8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report(Date of earliest event reported): August 17, 2005

RITA Medical Systems, Inc.

(Exact name of registrant as specified in its charter)

000-30959

(Commission File Number)

California	94-3199149
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation)

46421 Landing Parkway

Fremont, CA 94538

(Address of principal executive offices, with zip code)

(510) 771-0400

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01Entry into a Material Definitive Agreement

Pursuant to the terms of an offer letter, dated July 25, 2005 (the “Agreement”), from RITA Medical Systems, Inc. (the "Company") to Mario Martinez, Mr. Martinez commenced employment with the Company on August 17, 2005. Pursuant to the terms of the Agreement, Mr. Martinez shall receive an annual salary of $190,000 and he will be entitled to participate in the Company's management cash bonus program. In addition, the Company will issue to Mr. Martinez an incentive stock option to purchase 100,000 shares of the Company's common stock. These option shares will become exercisable at the rate of 1/8 of the total number of shares after the first six months of August 17, 2005 and then with respect to 1/48 of the total per month, such that the options will become fully vested at the end of four years.

The Agreement also provides for the payment of severance in certain circumstances. Mr. Martinez' agreement provides that if his employment by the Company is terminated without cause, and provided that he resigns from his position with the Company, actively seeks full time employment and executes the Company's standard form of release agreement releasing any claims he may have against the Company, Mr. Martinez will receive monthly severance payments equal to 1/12th of his annual base salary and reimbursement for his continued medical coverage until the earlier of (i) 6 months after his termination date or (ii) such time as he accepts an offer of employment or consulting relationship which constitutes the equivalent of a full-time position.

The description of the standard form of change of control agreements and indemnification agreements entered into between Mr. Martinez and the Company set forth in Item 5.02 of this Current Report on Form 8-K is incorporated by reference herein.

The foregoing description of the Agreement is qualified in its entirety by reference to the Agreement, a copy of which is attached hereto as Exhibit 10.92 and incorporated herein by reference.

Item 5.02 Departures of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

On August 17, 2005, the Board of Directors of the Company (the "Board") appointed Rich DeYoung, age 54, the Company's Senior Director of Finance, to serve as Vice President of Finance of the Company effective August 17 2005. Mr. DeYoung will act as the Principal Financial Officer and Principal Accounting Officer of the Company. Donald Stewart, who announced in May 2005 that he would be leaving the Company to pursue other business interests once a new Chief Financial Officer for the Company is hired, will continue to hold the position of Chief Financial Officer but will no longer act as the Company’s Principal Financial Officer and Principal Accounting Officer. Mr. DeYoung has served as the Company's Senior Director of Finance since August 2004. From September 2000 to August 2004, Mr. DeYoung served as the Company's Corporate Controller. Prior to joining the Company, from February 2000 to September 2000, he served as Corporate Controller of Tubetronics, Inc., an aircraft component manufacturing company. From September 1996 to December 1999, he served as Divisional Controller of the Novacore Division of Baxter Healthcare, a medical device company. Mr. DeYoung holds a B.A. in English from Carleton College and an M.B.A. in Finance from the University of Michigan Graduate School of Business.

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In connection with Mr. DeYoung's promotion to the office described above, on August 17, 2005, the Company issued to Mr. DeYoung pursuant to the Company's 2005 Stock Incentive Plan an incentive stock option to purchase 60,000 shares of the Company's common stock, par value $0.001 per share, at a price of $3.34 per share, exercisable at the rate of 1/8 of the total number of shares after the first six months of August 17, 2005 and then with respect to 1/48 of the total per month, such that the option will become fully vested at the end of four years. Furthermore, in connection with Mr. DeYoung’s promotion, he shall receive an annual salary of $175,000 and he will be entitled to participate in the Company's management cash bonus program.

On August 17, 2005, the Board appointed Mario Martinez, age 51, to serve as Vice President of Operations and General Manager of the Company effective August 17, 2005. Prior to joining the Company, from January 2000 to August 2005, he was President and Chief Executive Officer of Tecnix, LLC, a technology advisory company. From October 1997 to January 2000, he served as Vice President Engineering and Technology Development at 2C Optics, a medical device company. From December 1995 to August 1997, he served as Vice President Engineering and Operations at Biofield Corp., a medical device company. From June 1992 to December 1995, Mr. Martinez served as Vice President Operations at EP Technologies, a division of Boston Scientific Corp. Prior to June 1992, Mr. Martinez held various positions at Cordis Corporation, a division of Johnson & Johnson, from March 1987 to June 1992. Mr. Martinez holds a B.S. degree from Florida International University.

In connection with Mr. Martinez' appointment to the office described above, on August 17, 2005, the Company issued to Mr. Martinez pursuant to the Company's 2005 Stock Incentive Plan an incentive stock option to purchase 100,000 shares of the Company's common stock, par value $0.001 per share, at a price of $3.34 per share, exercisable at the rate of 1/8 of the total number of shares after the first six months of August 17, 2005 and then with respect to 1/48 of the total per month, such that the options will become fully vested at the end of four years.

The Company has entered into its standard form of change of control agreements and indemnification agreements with each of Mr. DeYoung and Mr. Martinez. The Company’s change of control agreements provide the following benefits upon the sale or merger of the Company. In the event that the Company consummates a change of control transaction, 50% of any unvested options held by the Company officers shall become fully vested and immediately exercisable and repurchase rights retained by the Company with respect to 50% of the restricted stock held by the Company’s officers shall immediately lapse. In addition, on each one month anniversary following the effective date of a change of control transaction, 1/12th of the remaining unvested options held by the Company’s officers shall become fully vested and immediately exercisable and repurchase rights retained by the Company with respect to 1/12th of any remaining restricted stock held by the Company’s officers shall immediately lapse. If the officer is involuntarily terminated within 12 months after the change of control transaction, all unvested options held by the Company’s officers shall become fully vested and immediately exercisable and all repurchase rights retained by the Company with respect to the restricted stock held by the Company’s officers shall immediately lapse. If the officer voluntarily resigns or is terminated for cause after the change of control, then the officer is not entitled to any acceleration of the vesting of options or lapse of repurchase rights with respect to restricted stock.

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The Company’s indemnification agreements contain provisions which may require the Company, among other things, to indemnify the Company’s officers and directors against a number of liabilities that may arise by reason of their status or service as officers or directors (other than liabilities arising from willful misconduct of a culpable nature) and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

The description of the employment agreement between Mr. Martinez and the Company set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein.

Item 8.01 Other Events.

On August 17, 2005, the Company announced that it had appointed Mario Martinez, age 51, to serve as Vice President of Operations and General Manager of the Company. The full text of the press release issued in connection with this announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01Financial Statements and Exhibits.

(c) Exhibits:

10.92 Offer Letter to Mario Martinez dated July 25, 2005

99.1 Press Release of RITA Medical Systems, Inc. dated August 17, 2005

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	RITA MEDICAL SYSTEMS, INC.
Date: August 22, 2005	By:	/s/ Joseph DeVivo
		Joseph DeVivo
		President and Chief Executive Officer

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RITA MEDICAL SYSTEMS, INC.

INDEX TO EXHIBITS

Exhibit Number	Description
10.92	Offer Letter to Mario Martinez dated July 25, 2005
99.1	Press Release of RITA Medical Systems, Inc. dated August 17, 2005

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EX-10.92

July 25, 2005

Mario Martinez

10810 Centennial Dr.

Alpharetta, GA 30022

Dear Mario:

On behalf of RITA Medical Systems, Inc. (the “Company”), I am pleased to offer you the position of Vice President Operations, General Manager. Speaking for myself, as well as the other members of the Company’s management team, we are all very impressed with your credentials and we look forward to your future success in this position.

