Exhibit 10.47

ENTEROMEDICS INC.

NON-INCENTIVE STOCK OPTION AGREEMENT

 

GRANTED TO

  

GRANT
DATE

  

NUMBER OF
SHARES SUBJECT
TO OPTION

  

EXERCISE PRICE
PER SHARE

  

EXPIRATION
DATE

           

 

1. This Agreement. This agreement, together with Exhibit A (collectively, the
“Agreement”), sets forth the terms and conditions of a non-incentive stock
option award representing the right to purchase shares of common stock (“Common
Stock”) of EnteroMedics Inc., a Delaware corporation (the “Company”).

 

2. The Grant. The Company hereby grants to the individual named above (the
“Optionee”), as of the above grant date (the “Grant Date”), an option (the
“Option”) to purchase the number of shares of Common Stock of the Company set
forth above (the “Shares”) at the price per share set forth above (the “Exercise
Price”) with the expiration date set forth above (the “Expiration Date”). The
Option constitutes an employment inducement grant under NASDAQ Rule 5635(c)(4)
and is being granted pursuant to the terms of the Employment Agreement, entered
into as of                     , between the Company and the Optionee (the
“Employment Agreement”). The Option is not intended to qualify as an incentive
stock option within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended (the “Code”).

 

3. Exercise of Option. The exercise of the Option is subject to the following
terms and conditions:

 

  (a) During the lifetime of Optionee, the Option shall be exercisable only by
Optionee. The Option shall not be assignable or transferable by Optionee, other
than by will or the laws of descent and distribution. The Option may be
exercised only by the Optionee (or by the Optionee’s appropriate legal
representatives or guardian in the event of the Optionee’s death or if the
Optionee becomes Disabled, as defined in the Employment Agreement), in whole or
in part from time to time as provided in paragraph 3(b) below, during the period
commencing on the date set forth in paragraph 3(b) below and ending on the
earlier of (i) the Expiration Date or (ii) the expiration of the applicable
period following the date of the Optionee’s termination of employment with the
Company, as provided in paragraph 5 below. In no event, however, may the Option
be exercised to any extent after the Expiration Date.

 

  (b) The Option shall become exercisable in accordance with the schedule set
forth below. Once the Option has become exercisable, the Optionee may exercise
it to the extent set forth in the schedule at any time thereafter, subject to
the provisions of this Agreement and the Employment Agreement.

 

On or after each of

the following dates

  Shares as to which the
Option is vested     

 

Each subsequent monthly anniversary for         months

 

 

  (c) In the event the Optionee’s employment is terminated (i) without Cause (as
defined in the Employment Agreement), (ii) by the Optionee for Good Reason (as
defined in the Employment Agreement), or (iii) as a result of the Company giving
notice to Employee of Company’s desire to terminate the Employment Agreement
(pursuant to Section        of the Employment Agreement), then provided that
Optionee has executed, delivered and not rescinded a written release as
described in Section        of the Employment Agreement, the Option shall become
fully exercisable on the Separation Date (as defined in the Employment
Agreement).

 

  (d) Upon the occurrence of a Change in Control, the Option shall become fully
exercisable on the date the Change of Control is completed. In addition, upon a
Change in Control, the Committee may, in its sole discretion, provide that upon
the consummation of such Change in Control, the Option shall be cancelled (after
its full acceleration) in exchange for a cash payment equal to the difference
between (a) the per share amount paid to holders of the Common Stock in such
transaction and (b) the Exercise Price.

 

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4. Manner of Exercise. The Option shall be exercised by the delivery of written
notice of exercise (the “Notice”) to the Company at its principal executive
office. The Notice shall be in such form as the Committee may prescribe
(including electronic form) and shall specify the number of Shares as to which
the Optionee is exercising the Option, and shall be accompanied by payment of
the Exercise Price of the Shares either in cash (bank check, certified check or
personal check payable to the Company or by wire transfer to the Company) or by
the delivery of Shares owned by the Optionee with a Fair Market Value (as
defined in the attached Exhibit A) equal to the amount of the Exercise Price, or
a combination of both. The Notice shall also be accompanied by such other
information and documents as the Committee, in its discretion, may request.

 

5. Effect of Termination of Relationship with the Company.

 

  (a) In the event that Optionee’s relationship with the Company or its
Affiliates shall terminate, for any reason other than for Cause or Optionee’s
death or Disability, Optionee shall have the right to exercise the Option at any
time within five years after such termination to the extent of the full number
of Shares Optionee was entitled to purchase under the Option on the Separation
Date, subject to the condition that the Option shall not be exercisable after
the expiration of its term.

 

  (b) In the event that Optionee’s relationship with the Company or its
Affiliates shall terminate for Cause, the Option shall terminate as of the
Separation Date and shall not be exercisable thereafter.

