Document:

Prepared by R.R. Donnelley Financial -- Offer letter between the Company & Joseph DeVivo

 Exhibit 10.40 
  
 July 23, 2003 
  
 Joseph DeVivo 
 1030 Ocean Vista Lane 
 Santa Barbara, CA 93111 
  
 Dear Joe: 
  
 On behalf of RITA
Medical Systems, Inc. (the “Company”), I am pleased to offer you the position of President and Chief Executive Officer of the Company. You will be working out of the Company’s headquarters in Mountain View, California. Your
duties and responsibilities shall include general oversight and management of the Company and responsibility for the day-to-day operations of the Company as well as other duties the Company’s Board of Directors may reasonably assign to you
consistent with your position with the Company. 
  
 1.    Compensation. 
  
 a.    Base Wage.    In this exempt position, you will earn a starting salary of $21,666.67 per month, which is equivalent to $260,000 on an annualized basis, subject to applicable tax
withholding. Your salary will be payable pursuant to the Company’s regular payroll policy. 
  
 b.    Incentive Compensation.    You will be eligible to earn an incentive bonus in 2004 of up to
40% (the “Base Bonus”) (and in certain circumstances to be determined by the Company’s Compensation Committee of the Board of Directors, up to 65% (the “Stretch Bonus”)) of the salary that is paid to you from
January 1, 2004 to December 31, 2004, subject to the attainment of Company and individual performance objectives set forth by the Company’s Compensation Committee of the Board of Directors and provided that you are an employee of the Company
through December 31, 2004. The Company’s Compensation Committee of the Board of Directors will determine these objectives and the related portion of the bonus attributable to such objectives, in consultation with you, within 60 days after
January 1, 2004; provided, however if you are an employee of the Company through December 31, 2004, the Company will pay you $40,000 of the Base Bonus (such amount, the “Minimum 2004 Bonus”) whether or not any of these objectives
are obtained. To the extent that the Company’s Compensation Committee of the Board of Directors determines that any or all of these objectives have been attained and provided that you are an employee of the Company through December 31, 2004,
the Company will pay to you the related portion of the bonus attributable to such attained objectives (and in any event at least the Minimum 2004 Bonus), less applicable withholding taxes, on or before March 31, 2005. 
  
 c.    Signing
Bonus.    The Company will pay to you a $100,000 bonus payment, less applicable withholding taxes (the “Signing Bonus”), on the Company’s first regularly scheduled pay period after your Start Date
(as defined below). If your employment with the Company is terminated voluntarily by the employee on or before the first anniversary of your Start Date, you shall promptly, and in any event within 5 days, after your date of termination, repay to the
Company the Signing Bonus. If the employment with the Company is terminated voluntarily by the employee after the first anniversary and before the second anniversary of your Start Date, you shall promptly pay 50% of the signing bonus, and in any
event within 5 days, after your date of termination. 
  

 d.    Annual Review.    Your base salary will be
reviewed as part of the Company’s normal annual salary review process. 
  
 2.    Employee Benefits. 
  
 a.    Paid Time Off.    You will be eligible to accrue up to 15 days of paid vacation per calendar year, pro-rated for the remainder of this calendar year.
Vacation accrues as follows: five (5) hours accrue per pay period from your Start Date. 
  
 b.    Group Plans.    The Company will provide you with the opportunity to participate in the standard benefits plans currently available to other similarly
situated employees, including medical, dental, vision, life and long-term disability insurance, subject to any eligibility requirements imposed by such plans. 
  

c.    401K Retirement Plan.    You will be eligible to participate in the Company’s
employee-contribution 401K Retirement Plan beginning on October 1, provided that you have been employed with the Company for at least 30 days. 
  
 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. 
  
 e.    Relocation Expenses.    The Company (A) will reimburse you for, or pay directly, your expenses
incurred in relocating from Santa Barbara to the San Francisco Bay Area, which reimbursement shall not exceed $27,000 without the prior approval of the Company’s Compensation Committee of the Board of Directors, and (B) will pay to you a full
gross-up on any taxes that you are required to pay on such reimbursement of relocation expenses (the “Relocation Package”). You shall be entitled to use the Relocation Package to pay for any rent, moving or home purchase expenses
incurred during the first 90 days of your employment with the Company as a result of your personal relocation and/or your family’s relocation to the San Francisco Bay Area. Payment of any amount of the Relocation Package is contingent upon your
submission of original receipts to the Company. Any amounts of the Relocation Package owed to you will be paid within 30 days after the Company’s receipt of your substantiated reimbursement request. 
  
