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                                                                   EXHIBIT 10.21

                               SILICON VALLEY BANK

                               SILICON VALLEY BANK
                                3003 Tasman Drive
                         Santa Clara, California 95054
                                 Sept. 19, 2003

         State Street Bank and Trust Company
         1200 Crown Colony Drive
         Quincy, MA 02169
         ATTENTION: Kevin Hughes

         Re:      Novacept

         Dear Mr. Hughes:

         All terms not defined herein but defined in the Uniform Commercial
Code, as in effect from time to time in the Commonwealth of Massachusetts (the
"UCC"), shall have the meanings given to such terms in Articles 8 & 9 of the
UCC.

         For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned, (a) NOVACEPT, a California
corporation (the "BORROWER"), (b) CAPITAL ADVISORS (the "INVESTMENT MANAGER"),
(c) SILICON VALLEY BANK (the "LENDER") and (d) STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company (the "SECURITIES INTERMEDIARY"),
intending to be legally bound, do hereby agree as follows:

1.       Establishment of Account.

         The Securities Intermediary hereby confirms that certain account
(Account No. DE1585) (the "ACCOUNT"), identified in the books of the Securities
Intermediary in the name of the Borrower, has been established with and is held
by the Securities Intermediary. The Account is an account to which financial
assets may be credited in accordance with this Agreement.

2.       Acknowledgement of Security Interest.

         The Borrower and Securities Intermediary are parties to one or more
agreements governing or relating to the establishment and administration of the
Account (referred to herein, collectively if more than one, as the Custodial
Agreement"). The Securities Intermediary hereby acknowledges that the Borrower
has notified the Securities Intermediary that the Borrower has granted to the
Lender a security interest in the Borrower's rights and interests in and to the
Account and all entitlements to any and all securities, investment property and
other financial assets which are now or hereafter may be deposited in and
credited to the Account, and in all cash balances that are credited to the
Account from time to time, and in all proceeds of any of the foregoing
(collectively, the "ACCOUNT ASSETS"). The initial Account Assets as of the close
of business on June 30, 2003, are listed on EXHIBIT A hereto and incorporated
herein by reference.

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3.       Account Control.

         3.1      Borrower Control.

                  (i)      Unless and until the Securities Intermediary receives
         written notice from the Lender directing the Securities Intermediary
         that the Lender is exercising its right to exclusive control over the
         Account, which notice is substantially in the form attached hereto as
         Exhibit A (a "NOTICE OF EXCLUSIVE CONTROL"), or if all previous Notices
         of Exclusive Control have been revoked or rescinded in writing by the
         Lender, the Borrower (or, until the Investment Manager's receipt of
         notice from the Lender that it is exercising exclusive control over the
         Account, the Investment Manager pursuant to the Custodial Agreement)
         shall be entitled to exercise all rights with respect to, and to direct
         the Securities Intermediary with respect to, the Account and the
         Account Assets, including, but not limited to, the investment and
         re-investment of the Account Assets and the Securities Intermediary
         shall be entitled to deal with the Borrower (or the Investment Manager
         pursuant to the Custodial Agreement) as the sole and absolute owner
         thereof, including without limitation the sale, liquidation, purchase,
         trading, transfer, delivery, withdrawal, release or payment of any
         Account Assets, including any cash balances.

                  (ii)     The Securities Intermediary shall have no
         responsibility or liability to the Lender for settling trades of
         financial assets carried in the Account at the direction of and in
         accordance with the instructions of the Borrower or the Investment
         Manager given in accordance with the Custodial Agreement, or for
         complying with entitlement orders concerning any Account Assets from
         the Borrower, if received by the Securities Intermediary prior to
         receipt of a Notice of Exclusive Control from the Lender.

         3.2      Control by Lender.

                  (i)      Upon receipt by the Securities Intermediary of a
         Notice of Exclusive Control, the Securities Intermediary shall
         thereafter follow only the instructions of the Lender with respect to
         the Account and the Account Assets, and shall comply with any
         entitlement order (within the meaning of Section 8-102(a)(8) of the
         UCC) received from the Lender, without further consent of the Borrower
         or any other person, and notwithstanding any demand or notice to the
         contrary from the Borrower.

