Exhibit 10.20

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF
ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE
OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION.

WARRANT TO PURCHASE STOCK

 

Company:    EnteroMedics Inc., a Delaware corporation Class of Stock:    At
Holder’s option, the “Shares” shall be (subject to any adjustment pursuant to
this Warrant (an “Adjustment”)): (1) the Company’s common stock or (2) any other
class of the Company’s stock that the Company sells (other than (i) stock sold
to employees, directors, consultants and other service providers for the primary
purpose of soliciting their services, and (ii) stock sold to persons or entities
with which the Company has business relationships, provided that such sale is
primarily for other than equity financing purposes) during the period beginning
on the Issue Date and ending on [insert date 18 months after Issue date],
inclusive (the “Choice Period”). Holder may choose the class of stock that shall
constitute the Shares (subject to any Adjustment) at any time prior to the
Deemed Choice (as defined below) by giving the Company written notice of
Holder’s choice, and at Holder’s request the Company shall promptly provide
Holder with Sale Information (as defined below) and such other information as
Holder shall reasonably request. Within 30 days after the expiration of the
Choice Period, if Holder has not yet given the Company written notice of its
choice, the Company shall give Holder written notice that Holder may choose the
class of stock that shall constitute the Shares and that absent such choice,
such class of stock shall be the Company’s common stock. The notice from the
Company shall list the classes of the Company’s stock sold (other than (i) stock
sold to employees, directors, consultants and other service providers for the
primary purpose of soliciting their services, and (ii) stock sold to persons or
entities with which the Company has business relationships, provided that such
sale is primarily for other than equity financing purposes) during the Choice
Period, provide a copy of the Company’s Certificate of Incorporation (including
all stock designations), provide the prospectus and any other information
provided to the purchasers of each such class of stock, and indicate the lowest
price at which each was sold during the Choice Period (the “Sale Information”).
Holder shall have 90 days from receipt of the written notice from the Company to
notify the Company in writing of Holder’s choice, and if Holder fails to so
notify the Company, the Shares shall be

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   deemed (the “Deemed Choice”) to be the Company’s common stock (subject to any
Adjustment). Holder’s choice (whether via Holder’s notice to the Company or the
Deemed Choice provision) shall be irrevocable. Warrant Price:    (1) if pursuant
to “Class of Stock” above, the Shares are the Company’s common stock (before any
Adjustment), the per share “Warrant Price” (before any Adjustment) shall be the
lower of (a) $[average of closing price of five prior trading days before
issuance] and (b) the lowest price per share at which the Company sells its
common stock during the Choice Period prior to exercise of this Warrant, but (2)
if pursuant to “Class of Stock” above, the Shares are other than the Company’s
common stock (before any Adjustment), the per share Warrant Price (before any
Adjustment) shall be the lowest price per share at which the Company sells the
Shares during the Choice Period prior to exercise of this Warrant. Number of
Shares:    (1) if pursuant to “Class of Stock” above, the Shares are the
Company’s common stock (before any Adjustment), the number of Shares that may be
acquired upon exercise of this Warrant (before any Adjustment) shall be equal to
the result of dividing $[11% of Holder’s Loan Committment] by the Warrant Price
for such common stock (before any Adjustment), and (2) if pursuant to “Class of
Stock” above, the Shares are other than the Company’s common stock (before any
Adjustment), the number of Shares that may be acquired upon exercise of this
Warrant (before any Adjustment) shall be equal to the result of dividing
$[Insert Loan Amount] by the Warrant Price for such other stock (before any
Adjustment). Issue Date:    __________, 2008 Expiration Date:    The 10th
anniversary after the Issue Date (subject to early termination pursuant to
Section 1.6.2) Credit Facility:    This Warrant is issued in connection with the
Term Loan referenced in the Loan and Security Agreement dated November 18, 2008,
between Company, Silicon Valley Bank, Compass Horizon Funding Company LLC, and
Venture Lending & Leasing V, Inc.

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, [Insert Holder
Name] ([Insert Holder Name], together with any registered holder from time to
time of this Warrant or any holder of the shares issuable or issued upon
exercise of this Warrant, “Holder”) is entitled to purchase the number of fully
paid and nonassessable shares of the class of securities (the “Shares”) of the
Company at the Warrant Price, all as set forth above and as adjusted pursuant to
Article 2 of this Warrant, subject to the provisions and upon the terms and
conditions set forth in this Warrant.

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ARTICLE 1. EXERCISE.

1.1 Method of Exercise. Holder may exercise this Warrant by delivering a duly
executed Notice of Exercise in substantially the form attached as Appendix 1 to
the principal office of the Company. Unless Holder is exercising the conversion
right set forth in Article 1.2, Holder shall also deliver to the Company a
check, wire transfer (to an account designated by the Company), or other form of
payment acceptable to the Company for the aggregate Warrant Price for the Shares
being purchased.

1.2 Conversion Right. In lieu of exercising this Warrant as specified in Article
1.1, Holder may from time to time convert this Warrant, in whole or in part,
into a number of Shares determined by dividing (a) the aggregate fair market
value of the Shares or other securities otherwise issuable upon exercise of this
Warrant minus the aggregate Warrant Price of such Shares by (b) the fair market
value of one Share. The fair market value of the Shares shall be determined
pursuant to Article 1.3.

1.3 Fair Market Value. If the Company’s common stock is traded in a public
market and the Shares are common stock, the fair market value of each Share
shall be the closing price of a Share reported for the business day immediately
before Holder delivers its Notice of Exercise to the Company. If the Company’s
common stock is traded in a public market and the Shares are preferred stock,
the fair market value of a Share shall be the closing price of a share of the
Company’s common stock reported for the business day immediately before Holder
delivers its Notice of Exercise to the Company, multiplied by the number of
shares of the Company’s common stock into which a Share is convertible. If the
Company’s common stock is not traded in a public market, the Board of Directors
of the Company shall determine fair market value in its reasonable good faith
judgment.

1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or
converts this Warrant and, if applicable, the Company receives payment of the
aggregate Warrant Price, the Company shall deliver to Holder certificates for
the Shares acquired and, if this Warrant has not been fully exercised or
converted and has not expired, a new Warrant representing the Shares not so
acquired.

1.5 Replacement of Warrants. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation on surrender and cancellation of this Warrant, the Company shall
execute and deliver, in lieu of this Warrant, a new warrant of like tenor.

1.6 Treatment of Warrant Upon Acquisition of Company.

1.6.1 “Acquisition”. For the purpose of this Warrant, “Acquisition” means any
sale, license, or other disposition of all or substantially all of the assets of
the Company, or any reorganization, consolidation, or merger of the Company
where the holders of the Company’s securities before the transaction
beneficially own less than 50% of the outstanding voting securities of the
surviving entity after the transaction.

 

  1.6.2 Treatment of Warrant at Acquisition.

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A) Upon the written request of the Company, Holder agrees that, in the event of
an “arms length” Acquisition in which the sole consideration is cash or shares
of a publicly traded company with a market capitalization of not less than One
Billion Dollars ($1,000,000,000) listed on a national market or exchange and
whereby the shares receivable by Holder were Holder to exercise this Warrant in
full as of immediately prior to the consummation of such Acquisition may be
publically re-sold by the Holder in their entirety within the three (3) months
following such consummation pursuant to an effective registration statement
under the Securities Act of 1933, as amended, or pursuant to Rule 144 (subject
to compliance with Rule 144’s holding period and other applicable requirements),
or a combination thereof, either (a) Holder shall exercise its conversion or
purchase right under this Warrant and such exercise will be deemed effective
immediately prior to the consummation of such Acquisition or (b) if Holder
elects not to exercise the Warrant, in the case of an Acquisition that is a sale
of all or substantially all of the Company’s assets (and only its assets) to a
third party, this Warrant will continue until the Expiration Date, and in all
other cases, this Warrant will expire upon the consummation of such Acquisition.
The Company shall provide Holder with written notice of its request relating to
the foregoing (together with such reasonable information as Holder may request
in connection with such contemplated Acquisition giving rise to such notice),
which is to be delivered to Holder not less than ten (10) days prior to the
closing of the proposed Acquisition.

