EMPLOYMENT AGREEMENT

        THIS EMPLOYMENT AGREEMENT (the Agreement) is made and entered into as of February 7, 2005 by and between ENDOLOGIX, INC., a Delaware corporation (the Company), and Herbert Mertens an individual (the Executive).

R E C I T A L

        The Company desires to employ Executive in the capacity hereinafter stated, and the Executive desires to enter into the employ of the Company in that capacity pursuant to the terms and conditions set forth herein.

A G R E E M E N T

        NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, the Company and the Executive, intending to be legally bound, hereby agree as follows:

    1.        Employment. The Company hereby agrees to employ the Executive as Vice President of Sales and Marketing of the Company, reporting to the President and Chief Executive Officer of the Company, and the Executive accepts such employment and agrees to devote substantially all his business time and efforts and skills on such reasonable duties as shall be assigned to him by the Company commensurate with such position. The term of this Agreement shall commence on February 7, 2005 and expire on October 18, 2005, unless sooner terminated pursuant to the terms and provisions herein stated. This Agreement shall automatically be extended for additional one (1) year renewal terms (unless sooner terminated pursuant to the terms and provisions herein) unless either party gives written notice to the other to terminate this Agreement at least thirty (30) days prior to the end of the preceding term.

    2.        Stock Options: Acceleration of Options. Notwithstanding any provisions of the Companys option or stock incentive plan, or of the Executives stock option or restricted stock agreements, in the event of a Corporate Transaction or Change in Control, as defined below, during the period of the Executives employment with the Company, all of the Executives stock options shall vest in full and all rights of the Company to repurchase restricted stock of the Executive shall terminate.

        For purposes hereof, Change in Control shall mean a change in ownership or control of the Company effected through the acquisition, directly or indirectly, by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Companys outstanding securities pursuant to a tender or exchange offer made directly to the Companys stockholders which the Board does not recommend such stockholders to accept.

        For purposes hereof, Corporate Transaction shall mean either of the following stockholder-approved transactions to which the Company is a party: