Exhibit 10.1

THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE,

PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED.

STOCK PURCHASE WARRANT

To Subscribe for and Purchase

Common Stock of

ENTEROMEDICS INC.

THIS CERTIFIES THAT, for value received, Craig-Hallum Capital Group LLC, or its
registered assigns, (herein referred to as the “Purchaser” or “holder”), is
entitled to subscribe for and purchase from EnteroMedics Inc. (herein called the
“Company”), a corporation organized and existing under the laws of the State of
Delaware, Three Hundred Forty Thousand Four Hundred (340,400) fully paid and
nonassessable shares (“Shares”) of common stock (herein the “Common Stock”)
(subject to the limitation in Section 2(b) and to adjustment as noted below) at
the exercise price of $2.19 per Share (the “Warrant Purchase Price”) (subject to
adjustment as noted below). This Warrant may only be exercised during the
Exercise Period specified herein. This Warrant has been issued together with
Shares of the Common Stock in a public offering of 14,800,000 Shares of the
Common Stock and 14,800,000 Warrants registered on the Company’s Registration
Statements on Form S-1 (the “Registration Statement”) filed with the U.S.
Securities and Exchange Commission (the “SEC”) on November 10, 2010, as amended
and December 8, 2010 (the “Offering”).

This Warrant is subject to the following provisions, terms and conditions:

1. The Warrant exercise period (the “Exercise Period”) for this Warrant shall
begin on the date that is 181 days from the date of the issuance of this Warrant
at the closing of the Offering and shall end on the fifth anniversary of the
date of effectiveness of the Registration Statement.

2. The rights represented by this Warrant may be exercised by the holder hereof
as follows:

(a) The rights represented by this Warrant may be exercised by the holder
hereof, in whole or in part, by written notice of exercise delivered to the
Company and by the surrender of this Warrant (properly endorsed if required) at
the principal office of the Company and upon payment to it by check of the
Warrant Purchase Price for such Shares. The Company agrees that the Shares so
purchased shall be and are deemed to be issued to the holder hereof as the
record owner of such Shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for such Shares as
aforesaid. Subject to the provisions of the next succeeding paragraph, within 10
business days after the rights represented by this Warrant shall have been
exercised the Company shall cause its transfer agent to issue the Shares of
stock so purchased to Purchaser in book–entry format and deliver evidence of
such issuance to Purchaser, and, unless this Warrant has expired, a new Warrant
representing the number of Shares, if any, with respect to which this Warrant
shall not then have been exercised shall also be delivered to the holder hereof
within such time.

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(b) Notwithstanding any other provision in this Warrant, no holder shall be
permitted to exercise this Warrant for an amount of Common Stock that would
result in such holder owning more than 19.99% of the Company’s Common Stock
outstanding after such exericise.

3. The Company represents and warrants that this Warrant has been duly
authorized by all necessary corporate action, has been duly executed and
delivered and is a legal and binding obligation of the Company, enforceable
against the Company in accordance with the terms of this Warrant, except to the
extent (i) such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and (ii) such enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The Company
covenants and agrees that all Shares which may be issued upon the exercise of
the rights represented by this Warrant according to the terms hereof or
represented by the Common Stock will, upon issuance and payment therefor, be
duly authorized and issued, fully paid and nonassessable. The Company further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized,
and reserved for the purpose of issue or transfer upon exercise of the
subscription rights evidenced by this Warrant, a sufficient number of shares of
its Common Stock to provide for the exercise of the rights represented by this
Warrant, free from preemptive rights or other actual contingent purchase rights
other than those held by a holder of this Warrant (as a result of holding this
Warrant).

4. The Company will pay any documentary stamp taxes attributable to the issuance
of Shares of Common Stock upon the exercise of this Warrant; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the registration of any certificates for
Warrants, or shares of Common Stock issued upon exercise of this Warrant, in a
name other than that of the Purchaser. The Purchaser shall be responsible for
all other tax liability that may arise as a result of holding or transferring
this Warrant or receiving Shares of Common Stock upon exercise hereof.

