SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under Rule 14a-12
RITA Medical Systems, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________
(2) Aggregate number of securities to which transactions applies:
________________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________
(5) Total fee paid:
________________________________________________________________
[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________
(3) Filing Party:
________________________________________________________________
(4) Date Filed:
________________________________________________________________
RITA Medical Systems, Inc.
967 N. Shoreline Blvd.
Mountain View, California 94043
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 30, 2002
-----------------
On Thursday, May 30, 2002, RITA Medical Systems, Inc., a Delaware
corporation (the "Company"), will hold its Annual Meeting of Stockholders at
Venture Law Group, located at 2775 Sand Hill Road, Menlo Park, California 94025.
The Meeting will begin at 9:00 a.m. local time.
Only stockholders who owned stock at the close of business on April 1, 2002
can vote at the Meeting or any adjournment that may take place. At the Meeting
we will:
. Elect two (2) Class II directors to serve until the annual meeting of
the Company's stockholders for the year ending December 31, 2005;
. Ratify the appointment of PricewaterhouseCoopers LLP as our
independent accountants for the current fiscal year; and
. Transact any other business properly brought before the Meeting.
You can find more information about each of these items, including the
nominees for directors, in the attached Proxy Statement.
Our Board of Directors recommends that you vote in favor of each of the
two proposals outlined in this Proxy Statement.
We cordially invite all stockholders to attend the Annual Meeting in
person. However, whether or not you expect to attend the Annual Meeting in
person, please mark, date, sign and return the enclosed proxy card as promptly
as possible in the postage-prepaid envelope provided to ensure your
representation and the presence of a quorum at the Annual Meeting. If you send
in your proxy card and then decide to attend the Annual Meeting to vote your
shares in person, you may still do so. Your proxy is revocable in accordance
with the procedures set forth in the Proxy Statement.
At the Meeting, we will also report on our business results and other
matters of interest to stockholders.
By Order of the Board of Directors,
/s/ Donald Stewart
-----------------------------------
Donald Stewart, Chief Financial
Officer and Vice President,
Finance and Administration
Mountain View, California
May 3, 2002
RITA Medical Systems, Inc.
967 N. Shoreline Blvd.
Mountain View, California 94043
---------------------
PROXY STATEMENT
---------------------
FOR THE
2002 ANNUAL MEETING OF STOCKHOLDERS
May 30, 2002
Our Board of Directors is soliciting proxies for the 2002 Annual Meeting of
Stockholders. This Proxy Statement contains important information for you to
consider when deciding how to vote on the matters brought before the Meeting.
Please read it carefully.
The Board set April 1, 2002 as the record date for the Meeting.
Stockholders of record who owned our common stock on that date are entitled to
vote at and attend the Meeting, with each share entitled to one vote. 14,744,160
shares of common stock were outstanding on the record date.
Voting materials, which include this Proxy Statement, a proxy card and the
2001 Annual Report, will be mailed to stockholders on or about May 3, 2002.
In this Proxy Statement:
. "We," "us," "our" and the "Company" refer to RITA Medical Systems,
Inc.
. "Annual Meeting" or "Meeting" means our 2002 Annual Meeting of
Stockholders
. "Board of Directors" or "Board" means our Board of Directors
. "SEC" means the Securities and Exchange Commission
We have summarized below important information with respect to the Annual
Meeting.
Time And Place Of The Annual Meeting
The Annual Meeting is being held on Thursday, May 30, 2002 at 9:00 a.m.
local time at Venture Law Group, located at 2775 Sand Hill Road, Menlo Park,
California 94025.
All stockholders who owned shares of our stock as of April 1, 2002, the
record date, may attend the Annual Meeting.
Purpose Of The Proxy Statement And Proxy Card
You are receiving a Proxy Statement and proxy card from us because you
owned shares of our common stock on April 1, 2002, the record date. This Proxy
Statement describes issues on which we would like you, as a stockholder, to
vote. It also gives you information on these issues so that you can make an
informed decision.
When you sign the proxy card, you appoint Barry Cheskin and Donald Stewart
as your representatives at the Meeting. Barry Cheskin and Donald Stewart will
vote your shares, as you have instructed them on the proxy card, at the Meeting.
This way, your shares will be voted whether or not you attend the Annual
Meeting. Even if you
plan to attend the Meeting it is a good idea to complete, sign and return your
proxy card in advance of the Meeting just in case your plans change.
Proposals To Be Voted On At This Year's Annual Meeting
You are being asked to vote on:
. The election of directors to serve on our Board of Directors.
. The ratification of our appointment of PricewaterhouseCoopers LLP as
our independent accountants for the current fiscal year.
The Board of Directors recommends a vote FOR each proposal.
Voting Procedure
You may vote by mail
To vote by mail, please sign your proxy card and return it in the enclosed,
prepaid and addressed envelope. If you mark your voting instructions on the
proxy card, your shares will be voted as you instruct.
You may vote in person at the Meeting.
We will pass out written ballots to anyone who wants to vote at the
Meeting. If you hold your shares in street name, you must request a legal proxy
from your stockbroker in order to vote at the Meeting. Holding shares in "street
name" means your shares of stock are held in an account by your stockbroker,
bank, or other nominee, and the stock certificates and record ownership are not
in your name. If your shares are held in "street name" and you wish to attend
the Annual Meeting, you must notify your broker, bank or other nominee and
obtain the proper documentation to vote your shares at the Annual Meeting.
You may change your mind after you have returned your proxy.
If you change your mind after you return your proxy, you make revoke your
proxy at any time before the polls close at the Meeting. You may do this by:
. signing another proxy with a later date, or
. voting in person at the Annual Meeting.
Multiple Proxy Cards
If you received more than one proxy card, it means that you hold shares in
more than one account. Please sign and return all proxy cards to ensure that all
your shares are voted.
Quorum Requirement
Shares are counted as present at the Meeting if the stockholder either:
. is present and votes in person at the Meeting, or
. has properly submitted a proxy card.
A majority of our outstanding shares as of the record date must be present
at the Meeting (either in person or by proxy) in order to hold the Annual
Meeting and conduct business. This is called a "quorum."
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Consequences of Not Returning Your Proxy; Broker Non-Votes
If your shares are held in your name, you must return your proxy (or attend
the Annual Meeting in person) in order to vote on the proposals. If your shares
are held in street name and you do not vote your proxy, your brokerage firm may
either:
. vote your shares on routine matters, or
. leave your shares unvoted.