B) Upon the closing of any Acquisition other than those particularly described
in subsection (A) above, the successor entity shall assume the obligations of
this Warrant, and this Warrant shall be exercisable for the same securities,
cash, and property as would be payable for the Shares issuable upon exercise of
the unexercised portion of this Warrant as if such Shares were outstanding on
the record date for the Acquisition and subsequent closing. The Warrant Price
and/or number of Shares shall be adjusted accordingly.

ARTICLE 2. ADJUSTMENTS TO THE SHARES.

2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend on
the Shares payable in common stock, or other securities, then upon exercise of
this Warrant, for each Share acquired, Holder shall receive, without cost to
Holder, the total number and kind of securities to which Holder would have been
entitled had Holder owned the Shares of record as of the date the dividend
occurred. If the Company subdivides the Shares by reclassification or otherwise
into a greater number of shares or takes any other action which increase the
amount of stock into which the Shares are convertible, the number of shares
purchasable hereunder shall be proportionately increased and the Warrant Price
shall be proportionately decreased. If the outstanding shares are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares,
the Warrant Price shall be proportionately increased and the number of Shares
shall be proportionately decreased.

2.2 Reclassification, Exchange, Combinations or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification,

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exchange, substitution, or other event. Such an event shall include any
automatic conversion of the outstanding or issuable securities of the Company of
the same class or series as the Shares to common stock pursuant to the terms of
the Company’s Articles or Certificate (as applicable) of Incorporation upon the
closing of a registered public offering of the Company’s common stock. The
Company or its successor shall promptly issue to Holder an amendment to this
Warrant setting forth the number and kind of such new securities or other
property issuable upon exercise or conversion of this Warrant as a result of
such reclassification, exchange, substitution or other event that results in a
change of the number and/or class of securities issuable upon exercise or
conversion of this Warrant. The amendment to this Warrant shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 2 including, without limitation,
adjustments to the Warrant Price and to the number of securities or property
issuable upon exercise of the new Warrant. The provisions of this Article 2.2
shall similarly apply to successive reclassifications, exchanges, substitutions,
or other events.

2.3 Adjustments for Diluting Issuances. The Warrant Price and the number of
Shares issuable upon exercise of this Warrant or, if the Shares are preferred
stock, the number of shares of common stock issuable upon conversion of the
Shares, shall be subject to adjustment, from time to time in the manner set
forth in the Company’s Articles or Certificate of Incorporation as if the Shares
were issued and outstanding on and as of the date of any such required
adjustment. The provisions set forth for the Shares in the Company’s Articles or
Certificate (as applicable) of Incorporation relating to the above in effect as
of the Issue Date may not be amended, modified or waived, without the prior
written consent of Holder unless such amendment, modification or waiver affects
the rights associated with the Shares in the same manner as such amendment,
modification or waiver affects the rights associated with all other shares of
the same series and class as the Shares granted to Holder.

2.4 No Impairment. The Company shall not, by amendment of its Articles or
Certificate (as applicable) of Incorporation or through a reorganization,
transfer of assets, consolidation, merger, dissolution, issue, or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this
Warrant by the Company, but shall at all times in good faith assist in carrying
out of all the provisions of this Article 2 and in taking all such action as may
be necessary or appropriate to protect Holder’s rights under this Article
against impairment.

2.5 Fractional Shares. No fractional Shares shall be issuable upon exercise or
conversion of this Warrant and the number of Shares to be issued shall be
rounded down to the nearest whole Share. If a fractional share interest arises
upon any exercise or conversion of the Warrant, the Company shall eliminate such
fractional share interest by paying Holder the amount computed by multiplying
the fractional interest by the fair market value of a full Share.