5. The above provisions are, however, subject to the following:

(a) The Warrant Purchase Price shall, from and after the date of issuance of
this Warrant, be subject to adjustment from time to time as hereinafter
provided. Upon each adjustment of the Warrant Purchase Price, the holder of this
Warrant shall thereafter be entitled to purchase, at the Warrant Purchase Price
resulting from such adjustment, the number of Shares obtained by multiplying the
Warrant Purchase Price in effect immediately prior to such adjustment by the
number of Shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the warrant purchase price
resulting from such adjustment.

(b) In case the Company shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the Warrant Purchase Price in
effect

 

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immediately prior to such subdivision shall be proportionately reduced, and
conversely, in case the outstanding shares of Common Stock of the Company shall
be combined into a smaller number of shares, the Warrant Purchase Price in
effect immediately prior to such combination shall be proportionately increased.

(c) If any capital reorganization or reclassification of the capital stock of
the Company, shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock or securities with respect to or in exchange for
Common Stock, then, as a condition of such reorganization, reclassification or
consolidation, lawful and adequate provision shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive, upon the basis
and upon the terms and conditions specified in this Warrant and in lieu of the
Shares of the Common Stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby, such shares
of stock or securities as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had such
reorganization, reclassification or consolidation not taken place, and in any
such case appropriate provision shall be made with respect to the rights and
interests of the holder of this Warrant to the end that the provisions hereof
(including without limitation provisions for adjustments of the warrant purchase
price and of the number of shares purchasable upon the exercise of this Warrant)
shall thereafter be applicable, as nearly as may be, in relation to any shares
of stock or securities thereafter deliverable upon the exercise hereof.

(d) Upon any adjustment of the Warrant Purchase Price or any adjustment of any
material terms hereof, then and in each such case an officer of the Company
shall, as soon as practicable after the occurrence of any event that requires an
adjustment or readjustment, give signed written notice thereof, by first–class
mail, postage prepaid, addressed to the registered holder of this Warrant at the
address of such holder as shown on the books of the Company, which notice shall
state the Warrant Purchase Price resulting from such adjustment, any material
change in the terms of the Warrant, and the increase or decrease, if any, in the
number of Shares purchasable at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.

(e) In case any time:

(i) there shall be any capital reorganization, or reclassification of the
capital stock of the Company; or

(ii) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;

then, in any one or more of said cases, the Company shall give written notice,
by first–class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company, of
the date on which (A) the books of the Company shall close or a record shall be

 

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taken for such distribution or subscription rights, or (B) such reorganization,
reclassification or consolidation, dissolution, liquidation or winding up, or
conversion or redemption shall take place, as the case may be. Such notice shall
also specify the date as of which the holders of capital stock of record shall
participate in such distribution or subscription rights, or shall be entitled to
exchange their capital stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, dissolution, liquidation
or winding up, or conversion or redemption, as the case may be. Such written
notice shall be given at least 20 days prior to the action in question and not
less than 20 days prior to the record date or the date on which the Company’s
transfer books are closed in respect thereto.

(f) If any event occurs as to which in the opinion of the Board of Directors of
the Company the other provisions of this Section 5 are not strictly applicable
or if strictly applicable would not fairly protect the purchase rights of the
holder of this Warrant or of Common Stock in accordance with the essential
intent and principles of such provisions, then the Board of Directors shall make
an adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such purchase rights as
aforesaid.

6. This Warrant shall not entitle the holder hereof to any voting rights or
other rights as a stockholder of the Company.

7. This Warrant may not be sold, offered for sale, pledged, hypothecated or
otherwise transferred and must be held by the Purchaser until it is exercised
for Shares of Common Stock in accordance with paragraphs 1 and 2 above. In
addition, without limiting the first sentence of this Section 7, pursuant to
Rule 5110(g) of the Financial Industry Regulatory Authority, Inc., this Warrant
shall not be sold during the Offering, or sold, transferred, assigned, pledged,
or hypothecated, or be the subject of any hedging, short sale, derivative, put,
or call transaction that would result in the effective economic disposition of
this Warrant or the Shares of Common Stock acquirable upon exercise hereof, by
any person for a period of 180 days immediately following the date of
effectiveness or commencement of sales of the Offering, except as provided in
paragraph (g)(2) of Rule 5110(g) of the Financial Industry Regulatory Authority,
Inc.

