10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 000-30959

RITA MEDICAL SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

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

967 N. Shoreline Blvd.

Mountain View, CA 94043

(Address of principal executive offices, including zip code)

650-314-3400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  x    No  ¨

As of July 31, 2003, there were 17,780,872 shares of the registrant’s Common Stock outstanding.

INDEX

	Page
PART I.    FINANCIAL INFORMATION
Item 1.    Financial Statements (unaudited)
Condensed Consolidated Balance Sheets—June 30, 2003 and December 31, 2002	3
Condensed Consolidated Statements of Operations—three and six months ended June 30, 2003 and 2002	4
Condensed Consolidated Statements of Cash Flows—six months ended June 30, 2003 and 2002	5
Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.    Management’s Discussion and Analysis of Financial Conditions and Results of Operations	9
Item 3.    Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.    Controls and Procedures	19
PART II.    OTHER INFORMATION
Item 1.    Legal Proceedings	20
Item 2.    Changes in Securities and Use of Proceeds	20
Item 3.    Defaults Upon Senior Securities	20
Item 4.    Submission of Matters to a Vote of Security Holders	20
Item 5.    Other Information	20
Item 6.    Exhibits and Reports on Form 8-K	20
SIGNATURES	22
EXHIBIT INDEX	23

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PART 1.    FINANCIAL INFORMATION

Item 1.    Financial Statements

RITA MEDICAL SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts, unaudited)

	June 30, 2003			December 31, 2002
Assets
Current assets:
Cash and cash equivalents	$	3,757		$	6,888
Marketable securities		7,329			5,427
Accounts and note receivable, net		2,966			2,798
Inventories, net		2,727			3,521
Prepaid assets and other current assets		663			995
Total current assets		17,442			19,629
Long term marketable securities		1,122			520
Long term note receivable, net		406			381
Property and equipment, net		1,419			1,565
Intangibles and other assets		5,142			2,071
Total assets	$	25,531		$	24,166
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	442		$	1,053
Accrued liabilities		1,671			2,510
Total liabilities		2,113			3,563
Contingencies (Note 5)
Stockholders’ equity
Common stock		18			15
Additional paid-in capital		97,611			88,525
Stockholder notes receivable		—			(50	)
Accumulated other comprehensive income		7			7
Accumulated deficit		(74,218	)		(67,894	)
Total stockholders’ equity		23,418			20,603
Total liabilities and stockholders’ equity	$	25,531		$	24,166

The accompanying notes are an integral part of the condensed consolidated financial statements.

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RITA MEDICAL SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data, unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2003			2002			2003			2002
Sales	$	4,049		$	4,806		$	8,546		$	9,224
Cost of goods sold		1,702			2,040			3,276			4,042
Gross profit		2,347			2,766			5,270			5,182
Operating expenses:
Research and development		1,061			1,329			2,419			2,663
Selling, general and administrative		4,736			5,304			9,300			10,527
Total operating expenses		5,797			6,633			11,719			13,190
Loss from operations		(3,450	)		(3,867	)		(6,449	)		(8,008	)
Interest income and other expense, net		50			134			125			282
Net loss	$	(3,400	)	$	(3,733	)	$	(6,324	)	$	(7,726	)
Net loss per share, basic and diluted	$	(0.19	)	$	(0.25	)	$	(0.36	)	$	(0.52	)
Shares used in computing net loss per share, basic and diluted		17,578			14,835			17,402			14,725

The accompanying notes are an integral part of the condensed consolidated financial statements.

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RITA MEDICAL SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Six Months Ended June 30,
	2003			2002
Cash flows from operating activities:
Net loss	$	(6,324	)	$	(7,726	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		784			713
Revaluation of common stock warrants for services received		(42	)		62
Amortization of stock-based compensation		—			282
Allowance for doubtful accounts		55			591
Provision for obsolete inventories		247			479
Changes in operating assets and liabilities:
Accounts and note receivable		(316	)		(499	)
Inventories		547			(46	)
Prepaid and other current assets		332			438
Accounts payable and accrued liabilities		(1,450	)		219
Net cash used in operating activities		(6,167	)		(5,487	)
Cash flows from investing activities:
Purchase of property and equipment		(409	)		(566	)
Purchase of investments		(6,871	)		—
Sales and maturities of investments		4,367			3,963
Capitalization of patent litigation costs		(621	)		(771	)
Acquisition of intangibles		(2,650	)		—
Note receivable and other assets		68			3
Net cash provided by investing activities		(6,116	)		2,629
Cash flows from financing activities:
Proceeds from issuance of common stock		9,152			1,034
Payments on capital lease obligations		—			(118	)
Net cash provided by financing activities		9,152			916
Net decrease in cash and cash equivalents		(3,131	)		(1,942	)
Cash and cash equivalents at beginning of period		6,888			7,297
Cash and cash equivalents at end of period	$	3,757		$	5,355

The accompanying notes are an integral part of the condensed consolidated financial statements.

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RITA MEDICAL SYSTEMS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.    Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by RITA Medical Systems, Inc. (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information. These principles are consistent in all material respects with those applied in the Company’s financial statements contained in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2002 and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission. However, interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (all of which are normal and recurring in nature, including the elimination of intercompany accounts) necessary to present fairly the financial position, results of operations and cash flows of the Company for the periods indicated. Interim results of operations are not necessarily indicative of the results to be expected for the full year or any other interim periods. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and footnotes thereto for the year ended December 31, 2002 contained in the Company’s annual report on Form 10-K.

2.    Net loss per share

Basic earnings per share figures are calculated based on the weighted-average number of common shares outstanding during the period less the weighted-average number of any common shares subject to repurchase by the Company. Diluted earnings per share further includes the dilutive effect of potentially dilutive securities consisting of stock options and warrants provided that the inclusion of such securities is not antidilutive; the Company has reported net losses since its inception and therefore excludes such potentially dilutive securities from its calculation of diluted earnings per share.

The reconciliation of total weighted average outstanding common shares to shares used in determining net loss per share is as follows (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2003		2002		2003		2002
Weighted average shares of common stock outstanding	17,582		14,872		17,410		14,762
Less: weighted-average shares subject to repurchase	(4	)	(37	)	(8	)	(37	)
Weighted average shares used in basic and diluted net loss per share	17,578		14,835		17,402		14,725

The following numbers of shares represented by options and warrants (prior to application of the treasury stock method) and shares subject to repurchase were excluded from the computation of diluted net loss per share as their effect was antidilutive (in thousands):

	June 30,
	2003	2002
Effect of potentially dilutive securities:
Unvested common stock subject to repurchase	—	37
Options	2,182	2,639
Warrants	25	25
Total potentially dilutive securities excluded from the computation of net loss per share as their effect was antidilutive	2,207	2,701

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3.    Balance sheet components—Inventories

The components of the Company’s inventories at June 30, 2003 and December 31, 2002, respectively, were as follows (in thousands):

	June 30, 2003		December 31, 2002
Raw materials	$	1,332	$	1,039
Work-in-process		36		341
Finished goods		1,359		2,141
	$	2,727	$	3,521

4.    Accounting for stock-based compensation

During the year ended December 31, 2002, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure.” The Company accounts for stock-based employee compensation arrangements in accordance with provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and Financial Accounting Standards Board Interpretations (“FIN”) No. 28, “Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans.”

Under APB Opinion No. 25, compensation expense is based on the difference, if any, on the date of the grant between the fair value of the Company’s stock and the exercise price. SFAS No. 123 defines a “fair value” based method of accounting for an employee stock option or similar equity instruments.

The following table illustrates the effect on net loss and net loss per share for the three and six month periods ended June 30, 2003 and 2002, respectively, if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation granted under all of the stock option plans and the Employee Stock Purchase Plan (in thousands, except per share amounts):

	Three months ended June 30,						Six months ended June 30,
	2003			2002			2003			2002
Net loss, as reported	$	(3,400	)	$	(3,733	)	$	(6,324	)	$	(7,726	)
Add:    Stock-based employee compensation expense included in reported net loss		—			115			—			282
Deduct:    Total stock-based employee compensation determined under fair value based method for all awards		(406	)		(632	)		(996	)		(1,238	)
Pro-forma net loss	$	(3,806	)	$	(4,250	)	$	(7,320	)	$	(8,682	)
Basic and diluted net loss per share:
As reported	$	(0.19	)	$	(0.25	)	$	(0.36	)	$	(0.52	)
Pro-forma	$	(0.22	)	$	(0.29	)	$	(0.42	)	$	(0.59	)

The determination of stock-based employee compensation under the fair value based method used the following weighted average assumptions:

	Three months ended June 30,				Six months ended June 30,
	2003		2002		2003		2002
Volatility	76	%	79	%	76	%	79	%
Risk-free interest rate	2.69	%	4.56	%	2.73	%	4.41	%
Expected life	5 years		5 years		5 years		5 years
Expected dividends	0	%	0	%	0	%	0	%

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The corresponding assumptions for the Employee Stock Purchase Plan were as follows:

	Three months ended June 30,				Six months ended June 30,
	2003		2002		2003		2002
Volatility	70	%	79	%	70	%	79	%
Risk-free interest rate	1.49	%	4.56	%	1.63	%	4.41	%
Expected life	6 months		6 months		6 months		6 months
Expected dividends	0	%	0	%	0	%	0	%

5.    Contingencies

From 1999 until April 2003, the Company was involved in patent-related disputes before the United States Patent and Trademark Office and the European Patent Office, as well as several patent infringement suits filed in the United States District Court for the Northern District of California. The principal parties in these matters were the Company, Boston Scientific Corporation and two of its operating divisions, RadioTherapeutics Corporation and Scimed Life Systems, Inc. Also included as adverse parties on particular matters were institutions or corporations from whom Boston Scientific has licensed technology, including the University of Nebraska, UneMed Corporation, the University of Kansas and the University of Kansas Medical Center Research Institute.

In April 2003, the Company announced that it had signed a definitive agreement with Boston Scientific, its affiliates and licensors to settle all outstanding patent disputes between the two companies. Under the terms of the agreement, all litigation in the United States, including Boston Scientific’s appeal of a United States Patent and Trademark Office ruling, has been dismissed with prejudice and Boston Scientific will withdraw its opposition before the European Patent Office. The Company was required to make one-time payments of $1,325,000 to the University of Kansas and $1,325,000 to the University of Nebraska, the licensors of several of the disputed patents. These amounts were capitalized in April 2003 and are being amortized over the related assets’ useful lives, which range from six to twelve years. The agreement includes a series of licenses and sub-licenses, none of which include the Company’s proprietary temperature control technology. The Company agreed to license to Boston Scientific, on a royalty-bearing basis, its infusion technology for future products. However, Boston Scientific will not market or sell products utilizing licensed infusion technology before October 5, 2004.

The Company may, from time to time, become a party to legal proceedings arising in the ordinary course of business. Such matters generally involve complex questions of fact and law and could involve significant costs and the diversion of resources to defend. Additionally, the results of litigation are inherently uncertain, and an adverse outcome is at least reasonably possible. The Company is unable to estimate the range of possible loss from such future litigation or other legal proceedings and no amounts have been provided for such matters in the accompanying unaudited condensed consolidated financial statements.

6.    Comprehensive loss

Comprehensive loss generally represents all changes in stockholders’ equity except those resulting from investments or contributions by stockholders. The Company’s unrealized gains and losses on available-for-sale securities represent the only components of comprehensive loss that are excluded from the Company’s net loss. These components are not significant individually, or in the aggregate, and therefore, no separate statement of comprehensive loss has been presented.

7.    Private placement of securities

In January 2003, the Company issued to SF Capital Partners Ltd., Riverview Group, LLC, Baystar Capital II, L.P., and Baystar International II, L.P., 2,045,453 shares of unregistered common stock at a price of $4.40 per share, netting approximately $8.3 million after issuance fees and expenses. Wells Fargo Securities, LLC served as the lead placement agent for the transaction. The issuance was deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) thereof as transactions by an issuer not involving any public offering. On February 14, 2003, the Company’s Registration Statement on Form S-3, which registered the shares of common stock sold to the purchasers in the private placement transaction, was declared effective by the SEC.

8.    Recent accounting pronouncements

In November 2002, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables.” EITF Issue No. 00-21 provides guidance on how to account for arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. The provisions of EITF Issue No. 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The Company does not believe adoption of this statement will materially impact its financial position or results of operations.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly report on Form 10-Q contain forward-looking statements that involve risks and uncertainties. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, and similar expressions identify such forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or forecasted. Factors that might cause such a difference include, but are not limited to, those discussed in the section entitled “Factors That May Affect Future Results” and those appearing elsewhere in this quarterly report on Form 10-Q and in our annual report on Form 10-K for the fiscal year ended December 31, 2002. Readers are cautioned not to place undue reliance on these forward-looking statements that reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Overview

We develop, manufacture and market minimally invasive products that use radiofrequency energy to treat patients with solid cancerous or benign tumors. In 2001, we commercially launched our StarBurst XLi family of disposable devices and expanded our direct domestic sales organization and our international distribution network. In 2002, the XLi family of disposable devices gained acceptance in the United States. Also in 2002, we received regulatory approval from the FDA to use our products to treat pain associated with bone tumors, increasing the potential market for our products.

Our products are sold in the United States through our direct sales force and internationally through distribution partners. For the three months ended June 30, 2003, sales in the United States accounted for 81% of our total sales, compared to 73% in the prior year period, while sales in our international markets accounted for 19% of our total sales compared to 27% in the prior year period. We continue to expect domestic sales to account for the majority of total sales in future periods. Also, we expect that inventory reductions, particularly by our distributor in Japan, coupled with ongoing reimbursement issues in both Japan and Europe, to limit sales growth in these regions for at least the remainder of 2003. However, we expect our international operations to continue to represent a significant portion of our revenue because of the high incidence of primary liver cancer in Asian and European markets.

All of our revenue is derived from the sale of our disposable devices and radiofrequency generators. For the three months ended June 30, 2003, 87% of our sales were derived from our disposable devices and 13% were derived from the sale of our generators. Disposable product revenue for the quarter grew by 4% over the prior year period, primarily as a result of our expanded base of customer accounts, but generator revenue decreased by 62% as the prior year period included large generator shipments to our Japanese distributor. Going forward, we will continue to focus on expanding our base of customer accounts and on increasing usage of our disposable products in our established accounts. As a result, we expect revenue from the sale of our higher-margin disposable devices to grow faster than revenue from the sale of our generators.

To date, essentially all of our revenue has come from products sold in the treatment of cancerous liver tumors. In 2002, however, we began to see nominal revenue from the use of the RITA system sold for the treatment of patients with metastatic bone tumors. We are conducting research and clinical trials in other organs that may lead to additional sources of revenue in future years, although there can be no assurances that such additional revenue will materialize.

Our manufacturing costs consist of raw materials, including generators and ancillary hardware components produced for us by third-party suppliers, labor to produce our disposable devices and to inspect incoming, in-process and finished goods, sterilization performed by an outside service provider and general overhead expenses. Gross margins are affected by production volumes, average selling prices, the sales mix of higher-margin disposable devices versus generators and the mix of domestic direct sales versus international sales, which provide for distributor discounts. Our gross margin for the three months ended June 30, 2003 was 58%, equal to our margin rate in the prior year period. Margins in the current period were pressured by the amortization of capitalized license fees associated with the settlement of our patent litigation dispute with Boston Scientific Corporation, described below, and we expect such amortization charges to continue for as long as twelve more years. Also, margins for the three months ended June 30, 2003, were limited by temporary cost increases, effective through June 2003, on some of our vendor-sourced hardware products and by significant provisions to our reserve for obsolete inventory. We have, from time to time, recognized relatively high expenses related to obsolete inventory provisions as our product line has undergone several changes, and we may experience pressure on margins in the future due to similar product changes. Despite these factors, we generally expect modest gross margin improvement over the balance of 2003 primarily as a result of improvements in our sales mix and manufacturing cost reductions.

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Our operating expenses consist of product development costs, clinical trial expenses, patent litigation expenses, sales and marketing expense related to our selling efforts in the United States and Europe, and administrative expenses, including the costs associated with our status as a public company, professional service expenses and our provisions for uncollectible accounts. Growth in these areas is determined by the breadth of our new product development portfolio, the number of headcount we maintain in our selling and administrative functions, the scope of our marketing efforts, the costs we incur in defense of our patents and intellectual property and the extent to which credit issues and economic conditions constrain our ability to collect our receivables. For the three months ended June 30, 2003, $1.1 million of our operating expenses were related to research and development activities, including $0.2 million associated with patent litigation expenses. For the prior year period, we had $1.3 million in research and development expense, including $0.1 million for litigation costs, so expenses for product development and clinical trials were lower for the three months ended June 30, 2003 than such expenses for the same period last year. We expect expenses for product development and clinical trials to remain stable throughout 2003, but ongoing legal expenses associated with patent litigation should be significantly reduced for the remainder of 2003 because we settled all of our outstanding patent disputes in April 2003. Total selling, general and administrative costs for the three months ended June 30, 2003, were $4.7 million compared with $5.3 million in the prior year period. This reduction primarily reflects $0.5 million in reduced expenses associated with provisions to our allowance for uncollectible accounts, with only minimal charges in the current period. Selling expenses for the current quarter were also modestly lower. Although the deterioration we experienced in international collections in 2002 has stabilized in 2003, we may encounter new difficulties with international collections that require further increases in our allowance for uncollectible accounts in the future, and we may require specific accounts to post letters of credit or pay in advance to minimize credit risk to the Company. Recent expense reduction efforts are expected to result in stable or modestly reduced levels of selling, general and administrative expense for the remainder of 2003.

From 1999 until April 2003, we were involved in patent related disputes before the United States Patent and Trademark Office, the European Patent Office and several patent infringement suits filed in the United States District Court for the Northern District of California. The principal parties in these matters were ourselves, Boston Scientific Corporation, two of its operating divisions and two of its licensors. In April 2003, we signed a definitive agreement with Boston Scientific, its affiliates and its licensors to settle all outstanding patent disputes. Under the terms of the agreement, litigation in the United States, including Boston Scientific’s appeal of a United States Patent and Trademark Office ruling, has been dismissed with prejudice and Boston Scientific will withdraw its opposition before the European Patent Office. We made one-time payments of $1,325,000 to the University of Kansas and $1,325,000 to the University of Nebraska, the licensors of several of the disputed patents. These amounts were capitalized in April 2003 and are being amortized over the related assets’ useful lives, which range from six to twelve years. The agreement includes a series of licenses and sub-licenses, none of which include our proprietary temperature control technology. We agreed to license to Boston Scientific, on a royalty-bearing basis, our infusion technology for future products. However, Boston Scientific will not market or sell products utilizing licensed infusion technology before October 5, 2004.

Our working capital decreased to $15.3 million at June 30, 2003, from $16.1 million at December 31, 2002. Since December 31, 2002, we have used $6.2 million in cash for operations, $0.4 million in capital expenditures and $0.6 million in capitalized legal costs related to defense of our patent rights. We also paid $2.65 million for licenses acquired in settlement of our patent litigation disputes with Boston Scientific Corporation. Offsetting these amounts were cash inflows of approximately $9.2 million from financing activities. Our January 2003 issuance of 2,045,453 shares of unregistered common stock at $4.40 per share netted approximately $8.3 million after associated fees and expenses, and the balance of the cash inflows from financing resulted from exercise of stock options. We do not expect significantly increased capital expenditures for the remainder of 2003.

We incurred net losses of $3.4 million for the three months ended June 30, 2003. As of June 30, 2003, we had an accumulated deficit of $74.2 million. Due to the costs associated with continued research and development programs, clinical research programs and sales and marketing efforts, we expect to incur net losses for the full year 2003, with diminishing losses through the year. Profitability depends on our success in expanding product usage in our current market and in developing new markets. To the extent current or new markets do not materialize in accordance with our expectations, our sales and profitability could be lower than expected and we may be unable to achieve or sustain profitability.

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Critical Accounting Policies and Estimates

Our critical accounting policies and estimates were discussed in our annual report on Form 10-K for the fiscal year ended December 31, 2002. No changes in these policies and estimates have occurred during the six months ended June 30, 2003.

Results of Operations

The following table sets forth the percentage of net revenue represented by certain items in our Statements of Operations for the current quarter ended June 30, 2003 and the four preceding fiscal quarters:

	Q2 2003		Q1 2003		Q4 2002		Q3 2002		Q2 2002
Domestic sales	81	%	71	%	76	%	77	%	73	%
International sales	19	%	29	%	24	%	23	%	27	%
Total sales	100	%	100	%	100	%	100	%	100	%
Cost of goods sold	42	%	35	%	31	%	39	%	42	%
Gross profit	58	%	65	%	69	%	61	%	58	%
Operating Expenses:
Research and development	26	%	30	%	32	%	27	%	28	%
Selling, general and administrative	117	%	102	%	122	%	97	%	110	%
Total operating expenses	143	%	132	%	154	%	124	%	138	%
Loss from operations	(85	%)	(67	%)	(85	%)	(63	%)	(80	%)
Interest income and other expense, net	1	%	2	%	3	%	2	%	2	%
Net loss	(84	%)	(65	%)	(82	%)	(61	%)	(78	%)

Three months ended June 30, 2003 and 2002

Sales decreased 16% to $4.0 million for the quarter ended June 30, 2003, down from $4.8 million for the quarter ended June 30, 2002. Domestic sales decreased by 6% and international sales, due to large generator shipments to our distributor in Japan in the prior year period, decreased by 41% from the three months ended June 30, 2002. Sales of our disposable products totaled $3.5 million for the quarter, an increase of 4% over the comparable prior year period, reflecting modestly higher average selling prices in the domestic market, as unit shipments of disposable products decreased 2%. Generator sales for the quarter were 62% lower than sales in the second quarter of 2002, due again to the large generator shipments to our distributor in Japan in the prior year period.

Cost of goods sold for the quarter ended June 30, 2003 was $1.7 million compared to $2.0 million for the quarter ended June 30, 2002, resulting in 58% gross margin rates in both periods. Generally, we expect improvements in domestic and disposable product sales mix percentages to result in improved margin rates. However, in the current period, these trends were partially offset by the amortization of capitalized license fees associated with the settlement of our patent litigation dispute with Boston Scientific Corporation, and we expect such amortization charges to continue for as long as twelve more years. Also, margins were limited by temporary cost increases, effective through June 2003, on some of our vendor-sourced hardware products and by significant provisions to our reserve for obsolete inventory. We have, from time to time, recognized relatively high expenses related to obsolete inventory provisions as our product line has undergone several changes, and we may experience pressure on margins in the future due to similar product changes. Despite these factors, we generally expect modest gross margin improvement over the balance of 2003 primarily as a result of improvements in our sales mix and manufacturing cost reductions.

Research and development expenses for the quarter ended June 30, 2003 were $1.1 million compared to $1.3 million for the corresponding period in 2002, primarily because spending for product development and clinical trials decreased from year to year, although charges for patent litigation expense were also lower.

Selling, general and administrative expenses for the quarter ended June 30, 2003 were $4.7 million as compared to $5.3 million in the corresponding period in 2002. This reduction primarily reflects $0.5 million in lower expenses associated with provisions to our allowance for uncollectible accounts, with only minimal charges in the current period. Selling expenses for the current period were also modestly lower. Recent expense reduction efforts are expected to result in stable or modestly reduced levels of selling, general and administrative expense for the remainder of 2003.

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Interest income, net of interest and other expenses, was $50,000 for the quarter ended June 30, 2003, down from $134,000 in the corresponding period of 2002. The change was primarily attributable to a smaller portfolio of interest bearing securities, reflecting our use of cash over the past year, and lower interest rates.

Six months ended June 30, 2003 and 2002

Sales decreased 7% to $8.5 million for the six months ended June 30, 2003, down from $9.2 million for the six months ended June 30, 2002. For the six months ended June 30, 2003, domestic sales decreased by 3% and international sales, due to large generator shipments to our distributor in Japan in the prior year period, decreased by 41% from the six months ended June 30, 2002. Sales of our disposable products totaled $7.4 million for the year to date period, an increase of 12% over the prior year. This increase reflects modestly higher average selling prices in the domestic market, as unit shipments of disposable products decreased 4%. Generator sales for the six months ended June 30, 2003 were 57% lower than sales in the same period last year, due again to the large generator shipments to our distributor in Japan in the prior year period.

Cost of goods sold for the six months ended June 30, 2003 was $3.3 million compared to $4.0 million for the six months ended June 30, 2002, resulting in a 62% margin rate for the current year to date period, compared with a 56% rate in the comparable prior year period. Generally, we expect improvements in domestic and disposable product sales mix percentages to result in improved margin rates. However, in the current six month period, these trends were partially offset by the amortization of capitalized license fees associated with the settlement of our patent litigation dispute with Boston Scientific Corporation, and we expect such amortization charges to continue for as long as twelve more years. Also, margins were limited by temporary cost increases, effective through June 2003, on some of our vendor-sourced hardware products and by significant provisions to our reserve for obsolete inventory. We have, from time to time, recognized relatively high expenses related to obsolete inventory provisions as our product line has undergone several changes, and we may experience pressure on margins in the future due to similar product changes. Despite these factors, we generally expect modest gross margin improvement over the balance of 2003 primarily as a result of improvements in our sales mix and manufacturing cost reductions.

Research and development expenses for the six months ended June 30, 2003 were $2.4 million compared to $2.7 million for the corresponding period in 2002, primarily because spending for product development and clinical trials decreased from year to year, although charges for patent litigation expense were also lower.

Selling, general and administrative expenses for the six months ended June 30, 2003 were $9.3 million as compared to $10.5 million in the corresponding period in 2002. This reduction reflects $0.6 million in lower expenses associated with provisions to our allowance for uncollectible accounts, with only minimal charges in the current period. Also, our expenses for public relations and professional service charges were $0.3 million lower, and selling expenses were down by $0.3 million. We expect that recent expense reduction efforts will result in stable or modestly reduced levels of selling, general and administrative expenses for the remainder of 2003.

Interest income, net of interest expense and other expenses, was $125,000 for the six months ended June 30, 2003, down from $282,000 in the corresponding period of 2002. The change was primarily attributable to a smaller portfolio of interest bearing securities, reflecting our use of cash over the past year, and lower interest rates.

Liquidity and Capital Resources

Prior to August 2000, we financed our operations principally through private placements of convertible preferred stock, raising approximately $37.9 million net of expenses. On August 1, 2000, we completed our initial public offering of 3.6 million common shares at a price of $12 per share, raising approximately $39.0 million net of expenses. All outstanding convertible preferred shares were converted to common shares at that time. In January 2003, we completed a private placement of 2,045,453 common shares at a price of $4.40 per share, raising approximately $8.3 million net of expenses. As of June 30, 2003, we had $3.8 million of cash and cash equivalents, $8.5 million of short and long term marketable securities and $15.3 million of working capital. In April 2003, we paid a total of $2.65 million for licenses acquired in settlement of outstanding patent disputes, as required by the definitive agreement we reached with Boston Scientific Corporation, its affiliates and its licensors.

For the six months ended June 30, 2003, net cash used in operating activities was $6.2 million principally due to our net loss of $6.3 million offset by non-cash charges, including depreciation, amortization and provisions to reserves for uncollectible accounts and inventory, of $1.0 million. Approximately $0.9 million in cash was used by changes in working capital accounts, principally a $1.5 million reduction in accounts payable and accrued liabilities. Our investing activities for the six months ended June 30, 2003, were limited to the purchase of property and equipment in the amount of $0.4 million, capitalization of certain patent defense litigation costs in the amount of $0.6 million, and capitalization of intangibles associated with settlement of our

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patent litigation in the amount of $2.65 million. During the six months ended June 30, 2002, we invested, net of sales and maturities, approximately $2.5 million in short and long-term marketable debt securities. Financing activities for the six months ended June 30, 2003, provided $9.2 million in cash, all related to issuance of common shares through our January private placement or exercise of stock options.

As of June 30, 2003, future minimum payments due under operating leases were as follows (in thousands):

2003	$	267
2004		356
Total of future minimum operating lease payments	$	623

Our capital requirements depend on numerous factors including our research and development expenditures, expenses related to selling, general and administrative operations and working capital to support business growth. Although it is difficult for us to predict future liquidity requirements with certainty, based on our cash-burn rate of approximately $1.0 million per month through the first half of 2003 and recently implemented expense reduction programs, we believe that our current cash and cash equivalents will satisfy our cash requirements for approximately 18 months. During or after this period, if cash generated by operations is insufficient to satisfy our liquidity requirements, we may need to sell additional equity or debt securities or obtain an additional credit facility. There can be no assurance that additional financing will be available to us or, if available, that such financing will be available on terms favorable to the Company and our stockholders.

Recent Accounting Pronouncements

In November 2002, the EITF reached a consensus on Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables.” EITF Issue No. 00-21 provides guidance on how to account for arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. The provisions of EITF Issue No. 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. We do not believe adoption of this statement will materially impact our financial position or results of operations.

Factors That May Affect Future Results

In addition to the other information in this quarterly report on Form 10-Q and in our annual report on form 10-K for the fiscal year ended December 31, 2002, the following factors should be considered carefully in evaluating our business and prospects.

Due to our dependence on the RITA system, failure to achieve market acceptance in a timely manner could harm our business.

Because all of our revenue comes from the sale of the RITA system, our financial performance will depend upon physician adoption and patient awareness of this system. If we are unable to convince physicians to use the RITA system, we may not be able to generate revenues because we do not have alternative products.

We have a history of losses and may never achieve profitability.

Although we believe that our operating expenses have stabilized in absolute dollars, to become profitable we must increase our sales and continue to manage our operating expenses. If sales do not continue to grow, we may not be able to achieve or maintain profitability in the future. In particular, we incurred net losses of $6.3 million in the six months ended June 30, 2003, $13.5 million in 2002, $13.0 million in 2001, $12.8 million in 2000 and $7.5 million in 1999. At June 30, 2003, we had an accumulated deficit of approximately $74.2 million.

Because we face significant competition from companies with greater resources than we have, we may be unable to compete effectively.

The market for our products is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants.

We compete directly with two companies in the domestic and international markets: RadioTherapeutics Corporation, a division of Boston Scientific Corporation, and Radionics, Inc., a division of Tyco Healthcare, which is a division of Tyco International. Boston Scientific Corporation and Tyco International are publicly traded companies with substantially greater resources than we have. Both RadioTherapeutics and Radionics sell products that use radiofrequency energy to ablate soft tissue. Furthermore, in April 2003, we entered into a license agreement with Boston Scientific, its affiliates and licensors, pursuant to which we granted Boston Scientific rights to manufacture and sell products using our infusion technology after October 5, 2004.

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As a result, Boston Scientific may develop and sell some competing products that would, in the absence of this license agreement, infringe our patents.

We are also aware of several companies in international markets which sell products that compete directly with ours. These companies are affecting our international market share and may erode that share in the future. In addition, one of these companies, Berchtold Corporation, has recently received FDA clearance for using radiofrequency energy to ablate soft tissue.

Alternative therapies could prove to be superior to the RITA system, and physician adoption could be negatively affected.

In addition to competing against other companies offering products that use radiofrequency energy to ablate soft tissue, we also compete against companies developing, manufacturing and marketing alternative therapies that address both cancerous and benign tumors. If these alternative therapies prove to offer treatment options that are perceived to be superior to our system, physician adoption of our products could be negatively affected and our revenues could decline.

We currently lack long-term data regarding the safety and efficacy of our products and may find that long-term data does not support our short-term clinical results or that further short or long-term studies do not support the safety and efficacy of our products in various applications.

Our products are supported by clinical follow-up data in published clinical reports or scientific presentations covering periods from five months to three years after radiofrequency ablation. If additional studies in liver cancer or in other applications fail to confirm or demonstrate the effectiveness of our products, our sales could decline. If longer-term patient follow-up or clinical studies indicate that our procedures cause unexpected, serious complications or other unforeseen negative effects, we could be subject to significant liability. Further, because some of our data has been produced in studies that were retrospective, not randomized or included small patient populations and because, in certain circumstances, we rely on clinical data developed by independent third party physicians, our clinical data may not be reproduced in wider patient populations.

If we are unable to protect our intellectual property rights or if we are found to infringe the rights of others, we may lose market share to our competitors and our business could suffer.

Our success depends significantly on our ability to protect our proprietary rights to the technologies used in our products, and yet we may be unable to do so. A number of companies in our market, as well as universities and research institutions, have issued patents and have filed patent applications that relate to the use of radiofrequency energy to ablate soft tissue. That could result in lawsuits against us. Our pending United States and foreign patent applications may not issue or may issue and be subsequently successfully challenged by others. In addition, our pending patent applications include claims to material aspects of our products that are not currently protected by issued patents. Both the patent application process and the process of managing patent disputes can be time consuming and expensive.

In the event a competitor infringes on our patent or other intellectual property rights, enforcing those rights may be difficult and time consuming. Even if successful, litigation to enforce our intellectual property rights or to defend our patents against challenge could be expensive and time consuming and could divert management s attention. We may not have sufficient resources to enforce our intellectual property rights or to defend our patents against a challenge. In addition, confidentiality agreements executed by our employees, consultants and advisors may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure. If we are unable to protect our intellectual property rights we could lose market share to our competitors and our business could suffer.

Our dependence on international revenues, which account for a significant portion of our revenues, could harm our business.

Because our future profitability will depend in part on our ability to increase product sales in international markets, we are exposed to risks specific to business operations outside the United States. These risks include:

• the challenge of managing international sales without direct access to the end customer;

• the risk of inventory build-up by our distributors which could negatively impact sales in future periods (for example, our distributor in Japan has built up a significant inventory of product in anticipation of the receipt of product and reimbursement approvals);

• obtaining reimbursement for procedures using our devices in some foreign markets;

• the burden of complying with complex and changing foreign regulatory requirements;

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• longer accounts receivable collection time;

• significant currency fluctuations, which could cause our distributors to reduce the number of products they purchase from us because the cost of our products to them could increase relative to the price they could charge their customers;

• reduced protection of intellectual property rights in some foreign countries; and

• contractual provisions governed by foreign laws.

We are substantially dependent on two distributors in our international markets, and if we lose either distributor or if either distributor significantly reduces its product demand, our international and total revenues could decline.

We are substantially dependent on a limited number of significant distributors in our international markets, and if we lose these distributors and fail to attract additional distributors, our international revenues could decline. ITX Corporation, formerly known as Nissho Iwai Corporation, is our primary distributor in Asia. It accounted for 30% of our international revenues in the six months ended June 30, 2003 and 55% of our international revenues in 2002. M.D.H. s.r.l. Forniture Ospedaliere, our distributor in Italy, accounted for 26% of our international revenues in the six months ended June 30, 2003 and 17% of our international revenues for 2002. Because international revenues accounted for 24% of our total revenues for the six months ended June 30, 2003 and these two distributors represented 56% of that total, the loss of either distributor or a significant decrease in unit purchases by either distributor could cause our revenues to decline substantially. If we are unable to attract additional international distributors, our international revenues may not grow.

Our relationships with third-party distributors could negatively affect our sales.

We sell our products in international markets through third-party distributors over whom we have limited control, and, if they fail to adequately support our products, our sales could decline. During the first quarter of 2003, we terminated our agreements with three of our international distributors and although we have contracted with replacement distributors we have expended significant time and resources in doing so. In addition, our near term sales in the three affected markets could suffer during the transition period that we estimate could last through September of 2003. If we or our distributors terminate other distributor agreements, we could incur similar or more burdensome expenses, have to expend significant time and resources in finding replacement distributors and our sales could decrease during any related transition period.

We are aware that some of our international distributors have built up inventory of our products. As a result, future sales to these distributors could be negatively impacted. In addition, while these distributors have no price protection and no right of return relating to purchased products, if we permit the return of any of these products, we will have to adjust our revenues relating to these products which may also impact our revenue recognition policy on future distributor sales.

In recent quarters we have significantly increased our allowance for uncollectible accounts to address the risk associated with longer collection periods that have arisen principally with our European distributors. If difficult economic conditions persist, and our collection experience worsens as a result, we may need to further adjust our allowance for uncollectible accounts in future periods, thereby reducing profits.

If customers in markets outside the United States experience difficulty obtaining reimbursement for procedures using our products, international sales could decline.

Certain of the markets outside the United States in which we sell our products require that specific reimbursement codes be obtained before reimbursement for procedures using our products can be approved. As a result, in countries where specific reimbursement codes are strictly required and have not yet been issued, reimbursement has been denied on that basis. For example, ITX Corporation, our distributor in Japan, is seeking to obtain reimbursement coverage in Japan, but to date has not yet received this approval. If we are unable to either obtain the required reimbursement codes or develop an effective strategy to resolve the reimbursement issue, physicians in foreign markets may be unwilling to purchase our products which could negatively impact our international revenues.

If third-party payors do not reimburse health care providers for use of the RITA system, purchases could be delayed and our revenues could decline.

Physicians, hospitals and other health care providers may be reluctant to purchase our products if they do not receive substantial reimbursement for the cost of the procedures using our products from third-party payors, such as Medicare, Medicaid and private health insurance plans. Even though in February 2002 we were successful in establishing a new CPT code related to liver procedures with the American Medical Association, a third-party payor still may not reimburse adequately for the procedure or product. We are aware of cases in which reimbursement for liver procedures using our system has been denied. In addition,

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there is no specific reimbursement code for radiofrequency ablation of tumors in other organs. Further, we believe the advent of fixed payment schedules has made it difficult to receive reimbursement for disposable products, even if the use of these products improves clinical outcomes. Fixed payment schedules typically permit reimbursement for a procedure rather than a device. If physicians believe that our system will add cost to a procedure but will not add sufficient offsetting economic or clinical benefits, physician adoption could be slowed. In addition, reimbursement levels are highest when our products are used in an inpatient setting. If there is a trend toward the use of our products on an outpatient basis, reimbursement levels could be lower and physician use could decline.

We depend on key employees in a competitive market for skilled personnel and without additional employees, we cannot grow or achieve profitability.

We are highly dependent on the principal members of our management team, including our Chief Executive Officer and Chief Financial Officer, as well as key staff in the areas of finance, operations and research and development. Mr. Barry Cheskin, was our Chief Executive Officer from May 1997 until his resignation in April 2003. Our Chief Financial Officer, Mr. Donald Stewart, assumed interim responsibility for day-to-day operations at the Company until a permanent Chief Executive Officer was hired. Mr. Joseph DeVivo has agreed to become our new Chief Executive Officer, effective August 18, 2003. Our future success will depend in part on the continued service of our staff and our ability to identify, hire and retain additional personnel. The market for qualified management personnel in Northern California, where our offices are located, is competitive and is expected to remain so. Because the environment for good personnel is so competitive, costs related to compensation may increase significantly. If we are unable to attract and retain both the management team and key personnel we need to support and grow our business, our business will suffer.

We may be subject to costly and time-consuming product liability actions.

We manufacture medical devices that are used on patients in both minimally invasive and open surgical procedures and, as a result, we may be subject to product liability lawsuits. To date, we have not been subject to a product liability claim; however, any product liability claim brought against us, with or without merit, could result in the increase of our product liability insurance rates or the inability to secure coverage in the future. In addition, we could have to pay any amount awarded by a court in excess of policy limits. Finally, even a meritless or unsuccessful product liability claim could be time consuming and expensive to defend and could result in the diversion of management’s attention from managing our core business.

Any failure in our physician training efforts could result in lower than expected product sales.