2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant Price,
the Company shall promptly notify Holder in writing, and, at the Company’s
expense, promptly compute such adjustment, and furnish Holder with a certificate
of its Chief Financial Officer setting forth such adjustment and the facts upon
which such adjustment is based. The Company shall, upon written request, furnish
Holder a certificate setting forth the Warrant Price in effect upon the date
thereof and the series of adjustments leading to such Warrant Price.

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ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

3.1 Representations and Warranties. The Company represents and warrants to
Holder as follows:

(a) [Reserved]

(b) All Shares which may be issued upon the exercise of the purchase right
represented by this Warrant, and all securities, if any, issuable upon
conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.

(c) The following capitalization of the Company is true and complete as of the
Issue Date: the Company has 16,881,104 shares of common stock, par value $0.01
per share, issued and outstanding, options to purchase 3,032,152 shares of
Common Stock issued and outstanding, and warrants to purchase 683,235 shares of
Common Stock issued and outstanding.

3.2 Notice of Certain Events. If the Company proposes at any time (a) to declare
any dividend or distribution upon any of its stock, whether in cash, property,
stock, or other securities and whether or not a regular cash dividend; (b) to
offer for sale any shares of the Company’s capital stock (or other securities
convertible into such capital stock), other than (i) pursuant to the Company’s
stock option or other compensatory plans, (ii) in connection with commercial
credit arrangements or equipment financings, or (iii) in connection with
strategic transactions for purposes other than capital raising; (c) to effect
any reclassification or recapitalization of any of its stock; (d) to merge or
consolidate with or into any other corporation, or sell, lease, license, or
convey all or substantially all of its assets, or to liquidate, dissolve or wind
up; or (e) offer holders of registration rights the opportunity to participate
in an underwritten public offering of the Company’s securities for cash, then,
in connection with each such event, the Company shall give Holder: (1) at least
10 days prior written notice of the date on which a record will be taken for
such dividend, distribution, or subscription rights (and specifying the date on
which the holders of common stock will be entitled thereto) or for determining
rights to vote, if any, in respect of the matters referred to in (a) and
(b) above; (2) in the case of the matters referred to in (c) and (d) above at
least 10 days prior written notice of the date when the same will take place
(and specifying the date on which the holders of common stock will be entitled
to exchange their common stock for securities or other property deliverable upon
the occurrence of such event); and (3) in the case of the matter referred to in
(e) above, the same notice as is given to the holders of such registration
rights. Company will also provide information requested by Holder reasonably
necessary to enable Holder to comply with Holder’s accounting or reporting
requirements.

3.3 Registration Under Securities Act of 1933, as amended. The Company and
Holder agree that, upon exercise or conversion of this Warrant, Holder shall,
with respect to the Shares that constitute common stock or which are convertible
into common stock, (i) be entitled to the registration rights set forth in
Sections 1.2, 1.3

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and 1.4 of that certain Amended and Restated Investors’ Rights Agreement, dated
July 6, 2006 (the “Investors’ Rights Agreement”), by and among the Company and
the Investors named therein, provided, however, that the Holder of this Warrant
hereby agrees that it may not be one of the “Initiating Holders” under
Section 1.2 of Investors’ Rights Agreement, (ii) may exercise the registration
rights provided in this Section 3.3 only to the extent that the inclusion of
Holder’s Shares pursuant to such registration rights will not reduce the amount
of “Registrable Securities” (as defined in the Investors’ Rights Agreement) of
the “Holders” (as defined in the Investors’ Rights Agreement) that are included
in such registration, and (iii) upon exercise of any such registration rights,
be subject to and bound by the obligations of a “Holder” under Sections 1.2
through 1.10 and Sections 1.12 through 1.15 of the Investors’ Rights Agreement.
For purposes of the foregoing, the Shares issued upon exercise hereof shall be
deemed “Registrable Securities” (as defined in the Investors’ Rights Agreement)
and Holder shall be deemed a “Holder” (as defined in the Investors’ Rights
Agreement). The provisions set forth in the Company’s Investors’ Right Agreement
or similar agreement relating to the above in effect as of the Issue Date may
not be amended, modified or waived without the prior written consent of Holder
unless such amendment, modification or waiver affects the rights associated with
the Shares in the same manner as such amendment, modification, or waiver affects
the rights associated with all other shares of the same series and class as the
Shares granted to Holder.

