<PAGE>

                                                                    Exhibit 10.4

                           RITA Medical Systems, Inc.

                        2000 DIRECTORS' STOCK OPTION PLAN

     1. Purposes of the Plan. The purposes of this Directors' Stock Option Plan
are to attract and retain the best available personnel for service as Directors
of the Company, to provide additional incentive to the Outside Directors of the
Company to serve as Directors, and to encourage their continued service on the
Board.

     All options granted hereunder shall be nonstatutory stock options.

     2. Definitions. As used herein, the following definitions shall apply:

     (a) "Board" means the Board of Directors of the Company.

     (b) "Change of Control" means a sale of all or substantially all of the
Company's assets, or a merger, consolidation or other capital reorganization of
the Company with or into another corporation, or any other transaction or series
of related transactions in which the Company's stockholders immediately prior
thereto own less than 50% of the voting stock of the Company (or its successor
or parent) immediately thereafter.

     (c) "Code" means the Internal Revenue Code of 1986, as amended.

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

     (e) "Company" means RITA Medical Systems, Inc., a Delaware corporation.

     (f) "Continuous Status as a Director" means the absence of any interruption
or termination of service as a Director.

     (g) "Director" means a member of the Board.

     (h) "Employee" means any person, including any officer or Director,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.

     (i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     (j) "Option" means a stock option granted pursuant to the Plan. All options
shall be nonstatutory stock options (i.e., options that are not intended to
qualify as incentive stock options under Section 422 of the Code).

     (k) "Optioned Stock" means the Common Stock subject to an Option.

     (l) "Optionee" means an Outside Director who receives an Option.
<PAGE>

     (m) "Outside Director" means a Director who is not an Employee.

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

     (o) "Plan" means this 2000 Directors' Stock Option Plan.

     (p) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 11 of the Plan.

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

     3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 500,000 Shares of Common Stock (the "Pool"). The Shares may be
authorized, but unissued, or reacquired Common Stock. -----

     If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan has been terminated, become available for future grant
under the Plan. In addition, any Shares of Common Stock that are retained by the
Company upon exercise of an Option in order to satisfy the exercise price for
such Option, or any withholding taxes due with respect to such exercise, shall
be treated as not issued and shall continue to be available under the Plan. If
Shares that were acquired upon exercise of an Option are subsequently
repurchased by the Company, such Shares shall not in any event be returned to
the Plan and shall not become available for future grant under the Plan.

     4. Administration of and Grants of Options under the Plan.

     (a) Administrator. Except as otherwise required herein, the Plan shall be
administered by the Board.

     (b) Procedure for Grants. All grants of Options hereunder shall be
automatic and nondiscretionary and shall be made strictly in accordance with the
following provisions:

          (i) No person shall have any discretion to select which Outside
     Directors shall be granted Options or to determine the number of Shares to
     be covered by Options granted to Outside Directors.

          (ii) Each Outside Director shall be automatically granted an Option to
     purchase 25,000 Shares, (the "Initial Option") on the date on which such
     person first becomes an Outside Director after the effective date of this
     Plan, whether through election by the shareholders of the Company or
     appointment by the Board of Directors to fill a vacancy.

                                      -2-
<PAGE>

          (iii) Each Outside Director, including an Outside Director who did not
     receive an Initial Option grant, shall be automatically granted an Option
     to purchase 5,000 Shares (the "Annual Option") on the date of each Annual
     Meeting of the Company's shareholders immediately following which such
     Outside Director is serving on the Board, provided that, on such date, he
     or she shall have served on the Board for at least six (6) months prior to
     the date of such Annual Meeting.

          (iv) Notwithstanding the provisions of subsections (ii) and (iii)
     hereof, in the event that a grant would cause the number of Shares subject
     to outstanding Options plus the number of Shares previously purchased upon
     exercise of Options to exceed the Pool, then each such automatic grant
     shall be for that number of Shares determined by dividing the total number
     of Shares remaining available for grant by the number of Outside Directors
     receiving an Option on the automatic grant date. Any further grants shall
     then be deferred until such time, if any, as additional Shares become
     available for grant under the Plan through action of the stockholders to
     increase the number of Shares which may be issued under the Plan or through
     cancellation or expiration of Options previously granted hereunder.

          (v) Notwithstanding the provisions of subsections (ii) and (iii)
     hereof, any grant of an Option made before the Company has obtained
     stockholder approval of the Plan in accordance with Section 17 hereof shall
     be conditioned upon obtaining such stockholder approval of the Plan in
     accordance with Section 17 hereof.