                  (ii)     The Securities Intermediary shall be authorized to
         follow the instruction or any entitlement order of the Lender pursuant
         to this Section 3.2 with respect to the Account and the Account Assets
         in all respects and shall be entitled to deal with the Lender as though
         the Lender were the sole and absolute owner of the Account and Account
         Assets, including without limitation with respect to the sale,
         liquidation, purchase, delivery, trading, transfer, withdrawal, release
         or payment of any Account Assets, including any cash balances credited
         to the Account.

                  (iii)    The Securities Intermediary shall have no
         responsibility or liability to the Borrower for complying with a Notice
         of Exclusive Control or complying with entitlement orders concerning
         any Account Assets originated by the Lender. The

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         Securities Intermediary shall have no duty to investigate or make any
         determination as to whether a default or an event of default exists
         under any credit agreement between the Borrower and the Lender, and the
         Securities Intermediary shall comply with a Notice of Exclusive Control
         whether or not the Borrower may allege that no such default or event of
         default exists.

                 (iv) Concurrently with notifying the Securities Intermediary
         that it is exercising or rescinding its right of exclusive control over
         the Account, the Lender shall also provide written notice to the
         Investment Manager of such exercise or rescission.

4.       Lender Security Interest.

         This Agreement is intended by the Borrower and Lender to grant
"control" of the Account Assets to the Lender for purposes of perfection of the
Lender's security interest in the Account Assets pursuant to Article 8 and
Article 9 of the UCC. Notwithstanding the foregoing, the Securities Intermediary
makes no representation with respect to and shall have no responsibility for the
sufficiency of this Agreement for such purpose.

5.       Indemnification.

         In addition to the indemnities set forth in the Custodial Agreement,
the Borrower hereby agrees to indemnify and hold the Securities Intermediary
harmless from and against all liabilities, obligations, losses, damages, claims,
costs and expenses (including without limitation attorney's fees and costs)
which may be asserted against or incurred or suffered by the Securities
Intermediary arising out of this Agreement or the performance of the Securities
Intermediary's agreements or duties hereunder, or as a consequence of any action
or omission by the Securities Intermediary pursuant to the terms of this
Agreement (except for such claims which have been determined by a court of
competent jurisdiction to have resulted from the Securities Intermediary's
willful misconduct or gross negligence). The Lender agrees to indemnify and hold
the Securities Intermediary harmless from and against any and all liabilities,
obligations, losses or claims which may arise as a result of the Securities
Intermediary acting in accordance with any notice, instruction, direction or
advice received from the Lender pursuant to the terms of this Agreement (except
for such claims which have been determined by a court of competent jurisdiction
to have resulted from the Securities Intermediary's willful misconduct or gross
negligence) THE SECURITIES INTERMEDIARY SHALL NOT BE LIABLE IN ANY EVENT TO THE
LENDER, BORROWER, OR INVESTMENT MANAGER FOR ANY SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES WHICH ANY PARTY MAY INCUR OR SUFFER IN CONNECTION WITH
THIS LETTER AGREEMENT, REGARDLESS OF WHETHER THE SECURITIES INTERMEDIARY KNEW OF
THE LIKELIHOOD OF SUCH LOSS OR DAMAGE. This paragraph shall survive termination
of this Agreement and the satisfaction or termination of the Lender's interest
in the Account.

6.       Force Majeure.

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         The Securities Intermediary shall not be liable for delays or errors
occurring by reason of circumstances beyond the control of the Lender,
including, without limitation, acts of civil, military, or banking authorities,
national emergencies, market disorder, labor difficulties, fire, flood or other
catastrophes, acts of God, terrorism, insurrection, war, riots, failure of
transportation or equipment, or failure of vendors, communication or power
supply. In no event shall the Securities Intermediary be liable to any person
for consequential damages, exemplary damages, special damages, indirect damages,
or lost profits, even if the Securities Intermediary has been advised of the
possibility or likelihood of such damages. The provisions of this paragraph
shall survive termination of this Agreement and the Lender's interest in the
Account

7.       Duties of Securities Intermediary; No Implied Obligations.

                  (i)      The Securities Intermediary shall have no duties,
         obligations, responsibilities or liabilities with respect to the
         Account or the Account Assets except as and to the extent expressly set
         forth in this Agreement and the Custodial Agreement, and no implied
         duties of any kind shall be read into this Agreement against the
         Securities Intermediary.