3.4 No Shareholder Rights. Except as provided in this Warrant, Holder will not
have any rights as a shareholder of the Company until the exercise of this
Warrant.

ARTICLE 4. REPRESENTATIONS, WARRANTIES OF HOLDER. Holder represents and warrants
to the Company as follows:

4.1 Purchase for Own Account. This Warrant and the securities to be acquired
upon exercise of this Warrant by Holder will be acquired for investment for
Holder’s account, not as a nominee or agent, and not with a view to the public
resale or distribution within the meaning of the Act. Holder also represents
that Holder has not been formed for the specific purpose of acquiring this
Warrant or the Shares.

4.2 Disclosure of Information. Holder has received or has had full access to all
the information it considers necessary or appropriate to make an informed
investment decision with respect to the acquisition of this Warrant and its
underlying securities. Holder further has had an opportunity to ask questions
and receive answers from the Company regarding the terms and conditions of the
offering of this Warrant and its underlying securities and to obtain additional
information (to the extent the Company possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify any
information furnished to Holder or to which Holder has access.

4.3 Investment Experience. Holder understands that the purchase of this Warrant
and its underlying securities involves substantial risk. Holder has experience
as an investor in securities of companies in the development stage and
acknowledges that Holder can bear the economic risk of such Holder’s investment
in this Warrant and its underlying securities and has such knowledge and
experience in financial or business matters that Holder is capable of evaluating
the merits and risks of its investment in this Warrant and its underlying
securities and/or has a preexisting personal or business relationship with the
Company and certain of its officers, directors

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or controlling persons of a nature and duration that enables Holder to be aware
of the character, business acumen and financial circumstances of such persons.

4.4 Accredited Investor Status. Holder is an “accredited investor” within the
meaning of Regulation D promulgated under the Act.

4.5 The Act. Holder understands that this Warrant and the Shares issuable upon
exercise or conversion hereof have not been registered under the Act in reliance
upon a specific exemption therefrom, which exemption depends upon, among other
things, the bona fide nature of Holder’s investment intent as expressed herein.
Holder understands that this Warrant and the Shares issued upon any exercise or
conversion hereof must be held indefinitely unless subsequently registered under
the Act and qualified under applicable state securities laws, or unless
exemption from such registration and qualification are otherwise available.

ARTICLE 5. MISCELLANEOUS.

5.1 Term. This Warrant is exercisable in whole or in part at any time and from
time to time on or before the Expiration Date.

5.2 Legends. This Warrant and the Shares (and the securities issuable, directly
or indirectly, upon conversion of the Shares, if any) shall be imprinted with a
legend in substantially the following form:

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF
ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE
OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION.

5.3 Compliance with Securities Laws on Transfer. This Warrant and the Shares
issuable upon exercise of this Warrant (and the securities issuable, directly or
indirectly, upon conversion of the Shares, if any) may not be transferred or
assigned in whole or in part without compliance with applicable federal and
state securities laws by the transferor and the transferee (including, without
limitation, the delivery of investment representation letters and legal opinions
reasonably satisfactory to the Company, as reasonably requested by the Company).
The Company shall not require [Insert Holder Name] to provide an opinion of
counsel if the transfer is to any affiliate of [Insert Holder Name].
Additionally, the Company shall also not require an opinion of counsel if there
is no material question as to the availability of current information as
referenced in Rule 144(c), Holder represents that it has complied with Rule
144(d) and (e) in reasonable detail, the selling broker represents that it has
complied with Rule 144(f), and the Company is provided with a copy of Holder’s
notice of proposed sale.

