Exhibit 10.6

Retention Agreement

This Retention Agreement (the “Agreement”) is entered into by and between Andrew
Rasdal (the “Executive”) and Obalon Therapeutics, Inc., a Delaware corporation
(the “Company”), on October 10, 2016, and is effective on the first date on
which a registration statement covering the initial public offering of the
common stock of the Company is declared effective by the United States
Securities and Exchange Commission (the “Effective Date”).

1.Term of Agreement.

Except to the extent renewed as set forth in this Section 1, this Agreement
shall terminate the earlier of the third (3rd) anniversary of the Effective Date
(the “Expiration Date”) or the date the Executive’s employment with the Company
terminates for a reason other than a Qualifying Termination or CIC Qualifying
Termination; provided however, if a definitive agreement relating to a Change in
Control has been signed by the Company on or before Expiration Date, then this
Agreement shall remain in effect through the earlier of:

(a)The date the Executive’s employment with the Company terminates for a reason
other than a Qualifying Termination or CIC Qualifying Termination, or

(b)The date the Company has met all of its obligations under this Agreement
following a termination of the Executive’s employment with the Company due to a
Qualifying Termination or CIC Qualifying Termination.

This Agreement shall renew automatically and continue in effect for three (3)
year periods measured from the initial Expiration Date, unless the Company
provides Executive notice of non-renewal at least three (3) months prior to the
date on which this Agreement would otherwise renew.

2.Qualifying Termination. If the Executive is subject to a Qualifying
Termination, then, subject to Sections 4, 9, and 10 below, Executive will be
entitled to the following benefits:

(a)Severance Benefits. The Company shall pay the Executive twelve (12) months of
his or her monthly base salary (at the rate in effect immediately prior to the
actions that resulted in the Qualifying Termination).  The Executive will
receive his or her severance payment in a cash lump-sum in accordance with the
Company’s standard payroll procedures which will be made on the first business
day occurring after the sixtieth (60th) day following the Separation, provided
that the Release Conditions have been satisfied.  

(b)Equity.  Each of Executive’s then-outstanding and unvested Equity Awards (as
defined below), including awards that would otherwise vest only upon
satisfaction of performance criteria (measured at 100% of target), shall
accelerate and become vested and exercisable as to 100% of the then unvested
shares subject to the Equity Award effective immediately prior to the
Separation.

(c)Continued Employee Benefits.  If Executive timely elects continued coverage
under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), the Company
shall pay the full amount of Executive’s COBRA premiums on behalf of the
Executive for the Executive’s continued coverage under the Company’s health,
dental and vision plans, including coverage for the Executive’s eligible
dependents, for the twelve (12) month period following the Executive’s
Separation or, if earlier, until Executive is eligible to be covered under
another substantially equivalent medical insurance plan by a subsequent
employer.  Notwithstanding the foregoing, if the Company, in its sole
discretion, determines that it cannot provide the foregoing subsidy of COBRA
coverage without potentially violating or causing the Company to incur
additional expense as a result of noncompliance with applicable law (including,
without limitation, Section 2716 of the Public Health Service Act), the Company
instead shall provide to Executive a taxable monthly payment in an amount equal
to the monthly COBRA premium that Executive

 

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would be required to pay to continue the group health coverage in effect on the
date of the Separation (which amount shall be based on the premium for the first
month of COBRA coverage), which payments shall be made regardless of whether
Executive elects COBRA continuation coverage and shall commence on the later of
(i) the first day of the month following the month in which Executive
experiences a Separation and (ii) the effective date of the Company’s
determination of violation of applicable law, and shall end on the earlier of
(x) the effective date on which Executive becomes covered by a health, dental or
vision insurance plan of a subsequent employer, and (y) the last day of the
period twelve (12) months after the Separation, provided that, any taxable
payments under Section 2(b) will not be paid before the first business day
occurring after the sixtieth (60th) day following the Separation and, once they
commence, will include any unpaid amounts accrued from the date of Executive’s
Separation (to the extent not otherwise satisfied with continuation
coverage).  However, if the period comprising the sum of the sixty (60)-day
period described in the preceding sentence and the ten (10)-day period described
in Section 7(e)(3) below spans two calendar years, then the payments which
constitute deferred compensation subject to Section 409A will not in any case be
paid in the first calendar year.  Executive shall have no right to an additional
gross-up payment to account for the fact that such COBRA premium amounts are
paid on an after-tax basis.