It is critical to our sales effort to train a sufficient number of physicians and to instruct them properly in the procedures that utilize our products. We have established formal physician training programs and rely on physicians to devote adequate time to understanding how and when our products should be used. If physicians are not properly trained, they may misuse or ineffectively use our products. Such use may result in unsatisfactory patient outcomes, patient injury and related liability or negative publicity that could have an adverse effect on our product sales.

We may incur significant costs related to a class action lawsuit due to the likely volatility of our stock.

Our stock price may fluctuate for a number of reasons including:

• failure of the public market to support the valuation established in our initial public offering;

• our ability to successfully commercialize our products;

• announcements regarding patent litigation or the issuance of patents to us or our competitors;

• quarterly fluctuations in our results of operations;

• announcements of technological or competitive developments;

• regulatory developments regarding us or our competitors;

• acquisitions or strategic alliances by us or our competitors;

• changes in estimates of our financial performance or changes in recommendations by securities analysts; and

• general market conditions, particularly for companies with small market capitalizations.

Securities class action litigation is often brought against a company after a period of volatility in the market price of its stock. If our future quarterly operating results are below the expectations of securities analysts or investors, the price of our common stock would likely decline. Stock price fluctuations may be exaggerated if the trading volume of our common stock is

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low. Any securities litigation claims brought against us could result in substantial expense and divert management’s attention from our core business.

We have limited experience manufacturing our disposable devices in substantial quantities, and if we are unable to hire sufficient additional personnel or to purchase additional equipment or are otherwise unable to meet customer demand, our business could suffer.

To be successful, we must manufacture our products in substantial quantities in compliance with regulatory requirements at acceptable costs. If we do not succeed in manufacturing quantities of our disposable devices that meet customer demand, we could lose customers and our business could suffer. At the present time, we have limited high-volume manufacturing experience. Our manufacturing operations are currently focused on the in-house assembly of our disposable devices. As we increase our manufacturing volume and the number of product designs for our disposable devices, the complexity of our manufacturing processes will increase. Because our manufacturing operations are primarily dependent upon manual assembly, if demand for our system increases we will need to hire additional personnel and may need to purchase additional equipment. If we are unable to sufficiently staff and equip our manufacturing operations or are otherwise unable to meet customer demand for our products, our business could suffer.

We are dependent on two suppliers as the only sources of a component that we use in our disposable devices, and any disruption in the supply of this component could negatively affect our business.

Until recently, there has been only one supplier available to provide us with a component that we include in our disposable devices. During the quarter ended June 30, 2003, we qualified a second supplier. However, a disruption in the supply of this component is still possible and could negatively affect revenues. If we were unable to remedy a disruption in supply of this component within twelve months, we could be required to redesign the handle of our disposable devices, which could divert engineering resources from other projects or add to product costs. In addition, a new or supplemental filing with applicable regulatory authorities may require clearance prior to our marketing a product containing new materials. This clearance process may take a substantial period of time, and we may be unable to obtain necessary regulatory approvals for any new material to be used in our products on a timely basis, if at all. This could also create supply disruptions that could negatively affect our business.

We are dependent on two suppliers as our only sources of an accessory device used in conjunction with our Starburst XLi line of disposable devices, and any disruption in the supply of these devices could negatively affect our revenues.

Until December 2002, we had only one supplier available to provide us with accessory infusion pumps used in conjunction with our Starburst XLi line of disposable devices. During the quarters ended September 30, 2002 and December 31, 2002, we experienced shortages in the supply of accessory infusion pumps. In December 2002, we qualified a new accessory infusion pump from our existing supplier for which we now have approval from UL and conditional approval from TUV for use in the United States and Europe. Also in December 2002, we qualified a second supplier of an accessory infusion pump, although we have not yet shipped this product to our customers commercially. Although we were able to remedy this supply disruption, future disruptions in the supply of this component are still possible and, in that event, our business could suffer through lower revenues or higher costs. Additionally, we have limited experience with both the primary and alternative pump and if either pump fails to perform as desired, revenues could be negatively affected.

We are dependent on third-party contractors for the supply of our generators, and any failure to deliver generators to us could result in lower than expected revenues.

We are dependent on two third-party suppliers to produce our generators. While we have agreements with both of these suppliers, any delay in shipments of generators to us could result in our failure to ship generators to customers and could negatively affect revenues.

Complying with the FDA and other domestic and international regulatory authorities is an expensive and time-consuming process, and any failure to comply could result in substantial penalties.

We are subject to a host of federal, state, local and international regulations regarding the manufacture and marketing of our products. In particular, our failure to comply with FDA regulations could result in, among other things, seizures or recalls of our products, an injunction, substantial fines and/or criminal charges against our employees and us. The FDA’s medical device reporting regulations require us to report any incident in which our products may have caused or contributed to a death or serious injury, or in which our products malfunctioned in a way that would be likely to cause or contribute to a death or serious injury if the malfunction recurred.

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Sales of our products outside the United States are subject to foreign regulatory requirements that vary from country to country. The time required to obtain approvals from foreign countries may be longer than that required for FDA approval or clearance, and requirements for foreign licensing may differ from FDA requirements. For example, some of our newer products have not received approval in Japan. Any failure to obtain necessary regulatory approvals for our new products in foreign countries could negatively affect revenues.

Product introductions or modifications may be delayed or canceled as a result of the FDA regulatory process, which could cause our revenues to be below expectations.

Unless we are exempt, we must obtain the appropriate FDA approval or clearance before we can sell a new medical device in the United States. Obtaining this approval or clearance can be a lengthy and time-consuming process. To date, all of our products have received clearances from the FDA through premarket notification under Section 510(k) of the Federal Food, Drug and Cosmetic Act. However, if the FDA requires us to submit a new premarket notification under Section 510(k) for modifications to our existing products, or if the FDA requires us to go through a lengthier, more rigorous examination than we now expect, our product introductions or modifications could be delayed or canceled which could cause our revenues to be below expectations. The FDA may determine that future products will require the more costly, lengthy and uncertain premarket approval process. In addition, modifications to medical device products cleared via the 510(k) process may require a new 510(k) submission. We have made minor modifications to our system. Using the guidelines established by the FDA, we have determined that some of these modifications do not require us to file new 510(k) submissions. If the FDA disagrees with our determinations, we may not be able to sell the RITA system until the FDA has cleared new 510(k) submissions for these modifications, or it may require us to recall previously sold products. In addition, we intend to request additional label indications, such as approvals or clearances for the ablation of tumors in additional organs, including lung, uterus and breast, for our current products. The FDA may either deny these requests outright, require additional extensive clinical data to support any additional indications or impose limitations on the intended use of any cleared product as a condition of approval or clearance. Therefore, obtaining necessary approvals or clearances for these additional applications could be an expensive and lengthy process. In addition, in the course of the FDA process leading to clearance or approval for a new indication, FDA may request an advisory panel meeting or meetings to discuss the clinical data, the appropriate study design or other criteria for clearance or approval. In the event that the advisory panel advises FDA that the clinical data are inadequate or the study design or other criteria are inappropriate, and FDA concurs, the FDA clearance or approval process could be lengthened and anticipated revenues from that new indication would be delayed.

We may need to raise additional capital in the future resulting in dilution to our stockholders.

We may need to raise additional funds for our business operations and to execute our business strategy. We may seek to sell additional equity or debt securities or to obtain an additional credit facility. The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders. If additional funds are raised through the issuance of debt securities, these securities could have rights that are senior to holders of common stock and could contain covenants that would restrict our operations. Any additional financing may not be available in amounts or on terms acceptable to us, if at all.

Our executive officers and directors own a large percentage of our voting stock and could exert significant influence over matters requiring stockholder approval.

Because our executive officers and directors, and their respective affiliates, own approximately 10 percent of our outstanding common stock as of June 30, 2003, these stockholders may, as a practical matter, be able to exert significant influence over matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other business combinations. This concentration of voting stock could have the effect of delaying or preventing a merger or acquisition or other change of control that a stockholder may consider favorable.

Our certificate of incorporation, our bylaws, Delaware law and our stockholder rights plan contain provisions that could discourage a takeover.

Provisions of our certificate of incorporation, our bylaws, Delaware law and our stockholder rights plan contain provisions that may discourage, delay or prevent a merger or acquisition or other change of control that a stockholder may consider favorable.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

Our market risk disclosures have not changed significantly from those set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the year ended December 31, 2002, filed on March 28, 2003.

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Item 4.    Controls and Procedures

Within 90 days prior to the date of this report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934. Based upon that evaluation, the principal executive officer and principal financial officer has concluded that the Company’s disclosure controls and procedures are effective. The Company’s disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching its desired disclosure control objectives and are effective in doing so.

There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these internal controls subsequent to the date of their evaluation.

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PART II.    OTHER INFORMATION

Item 1.    Legal Proceedings.

From 1999 through March, 2003, the Company has been involved in patent-related disputes before the United States Patent and Trademark Office and the European Patent Office, as well as several patent infringement suits filed in the United States District Court for the Northern District of California. The principal parties in these matters were Boston Scientific Corporation and two of its operating divisions, RadioTherapeutics Corporation and Scimed Life Systems, Inc. Also included as adverse parties on particular matters were institutions or corporations from whom Boston Scientific has licensed technology, including the University of Nebraska, UneMed Corporation, the University of Kansas and the University of Kansas Medical Center Research Institute. These matters are described more fully in the Company’s annual report on Form 10-K for the year ended December 31, 2002.

In April 2003, the Company announced that it had signed a definitive agreement with Boston Scientific and its affiliates to settle all outstanding patent disputes between the two companies. Under the terms of the agreement, all litigation in the United States, including Boston Scientific’s appeal of a United States Patent and Trademark Office ruling, has been dismissed with prejudice and Boston Scientific will withdraw its opposition before the European Patent Office. The Company was required to make one-time payments of $1,325,000 to the University of Kansas and $1,325,000 to the University of Nebraska, the licensors of several of the disputed patents. These amounts were capitalized in April 2003 and are being amortized over the related assets’ useful lives, which range from six to twelve years. The agreement includes a series of licenses and sub-licenses, none of which include the Company’s proprietary temperature control technology. The Company agreed to license to Boston Scientific, on a royalty-bearing basis, its infusion technology for future products. However, Boston Scientific will not market or sell products utilizing licensed infusion technology before October 5, 2004.

The Company may, from time to time, become a party to legal proceedings arising in the ordinary course of business. Such matters generally involve complex questions of fact and law and could involve significant costs and the diversion of resources to defend. Additionally, the results of litigation are inherently uncertain, and an adverse outcome is at least reasonably possible. We are unable to estimate the range of possible loss from such future litigation or other legal proceedings and no amounts have been provided for such matters in the accompanying unaudited condensed consolidated financial statements.

Item 2.    Changes in Securities and Use of Proceeds.    Not applicable.

Item 3.    Defaults Upon Senior Securities.    Not applicable.

Item 4.    Submission of Matters to a Vote of Security Holders.

On June 26, 2003, the Annual Meeting of Stockholders of RITA Medical Systems, Inc. was held in Menlo Park, California.

An election of Class III directors was held with the following individuals being elected to our Board of Directors to serve until our annual meeting of stockholders for the year ending December 31, 2006:

Vincent Bucci	(10,906,475 votes in favor, no votes withheld, 14,388 votes abstaining)
Randy Lindholm	(10,906,475 votes in favor, no votes withheld, 14,388 votes abstaining)
F. Thomas (Jay) Watkins	(10,906,475 votes in favor, no votes withheld, 14,388 votes abstaining)

Other matters voted upon and approved at the meeting and the number of affirmations, negative votes cast and abstentions with respect to each such matter were as follows:

• Ratification of the appointment of PricewaterhouseCoopers LLP as our independent accountants for the fiscal year ending December 31, 2003 (10,889,025 votes in favor, 31,043 votes opposed, 795 votes abstaining).

Item 5.    Other Information.    Not applicable.

Item 6.    Exhibits and Reports on Form 8-K.

(a)    Exhibits:

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** 10.32	Litigation Settlement Agreement between the Company and RadioTherapeutics Corporation, Boston Scientific Corporation, Scimed Life Systems Inc., the Board of Regents of the University of Nebraska, University of Kansas d/b/a University of Kansas Medical Center and University of Kansas Medical Center Research Institute, Inc. effective as of April 4, 2003.
# 10.33	Form of Indemnification Agreement between the Company and Randy Lindholm on April 25, 2003 and between the Company and Lynn Saccoliti on May 1, 2003.
# 10.34	Consulting Agreement with Randy Lindholm dated April 25, 2003.
# 10.35	Amendment to offer letter to Donald Stewart dated as of May 1, 2003.
# 10.36	Offer letter to Lynn Saccoliti dated as of May 1, 2003.
31.1	Rule 13a-14(a) Section 302 Certification
32.1	Certificate pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

** Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

# Management contract or compensatory plan or arrangement.

(b)    Reports on Form 8-K:

A report on Form 8-K was filed with the SEC on April 7, 2003.

A report on Form 8-K was filed with the SEC on April 28, 2003.

A report on Form 8-K was filed with the SEC on April 29, 2003.

A report on Form 8-K was filed with the SEC on May 15, 2003.

A report on Form 8-K was filed with the SEC on July 7, 2003.

A report on Form 8-K was filed with the SEC on July 22, 2003.

A report on Form 8-K was filed with the SEC on July 31, 2003.

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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 thereunto duly authorized.

RITA MEDICAL SYSTEMS, INC.
By:	/S/    DONALD STEWART
Donald Stewart Acting Chief Executive Officer, Chief Financial Officer and Vice President, Finance and Administration

Date:  August 13, 2003

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EXHIBIT INDEX

** 10.32	Litigation Settlement Agreement between the Company and RadioTherapeutics Corporation, Boston Scientific Corporation, Scimed Life Systems Inc., the Board of Regents of the University of Nebraska, University of Kansas d/b/a University of Kansas Medical Center and University of Kansas Medical Center Research Institute, Inc. effective as of April 4, 2003.
# 10.33	Form of Indemnification Agreement between the Company and Randy Lindholm on April 25, 2003 and between the Company and Lynn Saccoliti on May 1, 2003.
# 10.34	Consulting Agreement with Randy Lindholm dated April 25, 2003.
# 10.35	Amendment to offer letter to Donald Stewart dated as of May 1, 2003.
# 10.36	Offer letter to Lynn Saccoliti dated as of May 1, 2003.
31.1	Rule 13a-14(a) Section 302 Certification
32.1	Certificate pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

** Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

# Management contract or compensatory plan or arrangement.

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EX-10.32

Exhibit 10.32

LITIGATION SETTLEMENT AGREEMENT

This Litigation Settlement Agreement (“Agreement”) is entered into effective as of April 4, 2003 (“Effective Date”), by and among:

Rita Medical Systems, Inc. (“RITA”), a Delaware corporation, on the one hand, and

RadioTherapeutics Corporation (“RTC”), a California corporation, Boston Scientific Corporation (“BSC”), a Delaware corporation, Scimed Life Systems, Inc. (“Scimed”), a Minnesota corporation, The Board of Regents of the University of Nebraska (“Board of Regents”), a Nebraska corporation, UneMed Corporation (“UneMed”), a Nebraska corporation, (together, the Board of Regents and UneMed are referred to as “Nebraska”), University of Kansas d/b/a University of Kansas Medical Center (“KUMC”), a Kansas state educational institution and University of Kansas Medical Center Research Institute, Inc. (“KUMCRI”), a Kansas corporation, (together, KUMC and KUMCRI are referred to as “Kansas”) (collectively, Nebraska and Kansas are referred to as the “Universities”), on the other hand;

(each of RITA, RTC, BSC, Scimed, Nebraska and Kansas are referred to as a “Party” and collectively as the “Parties”).

RECITALS

A. There is pending in the United States District Court for the Northern District of California Civil Action No. C01-03267, in which RITA is the plaintiff and

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

RTC is the defendant, for infringement of United States Patent Nos. 6,071,280, 5,935,123, 5,728,143, 5,683,384, 5,672,174 and 5,672,173 owned by RITA.

B. There is also pending in the United States District Court for the Northern District of California Civil Action No. C02-01745, in which RTC, Scimed and Nebraska are the plaintiffs and RITA is the defendant, for infringement of United States Patent Nos. 5,855,576 and 6,454,765 owned by the Board of Regents, exclusively licensed to UneMed and exclusively sublicensed to RTC, and United States Patent No. 5,584,872 owned by Scimed.

C. There is also pending in the United States District Court for the Northern District of California Civil Action No. C02-03270, in which BSC and Kansas are the plaintiffs and RITA is the defendant, for infringement of United States Patent No. Re. 35,330 owned by KUMC and exclusively (within limited fields of use) licensed to BSC.

D. There is also pending in the United States District Court for the Northern District of California Civil Action No. C02-5005, in which RTC and Nebraska are the plaintiffs and RITA is the defendant, for patent interference.

E. There is also pending in Europe a certain appeal proceeding bearing Case No. T0700/02-322 (the “European Appeal”) against the Decision of the Opposition Division of the European Patent Office dated April 17, 2002 in Opposition Proceedings Re European Patent No. EP 0 777 445 B1, formerly European Patent Application

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

No. 95928379.7-2305, in which RTC is the opponent and RITA is the applicant (the “Opposition”).

F. It is the desire and intention of the Parties to avoid the risks and expenses of further litigation of the Actions (as defined herein), to avoid disputes between themselves and to settle the rights, claims and demands between them relating to the subject matter of the Actions, without any admissions whatsoever by any Party, upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual covenants and agreements contained here, the Parties agree as follows:

1. DEFINITIONS

1.1 “Actions” shall mean, collectively, the pending actions and the European Appeal and Opposition as described in Recitals A through E of this Agreement.

1.2 “Affiliate” shall mean, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with, that Person, provided however, that in each case any such other Person shall be considered to be an Affiliate only during the time during which such control exists. For purposes of this definition, “control”, including, with correlative meaning, the terms “controlled by” and “under common control with”, as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct and/or cause the direction of the

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

1.3 “Claim” shall mean an issued patent claim which has not expired and which has not been disclaimed, canceled or finally held invalid or unenforceable by a court of competent jurisdiction from which no further appeal is possible or has been taken within the time period provided under applicable law for such an appeal. If an issued patent claim has been finally held unenforceable as provided in the immediately preceding sentence, but thereafter the unenforceability thereof is purged such that under applicable law it again becomes enforceable, such patent claim shall thereafter be a Claim for purposes of the immediately preceding sentence.

1.4 “Existing Products” shall mean Products offered for sale or sold in the Field by an Original Party as of the Effective Date.

1.5 “Field” shall mean Products and Methods used to ablate tumors with radio frequency (RF) electrical energy.

1.6 “Future Products” shall mean Products, other than Existing Products, offered for sale or sold in the Field after the Effective Date.

1.7 “Gastro-Intestinal Tract” shall mean the body passage beginning at the esophagus and including, but not limited to, the stomach, the small and large intestines and the rectum, through which food taken into the body is digested.

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

1.8 “Head and Neck Region” shall mean the interior and exterior regions of the body located above the esophagus, including, but not limited to, the soft palate, uvula, tonsils, the nasal turbinates and facial tissue.

1.9 “LaFontaine Patent Portfolio” shall mean and include all of the issued and unexpired United States patents listed in Exhibit A, as well as all United States and foreign patents that have issued or may hereafter issue on applications which claim the benefit of the priority filing date(s) of any such patents.

1.10 “LeVeen Everting Electrode Claims” shall mean those Claims of any patents within the LeVeen Patent Portfolio which require for infringement an everting, RF emitting electrode, or its use.

1.11 “LeVeen Patent Portfolio” shall mean and include all of the issued and unexpired United States patents listed in Exhibit B, as well as all United States and foreign patents that have issued or may hereafter issue on applications which claim the benefit of the priority filing date(s) of any such patents.

1.12 “Licensed Territories” shall mean the United States and all foreign countries worldwide where a Claim of the subject Patent Portfolio has issued or does issue.

1.13 “Malone Patent Portfolio” shall mean and include all of the issued and unexpired United States patents listed in Exhibit C, as well as all United States and

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

foreign patents that have issued or may hereafter issue on applications which claim the benefit of the priority filing date(s) of any such patents.

1.14 “Method” shall mean any process or method.

1.15 “Net Sales” shall mean the aggregate amount of net sales recorded by the applicable Party (and its Affiliates) from sales of applicable Products in accordance with generally accepted accounting principles, consistently applied by such Party across all similar product lines, in connection with the preparation of such Party’s financial statements, as publicly-reported.

1.16 “New Patents” shall mean and include any and all United States and foreign patents and patent applications (i) having an earliest priority filing date after the Effective Date of this Agreement; (ii) that are acquired or licensed by a Party, or any of its respective Affiliates, from a Third Person after the Effective Date of this Agreement; or (iii) that are owned, licensed or controlled, prior to the date of the subject acquisition, by a Third Person that acquires, whether by merger, purchase of assets, operation of law or in any other manner, any of RITA, RTC, Scimed, BSC, or any of their respective Affiliates, after the Effective Date of this Agreement.

1.17 “Original Party” shall mean each of RITA, RTC, BSC, Scimed, Nebraska and Kansas and “Original Parties” shall mean all of those Parties, collectively. For the avoidance of doubt, Affiliates, permitted successors and permitted assigns of the Original Parties to this Agreement are not, and shall not be deemed to be, Original Parties.

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

1.18 “Patent Portfolio” shall mean, as applicable, the LeVeen Patent Portfolio, the RTC RF Ablation Patent Portfolio, the Malone Patent Portfolio, the LaFontaine Patent Portfolio, the RITA Patent Portfolio or the RITA Infusion Claims, as the context may require.

1.19 “Person” shall mean an individual or any legally recognized entity, including any corporation, partnership, limited partnership, limited liability company, association or trust.

1.20 “Product” shall mean any system, apparatus or component thereof.

1.21 “Regulatory Authority” shall mean the U.S. Food and Drug Administration and any equivalent national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental or quasi-governmental entity outside of the United States.

1.22 “Reserved Areas” shall mean any Product which, in the absence of a right or license, would infringe one or more of the Claims of any patent within the Malone Patent Portfolio and that is specially made or adapted for use, or the use of such Product, in the following anatomical fields of use: (i) the Head and Neck Regions; (ii) the Gastro-Intestinal Tract; (iii) the Spine; and/or (iv) cardiovascular applications.

1.23 “RITA Infusion Claims” shall mean those Claims of any patents within the RITA Patent Portfolio which require for infringement liquid infusion capability or the use of liquid infusion.

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

1.24 “RITA Patent Portfolio” shall mean and include all United States patent applications and all issued and unexpired United States patents owned or controlled by RITA as of the Effective Date or as to which RITA has the right to grant licenses or sub-licenses as of the Effective Date, including, without limitation, those United States patent applications and patents listed in Exhibit D, as well as all United States and foreign patents that have issued or may hereafter issue on applications which claim the benefit of the priority filing date(s) of any such patent applications and patents.

1.25 “RITA Temperature Sensor Claims” shall mean those Claims of any patents within the RITA Patent Portfolio which require for infringement at least one temperature-sensing device integrally located on an ablation device, or the use of such ablation device.

1.26 “RTC Impedance Display Claims” shall mean those Claims of any patents within the RTC RF Ablation Patent Portfolio which require for infringement the display of impedance or the use of displayed impedance.

1.27 “RTC RF Ablation Patent Portfolio” shall mean and include all United States patent applications and all issued and unexpired United States patents owned or controlled by RTC as of the time of its acquisition by BSC or as to which RTC had the right as of such time to grant licenses or sub-licenses (excluding the LeVeen Patent Portfolio), including, without limitation, those United States patent applications and patents listed in Exhibit E, as well as all United States and foreign patents that have

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

issued or may hereafter issue on applications which claim the benefit of the priority filing date(s) of any such patent applications and patents.

1.28 “Spine” shall mean the skeletal structures and structures in and above the vertebral column from the occipital region to the sacral region of the spine including the bony structures and associated soft tissue, but excluding the nasopharynx and non-spine structures.

1.29 “Sub-Field” shall mean tumor ablation within the Field directed to specific organs or regions of the body.

1.30 “Third Person” shall mean a Person other than the Parties or any of their respective Affiliates.

2. LICENSE GRANTS

2.1 License Grant to RITA under LeVeen Patent Portfolio. Subject to the terms and conditions of this Agreement, including, without limitation, the limitations set forth in Section 2.2, and in consideration of the payment of license fees to Nebraska in accordance with Section 3.1, each of Nebraska and RTC hereby grants to RITA and RITA’s Affiliates, under the LeVeen Patent Portfolio, but excluding the LeVeen Everting Electrode Claims, a non-exclusive license throughout the Licensed Territories in the Field to make, have made, use, practice, import, offer to sell, sell and otherwise dispose of or make available for use, directly or indirectly, Products and Methods which, but for the license granted herein, would infringe one or more of the Claims within the LeVeen

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

Patent Portfolio, excluding the LeVeen Everting Electrode Claims. Notwithstanding any other provision of this Agreement, the foregoing license extends only to such Products and Methods as are offered for sale, sold and otherwise disposed of or made available for use under RITA’s (or its Affiliates’) own trademarks, tradenames and/or label(s), which shall be the most prominent trademarks, tradenames and/or label(s) thereon, and does not extend, and shall not be construed to extend, to any Products, or parts or components thereof, offered for sale, sold or otherwise disposed of or made available for use to any Third Person by RITA (or its Affiliates) for resale or re-distribution by such Third Person solely under such Third Person’s own trademarks, tradenames and/or label(s). Subject to Section 3.1, the foregoing license grant is fully paid and [***].

2.2 Limitations on License under LeVeen Patent Portfolio. Nothing in this Agreement shall be construed to grant RITA or its Affiliates the right to sublicense the LeVeen Patent Portfolio, or any of RITA’s (or its Affiliates’) license rights hereunder, and any such sublicensing is strictly prohibited. RITA, on its own behalf and on behalf of its Affiliates, hereby acknowledges that: (i) the rights and licenses granted by Nebraska and RTC to RITA and its Affiliates are non-exclusive, and (ii) nothing in this Agreement shall limit or restrict Nebraska’s and/or RTC’s rights to grant similar rights and licenses to one or more additional Persons within the Licensed Territories, or to exercise such rights themselves. RITA, on its own behalf and on behalf of its Affiliates, further acknowledges and agrees that the license granted under Section 2.1 does not include, and expressly excludes, the grant of any rights with respect to the LeVeen Everting Electrode Claims. Notwithstanding the foregoing, RITA shall be permitted to

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

sell and otherwise make available, directly, or indirectly through distributors, solely for use in Japan, the existing inventory of Model 30 arrays as of the Effective Date (“Japan Inventory”). RITA acknowledges and agrees that the number of units comprising the Japan Inventory does not exceed six hundred (600) units.

2.3 License Grant to RITA under RTC RF Ablation Patent Portfolio. Subject to the terms and conditions of this Agreement, including, without limitation, the limitations set forth in Section 2.4, RTC hereby grants to RITA and RITA’s Affiliates, under the RTC RF Ablation Patent Portfolio, but excluding the RTC Impedance Display Claims, a non-exclusive license throughout the Licensed Territories in the Field to make, have made, use, practice, import, offer to sell, sell and otherwise dispose of or make available for use, directly or indirectly, Products and Methods which, but for the license granted herein, would infringe one or more of the Claims within the RTC RF Ablation Patent Portfolio, excluding the RTC Impedance Display Claims. Notwithstanding any other provision of this Agreement, the foregoing license extends only to such Products and Methods as are offered for sale, sold and otherwise disposed of or made available for use under RITA’s (or its Affiliates’) own trademarks, tradenames and/or label(s), which shall be the most prominent trademarks, tradenames and/or label(s) thereon, and does not extend, and shall not be construed to extend, to any Products, or parts or components thereof, offered for sale, sold or otherwise disposed of or made available for use to any Third Person by RITA or its Affiliates for resale or re-distribution by such Third Person solely under such Third Person’s own trademarks, tradenames and/or label(s). The foregoing license grant is fully paid and [***].

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

2.4 Limitations on License under RTC RF Ablation Patent Portfolio. Nothing in this Agreement shall be construed to grant RITA or its Affiliates the right to sublicense the RTC RF Ablation Patent Portfolio, or any of RITA’s (or its Affiliates’) license rights hereunder, and any such sublicensing is strictly prohibited. RITA, on its own behalf and on behalf of its Affiliates, hereby acknowledges that: (i) the rights and licenses granted by RTC to RITA and its Affiliates are non-exclusive, and (ii) nothing in this Agreement shall limit or restrict RTC’s rights to grant similar rights and licenses to one or more additional Persons within the Licensed Territories, or to exercise such rights itself. RITA, on its own behalf and on behalf of its Affiliates, further acknowledges and agrees that the license granted under Section 2.3 does not include, and expressly excludes, the grant of any rights with respect to the RTC Impedance Display Claims. Notwithstanding the foregoing, RITA shall be permitted to make, have made, use, practice, import, offer to sell, sell and otherwise make available for use RITA’s Existing Products for a period of eighteen (18) months (as may be adjusted pursuant to Section 4.8) after the Effective Date subject to and in accordance with the terms and conditions of RITA’s covenants set forth in Section 4.8.

2.5 License Grant to RITA under Malone Patent Portfolio. Subject to the terms and conditions of this Agreement, including, without limitation, the limitations set forth in Section 2.6, and in consideration of the payment of license fees to Kansas in accordance with Section 3.1, each of Kansas and BSC hereby grants to RITA and RITA’s Affiliates, under the Malone Patent Portfolio, a non-exclusive license throughout the Licensed Territories in the Field to make, have made, use, practice, import, offer to sell,

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

sell and otherwise dispose of or make available for use, directly or indirectly, Products and Methods which, but for the license granted herein, would infringe one or more of the Claims within the Malone Patent Portfolio, but excluding any Products within the Reserved Areas. Notwithstanding any other provision of this Agreement, the foregoing license extends only to such Products and Methods as are offered for sale, sold and otherwise disposed of or made available for use under RITA’s (or its Affiliates’) own trademarks, tradenames and/or label(s), which shall be the most prominent trademarks, tradenames and/or label(s) thereon, and does not extend, and shall not be construed to extend, to any Products, or parts or components thereof, offered for sale, sold or otherwise disposed of or made available for use to any Third Person by RITA or its Affiliates for resale or re-distribution by such Third Person solely under such Third Person’s own trademarks, tradenames and/or label(s). Subject to Section 3.1, the foregoing license grant is fully paid and [***].

2.6 Limitations on License under Malone Patent Portfolio. Nothing in this Agreement shall be construed to grant RITA or its Affiliates the right to sublicense the Malone Patent Portfolio, or any of RITA’s (or its Affiliates’) license rights hereunder, and any such sublicensing is strictly prohibited. RITA, on its own behalf and on behalf of its Affiliates, hereby acknowledges that: (i) the rights and licenses granted by Kansas and BSC to RITA and its Affiliates are non-exclusive, and (ii) nothing in this Agreement shall limit or restrict Kansas’ and/or BSC’s rights to grant similar rights and licenses to one or more additional Persons within the Licensed Territories, or to exercise such rights themselves. RITA, on its own behalf and on behalf of its Affiliates, further

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

acknowledges and agrees that the license granted under Section 2.5 does not include, and expressly excludes, the grant of any rights with respect to Products within the Reserved Areas.

2.7 License Grant to RITA under LaFontaine Patent Portfolio. Subject to the terms and conditions of this Agreement, including, without limitation, the limitations set forth in Section 2.8, Scimed hereby grants to RITA and RITA’s Affiliates, under the LaFontaine Patent Portfolio, a non-exclusive license throughout the Licensed Territories in the Field to make, have made, use, practice, import, offer to sell, sell and otherwise dispose of or make available for use, directly or indirectly, Products and Methods which, but for the license granted herein, would infringe one or more of the Claims within the LaFontaine Patent Portfolio. Notwithstanding any other provision of this Agreement, the foregoing license extends only to such Products and Methods as are offered for sale, sold and otherwise disposed of or made available for use under RITA’s (or its Affiliates’) own trademarks, tradenames and/or label(s), which shall be the most prominent trademarks, tradenames and/or label(s) thereon, and does not extend, and shall not be construed to extend, to any Products, or parts or components thereof, offered for sale, sold or otherwise disposed of or made available for use to any Third Person by RITA or its Affiliates for resale or re-distribution by such Third Person solely under such Third Person’s own trademarks, tradenames and/or label(s). The foregoing license grant is fully paid and [***].

2.8 Limitations on License under LaFontaine Patent Portfolio. Nothing in this Agreement shall be construed to grant RITA or its Affiliates the right to sublicense

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

the LaFontaine Patent Portfolio, or any of RITA’s (or its Affiliates’) license rights hereunder, and any such sublicensing is strictly prohibited. RITA, on its own behalf and on behalf of its Affiliates, hereby acknowledges that: (i) the rights and licenses granted by Scimed to RITA and its Affiliates are non-exclusive, and (ii) nothing in this Agreement shall limit or restrict Scimed’s rights to grant similar rights and licenses to one or more additional Persons within the Licensed Territories, or to exercise such rights itself.

2.9 License Grant to BSC under the RITA Patent Portfolio. Subject to the terms and conditions of this Agreement, including, without limitation, the limitations set forth in Section 2.10, RITA hereby grants to BSC and BSC’s Affiliates, under the RITA Patent Portfolio, but excluding the RITA Infusion Claims and RITA Temperature Sensor Claims, a non-exclusive license throughout the Licensed Territories in the Field to make, have made, use, practice, import, offer to sell, sell and otherwise dispose of or make available for use, directly or indirectly, Products and Methods which, but for the license granted herein, would infringe one or more of the Claims within the RITA Patent Portfolio, excluding the RITA Infusion Claims or the RITA Temperature Sensor Claims. Notwithstanding any other provision of this Agreement, the foregoing license extends only to such Products and Methods as are offered for sale, sold and otherwise disposed of or made available for use under BSC’s (or its Affiliates’) own trademarks, tradenames and/or label(s), which shall be the most prominent trademarks, tradenames and/or label(s) thereon, and does not extend, and shall not be construed to extend, to any Products, or parts or components thereof, offered for sale, sold or otherwise disposed of or made

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

available for use to any Third Person by BSC or its Affiliates for resale or re-distribution by such Third Person solely under such Third Person’s own trademarks, tradenames and/or label(s). The foregoing license grant is fully paid and [***].

2.10 Limitations on Licenses under RITA Patent Portfolio. Nothing in this Agreement shall be construed to grant BSC or its Affiliates, the right to sublicense the RITA Patent Portfolio, or any of BSC’s (or its Affiliates’) license rights hereunder, and any such sublicensing is strictly prohibited. BSC, on its own behalf and on behalf of its Affiliates, hereby acknowledges that: (i) the rights and licenses granted by RITA to BSC and its Affiliates under the RITA Patent Portfolio are non-exclusive, and (ii) nothing in this Agreement shall limit or restrict RITA’s rights to grant similar rights and licenses to one or more additional Persons within the Licensed Territories, or to exercise such rights itself. BSC, on its own behalf and on behalf of its Affiliates, further acknowledges and agrees that the licenses granted under Section 2.9 do not include, and expressly exclude, the grant of any rights with respect to the RITA Infusion Claims or the RITA Temperature Sensor Claims.

2.11 License Grant to BSC under the RITA Infusion Claims. Subject to the terms and conditions of this Agreement, including, without limitation, the limitations set forth in Section 2.12, and in consideration of the payment of royalties by BSC to RITA in accordance with Section 3.3, RITA hereby grants to BSC and BSC’s Affiliates, under the RITA Infusion Claims, a non-exclusive license throughout the Licensed Territories in the Field to make, have made, use, practice, import, offer to sell, sell and otherwise dispose of or make available for use, directly or indirectly, Products and Methods which, but for

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

the license granted herein, would infringe any one or more of the RITA Infusion Claims. Notwithstanding any other provision of this Agreement:

(a) the foregoing license extends only to such Products and Methods as are offered for sale, sold and otherwise disposed of or made available for use under BSC’s (or its Affiliates’) own trademarks, tradenames and/or label(s), which shall be the most prominent trademarks, tradenames and/or label(s) thereon, and does not extend, and shall not be construed to extend, to any Products, or parts or components thereof, offered for sale, sold or otherwise disposed of or made available for use to any Third Person by BSC or its Affiliates for resale or re-distribution by such Third Person solely under such Third Person’s own trademarks, tradenames and/or label(s); and

(b) BSC, on behalf of itself and its Affiliates, hereby covenants and agrees not to market, offer for sale or sell any Products or Methods that, absent the foregoing license, would infringe the RITA Infusion Claims, until eighteen (18) months after the Effective Date.

2.12 Limitations on Licenses under RITA Infusion Claims. Nothing in this Agreement shall be construed to grant BSC or its Affiliates the right to sublicense the RITA Infusion Claims, or any of BSC’s (or its Affiliates’) license rights hereunder, and any such sublicensing is strictly prohibited. BSC, on its own behalf and on behalf of its Affiliates, hereby acknowledges that: (i) the rights and licenses granted by RITA to BSC and its Affiliates under the RITA Infusion Claims are non-exclusive, and (ii) nothing in this Agreement shall limit or restrict RITA’s rights to grant similar rights and licenses to

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

one or more additional Persons within the Licensed Territories, or to exercise such rights itself.

2.13 No Licenses under New Patents. Each Party hereby acknowledges and agrees that no right or license is granted to such Party under or in relation to this Agreement, whether expressly, by implication, estoppel or otherwise, by any other Party in regard to any New Patents of such other Party.

2.14 Third Party IP Sublicenses Optional. To the extent sublicenses to intellectual property rights granted by any third party license are made available to RITA (and RITA’s Affiliates) under Section 2.3 or to BSC (and BSC’s Affiliates) (individually, each a “Sublicensee Party”) under Section 2.9, such sublicenses shall be optional at the sole discretion of the respective Sublicensee Party, will be limited to the terms of such third party license to the extent of the licenses granted hereunder, and such Sublicensee Party shall pay any fees, royalties or other charges, of which it is made aware in a timely manner, resulting from such Party’s exercise of the sublicense rights granted herein. For avoidance of doubt, RITA (and its Affiliates) and BSC (and its Affiliates) shall have the option to decline to include in the license granted to it herein any third party sublicense for which it does not want to pay the applicable fees, royalties or other charges or abide by other terms or limitations applicable to sublicensees of such third party sublicense. With respect to any third party rights sublicensed hereunder, if the Sublicensee Party materially breaches its obligation to pay any applicable fees, royalties or other charges or to abide by other terms or limitations applicable to it as a Sublicensee Party (of which it has been made aware in advance) as described above, the respective sublicense granted

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

herein may be terminated only with respect to such third party license (for which such obligations have been breached) upon sixty (60) days written notice, unless such breach is cured within the notice period.

3. PAYMENT

3.1 License Fee. The Parties enter into this Agreement, and grant the license rights set forth herein, for and in consideration of, among other things, the payment by RITA to the Universities of the aggregate sum of Two Million, Six Hundred Fifty Thousand Dollars (US$2,650,000), as a one-time fully paid up license fee and royalty in respect of the LeVeen Patent Portfolio and the Malone Patent Portfolio. This sum shall be paid by RITA to Nebraska and Kansas by wire transfers in immediately available funds in the sums of US$1,325,000 and US$1,325,000 payable in accordance with the instructions set forth on Exhibit F within fourteen (14) days after the Effective Date of this Agreement.

3.2 Acknowledgement. Each of the Universities, RTC and BSC hereby acknowledges and agrees that the payment by RITA to the Universities in accordance with Section 3.1 satisfies and fully discharges any and all liability on the part of either RTC or BSC pursuant to any royalty or other payment obligations under any respective license or sub-license agreements between Nebraska and RTC and/or Kansas and BSC to pay any amount to either of the Universities as a consequence of the licenses granted to RITA under Sections 2.1 and 2.5.

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

3.3 Potential Royalties Regarding RITA Infusion Claims. In consideration of the license grants set forth in Section 2.11 with respect to the RITA Infusion Claims, subject to the terms and conditions of this Agreement, from the Effective Date of this Agreement until the expiration of the last to expire of the RITA Infusion Claims, BSC shall pay to RITA a royalty equal to [***] of the Net Sales in the Licensed Territories by or on behalf of BSC or its Affiliates to Third Persons of tumor ablation probes utilizing infusion which, but for the license granted herein, would infringe any one or more of the RITA Infusion Claims issued in the Licensed Territories.

3.4 Statements and Payments. BSC, on behalf of itself and its Affiliates, shall deliver a quarterly statement to RITA indicating the royalty payments due to RITA in respect of each calendar quarter accompanied by payment of the applicable royalty due. Each quarterly statement shall state the Net Sales in the Licensed Territories of tumor ablation probes utilizing infusion which, but for the license granted herein, would infringe any one or more of the RITA Infusion Claims issued in the Licensed Territories, by BSC and its Affiliates to Third Persons for such calendar quarter. The first such statement shall be due prior to the expiration of sixty (60) days after the close of the first calendar quarter following the first sale of such a tumor ablation probe to a Third Person in the Licensed Territories by BSC or any of its Affiliates. Subsequent statements shall be due prior to the expiration of sixty (60) days following the close of each subsequent calendar quarter thereafter. Each such statement shall clearly state in reasonable detail the basis for calculating the royalty due to RITA during the applicable calendar quarter.

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

3.5 Audits. BSC, on behalf of itself and its Affiliates, agrees to keep, in accordance with its usual and customary practice and as set forth below, books of account and records of Net Sales in the Licensed Territories of those tumor ablation probes which are subject to the royalty obligations of Section 3.3. BSC, on behalf of itself and its Affiliates, grants to RITA, at RITA’s expense, the right, exercisable no more than once during each calendar year, and subject to the execution of, and compliance with, a confidentiality agreement in form and substance reasonably satisfactory to BSC, to examine such books and records at the location of such books and records on prior written notice of at least ten (10) business days, insofar as they concern the sale of applicable royalty-bearing tumor ablation probes, for the purpose of verifying the amount of Net Sales in the Licensed Territories of such probes. Any such examination of books and records concerning the Net Sales of such probes shall be completed within fifteen (15) business days of the date on which access to such books and records is made available to RITA. Nothing in this Section 3.5 shall be deemed to require BSC or its Affiliates to keep any books of account or records other than those which BSC or its Affiliates maintains in the ordinary course of business in BSC’s or its Affiliates’ usual and customary practice, to retain any such books of account or records for any period in excess of the period for which BSC or its Affiliates’ retains such books and records in the ordinary course of business in BSC’s or its Affiliates’ usual and customary practice, or to provide access to any books and records of BSC or its Affiliates other than as specified herein.

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

3.6 Nondisclosure. RITA shall hold the statements and reports described in Section 3.4 and any information acquired during any inspection and audit conducted in accordance with Section 3.5 in strict confidence and shall use such statements, reports and information solely for the purposes of (i) collecting any royalties due RITA, and/or (ii) complying with the terms and conditions of this Agreement. Nothing in this Section 3.6 shall be construed to preclude RITA from making any disclosures required by any governmental laws or regulations or by judicial process.

4. RELEASES AND COVENANTS NOT TO SUE; ADDITIONAL COVENANTS.

4.1 Release by BSC, RTC, Scimed, Nebraska and Kansas in Favor of RITA. Subject to the terms and conditions of this Agreement, each of BSC, RTC, Scimed, Nebraska and Kansas, for itself and for its respective Affiliates, and for all of its and their respective present and past officers, directors, shareholders, agents, employees, attorneys and legal representatives, and each of them, hereby releases, acquits, discharges and covenants not to sue RITA, its Affiliates and all of its and their respective present and past officers, directors, shareholders, agents, employees, suppliers, vendors, distributors, customers, attorneys and legal representatives, and each of them (collectively, the “RITA Releasees”), from or for:

(a) any claims, known or unknown, of infringement or violation of any of the LeVeen Patent Portfolio, the RTC RF Ablation Patent Portfolio, the Malone Patent Portfolio or the LaFontaine Patent Portfolio, arising from, relating to, based on or

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

otherwise concerning Products or Methods made, have made, used, practiced, imported, offered for sale, sold or otherwise disposed of or made available for use, directly or indirectly, by RITA or its Affiliates in the Field prior to the Effective Date; and

(b) any and all claims, demands, suits, damages, indebtedness, liabilities, actions and causes of action, whether known or unknown, whether legal, equitable or administrative that are or may be based in whole or in part on, or do or may arise out of, or may be related to or based on or in any way connected with the Actions, or the facts, events, circumstances, actions and transactions that are or could have been alleged in the Actions, or any matter referred to in the pleadings or any other papers filed or served in the Actions, excepting only the duties and obligations set forth in this Agreement.

4.2 Release by RITA in Favor of BSC. Subject to the terms and conditions of this Agreement, RITA, for itself and for its Affiliates and for all of its and their present and past officers, directors, shareholders, agents, employees, attorneys and legal representatives (collectively, “RITA Releasers”), hereby releases, acquits, discharges and covenants not to sue BSC, its Affiliates and all of its and their respective present and past officers, directors, shareholders, agents, employees, suppliers, vendors, distributors, customers, attorneys and legal representatives, and each of them (collectively, the “BSC Releasees”), from or for:

(a) any claims, known or unknown, of infringement or violation of the RITA Patent Portfolio arising from, relating to, based on or otherwise concerning

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

Products or Methods made, have made, used, practiced, imported, offered for sale, sold or otherwise disposed of or made available for use, directly or indirectly, by BSC or its Affiliates in the Field prior to the Effective Date; and

(b) any and all claims, demands, suits, damages, indebtedness, liabilities, actions and causes of action, whether known or unknown, whether legal, equitable or administrative that are or may be based in whole or in part on, or do or may arise out of, or may be related to or based on or in any way connected with the Actions, or the facts, events, circumstances, actions and transactions that are or could have been alleged in the Actions, or any matter referred to in the pleadings or any other papers filed or served in the Actions, excepting only the duties and obligations set forth in this Agreement.

4.3 Release by RITA in Favor of Nebraska and Kansas. Subject to the terms and conditions of this Agreement, RITA, for itself and for the RITA Releasers, hereby releases, acquits, discharges and covenants not to sue Nebraska and Kansas, and their respective Affiliates, and all of their respective present and past officers, directors, shareholders, agents, employees, suppliers, vendors, distributors, customers, attorneys and legal representatives, and each of them, from or for:

(a) any claims, known or unknown, of infringement or violation of the RITA Patent Portfolio arising from, relating to, based on or otherwise concerning Products or Methods made, have made, used, practiced, imported, offered for sale, sold or otherwise disposed of or made available for use, directly or indirectly, by Nebraska and Kansas, and their respective Affiliates in the Field prior to the Effective Date; and

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

(b) any and all claims, demands, suits, damages, indebtedness, liabilities, actions and causes of action, whether known or unknown, whether legal, equitable or administrative that are or may be based in whole or in part on, or do or may arise out of, or may be related to or based on or in any way connected with the Actions, or the facts, events, circumstances, actions and transactions that are or could have been alleged in the Actions, or any matter referred to in the pleadings or any other papers filed or served in the Actions, excepting only the duties and obligations set forth in this Agreement.

4.4 Waiver. Each Party, for itself and for its respective Affiliates, expressly waives any and all rights under Section 1542 of the Civil Code of the State of California, and under any statute of similar import or purpose of any other jurisdiction. Section 1542 provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO

CLAIMS WHICH THE CREDITOR DOES NOT KNOW

OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME

OF EXECUTING THE RELEASE, WHICH IF KNOWN

BY HIM MUST HAVE MATERIALLY AFFECTED HIS

SETTLEMENT WITH THE DEBTOR.

4.5 Covenant Not to Sue by BSC, RTC and Scimed in Favor of RITA. Subject to the terms and conditions of this Agreement, each of BSC, RTC and Scimed, for itself and for its respective Affiliates, hereby covenants not to sue RITA, or any of the

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

RITA Releasees, for infringement of any Claims owned or controlled by BSC, RTC or Scimed, or their respective Affiliates, by:

(a) Existing Products of RITA or its Affiliates, or

(b) Future Products of RITA or its Affiliates;

provided, however, that the foregoing covenant not to sue with respect to Future Products of RITA or its Affiliates shall not apply to infringement of any Claim:

(i) within any New Patents of BSC, RTC or Scimed, or their respective Affiliates;

(ii) within the LeVeen Everting Electrode Claims;

(iii) within the RTC Impedance Display Claims; or

(iv) that requires for infringement any feature that is not substantially similar in all material aspects and application to an existing feature in an Existing Product of RITA or its Affiliates, or the use thereof.

By way of example, and not by way of limitation, the foregoing covenant not to sue with respect to Future Products of RITA or its Affiliates shall not apply to Products which, in the absence of a right or license, would infringe one or more Claims of BSC, RTC or Scimed (or their respective Affiliates) covering technologies (such as imaging or drug delivery) which are not substantially similar in all material aspects and application to a feature in an Existing Product of RITA or its Affiliates, regardless of whether or not

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

such Claims also require for infringement a feature that is substantially similar in all material aspects and application to a feature of an Existing Product of RITA or its Affiliates.

Notwithstanding any other provision of this Agreement, the foregoing covenant extends only to such Products as are offered for sale, sold and otherwise disposed of or made available for use under RITA’s (or its Affiliates’) own trademarks, tradenames and/or label(s), which shall be the most prominent trademarks, tradenames and/or label(s) thereon, and does not extend, and shall not be construed to extend, to any Products, or parts or components thereof, offered for sale, sold or otherwise disposed of or made available for use to any Third Person by RITA (or its Affiliates) for resale or re-distribution by such Third Person solely under such Third Person’s own trademarks, tradenames and/or label(s).

4.6 Covenant Not to Sue by RITA in Favor of BSC. Subject to the terms and conditions of this Agreement, including the payment by BSC of BSC’s royalty obligations under Section 3.3, RITA, for itself and for its respective Affiliates, hereby covenants not to sue BSC, or any of the BSC Releasees, for infringement of any Claims owned or controlled by RITA, or its Affiliates, by:

(a) Existing Products of BSC or its Affiliates, or

(b) Future Products of BSC or its Affiliates;

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

provided, however, that the foregoing covenant not to sue with respect to Future Products of BSC or its Affiliates shall not apply to infringement of any Claim:

(i) within any New Patents of RITA, or its Affiliates;

(ii) within the RITA Temperature Sensor Claims; or

(iii) that requires for infringement any feature that is not substantially similar in all material aspects and application to an existing feature in an Existing Product of BSC or its Affiliates, or the use thereof.

Notwithstanding any other provision of this Agreement, the foregoing license extends only to such Products as are offered for sale, sold and otherwise disposed of or made available for use under BSC’s (or its Affiliates’) own trademarks, tradenames and/or label(s), which shall be the most prominent trademarks, tradenames and/or label(s) thereon, and does not extend, and shall not be construed to extend, to any Products, or parts or components thereof, offered for sale, sold or otherwise disposed of or made available for use to any Third Person by BSC (or its Affiliates) for resale or re-distribution by such Third Person solely under such Third Person’s own trademarks, tradenames and/or label(s).

4.7 Additional Covenants Relating to Malone Patent Portfolio. In the event, and solely to the extent, that any of BSC, RTC or RITA (or their respective Affiliates) (as applicable, the “Acquiring Party”) acquires any additional field-of-use license(s) after the Effective Date with respect to Products or Methods which, in the absence of a right or license, would infringe any Claim within the Malone Patent

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

Portfolio that requires for infringement the use of RF electrical energy to ablate tumors, or the use of such Products or Methods to ablate tumors using RF electrical energy, in the following anatomical fields of use: (i) the Head and Neck Regions; (ii) the Gastro-Intestinal Tract; or (iii) the Spine, then the Acquiring Party, for itself and for its respective Affiliates, hereby covenants not to sue (A) if either BSC or RTC, or their respective Affiliates, is the Acquiring Party, RITA and the RITA Releasees, or (B) if RITA or its Affiliates is the Acquiring Party, each of BSC and RTC and the BSC Releasees, (in each case, as applicable, the “Other Party”), for infringement of the Acquiring Party’s rights under such additional field-of-use license(s) by:

(a) Existing Products of the Other Party or its Affiliates, or

(b) Future Products of the Other Party or its Affiliates;

provided, however, that the foregoing covenant not to sue with respect to Future Products of the Other Party or its Affiliates shall not apply to infringement of any Claim that requires for infringement any feature that is not substantially similar in all material aspects and application to an existing feature in an Existing Product of the Other Party or its Affiliates, or the use thereof.

4.8 Additional Covenant by RITA. In consideration for the licenses granted to RITA under this Agreement, the foregoing releases and covenants not to sue under this Section 4, and so as not to induce or contribute to infringement of the RTC Impedance Display Claims, effective from the Effective Date until the expiration of the last-to-expire

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

of the Claims within the RTC Impedance Display Claims, RITA, for itself and for its Affiliates, hereby covenants and agrees:

(a) not to knowingly promote or support through customer marketing efforts, either directly or through RITA’s agents or distributors, the use of impedance on or in the performance of RITA’s (or its Affiliates’) Products in the Field; and

(b) not to display impedance, in regard to the use of RITA’s (or its Affiliates’) Products made, have made, used, practiced, imported, offered for sale, sold or otherwise disposed of or made available for use in the Field,

provided, however, that RITA (and its Affiliates) may: (i) at all times educate customers of RITA (or its Affiliates) on the use of RITA’s (or its Affiliates’) Products through non-promotional materials (such as directions for use, instructions for use and training materials, but not including brochures, sales aids, speeches, articles, reprints of articles or other marketing literature), (ii) notwithstanding the foregoing, distribute customer marketing literature promoting the use of impedance on Existing Products of RITA or its Affiliates for up to six (6) months after the Effective Date, and (iii) display impedance on any of the Existing Products of RITA or its Affiliates sold up to the eighteen (18) month anniversary of the Effective Date (the “Eighteen Month Window”), subject to additional time, on a country by country basis, as may be necessitated by appropriate regulatory approvals in such country, where required to comply with Section 4.8(b), which shall be diligently undertaken by RITA, provided further, in each country where RITA desires that the Eighteen Month window be subject to the foregoing adjustment and where any

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

regulatory approval is required in such country in connection with the foregoing, RITA will initiate regulatory efforts, including making any required submission to the appropriate Regulatory Authority in such country, necessary to comply with RITA’s obligations under this Section 4.8(b) within six (6) months after the Effective Date, and will use its commercially reasonable efforts to conclude the appropriate change(s) to the Existing Products of RITA and its Affiliates expeditiously and within eighteen (18) months after the Effective Date.

4.9 Additional Covenant by BSC. In consideration for the licenses granted under this Agreement, the foregoing releases and covenants not to sue under this Section 4, and so as not to induce or contribute to infringement of the RITA Temperature Sensor Claims, effective from the Effective Date until the expiration of the last-to-expire of the Claims within the RITA Temperature Sensor Claims, BSC, for itself and for its Affiliates, hereby covenants and agrees not to knowingly promote through customer marketing efforts, either directly or through BSC’s or its Affiliates’ agents or distributors, the use of temperature, nor to display temperature, in regard to the use of BSC’s (or its Affiliates’) Products made, have made, used, practiced, imported, offered for sale, sold or otherwise disposed of or made available for use in the Field after the Effective Date. The Parties acknowledge that as of the Effective Date, Existing Products of BSC or its Affiliates do not display the use of temperature.

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

5. RESERVATIONS OF RIGHTS; PATENT PROSECUTION, MAINTENANCE AND ENFORCEMENT; ACKNOWLEDGEMENTS.

5.1 Reservation of Rights by RITA. Each of BSC, RTC, Scimed, Nebraska and Kansas hereby acknowledges and agrees that RITA is and shall remain the owner of all rights, title and interests in and to the RITA Patent Portfolio and the RITA Infusion Claims, and that no Party shall acquire any rights whatsoever in or to the RITA Patent Portfolio or the RITA Infusion Claims except as expressly provided in this Agreement. Further, no Party (other than RITA) shall utilize or practice under the RITA Patent Portfolio or the RITA Infusion Claims for any purpose whatsoever, except as expressly authorized herein. RITA reserves all rights and licenses to the RITA Patent Portfolio and the RITA Infusion Claims not expressly granted to any Party hereunder.

5.2 Reservation of Rights by Nebraska and RTC. RITA hereby acknowledges and agrees that Nebraska and RTC are and shall remain, respectively, the owner and exclusive sublicensee, of all rights, title and interests in and to the LeVeen Patent Portfolio, and RITA shall not acquire any rights whatsoever in or to the LeVeen Patent Portfolio except as expressly provided in this Agreement. Further, RITA shall not utilize the LeVeen Patent Portfolio for any purpose whatsoever, except as expressly authorized herein. Nebraska and RTC reserve all rights and licenses to the LeVeen Patent Portfolio not expressly granted to RITA hereunder.

5.3 Reservation of Rights by RTC. RITA hereby acknowledges and agrees that RTC is and shall remain the owner of all rights, title and interests in and to the RTC

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

RF Ablation Patent Portfolio, and RITA shall not acquire any rights whatsoever in or to the RTC RF Ablation Patent Portfolio except as expressly provided in this Agreement. Further, RITA shall not utilize the RTC RF Ablation Patent Portfolio for any purpose whatsoever, except as expressly authorized herein. RTC reserves all rights and licenses to the RTC RF Ablation Patent Portfolio not expressly granted to RITA hereunder.

5.4 Reservation of Rights by Kansas and BSC. RITA hereby acknowledges and agrees that Kansas and BSC are and shall remain, respectively, the owner and exclusive licensee (subject to certain field of use limitations), of all rights, title and interests in and to the Malone Patent Portfolio, and RITA shall not acquire any rights whatsoever in or to the Malone Patent Portfolio except as expressly provided in this Agreement. Further, RITA shall not utilize the Malone Patent Portfolio for any purpose whatsoever, except as expressly authorized herein. Kansas and BSC reserve all rights and licenses to the Malone Patent Portfolio not expressly granted to RITA hereunder.

5.5 Reservation of Rights by Scimed. RITA hereby acknowledges and agrees that Scimed is and shall remain the owner of all rights, title and interests in and to the LaFontaine Patent Portfolio, and RITA shall not acquire any rights whatsoever in or to any of the LaFontaine Patent Portfolio except as expressly provided in this Agreement. Further, RITA shall not utilize any of the LaFontaine Patent Portfolio for any purpose whatsoever, except as expressly authorized herein. Scimed reserves all rights and licenses to the LaFontaine Patent Portfolio not expressly granted to RITA hereunder.

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

5.6 Patent Prosecution, Maintenance and Enforcement. Subject to the terms and conditions of this Agreement, each Party reserves the right, in such Party’s sole discretion, to prepare, file, prosecute, maintain and enforce in the Licensed Territories patents and patent applications with respect to such Party’s own Patent Portfolio.

5.7 No Challenge Covenant by RITA. Except in connection with patent interference proceedings originating in the United States Patent and Trademark Office with respect to patents or patent applications within the subject Patent Portfolio, RITA covenants and agrees that RITA shall not, and shall cause its Affiliates not to, directly or indirectly, challenge or assist any other Person to challenge, the validity or enforceability of the patents or patent applications within the LeVeen, Malone, or RTC RF Ablation Patent Portfolios that are subject to the licenses or covenants of this Agreement; provided that RITA (and its Affiliates) may challenge, or assist any other Person to challenge, the validity or enforceability of any patent asserted against RITA (or its Affiliates) in an infringement action brought by another Party against RITA (or its Affiliates).

5.8 No Challenge Covenant by BSC. Except in connection with patent interference proceedings originating in the United States Patent and Trademark Office with respect to patents or patent applications within the subject Patent Portfolio, BSC covenants and agrees that it shall not, and shall cause its Affiliates not to, directly or indirectly, challenge or assist any other Person to challenge, the validity or enforceability of the patents or patent applications within the RITA Patent Portfolios of RITA that are subject to the licenses or covenants of this Agreement; provided that BSC (and its Affiliates) may challenge, or assist any other Person to challenge, the validity or

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

enforceability of any patent asserted against BSC (or its Affiliates) in an infringement action brought by RITA against BSC (or its Affiliates).

6. REPRESENTATIONS AND WARRANTIES

6.1 Representations and Warranties by RITA. RITA hereby represents and warrants to each of the other Parties that:

(a) it owns or has the right to grant the licenses, rights and immunities from suit granted herein under the RITA Patent Portfolio and the RITA Infusion Claims;

(b) it has full power to enter into this Agreement, and that the individual executing this Agreement on its behalf is fully empowered to bind it and duly authorized to enter into this Agreement; and

(c) as of the Effective Date it has not assigned or otherwise transferred or subrogated any interest in any of its claims that are the subject of this Agreement, whether voluntarily, involuntarily or by operation of law, and that it is fully entitled to give a full and complete release of all claims and demands under the Actions in accordance with the terms of this Agreement.

6.2 Representations and Warranties by Nebraska. Nebraska hereby represents and warrants to RITA that:

(a) it owns or has the right to grant the licenses, rights and immunities from suit granted herein under the LeVeen Patent Portfolio;

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

(b) it has full power to enter into this Agreement, and that the individual executing this Agreement on its behalf is fully empowered to bind it and duly authorized to enter into this Agreement; and

(c) as of the Effective Date it has not assigned or otherwise transferred or subrogated any interest in any of its claims that are the subject of this Agreement, whether voluntarily, involuntarily or by operation of law, and that it is fully entitled to give a full and complete release of all claims and demands under the Actions in accordance with the terms of this Agreement.

6.3 Representations and Warranties by RTC. RTC hereby represents and warrants to RITA that:

(a) it has the right to grant the licenses, rights and immunities from suit granted herein under the LeVeen Patent Portfolio;

(b) it owns or has the right to grant the licenses, rights and immunities from suit granted herein under the RTC RF Ablation Patent Portfolio;

(c) it has full power to enter into this Agreement, and that the individual executing this Agreement on its behalf is fully empowered to bind it and duly authorized to enter into this Agreement; and

(d) as of the Effective Date it has not assigned or otherwise transferred or subrogated any interest in any of its claims that are the subject of this Agreement, whether voluntarily, involuntarily or by operation of law, and that it is fully entitled to

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

give a full and complete release of all claims and demands under the Actions in accordance with the terms of this Agreement.

6.4 Representations and Warranties by Kansas. Kansas hereby represents and warrants to RITA that:

(a) it owns or has the right to grant the licenses, rights and immunities from suit granted herein under the Malone Patent Portfolio;

(b) it has full power to enter into this Agreement, and that the individual executing this Agreement on its behalf is fully empowered to bind it and duly authorized to enter into this Agreement; and

(c) as of the Effective Date it has not assigned or otherwise transferred or subrogated any interest in any of its claims that are the subject of this Agreement, whether voluntarily, involuntarily or by operation of law, and that it is fully entitled to give a full and complete release of all claims and demands under the Actions in accordance with the terms of this Agreement.

6.5 Representations and Warranties by BSC. BSC hereby represents and warrants to RITA that:

(a) it has the right to grant the licenses, rights and immunities from suit granted herein under the Malone Patent Portfolio;

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

(b) it has full power to enter into this Agreement, and that the individual executing this Agreement on its behalf is fully empowered to bind it and duly authorized to enter into this Agreement; and

(c) as of the Effective Date it has not assigned or otherwise transferred or subrogated any interest in any of its claims that are the subject of this Agreement, whether voluntarily, involuntarily or by operation of law, and that it is fully entitled to give a full and complete release of all claims and demands under the Actions in accordance with the terms of this Agreement.

6.6 Representations and Warranties by Scimed. Scimed hereby represents and warrants to RITA that:

(a) it owns or has the right to grant the licenses, rights and immunities from suit granted herein under the LaFontaine Patent Portfolio;

(b) it has full power to enter into this Agreement, and that the individual executing this Agreement on its behalf is fully empowered to bind it and duly authorized to enter into this Agreement; and

(c) as of the Effective Date it has not assigned or otherwise transferred or subrogated any interest in any of its claims that are the subject of this Agreement, whether voluntarily, involuntarily or by operation of law, and that it is fully entitled to give a full and complete release of all claims and demands under the Actions in accordance with the terms of this Agreement.

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

6.7 Disclaimer. Nothing in this Agreement nor in the grants of licenses hereunder shall be construed as:

(a) a warranty or representation by any Party as to the validity or scope of any patent within such Party’s subject Patent Portfolio;

(b) a warranty or representation by any Party that anything made, have made, used, imported, offered for sale, sold or otherwise disposed of under or pursuant to this Agreement, or any other conduct, is or will be free from infringement of patents, intellectual property or other rights of any Third Person;

(c) a requirement that any Party shall file any patent application, secure any patent or maintain any patent in force;

(d) an obligation to bring or prosecute any action or suit against any Third Person for infringement of the patents within such Party’s subject Patent Portfolio or otherwise;

(e) an obligation to furnish any manufacturing or technological information;

(f) conferring the right to use in advertising, publicity or otherwise any trademark, service mark or trade name of any Party;

(g) a warranty, representation or guaranty by any Party with respect to the performance or failure of performance of any Product or Method by reason of its utilization or embodiment of any invention covered by a Claim of any of the patents

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

within such Party’s subject Patent Portfolio or otherwise, including, without limitation, that any Product or Method will not result in safety or health hazards to purchasers, users, patients or workers, and such Party does not warrant, represent or guarantee against any health or safety hazards; or

(h) except as expressly provided herein, granting by implication, estoppel or otherwise, any licenses or rights under patents of a Party (including any New Patents), or with respect to which such Party may have any rights, other than the patents within such Party’s subject Patent Portfolio as provided herein.

7. SUCCESSORS AND ASSIGNS

7.1 Successors and Assigns. This Agreement includes licenses of intellectual property for the purposes of § 365(n) of the U.S. Bankruptcy Code. This Agreement shall bind and inure to the benefit of each of the Original Parties and their respective permitted successors and permitted assigns, and their respective Affiliates, and each of them. Affiliates of each Original Party and of its respective permitted successors and permitted assigns are intended third party beneficiaries of this Agreement to the extent expressly provided herein.

7.2 Assignability. This Agreement, and the respective rights and obligations of the Original Parties under this Agreement, shall be freely assignable or transferable, by merger, operation of law or in any other manner, by each of the Original Parties, only if assigned or transferred in whole, as part of an assignment or transfer of such Original Party’s entire business or operations, or entire interests in the Field, provided that such

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

assigning or transferring Original Party shall retain no rights under this Agreement and the assignee or transferee of such Original Party assumes in writing the obligations of such Original Party under this Agreement. Notwithstanding anything else in this Section 7.2, BSC and its Affiliates, and RITA and its Affiliates, acknowledge and agree that, with regard to the assignment or transfer of this Agreement and their respective rights and obligations under this Agreement as a whole, this Agreement and such rights and obligations may only be so transferred by BSC and its Affiliates or by RITA and its Affiliates if and to the extent that each of BSC and its Affiliates or each of RITA and its Affiliates assigns or transfers all of their respective rights and obligations hereunder concurrently and collectively to the same assignee or transferee, as applicable.

7.3 Partial Assignments by Sub-Field. In addition to, and without limiting the rights and obligations of the Parties under Section 7.2, this Agreement, and any rights and licenses hereunder, may be assigned or transferred, by merger, operation of law or in any other manner, to any Person, in part, by BSC and its Affiliates or by RITA and its Affiliates (the “Assigning Party”) within and as pertaining to any Sub-Field, only if transferred or assigned as part of an assignment or transfer of such Assigning Party’s entire business, operations and interests in such Sub-Field; provided that (i) such Assigning Party shall retain no rights under this Agreement with respect to such Sub-Field and the assignee or transferee of such Assigning Party assumes in writing the obligations of the Assigning Party under this Agreement with respect to the Sub-Field rights so assigned or transferred, and (ii) for any assignment or transfer of this Agreement with respect to a Sub-Field hereunder by either BSC and its Affiliates or by RITA and its

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

Affiliates, all of BSC and its Affiliates or all of RITA and its Affiliates, as applicable, shall collectively be deemed to be the “Assigning Party” hereunder and the restrictions set forth in (i) above shall apply equally to all of BSC and its Affiliates or to all of RITA and its Affiliates, as applicable. Notwithstanding any other provision of this Agreement, such Sub-Field assignee or transferee shall have no obligations to any other Party outside the scope of the assigned or transferred Sub-Field, and the other Parties shall have no obligations to such assignee or transferee outside the scope of the assigned or transferred Sub-Field.

7.4 Conditions on Assignment. The Parties agree that, in the event that any Original Party or Assigning Party makes a permitted assignment or permitted transfer of its rights or licenses under this Agreement within the Field, or any Sub-Field, as applicable, pursuant to the terms and conditions of Sections 7.2 or 7.3, the benefit of (i) all applicable licenses granted to such assigning or transferring Original Party or Assigning Party under Section 2, and (ii) all applicable releases and covenants not to sue in favor of such assigning or transferring Original Party or Assigning Party under Sections 4.1, 4.2, 4.3, 4.5, 4.6, and/or 4.7 (as applicable), shall extend to such Original Party’s or Assigning Party’s permitted assignee or permitted transferee (for purposes of this Section and Sections 7.5 and 7.6, an “Assignee”), solely to the extent of the activities of such Assignee in the Field or applicable Sub-Field including, without limitation, any Products of the Original Party or Assigning Party, as applicable, that are within the Field or applicable Sub-Field and in existence at the time of the applicable assignment or transfer and any successor Products based upon and substantially utilizing the functional

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

design of such Products (collectively, the “Assigned Products”); provided, however, that such licenses, releases and covenants not to sue shall not extend to any Products of such Assignee as of the date of such permitted assignment or permitted transfer (“Assignee Existing Products”), or to any subsequent Products of such Assignee that are substantially similar to the Assignee Existing Products in material aspects other than Assigned Products. Notwithstanding the foregoing, the Parties further agree that no such Assignee shall retain or be entitled to rely upon the benefit of the releases and covenants not to sue set forth in Sections 4.1, 4.2, 4.3, 4.5, 4.6, and/or 4.7 (as applicable) if such Assignee initiates any infringement action within the Field, or Sub-Field as applicable, against any Original Party or Assigning Party (or any Affiliate or Assignee thereof) having any rights pursuant to this Agreement. Subject to the foregoing, it is understood that the releases and covenants not to sue set forth in Sections 4.1, 4.2, 4.3, 4.5, 4.6, and 4.7 shall apply only to the Original Parties and the RITA Releasees and BSC Releasees as expressly described in such Sections, and to Assignees of the Original Parties and Assigning Parties as expressly described in this Section 7.4, and do not relieve any other Person from any liability.

7.5 No Other Assignments. Subject only to the provisions of Section 7.2 and Section 7.3, no Party, nor any of their respective permitted successors or permitted assigns, except as expressly set forth herein, may assign or otherwise transfer any part of its rights or licenses hereunder, nor delegate any part of its duties hereunder, whether by merger, operation of law or in any other manner, without the written consent of each of the other Parties, provided however, that notwithstanding the foregoing, each of the

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

Original Parties may assign or transfer, by merger, operation of law or in any other manner, its rights and licenses and delegate its duties under this Agreement, in whole or in part, to any of its Affiliates controlled by such Original Party without the prior written consent of the other Parties, so long as such Affiliate assumes in writing the obligations of such Original Party under this Agreement. Original Parties and subsequent Assignees shall receive written notice from the Assigning Party within 30 days of any assignment, transfer or delegation undertaken in accordance with Section 7. Any purported assignment, transfer or delegation not strictly in compliance with the terms and conditions of this Section 7 shall be void and of no effect.

7.6 Effect of Assignment. Except as otherwise provided below in this Section 7.6, any permitted assignment, transfer or delegation of this Agreement, or any rights, licenses or duties hereunder, by any Party in accordance with the terms of this Section 7 shall not relieve or release such Party from any of its duties or obligations under this Agreement. However, with respect to any obligation to pay royalties to RITA pursuant to Section 3.3, the assigning or transferring Party(ies) shall be relieved and released from any such obligations incurred by the Assignee after the assignment or transfer, provided that such Assignee assumes in writing the obligations of such Party under this Agreement. Each and every permitted successor and permitted assign to the interests of any Party to this Agreement shall hold such interests subject to the terms, conditions and provisions of this Agreement. Each Party to this Agreement shall require any subsequent transferee or owner of an patent rights included within its subject Patent

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

Portfolio to take such patent rights subject to the terms, conditions and provisions of this Agreement.

8. DISMISSAL WITH PREJUDICE

Within 20 days after the Effective Date, each Party shall respectively dismiss with prejudice all causes of action, counts, claims for relief and allegations asserted against any other Party in the Actions, by filing an appropriate Stipulation of Dismissal in the form attached hereto as Exhibit G, with appropriate insertions; provided, however, that with respect to the European Appeal and Opposition, RTC will instead withdraw its appeal.

9. TERM

Each respective license grant set forth in Section 2 shall commence as of the Effective Date and continue until the expiration of the last-to-expire of all of the Claims of the respective subject Patent Portfolio licensed therein. Except as otherwise specifically provided with respect to particular covenants or provisions, this Agreement shall commence as of the Effective Date and continue in perpetuity.

10. DISCLOSURE

Each Party agrees that it shall not issue any press statement relating to or referring to this Agreement, the Actions or the activities contemplated by this Agreement, prior to the execution of this Agreement by the Original Parties. In the event that BSC (and its Affiliates) or RITA (and its Affiliates) issues any press statement thereafter, the first such

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

statement issued by such Party shall be in the approved form attached as Exhibit H-1 for BSC (and its Affiliates) and Exhibit H-2 for RITA (and its Affiliates). Each of Kansas and Nebraska may, in their sole discretion, issue press statements relating to or referring to this Agreement, the Actions or the activities contemplated by this Agreement subject to the prior written consent of RITA and BSC such consent not to be unreasonably withheld. Subject to Section 11 and without limiting the foregoing, each Party further undertakes and agrees that any and all future statements made by such Party, or its respective Affiliates, to the public, the media or to business associates, shall be entirely consistent with the press statement set forth in Exhibit H.

11. NONDISCLOSURE AND LIMITED USE

Except as otherwise provided in Section 10 above, the Parties agree that the specific terms and conditions of this Agreement and all information and materials exchanged between the Parties pursuant to this Agreement are confidential and will be treated with the same care as other confidential information held by the Parties, and in any event no less than a reasonable degree of care, and not used for any purpose other than to carry out the activities contemplated by this Agreement. Nevertheless, all Parties acknowledge that any Party may disclose the specific terms and conditions of this Agreement to attorneys, financial advisors, insurance carriers and similar professionals working with such Party, including outside insurance counsel, under binding obligations of confidentiality, and as required to comply with binding orders of governmental entities that have jurisdiction over such Party, provided that, in the event of such an order, the disclosing Party (i) whenever possible, shall give the other Parties written notice

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

sufficient to allow each other Party an opportunity to seek a protective order or other appropriate remedy; (ii) will disclose only such information as is required by the governmental entity, and (iii) will use commercially reasonable efforts to obtain confidential treatment for the portions disclosed and to enforce such confidential treatment terms. Furthermore, nothing in this Agreement shall prevent any Party from (a) disclosing information required to be disclosed by federal or state securities laws, or (b) filing a copy of this Agreement with the United States Patent and Trademark Office in accordance with 35 U.S.C. 135(c), provided that such Party filing the same shall request that the filed copy be kept separate from the file of the interference and made available only to government agencies on written request, or to any Person on a showing of good cause as contemplated in 35 U.S.C. 135(c). This confidentially provision shall in all other respects continue to be in force for all Parties even if a disclosure of the Agreement’s terms is required.

12. DISPUTE RESOLUTION

12.1 Mediation. If a dispute arises out of, relates to or concerns the Parties’ licenses, rights or obligations under this Agreement, the Parties will use good faith efforts, including if agreeable to the Parties the use of a third party mediator, to resolve the dispute in a timely and mutually acceptable fashion without recourse to judicial remedies. Nothing contained herein shall prohibit a Party from resorting to the remedies provided for in Sections 12.2 and 12.3 in the event disputes are not resolved in a timely manner or to the satisfaction of all Parties. Each Party shall be responsible for its costs

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

and expenses incurred as a result of any mediation. The Parties participating in the mediation shall share equally in the costs and expenses incurred by the mediator.

12.2 Infringement Matters. Without limiting the provisions of Section 12.1, in the event that any Party (the “Claimant”) makes any allegation or claim of infringement of a Claim in the Field against any other Party, the Claimant shall provide written notification of such allegation or claim to the other Party at least ninety (90) days prior to filing any complaint relating thereto. For a period of ninety (90) days after the receipt of such written notice by the other Party, the parties agree to use good faith efforts to resolve such allegation or claim in accordance with the provisions of Section 12.1 without resort to judicial remedies. If such allegation or claim is not thereby resolved, after complying with the foregoing requirements, the Claimant may file a complaint only in the United States District Court for the Northern District of California. Each Party hereby consents to the exclusive jurisdiction of the said District Court in regard to any such allegation or claim.

12.3 Arbitration. Any claims or disputes arising out of, relating to or otherwise concerning the Parties’ obligations under this Agreement which are not resolved in accordance with Section 12.1 shall be submitted to binding arbitration in accordance with the terms and conditions for arbitration set forth in Exhibit I; provided, however, that any claims or disputes arising under Title 35, United States Code, shall not be subject to such arbitration and shall be resolved pursuant to Section 12.2 above. Such arbitration shall be conducted in San Francisco, California.

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

13. GENERAL PROVISIONS

13.1 Choice of Law. This Agreement shall be interpreted, enforced and governed under the laws of the State of California, except that its conflicts of law rules shall not apply.

13.2 Interpretation. This Agreement shall be given a fair and reasonable construction in accordance with the intent of the Parties and without regard to which Party may have drafted it. Section and subsection headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

13.3 Severability. If any provision of this Agreement is declared or found to be illegal, unenforceable or void, then all Parties shall be relieved of all obligations arising under such provision, but only to the extent that such provision is illegal, unenforceable or void. Further, this Agreement shall be deemed amended by modifying such provision to the extent necessary to make it legal and enforceable while preserving its intent or, if that is not possible, by substituting therefor another provision that is legal and enforceable and achieves the same intended objective. The remainder of this Agreement shall not be affected by such illegal, unenforceable or void provision and each provision not so affected shall be enforced to the full extent permitted by law.

13.4 Modification and Waiver. This Agreement may be modified only by an instrument in writing signed by all of the Parties. No waiver of the enforcement of any

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

provision of this Agreement shall be effective unless in writing signed by the waiving Party nor shall it be deemed a continuing waiver.

13.5 Further Acts. Each Party shall do, or cause to be done, all such further acts, and shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all such further documentation as any other Party reasonably requires to carry out the purposes of this Agreement.

13.6 Performance by Affiliates. To the extent that any term or provision of this Agreement contemplates, permits or requires performance by any Affiliate of a Party, such Party shall cause such Affiliate to perform each and every obligation of such Party under this Agreement in accordance with the terms and conditions hereof.