                  (ii)     Except for the rights of control in favor of the
         Lender agreed to herein, nothing herein shall be deemed to modify,
         limit, restrict, amend or supercede the terms of the Custodial
         Agreement, and Securities Intermediary shall remain entitled to all of
         the rights, indemnities, powers, immunities and protections in its
         favor under the Custodial Agreement. The Securities Intermediary does
         not herein waive or agree to subordinate, and the Securities
         Intermediary hereby expressly reserves, any lien, security interest and
         rights of offset which it is granted or to which it is entitled under
         the Custodial Agreement and/or applicable law.

                  (iii)    Without limiting the generality of the foregoing, in
         no instance shall the Securities Intermediary be under any obligation
         to take any action to preserve, protect or exercise rights in the
         Account Assets (except to the extent that may be expressly required by
         the terms of the Custodial Agreement). It is understood that the
         Securities Intermediary shall have at no time any responsibility (a)
         for determining the value of the Account Assets, (b) for any market
         decline in the value of the Account Assets or (c) for notifying any
         person of any such decline in market value of the Account Assets.

                  (iv)     The Lender hereby expressly acknowledges that the
         Account may include Account Assets in the nature of securities
         entitlements in favor of the Securities Intermediary in one or more
         securities accounts at one or more underlying securities intermediaries
         in which or through which underlying assets, or entitlements thereto,
         are held or credited (including without limitation, with respect to
         federal book-entry securities, a "security entitlement" within the
         meaning of applicable federal book-entry regulations). The Securities
         Intermediary shall have no liability for the actions or omissions of,
         or any errors or omissions in the records of, any such underlying
         securities intermediary.

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                  (v)      All securities and investment property now or
         hereafter held in the Account shall be treated as "financial assets"
         within the meaning of Section 8-102(a)(9) of the UCC.

                  (vi)     The parties hereto acknowledge that no "security
         entitlement" under the UCC shall exist with respect to any financial
         asset held in the Account which is registered in the name of the
         Borrower, payable to the order of the Borrower or specially indorsed to
         the Borrower (each such asset an "Identified Security"), except to the
         extent such Identified Security has been specially indorsed by the
         Borrower to the Securities Intermediary or in blank. The parties
         further acknowledge and agree that any such Identified Securities
         received by it and credited to the Account from time to time shall (so
         long as so credited to the Account and so long as this Agreement
         remains in effect) be held by the Securities Intermediary (directly or
         through a Sub-Custodian, as defined below, as applicable) for the
         benefit of the Lender, not in its capacity as a "securities
         intermediary" (as defined in the UCC), but in its capacity as a
         custodial agent under and subject to the terms of this Agreement.

                  (vii)    For avoidance of doubt, the Lender hereby
         acknowledges that any Account Assets issued outside the United States
         ("Foreign Security System Assets") and held in the Account, which are
         held by the Securities Intermediary, a sub-custodian within the
         Securities Intermediary's network of sub-custodians (each a
         "SUB-CUSTODIAN") or a depository or book-entry system for the central
         handling of securities and other financial assets in which the
         Securities Intermediary or the Sub-Custodian are participants (each, a
         "SECURITIES SYSTEM") may not permit the Borrower to have a security
         entitlement under the UCC with respect to such Foreign Security System
         Assets (and such property shall be deemed for purposes of this
         Agreement not to be a financial asset held within the Account).

                  (viii)   The Securities Intermediary shall not change the name
         or the account number of the Account without the prior written consent
         of the Borrower and the Lender.