          (vi) The terms of each Initial Option granted hereunder shall be as
     follows:

               (1) each Initial Option shall be exercisable only while the
          Outside Director remains a Director of the Company, except as set
          forth in Section 9 below;

               (2) the exercise price per Share shall be 100% of the fair market
          value per Share on the date of grant of each Initial Option,
          determined in accordance with Section 8 hereof;

              (3) each Initial Option shall vest and become exercisable at the
          rate of 1/48 of the Shares subject to the Initial Option on each
          monthly anniversary of the date of grant of the Initial Option.

          (vii) The terms of each Annual Option granted hereunder shall be as
     follows:

               (1) each Annual Option shall be exercisable only while the
          Outside Director remains a Director of the Company, except as set
          forth in Section 9 below;

               (2) the exercise price per Share shall be 100% of the fair market
          value per Share on the date of grant of each Annual Option, determined
          in accordance with Section 8 hereof;

                                      -3-
<PAGE>

               (3) each Annual Option shall vest and become exercisable at the
rate of one hundred percent (100%) of the Shares subject to the Annual Option on
the day before the first anniversary of the date of grant of the Annual Option.

     (c) Powers of the Board. Subject to the provisions and restrictions of the
Plan, the Board shall have the authority, in its discretion: (i) to determine,
upon review of relevant information and in accordance with Section 8(b) of the
Plan, the fair market value of the Common Stock; (ii) to determine the exercise
price per Share of Options to be granted, which exercise price shall be
determined in accordance with Section 8 of the Plan; (iii) to interpret the
Plan; (iv) to prescribe, amend and rescind rules and regulations relating to the
Plan; (v) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted
hereunder; and (vi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.

     (d) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.

     (e) Suspension or Termination of Option. If the Chief Executive Officer or
his or her designee reasonably believes that an Optionee has committed an act of
misconduct, such officer may suspend the Optionee's right to exercise any option
pending a determination by the Board (excluding the Outside Director accused of
such misconduct). If the Board (excluding the Outside Director accused of such
misconduct) determines an Optionee has committed an act of embezzlement, fraud,
dishonesty, nonpayment of an obligation owed to the Company, breach of fiduciary
duty or deliberate disregard of the Company rules resulting in loss, damage or
injury to the Company, or if an Optionee makes an unauthorized disclosure of any
Company trade secret or confidential information, engages in any conduct
constituting unfair competition, induces any Company customer to breach a
contract with the Company or induces any principal for whom the Company acts as
agent to terminate such agency relationship, neither the Optionee nor his or her
estate shall be entitled to exercise any Option whatsoever. In making such
determination, the Board of Directors (excluding the Outside Director accused of
such misconduct) shall act fairly and shall give the Optionee an opportunity to
appear and present evidence on Optionee's behalf at a hearing before the Board
or a committee of the Board.

     5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) above. An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.

     The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.

     6. Term of Plan; Effective Date. The Plan shall become effective on the
effectiveness of the registration statement under the Securities Act of 1933, as
amended, relating


                                      -4-
<PAGE>

to the Company's initial public offering of securities. It shall continue in
effect for a term of ten (10) years unless sooner terminated under Section 13 of
the Plan.

     7. Term of Options. The term of each Option shall be ten (10) years from
the date of grant thereof unless an Option terminates sooner pursuant to Section
9 below.

     8. Exercise Price and Consideration.

     (a) Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be 100% of the fair market value
per Share on the date of grant of the Option.

     (b) Fair Market Value. The fair market value shall be determined by the
Board; provided however that in the event the Common Stock is traded on the
Nasdaq National Market or listed on a stock exchange, the fair market value per
Share shall be the closing sales price on such system or exchange on the date of
grant of the Option (or, in the event that the Common Stock is not traded on
such date, on the immediately preceding trading date), as reported in The Wall
Street Journal, or if there is a public market for the Common Stock but the
Common Stock is not traded on the Nasdaq National Market or listed on a stock
exchange, the fair market value per Share shall be the mean of the bid and asked
prices of the Common Stock in the over-the-counter market on the date of grant,
as reported in The Wall Street Journal (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated Quotation
("Nasdaq") System).

     (c) Form of Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option shall consist entirely of cash, check,
other Shares of Common Stock having a fair market value on the date of surrender
equal to the aggregate exercise price of the Shares as to which the Option shall
be exercised (which, if acquired from the Company, shall have been held for at
least six months), or any combination of such methods of payment and/or any
other consideration or method of payment as shall be permitted under applicable
corporate law.

     9. Exercise of Option.

     (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable at such times as are set forth in Section 4(b)
above; provided however that no Options shall be exercisable prior to
stockholder approval of the Plan in accordance with Section 17 below has been
obtained.

     An Option may not be exercised for a fraction of a Share.

     An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 8(c) of the Plan. Until the



                                      -5-
<PAGE>

issuance (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other
rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. A share certificate for the number
of Shares so acquired shall be issued to the Optionee as soon as practicable
after exercise of the Option. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the stock certificate is
issued, except as provided in Section 11 of the Plan.

     Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

     (b) Termination of Continuous Status as a Director. If an Outside Director
ceases to serve as a Director, he or she may, but only within ninety (90) days
after the date he or she ceases to be a Director of the Company, exercise his or
her Option to the extent that he or she was entitled to exercise it at the date
of such termination. Notwithstanding the foregoing, in no event may the Option
be exercised after its term set forth in Section 7 has expired. To the extent
that such Outside Director was not entitled to exercise an Option at the date of
such termination, or does not exercise such Option (to the extent he or she was
entitled to exercise) within the time specified above, the Option shall
terminate and the Shares underlying the unexercised portion of the Option shall
revert to the Plan.

     (c) Disability of Optionee. Notwithstanding Section 9(b) above, in the
event a Director is unable to continue his or her service as a Director with the
Company as a result of his or her total and permanent disability (as defined in
Section 22(e)(3) of the Code), he or she may, but only within twelve (12) months
from the date of such termination, exercise his or her Option to the extent he
or she was entitled to exercise it at the date of such termination.
Notwithstanding the foregoing, in no event may the Option be exercised after its
term set forth in Section 7 has expired. To the extent that he or she was not
entitled to exercise the Option at the date of termination, or if he or she does
not exercise such Option (to the extent he or she was entitled to exercise)
within the time specified above, the Option shall terminate and the Shares
underlying the unexercised portion of the Option shall revert to the Plan.

     (d) Death of Optionee. In the event of the death of an Optionee: (A) during
the term of the Option who is, at the time of his or her death, a Director of
the Company and who shall have been in Continuous Status as a Director since the
date of grant of the Option, or (B) three (3) months after the termination of
Continuous Status as a Director, the Option may be exercised, at any time within
twelve (12) months following the date of death, by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that had accrued at the date of
death or the date of termination, as applicable. Notwithstanding the foregoing,
in no event may the Option be exercised after its term set forth in Section 7
has expired. To the extent that an Optionee was not entitled to exercise the
Option at the date of death or termination or if he or she does not exercise
such Option (to the extent he or she was entitled to exercise) within the time
specified above, the



                                      -6-
<PAGE>

Option shall terminate and the Shares underlying the unexercised portion of the
Option shall revert to the Plan.

     10. Nontransferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent or distribution or pursuant to a qualified
domestic relations order (as defined by the Code or the rules thereunder). The
designation of a beneficiary by an Optionee does not constitute a transfer. An
Option may be exercised during the lifetime of an Optionee only by the Optionee
or a transferee permitted by this Section.

     11. Adjustments Upon Changes in Capitalization; Corporate Transactions.

     (a) Adjustment. Subject to any required action by the stockholders of the
Company, the number of shares of Common Stock covered by each outstanding
Option, the number of Shares of Common Stock set forth in Sections 4(b)(ii),
(iii) and (iv) above, and the number of Shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option, as well as the price per Share of Common Stock covered by each
such outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock (including any such change in the number of Shares of Common
Stock effected in connection with a change in domicile of the Company) or any
other increase or decrease in the number of issued Shares of Common Stock
effected without receipt of consideration by the Company; provided however that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option.

     (b) Change of Control. In the event of any transaction that qualifies as a
Change of Control and notwithstanding whether or not outstanding Options are
assumed, substituted for or terminated in connection with the transaction, the
vesting of each outstanding Option shall accelerate in full such that each
Optionee shall have the right to exercise his or her Option as to all of the
Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable, immediately prior to consummation of the transaction.