3.CIC Qualifying Termination. If the Executive is subject to a CIC Qualifying
Termination, then, subject to Sections 4, 9, and 10 below, Executive will be
entitled to the following benefits:

(a)Severance and Bonus Payments.  The Company or its successor shall pay the
Executive (i) twelve (12) months of his or her monthly base salary (at the rate
in effect immediately prior to the actions that resulted in the Separation) and
(ii) a pro rata portion (based on number of months worked in the Company’s
fiscal year of the Separation) of Executive’s then-current target bonus
opportunity.  Such payment shall be paid in a cash lump sum payment in
accordance with the Company’s standard payroll procedures, which payment will be
made on the first business day occurring after the sixtieth (60th) day following
the Separation, provided that the Release Conditions have been satisfied.

(b)Equity.

 

(i)

Post-IPO Equity Awards.  Each of Executive’s then-outstanding Post-IPO Equity
Awards, including awards that would otherwise vest only upon satisfaction of
performance criteria, shall accelerate and become vested and exercisable as to
100% of the then unvested shares subject to the Equity Award.  “Post-IPO Equity
Awards” means all options to purchase shares of Company common stock that are
granted on or after the Effective Date, as well as any and all other stock-based
awards granted to the Executive, including but not limited to stock bonus
awards, restricted stock, restricted stock units or stock appreciation rights
that are granted on or after the Effective Date. Subject to Section 4, the
accelerated vesting described above shall be effective as of the Separation.

 

(ii)

Pre-IPO Equity Awards.  For clarity, except as explicitly provided in Section
2(b) above and 3(b)(iii) below, any options to purchase shares of Company common
stock that were granted prior to the Effective Date, regardless of whether or
not exercised prior to the Effective Date (“Pre-IPO Equity Awards” and, together
with the Post-IPO Equity Awards, the “Equity Awards”), shall not be affected by
or subject to this Agreement, and such Pre-IPO Equity Awards shall continue to
be governed by the vesting and acceleration provisions contained in the grant
agreements for the Pre-IPO Equity Awards and, if applicable, any separate letter
agreement pertaining to vesting acceleration of Pre-IPO Equity Awards entered
into between the Company and Executive (such agreements, collectively, the
“Pre-IPO Equity Award Agreements”).

 

(iii)

Non-Assumption of Equity Awards.  Notwithstanding anything to the contrary, if
the successor or acquiring corporation (if any) of the Company refuses to
assume, convert, replace or substitute Executive’s unvested Equity Awards, as

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provided in Section 2.1.1 of the Plan, in connection with a Corporate
Transaction (as defined in the Plan), then notwithstanding any other provision
in this Agreement, the Plan or any Pre-IPO Equity Award Agreement to the
contrary, each of Executive’s then-outstanding and unvested Equity Awards that
are not assumed, converted, replaced or substituted, including awards that would
otherwise vest only upon satisfaction of performance criteria (measured at 100%
of target), shall accelerate and become vested and exercisable as to 100% of the
then unvested shares subject to the Equity Award effective immediately prior to
the Corporate Transaction.

 

(iv)

Death or Disability.  Notwithstanding anything to the contrary herein, in the
event Executive has a Separation due to Executive’s death or Disability and such
Separation occurs (i) within twelve (12) months following a Change in Control or
(ii) within three (3) months preceding a Change in Control (but as to part (ii),
only if the Separation occurs after a Potential Change in Control), each of
Executive’s then-outstanding and unvested Equity Awards, including awards that
would otherwise vest only upon satisfaction of performance criteria (measured at
100% of target), shall accelerate and become vested and exercisable as to 100%
of the then unvested shares subject to the Equity Award effective immediately
prior to the Separation.  