Under the rules that govern brokers who have record ownership of shares
that are held in "street name" for their clients, brokers may vote such shares
on behalf of their clients with respect to "routine" matters (such as the
election of directors or the ratification of auditors), but not with respect to
non-routine matters (such as a proposal submitted by a stockholder). If the
proposals to be acted upon at any meeting include both routine and non-routine
matters, the broker may turn in a proxy card for uninstructed shares that vote
FOR the routine matters, but expressly states that the broker is not voting on
non-routine matters. This is called a "broker non-vote."
Broker non-votes will be counted for the purpose of determining the
presence or absence of a quorum, but will not be counted for the purpose of
determining the number of votes cast.
We encourage you to provide instructions to your brokerage firm by voting
your proxy. This ensures that your shares will be voted at the Meeting.
Effect Of Abstentions
Abstentions are counted as shares that are present and entitled to vote for
the purposes of determining the presence of a quorum and as votes AGAINST for
purposes of determining the approval of any matter submitted to the stockholders
for a vote.
Required Vote
Assuming a quorum is present, the two nominees receiving the highest number
of yes votes will be elected as directors. The ratification of the independent
accountants will require the affirmative vote of a majority of shares present in
person or represented by proxy at the Meeting.
Vote Solicitation; No Use Of Outside Solicitors
RITA Medical Systems, Inc. is soliciting your proxy to vote your shares at
the Annual Meeting. In addition to this solicitation by mail, our directors,
officers, and other employees may contact you by telephone, Internet, in person
or otherwise to obtain your proxy. These persons will not receive any additional
compensation for assisting in the solicitation. We will also request brokerage
firms, nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners. We will reimburse these entities and our transfer agent for
their reasonable out-of-pocket expenses in forwarding proxy materials. We have
not retained the services of a proxy solicitor.
Voting Procedures
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
Brooke Campbell of Venture Law Group, our legal counsel, who will act as the
Inspector of Election. The Inspector will also determine whether a quorum is
present at the Annual Meeting.
The shares represented by the proxy cards received, properly marked, dated,
signed and not revoked, will be voted at the Annual Meeting. If the proxy card
specifies a choice with respect to any matter to be acted on, the shares will be
voted in accordance with that specified choice. Any proxy card which is returned
but not marked will be voted FOR each of the director nominees, FOR the other
proposal discussed in this Proxy Statement, and as the
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proxy holders deem desirable for any other matters that may come before the
Meeting. Broker non-votes will not be considered as voting with respect to any
matter for which the broker does not have voting authority.
We believe that the procedures to be used by the Inspector to count the
votes are consistent with Delaware law concerning voting of shares and
determination of a quorum.
Publication Of Voting Results
We will announce preliminary voting results at the Meeting. We will publish
the final results in our quarterly report on Form 10-Q for the second quarter of
2002, which we will file with the SEC. You can get a copy by contacting our
Investor Relations Department at (650) 314-3400 or the SEC at (800) 732-0330 for
the location of the nearest public reference room, or through the EDGAR system
at www.sec.gov.
Other Business
We do not know of any business to be considered at the 2002 Annual Meeting
other than the proposals described in this proxy statement. However, if any
other business is properly presented at the Annual Meeting, your signed proxy
card gives authority to Barry Cheskin and Donald Stewart to vote on such matters
at their discretion.
Proposals For 2003 Annual Meeting
To have your proposal included in our proxy statement for the 2003 Annual
Meeting, you must submit your proposal before December 28, 2002 to Donald
Stewart c/o RITA Medical Systems, Inc., 967 N. Shoreline Blvd., Mountain View,
California 94043.
If you submit a proposal for the 2003 Annual Meeting between January 30,
2003 and March 1, 2003, management may or may not, at their discretion, present
the proposal at the meeting, and the proxies for the 2003 Annual Meeting will
confer discretion on the management proxy holders to vote against your proposal.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our Certificate of Incorporation requires that the Board of Directors is
divided into three classes, with staggered three-year terms. The Class II
directors whose terms expire at the Annual Meeting are Gordon Russell and John
Gilbert; the Class III directors whose terms expire at the Company's 2003 Annual
Meeting of Stockholders are Vincent Bucci, Barry Cheskin and F. Thomas (Jay)
Watkins; and the Class I directors, whose terms expire at the 2004 Annual
Meeting of Stockholders are Scott Halsted and Janet Effland. You only elect one
class of directors at each annual meeting. The other classes continue to serve
for the remainder of their three-year terms. The Class II directors are nominees
for re-election at the Annual Meeting. Each nominee has consented to serve an
additional three-year term.
Vote Required
If a quorum is present, the two nominees receiving the highest number of
affirmative votes of shares entitled to be voted for them will be elected as
directors for the ensuing year. Unless marked otherwise, proxies received will
be voted FOR the election of each of the two nominees named held. If additional
people are nominated for election as directors, the proxy holders intend to vote
all proxies received by them in a way that will ensure that as many as possible
of the nominees listed above are elected. If this happens, the specific nominees
to be voted for will be determined by the proxy holders.
Nominees for the Board of Directors
The names of the nominees, their ages as of April 15, 2002 and certain
other information about them are set forth below:
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Name of Nominee Age Principal Occupation Director Since
--------------- --- -------------------- --------------
John Gilbert (2) .......... 65 Retired Vice Chairman of Keravision, May 2000
Inc. and Vice President of Sales
at Ethicon, Inc.
Gordon Russell (1)(2) ..... 69 Retired General Partner at August 1994
Sequoia Capital
_____________
(1) Member of the compensation committee
(2) Member of the audit committee
John Gilbert has served as a member of our Board since May 2000. From
1992 to July 1999 he served as Vice Chairman of Keravision, Inc., a medical
device company. Prior to that, Mr. Gilbert retired from Johnson & Johnson in
1992 after 30 years where he served as Vice President of Sales at Ethicon, Inc.,
Vice President of Johnson & Johnson International and Vice Chairman of Iolab
Corporation. Mr. Gilbert is also a director of STAAR Surgical Company. Mr.
Gilbert holds a B.S. from Texas A&M University.
Gordon Russell has served as a member of our Board since August 1994.
From 1979 to January 2000, he held the position of General Partner at Sequoia
Capital, a venture capital firm, specializing in high technology and healthcare.
Mr. Russell is also a director of Fusion Medical, Inc. and various private
companies. He holds an A.B. from Dartmouth College.
