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                                                                    Exhibit 10.4


                               ALTUS MEDICAL, INC.

                            2002 DIRECTOR OPTION PLAN

        1.  Purposes of the Plan. The purposes of this 2002 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) 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:
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            (a)     "Board" means the Board of Directors of the Company.
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            (b)     "Code" means the Internal Revenue Code of 1986, as amended.
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            (c)     "Common Stock" means the common stock of the Company.
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            (d)     "Company" means Altus Medical, Inc., a Delaware corporation.
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            (e)     "Director" means a member of the Board.
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            (f)     "Disability" means total and permanent disability as defined
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in section 22(e)(3) of the Code.

            (g)     "Employee" means any person, including officers and
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Directors, 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.

            (h)     "Exchange Act" means the Securities Exchange Act of 1934,
                     ------------
as amended.
            (i)     "Fair Market Value" means, as of any date, the value of
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Common Stock determined as follows:

                    (i)  If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;

                    (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock for the last market

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trading day prior to the time of determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable; or

                    (iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.

            (j)    "Inside Director" means a Director who is an Employee.
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            (k)    "Option" means a stock option granted pursuant to the Plan.
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            (l)    "Optioned Stock" means the Common Stock subject to an Option.
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            (m)    "Optionee" means a Director who holds an Option.
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            (n)    "Outside Director" means a Director who is not an Employee.
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            (o)    "Parent" means a "parent corporation," whether now or
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hereafter existing, as defined in Section 424(e) of the Code.
            (p)    "Plan" means this 2002 Director Option Plan.
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            (q)    "Share" means a share of the Common Stock, as adjusted in
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accordance with Section 10 of the Plan.
            (r)    "Subsidiary"  means a  "subsidiary  corporation,"  whether
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now or  hereafter  existing,  as defined in  Section 424(f)  of the Internal
Revenue Code of 1986.

        3.  Stock Subject to the Plan. Subject to the provisions of Section 10
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 150,000 Shares plus an annual increase to be added on the
first day of the Company's fiscal year beginning in 2003, equal to the lesser of
(i) the number of Shares issued pursuant to Options under the Plan in the prior
fiscal year or (ii) an amount determined by the Board. The Shares may be
authorized, but unissued, or reacquired Common Stock.

            If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.

        4.  Administration and Grants of Options under the Plan.
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            (a)   Procedure for Grants. All grants of Options to Outside
Directors under this Plan 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.


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                    (ii)  Each Outside Director shall be automatically granted
an Option to purchase 30,000 Shares (the "First Option") on the date on which
such person first becomes an Outside Director, whether through election by the
shareholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that an Inside Director who ceases to be an Inside Director
but who remains a Director shall not receive a First Option.

                    (iii) Each Outside Director shall be automatically granted
an Option to purchase 10,000 Shares (a "Subsequent Option") on the date of the
Company's annual stockholders meeting each year provided he or she is then an
Outside Director.

                    (iv) The terms of a First Option granted hereunder shall be
as follows:

                         (A)  the term of the Election Option shall be ten (10)
years.

                         (B)  the First Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.

                         (C) the exercise price per Share shall be 100% of the
Fair Market Value per Share on the date of grant of the First Option.

                         (D) subject to Section 10 hereof, the First Option
shall become exercisable as to 1/3rd of the Shares subject to the First Option
on each anniversary following its date of grant, provided that the Optionee
continues to serve as a Director on such dates.

                    (v)  The terms of a Subsequent Option granted hereunder
shall be as follows:

                         (A) the term of the Subsequent Option shall be ten (10)
years.

                         (B) the Subsequent Option shall be exercisable only
while the Outside Director remains a Director of the Company, except as set
forth in Sections 8 and 10 hereof.

                         (C) the exercise price per Share shall be 100% of the
Fair Market Value per Share on the date of grant of the Subsequent Option.

                         (D) subject to Section 10 hereof, the Subsequent
Option shall become exercisable as to 100% of the Shares subject to the
Subsequent Option three (3) years following its date of grant, provided that the
Optionee continues to serve as a Director on such date.