(c)Pay in Lieu of Continued Employee Benefits.  If Executive timely elects
continued coverage under the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”), the Company or its successor shall pay the full amount of Executive’s
COBRA premiums on behalf of the Executive for the Executive’s continued coverage
under the Company’s health, dental and vision plans, including coverage for the
Executive’s eligible dependents, for the twelve (12) month period following the
Executive’s Separation or, if earlier, until Executive is eligible to be covered
under another substantially equivalent medical insurance plan by a subsequent
employer.  Notwithstanding the foregoing, if the Company, in its sole
discretion, determines that it cannot provide the foregoing subsidy of COBRA
coverage without potentially violating or causing the Company to incur
additional expense as a result of noncompliance with applicable law (including,
without limitation, Section 2716 of the Public Health Service Act), the Company
instead shall provide to Executive a taxable monthly payment in an amount equal
to the monthly COBRA premium that Executive would be required to pay to continue
the group health coverage in effect on the date of the Separation (which amount
shall be based on the premium for the first month of COBRA coverage), which
payments shall be made regardless of whether Executive elects COBRA continuation
coverage, shall commence on the later of (i) the first day of the month
following the month in which Executive experiences a Separation and (ii) the
effective date of the Company’s determination of violation of applicable law,
and shall end on the earlier of (x) the effective date on which Executive
becomes covered by a health, dental or vision insurance plan of a subsequent
employer, and (y) the last day of the period twelve (12) months after the
Separation, provided that, any taxable payments under Section 3(c) will not be
paid before the first business day occurring after the sixtieth (60th) day
following the Separation and, once they commence, will include any unpaid
amounts accrued from the date of Executive’s Separation (to the extent not
otherwise satisfied with continuation coverage). However, if the period
comprising the sum of the sixty (60)-day period described in the preceding
sentence and the ten (10)-day period described in Section 7(e)(3) below spans
two calendar years, then the payments which constitute deferred compensation
subject to Section 409A will not in any case be paid in the first calendar
year.  Executive shall have no right to an additional gross-up payment to
account for the fact that such COBRA premium amounts are paid on an after-tax
basis.

4.General Release.  Any other provision of this Agreement notwithstanding, the
benefits under Section 2 and 3 shall not apply unless the Executive (i) has
executed a general release (in substantially the form attached hereto as Exhibit
A) of all known and unknown claims that he or she may then have against the
Company or persons affiliated with the Company and such release has become
effective and (ii) has agreed not to prosecute any legal action or other
proceeding based upon any of such claims.  The release must be in the form
prescribed by the Company, without alterations (this document effecting the
foregoing, the “Release”).  The Company will deliver the form of Release to the
Executive within thirty

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(30) days after the Executive’s Separation.  The Executive must execute and
return the Release within the time period specified in the form.

5.Accrued Compensation and Benefits.  Notwithstanding anything to the contrary
in Section 2 and 3 above, in connection with any termination of employment
(whether or not a Qualifying Termination or CIC Qualifying Termination), the
Company shall pay Executive’s earned but unpaid base salary and other vested but
unpaid cash entitlements for the period through and including the termination of
employment, including unused earned vacation pay and unreimbursed documented
business expenses incurred by Executive through and including the date of
termination (collectively “Accrued Compensation and Expenses”), as required by
law and the applicable Company plan or policy. In addition, Executive shall be
entitled to any other vested benefits earned by Executive for the period through
and including the termination date of Executive’s employment under any other
employee benefit plans and arrangements maintained by the Company, in accordance
with the terms of such plans and arrangements, except as modified herein
(collectively “Accrued Benefits”).  Any Accrued Compensation and Expenses to
which the Executive is entitled shall be paid to the Executive in cash as soon
as administratively practicable after the termination and, in any event, no
later than two and one-half (2-1/2) months after the end of the taxable year of
the Executive in which the termination occurs or at such earlier time as may be
required by Section 10 below or to such lesser extent as may be mandated by
Section 9 below.  Any Accrued Benefits to which the Executive is entitled shall
be paid to the Executive as provided in the relevant plans and arrangements.

6.Covenants.

(a)Non-Competition.  The Executive agrees that, during his or her employment
with the Company, he or she shall not engage in any other employment, consulting
or other business activity (whether full-time or part-time) that would create a
conflict of interest with the Company.