The names of the Class I and Class III directors, their ages as of
April 15, 2002 and certain other information about them are set forth below:
Name of Nominee Age Principal Occupation Director Since
--------------- --- -------------------- --------------
Vincent Bucci (1)(2) ...... 48 President, Health Policy Associates, Inc. March 1999
Barry Cheskin ............. 41 Chief Executive Officer and President of May 1997
RITA Medical Systems, Inc.
Janet Effland ............. 53 General Partner at Apax Partners October 1999
Scott Halsted (1) ......... 42 General Partner and Principal at Morgan May 1998
Stanley, Dean Witter Venture Partners
F. Thomas (Jay) Watkins ... 49 Independent Advisor to Healthcare April 2002
Companies
_____________
(1) Member of the compensation committee
(2) Member of the audit committee
Vincent Bucci has served as a member of our Board since March 1999. Mr.
Bucci holds the position of President of Health Policy Associates, Inc., a
consulting company, since 1992. Mr. Bucci holds a B.A. from Bates College and a
J.D. in Public Law and an M.A. in Government, both from Georgetown University.
Barry Cheskin has served as our President and Chief Executive Officer
and has been a member of our Board since May 1997. Prior to joining us, he held
various positions at Datascope Corp, a medical device company. He was President,
Collagen Products Division and Corporate Vice President from May 1994 to April
1997, General Manager, Vasoseal/Bioplex Division from November 1992 to May 1994,
and Director, Corporate Business Development from April 1992 to November 1992.
Mr. Cheskin holds a B.S. in Mechanical Engineering from Massachusetts Institute
of Technology, an M.S. in Mechanical Engineering from Stanford University, and
an M.B.A. from Columbia University.
Janet Effland has served as a member of our Board since October 1999.
She has held the position of General Partner of Apax Partners, a venture capital
firm, since April 1988. Ms. Effland is also a director of various private
companies. Ms. Effland holds a B.S. and a J.D. from Arizona State University,
and she attended Harvard Business School's Program for Management Development.
Scott Halsted has served as a member of our Board since May 1998. He
has held the positions of General Partner and Principal of Morgan Stanley Dean
Witter Venture Partners, a venture capital firm, since February 1997
-5-
and prior to that he was Vice President from January 1992 to January 1997. Mr.
Halsted is also a director of Intuitive Surgical, Inc. and various private
companies. Mr. Halsted holds an A.B. and a B.S. in Biomechanical Engineering
from Dartmouth College and an M.M. from the Kellogg Graduate School of
Management at Northwestern University.
F. Thomas (Jay) Watkins has served as a member of our Board since April
2002. Mr. Watkins is currently an independent advisor to healthcare companies.
Prior to that, he was a Vice President of Guidant Corporation, a cardiovascular
medical products company, from 1995 to March 2002 where he served in various
positions. He was President of Compass, Guidant's corporate business development
and new ventures organization, from March 1995 to March 2002, President, Cardiac
& Vascular Surgery Group from January 1999 to November 2000 and President,
Minimally Invasive Systems Group from 1996 to December 1999. Prior to that, in
1989, Mr. Watkins co-founded Origin Medsystems, Inc., a developer of orthopedic
surgical devices and specialty endoscopic equipment, and served as its President
from 1989 to 1991. Origin Medsystems, Inc. was acquired by Eli Lilly & Company
in 1992. Mr. Watkins holds a B.A. from Stanford University and an M.B.A. from
Harvard University.
There are no family relationships among any of the directors or executive
officers of the Company.
Meetings And Committees Of The Board Of Directors
During the last fiscal year (the period from December 31, 2000 through
December 31, 2001), the Board met eight times. Each director attended at least
75% of all Board and applicable committee meetings during this time with the
exception of director Gordon Russell, who attended three of the eight meetings
of the entire Board. The Board has a Compensation Committee and an Audit
Committee.
Vincent Bucci, Scott Halsted and Gordon Russell are members of the
Compensation Committee. The Compensation Committee held two meetings during the
last fiscal year. The functions of the Compensation Committee are to establish
and administer our policies regarding annual executive salaries and cash
incentives and long-term equity incentives. The Compensation Committee
administers our 2000 Stock Plan, 2000 Employee Stock Purchase Plan and our 2000
Directors' Stock Option Plan.
Vincent Bucci, John Gilbert and Gordon Russell are members of the Audit
Committee. The Audit Committee held four meetings during the last fiscal year.
The functions of the Audit Committee are to recommend the engagement of the
independent public accountants, to monitor the effectiveness of the audit
effort, and to monitor our financial and accounting organization and its system
of internal accounting controls. The Audit Committee has a written charter,
which was attached as Appendix A to last year's proxy statement.
Director Compensation
Nonemployee directors are not compensated for Board meetings attended but
are reimbursed for reasonable and customary travel expenses.
All nonemployee directors are eligible to participate in the 2000
Directors' Stock Option Plan. Employee directors and nonemployee directors are
eligible to participate in the 2000 Stock Plan. Employee directors are eligible
to participate in the 2000 Employee Stock Purchase Plan. Under the 2000
Directors' Plan, when a nonemployee director first becomes a director, he or she
receives a nonstatutory stock option to purchase 25,000 shares of the Company's
common stock. This option shall vest at a rate of 1/48 of the total number of
shares subject to such option per month. Thereafter, on the date of each annual
meeting of the Company's stockholders, each director who has been a member for
at least six months will be granted a nonstatutory stock option to purchase
10,000 shares of the Company's common stock. These options shall vest at a rate
of 100% of the total number of shares subject to such option on the one-year
anniversary of the grant date. Therefore, on the date of the Annual Meeting each
of the Company's nonemployee directors, with the exception of F. Thomas (Jay)
Watkins who has not yet been a member of the Board for six months, will be
granted an option to purchase 10,000 shares of the Company's common stock. On
April 15, 2002, F. Thomas (Jay) Watkins was granted an option to purchase 25,000
shares of the Company's common stock under the 2000 Directors' Plan and an
additional option to purchase 25,000 shares of the Company's common stock under
the 2000 Stock Plan which shall vest at a rate of 1/24 of the total
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number of shares subject to the option per month. All options granted under the
Directors' Plan are for a ten-year term and shall be adjusted to reflect any
stock splits, stock dividends, combinations or similar transactions. The
exercise price of the options must be at least 100% of the fair market value of
the common stock on the Nasdaq National Market on the date the option was
granted. The options may be exercised only (1) while the individual is serving
as a director on the Board, (2) within 6 months after termination by death or
disability, or (3) within 3 months after the individual's term as director ends.
Employee directors receive no additional compensation for serving on the
Board of Directors.
Recommendation of the Board:
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL NO. 1
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PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit Committee has recommended, and the Board has approved, the
appointment of PricewaterhouseCoopers LLP as our independent accountants.
PricewaterhouseCoopers LLP has served as our independent accountants since 1994.
In the event that ratification of this selection of accountants is not approved
by a majority of the shares of common stock voting at the Annual Meeting in
person or by proxy, the Board will review its future selection of auditors.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting. This representative will have an opportunity to make a
statement and will be available to respond to appropriate questions.
Recommendation of the Board:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 2.
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COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to the Company with
respect to the beneficial ownership of the Company's common stock, as to (i)
each person who is known to the Company to beneficially own more than 5% of the
Company's common stock, (ii) each of the Company's directors, (iii) each of the
Company's Named Executive Officers (as defined hereafter), and (iv) all
directors and executive officers as a group. The information set forth below is
as of February 28, 2002.
Amount and
5% Stockholders, Directors, Named Executive Officers Nature of Percent of
and Directors and Executive Officers as Beneficial Common Stock (1)(2)
a Group Ownership (1)
--------------------------------------------------------------------------------------------------------------
Entities Affiliated with Apax Partners (3) 1,963,635 13.4%
2100 Geng Road, Suite 150
Palo Alto, CA 94303
Entities Affiliated with The Vertical Group, L.P. (4) 1,804,600 12.3%
25 DeForest Avenue
Summit, NJ 07901
Entities Affiliated with Morgan Stanley Venture Partners (5) 1,636,362 11.2%
3000 Sand Hill Road
Building 4, Suite 250
Menlo Park, CA 94025
Janet Effland (3) 1,963,635 13.4%
Scott Halsted (5) 1,636,362 11.2%
Barry Cheskin (6) 729,894 4.9%
Daniel Balbierz (7) 146,984 1.0%
Donald Stewart (8) 77,900 *
Gordon Russell (9) 97,375 *
David Martin (10) 96,335 *
Ronald Steckel (11) 77,680 *
Vincent Bucci (12) 32,125 *
John Gilbert (13) 11,978 *
Trent Reutiman (14) 19,936 *
All directors and executive officers as a group 5,011,460 32.3%
(15 persons)(15)
________________
*Less than 1%
(1) The persons named in this table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them,
subject to community property laws where applicable and except as indicated
in the other footnotes to this table.
(2) In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock subject to
options or warrants held by that person that are currently exercisable or
exercisable within 60 days after February 28, 2002 are deemed outstanding.
Such shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of any other person. Beneficial
ownership calculations for 5% stockholders are based on publicly filed
13D's or 13G's, which 5% stockholders are required to file with the SEC,
and which generally set forth ownership interests as of December 31, 2001.
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(3) Includes 1,607,489 shares, 336,623 shares and 19,523 shares held by APA
Excelsior V, L.P., The P/A Fund III, L.P. and Patricof Private Investment
Club II, L.P., respectively. Janet Effland, a director of RITA, is a
General Partner of Apax Partners. Ms. Effland disclaims beneficial
ownership of the shares held by these entities except to the extent of her
proportional interest in the entities.
(4) Includes 1,470,493 shares and 334,107 shares owned by the Vertical Fund I,
L.P. and the Vertical Fund II, L.P., respectively.
(5) Includes 1,435,988 shares, 137,874 shares and 62,500 shares held by Morgan
Stanley Venture Partners III, L.P., Morgan Stanley Ventures Investors III,
L.P. and The Morgan Stanley Venture Partners Entrepreneur Fund, L.P.,
respectively. Scott Halsted, a director of RITA, is a general partner of
Morgan Stanley Dean Witter Venture Partners. Mr. Halsted disclaims
beneficial ownership of the shares held by these entities except to the
extent of his proportional interest in the entities.
(6) Includes 380,397 shares issuable upon exercise of options exercisable
within 60 days of February 28, 2002.
(7) Includes 113,637 shares issuable upon exercise of options exercisable
within 60 days of February 28, 2002.
(8) Includes 37,500 shares issuable upon exercise of options exercisable within
60 days of February 28, 2002.
(9) Includes 15,156 shares issuable upon exercise of options exercisable within
60 days of February 28, 2002. Also includes 82,219 shares held by The
Gordon Russell Trust, of which Mr. Russell is trustee. Mr. Russell
disclaims beneficial ownership of the shares held by this entity except to
the extent of his proportional interest in the entity. Excludes shares held
by entities affiliated with Sequoia Capital, of which Mr. Russell is a
former general partner. Mr. Russell disclaims beneficial ownership of such
shares except to the extent of his proportional interest in these entities.
(10) Includes 66,656 shares issuable upon exercise of options exercisable within
60 days of February 28, 2002 and 25,000 shares issuable upon exercise of
warrants exercisable within 60 days of February 28, 2002.
(11) Includes 71,335 shares issuable upon exercise of options exercisable within
60 days of February 28, 2002.
(12) Includes 15,001 shares issuable upon exercise of options exercisable within
60 days of February 28, 2002.
(13) Includes 11,978 shares issuable upon exercise of options exercisable within
60 days of February 28, 2002.
(14) Includes 19,936 shares issuable upon exercise of options exercisable within
60 days of February 28, 2002.
(15) Includes 839,191 shares issuable upon exercise of options exercisable
within 60 days of February 28, 2002 and 25,000 shares issuable upon
exercise of warrants exercisable within 60 days of February 28, 2002.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the compensation paid by the Company for
services rendered during the Company's three preceding fiscal years to (a) the
individual who served as the Company's Chief Executive Officer during the fiscal
year ended December 31, 2001, (b) the four other most highly compensated
individuals who served as executive officers of the Company during the fiscal
year ended December 31, 2001 (the "Named Executive Officers") and (c) a former
executive officer whose compensation would otherwise have resulted in his being
included as a Named Executive Officer.
