Exhibit 10.21

CURON MEDICAL, INC.

EMPLOYMENT AGREEMENT

         This Agreement is entered into as of January 2, 2003 (the "Effective
Date") by and between Curon Medical, Inc. (the "Company") and Larry C. Heaton II
("Executive").

         1.          Duties and Scope of Employment.

                  (a)          Positions and Duties.          As of the
Effective Date, Executive will serve as President and Chief Executive Officer of
the Company. Executive will render such business and professional services in
the performance of his duties, consistent with Executive's position within the
Company, as shall reasonably be assigned to him by the Company's Board of
Directors (the "Board"). Executive shall report to the Board. The period of
Executive's employment under this Agreement is referred to herein as the
"Employment Term." During the Employment Term, Executive will also be entitled
to a voting position on the Board, subject to any required Board and Shareholder
approvals. Executive agrees to resign from the Board at the end of the
Employment Term, if requested to do so by action of the Board.

                  (b)          Obligations. During the Employment Term,
Executive will perform his duties faithfully and to the best of his ability,
will devote his full business efforts and time to the Company, and will not
actively engage in any other employment, occupation or consulting activity for
any direct or indirect remuneration without the prior approval of the Board.

         2.          Employment Term. The parties agree that Executive's
employment with the Company will be "at-will" employment and may be terminated
by either party at any time with or without cause, and Executive shall not be
entitled to any benefits or payments upon termination, except as set forth in
this Agreement. Executive understands and agrees that neither his job
performance nor promotions, commendations, bonuses or the like from the Company
give rise to or in any way serve as the basis for modification, amendment or
extension, by implication or otherwise, of his employment with the Company.

         3.          Compensation.

                  (a)          Base Salary. During the Employment Term, the
Company will pay Executive as compensation for his services a base salary at an
annualized rate of $295,000 (the "Base Salary"). Executive's Base Salary will be
paid periodically in accordance with the Company's normal payroll practices.

                  (b)          Bonus. Commencing with the second year of
Executive's employment, Executive shall be eligible to receive an annual
performance bonus of up to 40% of Base Salary (the "Bonus"), by achieving
mutually agreed upon performance milestones approved each year by the Board.
During Executive's first year of employment, Executive shall be eligible to
receive a performance bonus of up to $18,000 by achieving mutually agreed upon
performance milestones approved by the Board.

                  (c)          Equity Compensation. On the Effective Date,
subject to approval of the Compensation Committee of the Board, Executive shall
be granted a stock option, which shall be, to the extent possible under the
$100,000 rule of Section 422(d) of the Internal Revenue Code of 1986, as amended
(the "Code"), an "incentive stock option" (as defined in Section 422 of the
Code), to purchase 750,000 shares of the Company's Common Stock at an exercise
price per share equal to the closing price of such shares as of the Effective
Date (the "Option"). Subject to the accelerated vesting provisions set forth in
Section 6 below, 12/48ths of the shares subject to the Option shall vest on the
first anniversary of the Effective Date and 1/48th of the shares subject to the
Option shall vest at the end of each full calendar month thereafter, so that the
Option will be fully vested and exercisable approximately four (4) years from
the Effective Date, subject to Executive's continued employment with the Company
on the relevant vesting dates. The Option will be subject to the terms,
definitions and provisions of the Company's 2000 Stock Plan (the "Stock Plan")
and a stock option agreement by and between Executive and the Company (the
"Option Agreement"), which documents are incorporated herein by reference.

                  (d)          The Board will review Executive's performance at
least once per year, and Executive's compensation may be subject to adjustment
as a result of such review.

         4.          Employee Benefits. Executive shall be entitled to the
following benefits during the Employment Term:

                  (a)          General. Executive will be entitled to
participate in the employee benefit plans currently and hereafter maintained by
the Company of general applicability to other senior executives of the Company.
The Company reserves the right to cancel or change the benefit plans and
programs it offers to its employees at any time.

                  (b)          Temporary Housing Allowance. The Company will pay
Executive a housing allowance of $57,000 per year for up to the first four (4)
years of employment, payable in accordance with the Company's standard payroll
policies.

                  (c)          Relocation Reimbursement and Assistance. The
Company will reimburse Executive for reasonable documented moving expenses
incurred by Executive and his family during their relocation from Executive's
primary residence to the San Francisco Bay Area up to $125,000. To the extent
that Executive's actual relocation costs are less than $125,000, the Company
will pay the difference to Executive in equal monthly installments over the
first two years of Executive's employment or at such other rate as determined by
the Board. In addition, if and when Executive purchases a home in the San
Francisco Bay Area, the Company shall pay Executive an additional $100,000 as
partial assistance for the increased cost associated with home ownership.

                  (d)          Vacation. Executive will be entitled to paid
vacation in accordance with the Company's vacation policy, with the timing and
duration of specific vacations mutually and reasonably agreed to with the Board.

                  (e)          Expenses. The Company will reimburse Executive
for reasonable travel, entertainment or other expenses incurred by Executive in
the furtherance of or in connection with the performance of Executive's duties
hereunder, in accordance with the Company's expense reimbursement policy as in
effect from time to time.

         5.          Severance. If the Company terminates Executive other than
for Cause (as defined below), Executive shall be entitled to receive a severance
payment equal to six (6) months of his Base Salary as then in effect, provided
that Executive also execute and not revoke a release in a form determined by the
Company at the time of termination.

         6.          Change of Control Benefits. If, following a Change of
Control (as defined below), the Company (or its successor) terminates Executive
other than for Cause or Executive voluntarily terminates as a result of a
Constructive Termination (as defined below), then (i) Executive will be entitled
to receive a severance payment equal to twelve (12) months of his Base Salary,
and (ii) the Option will have its vesting accelerated so as to become 100%
vested as of the date of such termination. Thereafter, the Option will continue
to be subject to the terms, definitions and provisions of the Stock Plan and
Option Agreement.

         7.          Definitions.

                  (a)          Cause. For purposes of this Agreement, "Cause" is
defined as (i) a material act of dishonesty made by Executive in connection with
Executive's responsibilities as an employee that leads to material harm to the
Company, (ii) Executive's conviction of, or plea of guilty or nolo contendere
to, a felony, (iii) an act by Executive which constitutes gross misconduct or
fraud and which is materially injurious to the Company, or (iv) Executive's
continued, substantial violations of his employment duties after Executive has
received a written demand for performance from the Company which specifically
sets forth the factual basis for the Company's belief that Executive has not
substantially performed his duties.

                  (b)          Change of Control. For purposes of this
Agreement, "Change of Control" of the Company is defined as: (i) a merger or
consolidation of the Company in which the stockholders of the Company
immediately prior to such transaction would own, in the aggregate, less than 50%
of the total combined voting power of all classes of capital stock of the
surviving entity normally entitled to vote for the election of directors of the
surviving entity or (ii) the sale by the Company of all or substantially all the
Company's assets in one transaction or in a series of transactions.

                  (c)          Constructive Termination. For purposes of this
Agreement, "Constructive Termination" is defined as a resignation of Executive's
employment within ninety (90) days following the occurrence of any of the
following events: (i) without Executive's written consent, a significant and
material reduction of Executive's duties or responsibilities relative to
Executive's duties or responsibilities in effect immediately prior to such
reduction (provided, however, that a reduction in duties or responsibilities
solely by virtue of the Company being acquired and made part of a larger entity
(as, for example, when the Chief Executive Officer of the Company remains as
such following a Change of Control but is not made the Chief Executive Officer
of the acquiring corporation) shall not constitute a "Constructive Termination")
or (ii) a relocation of Executive's workplace outside of the San Francisco Bay
Area.

         8.          Confidential Information. Executive agrees to enter into
the Company's standard Proprietary Information Agreement (the "Proprietary
Information Agreement") upon commencing employment hereunder.

         9.          Severability. In the event that any provision hereof
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement will continue in full force and effect
without said provision.

         10.          Arbitration. Executive agrees that any and all disputes
arising out of the terms of this Agreement, their interpretation, and any of the
matters herein released, shall be subject to binding arbitration in Santa Clara
County before the American Arbitration Association under its California
Employment Dispute Resolution Rules. Executive agrees that the prevailing party
in any arbitration shall be entitled to injunctive relief in any court of
competent jurisdiction to enforce the arbitration award. Executive agrees that
the prevailing party in any arbitration shall be awarded its reasonable
attorney's fees and costs.

         11.          Voluntary Nature of Agreement. Executive acknowledges and
agrees that Executive is executing this Agreement voluntarily and without any
duress or undue influence by the Company or anyone else. Executive further
acknowledges and agrees that Executive has carefully read this Agreement and
that Executive has asked any questions needed for Executive to understand the
terms, consequences and binding effect of this Agreement and fully understands
it, including that Executive is waiving Executive's right to a jury trial.
Finally, Executive agrees that Executive has been provided an opportunity to
seek the advice of an attorney of Executive's choice before signing this
Agreement.

         12.          Integration. This Agreement, together with the Stock Plan,
the Option Agreement, the Proprietary Information Agreement and any other
written document referred to herein, represents the entire agreement and
understanding between the parties as to the subject matter herein and supersedes
all prior or contemporaneous agreements whether written or oral. No waiver,
alteration, or modification of any of the provisions of this Agreement will be
binding unless in writing and signed by duly authorized representatives of the
parties hereto.

         13.          Tax Withholding. All payments made pursuant to this
Agreement will be subject to withholding of applicable taxes.

         14.          Identification. For purposes of federal immigration law,
Executive will be required to provide to the Company documentary evidence of
Executive's identity and eligibility for employment in the United States. Such
documentation must be provided to the Company within three (3) business days of
the Effective Date, or Executive's employment relationship with the Company may
be terminated and Executive will not be entitled to any benefits provided under
this Agreement.

         15.          Governing Law. This Agreement will be governed by the laws
of the State of California (with the exception of its conflict of laws
provisions).

         16.          Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original and all of which together shall
constitute one instrument.

         IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by a duly authorized officer, as of the Effective Date.

  CURON MEDICAL, INC.       By:    /s/  MICHAEL BERMAN

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  Date:    December 18, 2002

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  Title:    Chairman

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      EXECUTIVE       By:    /s/  LARRY C. HEATON II

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  Date:    December 18, 2002

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