     For purposes of this Section 11(b), an Option shall be considered assumed,
without limitation, if, at the time of issuance of the stock or other
consideration upon such Change of Control, each Optionee would be entitled to
receive upon exercise of an Option the same number and kind of shares of stock
or the same amount of property, cash or securities as the Optionee would have
been entitled to receive upon the occurrence of such transaction if the Optionee
had been, immediately prior to such transaction, the holder of the number of
Shares of Common Stock covered by the Option at such time (after giving effect
to any adjustments in the



                                      -7-
<PAGE>

number of Shares covered by the Option as provided for in this Section 11);
provided however that if such consideration received in the transaction was not
solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon exercise of the Option to be solely common
stock of the successor corporation or its Parent equal to the Fair Market Value
of the per Share consideration received by holders of Common Stock in the
transaction.

     (c) Certain Distributions. In the event of any distribution to the
Company's stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.

     12. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date determined in accordance with Section 4(b) hereof. Notice
of the determination shall be given to each Outside Director to whom an Option
is so granted within a reasonable time after the date of such grant.

     13. Amendment and Termination of the Plan.

     (a) Amendment and Termination. The Board may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable; provided
that, to the extent necessary and desirable to comply with Rule 16b-3 under the
Exchange Act (or any other applicable law or regulation), the Company shall
obtain approval of the stockholders of the Company to Plan amendments to the
extent and in the manner required by such law or regulation.

     (b) Effect of Amendment or Termination. Any such amendment or termination
of the Plan that would impair the rights of any Optionee shall not affect
Options already granted to such Optionee and such Options shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.

     14. Conditions Upon Issuance of Shares. Notwithstanding any other provision
of the Plan or any agreement entered into by the Company pursuant to the Plan,
the Company shall not be obligated, and shall have no liability for failure, to
issue or deliver any Shares under the Plan unless such issuance or delivery
would comply with the legal requirements relating to the administration of stock
option plans under applicable U.S. state corporate laws, U.S. federal and
applicable state securities laws, the Code, any stock exchange or Nasdaq rules
or regulations to which the Company may be subject and the applicable laws of
any other country or jurisdiction where Options are granted under the Plan, as
such laws, rules, regulations and requirements shall be in place from time to
time (the "Applicable Laws"). Such compliance shall be determined by the Company
in consultation with its legal counsel.


                                      -8-
<PAGE>

     As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by law.

     15. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     16. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

     17. Stockholder Approval. If required by the Applicable Laws, continuance
of the Plan shall be subject to approval by the stockholders of the Company.
Such stockholder approval shall be obtained in the manner and to the degree
required under the Applicable Laws.


                                      -9-
<PAGE>

                           RITA MEDICAL SYSTEMS, INC.

                        2000 DIRECTORS' STOCK OPTION PLAN

                          NOTICE OF STOCK OPTION GRANT

 Optionee
 OptioneeAddress1
 OptioneeAddress2

     You have been granted an option to purchase Common Stock of RITA Medical
Systems, Inc. (the "Company") as follows:

     Date of Grant                             GrantDate

     Vesting Commencement Date                 VestingStartDate

     Exercise Price per Share                  ExercisePrice

     Total Number of Shares Granted            SharesGranted

     Total Exercise Price                      TotalExercisePrice

     Expiration Date                           ExpirDate

     Vesting Schedule:                        This Option may be exercised, in
                                              whole or in part, in accordance
                                              with the following schedule:
                                              _________ of the Option Shares
                                              shall vest and be exercisable on
                                              each _____ anniversary of the
                                              Vesting Commencement Date.

     Termination Period:                      This Option may be exercised for
                                              90 days after termination of
                                              Optionee's Continuous Status as a
                                              Director, or such longer period as
                                              may be applicable upon death or
                                              Disability of Optionee as provided
                                              in the Plan, but in no event later
                                              than the Expiration Date as
                                              provided above.
<PAGE>

     By your signature and the signature of the Company's representative below,
you and the Company agree that this option is granted under and governed by the
terms and conditions of the 2000 Directors' Stock Option Plan and the
Nonstatutory Stock Option Agreement, all of which are attached and made a part
of this document.

OPTIONEE:                                      RITA MEDICAL SYSTEMS, INC.



                                               By:
-------------------------------------              -----------------------------
Signature
                                               Title:
                                                     ---------------------------
-------------------------------------
Print Name



                                      -2-
<PAGE>

                           RITA MEDICAL SYSTEMS, INC.

                       NONSTATUTORY STOCK OPTION AGREEMENT

     1. Grant of Option. The Board of Directors of the Company hereby grants to
the Optionee named in the Notice of Stock Option Grant attached as Part I of
this Agreement (the "Optionee"), an option (the "Option") to purchase a number
of Shares, as set forth in the Notice of Stock Option Grant, at the exercise
price per share set forth in the Notice of Stock Option Grant (the "Exercise
Price"'), subject to the terms and conditions of the 2000 Directors' Stock
Option Plan (the "Plan"), which is incorporated herein by reference.
(Capitalized terms not defined herein shall have the meanings ascribed to such
terms in the Plan.) In the event of a conflict between the terms and conditions
of the Plan and the terms and conditions of this Nonstatutory Stock Option
Agreement, the terms and conditions of the Plan shall prevail.