Summary Compensation Table
Long-Term All Other
Annual Compensation Compensation Compensation
------------------------------------------------ -------------------- ------------
Other Restricted Securities
Annual Stock Underlying
Fiscal Salary Bonus Compensation Awards Options
Name and Principal Position Year ($)(1) ($) ($) ($)(2) (#)
--------------------------- ---- --------------- ---------- ---------------- -------------- ----------
Barry Cheskin 2001 $ 255,000 $ 25,500 (3) $ 34,674 (9) - 160,000 $ -
President, Chief Executive 2000 228,000 76,380 (4) 77,569 (10) 49,500 (15) 68,982 -
Officer and Director 1999 217,000 - 51,000 (11) - 63,079 26,075 (16)
Trent Reutiman 2001 91,250 121,838 (5) 6,000 (12) - 76,000
Vice President, U.S. Sales 2000 - - - - -
1999 - - - - -
Daniel Balbierz 2001 184,993 27,600 (3) 6,548 (13) - 14,250
Vice President, Research 2000 171,180 42,850 (4) 6,539 (13) 12,624 (15) 33,000
and Development 1999 161,250 - - - -
Ronald Steckel 2001 185,000 27,600 (3) 5,770 (13) - 29,250
Senior Vice President, 2000 165,300 41,375 (4) 5,762 (13) 11,124 (15) 33,000
Operations 1999 155,625 10,000 (6) - - -
Donald Stewart 2001 131,042 17,100 (3) - 35,000 (17)
Chief Financial Officer and 2000 - - - - -
Vice President, Finance 1999 - - - - -
and Administration
David Martin 2001 256,582 101,774 (7) 8,400 (14) - 36,280 29,167 (18)
Former Vice President, 2000 131,260 97,454 (8) - - 180,000 -
Global Sales 1999 - - - - -
(1) Includes amounts deferred under our 401(k) plan.
(2) The value of the restricted stock awards, based on the December 31, 2001
closing price of $6.67 were as follows:
. Barry Cheskin's 49,500 shares of common stock have an aggregate
value of $330,165.
. Daniel Balbierz's 12,624 shares of common stock have an aggregate
value of $84,202.
. Ronald Steckel's 11,124 shares of common stock have an aggregate
value of $74,197.
(3) These bonuses were earned in 2001 and paid in 2002.
(4) These bonuses were earned in 2000 and paid in 2001.
-11-
(5) Mr. Reutiman earned $121,838 in sales commissions in 2001. Of this amount,
$102,379 was earned and paid in 2001 and $19,459 was accrued in 2001 and
paid in 2002.
(6) Mr. Steckel received a $30,000 signing bonus of which $10,000 was earned in
1999.
(7) Mr. Martin earned $76,774 in sales commissions in 2001. Of this amount,
$57,315 was earned and paid in 2001 and $19,459 was accrued in 2001 and
paid in 2002. Also, he earned and was paid $25,000 in 2001 relating to his
signing bonus (see footnote 8 below).
(8) Mr. Martin received a $50,000 signing bonus of which $25,000 was earned and
paid in 2000. Mr. Martin also earned $72,454 in commissions on sales in
2000 of which $35,646 was paid in 2000.
(9) Mr. Cheskin received a $9,000 auto allowance and $25,674 in forgiven
principal and interest for 2001 on the notes described in footnote (15)
below.
(10) Mr. Cheskin received a $42,000 housing allowance, which terminated December
31, 2000, a $9,000 auto allowance, $928 in relocation reimbursements and
$25,641 in forgiven principal and interest for 2000 on the notes described
in footnote (15) below.
(11) Mr. Cheskin received a $42,000 housing allowance and a $9,000 auto
allowance. In lieu of his 1999 cash bonus, the board of directors allowed
Mr. Cheskin to receive his housing allowance through December 31, 2000.
(12) Mr. Reutiman received a $6,000 car allowance in 2001.
(13) These amounts represent forgiven principal and interest on the notes
described in footnote (15) below.
(14) Mr. Martin received an $8,400 car allowance in 2001.
(15) The figures shown represent restricted common stock purchased for $1.67 per
share. Consideration for the shares was provided by each officers in the
form of a full recourse note bearing an interest rate of 8% compounded
semi-annually. No dividends have been paid on these shares and it is not
anticipated that any dividends will be paid in the future. Our right to
repurchase these shares will lapse with respect to one quarter of the
shares on each January 1 from 2001 through 2004, barring earlier
termination of employment. One quarter of each officer's note plus accrued
interest will be forgiven on each January 1 from 2001 through 2004,
provided that the officers are still employed by us. The per share market
value of the common stock was $6.67 on December 31, 2001.
(16) Mr. Cheskin received $26,075 in relocation reimbursement in 1999.
(17) The Company has accrued $35,000 in relocation expenses for Mr. Stewart, but
he has not yet incurred any relocation charges for reimbursement.
(18) The Company has accrued $29,167 in severance expenses related to Mr.
Martin's termination.
-12-
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain information with respect to stock
options granted to Named Executive Officers in the last fiscal year out of our
2000 Stock Plan. In addition, as required by Securities and Exchange Commission
rules, the table sets forth the hypothetical gains that would exist for the
options based on assumed rates of annual compound stock price appreciation
during the option term.
Individual Grants (1)
---------------------------------------------------------------------
Potential Realizable Value
Number of at Assumed Annual Rates of
Securities Percent of Total Stock Price Appreciation
Underlying Options Granted to Exercise for Option Term (2)
--------------------------
Options Employees in Fiscal Price Expiration 5% 10%
Name Granted Year 2001 (3) ($/sh)(4) Date --------------------------
------------------ -------------------- --------------------- ------------ --------------
Barry Cheskin 160,000 (5) 11.25% $6.56 1/25/2011 $660,339 $1,673,430
Trent Reutiman 15,000 (5) 1.05% $6.56 1/25/2011 61,907 156,884
1,000 (5) 0.07% $4.73 4/24/2011 2,975 7,538
60,000 (5) 4.22% $3.10 10/26/2011 116,974 296,436
Daniel Balbierz 14,250 (5) 1.00% $6.56 1/25/2011 58,811 149,040
Ronald Steckel 29,250 (5) 2.06% $6.56 1/25/2011 120,718 305,924
Donald Stewart 150,000 (5) 10.54% $4.73 4/24/2011 446,201 1,130,760
David Martin 11,280(5)(6) .79% $6.56 1/25/2011 46,554 117,977
(1) No stock appreciation rights were granted to the Named Executive Officers
in the last fiscal year. The options have a 10-year term, but are subject
to earlier termination in connection with termination of employment.