                    (vi) In the event that any Option granted under the Plan
would cause the number of Shares subject to outstanding Options plus the number
of Shares previously purchased under Options to exceed the total number of
Shares reserved for issuance under the Plan, then the remaining Shares available
for Option grant shall be granted under Options to the Outside Directors on a
pro rata basis. No further grants shall be made until such time, if any, as
additional Shares become available for grant under the Plan through the
provisions of the Plan, by action of the Board,

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by the stockholders  approving an increase in the number of Shares which may be
issued under the Plan or through  cancellation or expiration of Options
previously granted hereunder.

         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 hereof.

            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 the Director's relationship with the
Company at any time.

        6.  Term of Plan.  The Plan shall  become  effective  upon the later to
occur of its  adoption by the Board or its approval by the stockholders  of the
Company.  It shall  continue in effect for a term of ten (10) years unless
sooner  terminated  under Section 11 of the Plan.

        7.  Form of Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other Shares, which, in the case of
Shares acquired from the Company, (x) have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised, (iv) consideration received by the
Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (v) any combination of the foregoing methods of
payment.

        8.  Exercise of Option.
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            (a)  Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in
Section 4 hereof and 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 7 of
the Plan. Until the 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 shareholder 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 shall 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 10 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.

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            (b)   Termination of Continuous Status as a Director. Subject to
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or Disability), the Optionee may exercise
his or her Option, but only within three (3) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not vested as to
his or her entire Option on the date of such termination, the Shares covered by
the unvested portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.

            (c)  Disability of Optionee. In the event Optionee's status
as a Director terminates as a result of Disability, the Optionee may exercise
his or her Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not vested as to
his or her entire Option on the date of termination, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

            (d)  Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
vested as to his or her entire an Option on the date of death, the Shares
covered by the unvested portion of the Option shall revert to the Plan. To the
extent that the Optionee's estate or a person who acquired the right to exercise
such Option does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.

        9.  Non-Transferability 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 and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

        10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
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Asset Sale.
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            (a)  Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number of Shares covered by each
outstanding Option, the number of Shares 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 covered by each such outstanding Option, and the number
of Shares issuable pursuant to the automatic grant provisions of Section 4
hereof shall be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed

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to have been "effected without receipt of consideration." 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 subject to an Option.

            (b)  Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.

            (c)  Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation or the sale of substantially all of the assets
of the Company, outstanding Options may be assumed or equivalent options may be
substituted by the successor corporation or a Parent or Subsidiary thereof (the
"Successor Corporation"). If an Option is assumed or substituted for, the Option
or equivalent option shall continue to be exercisable as provided in Section 4
hereof for so long as the Optionee serves as a Director or a director of the
Successor Corporation. Following such assumption or substitution, if the
Optionee's status as a Director or director of the Successor Corporation, as
applicable, is terminated other than upon a voluntary resignation by the
Optionee, the Option or option shall become fully exercisable, including as to
Shares for which it would not otherwise be exercisable. Thereafter, the Option
or option shall remain exercisable in accordance with Sections 8(b) through (d)
above.

                 If the  Successor  Corporation  does not assume an  outstanding
Option or  substitute  for it an equivalent option, the Option shall become
fully vested and exercisable, including as to Shares for which it would not
otherwise be exercisable. In such event the Board shall notify the Optionee that
the Option shall be fully exercisable for a period of thirty (30) days from the
date of such notice, and upon the expiration of such period the Option shall
terminate.

                 For the purposes of this Section 10(c),  an Option shall be
considered  assumed if,  following the merger or sale of assets, the Option
confers the right to purchase or receive, for each Share subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
If such consideration received in the merger or sale of assets is 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 the exercise of the Option, for each Share subject to the
Option, to be solely common stock of the successor corporation or its Parent
equal in fair market value to the per share consideration received by holders of
Common Stock in the merger or sale of assets.

        11. Amendment and Termination of the Plan.
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            (a)  Amendment and Termination. The Board may at any time amend,
alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with any applicable

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law, regulation or stock exchange rule, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as
required.

            (b)  Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.

        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 hereof.

        13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

            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 any of
the aforementioned relevant provisions of law.

            Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

        14. 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.

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

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