13.7 Acknowledgment. Each Party acknowledges that it knows and understands the contents of this Agreement and has been represented by counsel of its choice in connection with this Agreement, and has executed this Agreement voluntarily.

13.8 Counterparts. This Agreement may be executed in counterparts and by facsimile transmission of such counterparts, all of which taken together shall constitute one agreement binding upon the Parties. This Agreement shall become effective, as of the Effective Date, upon the execution of a counterpart hereof by each of the Parties hereto.

13.9 Differences in Fact or Law. Each Party agrees that if the facts or law with respect to this Agreement are found hereafter to be different from the facts or law

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

now believed by it to be true, it expressly assumes the risk of such possible difference of fact or law, and it agrees that this Agreement shall remain in full force and effect notwithstanding such difference in fact or law.

13.10 Taxes. In the event that any sales or use taxes or other charges, if any, may be imposed by any government taxing authority on the amounts paid by any Party to any other Party under this Agreement, all such taxes and charges shall be borne and paid by the Party receiving the underlying payment. Where any Party is required to pay taxes or charges for the account of another Party, such Party may withhold such taxes or charges from the amounts paid to the other Party under this Agreement and shall deliver to the other Party true copies of the receipts and returns covering all such payments.

13.11 Entire Agreement. This Agreement constitutes the entire agreement of the Parties with respect to its subject matter, and supersedes, merges and replaces all prior negotiations, offers, representations, warranties, assurances and agreements of any kind, written or oral. The recitals set forth in this Agreement and the exhibits attached hereto are hereby incorporated into this Agreement and made a part hereof.

14. DISCLAIMER OF CONSEQUENTIAL DAMAGES

IN NO EVENT SHALL ANY PARTY OR ITS RESPECTIVE AFFILIATES BE LIABLE OR RESPONSIBLE FOR INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) ARISING FROM OR RELATING TO ANY BREACH OF OR DEFAULT UNDER THIS AGREEMENT.

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the Effective Date.

Radio Therapeutics Corporation		Rita Medical Systems, Inc.
By:	/s/ Larry Knopf	By:	/s/ Barry Cheskin
Name:	Larry Knopf	Name:	Barry Cheskin
Title:	Vice President – Legal and Secretary	Title:	President and Chief Executive Officer
Boston Scientific Corporation
By:	/s/ Stephen F. Moreci
Name:	Stephen F. Moreci
Title:	Senior Vice President and Group President, Endosurgery

***Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.

Scimed Life Systems, Inc.
By:	/s/ Larry Knopf
Name:	Larry Knopf
Title:	Assistant Secretary
Board of Regents of the University of Nebraska
By:	/s/ Donald S. Leuenberger
Name:	Donald S. Leuenberger
Title:	Vice Chancellor for Business and Finance
UneMed Corporation
By:	/s/ Richard A. Spellman
Name:	Richard A. Spellman
Title:	Chairman of the Board

University of Kansas d/b/a University of Kansas Medical Center
By:	/s/ Donald F. Hagen, MD
Name:	Donald F. Hagen, MD
Title:	Executive Vice Chancellor
University of Kansas Medical Center Research Institute, Inc.
By:	/s/ Thomas Noffsinger Ph.D.
Name:	Thomas Noffsinger Ph.D.
Title:	Executive Director

Exhibit A

LaFontaine Patent Portfolio

U.S. Patent No. 5,584,872

U.S. Patent No. 5,676,693

U.S. Patent No. 5,902,328

U.S. Patent No. 6,068,653

U.S. Patent No. 6,168,594

Exhibit B

LeVeen Patent Portfolio

U.S. Patent No. 5,827,276

U.S. Patent No. 5,855,576

U.S. Patent No. 5,868,740

U.S. Patent No. 6,454,765

U.S. Patent No. 6,468,273

Exhibit C

Malone Patent Portfolio

U.S. Patent No. RE. 35,330

Exhibit D

RITA Patent Portfolio

U.S. Patent No. 5,458,597	U.S. Patent No. 5,913,855
U.S. Patent No. 5,472,441	U.S. Patent No. 5,925,042
U.S. Patent No. 5,486,161	U.S. Patent No. 5,928,229
U.S. Patent No. 5,507,743	U.S. Patent No. 5,935,123
U.S. Patent No. 5,536,267	U.S. Patent No. 5,951,547
U.S. Patent No. 5,599,345	U.S. Patent No. 5,980,517
U.S. Patent No. 5,599,346	U.S. Patent No. 6,053,937
U.S. Patent No. 5,672,173	U.S. Patent No. 6,059,780
U.S. Patent No. 5,672,174	U.S. Patent No. 6,071,280
U.S. Patent No. 5,683,384	U.S. Patent No. 6,080,150
U.S. Patent No. 5,728,143	U.S. Patent No. 6,090,105
U.S. Patent No. 5,735, 847	U.S. Patent No. 6,132,425
U.S. Patent No. 5,741,225	U.S. Patent No. 6,235,023
U.S. Patent No. 5,782,827	U.S. Patent No. 6,330,478
U.S. Patent No. 5,800,484	U.S. Patent No. 6,471,698
U.S. Patent No. 5,810,804	U.S. Patent No. 6,500,175
U.S. Patent No. 5,863,290

Exhibit E

RTC RF Ablation Patent Portfolio

U.S. Patent No. 5,709,224

U.S. Patent No. 5,817,092

U.S. Patent No. 5,954,717

U.S. Patent No. 6,050,992

U.S. Patent No. 6,077,261

U.S. Patent No. 6,080,149

U.S. Patent No. 6,212,433

U.S. Patent No. 6,270,495

U.S. Patent No. 6,337,998

U.S. Patent No. 6,358,246

U.S. Patent No. 6,379,353

U.S. Patent No. 6,470,218

U.S. Patent No. 6,471,695

Exhibit F

Payment Wiring Instructions

University of Kansas

[***]

University of Nebraska

[***]

Exhibit G

Form of Stipulation of Dismissal

Exhibit H

Approved Press Statements

H-1 – Press Statement of BSC (and its Affiliates)

Boston Scientific Announces Settlement of Patent Disputes with Rita Medical Systems

Boston Scientific Corporation (NYSE:BSX) today announced that it has settled all pending patent disputes with Rita Medical Systems, Inc (Nasdaq:RITA). The patent disputes involved technologies used for the reduction of tumors using radiofrequency energy. The parties have agreed to cross-license certain intellectual property and Rita Medical Systems will pay a one-time royalty fee to both the University of Kansas and the University of Nebraska, the licensors of certain patents to Boston Scientific. In addition, Boston Scientific acquired a royalty-bearing license to Rita Medical Systems’ infusion technology for future products.

H-2 – Press Statement of RITA (and its Affiliates)

RITA Medical Systems And Boston Scientific Settle Patent Dispute

MOUNTAIN VIEW, CA (April XX, 2003) . . .. RITA Medical Systems, Inc. (Nasdaq:RITA) announced today that it had signed a definitive agreement with Boston Scientific Corporation (NYSE:BSX) and its affiliates to settle all outstanding patent disputes involving the two companies. The agreement includes a series of licenses and sub-licenses. Not included in the licenses is RITA’s proprietary temperature control technology.

Under the terms of the agreement, RITA will make a one time payment of $2.65 million to the Universities of Kansas and Nebraska, who are the licensors of several of the disputed patents. In addition, RITA agreed to license to Boston Scientific, on a royalty-bearing basis, its infusion technology for future products. Boston Scientific will not

market or sell products utilizing the infusion license until 18 months after the date of the agreement.

“It is with great pleasure that we put the expense, distraction and uncertainty of our patent dispute with Boston Scientific behind us,” said RITA Medical Systems President and Chief Executive Officer Barry Cheskin. “We look forward to focusing our energies and resources instead on developing the large potential market for radiofrequency ablation of tumors.”

Cheskin noted that the total legal expenses associated with the dispute would otherwise have been expected to be around $4-5 million in 2003 alone.

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Exhibit I

Arbitration

The Parties have entered into these terms and conditions for arbitration (the “Arbitration Terms”) to provide for arbitration of disputes as set forth in the Agreement. The Parties intend and agree that any such arbitration(s) shall be in the nature of a judicial proceeding, except as provided herein, that the dispute shall be resolved by an arbitration panel composed of three arbitrators (the “Arbitrators”) with technical expertise in patent law and technology licensing, to be selected as provided in these Arbitration Terms. The Parties recognize that there may be multiple disputes subject to these Arbitration Terms, and to the extent that they arise at different times, there may be multiple, separate arbitrations.

1. Location and Applicable Law. The arbitration, including the final hearing (the “Final Hearing,” as described in paragraph 9), shall be conducted in English in San Francisco, California unless otherwise agreed in writing by the parties to such arbitration. The applicable law shall be the laws of the State of California, except that California’s conflicts of law rules shall not apply.

2. Rules Applicable to the Arbitration. Except as otherwise provided in these Arbitration Terms, the arbitration shall be administered by the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules (the “Rules”) and such Rules are hereby incorporated into these Arbitration Terms. To the extent a specific provision of the Arbitration Terms conflicts with a

provision of the Rules, the specific provision of these Arbitration Terms shall control.

3. Notice. The demand setting forth notice of its intention to arbitrate or the written submission to arbitrate, as described in the Rules (the “Demand”), shall be submitted by a Party seeking arbitration (the “Claimant”) simultaneously to both the AAA and the respondent(s) in the arbitration (the “Respondents”). The addresses of the Parties for purposes of delivering the Demand are as follows:

Rita Medical Systems, Inc.

967 North Shoreline Boulevard

Mountain View, California 94043

Attention: Barry Cheskin

RadioTherapeutics Corporation

One Boston Scientific Place

Natick, Massachusetts 01760

Attention: Scott Bluni, Esq.

Boston Scientific Corporation

One Boston Scientific Place

Natick, Massachusetts 01760

Attention: Scott Bluni, Esq.

Scimed Life Systems, Inc.

One Boston Scientific Place

Natick, Massachusetts 01760

Attention: Scott Bluni, Esq.

Board of Regents of the University of Nebraska

c/o UNMC Intellectual Property Office

986099 Nebraska Medical Center

Omaha, Nebraska 68198-6099

Attention: Leonard Agneta, Esq.

UneMed Corporation

c/o UNMC Intellectual Property Office

986099 Nebraska Medical Center

Omaha, Nebraska 68198-6099

Attention: Leonard Agneta, Esq.

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University of Kansas d/b/a University of Kansas Medical Center

1450 Jayhawk Boulevard

245 Strong Hall

Lawrence, Kansas 66045

Attention: James P. Pottorff, Esq.

University of Kansas Medical Center Research Institute, Inc.

3901 Rainbow Boulevard,

Mailstop 1039

Kansas City, Kansas 66160

Attention: Jane E. Rosenthal, Esq.

4. The Arbitrators. Any proposed Arbitrator must, prior to appointment as Arbitrator, certify that he/she has read these Arbitration Terms and agrees to be bound by all of the provisions set forth herein, including, but not limited to, any time limitations set forth in these Arbitration Terms. Each of the Arbitrators shall have knowledge of patent law and patent licensing and (i) must not currently be, or have been within the past five years, a shareholder of any Party or an Affiliate of any Party; (ii) must not have, or had at any time, a business relationship with a Party; (iii) must not currently be, or have been at any time, an employee or director of a Party and (iv) must not represent, or have represented at any time, a Party; unless the other Parties waive each of these objections. Subject to the foregoing, the Arbitrators will be chosen by the Parties within thirty (30) calendar days after submission of the Demand to the Respondent and the AAA. The arbitration panel shall be composed of three Arbitrators, one of whom shall be selected by RITA, one of whom shall be selected by the other Party (or Parties) to the dispute and the third of whom shall be a neutral arbitrator selected by the other two so selected. If both or either of RITA and the other Party (or Parties) fails to select an arbitrator or arbitrators within such thirty (30) day period, or if

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the two arbitrators fail to select a third neutral arbitrator within fourteen (14) calendar days after their appointment, then the Arbitrators will be chosen pursuant to the procedures set forth in the Rules for the appointment from the National Panel of Commercial Arbitrators (the “Panel”) within thirty (30) calendar days of submission to the AAA by a Party of a request for appointment of an arbitrator or arbitrators. If during the course of the arbitration, any of the Arbitrators initially selected in accordance with the foregoing procedures dies or becomes otherwise unavailable to serve as Arbitrator, a substitute Arbitrator shall be chosen from the Panel pursuant to the procedures set forth in the Rules.

5. Powers of the Arbitrators. The Arbitrators shall: (1) have the right to choose one or more advisors, including an expert on technology, technology licensing, legal counsel (if none of the Arbitrators are a lawyer or judge) and/or an expert in any other area that the Arbitrators deem necessary to assist them in the arbitration; (2) have the power to order any discovery the Arbitrators deem necessary and to issue sanctions, including costs, attorneys’ fees or monetary penalties, for failure to comply with such orders or for failure to comply with the rules set forth in these Arbitration Terms; and (3) have the right to make interim, interlocutory or partial awards or take whatever other interim measures are necessary, including issuing injunctive relief and taking other measures for the preservation, protection, conservation or disposal of any property or things under the control of a Party.

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6. Initial Scheduling Conference. Within ten (10) calendar days after submission of the Respondent’s response to the Demand as described in the Rules (the “Answering Statement”) or if the Arbitrators have not been chosen by that date, within ten (10) calendar days after selection of the Arbitrators, the Arbitrators shall hold a conference, which may be conducted telephonically, at which the Arbitrators shall (1) fix the timetable for submissions and discovery; (2) set the time and place for hearings; (3) determine any procedures to be followed in the arbitration that have not already been provided for in these Arbitration Terms; and (4) discuss any other preliminary issues the Arbitrators or the Parties wish to raise.

7. Discovery. Discovery in the arbitration shall consist of exchanges of documents and depositions and shall be completed within 120 calendar days after submission to Claimant of the Answering Statement. Except as provided herein, the Parties shall be entitled to take all discovery, including third-party discovery, permitted under Rules 26, 27, 28, 29, 30, 34, 37 and 45 of the Federal Rules of Civil Procedure, and shall have the same obligations as under the Federal Rules of Civil Procedure. The Arbitrators shall have the same powers with respect to discovery, including the power to order sanctions, as under the Federal Rules of Civil Procedure, including Rule 37 — except as specifically provided for below.

(a) Documents - In the exchanges of documents, each Party shall produce all documents, not privileged, that are relevant to the factual issues in the case, including all documents relevant to the matter(s) specified in the Demand,

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Answering Statement, and counterclaim (“Counterclaim”), if any, and all documents that it intends to rely upon in the arbitration. Documents not disclosed during discovery shall not be subject to use in subsequent submissions or hearings, except upon consent of the Parties or where the Arbitrators determine that such use is justified.

(b) Depositions - Each Party shall, at the request of the other Party, produce for deposition up to six (6) employees possessing information relevant to the factual issues in the arbitration. Each Party will also be entitled to depose up to three (3) third-party witnesses and any expert witnesses designated to testify at the hearing. In addition, during the thirty (30) calendar days prior to the Final Hearing, each Party shall have the right to depose any witness identified in the pre-hearing list of witnesses identified in paragraph 10 herein who was not previously deposed by that Party during the discovery period. The Arbitrators may permit further depositions if the Arbitrators determine in their discretion that additional depositions are necessary. Depositions shall be no longer than one 8-hour day, except that each Party may designate two persons whose depositions may be up to two 8-hour days long.

(c) Third Parties - The Parties agree that third-party discovery shall be permitted and conducted to the same extent as under the Federal Rules of Civil Procedure. The Parties are required to use their best efforts to ensure that third-parties with information relevant to the factual issues in the arbitration, including any matter(s) specified in the Demand, Answering Statement and any

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Counterclaim, if any, provide the Arbitrators with any documents or testimony the Arbitrators may request.

(d) Sanctions - The Arbitrators shall be authorized to take one or more of the following actions with respect to a Party that has either improperly refused to respond to a proper discovery request, responded to such request in an untimely fashion, or otherwise engaged in discovery abuse or serious violations of the rules of the proceeding: (1) draw adverse interferences against the offending Party concerning facts in issue relating to such discovery ; (2) preclude the offending Party from presenting evidence concerning such facts; (3) award costs and/or monetary penalties to the Party seeking the discovery, including attorneys’ fees; or (4) take any other actions authorized under the Federal Rules of Civil Procedure.

8. Briefs, Witness Statements and Expert Reports. No brief or witness statement submitted during the course of the arbitration shall exceed twenty-five (25) pages in length, except that thirty (30) calendar days after the conclusion of the hearing, each Party may submit to the other and to the Arbitrators a post-hearing brief no longer than 50 pages. Sixty (60) calendar days prior to the Final Hearing, the Parties shall submit expert witness reports in the same format required by the Federal Rules of Civil Procedure for each expert witness the Party plans to call at the Final Hearing.

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9. The Final Hearing. The Final Hearing will be no longer than ten (10) business days, and shall be completed within a period of one month, unless the Arbitrators determine that a longer hearing and/or completion period is necessary.

At the Final Hearing, each Party shall be entitled to make opening and closing statements and to conduct direct examination, cross-examination and re-direct examination of fact and expert witnesses.

Forty-five (45) calendar days before the hearing, each Party participating in the arbitration will submit to each other and to the Arbitrators: (1) a list identifying all fact and expert witnesses that it intends to examine at the Final Hearing as part of its case-in-chief and; and (2) copies of all exhibits that the Party intends to introduce at the hearing. All fact and expert witnesses disclosed in a Party’s list who have not previously been deposed by the other Party can be deposed prior to the Final Hearing.

10. Award. The award shall consist of a writing setting forth the legal and factual bases of the Arbitrators’ decision and shall be rendered no more than one year after service of the Demand.

11. Damages. The Arbitrators shall have the power to award all actual damages suffered by an aggrieved Party.

12. Interest; Costs of Enforcement. The Arbitrators shall award to the prevailing Party on any claim, as determined by the Arbitrators, interest on any damages incurred for breach or other violation of these Arbitration Terms from the date of

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award until paid in full, at the prevailing statutory rate of interest under the laws of the State of California. Any costs, fees or taxes incident to enforcing an award shall, to the maximum extent permitted by law, be charged against the Party resisting such enforcement.

13. Confidentiality of Proceedings. The arbitration proceeding will be confidential and the Arbitrators will issue appropriate protective orders to safeguard each Parties’ confidential information. Except as required by law, no Party will disclose (or instruct the Arbitrators to disclose) to any non-participants in the arbitration the fact, conduct or outcome of the arbitration without the prior written consent of each other Party to such arbitration. The existence of any dispute submitted to arbitration, and the award of the Arbitrators will be kept in confidence by the Parties and the Arbitrators, except as required in connection with the enforcement of such award or as otherwise required by applicable law. Any Party who fails to observe the confidentiality restrictions in these Arbitration Terms shall be subject to the imposition of monetary sanctions by the Arbitrators.

14. Entry of Judgment. Judgment upon the award rendered by the Arbitrators may be entered in any court having jurisdiction thereof.

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EX-10.33

Exhibit 10.33

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (the “Agreement”) is made as of                 , by and between RITA Medical Systems, Inc., a Delaware corporation (the “Company”), and                                      (the “Indemnitee”).

RECITALS

The Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and key employees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance. The Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers and key employees to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited. Indemnitee does not regard the current protection available as adequate under the present circumstances, and Indemnitee and agents of the Company may not be willing to continue to serve as agents of the Company without additional protection. The Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify its directors, officers and key employees so as to provide them with the maximum protection permitted by law.

AGREEMENT

In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, receipt of which is hereby acknowledged, the Company and Indemnitee hereby agree as follows:

1. Indemnification.

(a) Third Party Proceedings. The Company shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any subsidiary of the Company, by reason of any action or inaction on the part of Indemnitee while an officer or director or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee in connection with such action, suit or proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee

reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

(b) Proceedings By or in the Right of the Company. The Company shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding by or in the right of the Company or any subsidiary of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any subsidiary of the Company, by reason of any action or inaction on the part of Indemnitee while an officer or director or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) and, to the fullest extent permitted by law, amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld), in each case to the extent actually and reasonably incurred by Indemnitee in connection with the defense or settlement of such action or suit if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and its stockholders, except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company in the performance of Indemnitee’s duty to the Company and its stockholders unless and only to the extent that the court in which such action or proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

(c) Mandatory Payment of Expenses. To the extent that Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1(a) or Section 1(b) or the defense of any claim, issue or matter therein, Indemnitee shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by Indemnitee in connection therewith.

2. No Employment Rights. Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment.

3. Expenses; Indemnification Procedure.

(a) Advancement of Expenses. The Company shall advance all expenses incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any civil or criminal action, suit or proceeding referred to in Section l(a) or Section 1(b) hereof (including amounts actually paid in settlement of any such action, suit or proceeding). Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Company as authorized hereby.

(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to his or her right to be indemnified under this Agreement, give the Company notice in

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writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the Chief Executive Officer of the Company and shall be given in accordance with the provisions of Section 12(d) below. In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee’s power.

(c) Procedure. Any indemnification and advances provided for in Section 1 and this Section 3 shall be made no later than twenty (20) days after receipt of the written request of Indemnitee. If a claim under this Agreement, under any statute, or under any provision of the Company’s Certificate of Incorporation or Bylaws providing for indemnification, is not paid in full by the Company within twenty (20) days after a written request for payment thereof has first been received by the Company, Indemnitee may, but need not, at any time thereafter bring an action against the Company to recover the unpaid amount of the claim and, subject to Section 11 of this Agreement, Indemnitee shall also be entitled to be paid for the expenses (including attorneys’ fees) of bringing such action. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any action, suit or proceeding in advance of its final disposition) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed, but the burden of proving such defense shall be on the Company and Indemnitee shall be entitled to receive interim payments of expenses pursuant to Section 3(a) unless and until such defense may be finally adjudicated by court order or judgment from which no further right of appeal exists. It is the parties’ intention that if the Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for the court to decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct.

(d) Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 3(b) hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

(e) Selection of Counsel. In the event the Company shall be obligated under Section 3(a) hereof to pay the expenses of any proceeding against Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved by Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees

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of counsel subsequently incurred by Indemnitee with respect to the same proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company.

4. Additional Indemnification Rights; Nonexclusivity.

(a) Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Certificate of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute, or rule which expands the right of a Delaware corporation to indemnify a member of its board of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee’s rights and the Company’s obligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligations hereunder.

(b) Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company’s Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested members of the Company’s Board of Directors, the General Corporation Law of the State of Delaware, or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while holding such office. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though he or she may have ceased to serve in any such capacity at the time of any action, suit or other covered proceeding.

5. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the expenses, judgments, fines or penalties actually or reasonably incurred in the investigation, defense, appeal or settlement of any civil or criminal action, suit or proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines or penalties to which Indemnitee is entitled.

6. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge that in certain instances, Federal law or public policy may override applicable state law and prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. For example, the Company and Indemnitee acknowledge that the Securities and Exchange Commission (the “SEC”) has taken the position that indemnification is not permissible for liabilities arising under certain federal securities laws, and federal legislation prohibits

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indemnification for certain ERISA violations. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the SEC to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify Indemnitee.

7. Officer and Director Liability Insurance. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of the Company but is an officer; or of the Company’s key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company.

8. Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. The provisions of this Agreement shall be severable as provided in this Section 8. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.

9. Exceptions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

(a) Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the Delaware General Corporation Law, but such indemnification or advancement of expenses may be provided by the Company in specific cases if the Board of Directors finds it to be appropriate;

(b) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred by Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this

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Agreement, if a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such proceeding was not made in good faith or was frivolous;

(c) Insured Claims. To indemnify Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the extent such expenses or liabilities have been paid directly to Indemnitee by an insurance carrier under a policy of officers’ and directors’ liability insurance maintained by the Company; or

(d) Claims under Section 16(b). To indemnify Indemnitee for expenses or the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.

10. Construction of Certain Phrases.

(a) For purposes of this Agreement, references to the “Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

(b) For purposes of this Agreement, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

11. Attorneys’ Fees. In the event that any action is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee with respect to such action, unless as a part of such action, the court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. In the event of an action instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys’ fees, incurred by Indemnitee in defense of such action (including with respect to

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Indemnitee’s counterclaims and cross-claims made in such action), unless as a part of such action the court determines that each of Indemnitee’s material defenses to such action were made in bad faith or were frivolous.

12. Miscellaneous.

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

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

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

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

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

(f) Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns, and inure to the benefit of Indemnitee and Indemnitee’s heirs, legal representatives and assigns.

(g) Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company to effectively bring suit to enforce such rights.

[Signature Page Follows]

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The parties hereto have executed this Agreement as of the day and year set forth on the first page of this Agreement.

RITA Medical Systems, Inc.

By:                                                                                      

Title:                                                                                  

Address:    967 N. Shoreline Blvd.

                   Mountain View, CA 94043

AGREED TO AND ACCEPTED:

___________________________________________

(Signature)

Address:    

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EX-10.34

Exhibit 10.34

RITA MEDICAL SYSTEMS, INC.

CONSULTING AGREEMENT

This Consulting Agreement (the “Agreement”) is entered into by and between RITA Medical Systems, Inc. (the “Company”), a Delaware corporation and Randy D. Lindholm (“Consultant”).

1. Consulting Relationship. During the term of this Agreement, Consultant will provide consulting services (the “Services”) to the Company as described on Exhibit A attached to this Agreement. Consultant represents that Consultant is duly licensed (as applicable) and has the qualifications, the experience and the ability to properly perform the Services. Consultant shall use Consultant’s best efforts to perform the Services such that the results are satisfactory to the Company. For the ninety day period following the date of execution of this Agreement (the “Initial Period”), Consultant shall be available to the Company upon the Company’s reasonable request for an average of three days per week over the course of the Initial Term. Thereafter, Consultant shall be available to the Company for two days per month for the remaining term of this Agreement (the “Subsequent Period”). Consultant shall perform the Services as reasonably requested by the Company.

2. Fees. As consideration for the Services to be provided by Consultant and other obligations, the Company shall pay to Consultant the amounts specified in Exhibit B attached to this Agreement at the times specified therein.

3. Expenses. Consultant shall not be authorized to incur on behalf of the Company any expenses, without the prior consent of the either a member of the Company’s Board of Directors or the Company’s Chief Executive Officer, which consent shall be evidenced in writing for any expenses in excess of $1,000.00. As a condition to receipt of reimbursement, Consultant shall be required to submit to the Company reasonable evidence that the amount involved was expended and related to Services provided under this Agreement.

4. Term and Termination. Consultant shall serve as a consultant to the Company for a period commencing on April 25, 2003 and terminating on April 25, 2004 provided however that the Consulting Relationship shall terminate prior to such date if at any time during the Subsequent Period and after the end of the sixty day period immediately following the start date of a permanent Chief Executive Officer of the Company, such Chief Executive Officer desires to terminate this Agreement. Such termination shall be effective upon ten days’ prior written notice to Consultant. In the event of such termination, Consultant shall be paid for any portion of the Services that have been performed prior to the termination.

5. Independent Contractor. Consultant’s relationship with the Company will be that of an independent contractor and not that of an employee.

(a) Method of Provision of Services: Consultant shall be solely responsible for determining the method, details and means of performing the Services. Consultant may, at

Consultant’s own expense, employ or engage the service of such employees or subcontractors as Consultant deems necessary to perform the Services required by this Agreement (the “Assistants”). Such Assistants are not the employees of the Company and Consultant shall be wholly responsible for the professional performance of the Services by his Assistants such that the results are satisfactory to the Company. Consultant shall expressly advise the Assistants of the terms of this Agreement, and shall require each Assistant to execute a Confidential Information and Invention Assignment Agreement substantially in the form attached to this Agreement as Exhibit C (the “Confidentiality Agreement”).

(b) No Authority to Bind Company. Neither Consultant, nor any partner, agent or employee of Consultant, has authority to enter into contracts that bind the Company or create obligations on the part of the Company without the prior written authorization of the Company.

(c) No Benefits. Consultant acknowledges and agrees that Consultant (or Consultant’s employees, if Consultant is an entity) will not be eligible for any Company employee benefits and, to the extent Consultant (or Consultant’s employees, if Consultant is an entity) otherwise would be eligible for any Company employee benefits but for the express terms of this Agreement, Consultant (on behalf of itself and its employees) hereby expressly declines to participate in such Company employee benefits.

(d) Withholding; Indemnification. Consultant shall have full responsibility for applicable withholding taxes for all compensation paid to Consultant, its partners, agents or its employees under this Agreement, and for compliance with all applicable labor and employment requirements with respect to Consultant’s self-employment, sole proprietorship or other form of business organization, and Consultant’s partners, agents and employees, including state worker’s compensation insurance coverage requirements and any US immigration visa requirements. Consultant agrees to indemnify, defend and hold the Company harmless from any liability for, or assessment of, any claims or penalties with respect to such withholding taxes, labor or employment requirements, including any liability for, or assessment of, withholding taxes imposed on the Company by the relevant taxing authorities with respect to any compensation paid to Consultant or Consultant’s partners, agents or its employees.

6. Supervision of Consultant’s Services. All of the Services to be performed by Consultant, including but not limited to the Services, will be as agreed between Consultant and either the Company’s Board of Directors or Chief Executive Officer. Consultant will be required to report to the either the Company’s Board of Directors or Chief Executive Officer concerning the Services performed under this Agreement. The nature and frequency of these reports will be left to the discretion of either the Company’s Board of Directors or Chief Executive Officer.

7. Consulting or Other Services for Competitors. Consultant represents and warrants that Consultant does not presently perform or intend to perform, during the term of the Agreement, consulting or other services for, or engage in or intend to engage in an employment relationship with, companies who businesses or proposed businesses in any way involve products or services which would be competitive with the Company’s products or services, or those products or services proposed or in development by the Company during the term of the

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Agreement (except for those companies, if any, listed on Exhibit D attached hereto). If, however, Consultant decides to do so, Consultant agrees that, in advance of accepting such work, Consultant will promptly notify the Company in writing, specifying the organization with which Consultant proposes to consult, provide services, or become employed by and to provide information sufficient to allow the Company to determine if such work would conflict with the terms of this Agreement, including the terms of the Confidentiality Agreement, the interests of the Company or further services which the Company might request of Consultant. If the Company determines that such work conflicts with the terms of this Agreement, the Company reserves the right to terminate this Agreement immediately.

8. Confidentiality Agreement. Consultant shall sign, or has signed, a Confidential Information and Invention Assignment Agreement substantially in the form attached to this Agreement as Exhibit C (the “Confidentiality Agreement”), on or before April 25, 2003. In the event that Consultant is an entity or otherwise will be causing individuals in its employ or under its supervision to participate in the rendering of the Services, Consultant warrants that it shall cause each of such individuals to execute a Confidentiality Agreement in the form attached as Exhibit C.

9. Conflicts with this Agreement. Consultant represents and warrants that neither Consultant nor any of Consultant’s partners, employees or agents is under any pre-existing obligation in conflict or in any way inconsistent with the provisions of this Agreement. Consultant represents and warrants that Consultant’s performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by Consultant in confidence or in trust prior to commencement of this Agreement. Consultant warrants that Consultant has the right to disclose and/or or use all ideas, processes, techniques and other information, if any, which Consultant has gained from third parties, and which Consultant discloses to the Company or uses in the course of performance of this Agreement, without liability to such third parties. Notwithstanding the foregoing, Consultant agrees that Consultant shall not bundle with or incorporate into any deliveries provided to the Company herewith any third party products, ideas, processes, or other techniques, without the express, written prior approval of the Company. Consultant represents and warrants that Consultant has not granted and will not grant any rights or licenses to any intellectual property or technology that would conflict with Consultant’s obligations under this Agreement. Consultant will not knowingly infringe upon any copyright, patent, trade secret or other property right of any former client, employer or third party in the performance of the Services required by this Agreement.

10. Miscellaneous.

(a) Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the parties.

(b) Sole Agreement. This Agreement, including the Exhibits hereto, constitutes the sole agreement of the parties and supersedes all oral negotiations and prior writings with respect to the subject matter hereof.

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(c) Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, 48 hours after being deposited in the regular mail as certified or registered mail (airmail if sent internationally) with postage prepaid, if such notice is addressed to the party to be notified at such party’s address or facsimile number as set forth below, or as subsequently modified by written notice.

(d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California, without giving effect to the principles of conflict of laws.

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

(f) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

(g) Arbitration. Any dispute or claim arising out of or in connection with any provision of this Agreement will be finally settled by binding arbitration in Santa Clara County, California, in accordance with the rules of the American Arbitration Association by one arbitrator appointed in accordance with said rules. The arbitrator shall apply California law, without reference to rules of conflicts of law or rules of statutory arbitration, to the resolution of any dispute. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph, without breach of this arbitration provision. This Section 10(g) shall not apply to the Confidentiality Agreement.

(h) Advice of Counsel. EACH PARTY ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

[Signature Page Follows]

4

The parties have executed this Agreement on the respective dates set forth below.

RITA MEDICAL SYSTEMS, INC.
By:	/s/ Scott Halsted
Title:  Director
Address:
Date:  4/25/03
RANDY D. LINDHOLM
/s/ Randy D. Lindholm
Signature
Address:
Date: 4/25/03

EXHIBIT A

DESCRIPTION OF CONSULTING SERVICES

Description of Services

Consultant shall provide advice to the Company in his field of expertise and shall introduce the Company to potential employees, consultants, customers and partners.

EXHIBIT B

COMPENSATION

For Services rendered by Consultant under this Agreement, during the Initial Period, the Company shall pay Consultant a flat fee of $125,000. During the Subsequent Period, the Company shall pay Consultant a monthly fee of $5,000 per day for providing the Services.

In addition, the Company will recommend that the Board grant a non-qualified option to purchase 25,000 shares of the Company’s Common Stock (the “Shares”), at an exercise price equal to the fair market value of the Company’s Common Stock on the date of grant, and which will vest and become exercisable as follows:  ¹/48^th of the Shares will vest each month following the grant date.

EXHIBIT C

CONFIDENTIAL INFORMATION AND

INVENTION ASSIGNMENT AGREEMENT

EXHIBIT D

LIST OF COMPANIES

EXCLUDED UNDER SECTION 7

         No conflicts

         Additional Sheets Attached

Signature of Consultant:                           

Print Name of Consultant:                         

Date:

EX-10.35

Exhibit 10.35

May 1, 2003

Donald Stewart

Chief Financial Officer,

Vice President, Finance and Administration

RITA Medical Systems Inc.

967 North Shoreline Blvd

Mountain View, CA 94043

Offer Letter Amendment

Dear Don:

In connection with the recent resignation of the President and Chief Executive Officer of RITA Medical Systems, Inc. (the “Company”) and your agreement to substantially increase your responsibilities at the Company following such resignation, the Compensation Committee of the Board of Directors of the Company has agreed to provide you with certain compensation and equity adjustments and additional benefits. Accordingly, your offer letter from the Company dated April 2, 2001 (the “Offer Letter”) is amended as described below. Section 7 of the Offer Letter shall be amended and superceded in its entirety by Section 3 set forth below. All other provisions of the Offer Letter that are not modified by this Amendment, including but not limited to, the provision regarding at-will employment, remain in full force and effect.

1.    Base Salary.  Your monthly salary shall be increased to $16,666.67 (subject to applicable withholding taxes) which is equivalent to $200,000.00 on an annualized basis.

2.    Stock Options.    You will be granted an option (the “Option”) to purchase 25,000 shares of Company Common Stock (the “Shares”) with an exercise price equal to the fair market value of the Common Stock on the date of grant. This Option will vest and become exercisable, subject to your continued employment with the Company, as to 1/48th of the Shares each month following the date of grant. The Option will be granted pursuant to the Company’s 2000 Stock Plan and the Company’s standard form of Stock Option Agreement.

3.    Severance Benefits.    If, during the period beginning on the date set forth above and ending on the one year anniversary of the date of hire of a full time Chief Executive Officer of the Company (the “Initial Period”), the Company or its successor in

May 1, 2003

Page 2

interest terminates your employment without Cause, then you will be entitled to receive continuation of your then-current monthly base salary for twelve (12) 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 Amendment 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) twelve (12) months following your termination date or (B) the date on which you become eligible for insurance benefits from another employer.

Following the Initial Period, in the event that the Company or its successor in interest terminates your employment without Cause, 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. 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 termination of your employment with 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.

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May 1, 2003

Page 3

For purposes of this Amendment, “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.

Please sign below to acknowledge and accept the terms of this Amendment and to agree that the terms of this Amendment taken together with the Offer Letter, the Confidential Information and Invention Assignment Agreement dated April 2, 2001 and the Change of Control Agreement dated April 2, 2001, constitute your entire agreement with respect to your employment with the Company.

Sincerely,

RITA Medical Systems, Inc.

/s/    VINCENT BUCCI

Vincent Bucci, Chairman of the Board

ACCEPTED AND AGREED:

/s/    DONALD STEWART

Donald Stewart

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EX-10.36

Exhibit 10.36

May 1, 2003

Lynn Saccoliti

1124 Via Appianna

Henderson, NV 89052

Dear Lynn:

On behalf of RITA Medical Systems, Inc. (the “Company”), I am pleased to offer you the position of Vice President, Reimbursement Affairs. 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, Reimbursement Affairs, working out of your home in Henderson, Nevada. You will report to the Company’s Chief Financial 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 May 1, 2003.

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 salary of $11,666.67 which is equivalent to $140,000.00 on an annualized basis. Your salary will be payable in two equal payments on the 15th and the last day of the month.

b.    Bonus.  You will be eligible to participate in the Company management cash bonus program. In addition, you will be eligible to receive a special bonus of up to $20,000.00 based upon the attainment of performance milestones to be established by the Company’s Chief Financial Officer within sixty days of your date of hire.

c.    Annual Review.  Your base salary will be reviewed as part of the Company’s normal annual salary review process.

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 (the “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 Stock Plan and the Stock Option Agreement between you and the Company. The Option is subject to the approval of the Company’s Board of Directors or designated Committee of the Board.

b.    Bonus.  You will be eligible to participate in the Company management stock bonus program.

c.    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 provide you with medical, dental and long-term disability insurance benefits.

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 hours accrue per pay period from your date of hire. With the exception of the days during the month of May that you will be taking as a previously planned vacation without pay, during the first six months following your date of hire, 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 one month of 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 termination of your employment with 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

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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.

10.    At-Will Employment.  Your employment 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 and 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 supersede 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 May 1, 2003.

Very truly yours, RITA MEDICAL SYSTEMS, INC.
By:	/s/    STEVE WILLIAMS
Steve Williams Chief Operating Officer

LYNN SACCOLITI

/s/    LYNN SACCOLITI

Signature

5/1/03

Date

Enclosure:    Confidential Information and Invention Assignment Agreement

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EX-31.1

Rule 13a-14(a) Section 302 Certification

Exhibit 31.1

CERTIFICATIONS

I, Donald Stewart, certify that:

1. I have reviewed this report on Form 10-Q of RITA Medical Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2003

/S/    DONALD STEWART        

Donald Stewart

Acting Chief Executive Officer, Chief Financial Officer

and Vice President, Finance and Administration

EX-32.1

Exhibit 32.1

RITA Medical Systems, Inc.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT of 2002

In connection with the Quarterly Report of RITA Medical Systems, Inc. (the “Company”) on Form 10-Q for the three and six months ended June 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Donald Stewart, Acting Chief Executive Officer, Chief Financial Officer and Vice President, Finance and Administration of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/S/    DONALD STEWART        

Donald Stewart

Acting Chief Executive Officer,

Chief Financial Officer and

Vice President, Finance and Administration

August 13, 2003