 

  (c) If Optionee shall die during its relationship with the Company or its
Affiliates, or within three months after termination of such relationship with
the Company for any reason other than for Cause, or if Optionee’s relationship
with the Company or its Affiliates is terminated because the Optionee has become
Disabled (as defined in Section        of the Employment Agreement), and
Optionee shall not have fully exercised the Option, the Option may be exercised
at any time within twelve months after the date of Optionee’s death or
termination of Optionee’s relationship because of Disability by the legal
representative or, if applicable, guardian of Optionee or by any person to whom
the Option is transferred by will or the applicable laws of descent and
distribution to the extent of the full number of Shares Optionee was entitled to
purchase under the Option on the date of death (or Separation Date, if earlier)
or termination of Optionee’s relationship because of Disability, and subject to
the condition that the Option shall not be exercisable after the Expiration
Date.

 

6. Income Taxes. The Optionee is liable for any federal, state and local income
or other taxes applicable upon the grant or exercise of the Option or the
disposition of the Shares, and the Optionee acknowledges that he should consult
with his own tax advisor regarding the applicable tax consequences. Upon
exercise of the Option, the Optionee shall promptly pay to the Company the
minimum statutory withholding taxes required to be withheld or collected by the
Company in connection with the exercise of the Option. The Optionee may pay all
or a portion of the minimum statutory withholding taxes by (a) having the
Company withhold Shares otherwise to be delivered upon the exercise of the
Option with a Fair Market Value equal to the amount of such taxes,
(b) delivering to the Company shares of Common Stock other than Shares issuable
upon the exercise of the Option with a Fair Market Value equal to the amount of
such taxes or (c) paying cash. For federal income tax purposes, the Option shall
not be eligible for treatment as a qualified or incentive stock option.

 

7. No Right to Employment. The grant of the Option shall not be construed as
giving the Optionee the right to be retained as an employee of the Company or
any Affiliate, nor will it affect in any way the right of the Company or an
Affiliate to terminate the Optionee’s employment at any time, with or without
Cause.

 

8. Adjustments. In the event that there is any change in the Common Stock or
corporate structure of the Company as a result of any dividend or other
distribution (whether in the form of cash, Common Stock, other securities or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company or other similar corporate transaction or event, then
the Committee shall, in such manner as it deems equitable, adjust the number and
type of Shares and the Exercise Price; provided, however, that the number of
Shares covered by the Option shall always be a whole number.

 

9. Governing Law. The validity, construction and effect of the Agreement, and
any rules and regulations relating to the Agreement, shall be determined in
accordance with the laws of the State of Minnesota.

 

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10. Acknowledgment. This Option shall not be effective until the Optionee dates
and signs the form of Acknowledgment below and returns a signed copy of this
Agreement to the Company. By signing the Acknowledgment, the Optionee agrees to
the terms and conditions of this Agreement.

 

ACKNOWLEDGMENT:         ENTEROMEDICS INC.           OPTIONEE’S SIGNATURE        
          DATE               By:             [Name]         [Title]

 

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EXHIBIT A

DEFINED TERMS USED IN THE

STOCK OPTION AGREEMENT

The following terms used in this Agreement have the following meanings:

“Affiliate” shall have the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act.

“Associate” shall have the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act.

“Change in Control” shall mean:

(i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act who did not own shares of the capital stock of the Company on the
date of grant of the Option shall, together with his, her or its Affiliates and
Associates (as such terms are defined in Rule 12b-2 promulgated under the
Exchange Act), become the “Beneficial Owner” (as such term is defined in Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, of securities
of the Company representing 50% or more of the combined voting power of the
Company’s then outstanding securities (any such person being hereinafter
referred to as an “Acquiring Person”);

(ii) the Continuing Directors cease to constitute a majority of the Company’s
Board;

(iii) There should occur (A) any consolidation or merger involving the Company
and the Company shall not be the continuing or surviving corporation or the
shares of the Company’s capital stock shall be converted into cash, securities
or other property; provided, however, that this subclause (A) shall not apply to
a merger or consolidation in which (i) the Company is the surviving corporation
and (ii) the stockholders of the Company immediately prior to the transaction
have the same proportionate ownership of the capital stock of the surviving
corporation immediately after the transaction; (B) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all of the assets of the Company; or (C) any liquidation or
dissolution of the Company; or

(iv) The majority of the Continuing Directors determine, in their sole and
absolute discretion, that there has been a Change in Control.

“Committee” shall mean the Compensation Committee of the Company’s Board of
Directors.

“Continuing Director” shall mean any person who is a member of the Board of
Directors of the Company, while such person is a member of the Board of
Directors, who is not an Acquiring Person, an Affiliate or Associate of an
Acquiring Person or a representative of an Acquiring Person or of any such
Affiliate or Associate and who (i) was a member of the Company’s Board of
Directors on the date of grant of the Option or (ii) subsequently became a
member of the Board of Directors, upon the nomination or recommendation, or with
the approval of, a majority of the Continuing Directors.

“Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended.

“Fair Market Value” shall mean the closing sale price of the Common Stock as
reported on the NASDAQ Capital Market on such date or, if such market is not
open for trading on such date, on the most recent preceding date when such
market is open for trading.

 

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