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5.4 Transfer Procedure. Subject to the provisions of Article 5.3 and upon
providing the Company with written notice, [Insert Holder Name] and any
subsequent Holder may transfer all or part of this Warrant or the Shares
issuable upon exercise of this Warrant (or the Shares issuable directly or
indirectly, upon conversion of the Shares, if any) to any transferee, provided,
however, in connection with any such transfer, [Insert Holder Name] or any
subsequent Holder will give the Company notice of the portion of the Warrant
being transferred with the name, address and taxpayer identification number of
the transferee and Holder will surrender this Warrant to the Company for
reissuance to the transferee(s) (and Holder if applicable). The Company may
refuse to transfer this Warrant or the Shares to any person who directly
competes with the Company, unless, in either case, the stock of the Company is
publicly traded.

5.5 Notices. All notices and other communications from the Company to Holder, or
vice versa, shall be deemed delivered and effective when given personally or
mailed by first-class registered or certified mail, postage prepaid, at such
address as may have been furnished to the Company or Holder, as the case may (or
on the first business day after transmission by facsimile) be, in writing by the
Company or such Holder from time to time. Effective upon receipt of the fully
executed Warrant and the initial transfer described in Article 5.4 above, all
notices to Holder shall be addressed as follows until the Company receives
notice of a change of address in connection with a transfer or otherwise:

[Insert Holder Name]

Attn: Chief Financial Officer

[Address]

Telephone:

Facsimile:

Notice to the Company shall be addressed as follows until Holder receives notice
of a change in address:

EnteroMedics Inc.

Attn: David Brooks

2800 Patton Road

Saint Paul, MN 55113

Telephone: (651) 789-2673

Facsimile: (651) 634-3212

5.6 Waiver. This Warrant and any term hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.

5.7 Attorneys’ Fees. In the event of any dispute between the parties concerning
the terms and provisions of this Warrant, the party prevailing in such dispute
shall be entitled to collect from the other party all costs incurred in such
dispute, including reasonable attorneys’ fees.

5.8 Automatic Conversion upon Expiration. In the event that, upon the Expiration
Date, the fair market value of one Share (or other security issuable upon the
exercise hereof) as determined in accordance with Section 1.3 above is greater
than the Warrant Price in effect on such date, then this Warrant shall
automatically be

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deemed on and as of such date to be converted pursuant to Section 1.2 above as
to all Shares (or such other securities) for which it shall not previously have
been exercised or converted, and the Company shall promptly deliver a
certificate representing the Shares (or such other securities) issued upon such
conversion to Holder.

5.9 Counterparts. This Warrant may be executed in counterparts, all of which
together shall constitute one and the same agreement.

5.10 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to its
principles regarding conflicts of law.

[Signature page follows.]

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“COMPANY”     ENTEROMEDICS INC.     By:         By:     Name:         Name:    
  (Print)       (Print) Title:   Chairman of the Board, President or Vice
President     Title:   Chief Financial Officer, Secretary, Assistant Treasurer
or Assistant Secretary “HOLDER”     By:           Name:             (Print)    
  Title:          

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APPENDIX 1

NOTICE OF EXERCISE

1. Holder elects to purchase ___________ shares of the ____________ [describe]
Stock of __________________ pursuant to the terms of the attached Warrant, and
tenders payment of the purchase price of the shares in full.

[or]

1. Holder elects to convert the attached Warrant into Shares/cash [strike one]
in the manner specified in the Warrant. This conversion is exercised for
_____________________ of the Shares covered by the Warrant.

[Strike paragraph that does not apply.]

2. Please issue a certificate or certificates representing the shares in the
name specified below:

________________________________________________

                                         Holder’s Name

________________________________________________

________________________________________________

                                         (Address)

3. By its execution below and for the benefit of the Company, Holder hereby
restates each of the representations and warranties in Article 4 of the Warrant
as the date hereof.

 

HOLDER:   By:    

Name:    

Title:    

(Date):