8.       Standard of Care.

         8.1      Custodial Agreement. In no event shall the Securities
Intermediary be liable for its failure to perform under the terms of this
Agreement, except to the extent that the Securities Intermediary has acted with
gross negligence or willful misconduct. The Securities Intermediary shall not be
responsible for the sufficiency of this Agreement or the arrangement
contemplated hereby to create, cause to attach or perfect, any security interest
in favor of the Lender.

         8.2      No Implied Duties. The Securities Intermediary shall have no
responsibilities, obligations or duties other than those expressly set forth in
this Agreement and the Custodial Agreement, and no implied duties,
responsibilities or obligations shall be read into this Agreement against the
Securities Intermediary; without limiting the generality of the foregoing, State
Street shall have no duty to preserve, exercise or enforce rights in the Account
Assets (against prior parties or otherwise).

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         8.3      Borrower Instruction. As between the Borrower and the
Securities Intermediary, except as may be otherwise expressly stated herein, the
liabilities of each to the other shall be governed by the provisions of the
Custodial Agreement. Instructions from a Borrower's Authorized Representative
given in accordance with the terms of the Custodial Agreement to the Securities
Intermediary hereunder shall also constitute Proper Instructions (as defined in
the Custodial Agreement) under the Custodial Agreement. Upon the Investment
Manager's receipt from the Lender of the Lender's exercise of exclusive control
over the Account, the Borrower acknowledges that the Investment Manager shall
have no responsibility for investing and reinvesting the Account Assets, until
such time as written notice of the Lender's revocation of such exclusive control
is received by the Investment Manager.

         8.4.     Lender Instruction. Notwithstanding any provision contained
herein or in any other document or instrument to the contrary, the Securities
Intermediary shall not be liable for any action taken or omitted to be taken at
the instruction of the Lender, or any action otherwise taken or omitted to be
taken under, in connection with, or pursuant to the terms of this Agreement,
except for in the case of (and to the extent of) the Securities Intermediary's
own gross negligence or willful misconduct.

         8.5      Certain Immunities and Protections. In no event shall the
Securities Intermediary be liable for indirect, special, punitive or
consequential damages of any kind, even if advised of the possibility of such
damages. Without limiting the generality of the foregoing, and notwithstanding
any provision to the contrary contained herein, the Securities Intermediary:

                  (i)      may in any instance where the Securities Intermediary
         reasonably determines that it lacks authority to take or refrain from
         taking certain action, or as to the requirements of this Agreement
         under any circumstance before it, delay or refrain from taking action
         unless and until it has received appropriate instructions hereunder;
         provided, however, that under no circumstances shall this clause (i) be
         construed as requiring the Securities Intermediary to obtain the
         consent of the Borrower in order to comply with any entitlement order
         originated by the Lender hereunder;

                  (ii)     may consult with legal counsel, independent public
         accountants, or other experts selected by it in good faith, and shall
         not be liable for any action taken or omitted to be taken in good faith
         in accordance with the advice of such experts;

                  (iii)    will have no duty to ascertain or inquire as to the
         performance or observance by the Borrower of any of the terms,
         conditions or covenants of this Agreement, or as to the terms of (or
         the Borrower's or Lender's compliance with) any credit agreement or
         related security agreement between the Borrower and Lender, or to
         inspect the property, books or records of the Borrower;

                  (iv)     except for the representations of the Securities
         Intermediary set forth in Section 9, will not be responsible for the
         due execution, legality, validity, enforceability, genuineness,
         effectiveness or sufficiency of this Agreement;

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                  (v)      will not incur any liability by acting or not acting
         in reliance upon any notice, consent, certificate, statement or other
         instrument or writing reasonably believed by it to be genuine and to be
         signed or sent by the proper party or parties;

                  (vi)     will not incur liability for any notice, consent,
         certificate, statement, wire instruction, telecopy, or other writing
         which is delayed, canceled or changed without the actual knowledge of
         State Street;

