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EXHIBIT 10.1

                              AMENDMENT NO. 1 TO
                       PREFERRED SHARES RIGHTS AGREEMENT

     This Amendment No. 1 to Preferred Shares Rights Agreement (this
"Amendment") is between VidaMed, Inc., a Delaware corporation (the "Company"),
and American Securities Transfer & Trust, Inc. (the "Rights Agent"), effective
as of January 3, 2000.

     A.   The Company and the Rights Agent have entered into a Preferred Shares
Rights Agreement, dated as of January 27, 1997 (the "Rights Agreement").
Capitalized terms used and not otherwise defined herein will have the meaning
given in the Rights Agreement.

     B.   Section 27 of the Rights Agreement provides that, prior to the
Distribution Date, the Company may amend the Rights Agreement, including the
definition of an Acquiring Person as set forth in Section 1(a) thereof, and
that, upon any such amendment, the Rights Agent shall amend the Rights Agreement
as the Company directs.

     C.   The Company desires, and hereby directs the Rights Agent, to amend the
definition of an Acquiring Person, and the Rights Agent agrees to such
amendment, on the terms and conditions hereof.

     NOW, THEREFORE, the Company and the Rights Agent agree as follows:

1.   Representations and Warranties.  The Company represents and warrants to the
     ------------------------------
     Rights Agent that:

     (a)  to the best knowledge of the Company, the Distribution Date has not
     occurred prior to the effective date hereof; and

     (b)  this Amendment is authorized pursuant to the requirements of Section
     27 of the Rights Agreement.

2.   Amendment of Section 1(a).  Section 1(a) of the Rights Agreement is hereby
     -------------------------
     amended by deleting Section 1(a) in its entirety and substituting the
     following therefor:

          (a)  "Acquiring Person" shall mean any Person who or which, together
     with all Affiliates and Associates of such Person, shall be the Beneficial
     Owner of 20% or more of the Common Shares then outstanding (the "Acquiring
     Person Triggering Amount"), but shall not include the Company, any
     Subsidiary of the Company or any employee benefit plan of the Company or of
     any Subsidiary of the Company, or any entity holding Common Shares for or
     pursuant to the terms of any such plan.
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     Notwithstanding the foregoing, no Person shall be deemed to be an Acquiring
     Person as the result of an acquisition of Common Shares by the Company
     which, by reducing the number of shares outstanding, increases the
     proportionate number of shares beneficially owned by such Person to the
     Acquiring Person Triggering Amount; provided, however, that if a Person
     shall become the Beneficial Owner of the Acquiring Person Triggering Amount
     by reason of share purchases by the Company and shall, after such share
     purchases by the Company, become the Beneficial Owner of any additional
     Common Shares of the Company (other than pursuant to a dividend or
     distribution paid or made by the Company on the outstanding Common Shares
     in Common Shares or pursuant to a split or subdivision of the outstanding
     Common Shares), then such Person shall be deemed to be an Acquiring Person
     unless upon becoming the Beneficial Owner of such additional Common Shares
     of the Company such Person does not beneficially own the Acquiring Person
     Triggering Amount. Notwithstanding the foregoing, (i) if a majority of the
     Continuing Directors then in office determines in good faith that a Person
     who would otherwise be an "Acquiring Person," as defined pursuant to the
     provisions of this paragraph (a), has become such inadvertently (including,
     without limitation, because (A) such Person was unaware that it
     beneficially owned a percentage of the Common Shares that would otherwise
     cause such Person to be an "Acquiring Person," as defined pursuant to the
     provisions of this paragraph (a), or (B) such Person was aware of the
     extent of the Common Shares it beneficially owned but had no actual
     knowledge of the consequences of such beneficial ownership under this
     Agreement) and without any intention of changing or influencing control of
     the Company, and if such Person divested or divests as promptly as
     practicable a sufficient number of Common Shares so that such Person would
     no longer be an "Acquiring Person," as defined pursuant to the provisions
     of this paragraph (a), then such Person shall not be deemed to be or to
     have become an "Acquiring Person" for any purposes of this Agreement; and
     (ii) if, as of the date hereof, any Person is the Beneficial Owner of 20%
     or more of the Common Shares outstanding, such Person shall not be or
     become an "Acquiring Person," as defined pursuant to the provisions of this
     paragraph (a), unless and until such time as such Person shall become the
     Beneficial Owner of additional Common Shares (other than pursuant to a
     dividend or distribution paid or made by the Company on the outstanding
     Common Shares in Common Shares or pursuant to a split or subdivision of the
     outstanding Common Shares), unless, upon becoming the Beneficial Owner of
     such additional Common Shares, such Person is not then the Beneficial Owner
     of the Acquiring Person Trigger Amount. For purposes of this definition of
     "Acquiring Person", the Acquiring Person Trigger Amount for Medtronic Asset
     Management, Inc. or any of its Affiliates or Associates (collectively, the
     "Medtronic Group") shall be 25.0% or more of the Common Shares then
     outstanding (the "Medtronic Trigger Amount") which shall be applicable if
     any member of the Medtronic Group has, or, together with any Affiliates and
     Associates of Medtronic, shall be the Beneficial Owner of, such Medtronic
     Trigger Amount.

3.   No Other Changes.  Except as specifically amended by this Amendment, all
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     other provisions of the Rights Agreement shall remain in full force and
     effect.  This Amendment shall not constitute or operate as a waiver of, or
     estoppel with respect to, any provisions of the Rights Agreement by any
     party hereto.

4.   Counterparts.  This Amendment may be executed in one or more counterparts,
     ------------
     each of which shall be deemed an original, but all of which together shall
     constitute one and the same agreement.

     The Company and the Rights Agent have caused this Amendment to be duly
executed on their behalf by their respective duly authorized representatives as
of the date first written above.

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VIDAMED, INC.                               AMERICAN SECURITIES TRANSFER &
                                            TRUST, INC.



By:  /s/ Randy D. Lindholm                  By:  /s/ Laura Sasneros
     -----------------------------------         -------------------------------
Its: President, Chief Executive Officer     Its: Vice President, Trust Officer
     -----------------------------------         -------------------------------



                                            AMERICAN SECURITIES TRANSFER &
                                            TRUST, INC.



                                            By:  Kellie Guinn
                                                 -------------------------------

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