(b)Cooperation and Non-Disparagement.  The Executive agrees that, during the six
(6) month period following his or her cessation of employment, he or she shall
cooperate with the Company in every reasonable respect and shall use his or her
best efforts to assist the Company with the transition of Executive’s duties to
his or her successor.  The Executive further agrees that, during this six-month
period, he or she shall not in any way or by any means disparage the Company,
the members of the Company’s Board of Directors or the Company’s officers and
employees.  The Company agrees that, during this six-month period, none of the
members of its Board of Directors or its executive officers will disparage
Executive.

7.Definitions.

(a)“Cause” means: (i) Executive’s conviction for, or guilty plea to, a felony
involving moral turpitude; (ii) a willful refusal by Executive to comply with
the lawful and reasonable instructions of the Company, or to otherwise perform
Executive’s duties as lawfully and reasonably determined by the Company, in each
case that is not cured by Executive (if such refusal is of a type that is
capable of being cured) within 15 days of written notice being given to
Executive of such refusal; (iii) any willful act or acts of dishonesty
undertaken by Executive and intended to result in Executive’s (or any other
person’s) material gain or personal enrichment at the expense of the Company or
any of its customers, partners, affiliates, or employees; or (iv) any willful
act of gross misconduct by Executive which is injurious to the Company.

(b) “Code” means the Internal Revenue Code of 1986, as amended.

(c)“Change in Control”  For all purposes under this Agreement, a Change in
Control shall mean a “Corporate Transaction,” as such term is defined in the
Plan, provided that the transaction (including any series of transactions) also
qualifies as a change in control event under U.S. Treasury Regulation
1.409A-3(i)(5).

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(d)“CIC Qualifying Termination” means a Separation (i) within twelve (12) months
following a Change in Control or (ii) within three (3) months preceding a Change
in Control (but as to part (ii), only if the Separation occurs after a Potential
Change in Control) resulting, in either case (i) or (ii), from (A) the Company
or its successor terminating the Executive’s employment for any reason other
than Cause or (B) the Executive voluntarily resigning his or her employment for
Good Reason. A termination or resignation due to the Executive’s death or
disability shall not constitute a CIC Qualifying Termination; provided, however,
that, solely for purposes of Section 3(b)(iv) hereof, Executive’s Separation due
to Executive’s death or Disability shall constitute a CIC Qualifying
Termination.  A “Potential Change in Control” means the date of execution of a
legally binding and definitive agreement for a corporate transaction which, if
consummated, would constitute the applicable Change in Control (which for the
avoidance of doubt, would include a merger agreement, but not a term sheet for a
merger agreement).  In the case of a termination following a Potential Change in
Control and before a Change in Control, solely for purposes of benefits under
this Agreement, the date of Separation will be deemed the date the Change in
Control is consummated.

(e)“Disability” means the total and permanent disability of Executive as defined
by, or determined under, the Company’s (or, if applicable, the Company’s
successor or acquiring corporation’s (if any)) long-term disability benefit plan
as in effect at the time of Separation.

(f)“Good Reason” means, without the Executive’s consent, (i) a reduction in
Executive’s then-current base salary (except for a reduction that is part of a
proportional reduction of the base salaries of all Company executives), bonus
opportunity or commissions opportunity; (ii) the offices of the Company that
Executive is required to report to being moved such that Executive’s usual
commuting distance is increased by more than ten (10) miles; (iii) a material
and adverse change to Executive’s duties or responsibilities (iv) a change to
Executive’s title and/or role, after which Executive is not both the Chief
Executive Officer of the top-level acquiring entity whose stock is publicly
traded and a voting member of its Board of Directors; (v) Executive is not, so
long as Executive is Chief Executive Officer of the Company, a voting member of
the Company’s Board of Directors; or (vi) the Company provides notice that this
Agreement will not be renewed, as set forth in Section 1 hereof; provided,
however, that a resignation by Executive shall not be considered to be for a
“Good Reason” unless (i) Executive provides written notice to the Company’s
Board of Directors of the occurrence of the event which Executive contends
constitutes Good Reason within ninety (90) days of the date such event occurs,
which notice states Executive’s intention to resign for a “Good Reason” under
this Agreement as a result thereof, (ii) the Company does not effect a cure with
respect to such event within thirty (30) days of receipt of such written notice,
and (iii) Executive thereafter resigns and ceases to perform services as an
employee of the Company within ten (10) days of the expiration of the Company’s
cure period.

