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                                                                    EXHIBIT 10.1

                                    NOVACEPT

                             1997 STOCK OPTION PLAN
                        (AS AMENDED ON JULY 27, 1998)(1)
                      (AS AMENDED ON NOVEMBER 10, 1999)(2)
                       (AS AMENDED ON APRIL 17, 2001)(3)
                          (AS AMENDED ON MAY 15, 2001)
                        (AS AMENDED ON JULY 18, 2002)(4)
                      (AS AMENDED ON DECEMBER 11, 2003)(5)

         1.       PURPOSES OF THE PLAN. The purposes of this 1997 Stock Option
Plan are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees and
Consultants of the Company and its Subsidiaries and to promote the success of
the Company's business. Options granted under the Plan may be incentive stock
options (as defined under Section 422 of the Code) or nonstatutory stock
options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code, as amended,
and the regulations promulgated thereunder.

         2.       DEFINITIONS. As used herein, the following definitions shall
apply:

                  (a)      "ADMINISTRATOR" means the Board or any of its
Committees appointed pursuant to Section 4 of the Plan.

                  (b)      "BOARD" means the Board of Directors of the Company.

                  (c)      "CODE" means the Internal Revenue Code of 1986, as
amended.

                  (d)      "COMMITTEE" means the Committee appointed by the
Board of Directors in accordance with Section 4(a) of the Plan.

                  (e)      "COMMON STOCK" means the Common Stock of the Company.

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         (1) Amended Section 3 by increasing the number of Shares that may be
optioned and sold under the Plan.

         (2) Amended Section 3 by increasing the number of Shares that may be
optioned and sold under the Plan.

         (3) Amended Sections 2 and 10 of the Plan.

         (4) Amended Section 3 by increasing the number of Shares that may be
optioned and sold under the Plan.

         (5) Amended Section 3 by increasing the number of Shares that may be
optioned and sold under the Plan.

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                  (f)      "COMPANY" means Novacept, a California corporation.

                  (g)      "CONSULTANT" means any person, including an advisor,
who is engaged by the Company or any Parent or Subsidiary to render services and
is compensated for such services, and any director of the Company whether
compensated for such services or not.

                  (h)      "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT"
means the absence of any interruption or termination of service as an Employee
or Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Administrator, provided that
such leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company, its Subsidiaries or their respective successors. For
purposes of this Plan, a change in status from an Employee to a Consultant or
from a Consultant to an Employee will not constitute an interruption of
Continuous Status as an Employee or Consultant.

                  (i)      "EMPLOYEE" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company,
with the status of employment determined based upon such minimum number of hours
or periods worked as shall be determined by the Administrator in its discretion,
subject to any requirements of the Code. The payment of a director's fee to a
director shall not be sufficient to constitute "employment" of such director by
the Company.

                  (j)      "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.

                  (k)      "FAIR MARKET VALUE" means, as of any date, the fair
market value of Common Stock determined as follows:

                           (i)      If the Common Stock is listed on any
established stock exchange or a national market system including without
limitation the National Market of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market Value shall
be the closing sales price for such stock (or the closing bid, if no sales were
reported), as quoted on such system or exchange, or the exchange with the
greatest volume of trading in Common Stock for the last market trading day prior
to the time of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;

                           (ii)     If the Common Stock is quoted on the NASDAQ
System (but not on the National Market thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock for the last market trading day prior to the time of determination,
as reported in The Wall Street Journal or such other source as the Administrator
deems reliable; or

                           (iii)    In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.

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                  (l)      "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code, as designated in the applicable written option agreement.

                  (m)      "LISTED SECURITY" means any security of the Company
that is listed or approved for listing on a national securities exchange or
designated or approved for designation as a national market system security on
an interdealer quotation system by the National Association of Securities
Dealers, Inc.

                  (n)      "NONSTATUTORY STOCK OPTION" means an Option not
intended to qualify as an Incentive Stock Option, as designated in the
applicable written option agreement.

                  (o)      "OPTION" means a stock option granted pursuant to the
Plan.

                  (p)      "OPTIONED STOCK" means the Common Stock subject to an
Option.

                  (q)      "OPTIONEE" means an Employee or Consultant who
receives an Option.

                  (r)      "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code, or any successor
provision.

                  (s)      "PLAN" means this 1997 Stock Option Plan.

                  (t)      "REPORTING PERSON" means an officer, director, or
greater than ten percent shareholder of the Company within the meaning of Rule
16a-2 under the Exchange Act, who is required to file reports pursuant to Rule
l6a-3 under the Exchange Act.

                  (u)      "RULE 16b-3" means Rule 16b-3 promulgated under the
Exchange Act, as the same may be amended from time to time, or any successor
provision.

                  (v)      "SHARE" means a share of the Common Stock, as
adjusted in accordance with Section 11 of the Plan.

                  (w)      "STOCK EXCHANGE" means any stock exchange or
consolidated stock price reporting system on which prices for the Common Stock
are quoted at any given time.

                  (x)      "SUBSIDIARY" means a "subsidiary corporation" whether
now or hereafter existing, as defined in Section 424(f) of the Code, or any
successor provision.

         3.       STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of shares that may be
optioned and sold under the Plan is 5,572,875 shares of Common Stock. The shares
may be authorized, but unissued, or reacquired Common Stock. If an Option should
expire or become unexercisable for any reason without having been exercised in
full, the unpurchased Shares that were subject thereto shall, unless the Plan
shall have been terminated, become available for future grant under the Plan. In
addition, any shares of Common Stock which are retained by the Company upon
exercise of an Option in order to satisfy the exercise or purchase price for
such Option or any withholding taxes due with respect to such exercise shall be
treated as not issued and shall continue to be available under the Plan.

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         4.       ADMINISTRATION OF THE PLAN.

                  (a)      INITIAL PLAN PROCEDURE. Prior to the date, if any,
upon which the Company becomes subject to the Exchange Act, the Plan shall be
administered by the Board or a committee appointed by the Board.

                  (b)      PLAN PROCEDURE AFTER THE DATE, IF ANY, UPON WHICH THE
COMPANY BECOMES SUBJECT TO THE EXCHANGE ACT.

                           (i)      MULTIPLE ADMINISTRATIVE BODIES. If permitted
by Rule 16b-3, grants under the Plan may be made by different bodies with
respect to directors, non-director officers and Employees or Consultants who are
not Reporting Persons.