(2) The potential realizable value illustrates the value that might be realized
upon the exercise of the options immediately prior to the expiration of
their terms, assuming the specified compounded rates of appreciation of the
market price on the date of grant through the option term, less the
exercise price. Actual gains, if any, on stock option exercise are
dependent upon a number of factors, including the future performance of the
common stock and the timing of option exercises, as well as the optionees'
continued employment throughout the vesting period. There can be no
assurance that the amounts reflected in this table will be achieved.
(3) The Company granted 1,422,680 options to purchase common stock to employees
in the last fiscal year.
(4) The exercise price may be paid in cash, in shares of common stock valued at
fair market value on the exercise date or through a cashless exercise
procedure involving a same-day sale of the purchased shares.
(5) Options vest at the rate of 12.5% on the six month anniversary of the
vesting commencement date and 2.0833% each month thereafter.
(6) Of this amount 8,695 options to purchase common stock were no longer
exercisable as of December 31, 2001.
-13-
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information with respect to stock
options exercised by the Named Executive Officers during the fiscal year ended
December 31, 2001. In addition, the table sets forth the number of shares
covered by stock options as of the fiscal year ended December 31, 2001, and the
value of "in-the-money" stock options, which represents the positive spread
between the exercise price of a stock option and the market price of the shares
subject to such option at the end of the fiscal year ended December 31, 2001.
Number of Securities Value of Unexercised In-the-
Shares Underlying Unexercised Money Options at
Acquired on Value Options at 12/31/2001 (1) December 31, 2001 (2)
------------------------------- --------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
----------------- ------------- ---------- ------------- --------------- ------------- ---------------
Barry Cheskin - - 367,064 120,000 $1,907,130 $ 12,900
Trent Reutiman - - 9,853 81,147 21,546 246,257
Daniel Balbierz - - 100,763 35,737 553,165 141,525
Ronald Steckel 40,000 128,800 53,699 51,891 253,341 147,652
Donald Stewart - - 25,000 125,000 48,500 242,500
David Martin 10,000 28,383 71,335 - 344,257 -
(1) No stock appreciation rights (SARs) were outstanding during fiscal 2001.
(2) Based on the $6.67 per share closing price of the Company's common stock on
The Nasdaq Stock Market on December 31, 2001, less the exercise price of
the options.
Certain Relationships and Related Party Transactions
Employment Agreements
We have entered into employment agreements with the executive officers set
forth below, which provide for the payment of severance or the acceleration of
unvested stock, options and warrants in certain circumstances.
Barry Cheskin. Mr. Cheskin's agreement provides that in the event Mr.
Cheskin's employment with us is involuntarily terminated without cause, which
would include constructive termination, all unvested shares held by Mr. Cheskin
will immediately vest and Mr. Cheskin will receive monthly severance payments,
equal to 1/12 of his annual base salary until the earlier of (i) twelve months
after his termination date or (ii) such time as he commences full-time
employment at another company. In addition, in the event of a change in control
of the company, immediately upon consummation of the transaction, seventy five
percent (75%) of any unvested shares held by Mr. Cheskin granted prior to the
Company's initial public offering will immediately vest.
Ronald Steckel. Mr. Steckel's agreement provides that if we terminate his
employment without cause, he will receive continued payment of his base salary
for the earlier of (i) six months after his termination date or (ii) such time
as he commences full-time employment with another company.
Change of Control Agreements
In addition, we have entered into change of control agreements with our
officers that provide the following benefits upon the sale or merger of RITA. In
the event that we consummate a change of control transaction, 50 percent of any
unvested options held by our officers shall become fully vested and immediately
exercisable and repurchase rights retained by us with respect to 50 percent of
the restricted stock held by our officers shall immediately lapse. In addition,
on each one month anniversary following the effective date of a change of
control transaction, 1/12th of the remaining unvested options held by our
officers shall become fully vested and immediately
-14-
exercisable and repurchase rights retained by us with respect to 1/12th of any
remaining restricted stock held by our officers shall immediately lapse.
If the officer is involuntarily terminated within twelve (12) months of the
change of control transaction, all unvested options held by our officers shall
become fully vested and immediately exercisable and all repurchase rights
retained by us with respect to the restricted stock held by our officers shall
immediately lapse. If the officer voluntarily resigns or is terminated for cause
after the change of control, then the officer is not entitled to any
acceleration of the vesting of options or lapse of repurchase rights with
respect to restricted stock.
Separation Agreements
We entered into a separation agreement with David Martin on November 5,
2001. Pursuant to this agreement, in consideration for the release of all claims
against the Company, the Company agreed to pay Mr. Martin continued salary for
two months and agreed to pay up to two additional months of salary and issue Mr.
Martin a warrant to purchase 25,000 shares of common stock if certain goals were
achieved. In addition, the Company agreed to allow the vacation accrual and
vesting of Mr. Martin's options to purchase shares of common stock granted to
him, to continue through December 31, 2001.
We entered into a separation agreement with Russell Johnson on June 29,
2001. Pursuant to this agreement, in consideration for the release of all claims
against the Company, the Company agreed to pay Mr. Johnson continued salary for
two and one half months. In addition, the Company agreed to allow the vacation
accrual and vesting of Mr. Johnson's options to purchase shares of common stock
granted to him, to continue through September 14, 2001.
Indemnification of Directors and Executive Officers
We have entered into indemnification agreements with our officers and
directors containing provisions which may require us, among other things, to
indemnify our officers and directors against a number of liabilities that may
arise by reason of their status or service as officers or directors (other than
liabilities arising from willful misconduct of a culpable nature) and to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers or
persons controlling us pursuant to the foregoing provisions, we have been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933 or the Securities Exchange Act of 1934
that might incorporate future filings, including this Proxy Statement, in whole
or in part, the Compensation Committee Report, the Audit Committee Report and
the Stock Performance Graph shall not be deemed to be incorporated by reference
into any such filings.
Other Relationships
Vincent Bucci, a member of our Board of Directors, is the President of
Health Policy Associates, Inc. In 2001, Health Associates, Inc. provided
consulting services to us in a variety of areas related to U.S. Food and Drug
Administration regulations including clinical studies, regulatory affairs and
quality assurance. While these services are provided to us on an as-needed
basis, yearly invoicing is estimated to total approximately $100,000.
-15-
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933 or the Securities Exchange Act of 1934
that might incorporate future filings, including this Proxy Statement, in whole
or in part, the Compensation Committee Report, the Audit Committee Report and
the Stock Performance Graph shall not be deemed to be incorporated by reference
into any such filings.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is a report of the Compensation Committee of the Board of
Directors describing the compensation policies applicable to the Company's
executive officers during the fiscal year that ended December 31, 2001. The
Compensation Committee is responsible for establishing and monitoring our
general compensation policies and compensation plans, as well as the specific
compensation levels for executive officers. It also makes recommendations to the
Board of Directors concerning the granting of options under our 2000 Stock Plan.
Executive officers who are also directors have not participated in deliberations
or decisions involving their own compensation.
General Compensation Policy
Under the supervision of the Board of Directors, our compensation policy is
designed to attract and retain qualified key executives critical to our growth
and long term success. It is the objective of the Board of Directors to have a
portion of each executive's compensation contingent upon our performance as well
as upon the individual's personal performance. Accordingly, each executive
officer's compensation package is comprised of three elements: (i) base salary
which reflects individual performance and expertise, (ii) variable bonus awards
payable in cash and tied to the achievement of certain performance goals that
the Board of Directors establishes from time to time for the Company and (iii)
long term stock-based incentive awards which are designed to strengthen the
mutuality of interests between the executive officers and our stockholders.
The summary below describes in more detail the factors which the Board of
Directors considers in establishing each of the three primary components of the
compensation package provided to the executive officers.
Base Salary
The level of base salary is established primarily on the basis of the
individual's qualifications and relevant experience, the strategic goals for
which he or she has responsibility, the compensation levels at similar companies
and the incentives necessary to attract and retain qualified management. Base
salary is adjusted each year to take into account the individual's performance
and to maintain a competitive salary structure. Company performance does not
play a significant role in the determination of base salary.
Cash-Based Incentive Compensation
Cash bonuses are awarded on a discretionary basis to executive officers on
the basis of their success in achieving designated individual goals and our
success in achieving specific company-wide goals, such as revenue growth and
earnings.
Long Term Incentive Compensation
We have utilized our stock option plans to provide executives and other key
employees with incentives to maximize long term stockholder values. Awards under
this plan by the Board of Directors take the form of stock options designed to
give the recipient a significant equity stake and thereby closely align his or
her interests with those of our stockholders. Factors considered in making such
awards include the individual's position, his or her performance and
responsibilities, and internal comparability considerations. In addition, the
Board of Directors has established certain general guidelines in making option
grants to the executive officers in an attempt to target a fixed number of
unvested option shares based upon each individual's position and his or her
existing holdings of unvested options. However, the Board of Directors is not
required to adhere strictly to these guidelines and may vary the size of the
option grant made to each executive officer as it determines the circumstances
warrant.
-16-
Each option grant allows the executive officer to acquire shares of common
stock at a fixed price per share (the fair market value on the date of grant)
over a specified period of time (up to 10 years). The options typically vest in
periodic installments over a four year period, contingent upon the executive
officer's continued employment with us. Accordingly, the option will provide a
return to the executive officer only if he or she remains in our service, and
then only if the market price of the common stock appreciates over the option
term.
Compensation of the Chief Executive Officer
Barry Cheskin has served as the Company's President and Chief Executive
Officer since May 1997. His base salary for the fiscal year ended December 31,
2001 was $255,000.
The factors discussed above in "Base Salaries," "Cash-Based Incentive
Compensation" and "Long Term Incentive Compensation" were also applied in
establishing the amount of Mr. Cheskin's salary and stock option grant.
Significant factors in establishing Mr. Cheskin's compensation were the
achievement of the Company's revenue goals, the development and implementation
of clinical initiatives designed to demonstrate applicability of our technology
to new organs, the commercial launch of our StarBurst XLi family of disposable
devices, the launch of a patient information website and the expansion of our
direct domestic sales organization and our international distribution network.
Deductibility of Executive Compensation
The Compensation Committee has considered the impact of Section 162(m) of
the Internal Revenue Code adopted under the Omnibus Budget Reconciliation Act of
1993, which section disallows a deduction for any publicly held corporation for
individual compensation exceeding $1 million in any taxable year for the CEO and
four other most highly compensated executive officers, respectively, unless such
compensation meets the requirements for the "performance-based" exception to
Section 162(m). As the cash compensation paid by the Company to each of its
executive officers is expected to be below $1 million and the committee believes
that options granted under the 2000 Stock Plan to such officers will meet the
requirements for qualifying as performance-based, the committee believes that
Section 162(m) will not affect the tax deductions available to the Company with
respect to the compensation of its executive officers. It is the Compensation
Committee's policy to qualify, to the extent reasonable, its executive officers'
compensation for deductibility under applicable tax law. However, the Company
may from time to time pay compensation to its executive officers that may not be
deductible.
The Compensation Committee of the Board of Directors of RITA Medical
Systems, Inc.:
Vincent Bucci
Scott Halsted
Gordon Russell
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors currently consists of
Vincent Bucci, Scott Halsted and Gordon Russell. No member of the committee or
executive officer of the Company has a relationship that would constitute an
interlocking relationship with executive officers or directors of another
entity.
-17-
AUDIT COMMITTEE REPORT
The Audit Committee of the RITA Board of Directors is composed of two
independent directors and one additional director and operates under a written
charter adopted by the Board of Directors in May 2000. The members of the Audit
Committee are Vincent Bucci, John Gilbert and Gordon Russell. Mr. Gilbert and
Mr. Russell are independent as defined by the Nasdaq Marketplace Rules. Mr.
Bucci is President of Health Policy Associates, Inc., a regulatory consulting
firm that provides consulting services to the Company. The Company has
determined that Mr. Bucci's membership on the Audit Committee is in the
Company's and its stockholders best interests due to Mr. Bucci's extensive
experience reviewing and evaluating the financial statements of both public and
private healthcare companies.
The Audit Committee recommends to the Board of Directors, subject to
stockholder ratification, the selection of an accounting firm to be engaged as
the Company's independent accountants. The independent accountants are
responsible for performing an independent audit of the Company's financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. Management is responsible for our internal controls and the
financial reporting process. The Audit Committee is responsible for monitoring
and overseeing these processes.
The Audit Committee held four meetings during the fiscal year 2001. The
Audit Committee had a year end meeting in January 2002 with management and our
independent public accountants, PricewaterhouseCoopers LLP. Management
represented to the Audit Committee that our financial statements were prepared
in accordance with generally accepted accounting principles. The Audit Committee
reviewed and discussed the audited financial statements for fiscal year 2001
with management and the independent accountants.
The Audit Committee discussed with the independent accountants the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees.