8. This Warrant is exchangeable, upon the surrender hereof by the holder hereof
at the principal office of the Company, for new Warrants of like tenor
representing in the aggregate the right to subscribe for and purchase the number
of shares which may be subscribed for and purchased hereunder, each of such new
Warrants to represent the right to subscribe for and purchase such number of
shares as shall be designated by said holder hereof at the time of such
surrender.

9. This Warrant has been registered with the SEC and qualified by state
authorities, or an exemption from such registration and qualification
requirements is available. The Shares of Common Stock issuable upon exercise of
the Warrant may be transferred and sold in reliance on the Registration
Statement. Pursuant to Section 4(t) of the Purchase Agreement, dated December 8,
2010, between the Company and Craig-Hallum Capital Group LLC (the “Purchase

 

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Agreement”), the Company will, at its own expense, prepare and file with the
SEC, and keep effective with the SEC, a registration statement with respect to
the Shares of Common Stock issuable upon exercise of this Warrant such that the
holder hereof may exercise this warrant and a holder of the Shares of Common
Stock acquired upon exercise hereof may resell such Shares to the public for a
period of time at least equal to the Exercise Period plus two years following
the expiration date thereof. The Company and the holder acknowledge and agree
that the Company’s obligation relating to the registration of the Shares of
Common Stock issuable upon exercise of this Warrant pursuant to this Section 9
and Section 4(t) of the Purchase Agreement is a one-time obligation, and that
holder’s countersignature to this Warrant upon its issuance constitutes holder’s
one-time exercise of such registration rights.

10. The Company will not be required upon the exercise of this Warrant to issue
fractions of shares of Common Stock, but may, at its option, either (a) purchase
such fraction for an amount in cash equal to the current value of such fraction
computed on the basis of the closing market price of a share of Common Stock as
quoted on the principal exchange or trading facility on which shares of Common
Stock are traded on the trading day immediately preceding the day upon which
this Warrant was surrendered for exercise in accordance with Section 2 hereof,
or (b) issue the required share. By accepting this Warrant, the holder hereof
expressly waives any right to receive any fractional share upon exercise of a
Warrant, except as expressly provided in this Section 10.

11. If this Warrant is exercised for less than all of the then-current number of
shares purchasable hereunder, then the Company shall, concurrently with the
issue of the Shares of stock purchased by Purchaser upon such exercise in
accordance with Section 2, issue a new warrant exercisable for the remaining
number of shares purchasable under this Warrant.

12. Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant and security reasonably
satisfactory to it, the Company shall execute and deliver a new warrant of like
tenor as the Warrant so lost, stolen, destroyed or mutilated.

13. All questions concerning this Warrant will be governed and interpreted and
enforced in accordance with the internal law, not the law of conflicts, of the
State of Delaware.

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IN WITNESS WHEREOF, EnteroMedics Inc. has caused this Warrant to be signed by
its duly authorized officer and this Warrant to be dated as of the date set
forth above.

 

ENTEROMEDICS INC. By  

 

  Its  

 

 

Acknowledged and agreed: Craig-Hallum Capital Group LLC By  

 

Name  

 

Its  

 

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SUBSCRIPTION FORM

To be Executed by the Holder of this Warrant if such Holder

Desires to Exercise this Warrant in Whole or in Part

 

To: EnteroMedics Inc. (the “Company”)

The undersigned                                                              

Please insert Social Security or other

identifying number of Subscriber:

 

 

hereby irrevocably elects to exercise the right of purchase represented by this
Warrant for, and to purchase thereunder,              shares of the Common Stock
(the “Common Stock”) provided for therein and tenders payment herewith to the
order of the Company in the amount of $            , such payment being made as
provided on the face of this Warrant.

The undersigned requests that certificates for such shares of Common Stock be
issued as follows:

 

Name:

  

 

Address:

  

 

Deliver to:

  

 

Address:

  

 

and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the shares of Common Stock purchasable under this Warrant be registered in
the name of, and delivered to, the undersigned at the address stated above.

Dated:                         

 

Signature  

 

  Note: The signature on this Subscription Form must correspond with the name as
written upon the face of this Warrant in every particular, without alteration or
enlargement or any change whatever.