                           (ii)     ADMINISTRATION WITH RESPECT TO REPORTING
PERSONS. With respect to grants of Options to Employees who are Reporting
Persons, such grants shall be made by (A) the Board if the Board may make grants
to Reporting Persons under the Plan in compliance with Rule 16b-3, or (B) a
committee designated by the Board to make grants to Reporting Persons under the
Plan, which committee shall be constituted in such a manner as to permit grants
under the Plan to comply with Rule 16b-3. Once appointed, such committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the committee and thereafter directly make grants to
Reporting Persons under the Plan, all to the extent permitted by Rule 16b-3.

                           (iii)    ADMINISTRATION WITH RESPECT TO CONSULTANTS
AND OTHER EMPLOYEES. With respect to grants of Options to Employees or
Consultants who are not Reporting Persons, the Plan shall be administered by (A)
the Board or (B) a committee designated by the Board, which committee shall be
constituted in such a manner as to satisfy the legal requirements relating to
the administration of incentive stock option plans, if any, of California
corporate and securities laws, of the Code and of any applicable Stock Exchange
(the "Applicable Laws"). Once appointed, such Committee shall continue to serve
in its designated capacity until otherwise directed by the Board. From time to
time the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new members
in substitution therefor, fill vacancies, however caused, and remove all members
of the Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws.

                  (c)      POWERS OF THE ADMINISTRATOR. Subject to the
provisions of the Plan and in the case of a Committee, the specific duties
delegated by the Board to such Committee, and subject to the approval of any
relevant authorities, including the approval, if required, of any Stock
Exchange, the Administrator shall have the authority, in its discretion:

                           (i)      to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(k) of the Plan;

                           (ii)     to select the Consultants and Employees to
whom Options may from time to time be granted hereunder;

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                           (iii)    to determine whether and to what extent
Options or any combination thereof are granted hereunder;

                           (iv)     to determine the number of shares of Common
Stock to be covered by each such option granted hereunder;

                           (v)      to approve forms of agreement for use under
the Plan;

                           (vi)     to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any option granted hereunder;

                           (vii)    to determine whether and under what
circumstances an Option may be settled in cash under Section 9(f) instead of
Common Stock;

                           (viii)   to reduce the exercise price of any Option
to the then current Fair Market Value if the Fair Market Value of the Common
Stock covered by such Option shall have declined since the date the Option was
granted;

                           (ix)     to construe and interpret the terms of the
Plan and Options granted under the Plan; and

                           (x)      in order to fulfill the purposes of the Plan
and without amending the Plan, to modify grants of Options to participants who
are foreign nationals or employed outside of the United States in order to
recognize differences in local law, tax policies or customs.

                  (d)      EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all holders of Options.

         5.       ELIGIBILITY.

                  (a)      RECIPIENTS OF GRANTS. Nonstatutory Stock Options may
be granted to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee or Consultant who has been granted an Option may,
if he or she is otherwise eligible, be granted additional Options.

                  (b)      TYPE OF OPTION. Each Option shall be designated in
the written option agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designations, to the
extent that the aggregate Fair Market Value of the Shares with respect to which
Options designated as Incentive Stock Options are exercisable for the first time
by any Optionee during any calendar year (under all plans of the Company or any
Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares subject to an Incentive Stock Option shall
be determined as of the date of the grant of such Option.

                  (c)      EMPLOYMENT RELATIONSHIP. The Plan shall not confer
upon any Optionee any right with respect to continuation of employment or
consulting relationship with the Company, nor shall it interfere in any way with
such Optionee's right or the Company's right to terminate his or her employment
or consulting relationship at any time, with or without cause.

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         6.       TERM OF PLAN. The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 18 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 14 of the Plan.

         7.       TERM OF OPTION. The term of each Option shall be the term
stated in the Option Agreement; provided, however, that the term shall be no
more than ten (10) years from the date of grant thereof or such shorter term as
may be provided in the Option Agreement. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.

         8.       OPTION EXERCISE PRICE AND CONSIDERATION.

                  (a)      The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Board, but shall be subject to the following:

                           (i)      In the case of an Incentive Stock Option
that is:

                                    (A)      granted to an Employee who, at the
time of the grant of such Incentive Stock Option, owns stock representing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the Fair Market Value per Share on the date of
grant.

                                    (B)      granted to any Employee, the per
Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.

                           (ii)     In the case of a Nonstatutory Stock Option
that is:

                                    (A)      granted to a person who, at the
time of the grant of such Option, owns stock representing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of the grant.

                                    (B)      granted to any person, the per
Share exercise price shall be no less than 85% of the Fair Market Value per
Share on the date of grant.

                  (b)      The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant) and may consist entirely of (1) cash,
(2) check, (3) promissory note, (4) other Shares that (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender or such other period as may be required
to avoid a charge to the Company's earnings, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) authorization for the Company to
retain from the total number of Shares as to which the Option is exercised that
number of Shares having a Fair

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Market Value on the date of exercise equal to the exercise price for the total
number of Shares as to which the Option is exercised, (6) delivery of a properly
executed exercise notice together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an exercise
of the Option and delivery to the Company of the sale or loan proceeds required
to pay the exercise price and any applicable income or employment taxes, (7)
delivery of an irrevocable subscription agreement for the Shares that
irrevocably obligates the option holder to take and pay for the Shares not more
than twelve months after the date of delivery of the subscription agreement, (8)
any combination of the foregoing methods of payment, or (9) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under Applicable Laws. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.

         9.       EXERCISE OF OPTION.

                  (a)      PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, including performance criteria
with respect to the Company and/or the Optionee, and as shall be permissible
under the terms of the Plan; provided that such Option shall become exercisable
at the rate of at least twenty percent (20%) per year over five (5) years from
the date the Option is granted. In the event that any of the Shares issued upon
exercise of an Option should be subject to a right of repurchase in the
Company's favor, such repurchase right shall lapse at the rate of at least
twenty percent (20%) per year over five (5) years from the date the Option is
granted.

         An Option may not be exercised for a fraction of a Share.

         An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and the Company has
received full payment for the Shares with respect to which the Option is
exercised. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.

         Exercise of an Option in any manner shall result in a decrease in the
number of Shares that thereafter may be available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to which the Option is
exercised.

                  (b)      TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP.
Subject to Section 9(c), in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant with the Company, such Optionee may, but
only within three (3) months (or such other period of time not less than thirty
(30) days as is determined by the Administrator, with such determination in the
case of an Incentive Stock Option being made at the time of grant of the Option
and not exceeding three (3) months) after the date of such termination (but in
no event later than the

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expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that the Optionee was
entitled to exercise it at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate. No
termination shall be deemed to occur and this Section 9(b) shall not apply if
(i) the Optionee is a Consultant who becomes an Employee; or (ii) the Optionee
is an Employee who becomes a Consultant.

                  (c)      DISABILITY OF OPTIONEE.

                           (i)      Notwithstanding Section 9(b) above, in the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant as a result of his or her total and permanent disability (within the
meaning of Section 22(e)(3) of the Code), Optionee may, but only within twelve
(12) months from the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate.

                           (ii)     In the event of termination of an Optionee's
Continuous Status as an Employee or Consultant as a result of a disability which
does not fall within the meaning of total and permanent disability (as set forth
in Section 22(e)(3) of the Code), Optionee may, but only within six (6) months
from the date of such termination (but in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), exercise
the Option to the extent otherwise entitled to exercise it at the date of such
termination. However, to the extent that such Optionee fails to exercise an
Option which is an Incentive Stock Option ("ISO") (within the meaning of Section
422 of the Code) within three (3) months of the date of such termination, the
Option will not qualify for ISO treatment under the Code. To the extent that
Optionee was not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option to the extent so entitled within six
months (6) from the date of termination, the Option shall terminate.

                  (d)      DEATH OF OPTIONEE. In the event of the death of an
Optionee during the period of Continuous Status as an Employee or Consultant and
having been in Continuous Status as an Employee or Consultant since the date of
grant of the Option, or within thirty (30) days following termination of
Optionee's Continuous Status as an Employee or Consultant, the Option may be
exercised, at any time within six (6) months following the date of death (but in
no event later than the expiration date of the term of such Option as set forth
in the Option Agreement), by Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of death or, if earlier,
the date of termination of Optionee's Continuous Status as an Employee or
Consultant. To the extent that Optionee was not entitled to exercise the Option
at the date of death or termination, as the case may be, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate.

                  (e)      RULE 16b-3. Options granted to Reporting Persons
shall comply with Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
for Plan transactions.

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                  (f)      BUYOUT PROVISIONS. The Administrator may at any time
offer to buy out for a payment in cash or Shares, an Option previously granted,
based on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.

         10.      TAXES.

                  (a)      As a condition of the exercise of an Option granted
under the Plan, the Optionee (or in the case of the Optionee's death, the person
exercising the Option) shall make such arrangements as the Administrator may
require for the satisfaction of any applicable federal, state, local or foreign
withholding tax obligations that may arise in connection with the exercise of
Option and the issuance of Shares. The Company shall not be required to issue
any Shares under the Plan until such obligations are satisfied.

                  (b)      In the case of an Employee and in the absence of any
other arrangement, the Employee shall be deemed to have directed the Company to
withhold or collect from his or her compensation an amount sufficient to satisfy
such tax obligations from the next payroll payment otherwise payable after the
date of an exercise of the Option.

                  (c)      This Section 10(c) shall apply only after the date,
if any, upon which the Common Stock becomes a Listed Security. In the case of
Optionee other than an Employee (or in the case of an Employee where the next
payroll payment is not sufficient to satisfy such tax obligations, with respect
to any remaining tax obligations), in the absence of any other arrangement and
to the extent permitted under the Applicable Laws, the Optionee shall be deemed
to have elected to have the Company withhold from the Shares to be issued upon
exercise of the Option that number of Shares having a Fair Market Value
determined as of the applicable Tax Date (as defined below) equal to the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, applicable to the exercise. For purposes of this Section 10, the
Fair Market Value of the Shares to be withheld shall be determined on the date
that the amount of tax to be withheld is to be determined under the Applicable
Laws (the "Tax Date").

                  (d)      If permitted by the Administrator, in its discretion,
an Optionee may satisfy his or her tax withholding obligations upon exercise of
an Option by surrendering to the Company Shares that (i) in the case of Shares
previously acquired from the Company, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
determined as of the applicable Tax Date equal to the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes,
applicable to the exercise.

                  (e)      Any election or deemed election by an Optionee to
have Shares withheld to satisfy tax withholding obligations under Section 10 (c)
or (d) above shall be irrevocable as to the particular Shares as to which the
election is made and shall be subject to the consent or disapproval of the
Administrator. Any election by an Optionee under Section 10(d) above must be
made on or prior to the applicable Tax Date.

                  (f)      In the event an election to have Shares withheld is
made by an Optionee and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the Optionee shall
receive the full number of Shares with respect to which the Option is exercised
but such Optionee shall be unconditionally obligated to tender back to the
Company the proper number of Shares on the applicable Tax Date.

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         11.      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR CERTAIN
OTHER TRANSACTIONS.

                  (a)      CHANGES IN CAPITALIZATION. Subject to any required
action by the share-holders of the Company, the number of shares of Common Stock
covered by each outstanding Option, and the number of shares of Common Stock
that have been authorized for issuance under the Plan but as to which no Options
have yet been granted or that have been returned to the Plan upon cancellation
or expiration of an Option, as well as the price per share of Common Stock
covered by each such outstanding Option, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination,
recapitalization or reclassification of the Common Stock, or any other increase
or decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.

                  (b)      DISSOLUTION OR LIQUIDATION. In the event of the
proposed dissolution or liquidation of the Company, the Board shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option will terminate immediately
prior to the consummation of such proposed action.

                  (c)      MERGER OR SALE OF ASSETS. In the event of a proposed
sale of all or substantially all of the Company's assets or a merger of the
Company with or into another corporation where the successor corporation issues
its securities to the Company's shareholders, each outstanding Option shall be
assumed or an equivalent option or right shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Board determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, that the Optionee shall have the right to exercise
the Option as to all of the Optioned Stock, including shares as to which the
Option would not otherwise be exercisable. If the Board makes an Option fully
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and the Option will terminate upon the expiration of such period.

                  (d)      CERTAIN DISTRIBUTIONS. In the event of any
distribution to the Company's shareholders of securities of any other entity or
other assets (other than dividends payable in cash or stock of the Company)
without receipt of consideration by the Company, the Administrator may, in its
discretion, appropriately adjust the price per share of Common Stock covered by
each outstanding Option to reflect the effect of such distribution.

         12.      NON-TRANSFERABILITY OF OPTIONS. Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised or
purchased during the lifetime of the Optionee, only by the Optionee.

                                      -10-
<PAGE>

         13.      TIME OF GRANTING OPTIONS. The date of grant of an Option
shall, for all purposes, be the date on which the Administrator makes the
determination granting such Option, or such other date as is determined by the
Board; provided however that in the case of any Incentive Stock Option, the
grant date shall be the later of the date on which the Administrator makes the
determination granting such Incentive Stock Option or the date of commencement
of the Optionee's employment relationship with the Company. Notice of the
determination shall be given to each Employee or Consultant to whom an Option is
so granted within a reasonable time after the date of such grant.

         14.      AMENDMENT AND TERMINATION OF THE PLAN.

                  (a)      AUTHORITY TO AMEND OR TERMINATE. The Board may at any
time amend, alter, suspend or discontinue the Plan, but no amendment,
alteration, suspension or discontinuation shall be made that would impair the
rights of any Optionee under any grant theretofore made, without his or her
consent. In addition, to the extent necessary and desirable to comply with Rule
16b-3 or with Section 422 of the Code (or any other applicable law or
regulation, including the requirements of any Stock Exchange), the Company shall
obtain shareholder approval of any Plan amendment in such a manner and to such a
degree as required.

                  (b)      EFFECT OF AMENDMENT OR TERMINATION. No amendment or
termination of the Plan shall adversely affect Options already granted, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.

         15.      CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended (the "Securities Act"), the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any Stock Exchange.

         As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by law.

         16.      RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan. The inability of
the Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

         17.      AGREEMENTS. Options shall be evidenced by written agreements
in such form as the Administrator shall approve from time to time.

         18.      SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject
to approval by the shareholders of the Company within twelve (12) months before
or after the date the Plan is adopted. Such shareholder approval shall be
obtained in the degree and manner required under applicable

                                      -11-
<PAGE>

state and federal law and the rules of any Stock Exchange upon which the Common
Stock is listed. All Options issued under the Plan shall become void in the
event such approval is not obtained.

         19.      INFORMATION AND DOCUMENTS TO OPTIONEES. The Company shall
provide financial statements at least annually to each Optionee during the
period such Optionee has one or more Options outstanding, and in the case of an
individual who acquired Shares pursuant to the Plan, during the period such
individual owns such Shares. The Company shall not be required to provide such
information if the issuance of Options under the Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information. In addition, at the time of issuance of any securities
under the Plan, the Company shall provide to the Optionee a copy of the Plan and
a copy of any agreement(s) pursuant to which securities under the Plan are
issued.

                                      -12-

<PAGE>

                                    NOVACEPT

                             1997 STOCK OPTION PLAN

                             STOCK OPTION AGREEMENT

         1.       GRANT OF OPTION. Novacept, a California corporation (the
"Company"), hereby grants to you, the optionee ("Optionee") named on the Notice
of Grant of Stock Options, an option (the "Option") to purchase a total number
of shares of Common Stock (the "Shares") set forth in the Notice of Grant of
Stock Options, at the exercise price per share set forth in the Notice of Grant
of Stock Options (the "Exercise Price") subject to the terms, definitions and
provisions of the Novacept 1997 Stock Option Plan (the "Plan") adopted by the
Company, which is incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in
this Option.

                  If designated an Incentive Stock Option, this Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code.

         2.       EXERCISE OF OPTION. This Option shall be exercisable during
its Term in accordance with the Vesting Schedule set out in the Notice of Grant
of Stock Options and with the provisions of Section 9 of the Plan as follows:

                  (a)      RIGHT TO EXERCISE.

                           (i)      This Option may not be exercised for a
fraction of a share.

                           (ii)     In the event of Optionee's death, disability
or other termination of employment, the exercisability of the Option is governed
by Sections 5, 6 and 7 below, subject to the limitation contained in Section
2(a)(i).

                           (iii)    In no event may this Option be exercised
after the date of expiration of the Term of this Option as set forth in the
Notice Grant of Stock Options.

                  (b)      METHOD OF EXERCISE. This Option shall be exercisable
by execution and delivery of the Exercise Notice and Restricted Stock Purchase
Agreement attached hereto as Exhibit A (the "Exercise Agreement") or of any
other form of written notice approved for such purpose by the Company which
shall state the election to exercise the Option, the number of Shares in respect
of which the Option is being exercised, and such other representations and
agreements as to the holder's investment intent with respect to such shares of
Common Stock as may be required by the Company pursuant to the provisions of the
Plan. Such written notice shall be signed by Optionee and shall be delivered in
person or by certified mail to the Chief Financial Officer of the Company. The
written notice shall be accompanied by payment of the Exercise Price. This
Option shall be deemed to be exercised upon receipt by the Company of such
written notice accompanied by the Exercise Price.

<PAGE>

                  No Shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant provisions
of applicable law and the requirements of any stock exchange upon which the
Shares may then be listed. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to Optionee on the date on which the
Option is exercised with respect to such Shares.

         3.       METHOD OF PAYMENT. Payment of the Exercise Price shall be by
any of the following, or a combination thereof, at the election of Optionee:

                  (a)      cash;

                  (b)      check;

                  (c)      surrender of other shares of Common Stock of the
Company which (i) in the case of Shares acquired pursuant to the exercise of a
Company option, have been owned by Optionee for more than six (6) months on the
date of surrender, and (ii) have a fair market value on the date of surrender
equal to the Exercise Price of the Shares as to which the Option is being
exercised; or

                  (d)      if there is a public market for the Shares and they
are registered under the Securities Act, delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds required to pay the
exercise price.

         4.       RESTRICTIONS ON EXERCISE. This Option may not be exercised
until such time as the Plan has been approved by the shareholders of the
Company, or if the issuance of such Shares upon such exercise or the method of
payment of consideration for such Shares would constitute a violation of any
applicable federal or state securities or other law or regulation, including any
rule under Part 207 of Title 12 of the Code of Federal Regulations as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.

         5.       TERMINATION OF RELATIONSHIP. In the event of termination of
Optionee's Continuous Status as an Employee or Consultant, Optionee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
Date"), exercise this Option during the Termination Period set forth in the
Notice of Stock Option Grant. To the extent that Optionee was not entitled to
exercise this Option at such Termination Date, or if Optionee does not exercise
this Option within the Termination Period, the Option shall terminate.

         6.       DISABILITY OF OPTIONEE.

                  (a)      Notwithstanding the provisions of Section 5 above, in
the event of termination of Continuous Status as an Employee or Consultant as a
result of Optionee's total and permanent disability (as defined in Section
22(e)(3) of the Code), Optionee may, but only within twelve (12) months from the
Termination Date (but in no event later than the Expiration Date set forth in
the Notice of Stock Option Grant), exercise this Option to the

                                      -2-

<PAGE>

extent Optionee was entitled to exercise it as of such Termination Date. To the
extent that Optionee was not entitled to exercise the Option as of the
Termination Date, or if Optionee does not exercise such Option (to the extent so
entitled) within the time specified in this Section 6(a), the Option shall
terminate.

                  (b)      Notwithstanding the provisions of Section 5 above, in
the event of termination of Optionee's consulting relationship or Continuous
Status as an Employee as a result of disability not constituting a total and
permanent disability (as set forth in Section 22(e)(3) of the Code), Optionee
may, but only within six (6) months from the Termination Date (but in no event
later than the Expiration Date set forth in the Notice of Stock Option Grant),
exercise the Option to the extent Optionee was entitled to exercise it as of
such Termination Date; provided, however, that if this is an Incentive Stock
Option and Optionee fails to exercise this Incentive Stock Option within three
(3) months from the Termination Date, this Option will cease to qualify as an
Incentive Stock Option (as defined in Section 422 of the Code) and Optionee will
be treated for federal income tax purposes as having received ordinary income at
the time of such exercise in an amount generally measured by the difference
between the Exercise Price for the Shares and the fair market value of the
Shares on the date of exercise. To the extent that Optionee was not entitled to
exercise the Option at the Termination Date, or if Optionee does not exercise
such Option to the extent so entitled within the time specified in this Section
6(b), the Option shall terminate.

         7.       DEATH OF OPTIONEE. In the event of the death of Optionee (a)
during the Term of this Option and while an Employee or Consultant of the
Company and having been in Continuous Status as an Employee or Consultant since
the date of grant of the Option, or (b) within thirty (30) days after Optionee's
Termination Date, the Option may be exercised at any time within six (6) months
following the date of death (but in no event later than the Expiration Date set
forth in the Notice of Stock Option Grant), by Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent of the right to exercise that had accrued at the Termination
Date.

         8.       NON-TRANSFERABILITY OF OPTION. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by him or
her. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of Optionee.

         9.       TERM OF OPTION. This Option may be exercised only within the
Term set forth in the Notice of Stock Option Grant, subject to the limitations
set forth in Section 7 of the Plan.

         10.      TAX CONSEQUENCES. Set forth below is a brief summary as of the
date of this Option of certain of the federal and California tax consequences of
exercise of this Option and disposition of the Shares under the laws in effect
as of the Date of Grant. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

                                      -3-
<PAGE>

                  (a)      EXERCISE OF INCENTIVE STOCK OPTION. If this Option
qualifies as an Incentive Stock Option, there will be no regular federal or
California income tax liability upon the exercise of the Option, although the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Exercise Price will be treated as an adjustment to the alternative
minimum tax for federal tax purposes and may subject Optionee to the alternative
minimum tax in the year of exercise.

                  (b)      EXERCISE OF NONSTATUTORY STOCK OPTION. If this Option
does not qualify as an Incentive Stock Option, there may be a regular federal
income tax liability and a California income tax liability upon the exercise of
the Option. Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the fair
market value of the Shares on the date of exercise over the Exercise Price. If
Optionee is an employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.

                  (c)      DISPOSITION OF SHARES. In the case of a Nonstatutory
Stock Option, if the Shares are held for at least one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
and California income tax purposes. In the case of an Incentive Stock Option, if
Shares transferred pursuant to the Option are held for at least one year after
exercise and are disposed of at least two years after the Date of Grant, any
gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal and California income tax purposes. If Shares purchased
under an Incentive Stock Option are disposed of within such one-year period or
within two years after the Date of Grant, any gain realized on such disposition
will be treated as compensation income (taxable at ordinary income rates) to the
extent of the difference between the Exercise Price and the lesser of (i) the
fair market value of the Shares on the date of exercise, or (ii) the sale price
of the Shares.

                  (d)      NOTICE OF DISQUALIFYING DISPOSITION OF INCENTIVE
STOCK OPTION SHARES. If the Option granted to Optionee herein is an Incentive
Stock Option, and if Optionee sells or otherwise disposes of any of the Shares
acquired pursuant to the Incentive Stock Option on or before the later of (i)
the date two years after the Date of Grant, or (ii) the date one year after the
date of exercise, Optionee shall immediately notify the Company in writing of
such disposition. Optionee acknowledges and agrees that he or she may be subject
to income tax withholding by the Company on the compensation income recognized
by Optionee from the early disposition by payment in cash or out of the current
earnings paid to Optionee.

         11.      WITHHOLDING TAX OBLIGATIONS. Optionee understands that, upon
exercising a Nonstatutory Stock Option, he or she will recognize income for tax
purposes in an amount equal to the excess of the then fair market value of the
Shares over the Exercise Price. However, the timing of this income recognition
may be deferred for up to six months if Optionee is subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). If Optionee is
an employee, the Company will be required to withhold

                                      -4-
<PAGE>

from Optionee's compensation, or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income.
Additionally, Optionee may at some point be required to satisfy tax withholding
obligations with respect to the disqualifying disposition of an Incentive Stock
Option. Optionee shall satisfy his or her tax withholding obligation arising
upon the exercise of this Option by one or some combination of the following
methods: (a) by cash payment, (b) out of Optionee's current compensation, (c) if
permitted by the Administrator, in its discretion, by surrendering to the
Company Shares which (i) in the case of Shares previously acquired from the
Company, have been owned by Optionee for more than six months on the date of
surrender, and (ii) have a fair market value on the date of surrender equal to
or greater than Optionee's marginal tax rate times the ordinary income
recognized, or (d) by electing to have the Company withhold from the Shares to
be issued upon exercise of the Option that number of Shares having a fair market
value equal to the amount required to be withheld. For this purpose, the fair
market value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined (the "Tax Date").

         If Optionee is subject to Section 16 of the Exchange Act (an
"Insider"), any surrender of previously owned Shares to satisfy tax withholding
obligations arising upon exercise of this Option must comply with the applicable
provisions of Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3").

         All elections by Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:

                  (a)      the election must be made on or prior to the
applicable Tax Date;

                  (b)      once made, the election shall be irrevocable as to
the particular Shares of the Option as to which the election is made; and

                  (c)      all elections shall be subject to the consent or
disapproval of the Administrator.

         12.      MARKET STANDOFF AGREEMENT. In connection with the initial
public offering of the Company's securities and upon request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
Optionee hereby agrees not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Shares (other than those
included in the registration) without the prior written consent of the Company
or such underwriters, as the case may be, for such period of time (not to exceed
180 days) from the effective date of such registration as may be requested by
the Company or such managing underwriters and to execute an agreement reflecting
the foregoing as may be requested by the underwriters at the time of the public
offering.

         This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
document.

                                                    NOVACEPT

                                      -5-
<PAGE>

                                                    By: ________________________

                                                        ________________________
                                                        (Print name and title)

                                      -6-
<PAGE>

         13.      Option Not a Service Contract. VESTING OF SHARES PURSUANT TO
THIS OPTION IS EARNED ONLY BY CONTINUING EMPLOYMENT OR CONSULTANCY AT THE WILL
OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S
STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON
OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY
THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME,
WITH OR WITHOUT CAUSE.

    Dated: _______________   Optionee: _____________________

                                      -7-
<PAGE>

                                    EXHIBIT A

                                    NOVACEPT

                             1997 STOCK OPTION PLAN

             EXERCISE NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT

         This Agreement ("Agreement") is made as of ______________, by and
between Novacept, a California corporation (the "Company"), and
___________________("Purchaser"). To the extent any capitalized terms used in
this Agreement are not defined, they shall have the meaning ascribed to them in
the 1997 Stock Option Plan.

         1.       EXERCISE OF OPTION. Subject to the terms and conditions
hereof, Purchaser hereby elects to exercise his or her option to purchase
__________ shares of the Common Stock (the "Shares") of the Company under and
pursuant to the Company's 1997 Stock Option Plan (the "Plan") and the Notice of
Grant of Stock Options and Option Agreement dated ______________, (the "Option
Agreement"). The purchase price for the Shares shall be $____ per Share for a
total purchase price of $_______________. The term "Shares" refers to the
purchased Shares and all securities received in replacement of the Shares or as
stock dividends or splits, all securities received in replacement of the Shares
in a recapitalization, merger, reorganization, exchange or the like, and all
new, substituted or additional securities or other properties to which Purchaser
is entitled by reason of Purchaser's ownership of the Shares.

         2.       TIME AND PLACE OF EXERCISE. The purchase and sale of the
Shares under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement in accordance
with the provisions of Section 2(b) of the Option Agreement. On such date, the
Company will deliver to Purchaser a certificate representing the Shares to be
purchased by Purchaser (which shall be issued in Purchaser's name) against
payment of the exercise price therefor by Purchaser by (a) check made payable to
the Company, (b) cancellation of indebtedness of the Company to Purchaser, (c)
delivery of shares of the Common Stock of the Company in accordance with Section
3 of the Option Agreement, or (d) by a combination of the foregoing.

         3.       LIMITATIONS ON TRANSFER. In addition to any other limitation
on transfer created by applicable securities laws, Purchaser shall not assign,
encumber or dispose of any interest in the Shares except in compliance with the
provisions below and applicable securities laws.

                  (a)      RIGHT OF FIRST REFUSAL. Before any Shares held by
Purchaser or any transferee of Purchaser (either being sometimes referred to
herein as the "Holder") may be sold or otherwise transferred (including transfer
by gift or operation of law), the Company or its assignee(s) shall have a right
of first refusal to purchase the Shares on the terms and conditions set forth in
this Section 3(a) (the "Right of First Refusal").

                           (i)      NOTICE OF PROPOSED TRANSFER. The Holder of
the Shares shall deliver to the Company a written notice (the "Notice") stating:
(i) the Holder's bona fide

<PAGE>

intention to sell or otherwise transfer such Shares; (ii) the name of each
proposed purchaser or other transferee ("Proposed Transferee"); (iii) the number
of Shares to be transferred to each Proposed Transferee; and (iv) the terms and
conditions of each proposed sale or transfer. The Holder shall offer the Shares
at the same price (the "Offered Price") and upon the same terms (or terms as
similar as reasonably possible) to the Company or its assignee(s).

                           (ii)     EXERCISE OF RIGHT OF FIRST REFUSAL. At any
time within thirty (30) days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase all,
but not less than all, of the Shares proposed to be transferred to any one or
more of the Proposed Transferees, at the purchase price determined in accordance
with subsection (iii) below.

                           (iii)    PURCHASE PRICE. The purchase price
("Purchase Price") for the Shares purchased by the Company or its assignee(s)
under this Section 3(a) shall be the Offered Price. If the Offered Price
includes consideration other than cash, the cash equivalent value of the
non-cash consideration shall be determined by the Board of Directors of the
Company in good faith.

                           (iv)     PAYMENT. Payment of the Purchase Price shall
be made, at the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice or in
the manner and at the times set forth in the Notice.

                           (v)      HOLDER'S RIGHT TO TRANSFER. If all of the
Shares proposed in the Notice to be transferred to a given Proposed Transferee
are not purchased by the Company and/or its assignee(s) as provided in this
Section 3(a), then the Holder may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within 60 days after the date of the
Notice and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section 3 shall continue to apply
to the Shares in the hands of such Proposed Transferee. If the Shares described
in the Notice are not transferred to the Proposed Transferee within such period,
or if the Holder proposes to change the price or other terms to make them more
favorable to the Proposed Transferee, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.

                           (vi)     EXCEPTION FOR CERTAIN FAMILY TRANSFERS.
Anything to the contrary contained in this Section 3(a) notwithstanding, the
transfer of any or all of the Shares during Purchaser's lifetime or on
Purchaser's death by will or intestacy to Purchaser's Immediate Family or a
trust for the benefit of Purchaser's Immediate Family shall be exempt from the
provisions of this Section 3(a). "Immediate Family" as used herein shall mean
spouse, lineal descendant or antecedent, father, mother, brother or sister. In
such case, the transferee or other recipient shall receive and hold the Shares
so transferred subject to the provisions of this Section,

                                      -2-
<PAGE>

and there shall be no further transfer of such Shares except in accordance with
the terms of this Section 3.

                  (b)      INVOLUNTARY TRANSFER.

                           (i)      COMPANY'S RIGHT TO PURCHASE UPON INVOLUNTARY
TRANSFER. In the event, at any time after the date of this Agreement, of any
transfer by operation of law or other involuntary transfer (including death or
divorce, but excluding a transfer to Immediate Family as set forth in Section
3(a)(vi) above) of all or a portion of the Shares by the record holder thereof,
the Company shall have an option to purchase all of the Shares transferred at
the greater of the purchase price paid by Purchaser pursuant to this Agreement
or the fair market value of the Shares on the date of transfer. Upon such a
transfer, the person acquiring the Shares shall promptly notify the Secretary of
the Company of such transfer. The right to purchase such Shares shall be
provided to the Company for a period of thirty (30) days following receipt by
the Company of written notice by the person acquiring the Shares.

                           (ii)     PRICE FOR INVOLUNTARY TRANSFER. With respect
to any stock to be transferred pursuant to Section 3(b)(i), the price per Share
shall be a price set by the Board of Directors of the Company that will reflect
the current value of the stock in terms of present earnings and future prospects
of the Company. The Company shall notify Purchaser or his or her executor of the
price so determined within thirty (30) days after receipt by it of written
notice of the transfer or proposed transfer of Shares. However, if the Purchaser
does not agree with the valuation as determined by the Board of Directors of the
Company, the Purchaser shall be entitled to have the valuation determined by an
independent appraiser to be mutually agreed upon by the Company and the
Purchaser and whose fees shall be borne equally by the Company and the
Purchaser.

                  (c)      ASSIGNMENT. The right of the Company to purchase any
part of the Shares may be assigned in whole or in part to any shareholder or
shareholders of the Company or other persons or organizations; provided,
however, that an assignee, other than a corporation that is the parent or a 100%
owned subsidiary of the Company, must pay the Company, upon assignment of such
right, cash equal to the difference between the original purchase price and fair
market value, if the original purchase price is less than the fair market value
of the Shares subject to the assignment.

                  (d)      RESTRICTIONS BINDING ON TRANSFEREES. All transferees
of Shares or any interest therein will receive and hold such Shares or interest
subject to the provisions of this Agreement. Any sale or transfer of the
Company's Shares shall be void unless the provisions of this Agreement are
satisfied.

                  (e)      TERMINATION OF RIGHTS. The right of first refusal
granted the Company by Section 3(a) above and the option to repurchase the
Shares in the event of an involuntary transfer granted the Company by Section
3(b) above shall terminate upon the first sale of Common Stock of the Company to
the general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act.
Upon termination of the right of first refusal described in Section 3(a) above,
a new certificate or

                                      -3-
<PAGE>

certificates representing the Shares not repurchased shall be issued, on
request, without the legend referred to in Section 6(a)(ii) herein and delivered
to Purchaser.

         4.       INVESTMENT AND TAXATION REPRESENTATIONS. In connection with
the purchase of the Shares, Purchaser represents to the Company the following:

                  (a)      Purchaser is aware of the Company's business affairs
and financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the
securities. Purchaser is purchasing these securities for investment for his or
her own account only and not with a view to, or for resale in connection with,
any "distribution" thereof within the meaning of the Securities Act.

                  (b)      Purchaser understands that the securities have not
been registered under the Securities Act by reason of a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Purchaser's investment intent as expressed herein.

                  (c)      Purchaser further acknowledges and understands that
the securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Purchaser further acknowledges and understands that the Company is under no
obligation to register the securities. Purchaser understands that the
certificate(s) evidencing the securities will be imprinted with a legend which
prohibits the transfer of the securities unless they are registered or such
registration is not required in the opinion of counsel for the Company.

                  (d)      Purchaser is familiar with the provisions of Rules
144 and 701, each promulgated under the Securities Act, which, in substance,
permit limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof (or from an affiliate of such issuer), in a
non-public offering subject to the satisfaction of certain conditions. Rule 701
provides that if the issuer qualifies under Rule 701 at the time of issuance of
the securities, such issuance will be exempt from registration under the
Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
securities exempt under Rule 701 may be resold by the Purchaser ninety (90) days
thereafter, subject to the satisfaction of certain of the conditions specified
by Rule 144, including, among other things: (1) the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934); and, in the case of an affiliate, (2) the availability of certain public
information about the Company, and the amount of securities being sold during
any three month period not exceeding the limitations specified in Rule 144(e),
if applicable. Notwithstanding this paragraph (d), Purchaser acknowledges and
agrees to the restrictions set forth in paragraph (f) hereof.

         In the event that the Company does not qualify under Rule 701 at the
time of purchase, then the securities may be resold by the Purchaser in certain
limited circumstances subject to the provisions of Rule 144, which requires,
among other things: (1) the availability of certain public information about the
Company; (2) the resale occurring not less than one year after the party has
purchased, and made full payment of (within the meaning of Rule 144), the
securities to be sold;

                                      -4-
<PAGE>

and, in the case of an affiliate, or of a non-affiliate who has held the
securities less than two years, (3) the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934) and
the amount of securities being sold during any three month period not exceeding
the specified limitations stated therein, if applicable.

                  (e)      Purchaser further understands that at the time he or
she wishes to sell the securities there may be no public market upon which to
make such a sale, and that, even if such a public market then exists, the
Company may not be satisfying the current public information requirements of
Rule 144 or 701, and that, in such event, Purchaser would be precluded from
selling the securities under Rule 144 or 701 even if the one-year minimum
holding period had been satisfied.

                  (f)      Purchaser further understands that in the event all
of the applicable requirements of Rule 144 or 701 are not satisfied,
registration under the Securities Act, compliance with Regulation A, or some
other registration exemption will be required; and that, notwithstanding the
fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and
Exchange Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.

                  (g)      Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

         5.       RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

                  (a)      LEGENDS. The certificate or certificates representing
the Shares shall bear the following legends (as well as any legends required by
applicable state and federal corporate and securities laws):

                           i)       THE SHARES REPRESENTED BY THIS CERTIFICATE
                                    HAVE NOT BEEN REGISTERED UNDER THE
                                    SECURITIES ACT OF 1933, AND HAVE BEEN
                                    ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
                                    TO, OR IN CONNECTION WITH, THE SALE OR
                                    DISTRIBUTION THEREOF. NO SUCH SALE OR
                                    DISPOSITION MAY BE EFFECTED WITHOUT AN
                                    EFFECTIVE REGISTRATION STATEMENT RELATED
                                    THERETO OR AN OPINION OF COUNSEL FOR THE
                                    COMPANY THAT SUCH REGISTRATION IS NOT
                                    REQUIRED UNDER THE SECURITIES ACT OF 1933.

                                      -5-
<PAGE>

                           (ii)     THE SHARES REPRESENTED BY THIS CERTIFICATE
                                    MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH
                                    THE TERMS OF AN AGREEMENT BETWEEN THE
                                    COMPANY AND THE SHAREHOLDER, A COPY OF WHICH
                                    IS ON FILE WITH THE SECRETARY OF THE
                                    COMPANY.

                           (iii)    IT IS UNLAWFUL TO CONSUMMATE A SALE OR
                                    TRANSFER OF THIS SECURITY, OR ANY INTEREST
                                    THEREIN, OR TO RECEIVE ANY CONSIDERATION
                                    THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT
                                    OF THE COMMISSIONER OF CORPORATIONS OF THE
                                    STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN
                                    THE COMMISSIONER'S RULES.

         Purchaser understands that transfer of the Shares may be restricted by
Section 260.141.11 of the Rules of the California Corporations Commissioner, a
copy of which is attached to this Agreement.

                  (b)      STOP-TRANSFER NOTICES. Purchaser agrees that, in
order to ensure compliance with the restrictions referred to herein, the Company
may issue appropriate "stop transfer" instructions to its transfer agent, if
any, and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.

                  (c)      REFUSAL TO TRANSFER. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement or
(ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.

         6.       NO EMPLOYMENT RIGHTS. Nothing in this Agreement shall affect
in any manner whatsoever the right or power of the Company, or a parent or
subsidiary of the Company, to terminate Purchaser's employment, for any reason,
with or without cause.

         7.       MARKET STAND-OFF AGREEMENT. In connection with the initial
public offering of the Company's securities and upon request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
Purchaser agrees not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any Shares (other than those included
in the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed 180
days) from the effective date of such registration as may be requested by the
Company or such managing underwriters and to execute an agreement reflecting the
foregoing as may be requested by the underwriters at the time of the public
offering.

                                      -6-
<PAGE>

         8.       MISCELLANEOUS.

                  (a)      GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law.

                  (b)      ENTIRE AGREEMENT; ENFORCEMENT OF RIGHTS. This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter herein and merges all prior discussions between
them. No modification of or amendment to this Agreement, nor any waiver of any
rights under this Agreement, shall be effective unless in writing signed by the
parties to this Agreement. The failure by either party to enforce any rights
under this Agreement shall not be construed as a waiver of any rights of such
party.

                  (c)      SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith. In the event that the parties
cannot reach a mutually agreeable and enforceable replacement for such
provision, then (i) such provision shall be excluded from this Agreement, (ii)
the balance of the Agreement shall be interpreted as if such provision were so
excluded and (iii) the balance of the Agreement shall be enforceable in
accordance with its terms.

                  (d)      CONSTRUCTION. This Agreement is the result of
negotiations between and has been reviewed by each of the parties hereto and
their respective counsel, if any; accordingly, this Agreement shall be deemed to
be the product of all of the parties hereto, and no ambiguity shall be construed
in favor of or against any one of the parties hereto.

                  (e)      NOTICES. Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient when delivered
personally or sent by telegram or fax or forty-eight (48) hours after being
deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party's address as
set forth below or as subsequently modified by written notice.

                  (f)      COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

                  (g)      SUCCESSORS AND ASSIGNS. The rights and benefits of
this Agreement shall inure to the benefit of, and be enforceable by the
Company's successors and assigns. The rights and obligations of Purchaser under
this Agreement may only be assigned with the prior written consent of the
Company.

                                      -7-
<PAGE>

         The parties have executed this Exercise Notice and Restricted Stock
Purchase Agreement as of the date first set forth above.

                                    COMPANY:

                                    NOVACEPT

                                    By: ______________________________________

                                    Name: ____________________________________
                                             (print)

                                    Title: ___________________________________

                                    1047 Elwell Court
                                    Palo Alto, CA 94303

                                    PURCHASER:

                                    ___________________________________________
                                    (Signature)

                                    ___________________________________________
                                    (Print Name)

                                    Social Security #:______________________

                                    Address:

                                    ___________________________

                                    ___________________________

I, ______________________, spouse of___________________, have read and hereby
approve the foregoing Agreement. In consideration of the Company's granting my
spouse the right to purchase the Shares as set forth in the Agreement, I hereby
agree to be irrevocably bound by the Agreement and further agree that any
community property or other such interest shall hereby by similarly bound by the
Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any
amendment or exercise of any rights under the Agreement.

                                      -8-
<PAGE>

                                          ________________________________
                                          Spouse of ______________________

                                      -9-
<PAGE>

              STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
         Title 10. Investment - Chapter 3. Commissioner of Corporations

         260.141.11: Restriction on Transfer.

         (a) The issuer of any security upon which a restriction on transfer has
been imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 shall cause a
copy of this section to be delivered to each issuee or transferee of such
security at the time the certificate evidencing the security is delivered to the
issuee or transferee.

         (b) It is unlawful for the holder of any such security to consummate a
sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:

                  (1)      to the issuer;

                  (2)      pursuant to the order or process of any court;

                  (3)      to any person described in Subdivision (i) of Section
         25102 of the Code or Section 260.105.14 of these rules;

                  (4)      to the transferor's ancestors, descendants or spouse,
         or any custodian or trustee for the account of the transferor or the
         transferor's ancestors, descendants, or spouse; or to a transferee by a
         trustee or custodian for the account of the transferee or the
         transferee's ancestors, descendants or spouse;

                  (5)      to holders of securities of the same class of the
         same issuer;

                  (6)      by way of gift or donation inter vivos or on death;

                  (7)      by or through a broker-dealer licensed under the Code
         (either acting as such or as a finder) to a resident of a foreign
         state, territory or country who is neither domiciled in this state to
         the knowledge of the broker-dealer, nor actually present in this state
         if the sale of such securities is not in violation of any securities
         law of the foreign state, territory or country concerned;

                  (8)      to a broker-dealer licensed under the Code in a
         principal transaction, or as an underwriter or member of an
         underwriting syndicate or selling group;

                  (9)      if the interest sold or transferred is a pledge or
         other lien given by the purchaser to the seller upon a sale of the
         security for which the Commissioner's written consent is obtained or
         under this rule not required;

                  (10)     by way of a sale qualified under Sections 25111,
         25112, 25113 or 25121 of the Code, of the securities to be transferred,
         provided that no order under Section 25140 or Subdivision (a) of
         Section 25143 is in effect with respect to such qualification;

                  (11)     by a corporation to a wholly owned subsidiary of such
         corporation, or by a wholly owned subsidiary of a corporation to such
         corporation;

                  (12)     by way of an exchange qualified under Section 25111,
         25112 or 25113 of the Code, provided that no order under Section 25140
         or Subdivision (a) of Section 25143 is in effect with respect to such
         qualification;

                  (13)     between residents of foreign states, territories or
         countries who are neither domiciled nor actually present in this state;

                  (14)     to the State Controller pursuant to the Unclaimed
         Property Law or to the administrator of the unclaimed property law of
         another state;

                  (15)     by the State Controller pursuant to the Unclaimed
         Property Law or by the administrator of the unclaimed property law of
         another state if, in either such case, such person (i) discloses to
         potential purchasers at the sale that transfer of the securities is
         restricted under this rule, (ii) delivers to each purchaser a copy of
         this rule, and (iii) advises the Commissioner of the name of each
         purchaser;

                  (16)     by a trustee to a successor trustee when such
         transfer does not involve a change in the beneficial ownership of the
         securities; or

                  (17)     by way of an offer and sale of outstanding securities
         in an issuer transaction that is subject to the qualification
         requirement of Section 25110 of the Code but exempt from that
         qualification requirement by subdivision (f) of Section 25102;

provided that any such transfer is on the condition that any certificate
evidencing the security issued to such transferee shall contain the legend
required by this section.

         (c)      The certificates representing all such securities subject to
such a restriction on transfer, whether upon initial issuance or upon any
transfer thereof, shall bear on their face a legend, prominently stamped or
printed thereon in capital letters of not less than 10-point size, reading as
follows:

         "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."