VidaMed, Inc.
                              46107 Landing Parkway
                            Fremont, California 94538


                                  June 22, 1999

Mr. Randy Lindholm
VidaMed, Inc.
46107 Landing Parkway
Fremont, CA 94538

                          Re: Terms of Employment Offer

Dear Mr. Lindholm:

         This letter will  confirm  the terms of your offer of  employment  with
VidaMed, Inc. Such terms are as follows:

         1.  Position  and  Responsibilities.  You will serve in the position of
President and Chief  Executive  Officer,  reporting to the Board of Directors of
the  Company.  You  will  assume  and  discharge  such  responsibilities  as are
commensurate with such position.  During the term of your employment,  you shall
devote your full time,  skill and attention to your duties and  responsibilities
and shall perform them faithfully,  diligently and competently. In addition, you
shall  comply  with and be  bound  by the  operating  policies,  procedures  and
practices  of VidaMed in effect from time to time during your  employment.  Your
service as President and Chief Executive Officer will commence on August 1, 1999
(the "Start Date").

         2.       Compensation.

                  (a) In  consideration  of your  services,  effective as of the
Start Date, you will be paid a base salary of $235,000 per annum,  payable twice
monthly in  accordance  with  VidaMed's  standard  payroll  practices.  Upon the
termination  of  service  of David  Illingworth  as  Executive  Chairman  of the
Company, which is expected to occur no later than six months following the Start
Date (the  "Phase II Date")  your base salary  will be  increased  to  $260,000.
Thereafter,  your  base  salary  will  normally  be  reviewed  annually  by  the
compensation committee of the Board of Directors of VidaMed.

                  (b) On the Start Date,  25% of the original  principal  amount
(plus accrued  interest  thereon) of your loan from VidaMed (the "Loan") will be
forgiven.  On each of the Phase II Date,  the date which is six months after the
Phase II Date and the date  which is 18 months  after the Phase II Date,  25% of
the original  principal amount (plus accrued interest  thereon) of the Loan will
be forgiven,  provided you remain employed by the Company as President and Chief
Executive Officer on each such Loan forgiveness date.

                  (c)  You  will  be  entitled  to  participate  in the  VidaMed
Performance  Incentive Plan. For purposes of calculating benefits under the PIP,
the  Operating  Plan shall be the "Steady  Growth Plan" stated in the Minutes of
the Board of Directors  dated June 22, 1999. Your  participation  in the

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PIP for  fiscal  year 1999  shall be at  seven-twelfths  in your  capacity  as a
corporate officer and five-twelfths as President and CEO.

         3.  Other  Benefits.  You will be  entitled  to  receive  the  standard
employee  benefits made available by VidaMed to its employees to the full extent
of your  eligibility  therefor.  You  shall  be  entitled  to paid  vacation  in
accordance with VidaMed's vacation policy. During your employment,  you shall be
permitted, to the extent eligible, to participate in any group medical,  dental,
life  insurance  and  disability  insurance  plans,  or similar  benefit plan of
VidaMed that is available to executive officers generally.  Participation in any
such plan shall be consistent  with your rate of compensation to the extent that
compensation is a  determinative  factor with respect to coverage under any such
plan.

                  VidaMed  shall  reimburse  you  for  all  reasonable  expenses
actually  incurred or paid by you in the  performance of your services on behalf
of the  company,  upon prior  authorization  and  approval  in  accordance  with
VidaMed's expense reimbursement policy as from time to time in effect.


         4. Stock Option.  Pursuant to Board  approval,  and under the terms and
conditions  of the  VidaMed  Stock  Option  Plan  and  Stock  Option  Agreement,
including the stock vesting provisions contained therein, you will be granted an
option to purchase 400,000 shares of common stock of VidaMed.  Your stock option
will be granted in two separate  tranches as follows:  (i) tranche 1 for 200,000
shares will be granted to you on the second  business day after your  acceptance
of this offer  letter and (ii)  tranche 2 will be granted to you on the Phase II
Date,  provided  you  remain  employed  by the  Company as  President  and Chief
Executive Officer on the Phase II Date. The exercise price for each tranche will
equal the fair market  value of VidaMed  Common  Stock on the  respective  grant
dates.  Both tranches will vest over a four-year period beginning on the date of
commencement  of your service as President and Chief  Executive  Officer (in the
case of the  tranche  1  options)  and on the  Phase II Date (in the case of the
tranche 2 options).  The VidaMed  Stock Option Plan,  including the Stock Option
Agreement, will be sent to you separately.


         5.  Confidential  Information.   You  agree  that  your  employment  is
contingent  upon your  execution of, and delivery to,  VidaMed of an Employment,
Confidential Information and Invention Assignment Agreement in the standard form
utilized by VidaMed.

         6.  Conflicting  Employment.  You agree  that,  during the term of your
employment  with  VidaMed,   you  will  not  engage  in  any  other  employment,
occupation,  consulting  or other  business  activity  directly  related  to the
business in which VidaMed is now involved or becomes involved during the term of
your employment,  nor will you engage in any other activities that conflict with
your obligations to VidaMed.

         7.       General Provisions.

                  (a) This  offer  letter  will be  governed  by the laws of the
State of California,  applicable to agreements made and to be performed entirely
within such state.

                  (b) This offer  letters  sets forth the entire  agreement  and
understanding  between  VidaMed and you relating your  employment and supersedes
all prior verbal discussion between us. Any subsequent change or changes in your
duties,  salary or other  compensation  will not affect the validity or scope of
this agreement.

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                  (c) This agreement will be binding upon your heirs, executors,
administrators  and other legal  representatives  and will be for the benefit of
VidaMed and its respective successors and assigns.

         Please  acknowledge  and  confirm  your  acceptance  of this  letter by
signing  and  returning  the  enclosed  copy of  this  offer  letter  as soon as
possible.

                                         VIDAMED, INC.


                                         By  ___________________________________
                                                  Robert Erra, Director


ACCEPTANCE:


         I accept the terms of my  employment  with  VidaMed,  Inc. as set forth
herein.  I understand  that this offer letter does not  constitute a contract of
employment  for any specified  period of time,  and that either  party,  with or
without   cause  and  with  or  without   notice  may  terminate  my  employment
relationship.



Date:___________, 1999

                                          -----------------------
                                          Randy Lindholm