(g) “Plan” means the Company’s 2016 Equity Incentive Plan, as may be amended
from time to time.

(h)“Release Conditions” mean the following conditions: (i) Company has received
the Executive’s executed Release in the form attached hereto as Exhibit A and
(ii) any rescission period applicable to the Executive’s executed Release has
expired.  

(i)“Qualifying Termination” means a Separation that is not a CIC Qualifying
Termination, but which results from (i) the Company terminating the Executive’s
employment for any reason other than Cause or (ii) the Executive voluntarily
resigning his or her employment for Good Reason. A termination or resignation
due to the Executive’s death or disability shall not constitute a Qualifying
Termination.  

(j)“Separation” means a “separation from service,” as defined in the regulations
under Section 409A of the Code.

8.Successors.

(a)Company’s Successors.  The Company shall require any successor (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or

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substantially all of the Company’s business and/or assets, by an agreement in
substance and form satisfactory to the Executive, to assume this Agreement and
to agree expressly to perform this Agreement in the same manner and to the same
extent as the Company would be required to perform it in the absence of a
succession.  For all purposes under this Agreement, the term “Company” shall
include any successor to the Company’s business and/or assets or which becomes
bound by this Agreement by operation of law.

(b)Executive’s Successors.  This Agreement and all rights of the Executive
hereunder shall inure to the benefit of, and be enforceable by, the Executive’s
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

9.Golden Parachute Taxes.

(a)Best After-Tax Result.  In the event that any payment or benefit received or
to be received by Executive pursuant to this Agreement or otherwise (“Payments”)
would (i) constitute a “parachute payment” within the meaning of Section 280G of
the Code and (ii) but for this subsection (a), be subject to the excise tax
imposed by Section 4999 of the Code, any successor provisions, or any comparable
federal, state, local or foreign excise tax (“Excise Tax”), then, subject to the
provisions of Section 10, such Payments shall be either (A) provided in full
pursuant to the terms of this Agreement or any other applicable agreement, or
(B) provided as to such lesser extent which would result in no portion of such
Payments being subject to the Excise Tax (“Reduced Amount”), whichever of the
foregoing amounts, taking into account the applicable federal, state, local and
foreign income, employment and other taxes and the Excise Tax (including,
without limitation, any interest or penalties on such taxes), results in the
receipt by Executive, on an after-tax basis, of the greatest amount of payments
and benefits provided for hereunder or otherwise, notwithstanding that all or
some portion of such Payments may be subject to the Excise Tax.  Unless the
Company and Executive otherwise agree in writing, any determination required
under this Section shall be made by independent tax counsel designated by the
Company and reasonably acceptable to Executive (“Independent Tax Counsel’),
whose determination shall be conclusive and binding upon Executive and the
Company for all purposes.  For purposes of making the calculations required
under this Section, Independent Tax Counsel may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code; provided that Independent Tax Counsel shall assume that Executive pays
all taxes at the highest marginal rate.  The Company and Executive shall furnish
to Independent Tax Counsel such information and documents as Independent Tax
Counsel may reasonably request in order to make a determination under this
Section.  The Company shall bear all costs that Independent Tax Counsel may
reasonably incur in connection with any calculations contemplated by this
Section.  In the event that Section 9(a)(ii)(B) above applies, then based on the
information provided to Executive and the Company by Independent Tax Counsel,
Executive may, in Executive’s sole discretion and within thirty (30) days of the
date on which Executive is provided with the information prepared by Independent
Tax Counsel, determine which and how much of the Payments (including the
accelerated vesting of equity compensation awards) to be otherwise received by
Executive shall be eliminated or reduced (as long as after such determination
the value (as calculated by Independent Tax Counsel in accordance with the
provisions of Sections 280G and 4999 of the Code) of the amounts payable or
distributable to Executive equals the Reduced Amount).  If the Internal Revenue
Service (the “IRS”) determines that any Payment is subject to the Excise Tax,
then Section 9(b) hereof shall apply, and the enforcement of Section 9(b) shall
be the exclusive remedy to the Company.

(b)Adjustments.  If, notwithstanding any reduction described in Section 9(a)
hereof (or in the absence of any such reduction), the IRS determines that
Executive is liable for the Excise Tax as a result of the receipt of one or more
Payments, then Executive shall be obligated to surrender or pay back to the
Company, within one-hundred twenty (120) days after a final IRS determination,
an amount of such payments or benefits equal to the “Repayment Amount.”  The
Repayment Amount with respect to such Payments shall be the smallest such
amount, if any, as shall be required to be surrendered or paid to the Company so
that Executive’s net proceeds with respect to such Payments (after taking into
account the payment of the Excise Tax imposed on such Payments) shall be
maximized.  Notwithstanding the foregoing, the Repayment Amount with respect to
such Payments shall be zero (0) if a Repayment

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Amount of more than zero (0) would not eliminate the Excise Tax imposed on such
Payments or if a Repayment Amount of more than zero would not maximize the net
amount received by Executive from the Payments.  If the Excise Tax is not
eliminated pursuant to this Section 9(b), Executive shall pay the Excise Tax.

10.Miscellaneous Provisions.

(a)Section 409A.  To the extent (i) any payments to which Executive becomes
entitled under this Agreement, or any agreement or plan referenced herein, in
connection with Executive’s termination of employment with the Company
constitute deferred compensation subject to Section 409A of the Code and (ii)
Executive is deemed at the time of such termination of employment to be a
“specified” employee under Section 409A of the Code, then such payment or
payments shall not be made or commence until the earlier of (i) the expiration
of the six (6)-month period measured from the Executive’s Separation; or (ii)
the date of Executive’s death following such Separation; provided, however, that
such deferral shall only be effected to the extent required to avoid adverse tax
treatment to Executive, including (without limitation) the additional twenty
percent (20%) tax for which Executive would otherwise be liable under Section
409A(a)(1)(B) of the Code in the absence of such deferral.  Upon the expiration
of the applicable deferral period, any payments which would have otherwise been
made during that period (whether in a single sum or in installments) in the
absence of this paragraph shall be paid to Executive or Executive’s beneficiary
in one lump sum (without interest). Except as otherwise expressly provided
herein, to the extent any expense reimbursement or the provision of any in-kind
benefit under this Agreement (or otherwise referenced herein) is determined to
be subject to (and not exempt from) Section 409A of the Code, the amount of any
such expenses eligible for reimbursement, or the provision of any in-kind
benefit, in one calendar year shall not affect the expenses eligible for
reimbursement or in kind benefits to be provided in any other calendar year, in
no event shall any expenses be reimbursed after the last day of the calendar
year following the calendar year in which Executive incurred such expenses, and
in no event shall any right to reimbursement or the provision of any in-kind
benefit be subject to liquidation or exchange for another benefit. To the extent
that any provision of this Agreement is ambiguous as to its exemption or
compliance with Section 409A, the provision will be read in such a manner so
that all payments hereunder are exempt from Section 409A to the maximum
permissible extent, and for any payments where such construction is not tenable,
that those payments comply with Section 409A to the maximum permissible
extent.  To the extent any payment under this Agreement may be classified as a
“short-term deferral” within the meaning of Section 409A, such payment shall be
deemed a short-term deferral, even if it may also qualify for an exemption from
Section 409A under another provision of Section 409A.  Payments pursuant to this
Agreement (or referenced in this Agreement) are intended to constitute separate
payments for purposes of Section 1.409A-2(b)(2) of the regulations under Section
409A.

(b)Other Arrangements.  This Agreement supersedes any and all cash severance
arrangements and vesting acceleration arrangements on change in control under
any agreement governing Equity Awards, severance and salary continuation
arrangements, programs and plans which were previously offered, or may be
offered on the Effective Date or thereafter, by the Company to the Executive,
including change in control severance arrangements and vesting acceleration
arrangements pursuant to an agreement governing Equity Awards, employment
agreement or offer letter, and Executive hereby waives Executive’s rights to
such other benefits, provided that this Agreement shall not supersede the
acceleration of vesting arrangements of any Pre-IPO Equity Awards (except as
explicitly provided in Sections 2(b) and 3(b)(iii) hereof).  In no event shall
any individual receive cash severance benefits under both this Agreement and any
other vesting acceleration arrangement, severance pay or salary continuation
program, plan or other arrangement with the Company, provided that this
Agreement shall not supersede the acceleration of vesting arrangements of any
Pre-IPO Equity Awards (except as explicitly provided in Section 3(b)(iii)
hereof).  For the avoidance of doubt, in no event shall Executive receive (i)
payment under both Section 2 and Section 3 and/or (ii) acceleration of Equity
Award vesting under (a) both Section 2 and Section 3 or (b) any combination of
(x) Section 3(b)(iii), (y) Section 3(b)(i) and/or Section 3(b)(ii) and/or (z)
Section 3(b)(iv), as applicable, in each case with respect to Executive’s
Separation.

