Exhibit 10.1

		Canaccord Adams Inc.
		99 High Street
		Boston, MA 02110
		T: 617.371.3900

CONFIDENTIAL

COPY ONE OF TWO

October 26, 2009

EnteroMedics Inc.

2800 Patton Road

St. Paul, MN 55113

Dear Mr. Knudson,

Canaccord Adams Inc. (together with its affiliates, control persons, officers, directors, employees and agents, “CA” or “Canaccord Adams”) is pleased to confirm the terms and conditions under which CA is engaged by EnteroMedics Inc. (the “Company” or “Client”) to act as its exclusive financial advisor with respect to evaluating the Company’s strategic and financial planning matters.

A “Strategic Transaction” shall mean any transaction or series or combination of transactions, other than in the ordinary course of trade or business, whereby, directly or indirectly, control of, or a material interest in, the Company, its subsidiaries or any of the businesses, assets or properties of any of them, is sold, leased or otherwise transferred, including, without limitation, a sale or exchange of equity interests or assets, a lease of assets with or without a purchase option, a merger or consolidation, a tender or exchange offer, a leveraged buy out, a restructuring, a recapitalization, a repurchase of equity interests, an extraordinary dividend or distribution (whether cash, property, securities or a combination thereof), a liquidation, the formation of a joint venture of partnership, a minority investment or any other similar transaction. In the case of a tender or exchange offer or a multi step transaction which contemplates the acquisition of more than 50% of the outstanding voting power of the Company, a Strategic Transaction shall be deemed to have been consummated upon the acquisition pursuant to such offer of more than 50% of such outstanding voting power.

During the period of our engagement, we will continue to update and maintain our knowledge to ensure that we are current with the Company’s business, operations, financial condition, and prospects.

The Client further understands that if Canaccord Adams is asked to act for the Company as underwriter or placement agent in connection with a public or private offering of equity or debt securities of the Company, as its exclusive financial advisor in connection with any Strategic Transaction or in any other formal additional capacity, then the terms of any such additional engagement(s), will be embodied in one or more separate written agreements, containing provisions and terms to be mutually reasonably agreed upon. The indemnity provisions in the separate letter agreement referred to above shall apply to the engagement contemplated pursuant to this agreement and any such additional engagement and shall remain in full force and effect regardless of any completion, modification or termination of Canaccord Adams’ engagement(s).

In addition to the rights set forth above, during the period through December 31, 2009, the Company shall retain Canaccord Adams as its financial advisor for any of the transactions described in clauses (i) through (vi) above with respect to

which Canaccord Adams has provided advisory services hereunder (each a “Covered Transaction”). All such engagements shall be memorialized in a separate engagement letter as contemplated in paragraph 3 above. Not withstanding the forgoing, this Section 6 shall not apply to actions taken by the Company with respect to those parties listed on Exhibit A.

In addition, the Company represents to Canaccord Adams that there is no other person or entity that is entitled to a finder’s fee or any type of brokerage commission in connection with the transactions contemplated by this Agreement as a result of any agreement or understanding with it which creates an interest in the compensation payable to Canaccord Adams hereunder. The Company agrees to indemnify and hold Canaccord Adams harmless from and against any actions, suits, claims, costs, expenses, losses and liabilities arising out of any breach of the foregoing sentence.

Nothing in this agreement shall be construed to limit the ability of Canaccord Adams or its affiliates to pursue, investigate, analyze, invest in, or engage in investment banking, financial advisory or any other business relationships with entities other than the Company, notwithstanding that such entities may be engaged in a business which is similar to or competitive with the business of the Company, and notwithstanding that such entities may have actual or potential operations, products, services, plans, ideas, customers or supplies similar or identical to the Company’s, or may have been identified by the Company as potential merger or acquisition targets or potential candidates for some other

business combination, cooperation or relationship. The Company expressly acknowledges and agrees that it does not claim any proprietary interest in the identity of any other entity in its industry or otherwise, and that the identity of any such entity is not confidential information.

The Company acknowledges that all advice (written or oral) given by Canaccord Adams to the Company is intended solely for the benefit and use of the Company. Other than to the extent required to be reflected in Board and committee meeting minutes or as required by law or by order of a governmental authority or court of competent jurisdiction, no advice (written or oral) of Canaccord Adams hereunder shall be used, reproduced, disseminated, quoted or referred to at any time, in any manner, or for any purpose, nor shall any public references to Canaccord Adams be made by the Company (or such persons), without the prior written consent of Canaccord Adams.

If you are in agreement with the foregoing, please sign both copies, retain Copy One for your records and return Copy Two, whereupon the Agreement shall become effective as of the date hereof.