                  (vii)    shall not be deemed to have or be charged with notice
         or knowledge of any fact or matter unless a written notice thereof has
         been received by the Securities Intermediary at the address designated
         in (or as subsequently designated pursuant to) this Agreement;

                  (viii)   shall not be required by any provision of this
         Agreement to expend or risk the Securities Intermediary's own funds, or
         to take any action (including but not limited to the institution or
         defense of legal proceedings) which in its reasonable judgment could
         cause it to incur or suffer any significant expense or liability
         (including but not limited to reasonable attorneys' fees and
         disbursements), unless and until security or indemnity in form and
         amount reasonably satisfactory to State Street shall have been provided
         therefor;

                  (ix)     shall not incur any liability for acts or omissions
         of any domestic or foreign depository, securities intermediary or
         book-entry system for the central handling of financial assets (except
         to the extent provided in the Custodial Agreement, if applicable); and

                  (x)      except as expressly set forth herein, shall not be
         responsible for the title, validity or genuineness of any Account Asset
         carried in the Account at any time or times.

9.       Compliance with Legal Process and Judicial Orders.

         The Securities Intermediary shall have no responsibility or liability
to the Borrower or to the Lender or to any other person or entity for acting in
accordance with any judicial or arbitration process, order, writ, judgment or
decree relating to the Account Assets subject to this Agreement notwithstanding
that such order or process is subsequently modified, vacated or otherwise
determined to have been without legal force or effect.

10.      Representations and Warranties; Covenants.

         10.1     General Representations. Each of the parties to this Agreement
represents and warrants to the other parties to this Agreement as follows:

                  (i)      it is duly organized and existing under the laws of
         the jurisdiction of its organization with full power and authority to
         execute and deliver this Agreement and to perform all of the duties and
         obligations to be performed by it under this Agreement; and

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                  (ii)     this Agreement has been duly authorized, executed and
         delivered by it, and constitutes its valid, legal and binding
         obligation enforceable against it in accordance with its terms, except
         as enforceability may be limited by bankruptcy, insolvency or other
         similar laws of general application relating to or affecting the
         enforcement of creditors' rights in general or by general principles of
         equity whether considered in a proceeding at law or equity.

         10.2     Securities Intermediary Representations. The Securities
Intermediary represents, warrants, covenants, agrees and confirms, as of the
date hereof, and at all times until the termination of this Agreement:

                  (i)      that in the ordinary course of its business the
         Securities Intermediary maintains securities accounts for others, and
         that it is acting in that capacity with respect to the Account;

                  (ii)     that there are to its knowledge no other agreements
         entered into between the Securities Intermediary and the Borrower with
         respect to the Account except for this Agreement, the Custodial
         Agreement and any related fee agreement, funds transfer agreement and
         data access agreement;

                  (iii)    that the Securities Intermediary has not entered
         into, and until the termination of this Agreement will not enter into,
         any agreement (other than the Custodial Agreement) with any other
         person or entity relating to the Account or the Account Assets under
         which it has agreed to comply with entitlement orders (as defined in of
         the UCC) of such other person or entity; and

                  (iv)     that the Securities Intermediary has not entered
         into, and until the termination of this Agreement will not enter into,
         any agreement with the Borrower or any other person or entity,
         purporting to revoke, limit or condition the agreement of the
         Securities Intermediary set forth in this Agreement to comply with
         entitlement orders of the Lender, as set forth herein, without the
         Lender's express written consent.

         10.3     Notice of Third Party Claims. If the Securities Intermediary
receives written notice that any person or entity asserts a lien, encumbrance or
adverse claim (including any writ, garnishment, judgment, warrant of attachment,
execution or similar process) against the Account, the Securities Intermediary
will undertake reasonable efforts promptly to notify the Lender and the Borrower
thereof (but shall have no liability in the event of any delay or failure on its
part to do so).

         10.4.    The Investment Manager is executing this Agreement for the
purpose of acknowledging (i) receipt of this Agreement and (ii) knowledge of its
terms and conditions.

11.      Further Agreements.

         11.1     Settlement By Borrower. The Borrower agrees with the
Securities Intermediary that assets of the Borrower shall not be deposited,
delivered or held in the Account until such assets have been fully paid by the
Borrower.