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(c)Dispute Resolution.  To ensure rapid and economical resolution of any and all
disputes that might arise in connection with this Agreement, Executive and the
Company agree that any and all disputes, claims, and causes of action, in law or
equity, arising from or relating to this Agreement or its enforcement,
performance, breach, or interpretation, will be resolved solely and exclusively
by final, binding, and confidential arbitration, by a single arbitrator, in San
Diego County, and conducted by Judicial Arbitration & Mediation Services, Inc.
(“JAMS”) under its then-existing employment rules and procedures. Nothing in
this section, however, is intended to prevent either party from obtaining
injunctive relief in court to prevent irreparable harm pending the conclusion of
any such arbitration.  Each party to an arbitration or litigation hereunder
shall be responsible for the payment of its own attorneys’ fees.

(d)Notice.  Notices and all other communications contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or when mailed by U.S. registered or certified mail, return receipt
requested and postage prepaid or deposited with Federal Express Corporation,
with shipping charges prepaid.  In the case of the Executive, mailed notices
shall be addressed to him or her at the home address which he or she most
recently communicated to the Company in writing.  In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary.

(e)Waiver.  No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Executive and by an authorized officer of the Company (other
than the Executive).  No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.

(f)Withholding Taxes.  All payments made under this Agreement shall be subject
to reduction to reflect taxes or other charges required to be withheld by law.

(g)Severability.  The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.

(h)No Retention Rights.  Nothing in this Agreement shall confer upon the
Executive any right to continue in service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Company or
any subsidiary of the Company or of the Executive, which rights are hereby
expressly reserved by each, to terminate his or her service at any time and for
any reason, with or without Cause.

(i)Choice of Law.  The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of California (other
than its choice-of-law provisions).

 

 

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.

 

EXECUTIVE

 

OBALON THERAPEUTICS, INC.

 

 

 

Andrew Rasdal

 

By:

 

 

 

Title:

 

 

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EXHIBIT A

 

GENERAL RELEASE OF ALL CLAIMS AND COVENANT NOT TO SUE

 

This General Release of All Claims and Covenant Not to Sue (the “ Release”) is
entered into between Andrew Rasdal (“Executive”) and Obalon Thereapeutics, Inc.
(the “Company”) (collectively, “the parties”).

WHEREAS, on __________, Executive and the Company entered into a Retention
Agreement with the Company (the “Retention Agreement,” to which this Release is
attached as Exhibit A);

WHEREAS, on __________, Executive’s employment with the Company terminated (the
“Separation Date”);

WHEREAS, this agreement serves as the Release, pursuant to the Retention
Agreement; and

WHEREAS, Executive and the Company desire to mutually, amicably and finally
resolve and compromise all issues and claims surrounding Executive’s employment
and separation from employment with the Company;

NOW THEREFORE, in consideration for the mutual promises and undertakings of the
parties as set forth below, Executive and the Company hereby enter into this
Release.

1.Acknowledgment of Payment of Wages:  By his signature below, Executive
acknowledges that, on the Separation Date, the Company paid him for all wages,
salary, bonuses, commissions, reimbursable expenses, accrued but unused vacation
and any similar payments due him from the Company as of the Separation Date.  By
signing below, Executive acknowledges that the Company does not owe him any
other amounts, except as may become payable under the Retention Agreement and
the Release.

2.Return of Company Property:  Executive hereby warrants to the Company that he
has returned to the Company all property or data of the Company of any type
whatsoever that has been in his possession, custody or control.

3.Consideration:  In exchange for Executive’s agreement to this Release and his
other promises in the Retention Agreement and herein, and pursuant to the
Retention Agreement, the Company agrees to provide Executive with the
consideration set forth in Section _____ of the Retention Agreement.  By signing
below, Executive acknowledges that he is receiving the consideration in exchange
for waiving his rights to claims referred to in this Release.  