 3.    Equity Award. 
  
 a.    Stock
Option.    In connection with the commencement of your employment, the Company will recommend that the Board of Directors grant you a stock option (the “Option”) to purchase 692,175 shares of the
Company’s Common Stock with an exercise price equal to the fair market value on the date of the grant. The Option shares will vest and become exercisable at the rate of 25% of the total number of shares on the 12-month anniversary of your
Vesting Commencement Date (as defined in the Stock Option Agreement to be executed between you and the Company, which date will be your Start Date) and 1/48th of the total number of shares each 

  

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month thereafter on the monthly anniversary of the Vesting Commencement Date. Vesting will, of course, depend on your continued employment with the Company.
The Option will be an incentive stock option to the maximum extent allowed by the tax code and will be subject to the terms of the Company’s 2000 Incentive Stock Option Plan and the Stock Option Agreement between you and the Company.
Furthermore, after a Change of Control (as defined in the COC Agreement), the Option (to the extent vested) shall be exercisable by you for up to 18 months after the date of the termination of your employment with the Company (or its successor),
provided that you shall not be able to exercise the Option after the date that is 10 years from the date of grant thereof. 
  
 b.    Acceleration Benefit. 
  
 i.    Subject to the approval of the Board of Directors, the Option will be subject to the terms and conditions of the
Company’s standard form of Change of Control Agreement, a form of which is enclosed for your review (the “COC Agreement”), accelerated vesting upon a Change of Control only as explicitly set forth in the COC Agreement.

  
 ii.    Furthermore,
subject to the approval of the Board of Directors, if, prior to the first anniversary of your Start Date, your employment with the Company is terminated without Cause, then as of the date your employment with the Company is terminated without Cause,
you shall be vested and able to exercise that number of shares subject to the Option equal to the product of (1) the total shares subject to the Option times (2) the following ratio: (A) the total number of full months from your Start Date to the
date your employment is terminated without Cause divided by (B) 48. 
  
 4.    Pre-employment Conditions. 
  
 a.    Confidentiality 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. 
  
 b.    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 Start Date, or our employment relationship with you may be terminated. 
  
 c.    Verification of Information.    This offer of employment is also contingent upon the
successful verification of the information you provided to the Company during your application process, as well as a general background check performed by the Company to confirm your suitability for employment. By accepting this offer of employment,
you warrant that all information provided by you is true and correct to the best of your knowledge, and you expressly release the Company from any claim or cause of action arising out of the Company’s verification of such information. You have
a right to review copies of any public records obtained by the Company in conducting this verification process unless you check the box below. 
  

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 5.    No Conflicting Obligations.    You understand
and agree that by accepting this offer of employment, you represent to the Company that your performance will not breach any other agreement to which you are a party and that you have not, and will not during the term of your employment with the
Company, enter into any oral or written agreement in conflict with any of the provisions of this letter or the Company’s policies. You are not to bring with you to the Company, or use or disclose to any person associated with the Company, any
confidential or proprietary information belonging to any former employer or other person or entity with respect to which you owe an obligation of confidentiality under any agreement or otherwise. The Company does not need and will not use such
information and we will assist you in any way possible to preserve and protect the confidentiality of proprietary information belonging to third parties. Also, we expect you to abide by any obligations to refrain from soliciting any person employed
by or otherwise associated with any former employer and suggest that you refrain from having any contact with such persons until such time as any non-solicitation obligation expires. 
  
 6.    General Obligations.    As an employee, you will be expected to
adhere to the Company’s standards of professionalism, loyalty, integrity, honesty, reliability and respect for all. Please note that the Company is an equal opportunity employer. The Company does not permit, and will not tolerate, the unlawful
discrimination or harassment of any employees, consultants, or related third parties on the basis of sex, race, color, religion, age, national origin or ancestry, marital status, veteran status, mental or physical disability or medical condition,
sexual orientation, pregnancy, childbirth or related medical condition, or any other status protected by applicable law. Any questions regarding this equal employment opportunity statement should be directed to the Company’s Human Resources.

  
 7.    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. The Company also reserves the right to modify or amend the terms of your employment at any time for any reason. This policy of at-will employment is the entire agreement as to the duration of your employment and may only be
modified in an express written agreement signed by the Chief Executive Officer of the Company. 
  