     2. Exercise of Option.

     (a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Stock Option Grant
and the applicable provisions of the Plan and this Nonstatutory Stock Option
Agreement. In the event of Optionee's death, disability or other termination of
Optionee's employment or consulting relationship, the exercisability of the
Option is governed by the applicable provisions of the Plan and this
Nonstatutory Stock Option Agreement.

     (b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.

     No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with all relevant provisions of law and the
requirements of any stock exchange or quotation service upon which the Shares
are then listed. Assuming such compliance, for income tax purposes the Exercised
Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.

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

     (a) cash;
<PAGE>

     (b) check;

     (c) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price; or

     (d) surrender of other Shares which (i) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six (6)
months on the date of surrender, and (ii) have a Fair Market Value on the date
of surrender equal to the aggregate Exercise Price of the Exercised Shares.

     4. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution or
pursuant to a domestic relations order (as defined by the Code or the rules
thereunder) and may be exercised during the lifetime of Optionee only by the
Optionee or a transferee permitted by Section 10 of the Plan. The terms of the
Plan and this Nonstatutory Stock Option Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.

     5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Stock Option Grant, and may be exercised during such term
only in accordance with the Plan and the terms of this Nonstatutory Stock Option
Agreement.

     6. Tax Consequences. Set forth below is a brief summary of certain federal
tax consequences relating to this Option under the law in effect as of the date
of grant. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT HIS OR HER OWN TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

     (a) Exercising the Option. Since this Option does not qualify as an
incentive stock option under Section 422 of the Code, the Optionee may incur
regular federal income tax liability upon exercise. The Optionee will be treated
as having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the fair market value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price.

     (b) Disposition of Shares. If the Optionee holds the Option Shares for more
than one year, gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes. The long-term capital
gain will be taxed for federal income tax purposes at a maximum rate of 20
percent.


                                      -2-
<PAGE>

     By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Nonstatutory Stock Option Agreement.
Optionee has reviewed the Plan and this Nonstatutory Stock Option Agreement in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Nonstatutory Stock Option Agreement and fully understands all
provisions of the Plan and Nonstatutory Stock Option Agreement. Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions relating to the Plan and
Nonstatutory Stock Option Agreement.

                                               RITA MEDICAL SYSTEMS, INC.


                                               By:
-----------------------------                      -----------------------------
 Optionee
                                               Title:
                                                     ---------------------------


                                CONSENT OF SPOUSE

     The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Nonstatutory Stock Option Agreement. In
consideration of the Company's granting his or her spouse the right to purchase
Shares as set forth in the Plan and this Nonstatutory Stock Option Agreement,
the undersigned hereby agrees to be irrevocably bound by the terms and
conditions of the Plan and this Nonstatutory Stock Option Agreement and further
agrees that any community property interest shall be similarly bound. The
undersigned hereby appoints the undersigned's spouse as attorney-in-fact for the
undersigned with respect to any amendment or exercise of rights under the Plan
or this Nonstatutory Stock Option Agreement.


                                               ---------------------------------
                                               Spouse of Optionee


                                      -3-
<PAGE>

                                    EXHIBIT A

                               NOTICE OF EXERCISE

To:       RITA Medical Systems, Inc.

Attn:     Stock Option Administrator

Subject:  Notice of Intention to Exercise Stock Option

     This is official notice that the undersigned ("Optionee") intends to
exercise Optionee's option to purchase __________ shares of RITA Medical
Systems, Inc. Common Stock, under and pursuant to the Company's 2000 Directors'
Stock Option Plan and the Nonstatutory Stock Option Agreement dated
_______________, as follows:

     Grant Number:
                                       ----------------------------
     Date of Purchase:
                                       ----------------------------
     Number of Shares:
                                       ----------------------------
     Purchase Price:
                                       ----------------------------
     Method of Payment of
     Purchase Price:
                                       ----------------------------
     Social Security No.:
                                       ----------------------------

     The shares should be issued as follows:

         Name:
                   --------------------
         Address:
                   --------------------

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

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

         Signed:
                   --------------------
         Date:
                   --------------------




                                       -4-