Annex A

In the event that Canaccord Adams Inc. or any of its affiliates (“Canaccord Adams”), the respective shareholders, directors, officers, agents or employees of Canaccord Adams, or any other person controlling Canaccord Adams (collectively, together with Canaccord Adams, “Indemnified Persons”) becomes involved in any capacity in any action, claim, suit, investigation or proceeding, actual or threatened, brought by or against any person, including stockholders of EnteroMedics Inc. (the “Company”), in connection with or as a result of the engagement contemplated by the letter agreement to which this Annex A is attached (the “engagement”), the Company will reimburse such Indemnified Person for its legal and other expenses (including without limitation the costs and expenses incurred in connection with investigating, preparing for and responding to third party subpoenas or enforcing the engagement) incurred in connection therewith as such expenses are incurred; provided, however, that if it is finally determined by a court or arbitral tribunal in any such action, claim, suit, investigation or proceeding that any loss, claim damage or liability of Canaccord Adams or any other Indemnified Person has resulted primarily and directly from the gross negligence or willful misconduct of Canaccord Adams in performing the services that are the subject of the engagement, then Canaccord Adams will repay such portion of reimbursed amounts that is attributable to expenses incurred in relation to the act or omission of Canaccord Adams or any other Indemnified Person which is the subject of such determination. The Company will also indemnify and hold harmless each Indemnified Person from and against any losses, claims, damages or liabilities (including actions or proceedings in respect thereof) (collectively, “Losses”) related to or arising out of the engagement, except to the extent any such Losses are finally determined by a court or arbitral tribunal to have resulted primarily and directly from the willful misconduct or gross negligence of Canaccord Adams in performing the services that are the subject of the engagement.

If such indemnification is for any reason not available or insufficient to hold an Indemnified Person harmless (except by reason of the gross negligence or willful misconduct of Canaccord Adams), the Company and Canaccord Adams shall contribute to the Losses involved in such proportion as is appropriate to reflect the relative benefits received (or anticipated to be received) by the Company, on the one hand, and by Canaccord Adams, on the other hand, with respect to the engagement or, if such allocation is determined by a court or arbitral tribunal to be unavailable, in such proportion as is appropriate to reflect other equitable considerations such as the relative fault of the Company on the one hand and of Canaccord Adams on the other hand; provided, however, that in no event shall the amounts to be contributed by Canaccord Adams exceed the fees actually received by Canaccord Adams in the engagement. Relative benefits to the Company, on the one hand, and Canaccord Adams, on the other hand, shall be deemed to be in the same proportion as (i) the total value paid or proposed to be paid or received or proposed to be received by the Company or its security holders, as the case may be, pursuant to the transaction(s), whether or not consummated, contemplated by the engagement, bears to (ii) all fees actually received by Canaccord Adams in the engagement.

The Company also agrees that neither Canaccord Adams nor any other Indemnified Person shall have any liability to the Company or any person asserting claims on behalf or in right of the Company in connection with or as a result of the engagement or any matter referred to in the engagement, except to the extent that any Losses incurred by the Company are finally determined by a court or arbitral tribunal to have resulted primarily and directly from the willful misconduct or gross negligence of Canaccord Adams in performing the services that are the subject of the engagement.

Prior to entering into any agreement or arrangement with respect to, or effecting, any merger, statutory exchange or other business combination or proposed sale or exchange, dividend or other distribution or liquidation of all or a significant portion of its assets in one or a series of transactions or any significant recapitalization or reclassification of its outstanding securities that does not directly or indirectly provide for the assumption of the obligations of the Company set forth herein, the Company will notify

Canaccord Adams in writing thereof (if not previously so notified) and, if requested by Canaccord Adams, shall arrange in connection therewith alternative means of providing for the obligations of the Company set forth herein upon terms and conditions satisfactory to Canaccord Adams.

The Company’s obligations hereunder shall be in addition to any rights that any Indemnified Person may have at common law or otherwise. The letter to which this Annex A is attached, including this Annex A, and any other agreements relating to the engagement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, applicable to contracts made and to be performed therein and, in connection therewith, the parties hereto consent to the exclusive jurisdiction of the state and federal courts of the Commonwealth of Massachusetts. Notwithstanding the foregoing, solely for purposes of enforcing the Company’s obligations hereunder, the Company consents to personal jurisdiction, service and venue in any court proceeding in which any claim subject to this Annex A is brought by or against any Indemnified Person. CANACCORD ADAMS HEREBY AGREES, AND THE COMPANY HEREBY AGREES ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS SECURITY HOLDERS, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF THE ENGAGEMENT OR CANACCORD ADAMS’S PERFORMANCE OF SERVICES THAT ARE THE SUBJECT THEREOF.

The provisions of this Annex A shall apply to the engagement (including related activities prior to the date hereof) and any modification thereof and shall remain in full force and effect regardless of the completion or termination of the engagement. If any term, provision, covenant or restriction herein is held by a court of competent jurisdiction to be invalid, void or unenforceable or against public policy, the remainder of the terms, provisions and restrictions contained herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated.