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                                                                    Exhibit 10.2


                           RITA MEDICAL SYSTEMS, INC.

                            1994 INCENTIVE STOCK PLAN

     1. Purposes of the Plan. The purposes of this Stock 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 non-statutory 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. Stock purchase rights may also be granted under the
Plan.

     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 a Committee appointed by the Board of Directors in
accordance with Section 4 of the Plan.

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

     (f) "Company" means RITA MEDICAL SYSTEMS, INC.

     (g) "Consultant" means any person who is engaged by the Company or any
Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any director of the Company whether
compensated for such services or not, provided that if and in the event the
Company registers any class of any equity security pursuant to the Exchange Act,
the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the Company.

     (h) "Continuous Status as an Employee or Consultant" means that the
employment or consulting relationship with the Company or any Parent or
Subsidiary is not interrupted or terminated. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Company, including sick leave, military leave, or any
other personal leave, provided, however, that for purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract (including certain Company
policies) or statute, provided, further, that on the ninety-first (91st) day of
any such leave (where reemployment is not guaranteed by contract or statute) the
Optionee's Incentive Stock Option shall cease to be treated as an Incentive
Stock Option and will be treated for tax
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purposes as a Nonstatutory Stock Option, or (ii) transfers between locations of
the Company or between the Company, its Parent, its Subsidiaries or its
successor.

     (i) "Employee" means any person, including officers and directors, employed
by the Company or any Parent or Subsidiary of the Company. The payment of a
director's fee by the Company shall not be sufficient to constitute "employment"
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 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
     System 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 exchange or system 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 System 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; 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.

     (1) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

     (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.

     (o) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

     (p) "Option" means a stock option granted pursuant to the Plan.

     (q) "Optioned Stock" means the Common Stock subject to an Option or a Stock
Purchase Right.


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     (r) "Optionee" means an Employee or Consultant who receives an Option or
Stock Purchase Right.

     (s) "Parent" means a parent corporation, whether now or hereafter existing,
as defined in Section 424(e) of the Code.

     (t) "Plan" means this 1994 Incentive Stock Plan.

     (u) "Restricted Stock" means shares of Common Stock acquired pursuant to a
grant of a Stock Purchase Right under Section 11 below.

     (v) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 12 below.

     (w) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 below.

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

     3. "Stock Subject to the Plan" Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is 4,764,080 shares of Common Stock. The shares may be
authorized, but unissued, or reacquired Common Stock.

     If an Option or Stock Purchase Right should expire or become unexercisable
for any reason without having been exercised in full, the unpurchased Shares
which were subject thereto shall, unless the Plan shall have been terminated,
become available for future grant under the Plan.

     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) Administration With Respect to Directors and Officers. With
     respect to grants of Options or Stock Purchase Rights to Employees who are
     also officers or directors of the Company, the Plan shall be administered
     by (A) the Board if the Board may administer the Plan in compliance with
     Rule 16b-3 promulgated under the Exchange Act or any successor thereto
     ("Rule 16b-3") with respect to a plan intended to qualify thereunder as a
     discretionary plan, or (B) a committee designated by the Board to
     administer the Plan, which committee shall be constituted in such a manner
     as to permit the Plan to comply with Rule 16b-3 with respect to a plan
     intended to qualify thereunder as a discretionary plan. Once appointed,



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     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 Rule 16b-3 with respect to a plan intended to qualify
     thereunder as a discretionary plan.

          (ii) Multiple Administrative Bodies. If permitted by Rule 16b-3, the
     Plan may be administered by different bodies with respect to directors,
     non-director officers and Employees who are neither directors nor officers.

          (iii) Administration With Respect to Consultants and Other Employees.
     With respect to grants of Options or Stock Purchase Rights to Employees or
     Consultants who are neither directors nor officers of the Company, 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 meanders 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 upon which the Common Stock is
listed, 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 and Stock
     Purchase Rights may from time to time be granted hereunder;

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

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


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          (vii) to determine whether and under what circumstances an Option may
     be settled in cash under subsection 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 determine the terms and restrictions applicable to Stock
     Purchase Rights and the Restricted Stock purchased by exercising such Stock
     Purchase Rights; and

          (x) to construe and interpret the terms of the Plan and awards granted
     pursuant to the Plan.

     (d) Effect of Administrator's Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Optionees
and any other holders of any Options or Stock Purchase Rights.

     5. Eligibility.

     (a) Nonstatutory Stock Options and Stock Purchase Rights 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 or Stock
Purchase Right may, if otherwise eligible, be granted additional Options or
Stock Purchase Rights.

     (b) 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.

     (c) For purposes of 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 shall be determined as of the time the Option with respect to such
Shares is granted.

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

     (e) Upon the Company or a successor corporation issuing any class of common
equity securities required to be registered under Section 12 of the Securities
Exchange Act of 1934, as amended, or upon the Plan being assumed by a
corporation having a class of common equity securities required to be registered
under Section 12 of the Securities Exchange


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Act, the following limitations shall apply to grants of Options and Stock
Purchase Rights to Employees:

          (i) No Employee shall be granted, in any fiscal year of the Company,
     Options and Stock Purchase Rights to purchase more than 1,000,000 Shares.

          (ii) The foregoing limitation shall be adjusted proportionately in
     connection with any change in the Company's capitalization as described in
     Section 12(a).

          (iii) If an Option or Stock Purchase Right is cancelled (other than in
     connection with a transaction described in Section 12), the cancelled
     Option or Stock Purchase Right will be counted against the limit set forth
     in Section 5(e)(i). For this purpose, if the exercise price of an Option or
     Stock Purchase Right is reduced, the transaction will be treated as a
     cancellation of the Option or Stock Purchase Right and the grant of a new
     Option or Stock Purchase Right.

     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. 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 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

               (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 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 other than an Employee described in
          the preceding paragraph, the per Share exercise price shall be no less
          than 100% of the Fair Market Value per Share on the date of grant.


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          (ii) In the case of a Nonstatutory Stock Option

               (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
          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 which (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, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (5) 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, or (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to accept, the Board
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 Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.

     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 full payment for the
Shares with respect which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) 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 12 of the Plan.


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     Exercise of an Option in any manner shall result in a decrease in the
number of Shares which 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. In the event of
termination of an Optionee's Continuous Status as an Employee or Consultant with
the Company (but not in the event of an Optionee's change of status from
Employee to Consultant (in which case an Employee's Incentive Stock Option shall
automatically convert to a Nonstatutory Stock Option on the ninety-first (91st)
day following such change of status) or from Consultant to Employee), such
Optionee may, but only within such period of time as is determined by the
Administrator, of at least thirty (30) days, with such determination in the case
of an Incentive Stock Option not exceeding three (3) months after 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 his or her Option to
the extent that 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.

     (c) Disability of Optionee. In the event of termination of an Optionee's
consulting relationship or Continuous Status as an Employee as a result of his
or her disability, Optionee may, but only within six (6) months from the date of
such termination (and 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,
provided, however, that if such disability is not a "disability" as such term is
defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock
Option such Incentive Stock Option shall automatically convert to a Nonstatutory
Stock Option on the day three months and one day following 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, and the
Shares covered by such Option shall revert to the Plan.

     (d) Death of Optionee. In the event of the death of an optionee, the Option
may be exercised at any time within twelve (12) months following the date of
death (but in no event later than the expiration of the term of such Option as
set forth in the Notice of Grant), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that the Optionee was entitled to exercise the Option at the date of
death. If, at the time of death, the Optionee was not entitled to exercise his
or her entire Option, the Shares covered by the unexercisable portion of the
Option shall immediately revert to the Plan. If, after death, the Optionee's
estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.

     (e) Rule 16b-3. Options granted to persons subject to Section 16(b) of the
Exchange Act must comply with Rule 16b-3 and shall contain such additional
conditions or


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restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions.

     (f) Buyout Provisions. The Administrator may at any time offer to buy out
for a patent 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. Non-Transferability of Options and Stock Purchase Rights. Options and
Stock Purchase Rights 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, during the lifetime of the
Optionee, only by the Optionee.

     11. Stock Purchase Rights.

     (a) Rights to Purchase. Stock Purchase Rights may be issued either alone,
in addition to, or in tandem with other awards granted under the Plan and/or
cash awards made outside of the Plan. After the Administrator determines that it
will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer, which shall in no event exceed thirty (30) days from the date upon which
the Administrator made the determination to grant the Stock Purchase Right. The
offer shall be accepted by execution of a Restricted Stock purchase agreement in
the form determined by the Administrator. Shares purchased pursuant to the grant
of a Stock Purchase Right shall be referred to herein as "Restricted Stock."

     (b) Repurchase Option. Unless the Administrator determines otherwise, the
Restricted Stock purchase agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment with the Company for any reason (including death or Disability). The
purchase price for Shares repurchased pursuant to the Restricted Stock purchase
agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at such rate as the Administrator may determine, but at a
minimum rate of 20% per year.

     (c) Other Provisions. The Restricted Stock purchase agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as
may be determined by the Administrator in its sole discretion. In addition, the
provisions of Restricted Stock purchase agreements need not be the same with
respect to each purchaser.

     (d) Rights as a Shareholder. Once the Stock Purchase Right is exercised,
the purchaser shall have the rights equivalent to those of a shareholder, and
shall be a shareholder when his or her purchase is entered upon the records of
the duly authorized transfer agent of the Company. No adjustment will be made
for a dividend or other right for which the record date is


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prior to the date the Stock Purchase Right is exercised, except as provided in
Section 12 of the Plan.

     12. Adjustments Upon Changes in Capitalization or Merger.

     (a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, 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 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 or Stock
Purchase Right.

     (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 or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.

     (c) Merger. In the event of a merger of the Company with or into another
corporation, the Option or Stock Purchase Right 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. If, in such event, the
Option or Stock Purchase Right is not assumed or substituted, the Option or
Stock Purchase Right shall terminate as of the date of the closing of the
merger. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the merger, the option or right
confers the right to purchase, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the merger, the
consideration (whether stock, cash, or other securities or property) received in
the merger by holders of Common Stock for each Share held on the effective date
of the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares), provided, however, that if such consideration received in the merger
was not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common


                                      -10-
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stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the merger.

     13. Time of Granting Options and Stock Purchase Rights. The date of grant
of an Option or Stock Purchase Right shall, for all purposes, be the date on
which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Board. Notice of the
determination shall be given to each Employee or Consultant to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.

     14. 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 and
employment tax obligations that may arise in connection with the exercise of the
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 14(c) shall apply only after the date, if any, upon which
the Common Stock becomes a Listed Security. In the case of an 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
amounts required to be withheld. For purposes of this Section 14, 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 amounts required to be
withheld.

     (e) Any election or deemed election by a Optionee to have Shares withheld
to satisfy tax withholding obligations under Section 14(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



                                      -11-
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disapproval of the Administrator. Any election by an Optionee under Section
14(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 Tax Date.

     15. Amendment and Termination of the Plan.

     (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which 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 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established 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. Any such amendment or termination
of the Plan shall not affect Options or Stock Purchase Rights already granted,
and such Options and Stock Purchase Rights shall remain in full force and effect
as if this Plan had not been amended or terminated, unless mutually agreed
otherwise between the Optionee and the Board, which agreement must be in writing
and signed by the Optionee and the Company.

     16. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right 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 Exchange Act,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

     As a condition to the exercise of an Option or Stock Purchase Right, the
Company may require the person exercising such Option or Stock Purchase Right 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 any of the aforementioned relevant provisions of
law.

     17. 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.


                                      -12-
<PAGE>

     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.

     18. Agreements. Options and Stock Purchase Rights shall be evidenced by
written agreements in such form as the Board shall approve from time to time.

     19. 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 state and federal law and the
rules of any stock exchange upon which the Common Stock is listed.

     20. Information to Optionees and Purchasers. The Company shall provide to
each Optionee and to each individual who acquired Shares pursuant to the Plan,
not less frequently than annually during the period such Optionee or purchaser
has one or more Options or Stock Purchase Rights outstanding, and, in the case
of an individual who acquired Shares pursuant to the Plan, during the period
such individual owns such Shares, copies of annual financial statements. The
Company shall not be required to provide such statements to key employees whose
duties in connection with the Company assure their access to equivalent
information.


                                      -13-
<PAGE>

                           RITA MEDICAL SYSTEMS, INC.

                            1994 INCENTIVE STOCK PLAN

                             STOCK OPTION AGREEMENT

     Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.

I.       NOTICE OF STOCK OPTION GRANT

          Name
          Address1
          Address2

     You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

<TABLE>
<S>                                            <C>
         Date of Grant                           GrantDate

         Vesting Commencement Date               VCD

         Exercise Price per Share              $  ExercisePrice

         Total Number of Shares Granted          NoShares

         Total Exercise Price                  $  TotalPrice

         Type of Option:                         ISO   Incentive Stock Option Agreement

                                                 NSO   Nonstatutory Stock Option

         Term/Expiration Date:                   TermDate
</TABLE>

Vesting Schedule:

     This Option may be exercised, in whole or in part, in accordance with the
following schedule:

     1/48th of the Shares subject to the Option shall be exercisable on each
monthly anniversary of the Vesting Commencement Date, provided that on such date
the Optionee remains in continuous status as an Employee or Consultant until all
of the Shares are exercisable.



                                      -14-
<PAGE>

Termination Period:

     This Option may be exercised for three months after termination of
employment or consulting relationship, or such longer period as may be
applicable upon death or disability of Optionee as provided in the Plan, but in
no event later than the Term/Expiration Date as provided above.

II.  AGREEMENT

     1. Grant of Option. RITA Medical Systems, Inc. (the "Company"), hereby
grants to the Optionee named in the Notice of Grant (the "Optionee"), an option
(the "Option") to purchase the total number of shares of Common Stock (the
"Shares") set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price") subject to the terms,
definitions and provisions of the 1994 Incentive Stock 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 in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").

     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 and with the
provisions of Section 9 of the Plan as follows:

          (i)  Right to Exercise.

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

               (b)  In the event of Optionee's death, disability or other
                    termination of the employment or consulting relationship,
                    the exercisability of the Option is governed by Sections 6,
                    7 and 8 below, subject to the limitation contained in
                    subsection 2(i)(c).

               (c)  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 of Grant.

          (ii) Method of Exercise. This Option shall be exercisable by written
     notice (in the form attached as Exhibit A) 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 the Optionee and shall be delivered in
     person or by certified mail to the Secretary of the Company. The written
     notice shall be accompanied by payment of the Exercise


                                      -15-
<PAGE>

     Price. This Option shall be deemed to be exercised upon receipt by the
     Company of such written notice accompanied by the Exercise Price.

     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 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 the Optionee on the date on which the Option is exercised with
respect to such Shares.

     3. Optionee's Representations. In the event the Shares purchasable pursuant
to the exercise of this Option have not been registered under the Securities Act
of 1933, as amended, at the time this Option is exercised, Optionee shall, if
required by the Company, concurrently with the exercise of all or any portion of
this Option, deliver to the Company his or her Investment Representation
Statement in the form attached hereto as Exhibit B, and shall read the
applicable rules of the Commissioner of Corporations attached to such Investment
Representation Statement.

     4. Method of Payment. Payment of the Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

          (i) cash; or

          (ii) check; or

          (iii) surrender of other shares of Common Stock of the Company which
     (A) in the case of Shares acquired pursuant to the exercise of a Company
     option, have been owned by the Optionee for more than six (6) months on the
     date of surrender, and (B) 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

          (iv) 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.

     5. 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 ("Regulation G") 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.

     6. Termination of Relationship. In the event an Optionee's Continuous
Status as an Employee or Consultant terminates, Optionee may, to the extent
otherwise so entitled at the date



                                      -16-
<PAGE>

of such termination (the "Termination Date"), exercise this Option during the
Termination Period set out in the Notice of Grant. To the extent that Optionee
was not entitled to exercise this Option at the date of such termination, or if
Optionee does not exercise this Option within the time specified herein, the
Option shall terminate.

     7. Disability of Optionee. Notwithstanding the provisions of Section 6
above, in the event of termination of an Optionee's consulting relationship or
Continuous Status as an Employee as a result of his or her disability, Optionee
may, but only within six (6) months from the date of such termination (and 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; provided, however, that if such
disability is not a "disability" as such term is defined in Section 22(e)(3) of
the Code, in the case of an Incentive Stock Option such Incentive Stock Option
shall automatically convert to a Nonstatutory Stock Option on the day three
months and one day following 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, and the Shares covered by such
Option shall revert to the Plan.

     8. Death of Optionee. In the event of termination of Optionee's Continuous
Status as an Employee or Consultant as a result of the death of Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the date of expiration of the term of this
Option as set forth in Section 10 below), 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 the Optionee could exercise the Option at the date of death.

     9. 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 Optionee. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.

     10. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 7 of the Plan regarding Options designated as Incentive Stock Options
and Options granted to more than ten percent (10%) shareholders shall apply to
this Option.

     11. Taxation Upon Exercise of Option. Optionee understands that, upon
exercising a Nonstatutory 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 the
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.
Additionally, the Optionee may at some point be required to satisfy tax
withholding obligations with respect to the disqualifying



                                      -17-
<PAGE>

disposition of an Incentive Stock Option. The Optionee shall satisfy his or her
tax withholding obligation arising upon the exercise of this Option out of
Optionee's compensation or by payment to the Company.

     12. Tax Consequences. Set forth below is a brief summary as of the date of
this Option of some of the federal and California tax consequences of exercise
of this Option and disposition of the Shares. 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.

          (i) Exercise of ISO. If this Option qualifies as an ISO, there will be
     no regular federal income tax liability 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 the Optionee to the alternative minimum tax in
     the year of exercise.

          (ii) Exercise of ISO Following Disability. If the Optionee's
     Continuous Status as an Employee or Consultant terminates as a result of
     disability that is not total and permanent disability as defined in Section
     22(e)(3) of the Code, to the extent permitted on the date of termination,
     the Optionee must exercise an ISO within 90 days of such termination for
     the ISO to be qualified as an ISO.

          (iii) Exercise of Nonstatutory Stock Option. There may be a regular
     federal income tax liability and California income tax liability upon the
     exercise of a Nonstatutory Stock Option. The 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.

          (iv) Disposition of Shares. In the case of an NSO, if 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 ISO, 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. In either case, the long-term capital
     gain will be taxed for federal income tax and alternative minimum tax
     purposes at a maximum rate of 28% if the Shares are held more than one year
     but less than 18 months after exercise and at 20% if the Shares are held
     more than 18 months after exercise. If Shares purchased under an ISO 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 (1) the Fair Market
     Value of the Shares on the date of exercise, or (2) the sale price of the
     Shares.


                                      -18-
<PAGE>

          (v) Notice of Disqualifying Disposition of ISO Shares. If the Option
     granted to Optionee herein is an ISO, and if Optionee sells or Otherwise
     disposes of any of the Shares acquired pursuant to the ISO on or before the
     later of (1) the date two years after the Date of Grant, or (2) the date
     one year after the date of exercise, the Optionee shall immediately notify
     the Company in writing of such disposition. Optionee agrees that Optionee
     may be subject to income tax withholding by the Company on the compensation
     income recognized by the Optionee.

                                               RITA MEDICAL SYSTEMS, INC.

                                               By: _____________________________

                                                   Title: ______________________

     OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL
OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
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.

     Optionee acknowledges receipt of a copy of the Plan and represents that he
is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof. Optionee has reviewed
the Plan and this Option in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option and fully understands all
provisions of the Option. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions arising under the Plan or this Option. Optionee further agrees to
notify the Company upon any change in the residence address indicated below.


Dated: __________________
                                               Optionee ________________________

                                               Residence Address: ______________


                                      -19-
<PAGE>

                                    EXHIBIT A

                           RITA MEDICAL SYSTEMS, INC.

                            1994 INCENTIVE STOCK PLAN

                                 EXERCISE NOTICE

RITA Medical Systems, Inc.
967 N. Shoreline Blvd.
Mountain View, CA 94043
Attention:  Secretary

     1. Exercise of Option. Effective as of today, _______________, 19___ the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
________ shares of the Common Stock (the "Shares") of RITA Medical Systems, Inc.
(the "Company") under and pursuant to the 1994 Incentive Stock Plan, as amended
(the "Plan") and the [ ] Incentive [ ] Nonstatutory Stock Option Agreement dated
  GrantDate   (the "Option Agreement").

     2. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.

     3. Rights as Shareholder. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), 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
after the Option is exercised. 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 12 of the Plan.

     Optionee shall enjoy rights as a shareholder until such time as Optionee
disposes of the Shares or the Company and/or its assignee(s) exercises the Right
of First Refusal hereunder. Upon such exercise, Optionee shall have no further
rights as a holder of the Shares so purchased except the right to receive
payment for the Shares so purchased in accordance with the provisions of this
Agreement, and Optionee shall forthwith cause the certificate(s) evidencing the
Shares so purchased to be surrendered to the Company for transfer or
cancellation.

     4. Company's Right of First Refusal. Before any Shares held by Optionee or
any transferee (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 (the
"Right of First Refusal").
<PAGE>

     (a) 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
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 bona fide
cash price or other consideration for which the Holder proposes to transfer the
Shares (the "Offered Price"), and the Holder shall offer the Shares at the
Offered Price to the Company or its assignee(s).

     (b) 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 (c)
below.

     (c) Purchase Price. The purchase price ("Purchase Price") for the Shares
purchased by the Company or its assignee(s) under this Section 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.

     (d) 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.

     (e) 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, 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 120 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 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, 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.

     (f) Exception for Certain Family Transfers. Anything to the contrary
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"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.

     (g) Termination of Right of First Refusal. The Right of First Refusal shall
terminate as to any Shares 90 days after 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 of 1933, as amended.

     5. 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 understands that the Shares are "restricted securities" under
applicable U.S. federal and state securities laws and that, pursuant to these
laws, Purchaser must hold the Shares indefinitely unless they are registered
with the Securities and Exchange Commission and qualified by state authorities,
or an exemption from such registration and qualification requirements is
available. Purchaser acknowledges that the Company has no obligation to register
or qualify the Shares for resale. Purchaser further acknowledges that if an
exemption from registration or qualification is available, it may be conditioned
on various requirements including, but not limited to, the time and manner of
sale, the holding period for the Shares, and requirements relating to the
Company which are outside of the Purchaser's control, and which the Company is
under no obligation and may not be able to satisfy.

     (d) 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.

     6. Restrictive Legends and Stop-Transfer Orders.

     (a) Legends. Optionee understands and agrees that the Company shall cause
the legends set forth below or legends substantially equivalent thereto, to be
placed upon any certificate(s) evidencing ownership of the Shares together with
any other legends that may be required by state or federal securities laws:

     THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
     SECURITIES ACT OF 1933 (THE "ACT") AND



                                      -3-
<PAGE>

     MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
     UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN
     FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH
     OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
     THEREWITH.

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
     RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE
     ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE
     ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
     OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS
     AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

     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.

     Optionee 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 Exhibit B, the Investment Representation Statement.

     (b) Stop-Transfer Notices. Optionee 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.

     7. Successors and Assigns. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.

     8. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the


                                      -4-
<PAGE>

committee thereof that administers the Plan, which shall review such dispute at
its next regular meeting. The resolution of such a dispute by the Board or
committee shall be final and binding on the Company and on Optionee.

     9. Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

     10. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address


                                      -5-
<PAGE>

as shown below beneath its signature, or to such other address as such party may
designate in writing from time to time to the other party.

     11. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

     12. Delivery of Payment. Optionee herewith delivers to the Company the full
Exercise Price for the Shares.

     13. Entire Agreement. The Plan and Notice of Grant/Option Agreement are
incorporated herein by reference. This Agreement, the Plan, the Option Agreement
and the Investment Representation Statement constitute the entire agreement of
the parties and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and is governed by California law except for that body of law pertaining
to conflict of laws.

Submitted by:                                  Accepted by:

OPTIONEE                                       RITA MEDICAL SYSTEMS, INC.


                                               By: -----------------------------

                                               Its:
----------------------                             -----------------------------
(Signature)

Address:

----------------------

----------------------

                                    EXHIBIT B

                       INVESTMENT REPRESENTATION STATEMENT

OPTIONEE        :            Name

COMPANY         :          RITA Medical Systems, Inc.

SECURITY        :          Common Stock

AMOUNT          :

DATE            :


                                      -6-
<PAGE>

     In connection with the purchase of the above-listed Securities, the
undersigned Optionee to the Company the following:

     (a) Optionee 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. Optionee is
acquiring these Securities for investment for Optionee's 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 of 1933, as amended (the "Securities
Act").

     (b) Optionee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Optionee's
investment intent as expressed hereto. In this connection, Optionee understands
that, in the view of the Securities and Exchange Commission, the statutory basis
for such exemption may be unavailable if Optionee's representation was
predicated solely upon a present such intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future. Optionee
further 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. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate 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
satisfactory to the Company, a legend prohibiting their transfer without the
consent of the Commissioner of Corporations of the State of California and any
other legend required under applicable state securities laws.

     (c) Optionee is familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly from the
issuer thereof, in a non-public offering subject to the satisfaction of certain
conditions. Rule 701 provides that if the issuer qualities under Rule 701 at the
time of the grant of the Option to the Optionee, the exercise 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, ninety (90) days thereafter (or such longer period as any
market stand-off agreement may require) the Securities exempt under Rule 701 may
be resold, subject to the satisfaction of certain of the conditions specified by
Rule 144, including: (1) the resale 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, (3) the amount of Securities being sold during any three
month period not exceeding the limitations specified in Rule 144(e), and (4) the
timely filing of a Form 144, if applicable.


                                      -7-
<PAGE>

     In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than two years after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than three years, the satisfaction of the conditions set forth
in sections (1), (2), (3) and (4) of the paragraph immediately above.

     (d) Optionee hereby agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act, Optionee
shall not sell or otherwise transfer any Shares or other securities of the
Company during the 180-day period following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however, that
such restriction shall only apply to the first registration statement of the
Company to become effective under the Securities Act which include securities to
be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such 180-day period.

     (e) Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 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
Rules 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. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.

     (f) Optionee understands that the certificate evidencing the Securities
will be imprinted with a legend which prohibits the transfer of the Securities
without the consent of the Commissioner of Corporations of California. Optionee
has read the applicable Commissioner's Rules with respect to such restriction, a
copy of which is attached.

                                               Signature of Optionee:


                                               ---------------------------------



                                      -8-
<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."



                                      -9-