4.General Release and Waiver of Claims:  

a.The payments and promises set forth in this Release are in full satisfaction
of all accrued salary, vacation pay, bonus and commission pay, profit‑sharing,
stock, stock options, restricted stock units or other ownership interest in the
Company, termination benefits or other compensation to which Executive may be
entitled by virtue of his employment with the Company or his separation from the
Company, including pursuant to the Retention Agreement.  To the fullest extent
permitted by law, Executive hereby releases and waives any other claims he may
have against the Company and its owners, agents, officers, shareholders,
employees, directors, attorneys, subscribers, subsidiaries, affiliates,
successors and assigns (collectively “Releasees”), whether known or not known,
including, without limitation, claims under any employment laws, including, but
not limited to, claims of unlawful discharge, breach of contract, breach of the
covenant of good faith and fair dealing, fraud, violation of public policy,
defamation, physical injury, emotional distress, claims for additional
compensation or benefits arising out of his employment or separation of
employment, including pursuant to the Offer Letter, claims under Title VII of
the 1964 Civil Rights Act, as amended, the California Fair Employment

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and Housing Act and any other laws and/or regulations relating to employment or
employment discrimination, including, without limitation, claims based on age or
under the Age Discrimination in Employment Act or Older Workers Benefit
Protection Act, and/or claims based on disability or under the Americans with
Disabilities Act.

b.By signing below, Executive expressly waives any benefits of Section 1542 of
the Civil Code of the State of California, which provides as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

c.Executive and the Company do not intend to release claims that he may not
release as a matter of law, including but not limited to claims for indemnity
under California Labor Code Section 2802, or any claims for enforcement of this
Release.  To the fullest extent permitted by law, any dispute regarding the
scope of this general release shall be determined by an arbitrator under the
procedures set forth in the Dispute Resolution section set forth in the
Retention Agreement.

5.Covenant Not to Sue:  

a.To the fullest extent permitted by law, at no time subsequent to the execution
of this Release will Executive pursue, or cause or knowingly permit the
prosecution, in any state, federal or foreign court, or before any local, state,
federal or foreign administrative agency, or any other tribunal, of any charge,
claim or action of any kind, nature and character whatsoever, known or unknown,
which he may now have, have ever had, or may in the future have against
Releasees, which is based in whole or in part on any matter released by this
Release.  

b.Nothing in this paragraph shall prohibit Executive from filing a charge or
complaint with a government agency where, as a matter of law, the parties may
not restrict his right to file such administrative complaints.  However,
Executive understands and agrees that, by entering into this Release, he is
releasing any and all individual claims for relief, and that any and all
subsequent disputes between Executive and the Company shall be resolved through
arbitration as provided in the Retention Agreement.

c.Nothing in this paragraph shall prohibit or impair Executive or the Company
from complying with all applicable laws, nor shall this Release be construed to
obligate either party to commit (or aid or abet in the commission of) any
unlawful act.

6.Review of Release:  Executive understands that he may take up to twenty-one
(21) days to consider this Release and, by signing below, affirms that he was
advised to consult with an attorney prior to signing this Release.  Executive
also understands that he may revoke this Release within seven (7) days of
signing this document and that the consideration to be provided to him pursuant
to Paragraph 2(c) of the Retention Agreement will be provided only at the end of
that seven (7) day revocation period.

7.Effective Date:  This Release is effective on the eighth (8th) day after
Executive signs it, provided he has not revoked it as of that time.

 

[Remainder of page intentionally left blank.]

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8.Other Terms of Retention Agreement Incorporated Herein:  All other terms of
the Retention Agreement to the extent not inconsistent with the terms of this
Release are hereby incorporated in this Release as though fully stated herein
and apply with equal force to this Release, including, without limitation, the
provisions on Non-Competition, Cooperation and Non-Disparagement, Section 409A,
Dispute Resolution and Choice of Law.

 

Dated:

 

 

 

 

 

Name:

 

 

 

Title:

 

 

 

For the Company

 

 

Dated:

 

 

 

 

 

Name:

Andrew Rasdal

 

 

 

 

 

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