 8.    Severance Benefits.    In no way limiting the Company’s policy of employment at-will, if your employment is terminated as a result of an Involuntary
Termination, and other than as a result of your death or disability, the Company will offer certain severance benefits to you. As a condition to your receipt of such benefits, you are required to comply with your continuing obligations (including
the return of any Company property), resign from all positions you hold with the Company, and execute the Company’s standard form of release agreement releasing any claims you may have against the Company. 
  
 a.    Cash
Payments.    The Company will provide you with severance equal to your then-current regular base salary, paid out over the Company’s regular payroll schedule following the effective date of your release until the
earlier of (A) the first anniversary of the date 

  

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of your termination without Cause or (B) the date on which you accept an offer of employment or consulting relationship which constitutes the equivalent of a
full-time position or compensates you at a level equal to the level of compensation provided by the Company at the date of your termination by the Company without Cause (the period from the effective date of your release until the earlier of the
dates in clauses (A) and (B), the “Severance Period”). This salary continuation is conditioned on your confirmation, to the Company’s satisfaction, that you are actively seeking such an employment or consulting relationship.
For purposes of this paragraph, “full-time employment” shall be defined as at least 35 hours per week of compensated labor, including consulting or other contract work. You shall promptly and in any event within three days notify that
Company if you accept such an employment or consulting relationship. 
  
 b.    Continued Medical Coverage.    As further consideration, if you timely elect continued group medical insurance coverage pursuant to COBRA or Cal-COBRA (as applicable), the Company
will reimburse you for the applicable premiums for you and your eligible dependents during the Severance Period. 
  
 9.    Limitation on Payments. 
  

a.    In the event that the severance benefits provided for in this letter (including the COC Agreement) to you (i) constitute
“parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) but for this Section, would be subject to the excise tax imposed by Section 4999 of the Code,
then the your benefits under this letter (and the COC Agreement) shall be payable either: (i) in full, or (ii) as to such lesser amount which would result in no portion of such severance benefits being subject to excise tax under Section 4999 of the
Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by you on an after-tax basis, of the greatest amount of benefits
under this letter (and the COC Agreement), notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. Unless the Company and you otherwise agree in writing, any determination required under this Section
9 (or Section 4 of the COC Agreement) shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon you and the Company for all purposes.
For purposes of making the calculations required by this Section 9 (or Section 4 of the COC Agreement), the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Section 280G and 4999 of the Code. The Company and you shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under
this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 9 (and Section 4 of the COC Agreement). 
  
 b.    The payment of severance benefits provided for in
this letter (including the COC Agreement) shall be subject to all applicable income, employment and social tax rules and regulations. 
  
  
  
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 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 original copy of the Confidentiality Agreement, on or before the date that is seven
days after the date of this letter. The Company requests that you begin work in this new position on or before August 1, 2003. Please indicate the date (either on or before the aforementioned date) on which you expect to begin work in the space
provided below (the “Start Date”). 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 will be governed by the laws of California, without regard to its conflict of laws provisions. This letter may not be modified or amended except by a written agreement, signed by an officer of the Company. 
  

	 Very truly yours,
  
 RITA MEDICAL SYSTEMS, INC.

		
	 By:
	 	 /s/    Vincent Bucci

	 	 	 Vincent Bucci, Chairman of the Board

  
  

	ACCEPTED AND AGREED:
	
	JOSEPH DEVIVO
	
	 /s/    Joseph DeVivo

	Signature
	
	 7/23/03

	Date

  
  ̈    I hereby waive my right to receive any public records as described above. 
  

	Anticipated Start Date:	 	8/1/03
	 	 	

  
 Attachment A: Form of Change of
Control Agreement 
 Attachment B: Confidential Information and Invention Assignment Agreement 
  

 -6-Prepared by R.R. Donnelley Financial -- Offer letter between the Company & Stephen Pedroff

 Exhibit 10.41 
  
 August 22, 2003 
  
 Steve Pedroff 
 806 Creekside Place 
 Solvang, CA 93463 
  
 Dear Steve: 
  
 On behalf of RITA
Medical Systems, Inc. (the “Company”), I am pleased to offer you the position of Vice President, Marketing Communications. 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, Marketing Communications, working out of the Company’s office in
Mountain View, California. You will report to the Company’s Chief Executive Officer. 
  
 b.    You agree to the best of your ability and experience that you will at all times loyally and conscientiously
perform all of the duties and obligations required of and from you pursuant to the express and implicit terms hereof, and to the reasonable satisfaction of the Company. During the term of your employment, you further agree that you will devote all
of your business time and attention to the business of the Company, the Company will be entitled to all of the benefits and profits arising from or incident to all such work services and advice, you will not render commercial or professional
services of any nature to any person or organization, whether or not for compensation, without the prior written consent of the Company’s Board of Directors, and you will not directly or indirectly engage or participate in any business that is
competitive in any manner with the business of the Company. Nothing in this letter agreement will prevent you from accepting speaking or presentation engagements in exchange for honoraria or from serving on boards of charitable organizations, or
from owning no more than one percent (1%) of the outstanding equity securities of a corporation whose stock is listed on a national stock exchange. 
  
 2.    Start Date.    Subject to fulfillment of any conditions imposed by this letter agreement, you
will commence this new position with the Company on September 2, 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 $12,500.00 which is equivalent to $150,000.00 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 at the Vice President level. 
  
 c.    Annual
Review.    Your base salary will be reviewed as part of the Company’s normal annual salary review process. 
  
 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 at the Vice President level. 
  
 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 make available to you medical, dental,
vision, life 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. 
  
 e.    Relocation
Expenses.    The Company (A) will reimburse you for, or pay directly, your expenses incurred in relocating from Solvang, CA to the San Francisco Bay Area, which reimbursement shall not exceed $20,000 without the prior
approval of the Company’s Compensation Committee of the Board of Directors, and (B) will pay to you a full gross-up on any taxes that you are required to pay on such reimbursement of relocation expenses (the “Relocation
Package”). You shall be entitled to use the Relocation Package to pay for any rent, moving or home purchase expenses incurred during the first 90 days of your employment with the Company as a result of your personal relocation and/or your
family’s relocation to the San Francisco Bay Area. Payment of any amount of the Relocation Package is contingent upon your submission of original receipts to the Company. Any amounts of the Relocation Package owed to you will be paid within 30
days after the Company’s receipt of your substantiated reimbursement request. 
  
 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. 
  

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 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.    No Conflicting Obligations.    You understand and agree that by
accepting this offer of employment, you represent to the Company that your performance will not breach any other agreement to which you are a party and that you have not, and will not during the term of your employment with the Company, enter into
any oral or written agreement in conflict with any of the provisions of this letter or the Company’s policies. You are not to bring with you to the Company, or use or disclose to any person associated with the Company, any confidential or
proprietary information belonging to any former employer or other person or entity with respect to which you owe an obligation of confidentiality under any agreement or otherwise. The Company does not need and will not use such information and we
will assist you in any way possible to preserve and protect the confidentiality of proprietary information belonging to third parties. Also, we expect you to abide by any obligations to refrain from soliciting any person employed by or otherwise
associated with any former employer and suggest that you refrain from having any contact with such persons until such time as any non-solicitation obligation expires. 
  
 10.    General Obligations.    As an employee, you will be expected to
adhere to the Company’s standards of professionalism, loyalty, integrity, honesty, reliability and respect for all. Please note that the Company is an equal opportunity employer. The Company does not permit, and will not tolerate, the unlawful
discrimination or harassment of any employees, consultants, or related third parties on the basis of sex, race, color, religion, age, national origin or ancestry, marital status, veteran status, mental or physical disability or medical condition,
sexual orientation, pregnancy, childbirth or related medical condition, or any other status protected by applicable law. Any questions regarding this EEO statement should be directed to Human Resources. 
  
 11.    Confidentiality of
Terms.    You agree to follow the Company’s strict policy that employees must not disclose, either directly or indirectly, any information, including any of the terms of this agreement, regarding compensation, or
stock purchase or option allocations to any person, including other employees of the Company; provided, however, that you may discuss such terms with members of your immediate family and any legal, tax or accounting specialists who provide you with
individual legal, tax or accounting advice. 
  
 12.    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. 
  

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 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 August 27, 2003. 
  

	 Very truly yours,
  
 RITA MEDICAL SYSTEMS, INC.

		
	 By:
	 	 /S/    JOSEPH
DEVIVO        

	 Joseph DeVivo
 President and
Chief Executive Officer

  
 STEPHEN PEDROFF 

	
	 /S/    STEPHEN
PEDROFF        

	

	Signature

  

	
	8/25/03
	

	Date

  
 Enclosure: Confidential Information
and Invention Assignment Agreement 
  

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