing Rule 3.1

The KMP seeking the clearance will be required to certify that they are not in possession of any inside information that might preclude them from trading at that time. Any written clearance provided to trade is not an endorsement of the proposed trade and the KMP doing the trading is individually responsible for their compliance with insider trading laws. If the KMP does come into possession of inside information after receiving a clearance to trade, they must not trade despite having the clearance.

5.4 During other periods

At all other times outside the Trading Windows (excluding Blackout Periods which are dealt with in sections 5.2 and 5.3), KMP must obtain written clearance (not to be unreasonably withheld or delayed) from the following person before undertaking a transaction of AirXpanders securities:

  1. directors of AirXpanders – from the Chairman or, if the Chairman is absent, the Board;
  2. the Chairman – from the Board; and
  3. executives – from the Chief Executive Officer.

Written clearance to trade outside of the Trading Windows will be granted in exceptional circumstances as described in section 5.3 and otherwise is discretionary.

6 Other restrictions

6.1 No short-term dealing in AirXpanders securities

KMP are encouraged to be long-term holders of AirXpanders securities.

As speculation in short-term fluctuations in AirXpanders securities does not promote market or stockholder confidence in the integrity of AirXpanders, no KMP may deal in AirXpanders securities on a short-term trading basis, except in exceptional circumstances as described in paragraph 5.3. Short-term means less than three months.

6.2 No hedging and pledging

All participants in an approved share or option plan of AirXpanders or who otherwise hold securities in AirXpanders which are subject to performance or other vesting conditions or escrow are prohibited from engaging in any conduct that seeks to secure the economic value attaching to the relevant securities and remove the element of price risk inherent in the value of those securities, while the securities remain unvested or subject to escrow.

Prohibited conduct includes writing put or call options over the underlying securities, dealing in derivative products or entering into other arrangements intended to hedge a “profit” in those securities, a margin loan or similar funding arrangement or other financial transaction which can give rise to pledging, lending or using the securities as collateral.

After vesting and the cessation of any applicable escrow arrangements, a holder of the relevant securities may undertake any transaction of a type referred to in this section, provided they give reasonable prior notice to the Chief Executive Officer of their intention to do so and comply with insider trading laws and the other provisions of this policy (including with respect to when dealings can occur) when undertaking any such transaction.

6.3 ASX notification by directors

Directors must notify AirXpanders if there is a change in their security interests as soon as possible to enable AirXpanders to comply with relevant timeframes under the ASX Listing Rules in relation to notification of changes to directors' relevant interests.

Any director requiring assistance in this regard should contact the Company Secretary.

7 Guidelines for employees

It is the responsibility of each employee to ensure that they observe the prohibition on insider trading.

Where an employee is unsure as to whether they are in possession of inside information they should discuss the matter with the Chief Executive Officer.

8 Securities of other companies

The prohibited insider trading under the Corporations Act also extends to trading in securities of other listed companies with which AirXpanders may be dealing (including suppliers or distributors) where an employee possesses “inside information” in relation to that other company.

That is, if a Relevant Person is aware of information that is not generally available that may have a material effect on the price or value of another company's securities; they should not deal in the securities of that company.

9 Exceptions to the policy

Subject to the insider trading provisions of the Corporations Act (described in section 4), Relevant Persons may at any time:

  1. acquire AirXpanders’ ordinary shares by conversion of securities giving a right of conversion to ordinary shares;
  2. acquire AirXpanders securities under a bonus issue made to all holders of securities of the same class;
  3. acquire AirXpanders securities under a dividend reinvestment plan, a rights issue or a share purchase plan that is available to all holders of securities of the same class;
  4. dispose of rights acquired under a rights issue of a kind referred to in paragraph (c) above;
  5. acquire, or agree to acquire, options or other rights under an AirXpanders’ equity incentive plan;
  6. exercise options or other rights acquired under an AirXpanders’ equity incentive plan (but may not sell all or part of the shares received upon exercise of the options other than in accordance with this policy);
  7. transfer AirXpanders securities already held into a superannuation fund or other saving scheme;
  8. invest in, or trade units of, a fund or other scheme where the assets of the fund or other scheme are invested at the discretion of a third party provided the Relevant Person does not hold more than 5% of the economic value of that fund or other scheme;
  9. accept a takeover offer or an equal access buy-back; or
  10. effect transactions in AirXpanders securities pursuant to approved trading plans established under Rule 10b5-1 of the U.S. Securities Exchange Act of 1934, as amended.

10 Penalties

Insider trading is a criminal offence under the Corporations Act, punishable by substantial fines or imprisonment or both. Insider trading may also attract civil penalties. A court may impose substantial pecuniary penalties, and order compensation paid to persons suffering related loss or damage.

In addition, breaches of this policy will be regarded as serious misconduct and may be subject to disciplinary action, which may include termination of employment.

11 Further information

Any person who has questions about this policy, or who requires further information, should contact the Chief Executive Officer or Chief Financial Officer.

12 Review of this policy

This policy may be amended by resolution of the Board of Directors.

Adopted by the Board of Directors of AirXpanders, Inc.