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         11.2     No Borrower Contravention of Lender Control. After the Lender
has delivered a Notice of Exclusive Control to the Securities Intermediary,
unless such Notice of Exclusive Control is revoked in writing by the Lender, the
Borrower agrees that it shall not give any instruction to the Securities
Intermediary in respect of the Account or Account Assets without the prior
written consent of the Lender.

         11.3     Notice of Default. The Lender agrees that it shall, promptly
after becoming aware of the Securities Intermediary's failure to perform or
observe any term, covenant or agreement on its part to be performed or observed
hereunder, deliver to the Borrower notice thereof setting forth in reasonable
detail the circumstances of such failure.

12.      Access to Reports; Tax Reporting.

         12.1     Information Sharing. The Borrower hereby authorizes the
Securities Intermediary to forward directly to the Lender a copy of the monthly
statement of the Account which is provided by the Securities Intermediary to the
Borrower; provided, however, that the Securities Intermediary failure not to
forward a copy of such statement to the Lender shall not give rise to any
liability hereunder.

         12.2     Tax Reporting. All items of income, gain, expense and loss
recognized in the Account which the Securities Intermediary determines that it
is required by law to report to the Internal Revenue Service or any other taxing
authorities shall be reported to the Internal Revenue Service or such taxing
authorities under the name and taxpayer identification number of the Borrower.

13.      Interpleader.

         Notwithstanding any provision contained in this Agreement to the
contrary, in the event the Securities Intermediary believes, in its reasonable
opinion, that (i) a bona fide dispute exists concerning this Agreement or the
disposition of any of the Account or the Account Assets, (ii) a person or entity
makes a claim against the Account or the Account Assets, or (iii) any action
under any bankruptcy, insolvency or similar law is commenced relating to the
Borrower, the Securities Intermediary shall have the absolute right, at its
election, to petition a court of competent jurisdiction as to the appropriate
action to be taken and either deliver the Account Assets to the court in which
the action is commenced or freeze the Account pending receipt of such court
direction or order, whereupon the Securities Intermediary shall thereby be
relieved from any further liability respecting the Account and the Account
Assets and shall be held harmless by the Borrower, Investment Manager and the
Bank in taking any action or refraining from taking any action if done pursuant
to any direction or order given by such court.

14.      Fees and Expenses of Securities Intermediary.

         14.1     Compensation. The Securities Intermediary shall be entitled
to, and the Borrower hereby agrees to pay to the Securities Intermediary,
compensation in accordance with the terms of the Custodial Agreement.

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         14.2     Reimbursement For Costs. In addition to the terms of the
Custodial Agreement, the Borrower hereby agrees to pay and reimburse the
Custodian for any advances, costs, expenses (including without limitation
reasonable attorney's fees and costs) and disbursements that may be paid or
incurred by the Custodian in connection with, this Agreement or the arrangement
contemplated hereby, including any that may be incurred in performing its duties
or responsibilities pursuant to the terms of this Agreement.

         14.3     Liens. Any amounts that may be owing to the Custodian from
time to time pursuant to the terms of, or as described in, this Section 14
and/or Section 5 hereof shall be deemed to be amounts owing under the Custodial
Agreement, and shall be deemed to be secured by any lien, encumbrance and other
rights that the Custodian may have under the Custodian Agreement and/or
applicable law; and the Custodian shall be entitled to exercise such rights and
interests in accordance with the terms of the Custodial Agreement.

         14.4     Advances. Without limiting the generality of the foregoing, it
is hereby expressly acknowledged and agreed by the parties that the Custodian
(including its affiliates, subsidiaries and agents) shall not be obligated to
advance cash or investments to, for or on behalf of the Borrower. however, if
the Custodian, or its affiliates, subsidiaries or agents, does advance cash or
investments for any purpose (including but not limited to securities
settlements, foreign exchange contracts, assumed settlement or account
overdraft) for the benefit of the Borrower, or in the event that the Custodian
or its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Agreement, except such as may arise from the Custodian's or its nominee's own
gross negligence, bad faith or willful misconduct, any property at any time held
pursuant to this Agreement shall be security therefore and should the Borrower
fail to repay the Custodian promptly, the Custodial shall be entitled to utilize
available cash and to dispose of Company assets to the extent necessary to
obtain reimbursement.