The Audit Committee has received and reviewed the written disclosures and
the letter from the independent accountants, PricewaterhouseCoopers LLP as
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees. Additionally, the Audit Committee has
discussed with PricewaterhouseCoopers LLP the issue of its independence from
RITA.
Based on its review of the audited financial statements and the various
discussions noted above, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2001.
The Audit Committee of the Board of Directors of RITA Medical Systems,
Inc.:
Vincent Bucci
John Gilbert
Gordon Russell
-18-
FEES BILLED FOR SERVICES RENDERED BY PRINCIPAL ACCOUNTANT
During the fiscal year ended December 31, 2001, and during 2002 for the
Audit Fees, PricewaterhouseCoopers LLP, our independent auditor and principal
accountant, billed the fees set forth below.
Audit Fees ................................................................................. $ 127,750
Financial Information System Design and Implementation Fees ................................ $ 0
All Other Fees (tax preparation and consulting) ............................................ $ 31,524
-19-
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return data
for the Company's stock since July 27, 2000 (the date on which the Company's
stock was first registered under Section 12 of the Securities Exchange Act of
1934, as amended) to the cumulative return over such period of (i) the Nasdaq
National Market Composite Index and (ii) the JP Morgan H & Q Healthcare--
Excluding Biotechnology Index. The graph assumes that $100 was invested on July
27, 2000, the date on which the Company completed the initial public offering of
its common stock, in the common stock of the Company and in each of the
comparative indexes. The graph further assumes that such amount was initially
invested in the common stock of the Company at a per share price of $12.00, the
price to which such stock was first offered to the public by the Company on the
date of its initial public offering, and reinvestment of any dividends. The
stock price performance on the following graph is not necessarily indicative of
future stock price performance.
COMPARISON OF 17 MONTH CUMULATIVE TOTAL RETURN*
AMONG RITA MEDICAL SYSTEMS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE JP MORGAN H & Q HEALTHCARE-EXCLUDING BIOTECHNOLOGY INDEX
[GRAPH]
. $100 Invested on 7/27/00 in stock or index-
including reinvestment of dividends.
Fiscal year ending December 31.
RITA MEDICAL SYSTEMS, INC. DELAWARE
Cumulative Total Return
------------------------------------------------------------------------------
7/27/00 9/00 12/00 3/01 6/01 9/01 12/01
---------- --------- ---------- --------- ---------- ---------- ---------
RITA Medical Systems, Inc ................. 100.00 92.97 70.83 29.69 40.08 23.75 55.58
The Nasdaq National Market Composite ...... 100.00 95.27 63.79 47.62 56.12 38.94 50.62
JP Morgan H & Q Healthcare Excluding
Biotechnology .......................... 100.00 109.12 119.24 107.05 114.70 114.92 117.62
-20-
Section 16 Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, our executive
officers and persons who own more than 10% of the common stock (collectively,
"Reporting Persons") to file initial reports of ownership and changes in
ownership of our common stock. Reporting Persons are required by SEC regulations
to furnish us with copies of all Section 16(a) reports they file. To our
knowledge, based solely on our review of the copies of such reports received or
written representations from certain Reporting Persons that no other reports
were required, we believe that during its fiscal year ended December 31, 2001,
all Reporting Persons complied with all applicable filing requirements with the
exception of the following: Eric Mueninghoff inadvertently failed to timely file
a Form 3 initial statement of beneficial ownership with the SEC with respect to
13,186 shares of common stock held and options to purchase common stock granted
to him on October 7, 1997, August 28, 1997, September 1, 1998, January 1, 2000,
May 1, 2000, January 1, 2001 and February 1, 2001. On April 10, 2001, Mr.
Mueninghoff filed the Form 3 initial statement of beneficial ownership with the
SEC reporting this common stock and options held.
Other Matters
The Board of Directors knows of no other business that will be presented to
the Annual Meeting. If any other business is properly brought before the Annual
Meeting, proxies in the enclosed form will be voted in respect thereof as the
proxy holders deem advisable.
-21-
It is important that the proxies be returned promptly and that your shares
be represented. Stockholders are urged to mark, date, execute and promptly
return the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/ Donald Stewart
-----------------------------------
Donald Stewart, Chief Financial
Officer and Vice President,
Finance and Administration
Mountain View, California
May 3, 2002
-22-
RITA MEDICAL SYSTEMS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Barry Cheskin and Donald Stewart, and each
of them individually, each with full power of substitution, as attorney, agent
and proxy to represent the undersigned at the 2002 Annual Meeting of
Stockholders (the "Annual Meeting") of RITA Medical Systems, Inc. (the
"Company") to be held at Venture Law Group located at 2775 Sand Hill Road, Menlo
Park, CA 94025 at 9:00 a.m. local time, on Thursday, May 30, 2002, or at any
adjournment thereof, with all power which the undersigned would possess if
personally present, and to vote all shares of stock of the Company which the
undersigned may be entitled to vote at said Annual Meeting in the manner set
forth below. The Board of Directors unanimously recommends your vote FOR all
matters set forth below.
1. ELECTION OF DIRECTORS:
Nominees: John Gilbert Gordon Russell
[_] FOR all nominees listed above (unless name of nominee is crossed out). [_] WITHHOLD AUTHORITY
2. RATIFICATION of the selection of PricewaterhouseCoopers LLP as independent accountants for the fiscal
year ending December 31, 2002.
[_] FOR [_] AGAINST [_] ABSTAIN
3. IN THEIR DISCRETION, ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING AND ANY ADJOURNMENT(S) THEREOF.
(continued and to be signed on reverse side)
(continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR NAMED IN PROPOSAL (1) AND FOR
PROPOSAL (2) AS DESCRIBED HEREIN, AND WILL CONFER THE AUTHORITY SET FORTH IN
PARAGRAPH 3.
Receipt is hereby acknowledged of
the Notice of Meeting and Proxy
Statement dated May 3, 2002, as
well as a copy of the Company's
Annual Report for the fiscal year
ended December 31, 2001.
Dated: ____________________, 2002
_________________________________
_________________________________
(signature of stockholder)
Please sign your name exactly as it
appears hereon. When signing as
attorney, executor, administrator,
trustee or guardian, please give
title. Each joint owner is requested
to sign. If a corporation,
partnership or other entity, please
sign by an authorized officer or
partner.
Whether or not you plan to attend the Annual Meeting, please complete, date,
sign and return this proxy in the envelope provided.