The terms of your new position with the Company are as set forth below:

1.Position.

a. You will become the Vice President Operations, General Manager, working out of the Company’s office in Manchester, Georgia. You will report to the Company’s Chief Executive Officer.

b. You agree to the best of your ability and experience that you will at all times loyally and conscientiously perform all of the duties and obligations required of and from you pursuant to the express and implicit terms hereof, and to the reasonable satisfaction of the Company. During the term of your employment, you further agree that you will devote all of your business time and attention to the business of the Company, the Company will be entitled to all of the benefits and profits arising from or incident to all such work services and advice, you will not render commercial or professional services of any nature to any person or organization, whether or not for compensation, without the prior written consent of the Company’s Board of Directors, and you will not directly or indirectly engage or participate in any business that is competitive in any manner with the business of the Company. Nothing in this letter agreement will prevent you from accepting speaking or presentation engagements in exchange for honoraria or from serving on boards of charitable organizations, or from owning no more than one percent (1%) of the outstanding equity securities of a corporation whose stock is listed on a national stock exchange.

2.Start Date. Subject to fulfillment of any conditions imposed by this letter agreement, you will commence this new position with the Company on August 21, 2005.

3.Proof of Right to Work. For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States. Such documentation must be provided to us within three (3) business days of your date of hire, or our employment relationship with you may be terminated.

4.Compensation.

a.Base Salary. You will be paid a monthly gross salary of $15,833.33, which is equivalent to $190,000 on an annualized basis. Your salary will be payable in two equal payments on the 15^th and the last day of the month.

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b.Bonus. You will be eligible to participate in the Company management cash bonus program at the Vice President level.

c.Annual Review. Your base salary will be reviewed as part of the Company’s normal annual salary review process. Consideration for COO level in six months if you have achieved mutually agreed upon metrics.

d. Relocation Expenses. The Company (A) will reimburse you for, or pay directly, your expenses incurred in relocating from Alpharetta, GA to the Manchester, Georgia area, which reimbursement shall not exceed $25,000 without the prior approval of the Company’s Compensation Committee of the Board of Directors, and (B) will pay to you a full gross-up on any taxes that you are required to pay on such reimbursement of relocation expenses (the “Relocation Package”). You shall be entitled to use the Relocation Package to pay for any rent, moving or home purchase expenses incurred after January 1, 2006 as a result of your personal relocation and/or your family’s relocation to the Manchester, Georgia area. Payment of any amount of the Relocation Package is contingent upon your submission of original receipts to the Company. Any amounts of the Relocation Package owed to you will be paid within 30 days after the Company’s receipt of your substantiated reimbursement request. Until such time as you move to the Manchester, Georgia area you will have use of the corporate apartment.

5.Stock Options.

a. Initial Grant. In connection with the commencement of your employment, the Company will recommend that the Board of Directors, or a Committee of the Board of Directors, grant you an option to purchase 100,000 shares of the Company’s Common Stock (“Shares”) with an exercise price equal to the fair market value on the date of the grant. These option shares will vest at the rate of 1/8 of the total after the first six months of employment and then 1/48 of the total per month, such that the options will become fully vested at the end of four years. Vesting will, of course, depend on your continued employment with the Company. The option will be an incentive stock option to the maximum extent allowed by the tax code and will be subject to the terms of the Company’s 2000 Incentive Stock Option Plan and the Stock Option Agreement between you and the Company. This option is subject to the approval of the Company’s Board of Directors or designated Committee of the Board.

b. Subsequent Option Grants. Subject to the discretion of the Company’s Board of Directors, you may be eligible to receive additional grants of stock options or purchase rights from time to time in the future, on such terms and subject to such conditions as the Board of Directors shall determine as of the date of any such grant.

6.Benefits.

a.Insurance Benefits. The Company will make available to you medical, dental, vision, life and long-term disability insurance benefits. More detailed information will be provided in a new-hire packet that will be given to you after your acceptance of this offer.

b.Vacation. You will be entitled to 3 weeks paid vacation per year, pro-rated for the remainder of this calendar year. Vacation accrues as follows: five (5) hours accrue per pay period from your date of hire. During the first six months, no vacation may be taken unless a special exception has been granted.

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c.401K Retirement Plan. You will be eligible to participate in the Company’s employee-contribution 401K Retirement Plan beginning on the first January 1, April 1, July 1, or October 1 following commencement of your employment.

d.Employee Stock Purchase Plan. You will be eligible to participate in the Company’s Employee Stock Purchase Plan beginning on the first February 1 or August 1 following commencement of your employment.

7.Severance Benefits. In the event that the Company or its successor in interest terminates your employment without Cause (as defined below), then you will be entitled to receive continuation of your then-current monthly base salary for six (6) months following your termination date. This salary continuation shall be contingent upon confirmation to the Company’s satisfaction that you are actively seeking Full-Time Employment, which for purposes of this Offer Letter shall be defined as at least thirty-five (35) hours per week of compensated labor, including consulting and other work. In the event that you commence Full-Time Employment, your salary continuation will cease. In addition, following the termination of your employment, the Company will pay your COBRA insurance premiums (provided that you elect such coverage) until the earlier of (A) six (6) months following your termination date or (B) the date on which you become eligible for insurance benefits from another employer. Upon terminationof your employmentwith the Company, you will be entitled to receive benefits only as set forth herein or as otherwise provided by applicable law. Your entitlement to these severance benefits will be conditioned upon your execution and delivery to the Company of (i) a general mutual release of all claims (provided that the Company shall not be required to release any claims arising from a material breach by you of the Confidentiality Agreement (as defined below)) and (ii) a resignation from all of your positions with the Company.

For purposes of this Offer Letter, “Cause” shall mean (i) gross negligence or willful misconduct in the performance of the Employee’s duties to the Company where such gross negligence or willful misconduct has resulted or is likely to result in substantial and material damage to the Company or its subsidiaries, (ii) repeated unexplained or unjustified absence from the Company, (iii) a material and willful violation of any federal or state law; (iv) commission of any act of fraud with respect to the Company; or (v) conviction of a felony or a crime involving moral turpitude causing material harm to the standing and reputation of the Company, in each case as determined in good faith by the Board of Directors of the Company.

8.Confidential Information and Invention Assignment Agreement. Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution, and delivery to an officer of the Company, of the Company’s Confidential Information and Invention Assignment Agreement, a copy of which is enclosed for your review and execution (the “Confidentiality Agreement”), prior to or on your Start Date.

9.Confidentiality of Terms. You agree to follow the Company’s strict policy that employees must not disclose, either directly or indirectly, any information, including any of the terms of this agreement, regarding compensation, or stock purchase or option allocations to any person, including other employees of the Company; provided, however, that you may discuss such terms with members of your immediate family and any legal, tax or accounting specialists who provide you with individual legal, tax or accounting advice.

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10.At-Will Employment. Youremployment with the Company will be on an “at will” basis, meaning that either you or the Company may terminate your employment at any time for any reason or no reason, without further obligation or liability.

We are all delighted to be able to extend you this offer and look forward to working with you. To indicate your acceptance of the Company's offer, please sign, date this letter in the space provided below, and return it to me, along with a signed and dated copy of the Confidentiality Agreement. This letter, together with the Confidentiality Agreement, set forth the terms of your employment with the Company and supersedes any prior representations or agreements, whether written or oral. This letter may not be modified or amended except by a written agreement, signed by the Company and by you. This offer will expire unless signed by you by July 29, 2005.

Very truly yours,

RITA MEDICAL SYSTEMS, INC.

By: /s/ Joseph DeVivo                          

            Joseph DeVivo

Title:   Chief Executive Officer

ACCEPTED AND AGREED:

MARIO MARTINEZ

/s/Mario Martinez                                         

Signature

July 28, 2005                                                 

Date

Enclosure:      Confidential Information and Invention Assignment Agreement

EX-99.1

RITA Medical Systems Names Mario Martinez Vice President of Operations, General Manager; Experienced Medical Device Executive to Lead Company's Operations and Serve as General Manager of Manchester, Georgia Facility

FREMONT, Calif.--(BUSINESS WIRE)--Aug. 17, 2005--RITA Medical Systems, Inc. (Nasdaq: RITA), the only publicly traded medical device company focused solely on cancer therapies, today announced the appointment of Mario Martinez, to the position of Vice President of Operations, General Manager. The position is newly created at the company and includes responsibility for company-wide operations including operating personnel, information technology, manufacturing, customer service and distribution. Mr. Martinez will also serve as the General Manager of the Company's Manchester, Georgia facility. Mr. Martinez will report directly to Mr. Joseph DeVivo, President and Chief Executive Officer.

"Mario will be focused on driving improvement in all areas of operations, manufacturing, and customer service throughout RITA. We believe that Mario's track record in medical devices, including radiofrequency ablation, makes him the perfect choice to lead RITA's operations," stated Mr. DeVivo. "With more than 25 years of experience in the medical device industry, we expect that Mario will be a strong leader and a great addition to the RITA management team," he concluded.

Mr. Martinez has held senior management and executive positions with several medical device companies including EP Technologies, a manufacturer of radiofrequency ablation products to treat cardiac arrhythmia, now a division of Boston Scientific (BSX). Prior to joining RITA, Mr. Martinez was a founder, President and CEO of Tecnix, LLC, a technology advisory firm based in Atlanta, GA. Prior to Tecnix Mr. Martinez held corporate officer, senior management and engineering positions with 2C Optics, an ophthalmic research development and commercialization company, with Biofield, a cancer diagnostic company, Cordis, a Johnson & Johnson (JNJ) company, Ohmeda (BOC), Ciba Geigy (Novartis), Coulter Electronics (Beckman Coulter, BEC), and Key Pharmaceuticals (Schering Plough, SGP). Mr. Martinez is a graduate of the Emory University Mini Medical School, the Goldratt Institute, the Covey Leadership Center and Leadership Miami, and received his bachelor's degree from Florida International University. In June of 2005 Mr. Martinez was appointed by Georgia Governor Sonny Perdue as Chairman of the Latino Commission for a New Georgia.

"I am thrilled to be working closely with Joe and his team to make RITA the premier medical device oncology company," Mr. Martinez commented. "I am also very pleased that the Company has selected Georgia as the home for the Company's manufacturing and operations center."

About RITA Medical Systems, Inc.

RITA Medical Systems develops, manufactures and markets innovative products for cancer patients including radiofrequency ablation (RFA) systems for treating cancerous tumors as well as percutaneous vascular and spinal access systems. The Company's oncology product lines include implantable ports, some of which feature its proprietary Vortex(R) technology; tunneled central venous catheters; safety infusion sets and peripherally inserted central catheters used primarily in cancer treatment protocols. The proprietary RITA system uses radiofrequency energy to heat tissue to a high enough temperature to ablate it or cause cell death. In March 2000, RITA became the first RFA Company to receive specific FDA clearance for unresectable liver lesions in addition to its previous general FDA clearance for the ablation of soft tissue. In October 2002, RITA again became the first company to receive specific FDA clearance, this time, for the palliation of pain associated with metastatic lesions involving bone. The RITA Medical Systems website is at www.ritamedical.com.

Except for historical information contained in this news release, the statements in this news release are forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Information regarding these risks is included in the Company's filings with the Securities and Exchange Commission.

CONTACT: RITA Medical Systems, Inc.

Stephen Pedroff, 510-771-0400

spedroff@ritamed.com

or

Investors:

EVC Group

Doug Sherk/Jennifer Beugelmans, 415-896-6820

dsherk@evcgroup.com

or

Media:

SurfMedia Communications

Juliana Minsky, 805-962-3700

jm@surfmedia.com

SOURCE: RITA Medical Systems, Inc.