15.      Termination.

         (a)      This Agreement may be terminated by the Securities
Intermediary at any time upon not less than thirty (30) days written notice to
the Borrower and the Lender. In such event, the Borrower and the Lender shall
within twenty (20) days of such notice notify the Securities Intermediary in
writing of the appointment of a successor custodian (including name, address,
contact person and telephone number) and shall give written instruction to the
Securities Intermediary to deliver the Account Assets to such successor
Custodian. In the event of the failure of the Borrower and Lender to give such
written notification and instruction within such twenty (20) days, the
Securities Intermediary shall be entitled to petition a court of competent
jurisdiction to appoint a successor (and otherwise to exercise its rights
pursuant to Section 13 hereof).

         (b)      Upon the sooner to occur of (i) the Securities Intermediary's
receipt of notice of the termination or release of the Lender's claim hereunder
as provided in Section 16.2 hereof, (ii) delivery of the Account Assets to a
successor Custodian pursuant to Section 15.6(a) hereof, or (iii) the termination
of the Account in accordance with the Custodial Agreement and distribution or
application of the Account Assets in accordance with the terms of this
Agreement, this

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Agreement shall terminate and all obligations and duties of the Securities
Intermediary hereunder shall immediately terminate and be discharged.

16.      Miscellaneous.

         16.1     Authorization. The Borrower hereby directs the Securities
Intermediary to comply with the terms of this Agreement.

         16.2     Release of Security Interest. The Lender agrees to notify the
Securities Intermediary promptly in writing when all obligations of the Borrower
to the Lender under the credit agreement between the Borrower and Lender have
been fully paid and satisfied (and any commitment of the Lender to advance
further amounts or credit thereunder has been terminated) or the Lender
otherwise no longer claims any interest in the Account Assets, whichever is
soonest; at which time the Securities Intermediary shall have no further
liabilities or responsibilities hereunder and the Securities Intermediary's
obligations under this Agreement shall terminate.

         16.3     Notices. All notices, requests and demands to or upon the
respective parties hereto shall be in writing (including by facsimile
transmission) and may be sent by hand, or by confirmed facsimile transmission
(confirmed promptly by mailing of the original) or by telex, answer back
received, or delivery by any recognized delivery service, prepaid, or by
certified or registered mail, return receipt requested, postage prepaid, and
addressed as follows, or to such other address as any party may hereafter notify
the other respective parties hereto in writing:

         (a)      If to the Securities Intermediary,
                  then:                      State Street Bank and Trust Company
                                             1200 Crown Colony Drive
                                             Quincy, MA 02169
                                             Attn: Kevin Hughes

         (b)      If to the Lender,
                  then:                      Silicon Valley Bank
                                             3003 Tasman Drive
                                             Santa Clara, CA 95054
                                             Attn: Mercy Forde

         (c)      If to the Borrower,
                  then:                      Novacept
                                             1047 Elwell Court
                                             Palo Alto, CA 94303
                                             Attn: Ed Unkart, VP Finance &
                                             Administration,
                                             Chief Executive Officer

         (d)      If to the Investment Manager,
                  then:                      Capital Advisors
                                             228 Hamilton Street, 3rd Floor
                                             Palo Alto, CA 94301

<PAGE>

State Street Bank and Trust Company
Page 12
041102

                                       Attn: Debbie Baker, Senior Vice President

         16.4     Additional Information.

         The Borrower, the Lender and the Investment Manager shall provide to
the Securities Intermediary any information or documents and execute any
document or instrument which the Securities Intermediary deem necessary or
appropriate to perform its obligations hereunder.

         16.5     Amendments in Writing; Counterparts. This Agreement may be
amended or modified only in a written document signed by all of the parties
hereto. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but such counterparts together shall
constitute one and the same instrument. Any proof of this Agreement shall
require production of only one such counterpart.

         16.6     Severability. If any provision of this Agreement or any
portion of such provision, or the application thereof to any person or
circumstance, shall to any extent be prohibited or held invalid or
unenforceable, the remainder of this Agreement or the remainder of such
provision and the application thereof to other persons or circumstances (other
than those as to which it is prohibited or held invalid or unenforceable) shall
not be affected thereby, and each term and provision hereof shall be valid and
enforced to the fullest extent permitted by law. To the extent permitted by law,
the parties hereto waive any provision of law which renders any such provision
or the application thereof to any person or circumstance prohibited, invalid or
unenforceable in any respect.

         16.7     Successors. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns.

         16.8     Governing Law; Jurisdiction of Securities Intermediary. Each
of the parties hereby agrees that this Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to the conflict of law provisions thereof, and that the
Securities Intermediary's jurisdiction, for purposes of Section 8-110(e) of the
UCC as it pertains to this Agreement, the Account and the security entitlements
relating to the financial assets (including without limitation, the Account
Assets) credited to or otherwise deposited or held in the Account, shall be the
Commonwealth of Massachusetts.

         16.9     Assignment. All of the terms of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns; provided, that no party may
assign or transfer any of its rights or obligations hereunder without the prior
written consent of the other parties hereto.

         16.10    Headings. Any headings appearing on this Agreement are for
convenience only and shall not affect the interpretation of any of the terms of
this Agreement.

<PAGE>

State Street Bank and Trust Company
Page 13
041102

         16.11 Counterparts. This Agreement may be executed simultaneously in
any number of counterparts each of which when so executed and delivered shall be
an original but all of which shall constitute but one and the same document.

            [THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]

<PAGE>

State Street Bank and Trust Company
Page 14
041102

         IN WITNESS WHEREOF, the undersigned have executed this Agreement under
         their respective seals as of Sept. 19, 2003.

                                         STATE STREET BANK AND TRUST COMPANY

                                         By: /s/ [ILLEGIBLE]
                                            --------------------------
                                         Name: Kevin J. Hughes
                                         Title: Vice President
                                         Its duly authorized officer

                                         SILICON VALLEY BANK

                                         By: /s/ Mercy F. Forde
                                            --------------------------
                                         Name: Mercy F. Forde
                                         Title: Vice President
                                         Its duly authorized Officer

                                         NOVACEPT

                                         By: /s/ Edward W. Unkart
                                            --------------------------
                                         Name:  Edward W. Unkart
                                         Title: VP
                                         Its duly authorized ___________

                                         CAPITAL ADVISORS

                                         By: /s/ Debra A. Potter
                                            --------------------------
                                         Name: Debra A. Potter
                                         Title: Exec. V.P.

<PAGE>

                       DESCRIPTION OF INITIAL SECURITIES

                                    EXHIBIT A

<PAGE>

State Street Bank and Trust Company
Page 16
041102

                               [LENDER LETTERHEAD]

State Street Bank and Trust Company
1200 Crown Colony Drive
Quincy, MA 02169
Attention: Kevin Hughes

                           NOTICE OF EXCLUSIVE CONTROL

         We hereby instruct you pursuant to the terms of that certain Account
Control Agreement dated as of July___, 2003 (as from time to time amended and
supplemented, the "Control Agreement") among the undersigned, Capital Advisors
(the "Investment Manager"), Novacept (together with its successors and assigns,
the "Borrower") and you, as Securities Intermediary, that you (i) shall not
follow any instructions or entitlement orders of the Borrower in respect of the
Account or the Account Assets (as each such capitalized term is defined in the
Control Agreement), and (ii) unless and until otherwise expressly instructed by
the undersigned, shall exclusively follow the entitlement orders and
instructions of the undersigned in respect of the Account or the Account Assets.

Very truly yours,

Silicon Valley Bank

By:____________________________
       Authorized Signatory

cc:      Novacept
         Capital Advisors